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Trading Plan Deep Dive

This past week, I conducted a Trading Plan (TP) review with the traders from my Teaching to Trade segment. I think the most important take away for anyone reading this, is just how much progress someone can make on a TP in a fairly brief amount of time. I was impressed with the progress they made in a few short weeks. I've been working on mine for over 15 years now. That being said, there are certainly areas that need to be tightened up, below are some of the key trends I identified. For those interested, you can checkout the full video here.

1. Structure. I provided an overview for the traders on how they could structure their TPs. Sometimes, even drafting an outline can be the start we need to begin adding more comprehensive detail. Here's a screenshot of what I shared. You'll find how I like to structure the overall trading plan as well as individual strategy outlines.

2. Depth. Depth of the plan is the name of the game. This is NOT to suggest we need to read the entire trading plan before we place every trade. However, adding depth is more of a mental exercise and forces us to thoroughly think through the TP and our deployment ahead of time.

3. Assumptions. A common theme when first starting off is, well, we don't know the answers yet. Hard to make a TP when we don't have confidence in the assumptions we're writing down. This is also a common reason traders don't trade their plans, they don't trust them. The way I'd work around this is to make an assumption, identify that it is one, and clearly list out what you need to analyze to confirm or deny the assumption. Progress, not perfection.

I'm passionate about trading plans because I think they're essential to retail trader's success. Far too many think we can just wing it and somehow perform well. Just because there's a low barrier to entry doesn't mean it's easy - it's not.

Be an Outlier!


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