Trading Rules Are Not a Suggestion or an OptionWhen you make a trading rule, it's not a suggestion or an option. Mostly, when we want to be flexible with our rules, it's an emotional impulse pulling us to make some unbalanced trading decision. Make sure to keep closing every escape route you have. If you are not ready to commit to rules then don't make them, you will just be setting yourself up. Wait until you are ready, then have a go at it.
In my posts, I have been doing an exercise of trade planning for 30 trades. This is a complete plan covering every aspect of the trade. Today I will do a review of the trades done so far.
Components of a Trade Plan:
1. Objective method
2. Trade entry, stop, and exit
3. Position sizing and risk management
4. Documentation and review
The review is simple, I ask 2 basic questions.
1. Did I make a clear plan ahead of time?
2. Did I follow that plan?
These questions demand honest, yes-or-no answers. They force me to confront my trading discipline head-on, without room for excuses or escape. At first, the rules may seem confining, but after a while, you will see that trading can be very relaxed.
I understand that rules for every aspect can be overwhelming. You can do it in steps tackling one thing at a time. For instance, you can work on only entries, stops, or management until you master that one thing. Setting the foundations of discipline and consistency won't offer immediate gratification but it will serve you in the long run. What's important is that you keep moving forward toward your objectives with awareness.
Shane
