When it comes to investing, having a trading plan is always a good idea.
- Decide your capital and level of risk you can support
- The plan will help you stick with your strategy
- You will manage your time better
- You will know anytime where you stand
A trading plan will help you develop greater trading discipline, as you will gain a better understanding of why one trading strategy might not work for you while another might. You will make more rational decisions and be less influenced by emotions as a result of your increased understanding of when to take profits and when to cut losses. While trading, your plan will compel you to monitor your actions. As a result, you will learn from your mistakes more quickly and will improve your future actions.