10. THE TRADING PLAN

Trying to win in the markets without a trading plan is like trying to build a house without blueprints-costly (and avoidable) mistakes are virtually inevitable. A trading plan simply requires combining a personal trading method with specific money management and trade entry rules. Krausz considers the absence of a trading plan the root of all the principal difficulties traders encounter in the markets. Driehaus stresses that a trading plan should reflect a personal core philosophy. He explains that without a core philosophy, you are not going to be able to hold on to your positions or stick with your trading plan during really difficult times.