How to Building Trading Plan

Ten Steps to Building a Winning Trading Plan

1 Skill assessment Are you ready to trade? Have you tested your system by paper trading it and do you have confidence that it works? Can you follow your signals without hesitation?

2.Mental preparation – How do you feel? Did you get a good night's sleep?

3.Set risk level – How much of your portfolio should you risk on any one trade?

4.Set goals – Before you enter a trade, set realistic profit targets and risk/reward ratios. What is the minimumrisk/reward you will accept?

5.Do your homework – Before the market opens, what is going on around the world?Are overseas markets up or down? Are index
futures such as the S&P 500 or Nasdaq 100 exchange-traded funds up or down in pre-market?

6.Trade preparation – Before the trading day, reboot your computer(s) to clear the resident memory (RAM).

7.Set exit rules – Most traders make the mistake of concentrating 90% or more of their efforts in looking for buy signals but pay very little attention to when and where to exit.

8.Set entry rules – This comes after the tips for exit rules for a reason: exits are far more important than entries.

9.Keep excellent records – All good traders are also good record keepers.

10.Perform a post-mortem – After each trading day, adding up the profit or loss is secondary to knowing the why and how. Write down
your conclusions in your trading journal so that you can reference them again later.

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