BY FOREX BANKS (BTMM + ICT):

Most people are terrified to make a trading plan.

Once you commit to a plan, YOU are responsible for the results. As humans, we prefer to avoid taking responsibility when things don’t go our way. 

But when you have a plan that tells you what you can and cannot do, you have no choice but to take responsibility.

In this process, your ego will get bruised and you’ll have no one to blame but yourself.  

This is required for growth.

A plan is ESSENTIAL to boosting your P&L long term.

Having a plan will allow you to move forward systematically.  

You’ll be able to notice what is working and do more of it. You’ll also notice what isn’t working and eliminate it from your trading.

How to put yourself in a position to respect your rules.

So what can we do in order to bypass our natural tendency to loss aversion and put ourselves in a position to make money?
Here are several strategies that can help you cut losses short & let winners run:

1- Have a clear trading strategy and plan every single trade
“I know where I’m getting out before I get in” – Bruce Kovner
As soon as you have a well-defined strategy, you’ll be able to know where you’re going to sell before entering a trade. You’ll know your stop loss level, and then if the position starts being profitable, you’ll know exactly when and where you’ll move your stop (using, for instance, volatility stop, moving average cross, …).
If you don’t know where to sell prior to entering a trade, do NOT enter the trade. Period.

2- Be rational
When in a losing position, we’ll often rationalize that we still haven’t taken the loss as long as we haven’t sold, while hoping the stock will come back to our breakeven point – even though it sometimes never does.
Well, here is the reality: you ALREADY have the loss. Whether you call that a “paper” loss or a losing position, the loss is very real. If you needed the money right away, you wouldn’t be able sell the stock for the price you paid for.
Also in this type of situations, you start being married “til death do us part” to your position. But there are undoubtedly other better trades that will come along the way.
While what’s left of your money is stuck in that losing position, you could be missing on a huge winner that would have not only helped you recoup the money you lost but also made you a profit.
So staying in a losing position is a bit like getting a surgery from a surgeon who killed his last patient. In the same way as you would get a better surgeon, get rid of your losing position and wait for a better one.

3- Stop looking at your position all day long
The daily fluctuations can drive you absolutely crazy and will tempt you to deviate from your plan.

“Once in a position, just stop looking at it and do something else until a real sell signal (as per your own rules) occurs”.

Enter your stop loss in the system or setup an alert, and go enjoy life.

4- Stop looking at your P&L
If you really have to watch your positions from time to time, you should not watch the profit & loss amount or percentage.
You should watch the chart instead. Seeing dollar figures or percentage figures will accentuate your proneness to loss aversion.
Do NOT watch your P&L but watch only the chart instead. Just place your stop loss level on the chart, and when it’s hit, just sell accordingly.

A justified WIN is when you create a very detailed trading plan and follow the plan, A win that results from following trading plan is justified and reinforces DISCIPLINE.