“No matter how good you are at planning, the pressure never goes away. So I don’t fight it. I feed off it. I turn pressure into motivation to do my best.” —Benjamin Carson
Does a Fortune 500 company have a strategic plan for the next XX years? Does Chevy plan on a new car launch before they roll out with some new gas hog? Well, hopefully. Let’s bring it a little closer to home.
When I renovate an apartment building or a house, do I have a plan? Do I know how much I am likely to spend? Do I know how much I should get when I’m done? (No, I’m not always right on that one by the way.) Of course I do.
The world revolves around careful planning. We don’t always reach our desired outcome. Sometimes we blow our goals out of the water and sometimes we fall short. But, we plan.
Maybe I should say, the real world revolves around planning.
So, why do so many people fail to plan out their trading? Is trading not real life? Do we lose track of time when we’re sitting at our desk? For those of us who don’t trade full time, do we just sit down and pull a few pips from the market when we have time?
Do we even know what our goals are? Here’s one goal, “I want to make a few million dollars.”
That’s a reasonable goal though, right? I mean, if I’m going to max out my earning at $5,000 – $10,000 a month, I may as well go get a job at a big fancy corporation. Maybe your personal numbers are higher or lower, but the sentiment is the same.
A year or two, I attended a Money Show event in San Francisco. While sitting through one of Greg Michaelowski’s seminars, he asked the audience how many of us had a written trading business plan. Maybe 5% of the room raised their hand. (Ya, I raised my hand, thanks for asking) The point is, if we don’t have a goal, how do we know when we get there, much less how to get there?
SO HOW MANY OF YOU HAVE A TRADING PLAN?
Think of it a different way. I’m a pretty big fan of working out. I understand how to change things about myself physically. I know how to lose weight if I want to slim down; I know how to bulk up if I want to add muscle. I know that when I want to climb a 14,000+ ft mountain, I have to plan ahead a little. I can’t just start walking and hope I’ll get there (sure, under this plan I’ll probably reach the summit and even get back. But I’m way too old to just pull a 17 hr walk out of a hat. That’s tiring. I know, I’ve done it.)
When I choose to pursue one of these above goals, I determine where I am, I write down where I want to be and when I want to get there. The first step climbing a mountain isn’t the first step. That’s the culmination of a lot of prior planning steps.
When planning, one needs to look at where they are. Ask yourself things like: what is my current fitness level? What’s my weight? How far can I run? How much can I lift?
Plan where you want to be and how you intend to get there. There’s a lot more to it than that, you have to analyze the feasibility of your plan and timeframe. The real hard part is you have to take a long hard look in the mirror. Most people don’t like to be introspective. We like to think we can do it all. And maybe with enough planning we can. But you have to know where you are in order to find out where you are going.
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Do you have a trading plan? Tell us about it below.
