I have just joined a proprietary trading program that is helping us new traders with training. I agree with their insistence that we devise and stick to a trading plan! It is exciting to know that I am in a program that cares more about the long-term and education aspects at this point. They are not requiring us to trade at all in a day if we think that it would be better suited to "stand on the sidelines." What are some BASIC guidelines to follow when I devise this plan? I want this plan so that I gain/test my discipline. I am looking for any input /ideas for becoming profitable in these choppy markets as of late. I am looking for some very basic rules to start out with and use to mold into my own style. I think if we traders can be humbled and educated in these present markets that when the markets pick up momentum we will be in the position to take advantage of them. Thank you for all input...I appreciate these forums... pro_25
i'll give this a try. Thier are so many aspects to being a profitable trader ....in any type of market. With regards to a plan.....i would first find a trading system that has rules and parameters. I was taught the overnite system back in 1989 and still use it today. The criteria for stock selection and entry points and exits still apply today. I've adapted to changing conditions and technology over the years but the system i use overall is virtually the same. If your firm teaches you a trading system and other traders have been successful with it than accept that and believe in it.You must believe in the system you are trading and stick with it.No system is profitable every day but i know at some point the market gives you a chance to make money with any system. What most traders need is experience but also patience. I realize when i go into a losing streak because of market conditions rather than bad trading that at some point i will have the chance to make good money. Most newbies will throw in the towel with the system they are using or lose thier discipline and think they will never make money again. But you must keep on trading. do less but trade any way. Because you never know when the easy times or trading days will occur. By gaining experience and by seeing different market events unfold you will learn the patterns of stocks and markets. By learning these likely outcomes you can take advantage of it by increasing size and thru stock selection. You see, i know whats stocks to go after based on market events or actions.With that i will increase or decrease trade size . Alot to learn and it takes a few years to be consistently successful and to make a good living.I've only scratched the surface but be persistant,dedicated,open minded,discipline and patient and you will have a good chance of making it.
Pristine just put this up on their site and since it is relevant I have pasted it here. Disclosure: I have no reln with Pristine. The Trading Plan - The Key to Your Success By Paul Lange, Moderator of Pristine's Educational Trading Room, and Private Mentor in Pristine's Private Mentorship Program ----------------------------------------------------------- There is an old cliché..."If you fail to plan, you will plan to fail." I bring this up now because I feel there is no area in life where this holds more true than in trading. During many of the previous Lessons I have referred to a common element - a reference to a "Trading Plan" - something I said "would be the subject of future lessons...". Now is that time. Explaining a Trading Plan is not that difficult. Explaining WHY you must have one is always a challenge because most traders do not have one. While they all agree it is a good idea, they never seem to take the time to write one. Do you know which strategy is your best morning strategy? Do you have exact criteria WRITTEN that explain that strategy, including what the stock must look like on the daily, where it must open, and what the futures must be doing for you to take that trade? Can you, right now, find in writing, how much is the maximum amount you are willing to lose and any one trade? Do you have a daily goal to hit financially? What do you do when you hit that goal? How much are you allowed to lose before you quit? What do you do after 3 winning trades? 5 winning trades? Most people just go through the day 'drifting'. Any amount of money made is never enough. Any loss does not stop the need to 'get back'. Most trades are the result of chasing someone else's idea, not following a strict strategy. If you answered 'Yes' to all of the questions above, nice going. If not, let me try to convince you. The mind responds better to things that are written. It activates a different physical part of the brain when we write or type something. It is necessary to write. I have often made reference to the fact that we would all like to be "emotionless traders". The closest you can come to that is to separate yourself into two people. One who does the planning... who writes a trading plan, puts that plan into effect by finding trades during the day, takes those trades and develops entries, stops, and targets and puts them in writing. Then a second person, the "executioner," is the one who has no power to change things. This person's only job is to carry out the plan. If you are able to find successful trades consistently, but you are not making money, find out why. It is likely because the "executioner" in you has taken over the "planner". He has taken you out of trades before the target or stop to your detriment. Or he has ignored stops thinking he knows better. You should have at least 4 parts to your trading plan. The first part should be a very simple chart of what you would consider to be your maximum lot size on any trade for any give price of stock. You may have a maximum for $30-40 stocks, and a higher maximum for $20-30 stocks. Spell it all out. This is NOT necessarily your trade lot size, just a maximum you would never exceed. Next, you need to define some financial things. How much are you willing to lose on a trade? How much are you willing to lose in a day before quitting, or before quitting for the morning? What is your goal per day? Per week? What do you do when you hit it? Quit? Trail stop your day's profits just like you would a good stock? The answers you chose are not as important as having the discipline to follow them. In this section you should also have the calculation for your lot size per trade. You should look to risk a constant amount of money per trade. This means you need to look at the stop on a proposed trade, and calculate the share size needed to make sure a stop does not violate the maximum amount you are willing to lose on a trade. In the third section you will need to spell out the strategies that you will use throughout the day. If you are new, pick one or two of your favorites only. Spell out the exact requirements of the stock that you will be watching. Detail what your entry will be based upon. What will the market have to be doing for you to take the trade? What time of day is this trade acceptable. Pass on all trades that to not fit the criteria. Try tracking your trade results by strategy for a while to see which ones truly do work best for you. You may be surprised that the results may be different from what you now think. Lastly, have a section for your own goals as a trader. Continuing education is important to us all. Do you want to learn options to supplement your trading? Do you want to take another seminar? Do you have a list of good books you would like to read. Need some relaxation classes?
All good points. Every nite i develope my plan for the positions i have for the next day..... i usually set a profit target. IF next mornings trend is against me i will revise my plan and go from thier.I Always do better when i have and follow a plan. Trading by the seat of your pants is a losers game.
Thanks Babak! Not coincidentally my firm is a big fan of Pristine...I actually just started another thread asking what other traders think of them...thanks again--- pro_25
Babak Thanks for sharing that article. It hit the nail right on the head for me. I have been reading this board for 4 months now and have heard of trading plans discussed before, but never really knew what they completely entailed. This will be greatly helpful to me. Thanks again.
There's no easy way.... i'd like to know if there is of course... i'm also looking to develop a 'plan' or trading strategy to follow. I'd have to say first is to read a lot... there are loads of trading books out there, and you can never tell where you might find the style/idea you're suited to. I'd particularly recommend 'Trade your way to financial freedom' by Tharp. Many other good books obviously, but this one was particularly aiming to get a trader to develop their own strategy or system (no, it won't tell you a strategy to follow but it will tell you why you shouldn't follow someone else's!). Also covers some areas i haven't come across in other books in the area of money management. Also points out how most are obssessed with entry to a trade... i'm going to look back thru ' New market Wizard's' by Schwager, there's one trader in their tells a story about giving a lecture and saying how entry is not so important. Someone pointed out you may as well flick a coin then..... the guy then went away and did just that and was profitable.... will have to find that one again. anyway, good luck coops