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.
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