Building a Trading Plan
One of my favourite sayings is, “Rome wasn’t built in a day”. Indeed, it takes years of hard work, determination, and patience to build something sustainable and efficient – whether it’s a trading plan or the secret recipe for your favourite dish. Success does not come overnight. Instead, it is achieved through continuous effort, persistence, focus, and unwavering discipline.
In the realm of financial markets, a trading plan is highly individual. Each market participant has their own way of navigating the vast maze of opportunities. The question is: how does one go about finding their own path and constructing a game plan solid enough to maintain consistent profitability? The answer lies in trial and error, years of work, and a combination of systematic planning and adaptability.
Preliminarily Detailed Guide
Ultimately, building a trading plan stems from one critical element: understanding yourself and the impulses that guide you. For instance, if you are a busy person or do not prefer sitting in front of a screen for hours, swing trading might be more appropriate for you. On the other hand, if you’re addicted to charts and desire frequent trading, scalping or intraday trading could be the best fit. Either way, it all boils down to personal tendencies, wants, and needs.
Nevertheless, one thing is certain: the journey at the start is not so different, regardless of your trading style within the market. Every participant, inevitably, goes through the same phases—euphoria and anger, greed and fear, impatience and over-leveraging, and so forth. Therefore, to provide the most effective procedure for constructing a trading plan, we are offering the following step-by-step guide:
- Finding oneself
In the beginning, it’s hard to know what we want from the market or how to proceed. To discover our goals, we should start with a demo account and trade everything. We should monitor all timeframes, explore various securities, and test different tools. In short, we must go through a trial period. This helps us understand what techniques and strategies work best.For example, I started trading in 2019 as a high-frequency day trader and scalper. I traded nearly all currency pairs, from majors to exotics. I also experimented with various technical tools to find what suited me. By losing trades, over-trading, and making foolish mistakes, I learned my impulses. I began noticing patterns that guided my behaviour. Over time, I started to “feel” the market.
- Opting for a given set of rules
After the discovery phase, it’s time to create a concrete plan and solidify it. Once we’ve traded for a while and used different techniques, we must ask: What works best for us?In my experience, after 1.5 years of trading practically everything and using various approaches, I finally concluded that I needed to establish a set of solid rules and stick to them. I eventually prioritised swing trading over other styles, despite beginning as a day trader. I wrote down my unique strategy based on my techniques and made sure to follow it rigorously.For example, here are a few of the rules I’ve adhered to for years:
– Use only two timeframes for market analysis and trade decisions (Weekly for direction, Daily for entries and monitoring)
– Actively trade only two financial instruments (EUR/GBP and USD/CHF)
– Expose only 1% of total capital per transaction - Sustaining and optimising the constructed planning
There is always room for improvement in all endeavours of life, and trading is no exception. Every setback and temporary defeat contains the seeds of growth. Only by making mistakes and learning from them can we refine our trading plan.From experience, success in financial markets is a byproduct of failures and temporary defeats. I can attribute 101% of my consistent profitability to the setbacks and losses I encountered along the way. It was through these challenges that I was able to develop a razor-sharp psychological state and an agile technical strategy.
Conclusion – Just Take the First Step
90% of the time, the most difficult step is the first one. By indulging in procrastination and delaying the work that could be done immediately, we push ourselves further away from that crucial initial step. If you’ve told yourself you’ll start tomorrow, then honour your word and take that leap of faith. Once you do, the rest will naturally fall into place. At the end of the day, building a trading plan will be impossible if the most vital step, which is the initial one, is not taken.
