Trading psychology · Lesson 25
Planning before the trade
A decision made before a trade is easier to evaluate than an explanation invented afterwards.
A trading plan defines the setup, entry conditions, invalidation, position risk and management rules before emotions are strongest. Planning cannot remove uncertainty, but it reduces the number of decisions made impulsively after price starts moving. A useful plan is specific enough to be followed and reviewed, yet simple enough that the trader can execute it consistently.
Imagine a written plan specifies the conditions to consider and the conditions to stand aside. After the event, those criteria make the decision easier to review.
Write an observation checklist for a historical setup, including when the idea would no longer be valid.
Next in this series: FOMO and chasing.
#TradingEducation #PriceAction #RiskManagement #TradingTurtle
Planning before the trade
A decision made before a trade is easier to evaluate than an explanation invented afterwards.
A trading plan defines the setup, entry conditions, invalidation, position risk and management rules before emotions are strongest. Planning cannot remove uncertainty, but it reduces the number of decisions made impulsively after price starts moving. A useful plan is specific enough to be followed and reviewed, yet simple enough that the trader can execute it consistently.
Imagine a written plan specifies the conditions to consider and the conditions to stand aside. After the event, those criteria make the decision easier to review.
Write an observation checklist for a historical setup, including when the idea would no longer be valid.
Next in this series: FOMO and chasing.
#TradingEducation #PriceAction #RiskManagement #TradingTurtle
