Trading Plan Example

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Trading Plan (Business Plan)... Written: 14/02/2012 (Prior to trading).  Updated: 16/3/12

1. Why am I trading?   I’m trading to have the freedom to work anywhere in the world at the end of a laptop - free from normal convention, BUT happily working around my Wife’s schedule and life.  My financial goals are to live comfortably, enjoying the basic things in life and occasionally enjoying the finer things too. Given these goals I plan to trade full-time, while saving a little for retirement.

2. What do I hope to gain?   Apart from the above , I hope to increase my financial capital year-on-year by trading with discretion & mechanically with no deviation from my chosen trading systems.

3. What’s going to make me successful?   I spent just over a year in 2011/12 to learn about technical analysis, psychology of trading, risk and money management.  My learning's have been documented in A Trader’s Notepad. This alone won’t make me a successful trader, so I will study, test and implement systems that have a proven track record.  

4. What’s my biggest weakness?   Fear of losing money and feeling as if I’m a failure.  To overcome the fear of losing money and risk I plan to trade on discretionary signals, taking most of the emotion out of trading.  Fear of failure will always be there - this fear of failure will drive me to succeed

5. How much time will I devote to Trading?   I plan to trade full-time.  What does this mean?  At least 8 hours per day

6. Time management plan?   Start of week - Identify potential swing trades. Daily basis 07:00 - 18:00  - Check my system and set up for the coming day. Execute trade with my system and research future trades; Evening - Review the trading day.

7. What is my Trading style?   Initially Swing Trading only using daily charts, but I want to combine day trading with swing trading eventually.

8. What markets will I trade?   Liquid markets currency pairs to start with.  Then move into other liquid markets. Always historically back testing / walk thru’ testing new markets.

9. How will I choose my system?   I’ll back test, historically walk thru’ & forward test several trend and news break-out system’s over several different types of markets over many year’s historical data.  After that I’ll demo test them for a month, then if all is acceptable with the system’s, I’ll choose 1 trending system and 1 break-out system.  The live account I open will be an account where I can trade with a small capital and risk to start with until I become more experienced.

10. What is my System?   I plan to trade a trend following system and a news break-out system. When attuned to my trading style and systems I’ll research other systems.
  • First System - A swing trend pull back discretionary system. Trading on the pullbacks into a trading activation zone (TAZ) between the 10EMA and 30EMA and when W%R is in overbought and oversold territory - only with long term trend. I’ll use price action, volume and support & resistance  on daily charts to determine the exact entry time. Exit will be Reward to risk 0.75:1, with risk the greater of 30EMA or 1 x ATR - 58% of trades must win under this system.  Discretionary means absolute values of the triggers have a bit of give and take. On trading new markets I’ll do a walk thru’ historical test before attempting to trade.

11. What is my Risk threshold?   My initial account starting balance will be £**** until I gain experience - This is as much as I can loose. I’m unsure of the amount of leverage I’m comfortable with just now, so I’ll use as little leverage as possible. If I hit a margin call, I’ll re-assess my trading system.  Reward to risk ratio’s will be determined by the systems I use and my initial stop order will be determined by risking no more than 2% of my capital. The system’s will also determine if I set trailing stops.  I will re-invest any winnings from my initial capital.

12. What’s my system monitoring plan?   This depends on what system’s I use.  If draw-downs and average profit & losses are more than the system recommends, it’s time to review the system.
  • First System -  If winning to losing trades drop below 58% over 10 trades it’s time to review my system.

13. What’s my system’s adjustment plan?   Tweak the system if it’s clear what the problem is, or go back to No.9 with the current system under scrutiny and start again

14. What Platform will I use?   C********  to execute trades.  For research and set ups I’m currently using ProRealTime.  This needs to be reviewed - It must be a robust and easy to use system with backtesting, trend spotting & good market analysis.

15. What Broker will I use?   At the moment I’m with C********.  Continually reassess this

16. Have I started my Trading Journal?  Not yet.

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Trading Plan (Business Plan)... Written: 14/02/2012 (Prior to trading).  Updated: 16/3/12

1. Why am I trading?   I’m trading to have the freedom to work anywhere in the world at the end of a laptop - free from normal convention, BUT happily working around my Wife’s schedule and life.  My financial goals are to live comfortably, enjoying the basic things in life and occasionally enjoying the finer things too. Given these goals I plan to trade full-time, while saving a little for retirement.

2. What do I hope to gain?   Apart from the above , I hope to increase my financial capital year-on-year by trading with discretion & mechanically with no deviation from my chosen trading systems.

3. What’s going to make me successful?   I spent just over a year in 2011/12 to learn about technical analysis, psychology of trading, risk and money management.  My learning's have been documented in A Trader’s Notepad. This alone won’t make me a successful trader, so I will study, test and implement systems that have a proven track record.  

4. What’s my biggest weakness?   Fear of losing money and feeling as if I’m a failure.  To overcome the fear of losing money and risk I plan to trade on discretionary signals, taking most of the emotion out of trading.  Fear of failure will always be there - this fear of failure will drive me to succeed

5. How much time will I devote to Trading?   I plan to trade full-time.  What does this mean?  At least 8 hours per day

6. Time management plan?   Start of week - Identify potential swing trades. Daily basis 07:00 - 18:00  - Check my system and set up for the coming day. Execute trade with my system and research future trades; Evening - Review the trading day.

7. What is my Trading style?   Initially Swing Trading only using daily charts, but I want to combine day trading with swing trading eventually.

8. What markets will I trade?   Liquid markets currency pairs to start with.  Then move into other liquid markets. Always historically back testing / walk thru’ testing new markets.

9. How will I choose my system?   I’ll back test, historically walk thru’ & forward test several trend and news break-out system’s over several different types of markets over many year’s historical data.  After that I’ll demo test them for a month, then if all is acceptable with the system’s, I’ll choose 1 trending system and 1 break-out system.  The live account I open will be an account where I can trade with a small capital and risk to start with until I become more experienced.

10. What is my System?   I plan to trade a trend following system and a news break-out system. When attuned to my trading style and systems I’ll research other systems.
  • First System - A swing trend pull back discretionary system. Trading on the pullbacks into a trading activation zone (TAZ) between the 10EMA and 30EMA and when W%R is in overbought and oversold territory - only with long term trend. I’ll use price action, volume and support & resistance  on daily charts to determine the exact entry time. Exit will be Reward to risk 0.75:1, with risk the greater of 30EMA or 1 x ATR - 58% of trades must win under this system.  Discretionary means absolute values of the triggers have a bit of give and take. On trading new markets I’ll do a walk thru’ historical test before attempting to trade.

11. What is my Risk threshold?   My initial account starting balance will be £**** until I gain experience - This is as much as I can loose. I’m unsure of the amount of leverage I’m comfortable with just now, so I’ll use as little leverage as possible. If I hit a margin call, I’ll re-assess my trading system.  Reward to risk ratio’s will be determined by the systems I use and my initial stop order will be determined by risking no more than 2% of my capital. The system’s will also determine if I set trailing stops.  I will re-invest any winnings from my initial capital.

12. What’s my system monitoring plan?   This depends on what system’s I use.  If draw-downs and average profit & losses are more than the system recommends, it’s time to review the system.
  • First System -  If winning to losing trades drop below 58% over 10 trades it’s time to review my system.

13. What’s my system’s adjustment plan?   Tweak the system if it’s clear what the problem is, or go back to No.9 with the current system under scrutiny and start again

14. What Platform will I use?   C********  to execute trades.  For research and set ups I’m currently using ProRealTime.  This needs to be reviewed - It must be a robust and easy to use system with backtesting, trend spotting & good market analysis.

15. What Broker will I use?   At the moment I’m with C********.  Continually reassess this

16. Have I started my Trading Journal?  Not yet.

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