The Trading Plan

The trading plan comes first, and it is the board based trading strategy each trader should have. It should reflect a trader's trading style, trading strategies, and risk aversion. A trading plan doesn't have to have a system set in stone, but it can have known-to-work strategies like "buy dips in an uptrend and don't risk more then 5 percent of equity on any given trade." A trading plan won't change much from day to day, as it consists of a trader's systems and money management plans. It does need to be reviewed on a regular basis, but overall it usually stays the same. Though this book is not about how to make a trading plan, I'll expand on the basics of doing so in the next chapter.

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