You might be wondering what a good trading plan is. Simple – a good trading plan is a plan that gives you parameters for going long or short a market, minimizes your losses (thereby protecting your seed capital) while maximizing your gains (growing your seed capital). That’s it. Seriously. I will tell you that trading with a plan is one of the best ways to ease trading anxiety.

Notice how I didn’t say, “eliminate” – you will always have trading anxiety in certain degrees, but with a well-thought out plan, you will begin to be comfortable with uncertainty knowing that you did everything possible to insulate yourself from losing money.

While this is not the end-all-be-all with trading, it is meant to keep you as a trader from letting things get out of hand emotionally.

You have to approach trading scientifically because if you approach it emotionally, you simply will go crazy. Observe the market, make a hypothesis, test the hypothesis, play around with the variables of the plan and see if things improve.

All of this takes time – a lot of time, don’t let anyone fool you - but the reward is well worth it. You’ll be on your way to making millions. Just remember me when you become a famous hedge fund trader.

Posted in Categories: Contributor, Psychology.