7: No Trading Plan
Opening up a trade without a concrete plan is like asking the market to take your money.
If the market moves against you, when will you cut your losses?
If the market moves in your favor, when will you take profit?
If you haven’t determined these levels in advance, why would you suddenly come up with them when you’re caught up in the emotions of a live position?
Resist the urge to trade spontaneously based on your instincts alone without a clearly defined risk-management plan.
If you have a strong view, go with it, but do the legwork in advance so you have a workable trading plan that specifies where to enter and where to exit — both stop-loss and take-profit.
Be aware of the increased risk of trading around important news and data releases. Study economic and event calendars to identify future event risks, and factor them into your trading plan.
That may mean stepping out of the market in advance of such events.