A very archaic saying often quoted in business is: "Failure to plan is planning to fail." This may sound simplistic, but people who are resolute about being prosperous and successful, especially traders, they ought to memorize this saying by heart. If one chooses to consult any trader making money consistently, he will surely explain that, one only has only two choices, either to follow a well written plan or risk the likelihood of inevitable failure.
An investment plan or written trading can be an additional benefit, as it makes you a part of the minority, which has successfully evaded a major road block, if not guaranteeing absolute success. The use of inefficient methods may delay the probability of your success, but not without skirting you in the right direction to chalk out and set up your own course of work The key to understanding this is carefully studying the various processes involved, how they work and also how to make them work in the most economical manner.
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The first major lesson to inculcate is to treat trading like a business only to succeed, because that is what it is. Doing things such as opening brokerage accounts, reading trade books, etc. is not exactly the right business idea, on the contrary being the disastrous recipe. According to John Novak, who is an experienced developer and trader of the T3 Fibs Pro-Trader Program, following a well-written trading program is essential to avoid failure in the market scenario.
He and his wife, who is his business associate in a software systems company, run trading chat-rooms to help educate traders in learning how to utilize their software and moreover, learning the all-important art of trade. Concisely, their software aids in identifying the Fibonacci areas in terms of resistance and support, in different time frames and provides the traders important data with respect to the specific areas, from which they may enter or exit the market. The trader should acquire an important knowledge of as to when the market may have a tendency to reverse or pause, so that he/she may take the necessary action to avoid it.
Novak also states that even for the best of trading programs, consequent analysis and market data, the odds leading to a consistent range of success varies from bleak to nil with the absence of a written plan. He states that his website offers good examples of plans for trading, while making the market information useful to both, clients and non clients alike. He also advises that a good trade plan must evolve and changes must be bought about eventually like in a market, improving gradually with time.
A plan shouldn't be altered while trading but should be surely revised after the closing of the market as it may have been changed with the market conditions. It is necessary for each trader to make his or her own plan, while leaving a niche for personal flair and goals, as copying another trader does not leave the mark of a good trader.
How to Develop the Master Plan?
The essential 10 components which are utmost necessary for every plan are: 1. Assessment of skill - The questions that arise include whether-The person is ready to indulge in trading? Do they have confidence about whether it will work out or not? Do they follow the various signals without even an inch of hesitation? If the answer to the above questions is no, one is advised to read the book by Mark Douglas, about zone trading and especially going through the trade exercises in it. Then one can gain sufficient knowledge about thinking in terms of probabilities and more importantly, the give or take battle ensuing in trading. The real pro traders are always able to envisage the market conditions and make money from those who lose money through their lack of planning.