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Creating a Trading Plan (Part 2)

To design an effective trading plan, traders need to pay attention to two main aspects: trading mindset and trading goals.

Trading Mindset

The trading mindset, or the way of thinking in trading, reflects a trader's mental attitude in analyzing and predicting market price movements. It includes emotions during trading, trading styles, personal strengths, and weaknesses. Here are some questions that can help determine someone's trading mindset:

  1. Why do you want to become a trader? (Motivation)
  2. What is your trading style? (Fundamentalist, Chartist/Technicalist, Scalping, Day Trader, Swing Trader, Long-term Trader)
  3. What are your personal strengths and weaknesses in trading?
  4. What is your mental tendency? (Calm, Relaxed, Stressed, Tired, or Emotional)
  5. How much time do you dedicate to trading, market analysis, or research?
  1. Below are example answers:

  2. Example Answers:
  • Motivation: I want to become a trader to earn additional income. This goal is important to me because in the long run, I aim to rely solely on my trading income. I believe I can become a successful trader because I am always confident, creative, and enjoy conducting research.
  • Trading Style: I am a technicalist, and my trading style is scalping or day trading. I only have about 2 hours each day for trading with a maximum of 4 trades depending on market conditions and technical setups or trading signals I obtain. I only enter the market when I am not busy with other work, when I am relaxed, and my mind is calm. I have evenings for analysis and research.
  • Strengths and Weaknesses: My main strength is that I am always confident in a reliable trading method. I can quickly predict the direction of price movements on low time frames. My main weakness is that I tend to be emotional in implementing exit strategies, especially in determining when to exit even though the target level has been set beforehand. To overcome this weakness, I will strive to carefully follow the exit strategy or create a special script for exit, or perhaps an Expert Advisor (EA) to avoid intervention in positions I have opened.

Trading Goals

Trading goals are crucial in a trading plan because they serve as a benchmark for evaluating your achievements in trading. Some questions that can help determine trading goals are:

  1. What are your main goals in trading? What do you expect to achieve from these goals?
  2. What is your income target from trading (per week, per month, per year)?
  3. How will you know if your plan is working well or not?
Example Answers:
  1. Goal: My main trading goal is essentially to achieve consistent profits every week, every month, and of course, every year. I expect to earn at least a 5% profit from my account equity per month with a drawdown of less than 20%. I am confident that I can achieve this goal because the strategy I apply has been backtested over the past 4 years, producing consistent profits. If my trading results are consistent for several months, I consider that I have achieved short-term goals, and I will evaluate to improve subsequent achievements.

Determining a clear trading mindset and trading goals is an important initial step in designing an effective trading plan. This helps traders stay focused, disciplined, and objective in facing the dynamic market.


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