Discussion in 'Professional Trading' started by JeffUSA, Feb 24, 2010.
I heard that traders should have a business plan. I'm looking for tips and advice on making one.
think there's a Trader Business Plan component in the free version of TradePerformance
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
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?
This might help get you started. You might want PM Don Bright. I think they have a pretty basic outline of what to do.
here are the key trading elements of your business plan:
You also need to make sure you have enough capital to get started, stay in business for at least one year, and have an emergency fund.
BUT, main elements were spelled out by lescor.
Thanks for the suggestions. I'm gonna get a business plan put together.
Back testing should be part of your plan. You know the part about how you know your strategy will work.
Make it a SMART Plan
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