Have you ever wondered why you struggle to keep up with your trading strategy or plan(s)? Well, this is the best online resource you need to identify the reasons you can’t stick to a trading plan!
Much emphasis has been given to the importance of sticking to a plan to become a profitable trader. Of course, developing a good trading plan is easy, but sticking to the plan has always been one of the problems often faced by all traders.
In this article, you will learn more about the reasons you can’t stick to a trading plan. But first, let’s define a trading plan.
What Is A Trading Plan?
A trading plan is a systematic approach for identifying and tracking securities that consider several variables, including time, risk, and a trader’s objectives. It can be referred to as what should be done, why, when, and how a trader should do it.
A good trading plan always shows you how to find and execute trades, including the conditions under which they will buy and sell securities, meaning it’s a roadmap for trading.
The main benefit of a trading plan is that it helps you remove the emotions of fear and greed from your decision-making. It also allows you to monitor your performance, reflect on outcomes and improve your approach accurately. So, without further ado, let’s dive into why you find sticking to a trading plan complex.
Top 4 Reasons You Can’t Stick to A Trading Plan
- Fear and Panic
Panic is probably the most common reason you fail to stick to a trading plan. Of course, not every trade goes picture-perfect as you would hope. However, when the unexpected happens, you likely get unnecessarily nervous, evoking an impulsive act that isn’t part of the plan.
To avoid this, consider all potential scenarios before considering a trade. There should be a plan for every scenario that is likely to happen. With this, nothing comes unexpectedly.
- Analysis Paralysis
Analysis paralysis is a stagnation point in decision-making when you become over-involved in researching and evaluating options. It happens when you have so much information at once.
As a trader, you may feel acquiring more knowledge at once will improve your trading. Still, the bitter truth is that overanalyzing or overthinking a situation can cause a forward motion or decision-making to become paralyzed.
If you struggle with analysis paralysis, I suggest you clearly define the information that might make your trading plans awry, pick a few trading tools you are comfortable with and stick to them.
- Trader Incompatibility
You may fail to stick to a trading plan because you don’t have a personalized plan that fits your goals, risk tolerances, and personal lifestyle. Your trading plans must be tailored to YOU and YOUR needs, not someone else’s. A good trading plan is based on reality and not hope.
Also, good trading plans are long-term, so if you are trying to make a trading plan based on false assumptions or someone else’s methods, you may not be compatible with it and will have problems following or sticking to it. Therefore, be honest with yourself when making a trading plan you want to stick to, and frequently revise the plans.
- Winning or Losing Multiple Trades
A lack of excess confidence after a trade of multiple losses and wins may swerve you from sticking to your trading plans. Likewise, running into a series of losing trades will cause a lack of confidence, making you miss other good trading setups you may encounter.
Conversely, if you have surplus winning trades, you may be overconfident and make trades that don’t consent with your trading plan. A solution to this may be keeping a psychology journal to help keep your emotions in check. In addition, remember that your goals are based on predefined rules, and risks are taken when you deviate from them.
Final Thoughts On The Reasons You Can’t Stick To A Trading Plan
Trading is just like every other professional career. It takes years of commitment, consistency, and willingness to learn from your mistakes to get good at it. Do any reasons you can’t stick to a trading plan explored in this article appear relatable? Then, check out my next article on how you can stick to your trading plan so you, too, can begin to make consistent profits as other top traders do.
Have you got questions or thoughts about this article? Do share them in the comment section just below. I can’t wait to hear from you. You may also find any of the related articles outlined below helpful. Do not hesitate to check them out!