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Trading Plan

Ok this on one of those critical areas that I can give you guidance but you need to work out for yourself over time.

The one key point is that you MUST have a trade plan, just like a business has a business plan or a general has a battle plan, you must have a trade plan, now the plan may completely fall to pieces at times but any plan is much better than no plan at all.

There are number of course at the OTA that help you build a plan but it really depends on a lot of factors, your style, risk level, what you are going to trade etc., you will also find your plan will change and develop over time as you get more experience results and knowledge.

I try to update my plan once a month, during the month I make notes of things that I should do better and could improve and then I add to the plan for the start of the next month, this way the plan morphs and improves over time.

I actually have one broad “Trend Trade Plan”

within the Trend Trade Plan I have:

  • Day Trade Plan
  • Swing Trade Plan
  • Tend Trade Plan

Each plan is broadly the same where I am looking for Trend and Golden Trades this difference is the timescale of the trades and the tool used. Day Trades as they sound are trades for the day using Futures Contracts and Equity where I am looking for a daily move. Swing Trades and Trend Trades are longer term trades that could last for several days and in some cases weeks, for these I really just use options contract with structure base on volatility. They are in separate accounts so that I can track the progress of both over time.

I could let you have a copy of my plans but honestly, that would not help you as trades plans are a very personal thing and you need to develop what works for you.

One thing I have done over time is really try to simplify my plans, they were much more complex and not adding value, simplicity where you can really does help, also consistency through the plans helps as well.

I also as part of my plans have some very broad statements of how I am going to trade, and broad rules as well as detailed entry and exit rules.

Finally I have learnt to define the difference between day trading and long term investing, in the early years I combined the both, that did not really work well as you have very different time-scales for making trades so I also have a Long Term Plan where I may hold positions for months, a little like a retirement account.

The net net is that you need to work out how you want to set up your trade plan but you do need a trade plan if you are going to be a successful trader long-term.