A trading business plan, just like a normal business plan, is a document that details everything that you need to know in order to run your trading business.
It includes your goals and objectives, how you intend to make money, what your edge is, what you will trade and why, and how you will grow your trading business.
It should also include details about the technical and fundamental analysis you will use, money management, psychological ideals and how you will prepare, execute and then evaluate the trades you place.
Now everyone’s Trading Business Plan will be different, and there is no right or wrong as long as it works for you.
And makes Money.
My Plan is always evolving but the core remains the same.
Nice explanation from Investopedia.
A typical entry rule could be worded like this: “If signal A fires and there is a minimum target at least three times as great as my stop loss and we are at support, then buy X contracts or shares here.” Your system should be complicated enough to be effective, but simple enough to facilitate snap decisions. If you have 20 conditions that must be met and many are subjective, you will find it difficult if not impossible to actually make trades. Computers often make better traders than people, which may explain why nearly 50% of all trades that now occur on the New York Stock Exchange are computer-program generated. Computers don’t have to think or feel good to make a trade. If conditions are met, they enter. When the trade goes the wrong way or hits a profit target, they exit. They don’t get angry at the market or feel invincible after making a few good trades. Each decision is based on probabilities.
Before you enter a trade, you should know where your exits are. There are at least two for every trade. First, what is your stop loss if the trade goes against you? It must be written down. Mental stops don’t count. Second, each trade should have a profit target. Once you get there, sell a portion of your position and you can move your stop loss on the rest of your position to break even if you wish. Never risk more than a set percentage of your portfolio on any trade.
Never risk more than a set percentage of your portfolio on any trade. (as discussed in the Risk Management lesson in the course
Those 3 things have to be followed and I cannot stress that enough, It will prevent over trading (the biggest enemy), lack of confidence and failing to pull the trigger is the opposite of overtrading and will also hurt you in the long run.
This video is a basic outline of mine and I will be posting the updates in the course.