It is absolutely essential to have a trading plan in writing before you begin trading . Most of traders do not have a written trading plan, Having a Written trading plan is always an additional edge most of profitable traders have. Without a trading plan, you will be prone to inconsistent and erratic trading with a lack of confidence that will eventually drain your trading account. A trading plan is like a roadmap that tells you where you need to go and how you will get there. Without one, you are just trading blind.
Lets discuss what shall be included in trading plan for Successful trading
What to Trade
As a trader have a list of instruments which you plan to trade. Once you identify the instrument Like Reliance than focus on the type of instrument that is you want to trade in cash/Future/Options. Having a list of instruments you want to trade is the stepping stone.
This is where many unsuccessful traders go wrong. They have no specific trading strategies for entering and exiting trades. First you need to decide you want to do Intraday Trading or Positional Trading. Once Identified the type of trading you want to do that focus on the strategies which should be back tested and you should have confidence on them. Gann Time Based Strategies works well for Swing, Price Action based strategies is helpful in intraday trading.
Controlling Trading Risk
You should know what your risk is on every trade before it is entered. Once you are filled on an order you should immediately place your stop loss order to limit your risk on every trade. One of the biggest mistakes new traders make is failure to take a loss. Often, one or two big losses will destroy an account. If you can keep your losses small, you will be far ahead of most new traders.
Keeping Trading Records
Recording every trade you make and the reasons why you entered and exited the trade is one of the best educational tools you can use. Over time, you will learn which strategies work best and under what conditions. Keep track of the profit or loss on each trade. I like to print out a chart of each trade that shows where I entered and exited. Over time, you will begin to see patterns of how the markets work and how you can improve your trading strategies.