Stop trading without a plan, you are wasting your money.

When I think about my first week of trading, something I constantly think about.  The first day I made around $680 and the second I lost $620 and did not make a trade for the rest of the week.  I was trading the Russell at the time, too.  I knew it all and refused to accept the advice of my mentors. IE have a plan, trade one market and trade very little.

The goal I had for trading was to make lots of money without having a clue how to accomplish it. What I failed to realize at the moment was the goal of my first trading account was to learn and more specifically learn efficiently.

If you have a goal you need a plan.  If you have a plan, you have to be willing to adjust as information changes.  If you need to adjust to changes in information, you need to have a reason to adjust.

The plan.

A trading plan needs to include a budget. The monthly budget must including commission and other costs of business. A plan needs a set of rules. New and struggling traders rules are designed to minimize loss and successful traders are to maximize profit. I have two sets of rules.  Once you have set your rules you have to be the judge, jury and execution.  Have a consequence for breaking the rules other than financial, when you are at your worst, money won’t matter more than psychological needs.

Adjusting to new information.

Bad traders see change too late, good traders see change happening and sometimes react, and great traders see it coming and always react.  I say I only work a few hours a day but I spend a good chunk of the day understanding if I helped or hurt my techniques.  Finding your trading environment equilibrium (TEE) is important. Once that is taken care of, absorb the feedback.  This includes cash and how you feel physically.  Not capturing risk and feeling abnormally drained are two important cues that should not be ignored.  Note: I have suffered through many years of over-thinking, you need to find your balance.

Establishing reasons for change.

Now that you are presented with this new information it is your responsibility to change or not.  Finding out if you are the problem, your techniques or the market, will help to determine what needs to change.  You can find more on figuring what is broken here.

Having a plan is key to being a successful trader at the very minimum it helps you learn more efficient.  A plan, get some.

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