NoFrills Trading Plan 2006 Objectives & Position Sizing * Grow $ 25,000 initial by $ 9,750 (39%) by year end * Improve my discipline discipline and also validate/refine my trade setups * I will risk a maximum of $ 500 per trade (2% of my trading capital) * If the total losses for the month is $ 2,500 or above, I will stop trading for that month * I will have a maximum of 5 positions open at once Instruments & Selection * US and Canadian (TSX) stocks * Long candidates will be selected from 1-IBD 100 list,2-MSN Stock Scouter Top 50,3-Visual Scanning * Preference will be given to stocks with stockscouter rating above 8 (long) * Short candidates will be selected from 1-IBD 100 list,2-MSN Stock Scouter (<=6),3-Visual Scanning * Preference will be given to stocks with stockscouter rating below 6 (short) * Stock last price should be 5 dollars or more * Average daily volume for the last 2 weeks should be 200k+ * No upcoming earnings release Time-Frames * Time frames for trading will be Daily, Weekly and Hourly Execution * Interactive Brokers and E*Trade Canada * Trade entry: Stop Limit orders * Trade exit: Stop limit orders & trailing stop orders (when available) Setups Support and Resistance Method (longer duration trades) * entry: at support for longs or at resistance for shorts * stop loss: below major pivot point or support (long) or above major pivot point or resistance (short), move to break even ASAP * profit taking: close 1/2 of the position at 2R profits and move the remainder to break even. 1-2-3 TTE or RH TTE (short duration trades) * entry: after trend has been stablished by 1-2-3 low/high. Enter 0.10 above (long) or below (short) of the last bar, up to 3 bars. * stop loss: 0.10 below low of the entry bar (long) or high of the entry bar (short). Move stop to break even ASAP. Move stop to 0.10 below (long) or above (short) of the last bar. * profit taking: close 1/2 of the position at 2R profits and move the remainder to break even.
2005/12/22 Long [X] 200 shares @ $46.23 stop loss @ $ 44 total risk $450 * Refer to chart for comments daily view weekly view
Please feel free to post comments or suggestions on how to improve my trading plan and my setups. I'm using a real trading account and I intend to post the results as a close trades my trades. My trading methodology is founded mostly on price and volume analysis. I use moving average (simple) at the most, no indicators. It will be a good 2006 !
Good luck. You have done a good job creating your business plan, my question for you is this, are those numbers in your plan in line with what your strategy produces? All the best in 2006! Mike
Yes Mike. The numbers are in line with my last year's results. I'm trying to get more formal this year.
You're going about it the right way. Good organization, record keeping and goal setting are under appreciated, especially by newer traders. I'm working on my 2006 strategic plan now as well. cheers
2005/12/23 Long [EXC] 300 shares @ $54.66 stop loss @ $ 53 total risk $504 (risk complies with my trading plan) Exelon Corporation is a utility services holding company engaged in three business areas through its subsidiaries. Exelon's Energy Delivery business consists of the purchase and regulated sale of electricity and distribution and transmission services by Commonwealth Edison Company in northern Illinois (including Chicago), and by PECO Energy Company (PECO) in southeastern Pennsylvania (including Philadelphia), and the purchase and regulated sale of natural gas and distribution services by PECO in the Pennsylvania counties surrounding Philadelphia. The Generation business consists principally of the electric generating facilities and wholesale energy marketing operations of Exelon Generation Company, LLC, the retail sales business of Exelon Energy Company and Generation's investment in Sithe Energies, Inc. Exelon's other businesses consist of the infrastructure and electrical contracting services of Exelon Enterprises Company, LLC. * Refer to chart for entry comments daily view weekly view
Excellent article. Iâll be disciplined and try to avoid these mistakes. The Top 10 Mistakes Traders Make and How To Avoid Them by Jim Wyckoff - original article 1. Failure to have a trading plan in place before a trade is executed. A trader with no specific plan of action in place upon entry into a trade does not know, among other things, when or where he or she will exit the trade, or about how much money may be made or lost. Traders with no pre-determined trading plan are flying by the seat of their pants, and that's usually a recipe for a "crash and burn." How am I'm avoiding: I have a trading plan 2. Inadequate trading assets or improper money management. It does not take a fortune to trade the markets with success. Traders with less than $5,000 in their trading accounts can and do trade futures successfully. And, traders with $50,000 or more in their trading accounts can and do lose it all in a heartbeat. Part of trading success boils down to proper money management and not gunning for those highly risky "home-run" type trades that involve too much trading capital at one time. How am I'm avoiding: My trading capital is 25k - in my plan. 3. Expectations that are too high, too soon. Beginning futures traders that expect to quit their "day job" and make a good living trading in their first few years of trading are usually disappointed. You don't become a successful doctor or lawyer or business owner in the first couple years of the practice. It takes hard work and perseverance to achieve success in any field of endeavor -- and trading is no different. Trading is not the easy, "get-rich-quick" scheme that a few unsavory characters make it out to be. How am I'm avoiding: My expectations are realistic if not low compared to other members in this board. 4. Failure to use protective stops. Using protective buy stops or sell stops upon entering a trade provide a trader with a good idea of about how much money he or she is risking on that particular trade, should it turn out to be a loser. Protective stops are a good money-management tool, but are not perfect. There are no perfect money-management tools in trading. How am I'm avoiding: I physical stops for every trade I enter. No mental stops. 5. Lack of "patience" and "discipline." While these two virtues are over-worked and very often mentioned when determining what unsuccessful traders lack, not many will argue with their merits. Indeed. Don't trade just for the sake of trading or just because you haven't traded for a while. Let those very good trading "set-ups" come to you, and then act upon them in a prudent way. The market will do what the market wants to do -- and nobody can force the market's hand. How am I'm avoiding: I try not to take profits too soon. 6. Trading against the trend--or trying to pick tops and bottoms in markets. It's human nature to want to buy low and sell high (or sell high and buy low for short-side traders). Unfortunately, that's not at all a proven means of making profits in futures trading. Top pickers and bottom-pickers usually are trading against the trend, which is a major mistake. How am I'm avoiding: Point taken. 7. Letting losing positions ride too long. Most successful traders will not sit on a losing position very long at all. They'll set a tight protective stop, and if it's hit they'll take their losses (usually minimal) and then move on to the next potential trading set up. Traders who sit on a losing trade, "hoping" that the market will soon turn around in their favor, are usually doomed. How am I'm avoiding: Point taken. 8. "Over-trading." Trading too many markets at one time is a mistake -- especially if you are racking up losses. If trading losses are piling up, it's time to cut back on trading, even though there is the temptation to make more trades to recover the recently lost trading assets. It takes keen focus and concentration to be a successful trader. Having "too many irons in the fire" at one time is a mistake. How am I'm avoiding: My plan accounts for maximum number of trades versus max loss. 9. Failure to accept complete responsibility for your own actions. When you have a losing trade or are in a losing streak, don't blame your broker or someone else. You are the one who is responsible for your own success or failure in trading. You make the trading decisions. If you feel you are not in firm control of your own trading, then why do you feel that way? You should make immediate changes that put you in firm control of your own trading destiny. How am I'm avoiding: Point taken. 10. Not getting a bigger-picture perspective on a market. One can look at a daily bar chart and get a shorter-term perspective on a market trend. But a look at the longer-term weekly or monthly chart for that same market can reveal a completely different perspective. It is prudent to examine longer-term charts, for that bigger-picture perspective, when contemplating a trade. How am I'm avoiding: I have to do a better job at analysis Indices and Sectors every weekend.
This is an Excel spreadsheet that I use to calculate risk based on stop placement and also target. It has also a Stop Loss Risk sheet adjusted to my maximum trading risk.