Yes, I know…you don’t need a trading plan…you just want to get started and make some money, you don’t need to laboriously document everything. As least that’s what 95% of traders would be saying right now.
But trading without a plan is just like parking your car on the railway tracks and taking a nap – just not very smart, and frankly, it is kind of dangerous!
My name is Adrian, founder of Enlightened Stock Trading, and I have been a profitable trader for over a decade. When I was learning to trade I tried lots of different methods, I read a huge number of books and attended numerous trading courses. But it wasn’t until I really understood the importance of a written trading plan, combined with a trading system that fit my personality and objectives that my trading results really took off.
Believe me when I say that this is one of THE BIGGEST determinants of success in trading.
If your plan is not documented
you will not succeed in the long term
Novices that fail and lose money almost never have a plan, but wealthy and professional traders do. That was enough justification for me, but just in case you need more, let me explain why it is so powerful to have a written plan.
Trading is challenging, and the markets have no regard or care for you, your positions, your opinion or your stress levels. No matter how you trade, the market will find a way to cause you stress.
And we all know that when we are stressed, we make bad decisions.
The reason why is actually really interesting. It is because of the natural human ‘fight or flight’ response which we all have.
This evolved early in human history when stress from the environment (such as coming face to face with a large predator) required a huge burst of physical exertion to protect ourselves.
Adrenalin gives us this burst of power. During stress the body releases adrenalin which makes us physically strong and instantly prepares the muscles for action…
…so what does this have to do with trading?
When we are stressed, adrenalin causes blood to be diverted to your muscles to get you ready for action – to run or to fight for survival. This means less oxygen to the brain and that lowers our intelligence.
Under intense stress, human IQ drops dramatically – That’s why a written trading plan saves your account!
You guessed it! Lower IQ means stupid decisions and wallet punishing trading mistakes!
Unexpected Event >> Stress >> Reduced IQ >> Mistakes >> Losses … Unless you have a trading system & plan
A written plan solves this problem because it captures what you will do under a wide range of scenarios in advance so that you don’t have to decide what to do in the heat of the moment. Pre-deciding what action you will take gives you a huge advantage in the markets.
Unexpected Event >> Consult Trading Plan >> Good Decision >> Stock Trading Profits!
If you don’t already have one, writing your plan is the number one priority to improve your trading and generate consistent, profitable results.
If you want to learn how to improve your trading performance and easily harness the power of your own trading plan to improve your profitability and consistency, enter your email in the box below to get access to a free video training series to get you started. In these videos I will cover exactly how a written plan will help you, the 8 components of a professional trading plan and what you need to consider in each section of your plan to make it really easy for you to get started.
Don’t be one of the 95% of traders that lose money – write your plan and watch how much clarity (and profit!) you gain.
To learn more about what you should include in your trading plan read these additional articles:
- Is a trading plan the difference between success and failure?
- Trading Plans – What’s the big deal?
- Trade Plan vs Trading Plan – what is the difference and why should I care?
- Writing a trading plan is not difficult or time consuming
- Creating a trading plan the easy way
- Stock trading plan – 5 critical factors
- Small cap trading plan secrets
Can you please send the training video on how to develop a Trading Plan?
Thanks for your comment. I have another Blog post here that will help you with the right approach to write a trading plan:
I also have a Trading Plan Toolkit which is available for a low price which includes a comprehensive trading plan template and video based training. Send me a message on the Contact US page if you are interested and I will get you the details (https://enlightenedstocktrading.com/contact-us/)