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Am I ready to write a trading plan?


Ok, by now hopefully I’ve convinced you that you need a trading plan.  If not, hopefully I’ve at least  gotten you to think about it a little. Well maybe not.  I posted a question at the end of my previous entry asking for feedback about why people don’t create trading business plans. From the feedback I’ve gotten apparently people are lazy.

This is a shocker.

What??? People are lazy? I had no idea!

I’ll let you in on a little secret. I am probably the laziest guy I know. Ya that’s right, I hate working. It isn’t fun.

I like golfing. I like surfing. I like traveling. I like working out. Get the point? I hate working. I don’t like going into the office. I sort of like renovating buildings, but I don’t like doing “the work”.

In fact, let me say it even a little stronger. I will do whatever it takes to avoid working, even if it means working my ass off.

Whoa, dude… You’re getting a little contradictory here aren’t you?

Well, no. I plan my work. I plan my long term goals. I realize that some short term sacrifices are necessary for long term success. AND, I try to minimize things I consider “work”. I know what my strengths and weaknesses are. Bring it back to my real estate analogy in my previous post, I can hang drywall and install tile. But I don’t do it. I find someone else to do that. I don’t like working that much.

It’s easy to not plan. It’s easy to just sit down and trade or go to work and go home and drink. It’s easy to collect a paycheck. But, these types of people love not taking responsibility for their actions. They love blaming everyone for their failure in life but themselves. It’s easy to blame the boss, the market, genetics, IQ, pick your poison.

You know what successful people do? They plan. They realize they can’t change the world, they can’t change the market, they can’t change their boss, but that doesn’t matter. They tweak their plan so they’re able to reach their goal REGARDLESS of outside circumstances. The most successful people USE these things they can’t control to their benefit.

So for us really lazy people, we plan. A lot. AND we change our plan when we need to.

The point is, I am so lazy, I want to maximize my return. I don’t like working so I do what I can to work smarter, not harder. (I’m reminded of Scrooge Mc. Duck from Duck Tails – though I doubt he originated the concept.) To steal a line from Michaelowski’s playbook, “I want to make the most money I can while taking on the least amount of risk possible.”

Ok, hopefully now we’re on the same page.

So, what’s the next step? Let’s sit down and write a plan.

Hold on there killer. Not yet. We need to plan our plan.

Ah nuts, that sounds like work.

Well ya, the good stuff in life isn’t easy. If we truly want to be lazy, we have to put in a little work.

So, where do we start?

We don’t start by just sitting down and writing our plan. We need some introspection. This comes easier for some of us than others. Back to the working out example in my last post, we need to know where we are before we can figure out where we’re able to go. Sure, we want to make a few million dollars. Who doesn’t. But can we do that? Can it be done?

Can I do that?

Do I have the skill level necessary to reach my desired goal? If I don’t, how do I get the requisite skill set?

See, in order to get where we want to go we have to figure out if we can get there. We need our plans to be obtainable otherwise we’re setting ourselves up for failure.

If there’s one thing I hate more than work, it’s failure.

I think it’s healthy to push the limits a little, but we should probably know what the limits are. Is it possible to turn $1,000 into $1,000,000 while trading forex? Ya of course it is. Heck, it’s theoretically possible to do that by putting the money in the bank and collecting interest. It’ll just take a long time. So, we ask ourselves; is my goal obtainable with my current skill level and in my desired timeframe?

Lets come up with a goal.  Lets ask ourselves can I turn $1,000 into $1,000,000 in 4 months? <<< Now that’s a goal.

But, can I do it?  Can I come up with a plan that I can reasonably expect will be successful that will help me get there?

um, probably not.

Sorry to break it to you guys– I would need a 475% monthly return for those 4 months. That’s theoretically possible, but not too realistic. Here’s one way to test myself. Did I have a 475% return last month in my trading account (fake money doesn’t count)? Have I ever had a 475% monthly return in my trading account? If yes, then maybe I can. If not, then probably not. Plans need to be realistic, obtainable, but still a bit of a stretch.

So, if I can reasonably expect that I have the ability to turn $1,000 into $1,000,000 in 4 months, then it’s time to write my plan. Go me! It’s more likely I’ll end up with $0,000 after a few days though. This sounds like my plan is likely to fail. And remember, I hate failing.

If my goal isn’t reasonable considering my skill level we’ll need to revise one of two things. We’ll either have to make our plan more reasonable or we’ll have to increase our skill level to meet our goal.

See, in order to write a comprehensive plan, it’s important to have an obtainable goal.

So, get yourself a goal. Then figure out how you’re going to get to your goal.

And THEN we’ll be ready to start writing a plan.

Next blog post? You guessed it. Tim’s Trading Business Plan. I can’t wait. The anticipation is killing me here. Well, stay tuned for next week’s post.

Happy trading,


One Comment
  1. jim permalink

    Nice post looking forward to the rest of this thread.

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