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The Option Trader’s Hedge Fund: A Business Framework for Trading Equity and Index Options by Mark Sebastian, Dennis A. Chen

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5. The Trading Plan

“Failing to plan is planning to fail.”

—Alan Lakein

Not every business has a business plan, but every successful trader has a trading plan. To make money consistently, you need a plan giving yourself a framework, defining the parameters, and keeping your focus.

Having a plan is not a prerequisite to starting a business. However, having a plan is usually a precursor to creating a successful business. Many people can start a business. The number of startups per year is large; but, in the end, only the ones with a plan that can be implemented well will survive and flourish. In the business of trading, successful traders have a trading plan that they follow. The reason for creating a trading plan is to guard against the emotional ...

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