Why are structured trading plans and strict discipline so important to traders?

Every serious trader needs a structured trading plan to help them achieve their desired trading results. This structured trading plan is one of the cornerstones of any successful trader. To succeed, we must be clear about what it is, how it works, and understand its importance.

So, what exactly is a structured trading plan? What are its characteristics? Why do we need it?

Why do we need structure?

For newbies who are just starting to trade, the information on the market chart may seem confusing and difficult to understand. After a while, they began to be able to identify trends and patterns, that is, they could see the structure of the market and what was happening in it. However, how to trade on this basis is a more complex challenge.

Since the forex market is open almost 24/7 (even Bitcoin is 24/7), some traders may tend to open trading at inappropriate times. To avoid this, we need to create a personalized trading framework that helps us stay focused, control risks, and achieve consistent trading.

Freedom or structure?

Many traders pursue freedom and independence, which may cause them to doubt their compliance with the rules. But in reality, rules and structures support this freedom instead. Structure does not bind us, but provides us with clear guidance. By setting clear trading hours, entry and exit rules, and strict risk management, we can effectively avoid making impulsive decisions and reduce unnecessary losses.

Our trading rules

Another advantage of following a structured trading plan is that we can set rules that meet our needs. To make this system effective, we should start with universally applicable principles. For example, the SMART target method is also suitable for setting trading strategies. Then our strategy should be specific and measurable so that it can be effectively implemented.

Unclear rules, such as “when the price moves rapidly from the support or resistance level, wait for confirmation and enter the market” cannot be quantified and can easily cause more unnecessary problems. For example, what does “quick action” mean? What support or resistance levels? What is “confirmation”? What is “reasonable risk”? These questions all indicate that the rules are not specific enough.

In contrast, clear rules are like this:

“Use the H1 chart, if the price breaks through the previous day’sHigh or low, wait for the candle to close. If the closing price is higher or lower than the breakout point, enter the market at a risk of 0.5%. Stop loss is set at a low or high point of breaking through the candle, with a profit target three times the stop loss. “

In short, a clear trading strategy greatly reduces the room for mistakes and avoids emotional decisions.

Don’t ignore trading management

Sometimes, traders may set clear entry strategies but ignore how to manage positions or exits. For example, when a trade reaches 30% of the target price, it may adjust the stop loss to break-even (BE), but the price reversal and returns to the target direction, eventually missing out on profits.

To avoid this, we should set rules for position management. For example, when the price reaches At 50% of the target, adjust the stop loss to break-even. This reduces unnecessary losses. Although sometimes you may miss some high returns opportunities, at least we can maintain psychological stability.

Discipline and Planning

With structure and rules, the most important thing is to strictly enforce these rules in each transaction and ensure that the same steps are taken each time. This requires us to create a detailed trading plan that clarifies every decision-making process, from checking our own mental state and paying attention to the international News, setting stop loss and profit, to assessing risks and recording results, every step cannot be ignored.

Many traders believe that as they accumulate experience, they will automatically perform these steps. But in fact, trading is a highly stressful job and is prone to making mistakes. Regularly checking your trading plan can help reduce psychological burden, stay calm, and avoid emotional decision-making.

In addition, discipline is the key to successful trading, but it does not happen overnight. To cultivate self-discipline, we need to focus on the trading process, not the simple result. By repeatedly executing trading plans, Only by feeding and improving our trading behavior can we gradually form stable trading habits with the help of the system.

By maintaining clear and consistent execution, constantly strengthening the sense of discipline, and ultimately making it a part of our trading. This is the core of the establishment of the EagleTrader exam. Remember, the gap between amateurs and professional traders is not about the amount of knowledge, but about consistent practice and execution. EagleTrader also expects that every trader can gradually find his own trading path and become a top trader!