Key Takeaways
As you must know by now, 2025 is the year you finally become a prop trader; and given that your trading journey is not an overnight process, The Trading Pit is accompanying you through every step of the way – whether that’s through explain key terminologies, debunking myths within the prop industry, or more.
Many traders believe that having a solid strategy is key to profitability. While strategy certainly plays a big role, it remains only a small piece of the puzzle. The real challenge – and the most important aspect of successful trading – lies in trade management.
Without a structured approach to managing your trades, even your best strategies will fail to generate consistent profits.
We had the chance to collaborate with trading coach and mentor Nanna Fick, who shared her insights, tips and tricks, and discussed the importance of building a solid trading plan.
The Reality Behind Trade Management
It’s easy to analyze past price movements and tell yourself “I should have entered here and exited there.” However, when you’re actively trading in real time, things can get trickier and much more complicated.
Simply explained, the moment you enter a trader, you are exposed to risk. Consequently, this risk triggers emotions – doubt, fear, and sometimes even overconfidence.
That is exactly why a trading plan helps remove these emotions from the equation. Instead of making impulsive decisions (which you are most likely going to regret later), you have a structured guide that tells you when to enter, how to manage risk, and when to exit.
What Makes a Trading Plan Essential
Discipline: Without a plan, it’s easy to second-guess your trades or make emotional decisions based on fear or greed. A structured plan helps you stick to your strategy and avoid any impulsive move.
Risk Management: While every trade carries risk, having a solid trading plan allows you to define your risk parameters ahead of time. This includes stop-loss levels, position sizing, and rules for when to cut losses or take profits.
Provides Clarity: Markets can be unpredictable, and no strategy guarantees a 100% win rate. A trading plan helps you stay focused, ensuring that you execute trades based on logic rather than reacting emotionally to short-term market movements.
Enhances Long-Term Performance: A trading plan enables traders to track trades, analyze past decisions, and refine their approach over time – which leads to consistent improvement and, ultimately, better results.
Do Emotions Rule Trading?
When you’re not in the heart of a trade, risk is hypothetical and doesn’t affect you emotionally – but as soon as you enter, that’s when the game changes.
Every trade brings uncertainty:
What we just mentioned above are psychological pressures, which can lead to irrational decisions if you don’t have a plan in place. That’s why professional traders rely on structured trading plans to keep their emotions in check and stick to their strategies regardless of external factors.
When you don’t possess a solid plan, it can sometimes like you’re being punished if the trade doesn’t turn into a winning one. The moment you allow your emotions to dictate your actions, is when you lose control and risk falling into chaos.
We could even go the extent of saying that emotions in trading are the enemy. Humans by nature are wired to want to escape discomfort.
When you are in a losing trade, that discomfort can feel like danger, pushing you to make impulsive and random decisions.
Conversely, when you are not in a trade, FOMO can drive you to enter without a signal.
As you can see, either way, emotions can cloud our judgment and lead to poor outcomes.
Discipline Over Motivation
The secret to long-term success is simply consistency – but consistency requires discipline... But what does discipline mean in trading? What should we be disciplined about? The rules.
A trading plan lays out when to enter the market, when to stay out, and how to manage risk along the way. How can you remain disciplined without a plan?
Let’s compare trading to training.
You want to become a powerlifter but barely know gym basics. What would you do in that case? You wouldn’t just start lifting heavy weights without understanding proper form, technique, or a strategy to progressively improve.
Instead, you would follow a structured program – perhaps a program custom-made by a professional coach. This plan would allow you to train consistently and build strength over time without risking burnout or injury.
Same applies to trading. Without a proper plan, you are basically lifting without the proper foundation. You might get lucky in the short term, but you are most likely to make mistakes that could lead to unnecessary losses.
A well-structured trading plan helps us do just that—removing the guesswork and emotional distractions, enabling us to stay focused on execution and follow through.
