Writing down a plan

Usually i have i pretty exact picture of what i want to do in any situation. I thought that i didn’t need to write everything down in advance, because i told myself, that it would make me less adaptive to the market. The market is like a moving target and it can hurt you when you have a plan that is too exact.


But,the big problem with that approach is volatility. It increases at turning points or at important support/resistance levels. At those points i always over trade. This is especially bad because after the choppy action in the market is over, usually trading will be somewhat easier again. But it is harder too trust it,when you got chopped up in the wild intraday swings.


For that purpose,it is very helpful to write down a plan for every scenario, that is as precise as possible. That will lead to less trading,prevent emotional reactions and save money


Friday is a perfect example of that. I saw pre-market,that NQ was failing at 2250.  I should have taken a short against the pre-market high @ about 2255.  But because i was not prepared well enough,i shorted too late (2243.50) were the risk reward was not that good any more. I quickly covered, then thought the market should go higher and at least test the pre-market highs again. So i waited for an opportunity to get in, disregarding too many of my rules, i stepped in at the first sign of stabilization,although VWAP was still declining and there was no real sign of some significant support (it was just a bounce in a downtrend,just like so many).


That shows the importance of having an exact plan written down.You can make rational decisions while the market is closed and execute them during market hours. When you don’t make rational decisions that are based on a plan,the market will very likely suck you in at exactly the wrong time.


About Schwarzdaytrades

I am a full time day trader. I like to share my opinion about stocks and the psychology of trading.
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