Business Plan for Trading?

Discussion in 'Professional Trading' started by JeffUSA, Feb 24, 2010.

  1. JeffUSA


    I heard that traders should have a business plan. I'm looking for tips and advice on making one.
  2. Thats a good idea, I would have a 20 page plan

    Overview - what the business is set to do also known as Executive summary

    Finances - upfront/startup costs, ongoing costs, minimum amount of risk capital to be a trader full time given the strategy you employ.

    How will you start trading at a level that you will need in order to be a full time trader- savings, loans, partners, etc, working as a subcontractor (prop), etc.

    Cashflow- how much money do you estimate the strategies will generate over say 1-3 mth period, annually, etc..

    Strategy - Overview of current strategy, skills, returns generated already or in simulation, etc, then consider Growth, Hiring, Outsourcing, Maintaining edges, identifying new opportunities,

    In this environment its more critical to have a business plan that describes explicitly your role and path to profitability, avoid technical things like how you trade.

    Spend time describing differentiation from other Market players (other traders, market makers, etc) and whether the edge is sustainable over 1,5,10 years.

    Their are a few book I'd recommend if you are going the systematic route - These books will make it easier to explain on the business plan the technology side of your trading with risk management, procedures for implementing complex systems, etc:

    Inside the Black Box - Rishi Narang

    Quality Money Management: Process Engineering and Best Practices for Systematic Trading and Investment
    by Benjamin Van Vliet

    Ernest Chan - Quantitative Trading
  3. wuming79


    Hi Guys, I'm always confused which one comes first. Trading Plan or backtesting? If we write a trade plan based on a strategy that is not proven profitable yet, do we still write that plan? If we wrote the plan before back test, when do we start to alter the plan if we feel a particular plan is not up to expectation?
  4. Arnie


    This might help get you started. You might want PM Don Bright. I think they have a pretty basic outline of what to do.
  5. vikana

    vikana Moderator

  6. JeffUSA


    Thanks for the suggestions. I'm gonna get a business plan put together.
  7. Back testing should be part of your plan. You know the part about how you know your strategy will work.
  8. Make it a SMART Plan