1. Pre market Planning
Your pre-market planning routine will set the stage for all your trades as well as your trading day and week. This is the time to get all your preparation done and also get yourself into the appropriate mindset. It may include specific market review, big picture analysis, possible news releases, fundamental analysis and any other routine you deem necessary for success.
2. Objective of the Trade
What is your objective for each trade? Intra-day, swing, and wealth trades can have very different objectives and processes.
3. Entry Parameters
This section of your trade plan will outline all of the rules you wish to set forth in order for a trade to have a valid entry signal.
4. Initial Stop Loss Parameters
Every trade must include a stop loss or other risk protection such as hedging. In this section of your trade plan lay out the parameters you’ll follow to tightly control the maximum risk on each trade.
5. Exit Parameters
Before you ever enter a trade you must also know and outline your exit strategy. What are your exit parameters for each and every trade you place?
6. Trade Management
Once you are in a trade you must have a set plan for how to manage it. I believe this is a very critical step of every traders business that is often overlooked. How you manage a trade can greatly impact it’s success and failure rate.
7. Risk Management Parameters
How will you protect your trading portfolio? This is the section of the trade plan that lays out your overall risk management strategies to achieve consistent protection and a steady equity curve. It may include rules for position sizing, maximum margin use, maximum trade wins/losses, among others.
8. Post Analysis
What type of post analysis do you need to conduct after each trade? How do you catalog and track your trades? How do you evaluate and track your performance? This is also the section to layout any learning-processes so that you can ensure as a trader you are consistently improving.
Every trader has a unique style that they prefer over all others. However, for each style or asset class being traded you should outline a unique trade plan. For instance if you are a day trader for income but also include weekly swing trades and are managing long term wealth also, you would need three separate trade plans or sections; One for each style.