When you create your trading plan, you can insert criteria such as the times you’ll trade and what percentage of your funds you’ll risk per session and per trade. Straightaway this will help you:
Limit losses
Prevent you from over-trading
Ensure that you’re not undercapitalised (in comparison to the trades you place)
Putting a plan together will also reduce stress and help prevent emotions from affecting your trading decisions.
Your trading plan should include the following:
Trade set up. This describes how you decide the direction and entry and exit levels.
Risk management. This describes how you will manage your risk, for instance how much you will have on each trade.
Trade execution. This describes what criteria is needed for you to hit the buy/sell button.