The 7 Point Business Plan Template
One of the first things beginning traders are told to do is create a trading plan that will detail a trading strategy and a list of rules to follow to implement that strategy. The only problem with that advice is that beginning traders don’t really have any trading experience and are therefore lost when trying to come up with a trading plan for their trades.
Another problem with trading plans is that beginners are instructed to treat their plans like gospel and told not to deviate from them. This prevents traders from adapting their strategies and rules to improve their performance, an essential step in any trader’s learning curve.
Instead of a rigid document that should be created early in your trading career and never changed, you should view your business plan as a living, breathing set of guidelines, capable of being modified as you gain trading experience. This article will teach you how to create a business plan that will guide your business efforts without stopping your progress.
The 7 Point Business Plan Template
When creating your business plan, these are the elements you should include:
1.Markets – What markets will you focus on? Be as specific as possible: If you’re trading stocks, what types of stocks will you be concentrating on?
2. Time frame – How long will he hold his posts? Will you be a day trader who focuses on trades that last a few minutes, or a swing trader who holds trades for a few days?
3. Time period – What hours of the day will you operate? You may have outside responsibilities that prevent you from trading for an entire trading day. Choose which moments of the day best suit your style.
4. Commercial style – How would you characterize your negotiation style? Perhaps you are an impulse trader who focuses on trending stocks? Or maybe you specialize in a particular sector? Again, this can and will change as you gain experience and learn from your results.
5.Risk Management Rules – This is an absolutely essential and often overlooked component of your trading plan. How will you manage your risk, both per trade and overall? You should have a “stop trading” point, which is a fixed dollar amount that will force you to stop trading if you are that low.
6. Mentor – Who do you follow and from whom do you learn as a teacher? Trying to learn how to trade on your own is not only lonely, but foolish as it ignores the hard-earned wisdom of other traders. You can repeat the mistakes of other professionals and hope to eventually learn the lessons and techniques they learned, or you can simply learn from successful traders and avoid those initial frustrations.
7. Learning process – How will you structure your learning process as a trader? What steps will you take to ensure that you are always improving? How will you structure your trading journal?
business plan example
To show you this trading plan template in action, I’m going to fill it out based on my own trading style:
1. I trade the US stock markets, concentrating on volatile stocks with sufficient volume. These stocks are often the focus of the news and are therefore “in play.”
2. I am a day trader and I hold my positions from a few seconds to a few hours. I am primarily a reseller looking to take advantage of short term imbalances between supply and demand. I will stay in a trade as long as I can identify an imbalance between supply and demand.
3. I trade throughout the trading day, although I concentrate most of my activity at the open and close of the trading day.
4. While I have several styles, I would primarily characterize myself as an impulse trader who relies on reading tapes to identify favorable risk/reward situations to enter in the direction of a trend.
5. I am a sucker for managing my risk, both per trade and overall. Every trade I enter has a pre-defined stop loss and I have a daily stop loss to stop trading when I have a tough day.
6. I have had a variety of mentors throughout my career and now speak to a select group of traders in my company with similar trading styles.
7. I review each trade I perform, always looking for ways I can improve. This can be as simple as reducing my risk when trading certain stocks or altering my trading patterns.
Your trading plan can be as simple as that, just a series of statements that answer those 7 questions. You also shouldn’t spend too much time creating his business plan, as it will change frequently throughout his career.
Resume
Your business plan will crystallize exactly what you’re trying to achieve, but don’t view it as set in stone. Rather, his plan will grow and change as he gains experience and develops his own trading style.
Your business plan doesn’t need to be a complicated document that spans multiple pages, either. You simply need to define which markets you are going to trade, how you are going to trade them (how long you will hold positions, what hours of the day you are going to trade and your trading style), how you are going to manage your risk and how you are going to continue to develop as a trader. . By clarifying and explicitly stating those 7 key points, your trading plan will serve and support you in your trading career.