The Road to Successful Trading

Writing out your trading premise: 
Now that you have done some serious self examination, it’s time to put down on paper the 
reasons why you trade. By writing it down, you have the opportunity to think it out more 
carefully and by making your declarations on paper you lift your reasons from a level of 
consciousness known only to your self and proclaim it publically. By making it “public”, 
you have a tendency to take it more seriously and with a higher level of commitment.
Example trading premise 
“My salary does not permit me to save enough capital to accumulate to buy my own 
business. My work schedule doesn’t allow me to engage effectively in any other business. 
During the course of my work day, I do have time to enter and monitor trades. As long as 
my trading doesn’t interfere with my job duties, I have a chance to earn extra money through 
trading”.
“I anticipate that it will cost about $100,000 to purchase the equipment I will need for my 
new business and with a trading account of $30,000, I should be able to accumulate the 
necessary money within five years if I have a 40% annualized ROI; or a monthly gain of 
3.33% ($990). I plan to use my self directed 401K to allow my capital to accrue in a tax 
deferred account When my goal has been achieved, I will borrow the money from the 401K 
as permitted by law”. “In this fashion, I can maintain a regular income and take advantage of 
the insurance benefits I currently receive from my employer. I will limit my maximum 
trading account drawdown to $15,000 and if it is reached, I will stop trading and re-
evaluate.” 
How to Design and Construct An Effective Trading Plan 
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This is not the place to write out your detailed trading plan but rather to clearly define why 
you are trading and how you plan to integrate trading with the rest of you life. You will also 
see how the trading premise is integrated into a trading plan in the example trading plan in 
the final chapter of the book. 

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