Action Plan for Trading Success
Most of us have had the experience of driving to work without ever thinking about the route we need to take to get there. For those of us who have regularly played a sport. We don’t think about every movement we make. We just do it without much deliberation. The tasks we perform regularly seem to occur automatically. But if we think back to when we first started doing them. We will usually find that that it required much more thought. Some of us didn’t drive to work on the first day without consciously thinking about where we needed to turn and how much time was needed to get there. You might be asking how is this related with creating an action plan for trading success?
The same is true for trading. I have seen novice traders who have spent some time learning various skills, but act on an impulse. They didn’t take the time to carefully plan a trade and then follow through with the plan. However, in order to be successful at trading, a detailed plan is essential.
Creating a Detailed Action Plan For Trading Success
For those starting out, trading on the spur of the moment is difficult. Without a great deal of experience it is easy for us to make mistakes with that approach. There are just too many issues to pay attention to and we will inevitably make errors along the way. On the other hand, there is clear scientific evidence showing that we are much more likely to achieve our goals when we have an action plan. A professor of psychology at New York University, Dr. Peter Gollwitzer, demonstrated this in several studies. His studies concluded that making specific plans that outline when, where and how to carry out an action have clear benefits. Think about it.
Would we have a better chance of success if we acted on an impulse. If we were to know before we even consider making a trade that when we reach a specific market condition and see a particular pattern we will enter the market, set a protective stop and watch the trade until we achieve our objective?
Having a specific plan and knowing the when, where and how greatly increases the likelihood of effortless success. It will ensure that we are ready to act quickly and, when necessary, automatically.
Using an Action Plan for Trading Success
So, let’s look at what the research reveals. According to Dr. Gollwitzer, relevant studies on creating action plans show that we are more likely to remember what to do when we have specific plans. Those of us with the specifics laid out in advance don’t have to spend time thinking about what it is that we need to do. We know exactly what needs to be done and we can act on it. Also, with a detailed action plan, we have the ability to act swiftly and efficiently when the most ideal market conditions occur. Finally, when there is a plan in place, it is much harder to become distracted from our goal. We are better able to maintain focus and practice self-control.
Under stressful conditions, an action plan is invaluable. The markets can become quite chaotic, requiring split second decisions no matter how skilled we think we may be. There is only so much information the human mind can take in and process effectively. A detailed trading plan can provide us with the ability to direct our mental energy and focus where it needs to be.
If our goal is to achieve success in trading, a key ingredient to that success is taking the time to develop a detailed trading plan and making a commitment to follow it. It will pay off in the long run.
In order to achieve trading success, it is essential to develop a detailed action plan. Having a plan, rather than acting on impulse helps us to act quickly and efficiently in all situations. Knowing the when, where and how when it comes to trading is key to effortless success.