Time for a trading plan

Right, last weeks performance was poor to say the least, it's time to pull together all the wishy washy ideas of a trading plan I have had going round in my head and get them down (and stick to them).  This is partly inspired by Simon Massey over at ftseday and by The Disciplined Trader by Mark Douglas which I have just finished reading (and will read again).

Firstly the acceptance:  I fully understand that the poor performance last week was in stark contrast to the previous 2 weeks because of poor self discipline (influenced by emotion), bad cash management (risked more than I should have) and over trading mediocre and invalid setups.

Rules of the trade

I WILL…

• Only trade valid setups (imagine I have to justify every trade to a pro trader)

• I will risk X% of my account on each trade
• Take full or partial profit at +X pips
• Stop trading for the day when I have hit my target
• Cut trades when the reason for entry is invalidated
• Get up at 6:30 every trading day to evaluate the pre market action and prepare for the open
• Stop trading for the day after 2 full losses
• Be aware of my emotions particularly "REVENGE", "im going to miss out" and "I hope this turns around"
• Record every trade I make with notes and suggestions
• Learn from my mistakes by reviewing my trading log weekly/monthly
• Help as much as I can and continually learn and improve my knowledge of markets and psychology
• Run over these rules everyday
• Make sure I have time for my family outside of work and trading

I WILL NOT…

• Listen to the emotions above
• Look for reasons to stay in a trade that s going against me
• Trade around important news releases and the US open
• Leave trades open overnight
• Take trades I cant be around to monitor continually
• Pay attention to anyone elses opinion on the market

Taking losses

I will cut losses quickly when the trade is invalidated.  Once open trades should be managed on the lower time frame chart, I will identify areas that if broken will result in order flow against me and get out at or before those areas.

After a loss I will review my emotional state.  Do I need to relax and cool down?  Do I feel tense or agitated?  If so then I will take steps to resolve this.  Breathe and review the trade, I will not trade until balanced again.  Was that trade a fair set up?  Did I manage it professionally?  A loss is only that, its part of the business and part of learning.  I will learn from these trades and move on.

I have removed some of the details in the plan as my tolerance for risk my differ to other people and my set ups are unique to my experience.