Trading Plans

Discussion in 'Professional Trading' started by shortseller, Oct 17, 2005.

  1. how beneficial do you think it is to have a pre written plan for trading before hand? Can this hurt your flexibility when trading. Is anyone willing to post an example of a trading plan (or there own for that matter) on what it includes and how detailed it is? Thank you in advance.
     
  2. I think this Journal area has many different trading journals where trading plans have been written out and plans detailed before trading. It is the best way to develop and implement a good risk management plan.
     
  3. i would say it is very important --- when was the last time you saw a cruise ship "bridge" that did not have their mapped out course prior to leaving the port. :)
     
  4. Hi shortseller,

    As optioncoach mentioned...

    There's trading plans posted here at ET in-depth although they may not be suitable for your trading instruments or trading style.

    As for one's trading suffering as the result of following a trading plan with specific rules...

    Your forgetting that usually a trading plan has been formed because it has an edge when those rules are followed.

    Therefore, those that have less profits via following their trading plan in comparison to when they are flexible (bending the rules or not following the plan) most likely needs to revise their trading plan because they have obviously adapted to current market conditions...

    That adapting is reflected in the results of the recent flexibility.

    P.S. I'm too lazy to find all the posted trading plans for you here at ET.

    Your just going to have to do it the hard way...do some research...

    http://www.elitetrader.com/vb/search.php?s=

    NihabaAshi
     
  5. slacker

    slacker

  6. Thank you all, good information. :)
     
  7. Shortseller,

    No way you been trading for 3 years and no trading plan??

    I've been trading for a few months, and I have written up 2 150 page spiral notebooks full of notes already.

    On my 3rd one now.

    The funny thing is, all the notes in the previous books were all useless when I look back on it,
    Once you find your old notes are good points but doesn't really work in reality you'll know you are on the right track.
     
  8. You might benefit a lot from listening to the Mark Douglas (2) and Adrienne T interviews at Woodies club.

    They are about the psych side of trading (some would say the most important and hardest part - some would disagree) but you will get a real sense of why a system or a discretionary trader might want plans from these interviews.

    http://woodiescciclub.com/Lecture/
     
  9. I think it is very important to having a trading plan. I have seen first hand how not having one or sticking to it are hurting my trading.
     
  10. Here’s an abridged outline of one of my plans.

    1 Strategic Plan
    1.1 Economic Goals
    1.2 Market A (e.g. Equities)
    1.2.1 Trading Objectives
    1.2.2 Capital Allocation
    1.2.2.1 Total Equity at Risk for this market
    1.2.2.2 Maximum Allowable Drawdraw
    1.2.3 Trading Timeframe and Holding Period
    1.2.4 Trading Approach
    1.2.4.1 Mechanical (vs. Discretionary vs. Automated)
    1.2.4.1.1 System Trading Concept (Trending/Mean-Reversal/etc.)
    1.2.4.1.2 System Development Methodology
    1.2.4.1.3 System Testing Standards
    1.2.4.1.3.1 Out-of-sample tests
    1.2.4.1.3.2 Paper Trading
    1.2.4.1.3.3 Minimum number of trades to accept system
    1.2.4.1.4 Minimum Criteria to begin trading system
    1.2.4.1.4.1 PF
    1.2.4.1.4.2 MaxDD
    1.2.4.1.4.3 %Winning Trades
    1.2.4.1.4.4 Equity Curve Correlation, etc.
    1.2.4.2 Setups/Screening Criteria
    1.2.4.3 Position Sizing Algorithm
    1.2.4.3.1 Max Net Equity Risked per Trade (% and/or $)
    1.2.4.3.2 When to increase Size (with equity growth)
    1.2.4.3.3 When to decrease Size (with equity drawdown)
    1.2.4.4 Entry Conditions
    1.2.4.4.1 Market Indicators
    1.2.4.4.2 Sector Indicators
    1.2.4.4.3 Indicators/Conditions
    1.2.4.4.4 Order Types (Market/Limit/Stop)
    1.2.4.5 Exit Conditions
    1.2.4.5.1 Profit Targets
    1.2.4.5.2 Trailing Stops
    1.2.4.5.3 Disaster Stops
    1.2.4.5.4 Order Types for the above (Market/Limit/Stop)
    1.2.4.5.5 Indicators/Conditions (Market/Sector/Stock)
    1.2.4.5.6 Response to Adverse News
    1.2.4.6 Trading Log
    1.2.4.7 Periodic Reviews of Trading Performance
    1.2.4.8 System Shutdown Conditions (When to stop trading)
    1.2.4.8.1 Max Drawdown
    1.2.4.8.2 Equity Curve, etc.
    1.2.5 Trading Platform
    1.2.5.1 Hardware
    1.2.5.2 Software
    1.2.5.3 Data/Broker Connectivity
    1.2.5.4 Backup Data/Broker Connectivity
    1.2.6 Trading Room/Environment
    1.2.7 Broker
    1.3 Market B (e.g. Options)
    1.4 Market C (e.g. IRA)
    2 Tactical Plan for Market A
    2.1 Pre-Week Planning (Prepared Weekly)
    2.1.1 Market Review
    2.1.2 Sector
    2.1.3 Stock Screens
    2.1.4 Key Numbers (Fibs, S/R)
    2.1.5 News Events
    2.2 Pre-Open Planning (Prepared Daily)
    2.2.1 Review Market/Sector Indicators
    2.2.2 Setups/Screen Results
    2.2.3 Define Possible Scenarios
    2.2.3.1 Gap open, trend day, breakout, etc
    2.2.3.2 Define Key Numbers (Pivots, Fibs, S/R)
    2.2.3.3 News Events (Earning, FED, weather, etc).
    2.2.4 Establish Position Size per trade
    2.2.5 Establish Explicit Entry Point/Conditions for each stock
    2.2.6 Establish Explicit Exit Points/Conditions for each stock
    2.2.7 Refine Plan based on Pre-Open News/Futures Premium
    2.3 Realtime Targets-of-Opportunity
    2.3.1 Sectors
    2.3.2 Stocks Scan List
    2.3.3 Position Size
    2.3.4 Entry Conditions
    2.3.5 Exit Conditions
    2.4 Trading Log
    2.5 Post- Trading Review
    3 Tactical Plan for Market B
    4 Tactical Plan for Market C
     
    #10     Oct 17, 2005