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smuhr

Define Your Trading Plan

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Good Morning,

 

All profitable traders talk about their Trading Plan so I would like your advises to define my own Trading Plan.

 

But what is a good Trading Plan ?

And what must and must not be written in a Trading Plan ?

 

Thank you,

Steven

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The smple answer...A trading plan should cover every pertinent detail from Entry to Exit for any single trade or any strategy that you are using.

 

A Trading plan will cover and describe the setup it self, covering all imprtant factors.

Another part of your plan will cover the trademanagement part of your setup.

Another part of your plan might cover seaasonal tendencies or days that the market tends to behave differently for the particualr market you trade e.g. many Index future traders adjust their trading plan for the FOMC and other key market events, Quad Expiration, Winter holidays, Summer and Fall trading etc..

Another part of your trading plan might cover the psychological part of trading and executing you trade plan. off-course this is personal and may or may not be needed, only the individual can answer this....As mentioned before evey pertinent detail can be included in your trading plan as it will help you to be better prepared and to keep you honest.

 

Start a trading plan and As you begin this habit and cover the basics--over time the markets will tell you what other factors are also important to integrate into your trading plan based on your trade style and market experience.

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Good Morning,

 

All profitable traders talk about their Trading Plan so I would like your advises to define my own Trading Plan.

 

But what is a good Trading Plan ?

And what must and must not be written in a Trading Plan ?

 

Thank you,

Steven

 

In my trading plan I discuss my overall beliefs in the market, what markets I trade, when I trade those markets, when not to trade those markets, my money management rules, how I will track my progress, goals for the year and most importantly: A detailed description (with images) on what setups to take.

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A detailed description (with images) on what setups to take.

 

A trading journal and a Trading Plan is to different things, no ?

 

In a trading plan you define a set of rules about the way you will manage a trade

In a trading journal you describe all your trades

 

Is that right ?

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A trading journal and a Trading Plan is to different things, no ?

 

In a trading plan you define a set of rules about the way you will manage a trade

In a trading journal you describe all your trades

 

Is that right ?

 

That sounds about right to me. In my Trading Plan I state I need to keep a journal and track my trading statistics. I even list what should be tracked. In short, my Trading plan lists what I should be doing as a professional trader. This includes keeping a journal and tracking statistics on my trades, which are both separate documents.

 

The Trading Plan is like a business plan that governs my trading activity on many different fronts. My Journal and Trade Record are historical documentation on my trades which are both used for tracking progress, finding weakness and overall, improving my skill as a trader.

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There are two ways to treat a trading plan

one - like a business plan - beliefs, goals, etc; Do this first to set out goals and try and see if this actually then matches step two

two - incorporating a trade journal as part of a daily plan. Show how you actually implement your strategy so that you can review the numbers.

 

Ideally you should have both - but I would imagine the second (a daily plan) is the one that is hardest to maintain and hence requires the most thought and discipline.

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In fact the trading plan is the first step to be a disciplined trader ;)

 

Do you write your setup in your trading plan too ?

 

If some one can copy/paste the summary of a good and structured trading plan it will be very useful for beginners who want to write their first trading plan.

 

Thank you

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Good Morning,

But what is a good Trading Plan ?

 

Thank you,

Steven

I try and run trading as a business.

 

At the very least it includes the overall business plan. What funds to use, risk, accounts, expected return, etc. etc. One of the best examples is in John Carter's book "Mastering the Trade". At one time he would send the business plan template if you asked for it by email

 

Without that template think GOST:

Goals

Objectives

Strategies

Tactics

 

 

Then the day to day execution:

 

I like the book "Flawless Execution: Use the Techniques and Systems of America's Fighter Pilots to Perform at Your Peak"

 

They have excellent templates for pre-brief and post-brief that I use.

 

I have a written pre-brief and post-brief for 80% of the days I traded last year which is great to review my progress and helpful in planning next year.

 

Each night I do the paperwork and print the docs to a pdf file that I email to a private google group. During the day I can look at price levels and charts that I am following. I can review my progress at any time from any computer including my iphone.

 

I also use google docs to keep win/loss stats in an online spreadsheet.

 

It is a paperless process, all records are on my private google group and backup with a email copy to another account.

 

I hate the paperwork but trade better when it is done. Also the process alone prepares me for the next day. "Planning is more important than the plan."

 

Its a business. Now I am preparing my 2010 goals and objectives.

 

Good trading!

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I have a written pre-brief and post-brief for 80% of the days I traded last year which is great to review my progress and helpful in planning next year.

 

Could you please post a pre-brief & post-brieft sample ramora ?

 

Thanks Ramora :)

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Could you please post a pre-brief & post-brieft sample ramora ?

 

Thanks Ramora :)

 

Pre-brief outline with details removed:

=========

Pre-Brieft: Date

MISSION OBJECTIVE:

Target:

System #1:

System #2:

System #3:

 

Enemy: Impatience - lack of discipline

 

 

MISSION SCENARIO: (How I think the day will go... Size and risk mostly)

 

Template: SpeedDay -- StandardDay -- Simulator

 

 

WEATHER & ENVIRONMENT: (Last market details any analysist reports, Macro stuff)

 

Mar10 Last OHLC:

 

9:30pm HangSing 323 Nikkei 95 YM +6

 

 

THREATS & INTELLIGENCE: (Econ reports)

 

Reports: 5:30

6:45

7:00 Nothing

7:30

 

Schedule: Stations: 0600 First Trade: 0645 Last Trade: 1245

 

Screen shots of traded markets with Pivot levels

 

=================

Post-brief

STEALTH: Date

 

Set the stage - what happened?

 

 

Trading System #1:

Trading System #2:

Trading System #3: No trades

 

 

Tone - Attitude

 

Pleasant: happy, pleased, content

Unpleasant: miserable, troubled, unhappy

Activated: Aroused, alert, hyperactivated

Deactivated: sleepy, still quiet

Unpleasant Activated distressed, upset, builty, scared, hostile, irritable, ashamed, nervous, jittery, afraid

Pleasant Deactivated: relaxed, at rest, serene, calm, at ease

Pleasant Activated: interested, excited, strong, enthusiastic, proud, inspired, determined, attentive, active

Unpleasant Deactivated: tired, sluggish, droopy, dull, drowsy, bored

 

 

Today was mostly: Pleasant Activated: rested, good exercise last night, energy high

 

Execution vs Objective:

 

Expectations

 

Analyse Execution:

 

Look at best and worst trades.

 

Lessons Learned:

 

 

Transfer Lessons Learned:

 

 

High note:

 

Very satisfied

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Hi, please find attached an excel spreadsheet with a few headings I use.

I divide it up into strategies and instruments - as I follow a few in both categories.

 

(please note: this is an example of headings only, I use this combined with a lot of macros to incorporate a a PL and testing system, so you cant have the whole thing)

(As a suggestion if you know some macros - use a lot of cutting and pasting, OR tables to fill in the journal using default values. It keeps the thought process consistent, it also saves a lot of typing)

Try google - Bedford Louise trading plan- which might help regards Trading plans, that seemed a good one from memory.

Trading Journal example.xls

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Thanks to your help I have made my trading journal for 2010.

 

The uploaded excel sheet calculates automatically the RR ratio, max benefit, max loss, broker entry price, broker exit price, stats, etc...

 

If you have any advices, feel free to post :)

 

Cheers,

Steven

 

PS : If you want to edit some formula do not forget to unprotect the excel sheet.

traiding_journal_2010.xlsx

Edited by smuhr
update uploaded file

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I try and run trading as a business.

 

Without that template think GOST:

Goals

Objectives

Strategies

Tactics

 

From a 'psych consultant' marketing email received today.... Looks like somebody reads these threads!!

 

It is that time of year again ... time for "GOST". “But xxxxxx,” you say, “it is New Year's - not Halloween. Where have you been?”

 

Ah... well I was so busy I basically did miss Halloween BUT that’s not what I'm referring to. I mean GOST as in Goals, Objectives, Strategies and Tactics.

 

If you're looking at 2010 and wondering "what do I want to accomplish?" Try breaking it down into these steps:

 

* 1. Goals - the big picture. Let's just say "Improve performance over 2009."

 

*

2. Objectives - this is where you get numerical. For example: In the 1st quarter I will achieve a net 5% return on my trading capital OR in the 1st quarter I will improve my results 1% over last year. (Notice this requires KNOWING last year's performance – something to do for everyone who is itching to trade this holiday week).

 

*

3. Strategies - this is where you explain to a theoretical third party HOW it is you are going to achieve the objective. This is conceptual. For example: I will learn to use the volume accumulated at a price to tell me something useful about market development.

 

*

4. Tactical - this is where you answer yourself about exactly what you have to do to put that strategy in place. Example of a tactic? "I will determine each day what the highest volume nodes are for the last 3 trading days as well as any composite volume nodes that exist. I will enter trades ONLY when we are again trading within those nodes and I will fade them with stops on the other side until proven that their support or resistance has been broken." (This could use a few more details as to exact entry and theory of what to risk - of which the latter should be in strategies - i.e. your theories of stop placement).

 

 

Oh yes... it does require thinking. Hard thinking, in fact. But seriously now, can you really expect to win against 95% of the traders out there without doing the hard thinking? No great thing comes in this life without work and sacrifice. If you’re willing to commit to the difficult parts, do the work, and take a new tack, we’re here to help you achieve your goals (and objectives!)—no matter how high they take you.

Edited by ramora

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I find specific profit goals, whether expressed in nominal dollars, percent ROI or however to be of no value, and I do no such "goal setting." I have defined when I will enter, how I will manage, and when and how I will exit a position. I know how I will determine trade size, and most importantly, I know when I will quit. That really is all you need - what will you trade, when, how much, and when do you get flat and when do you stop the bleeding when it occurs.

 

Best Wishes,

 

Thales

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when do you stop the bleeding when it occurs.

 

Best Wishes,

 

Thales

 

This is the one area I have to improve on in 2010, looking back over the last 2 years this is the one rule I break way to often and every single time it has done more harm than good.

 

I also want to say that my trading plan has no profit goals, it does have some goals and rewards for sticking to my plan though. I would rather reward myself for sticking to the plan instead of hitting the 100% ROI mark...

Edited by rcossey73

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I find specific profit goals, whether expressed in nominal dollars, percent ROI or however to be of no value, and I do no such "goal setting." I have defined when I will enter, how I will manage, and when and how I will exit a position. I know how I will determine trade size, and most importantly, I know when I will quit. That really is all you need - what will you trade, when, how much, and when do you get flat and when do you stop the bleeding when it occurs.

 

Best Wishes,

 

Thales

 

I at least define how much I would need to cover my monthly expenses, to live on and save some for a rainy day. If I cannot meet that, then my business' income does not cover my expenses even if I follow my trading plan on how to enter and exit perfectly and profitably and I need to know that and address it.

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I find specific profit goals, whether expressed in nominal dollars, percent ROI or however to be of no value, and I do no such "goal setting."

 

Interesting on a number of levels - business plan v trading plan

From a Trading plan perspective

I tend to agree - if you are running profits - depending on the style then ideally you should not have profit targets. Additionally as no one can predict the future then putting profit targets is kind of pointless.

However - I do think profit targets (lets call them these even though they also may be seen as risk reward points, good/fair value areas, etc;) are important to have, as they help visualise the trade from a risk reward point of view. ie; if you have a price at 100 and you think it will only rally to 105 where you will take profits then having a stop at 90 and going long does not make a lot of sense - unless you are right a high percentage of the time.

 

If you are talking about ROI and goals from a business point of view - again yes and no - Yes- Sevensa put it perfectly you need to know if the business is profitable and worthwhile to do. Sometimes it is just better to work for someone else. It all becomes about have a positive expected return that allows you to compound profits over the long term - otherwise making $X a day today is not going to allow you to really build on that if in ten years time you are still only making $X a day.

No - no strategy works all the time and so you can force the market to conform to your budgets, so trying to stick to budgets as such can be detrimental.

example;I have had years of not making any money (up, down, up, down) until October and then having 3 months to make enough for the year.....so long as I stuck to the strategy.

 

On saying all this - I actually do both and its much the same as thalestrader (I love that name) - I have profit targets and stops to determine my position sizing and help visualise what the trade should look like, however while these help determine the position sizing, they are not necessarily the be all and end all, as I will stop myself out quickly and even reverse if it fits the plan and the market mood changes.

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I at least define how much I would need to cover my monthly expenses, to live on and save some for a rainy day

 

Hi Sevensa,

 

I would only add that those figures exist independently of how you choose to try to meet those figures, i.e. whether you are trading futures or selling cars.

 

I agree with you that however you choose to pursue the aquisition of cash you need to consider whether it will be sufficient to cover your living expenses.

 

But trading is so scalable, and, at least for me, so potentially emotional, that a good plan that defines entries, exits, position size, and quitting (if only for a day, a week, a month) is more likely to lead to successful execution than the plan that adds "I need $500/day to make a living."

 

I know I have mentioned elsewhere here at TL a friend of mine who starts each month with 8K in his trading account. He trades only the TF. Month after month he manages to average about 16K/month profit on his 8K. Some months he makes 30K. Other months he loses enough of the 8K that he lacks sufficient margin to execute even a one lot. When tthat happens, he is done for the month, no exceptions. I do not know the particulars of his personal finances, but from what I know of him, I would guess that he needs about 60k to maintain his family's current standard of living. I know he has done over 200k+/year net for five years running. If you were to ask him if he has a trading plan, he would open Word and show it to you. He defines when he trades (and when he won't), he defines how he will enter, what size, how he pyramids, and when he quits for the day and for the month. What you will not find in his plan is a specific dollar profit/day/week/month/year goal. He just knows he will generate profits enough.

 

Trading is scalable. Trade well, and the profits will take care of themselves. Until you have a plan and sufficient capital to trade your plan, you should not attempt to generate sufficient profits to meet those expenses. I guess what I am advising is this: If you are going to make a living out of the markets, then it should go without saying that your profits wil be more than sufficient to provide you with an income with which to meet you normal and necessary living expenses. Focus on your approach and how you will manage your risk, and the profits, assuming sufficient capital to execute the plan, will exceed your needs.

 

Best Wishes,

 

Thales

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Guest Trend Hunter

Hi All,

Wow.... what a great thread on Trading plans. For me a trading plan must be detailed enough that you know exactly what to do before it happens, yet simple enough that anyone could follow it. It must help you define what mode the overall market is in, so your not rear-view mirror trading. It must also help you define exactly what your Risk and Reward is before you enter a trade.

Here is a new article to helping traders answer their questions in their Trading Plan. Top 10 questions a trading plan must answer

 

:D

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The plan is 'TO LOSE WITH PRIDE'.

Where I live, there is a small group of 'dry stone wall specialists' . They build and repair these kind of walls. Thousends and thousends of different shape and size stones put toguether end up in a very harmonic piece of art. They work on every one of these stones, reshaping them where needed and place them where they were planned to be. If a stone that has been modelated breaks or splits, is put on the side untill a new place is found for it and a new stone will be worked on to carry on with the overall plan which is to build a dry stone wall.

In the trading business we have to work on every trade as what it is,,,, a new trade. The market scenario changes very frecuently and we must decide if we are capable to use it in our favour before that scenario 'breaks'.

When we are in a trade (hammering and shaping a new stone), anything can happen (the stone can break). We, traders, must know when to give up on that trade if things go wrong (put that stone on a side) and look for other opportunities (look for a new stone to work on).

Normally we would look for setups that we would be comfortable to work with; setups that we have worked on before with good results,,, good results dont always mean profitable trades but being able to put on the side those 'stones' that broke at the last minute before they could be placed succesfully.

A 'stoner' knows that if one stone is too big comparable to the rest of the stones compounding the wall, it will outstand the rest and will break the harmony planned and that placing too small stones will take them forever to finish the wall.

A trader should know that putting a too big of a position could make a negative effect on their work at the end of the day. Using too small positions wont make them enough money at the end of the day either.

I rather make many small trades along the day; in fact, I make over 150 trades every day using my automated trading system on different Pairs and make over 2000 pips daily.

My plan on every trade is very similar. Its a matter of trying to be near the market price as much as I can in order to exit the trade with a small gain or otherwise with a small loss. A loss doesnt hurt if I feel I have done a good job as I know that I will recover that loss in the next trade or two.

There are thousends of methods that a trader can choose deppending on his/her personality and also deppending on the market scenario the trader has chosen to work on.

A trader should never try to guess the direction of a market, rather, he/she should have a clear view of what will be done at any time while in a trade.

In my case, after I enter my position, I dont have to worry if the trade goes my way and closes with a profit. I dont have to worry if a trade goes againts me either.... in these cases I just 'put the stone on one side' and will use it when the time is right,,, today, tomorrow or next week. The position size is of most importance here as ('a too big stone could break my back if I tried to lift it off the ground and carry it a long way'), if too big, it could be stoping me from placing new trades along the day and miss the opportunities given by the markets to make money.

If a broken stone that has been worked on is left too far behind, the chances of being used before the wall is finished vanish away,,, it would probably cost more to try to reuse it than just use it as rubble and work on a new stone. A trader must know when to give up on a trade before it becomes harmfull.

If one learns how to lose money it becomes innate to consistenly make it.

 

Good trading!

Catorpega

President of Club Catorpega (Traders Club)

 

some 'dry stone walls'

paret seca - Buscar con Google

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Meanwhile, Russia claimed fresh territorial gains in Ukraine’s Sumy region and ramped up attacks on surrounding areas—further darkening the outlook for markets.   Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Andria Pichidi HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • AMZN Amazon stock watch, good buying (+313%) toi hold onto the 173.32 support area at https://stockconsultant.com/?AMZN
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