Writing a trading plan like a pro

A trading plan is a comprehensive document that sets out your objectives, strategies and expectations. It's a roadmap that guides your decisions and actions in the market.

Elite traders know their edge in the market before they even place a trade. That edge is well defined and repeatable, and it forms the basis of their strategies. These traders understand that, for any given set of variables that define an edge, there is a random distribution of wins and losses. That understanding is what leads to excellent, repetitive execution.

The primary goal of a trade plan is to clearly define your trading processes and strategies, with the ultimate aim of creating a repeatable process.

When you're starting out, the focus should be on developing your trading process. That includes cultivating the mindset of a winning trader and learning to think in probabilities rather than in profit and loss. Too many traders focus on the outcome and not on the process that gets them to their goals.

Define the type of trading business you want to set up. Is it short-term, scalping, or structured trend following? Know your time frames and your periodicity. Which regimes does your business work best in, and when should you not trade at all? Pinning down these details stops you making things up on the fly once the market has opened.

AccountabilityWhen I began my career, I was surrounded by elite traders every day. My mentor and the owners of the firm kept me in line and made sure I followed their processes. If I was trading poorly, they held me accountable. As I developed and ran trading desks of my own, I did the same for the traders on my team who were looking to develop.

An accountability partner (AP) is someone you're close to who is committed to helping you achieve your goals. A good AP will call you out and question you when you're not following your rules. Because you respect them, their criticism should motivate you to improve. Never underestimate the power of social and peer pressure as a motivation for change.

JournalingMany traders forget the importance of journaling, but without a solid journal there can be no long-term learning. A journal is a heuristic diary of your progress and daily learning. Update it and review it daily.

PreparationGood trading should be effortless: the hard work comes in the preparation. Your trade plan and playbook are part of that preparation. The objectivity and clarity a solid plan gives you are essential in a market that demands split-second decisions to capitalise on opportunities.

After the marketBuild stress-relieving activities, such as meditation or working out, into your after-market routine. Trading can be emotionally challenging at times, and keeping mentally and physically fit is imperative in this business.

The weekly reviewEvery week, carry out a thorough analysis of your trading business. Examine your processes and your trading analytics, looking for areas to improve. Make sure you also highlight the parts of your game you do well: it's not only about errors and weaknesses.

Remember, all traders make mistakes. The question is whether you'll analyse those mistakes and learn from them.

One last thing: try to be kind to yourself and not overly harsh. Trading is a difficult endeavour, and if you're going to persevere, you can't always be beating yourself up.