Trading Plan Template

Hi,

Here's a comprehensive Trading Plan Template if anyone is interested, maybe one day compare notes if anyone actually completes it!


Trading Plan Template



Cheers

Hi Poormantrading

I just checked out the template and site. I notice Jake Bernstein is there too. Some excellent stuff. Thanks

Cheers
Happytrader

Well I'm glad your a Happy Chappy HappyTrader!

I've come accross a few trading plan templates, but this is by far the most thorough. I've made yet another start on a plan, & hope this time to get a more logical & structured approach.

After reading many useful posts on this forum (& others) I'm pleased to be able to make a small contribution.


Regards

You know I think this is a perfect example of making the simple into the complex.

I also think that most templates are written in theory not practice many by people who cant make a profit.

Its very very simple to trade profitably.

(1) Have EITHER more wins than losses.

OR

(2) Have bigger wins than accumulated losses.

Now I dont care how thorough your trading plan appears but if you dont have either of these two then your going to fail!

I notice that these two are NEVER included in ANY plan Ive seen.

KISS

tech/a said:

You know I think this is a perfect example of making the simple into the complex.

I also think that most templates are written in theory not practice many by people who cant make a profit.

Its very very simple to trade profitably.

(1) Have EITHER more wins than losses.

OR

(2) Have bigger wins than accumulated losses.

Now I dont care how thorough your trading plan appears but if you dont have either of these two then your going to fail!

I notice that these two are NEVER included in ANY plan Ive seen.

KISS

Click to expand...

tech,

Perhaps you would like to show us your trading plan.

Snake

Snake.
The way I trade is well documented on Reefcap.
Below are the links.Including Archives there were at last count around 400 pages of information and discussion.
Boiled down the above is true and correct.

You're welcome to read through the wads of info.

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=8;t=000287

Current trades

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=8;t=000091

Questions and Answers about "techtrader"

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=8;t=000409

3 yrs trading results--there are 14 threads starting at an initial $30K on margin---100K Capital base.
To simplify return Current balance $237,000 less Margin loan $70,000 =
$167,000.
Initial capital $30,000 return over 3 yrs on initial capital = 556%.

My method of trading is longterm and as boring as hell.

But I love boring, takes me 5 mins a day, and I dont have to watch the screen all day. It suits me---its not flashy predictive or exotic.
Techtraders development and consequent trading on the net was designed years ago to see if everyday traders could design----test---- and trade a method profitably--it was and still is a question asked time and again.

The answer is YES---I'm simply a builder so if I can do it why cant anyone?

Tech,

thanks for the reply, but I was referring to your trading plan as a document that stipulates your trading/investing objectives and rules etc. Is this something you are willing to show on this forum? If not how many pages is your trading plan and what are the points covered in your trading plan?

You alluded to the trading template being too big and not simple enough. I'm interested in a comparison to see what simple is.

I'm not a member of reefcap and I don't want to cipher through countless dicussion on it.

Cheers
Snake

Snake.

My trading plan is mechanical trading method/s which I am satisfied with the accuracy of the testing.
Its really as simple as having a positive expectancy trading method and trading it.
If it falls outside tested parameters then your tests are either incorrect or your trading an annomally not seen in testing---either way you stop.

I have 3 methods I trade.
Techtrader, a hybrid of a weekly method Stevo from Reefcap designed on Reef and another version of T/T.
Plus some discretionary stupidity at the moment.

Trading (Longer term---investing really) is a component in my overall investment/financial stratagy.

My overall goal is passive income.
Currently Im working on 3 areas and have achieved some in each area.

(1) Business---so that when semi retired my company still pays My wife and I. I have tested its ability (More so my staffs ability) a few times during long overseas trips. (3 mths at a time).

(2) Property--rental income from freehold property.

(3) Trading Longterm/investing----Trading profit and from dividends.

Mechanical trading can do away with 5 pages of "What to do and How to do it and Why and What ifs and Whens"

Plans are fine but

How do you know your plan or anyone elses for that matter will return profit if followed??

Particularly if your a discretionary trader.

The answer is that you dont---it could be years before you know.
I test mechanical systems back 8 yrs and 20000 different portfolio's and unless I get 100% winning portfolio's with a fair deviation then I wont trade it.
I've tested 100s of ideas/hypothisis/methods and Systems over many years and only found 3 I'd trade.Sure there are 1000's its just that I havent found them all yet!

This is the method I have adopted--above all I want simplicity and I dont have the time to devote to short term trading.
I certaintly dont wish to trade fulltime---couldnt think of anything more boring---but thats me others LOVE it.

Hi tech/a

Thanks for your interest, I'm aware of your posts & your passion & emphasis on positive expectancy & your TT system, which like many, I've found useful reading & I appreciate your time & effort.

However the Trading Plan is a template & therefore it can be edited & modified to ones choosing. If it is too complex or part's considered unnecessary then they can simply be deleted. I would have prefered posting it in full, so that it could have been modified here, but it is copywritted so I just posted the link.

From my point of view it can be used as a time management tool, & who knows I might eventually get my trading time down to 10 min a day too! Considering there are unlimited methods & ways to trade, being able to quantify the steps I think is useful. So I won't be throwing the baby out with the bathwater.

As I found this by googling, I had no involvement in it construction. However if you read the Introduction you have found out that -

"Towards the end of 2004, a thread entitled ‘A Trading Plan – You MUST Have One!’ on the ‘Trading for a Living’ forum was started on www.trade2win.com (T2W). The purpose of the thread was to produce a template by which all traders - regardless of experience, instruments traded, timeframes and brokers etc. - could create a professional trading plan. This document is the result of that thread. It comprises two main sections with a third section that in time will, hopefully, contain examples of real plans created using the template. "

So there you go, (as long an ASF don't mind !), you could enquire on their forum, as to the success of persons using this template & see if they are trading profitably or not. Better still you could make a comment/contribution to the plan itself if you wish! :

I confess, I haven't read the forum yet, but if the general consensus is that the plan is a pile of c... p & it's sending them broke, I can assure you I will re-read all your posts! (well some of them!).


Regards


P.S.
I can also assure you, that having a positive expectancy was always going to be a goal of my trading plan....honest!

PM.

I started with a plan like everyone else SHOULD.

I found----and I'm sure I'm not alone---that whilst great care and endless research into designing a plan to suit each as individuals--there is no guarentee that the plan will succeed.
Many of mine failed--and I equate failure to---in consistant profit. Anyone can have a winning trade or many winning trades,few attain longterm consistant profits.

In the end I decided that I had to KNOW as accurately as possible that whatever theory I was about to place my $$$s into had a well tested and documented Positive expectancy. I could then have something to reference--to determine how I or at least my theories were performing in the NOW.I could do this daily without having to wait lengthy periods to study actual data records.

I have information on--
(1) How many winning trades to expect
(2) How many losing trades to expect
(3) Average length of trade---both winners and losers.
(4) Average return to risk-Reward to Risk Ratio.
(5) Initial method drawdown.
(6) Maximum peak to Valley Drawdown
(7) Maximum string of winners and losers.
(8) I can test and implement best position sizing.
(9) I have maximum and minimu deviations from a mean on most of the above.
and much more.

All can and are refered back to the method/plan to see how its performing.
No guessing its either in parameter or not--for 3.5 yrs its been in the upper quartile of standard deviations to the positive side.

So today those theories and trading plans are in a mechanical format.
I dont refer to them,I just follow the signals Entry,Exit,Stops.

I no longer have a lenghty plan as its implemented---the only factors in the plan are wether to follow the method or not.
The answer to that is simple also--that whilst it is trading within the parameters of the tests then yes---once outside then I'll be out.

Then I will need ANOTHER plan.

Many many traders are discretionary and as such need plans--a,b,c,d and more for various possibilities.
The problem i found and find with these plans is that you wont know until youve made many trades wether your plan (Which changes more often than an act in a broadway play) is consistant enough in return to warrent the time effort and risk?--not to mention the money.

The point I'm making is that a plan alone is not worth the paper its written on.
Its only the result thats important.
Result first then implement plan not the other way around.
If you do this you'll find many plans wont pass go--best to find out now not $x down the track.

If you have consistant profitability you wont need a plan---anymore.
Just as when you can drive a car you dont need the "How to drive a car step by step guide".

Tech,

You've made some valid points in your posts. However, to say that a plan is not worth the paper it is written on is ludicrous. "Fail to plan, plan to fail"
I understand what you mean but just having consistant profitability doesn't give anyone the right to toss the plan away. Your plan is what keeps you mechanical in times of stress that leads to emotional pressures and mistakes! It also stipulates what makes you profitable, and once tested, leading to positive expectancy; that should be your bible.

Cheers
Snake

Perhaps I should phrase it better.

"An unproven plan isnt worth the paper its written on"

To develope a Trading plan--without proving it is actually developing a trading Hypothisis or guess.
To go out and trade a guess or hypothisis is pretty crazy.

Yet 95% do it and fail.

Actually my trading plan template complete with results is right here on this forum under the thread 'Trade only one stock via options' I notice there has been an obvious increase in contracts involving this stock over the last 6 weeks with some very big buyers. I think 350 contracts is somewhat large. I certainly take my hat off and feel privileged to have helped these brave souls. It doesnt take a genius to check option tick history for dates, times entries and the profit and losses involved in this template since all the prices are right there. Anyone who bothers would see that they could have done a lot better than me if they read the comments attached to each trade. By the way that system made 30% last month. Those comments refer to 'my weaknesses' not the systems'

If anyone is interested let me know.

Cheers

Happytrader

tech/a said:

Perhaps I should phrase it better.

"An unproven plan isnt worth the paper its written on"

To develope a Trading plan--without proving it is actually developing a trading Hypothisis or guess.
To go out and trade a guess or hypothisis is pretty crazy.

Yet 95% do it and fail.

Click to expand...

Tech,

Thanks for the clarification.
Basktesting is obviously important. How can this be done without a software program? I'm sure it can be done the way they did it in the 20's etc.

And, what software programs are good for this?

Cheers
Snake

Snake Pliskin said:

Tech,

Thanks for the clarification.
Basktesting is obviously important. How can this be done without a software program? I'm sure it can be done the way they did it in the 20's etc.

And, what software programs are good for this?

Cheers
Snake

Click to expand...

Amibroker- Excellent value ( Think I paid $150US), some say better than Metastock
Metastock- Quite expensive (2k plus I think) and you need tradesim add on too?

Milk Man said:

Amibroker- Excellent value ( Think I paid $150US), some say better than Metastock
Metastock- Quite expensive (2k plus I think) and you need tradesim add on too?

Click to expand...

Thanks Milkman.
Where did you buy it? Do you know where I could view it before buying?

Amibroker has 30 day trial period

www.amibroker.com

Snake.

Ami is your best bet.

Hi Tech/a

I have been following your threads here and at reefcap for some time and I am impressed with your knowledge and willingness to help. I have been dabbling in trading a few shares here and there for many years without much success. But re reading the positive expectancy theme has woken me up a bit. My problem always has been which trade to enter. I had some many plans and so many indicators I did not know which share to buy. And in most cases I bought the wrong one because I had so many choices. Therefore I believe I should narrow my choices to 1,2 or 3 plans. I have never been able to get anywhere near as high as your positive expectancy figure bit could you possible have a look at these stats from Amibroker and make a brief comment. I would like the %winners to be higher, but am i correct in saying that with a Risk-reward rate of 2.48, that for every $1 invested I am expecting a return of $2.48? If so i do like that return.


Statistics
All trades
Initial capital 100000
Ending capital 245006.61
Net Profit 145006.61
Net Profit % 145.01%
Exposure % 53.46%
Net Risk Adjusted Return % 271.25%
Annual Return % 12.05%
Risk Adjusted Return % 22.54%


All trades 540
*Avg. Profit/Loss 268.53
*Avg. Profit/Loss % 2.70%
*Avg. Bars Held 29.04


Winners 236 (43.70 %)
*Total Profit 329392.93
*Avg. Profit 1395.73
*Avg. Profit % 14.00%
*Avg. Bars Held 44.92
*Max. Consecutive 9
*Largest win 12355.69
*# bars in largest win 70


Losers 304 (56.30 %)
*Total Loss -184386.32
*Avg. Loss -606.53
*Avg. Loss % -6.08%
*Avg. Bars Held 16.72
*Max. Consecutive 10
*Largest loss -3048.13
*# bars in largest loss 9


Max. trade drawdown -11631
Max. trade % drawdown -52.26%
Max. system drawdown -30746.1
Max. system % drawdown -19.34%
Recovery Factor 4.72
CAR/MaxDD 0.62
RAR/MaxDD 1.17
Profit Factor 1.79
Payoff Ratio 2.3
Standard Error 8165.18
Risk-Reward Ratio 2.48
Ulcer Index 6.05
Ulcer Performance Index 1.1
Sharpe Ratio of trades 0.39
K-Ratio 0.13

Thanks
Chris

Chris.
I'll be out tonight and under pressure now I will have a good look as soon as I can along with having a geek at Milk Mans.

Your risk return ratio works this way.

If your risk on a trade is 1 then your ratio of return is 2.48 x that risk.
So yes for every $risked $2.48 is the return of course % winners has a bearing.
43% winners with a 2.48 rate of return is acceptable.
The longer term you go the higher your rate of return should be and the less % winners you'll likely see.

More later.