Here at Hawkeye, we’re serious about reaching our trading and financial goals.
I’m sure you are as well…
And I know you’re willing to use every tool at your disposal to do so.
Our philosophy has always been to treat trading as a business, not a “side hustle” or a hobby.
… Which means we need a business plan.
After all, a goal without a plan is just a wish.
A business plan is a powerful tool you can use to bring more predictability, organization, and ease to your trading.
It will help you achieve potentially bigger gains and safeguard your money by sticking to some pre-formed guidelines.
Before we dive in, you need to know that in order for a business plan to be as effective as possible, it needs to be written down.
Here are the 12 steps to follow:
What is the reason you got into trading? What’s the end goal beyond money?
Making money for its own sake is not a strong enough reason to keep you in the game when the going gets tough… for you to push your boundaries and not quit.
You need a mission… a purpose… a reason strong enough to keep you moving forward whatever happens.
In my case, my mission is to be a source of good, for my family and the world.
Write down the vision you have for your future.
If you keep your view on that vision and the things you want to achieve, you’ll stay motivated more easily and push through any hardships.
Here are a few things to think about:
- How do you envision your life in 1 year, 5 years, and 10 years from now?
- How do you want your life to be when you succeed?
- Where will you live?
- How will your typical day play out?
In order for you to hit your goals…
You actually need to have goals. Breakthrough discovery, I know…
You need to know:
- The average expected profit per trade
- How many trades you want to make on a daily or weekly basis
- How much of your profits you want to put into a savings account
Write down your goals, and start moving toward them.
This business plan will help you tremendously in doing that.
There are six market types (bull volatile, bull quiet, sideways volatile, sideways quiet, bear volatile, bear quiet).
Study them, and pick which ones you are going to profit from, and how.
By the way, with Hawkeye we can identify those market types rather easily…
- Big Picture:
Take note of the current state of the market.
The environment of the markets and the financial sector will have a big impact on your trading, so don’t make the mistake of not taking it into account.
What type of market is it? Where are the best opportunities for profit? What strategies are working?
- Tactical Trading Strategies:
There are different strategies for each of the six types of markets.
- What setups you’ll trade
- Under what circumstances you’ll open positions
- How you’ll manage your risk-reward for each type of market, and for every type of trade (position trades, day trades, etc)
- Position Sizing:
How much of your portfolio will you risk on any given trade?
You can use position sizing to help you determine how many units of a security you can purchase, which helps you control risk and maximize potential returns.
- Dealing with Personal Challenges:
Our unique personalities have a big impact on the way we trade.
So try to work your strategy around your personal habits and preferences. Ask yourself:
- What times do you like to trade?
- What things you can do to perform at a higher level?
- What emotions should you be wary of?
- What habits could have a negative impact on your trading?
All those things can become obstacles to your success if you don’t plan around them.
- Daily Procedures:
Daily procedures are a micro version of the business plan.
They are the little stepping stones you’ll follow to your goals.
You should break down your day into the different tasks you need to accomplish.
- What time you wake up
- What you do first in the morning
- When you read financial news
- When you browse the markets
- What time you start unwinding at the end of the day
- Any appointments you have
You get the idea.
- Education Plan:
You need an education plan to learn the skills and strategies necessary to achieve your goals.
If you’re not learning, you’re not growing, so your chances of reaching your trading goals will be lower unless you carve out time for education.
- Worst-Case Contingency Plan:
When you fail to plan, you plan to fail.
It’s easy to blame something external for a failure.
But if we are not actively thinking about worst case scenarios and preparing for them… whatever happens is solely our responsibility.
So make a list of negative things that could happen and plan how you’re going to respond.
- What will you do if a power or internet failure happens in the middle of a trade?
- Do you have the necessary preparations for a family crisis?
- What if there is a flash crash?
- Systems other than Trading:
Trading is the central piece of your business, but there are other aspects of a business you’ll need to take care of.
Taxes and having a solid financial model are the two of the most important ones.
Following these steps and creating a business plan can help make trading an easier and more predictable quest.
It can also help you find more consistency in your results and avoid dangerous situations.
But you need to make sure to write it down and stick to it religiously.
If you have any questions, do not hesitate to reach out.