My starting point each September 1 (my year runs Sept 1 to Aug 31) is my business plan. Since I treat trading as a business and we all know most, if not all successful businesses, have a business plan, I thought this the appropriate place to begin Success Routines and Habits.
I prepare my Business Plan in the first two weeks of September and I give priority to the task. Below are my headings; they are far from being cast in stone and the same can be said for the plan. It’s reviewed and revised quarterly. The plan serves as a guide only. In the recent past, I can’t remember when I did not make some mid-stream correction.
- Vision & Mission Statement. To me this is the crux of the document. What we want to become and why must align with our values otherwise all the plan will be is wallpaper and will be as much use.
- Projected Income
- Trading Plan
- Trading Timeframe
- How do I know when plan is not working?
- When will I take an enforced break?
- Risk Management Plan
- Position Sizing per trade
- Position Sizing Portfolio
- Initial Risk Exposure per trade
- Initial Risk Exposure Portfolio
- When and how to Pyramid.
- When and How to make Profits available to trading capital.
- Maximum Loss per trade
- Ongoing education in Plan, Risk Management and Psychology
- Time Allocation
- Dollar Budget
- Areas to Focus on within each area (Plan, RM and Psy)
- Focus and Review Plans
- Especially if there are important life-style changes e.g. changing jobs, having a child etc
- Disaster and Contingency Plans
A few years ago I attended a seminar by Van Tharp (www.iitm.com; also his blog at: www.smarttraderblog.com) on Business Plans. At the end of the seminar, we all had to do a business plan. I have attached this as one of the better ones submitted to give you an idea of the form the plan can take.