So here is my start at developing my trading plan. Something that I have been putting off for far too long.
The first thing it to clearly define my Trading Goals. If I don't have any trading goals then how do I know what I aim to achieve from my trading. I always find the easiest way to do this kind of thing is to generate some simple questions and then fill in the answers. This will also help other people as all you'll need to do is answer the questions and you'll have your own trading plan.
So we need questions that help define "Trading Goals"
The questions I need to ask myself here are:
• What is my main Trading Goal?
• How long per day do I want to spend trading?
• What percentage return do I aim to achieve from my trading?(It's best to think in percentages as if your goal is to make £100 per day but you only have a £100 account size then your being very optimistic to say the least)
• Will trading replace my current income?
• What do I aim to learn from trading? What is my main Trading Goal?
To trade my way to financial freedom. To acquire enough money from trading that I no longer need to work for someone else and I can trade full time and make a good living doing it.How long per day do I want to spend trading?
Ideally as little time as possible. I would think that 3 hours a day should be enough. I currently stare at a computer screen all day and while I don't mind it too much I would like to free up some time so I can pursue other activities. What percentage return do I aim to achieve from my trading?
I aim to make a minimum 10% annual return on my investment. (I decided to have an annual return as a goal as I think monthly or even weekly returns are too hard to manage and if you don't hit a target one week or month then you will probably try to make it up the next month and may cause some irrational thinking.) 10% doesn’t sound like a fantastic rate of return but if I could make 10% minimum year in year out then I would think I'm doing ok. I think if I aim for any more then I would start to chase profits too much and would probably only lose money further.Will trading replace my current income?
When I have traded to a large enough account size that 10% return in one year is enough to replace my current salary than I will aim to trade full time.What do I aim to learn from trading?
I aim to learn more about technical and fundamental analysis through reading books and the internet. Through this learning I aim to develop and hone my trading strategies to help me generate the 10% annual return that I am trying to achieve.
Can anyone else think of any other questions that I need to include in defining my Trading Goals? Any help or input will be greatly appreciated.
May the markets be with you!
The Spread betting beginner