You may have encountered successful traders telling people that it is not important whether you know when a market will top or bottom, what is important is you are prepared should one or the other happens. This is why having a trading plan is very crucial.
Because the truth is there is no trader, experienced or not, who can definitely determine when a market will top or bottom. He may get the signs or hints that something like that may happen, but exactly when and how is a hard thing to say. The best traders can make guesses and estimates but nothing more closer to the exact truth.
In most probability, what you can hear from traders, and also from the best stock broker that you can possibly find, are their expectations on what they think would happen to the market they are in. After all they have facts and figures, and not to mention the trading experience, to give them the best possible insights regarding that market. But then again, these are just predictions and are never closer to a hundred percent of being sure.
In most cases it would be very helpful to you if you would consider your trading activities as just another type of business. You are responsible for all that you do and decide on it, therefore you need a business plan to help and guide you with every step of the way. As to trading, this would be a trading plan. Something that is very essential in any trader’s life.
The key here is that you should plan your success, and surely not the other way around. For example, you should not get into any market without first understanding all that you can about that market.
Let me provide you with this easy to understand real world example. If you are going to take a look around your city, chances are there are many coffee shops there in almost every corner. And most of these are world brands. So what do you think is their secret to success that in every market or country that they get into they always make it big there? And it does not matter which market it is like Australia, the United States, China, or the United Kingdom.
The answer is because they had a plan. They first researched the market they are going into and made the necessary changes in their already existing set up and practices to accommodate the unique factors and needs of each market. That is why when the moment they put up shop in one country, it is almost an instant hit with that market. And for some they may even use a free trading software as well.
Your trading plans are therefore your methodology on how you should work and behave in the market. While it should set in stone, there are instances that certain changes that you need to do, particularly within your own habits and system of trading.
So before you really invest in any trading in any market, you should first come up with your very own trading plan to help and guide you every step of the way. You can successfully avoid losing it big if you are prepared from the very beginning.