A trade taken on a well-constructed trading plan, more often than not, puts the odds of it being a winning trade in a trader's favour.
The construction of a trading plan can be very multidimensional or simple, as a trader would prefer it to be. A simple trading plan with enough planned procedures to filter the available market information would be in order. The bottom line is that there should be enough information to implement the key actions while taking a trade. By information, it means that rules, strategies, and key elements of trading should find their way into a well-formulated trading plan. On the other hand, if the trading plan were to be too complex, there is a possibility that a trader might have difficulties applying it to real-life situations in the market and may forgo using it altogether.
The objectives of a trading plan are to keep the trader's mind calm and focused on the trade. Successful traders have already done their part of strategic thinking before entering a trade, and they don't think at all through the period a trade lasts. This reason alone is enough for the professional to be calm, composed, and unruffled during trading. This is where the amateurs need to bridge the gap between themselves and the professionals if they want to achieve success in the ways of Capital Markets.
If one does not have a dynamic trading plan, try and construct a plan which suits your personality and trading style and makes it a permanent fixture of your trading arsenal. A lot many experienced traders will say that a trading plan should be dynamic and should be modified when market circumstances demand it. The reason a trading plan should not be dynamic is because the plan will include strategies for the trending markets and non-trending markets. Secondly, the plan will be built on the knowledge a trader possesses, his trading style, and his risk-taking capabilities.
A trading plan should be constructed with information that suits the trader's goals. The construction of a trading plan is a painstaking process. If one has to construct this plan on his or her resourcefulness…it may take months and even years to formulate a good trading plan. Succeeding in developing a good trading plan is much easier if a trader can get an experienced market professional to mentor. A new entrant to the Capital Markets should understand that by having a mentor, not only does a trader benefit in a short time but also acquires the years of experience a mentor provides. This in itself is priceless.
Once a trading plan is constructed and applied to the Markets in real-time, the trader will notice immediately that his trading endeavors have become positively result-oriented, objective, less stressful, unemotional, and peacefully selective. A well-conceived trading plan will organize and structure the trader's actions. The trading plan will be a trader's partner in dealing with markets efficiently where other market participants would find it difficult to survive...let alone make money.
To cut a long story short… "Plan Your Trade and Trade Your Plan.