A DETAILED PLAN BEFORE EVERY TRADE

“The best trader is a prepared trader.” —Evan Lazarus-Partner, T3 Capital

The next time you are in a trade can you summarize your detailed trading plan in one sentence?

First, you need an exit strategy.

“You must have a backup plan for every situation.” And you must do this before you enter your every trade.

your plan should also include an exit strategy for if the stock trades in your favor. What will make you cover your position favorably? Will you exit if it trades at a certain price? Will you exit after a substantial move or when a large order appears? The details of the plan are important, but actually having a plan is most significant.

Look, if you are a developing trader, and you do not develop a detailed trading plan before every trade, please do me a favor. Go find all of your trading records. Secure a fireplace and a match. Take these “trading records” and light them on fire. A paper shredder would be just as effective. Your “trading records” are meaningless. Your trading results are only significant if you have followed the fundamentals used by all consistently profitable traders (CPTs). And a detailed plan for every trade is one of them. Now go and extinguish that fire, please.

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