Struggling to come up with a plan for the markets that makes you money? Are you losing money in the stock market (or Forex market)? Use these trading insights to get yourself on track.
Where to Start
You have come up with a trading plan, possibly based on a method developed by someone else which has worked for them, or you have developed your own market plan. No matter how your trading plan was devised, you obviously feel it should work-it worked for someone else (there are loads of profitable trading methods out there) or you took the time to develop a trading plan which should theoretically be profitable. Yet no matter what method you seem to use, it is not profitable. Sound familiar?
When a trading plan fails to work, the problem usually emanates from two distinct categories:
- The problem is with the trading plan itself. For example, the creator of the plan failed to account for a market reality such as volatility, changes in volatility, slippage, fees or some other market factor.
- The problem is within the trader. This is a more common problem. Even given a profitable trading plan the trader fails to execute it properly due to lack of discipline, greed, not adhering to trading rules or fearing the market and thus not taking signals or exiting trades to quickly.
Both of these are major issues, and both can happen at the same time. When the actual trading plan is at fault, it can be an easy fix if more research is done or more knowledge acquired. The issue of the trader being the real problem is more complex…usually because the trader continually blames the trading plan and does not look internally. Traders also like to blame others when they are losing money in the stock market (or any market).
When you are struggling in the market, no matter what your issues is, run through the following three points to aid in getting you on track:
- Clarify your objectives so you find/create a trading plan most suited to your needs.
- Take a personal inventory of market and personal risk/risk tolerance.
- See if the plan is even executable (before you waste a bunch of money) based on the tendencies you know you have.
While working on the self can be hard, it is time to get brutally honest with yourself, admit your faults, struggles, tendencies and weak areas so that you plan FOR them (not against them). When you don’t accept your short comings, you can plan all you want but you will always bump into a wall because you didn’t plan to accommodate for your destructive tendencies.
By clearly defining feasible objectives, looking at what you can afford to risk (and reasonably can expect to make from such risk) and by taking a personal evaluation of whether the plan you have in place is realistic you will be much further along in achieving success.
