by Linda Raschke
Sometimes I receive e-mails and articles that I feel have so much value and -- even though I can't take credit -- I think it would be a shame if you all did not get a chance to benefit from it. The following article is just one of "gems" that I feel is a MUST READ.
Your business plan is your personal blueprint for trading success. It
includes not only your goals, but a detailed plan of how you plan to get there.
This plan should go far beyond the details of your trading methodology. It
should include structuring not only your trading environment, but your whole
life. Your mind and psyche are your main trading assets. How do you plan to
protect them throughout the year? Your business plan should be structured to
motivate you to make higher highs in your account equity. This sounds like a
given, but you must truly fight to come back from each drawdown. You must have
allowances in your plan not to give back more than a minimal percentage of
profits. Your trading plan must include all the details such as which markets
you will trade, which strategies you will follow, and what type of leverage you
will use. Only by having a trading plan will you be able to avoid emotional
I am of the belief that it is never too late to start thinking about working
on a business plan for the current year. It is also never too early to think
about putting together a business plan for next year. This is because it will
take you some time to think about the things that I am going to say, and work on
your own program.
Trading is abstract and there are so many questions and decisions to be made
that come up during the day. Your goal as a trader is to execute your plan and
leave the thinking out of it. A daily plan helps to aid in providing ritual,
organization and structure. But before you think about how to construct your
daily game plan, you need to first put together a broader annual business plan.
In setting up your larger business plan, you will be designing a trading program
for yourself. Many of the questions our office receives pertain to what type of
trading patterns to follow, what time frames to trade on, how to place orders,
and which markets to trade. Your business plan should address these issues.