Trading Plans

[coyotte]

Thought I'd start a new thread on "Trading Plans"
The post below was posted in reply to a question in Tec/a thread and is really not suitable there


Wow -- if you expect to make a profit in your 1st year , you are in for a dose of reality - you will find its not the plan you have to sort out but yourself - wonderfull learning oppurtinity this trading , to drag out your short comings!


first off KISS
Trade ONE stock only at a time --- after a while you will get to Know it, feel it everyday movements ahead of time -- you sort of become one with it --- if you have to many stocks in a open position or on watchlist you will not be able to do this !


Thought the 3 plans Leon Wilson outlined where not a bad start -- he carries on further in "the next step"

But all i have done over the past 10years is keep a small watch list of Medium Cap stocks in a consolidation phase --- which do not have a great amount of previouse highs (to much resistance if they go up) -- have a far amount of daily vol (don,t get caught when you want to sell)
Wilson goes into detail in points i am outling

1: check your watch list DAILY
2: Check OBV -- is accumilation starting -- if so seperate this stock/s into another watch list
3: We now use the 2nd watch list
4: Look out for patterns ( triangles etc) -- increasing Vol
5: NOW comes the important bit --- If a stock starts to breakout(on Vol) --use Count Back Lines Before a Entery -- this will also give you your S/T stop
4: If it continues UP -- beaware of the points that S/T traders have set
5: If it continues to rise past these points then you probably have a new trend in place -- GMMAs now take over -- adjust your STOP on C/B & ATR
6: Generally there will be a S/T "pull-back" before the trend gets underway--
cleared out the S/T traders
7: Now just hitch a ride on the stock (adj Stop ) -- watch daily as this stock
hits important points eg: 21ma , trend lines, ADX , price compression ---
go back -what happened before ? --- try and get a feel for this stock

8: Whilst this is going on keep following your watchlists ,so as to begin to understand these stocks --- when the position you have is safely underway --bring in another one

Get a copy of the bible Edwards - " The Technical Anaysis of Stock Treads "
7 th Edit --- no plans -- Just T/A @ ITS BEST

But none of the above is of any use unless you apply stops & money managment !

Guppy's Trend Trading gives a detailed Plan (monthly Trade) -- allthough Shares mag is not around , the same principal applies with Mags,newspapers etc


Cheers

 

[happytrader]

This may sound very simplistic but hey if it works who cares.

After excellent research, isolate the best candidates
Trade one stock or one pattern.
Optimise entry time
Optimise exit time
Know and have realistic profit targets

Find a trading partner to handle exits.
Its a fact that when most people aren't being observed or do not have to answer to a higher authority they cheat.

Cheers
Happyttrader

 

[lesm]

In developing a trading plan, some of the aspects that you may wish to consider include:

1. What are your objectives
2. How much capital will you be using and be prepared to put at risk
3. Which market/s and instruments are you considering trading
4. Will you be trading long/short/medium/-term - trading timeframe
5. Risk management approach
6. Money management approach
7. Trading methodology
8. Testing approach
8. Plan monitoring and review

The above are some initial points and can be added to or expanded in more detail as required. Taking the time to research and develop a workable plan is worth the effort in the long term.

The plan itself does not need to be overly complicated, but should be at a level to enable you to determine whether you are meeting your objectives or not o ridentify points of weakness.

It's up to each individual to determine whether they wish to use a FA or TA based approach or to use a hybrid based approach.

Two URLs are provided below that may be of interest. Although the context of the strategy is related to daytrading and the system targetted at the YM, the concepts can be applied in a wider context.

http://www.trade2win.com/knowledge/articles/general articles/developing-a-trading-strategy

http://www.online-futurestrading.com/example_trading_system.htm

 

[Nick Radge]

1. Find something that works (i.e. create a method with a positive expectancy)

2. Validate it (i.e test or paper trade until you know what to expect)

3. Do it.

 

[yogi-in-oz]

Re: Trading Plan ..... wozzat???



Hi folks,

There's a freebie download, that may help you
in developing your own trading plan, at:

Click here for Trading Plan ... wozzat??? .....


happy days

yogi

 

[Porper]

Re: Trading Plan ..... wozzat???

Hi folks,

There's a freebie download, that may help you
in developing your own trading plan, at:

Click here for Trading Plan ... wozzat??? .....


happy days

yogi

Good article Yogi.I am not a fan of all this Astrology stuff, but you obviously know about trading a plan and the emotional challenge that we all have from time to time.

I didn't know you were a famous author either

 

[coyotte]

The Question that this was an answer to was on the theme that " have read several books & searched the web for a trading plan with out success "


Have to agree with you Yogi

Indicators can really bugger things up
I change the term from 33 days , 21d , 14d as the price starts to get toppy
I only use ADX , TMF & GMMA for trending stocks with OBV for stops
The only reliable use I have for them is divergences

Have far more success with price action -- compression ,patterns, breakouts, trend lines, volume -- watching the price action in last 30 min of trade relitive to that day can be very reveiling --- can set U up for a overnight Day Trade
Apart from the " US President Cycle" i have never considered Time , will have to follow it up


Cheers

 

[happytrader]

I know this thread is about trading plans but I thought it would be useful to cover the mental aspects of the trading character.

Once you have found a trading plan that is profitable take notice of how you feel as you trade it. Ask yourself 'does this feel right' 'Am I comfortable with it' 'Does this feel like me' 'Do I feel safe?' How does a loss make me feel? Do I try to put it off and avoid it?

Enter these thoughts and feelings into a journal and then ask yourself 'where have I ever felt this same feeling before?' Generally if avoiding discomfort and pain has been a lifelong habit, is it really a surprise when we respond the very same way when faced with a trading loss?

Obviously our behaviours served some protective purpose in the past when we were young and vulnerable, but are they useful to us now?

By keeping a journal we become aware of how we think and act and the characters we have been playing.

To develop a character in line with being a profitable trader (or any other character for that matter) we need to instill supportive beliefs and act them out until they become automated.

Profitable traders are goal oriented, insightful, decisive and protective just like good parents, good leaders and good bosses.

BTW if you doubt the importance of safety you might like to ask this question of yourself and others, 'When you were little, who did you feel safe with?'
The answer might surprise you.

Cheers
Happytrader

 

[yogi-in-oz]

Re: Trading Plan ..... wozzat???

Good article Yogi.I am not a fan of all this Astrology stuff, but you obviously know about trading a plan and the emotional challenge that we all have from time to time.

Hi Porper,

..... hope you downloaded the ebook, from the
link above the article ... as, that's where you will
find the trading plan stuff .....

happy days

yogi

 

[yogi-in-oz]

I know this thread is about trading plans but I thought it would be useful to cover the mental aspects of the trading character.

Once you have found a trading plan that is profitable take notice of how you feel as you trade it. Ask yourself 'does this feel right' 'Am I comfortable with it' 'Does this feel like me' 'Do I feel safe?' How does a loss make me feel? Do I try to put it off and avoid it?

Enter these thoughts and feelings into a journal and then ask yourself 'where have I ever felt this same feeling before?' Generally if avoiding discomfort and pain has been a lifelong habit, is it really a surprise when we respond the very same way when faced with a trading loss?

Obviously our behaviours served some protective purpose in the past when we were young and vulnerable, but are they useful to us now?

By keeping a journal we become aware of how we think and act and the characters we have been playing.

To develop a character in line with being a profitable trader (or any other character for that matter) we need to instill supportive beliefs and act them out until they become automated.

Profitable traders are goal oriented, insightful, decisive and protective just like good parents, good leaders and good bosses.

BTW if you doubt the importance of safety you might like to ask this question of yourself and others, 'When you were little, who did you feel safe with?'
The answer might surprise you.

Cheers
Happytrader

Good post Happytrader,

..... keeping a trading journal is really just getting to know
ourselves better, both as individuals and traders.

After a while, it should become quite apparent, whether we
are suited to trading or not ..... indeed, there's many people
that should NEVER be trading at all, as their God-gifted
talents lie in other fields ... and they would be far happier
and more successful in another field of endeavour.

That said, the self-talk that you have described, is part of
evaluating our own intuition, as traders.

Sixth sense, insightfulness, intuition ... call it what you will,
everybody has this ability, but it works better in different
fields of our lives, at different times ..... and sometimes,
that is why, we "just know" when a trade is right or wrong.

In our trading plan, this is part of the concept, that ...:

... "choosing to be out of a market, is a position !~!"

Actually, you have opened another can of worms here,
as astrotraders have other advantages over other traders,
in a personal sense.

First, they can use vocational astrology to find their
true calling ..... it's no good being in the markets, if
we continue to lose money ..... sadly, most traders
find out, the hard way.

Secondly, on a personal level, good astrotraders will have
a good idea as to when to take a break from the markets,
as no matter how good our analysis may be, there are
times, when we SHOULD NOT BE TRADING, at all.

Fortunately, if we are aware of these periods, we can either
take a break or compensate for our short-comings, by
consulting with other trusted traders, before making
a trade.

..... all that may sound far-fetched, but just consider the
many failures and the attrition rate of traders and you
will probably conclude, that there HAS to be a BETTER
APPROACH to the cyclical changes, in our trading lives .....

..... yes???

happy days

yogi

 

[barney]

Thought I'd start a new thread on "Trading Plans"
The post below was posted in reply to a question in Tec/a thread and is really not suitable there


Wow -- if you expect to make a profit in your 1st year , you are in for a dose of reality - you will find its not the plan you have to sort out but yourself - wonderfull learning oppurtinity this trading , to drag out your short comings!


first off KISS
Trade ONE stock only at a time --- after a while you will get to Know it, feel it everyday movements ahead of time -- you sort of become one with it --- if you have to many stocks in a open position or on watchlist you will not be able to do this !


Thought the 3 plans Leon Wilson outlined where not a bad start -- he carries on further in "the next step"

But all i have done over the past 10years is keep a small watch list of Medium Cap stocks in a consolidation phase --- which do not have a great amount of previouse highs (to much resistance if they go up) -- have a far amount of daily vol (don,t get caught when you want to sell)
Wilson goes into detail in points i am outling

1: check your watch list DAILY
2: Check OBV -- is accumilation starting -- if so seperate this stock/s into another watch list
3: We now use the 2nd watch list
4: Look out for patterns ( triangles etc) -- increasing Vol
5: NOW comes the important bit --- If a stock starts to breakout(on Vol) --use Count Back Lines Before a Entery -- this will also give you your S/T stop
4: If it continues UP -- beaware of the points that S/T traders have set
5: If it continues to rise past these points then you probably have a new trend in place -- GMMAs now take over -- adjust your STOP on C/B & ATR
6: Generally there will be a S/T "pull-back" before the trend gets underway--
cleared out the S/T traders
7: Now just hitch a ride on the stock (adj Stop ) -- watch daily as this stock
hits important points eg: 21ma , trend lines, ADX , price compression ---
go back -what happened before ? --- try and get a feel for this stock

8: Whilst this is going on keep following your watchlists ,so as to begin to understand these stocks --- when the position you have is safely underway --bring in another one

Get a copy of the bible Edwards - " The Technical Anaysis of Stock Treads "
7 th Edit --- no plans -- Just T/A @ ITS BEST

But none of the above is of any use unless you apply stops & money managment !

Guppy's Trend Trading gives a detailed Plan (monthly Trade) -- allthough Shares mag is not around , the same principal applies with Mags,newspapers etc


Cheers

Hi lads, Just thought I would bring these posts "back in to play"....Too much good info (specially for those needing to learn like myself) here to leave it where nobody finds it.........I'll be reading from start to finish a few times.........

 

[tech/a]

1. Find something that works (i.e. create a method with a positive expectancy)

2. Validate it (i.e test or paper trade until you know what to expect)

3. Do it.

There is absolutely no point in creating ANY plan if at the end all you have is a set of rules which you believe will in theory profit.

Unless you can and have tested it extensively and prove that you have a positive expectancy------ALL you have is a Trading hypothesis.

Not worth the paper its written on.

The best result most people can expect is to find in a few months/or WORSE---Years that their PLAN doest perform!!

 

[nizar]

Get a copy of the bible Edwards - " The Technical Anaysis of Stock Treads "
7 th Edit --- no plans -- Just T/A @ ITS BEST

Great post coyotte, some good advice there.

I have already ordered a copy of Edwards and Magee, sitting on my shelf, will be reading it in the following weeks, months. Im busy these days and i dont wanna rush it, i figured the market will still be here 2mrw, next week, next year.

 

[barney]

There is absolutely no point in creating ANY plan if at the end all you have is a set of rules which you believe will in theory profit.

Unless you can and have tested it extensively and prove that you have a positive expectancy------ALL you have is a Trading hypothesis.

Not worth the paper its written on.

The best result most people can expect is to find in a few months/or WORSE---Years that their PLAN doest perform!!

Quote:
Originally Posted by Nick Radge
1. Find something that works (i.e. create a method with a positive expectancy)

2. Validate it (i.e test or paper trade until you know what to expect)

3. Do it.


Hi tech, So bottom line for a "learner" ..............is make sure we have No.2 above sorted otherwise we are just wasting our time (not to mention money) fiddling around with No.1 and No. 3 ................Good advice, Thanks.

 

[tech/a]

Barney the KEY is Number one.

99% of traders who develope plans. End up with a plan that the THINK could work and at times it sure will work,however in the long run consistency isnt there and traders end up fiddling endlessly.

If you have the ability to test methods to such a degree that you would have confidence trading $200,000 ( even if you dont have it) then your well on your way.

Paper trading isnt the answer.You need to do 1000s of trades to collect the data you need for your trading Blueprint.Paper trading would take you years.

To me its worth the investment in good software and the time and effort to become proficient in its use.

Once you spend years in frustration----- youll know what I mean.

If you only intend punting then fine go ahead and punt!

 

[barney]

Barney the KEY is Number one.

99% of traders who develope plans. End up with a plan that the THINK could work and at times it sure will work,however in the long run consistency isnt there and traders end up fiddling endlessly.

If you have the ability to test methods to such a degree that you would have confidence trading $200,000 ( even if you dont have it) then your well on your way.

Paper trading isnt the answer.You need to do 1000s of trades to collect the data you need for your trading Blueprint.Paper trading would take you years.

To me its worth the investment in good software and the time and effort to become proficient in its use.

Once you spend years in frustration----- youll know what I mean.

If you only intend punting then fine go ahead and punt!

Point well taken, Thanks Tech..........Man I am frustrated already and I'm not long into this (Ive already had my "punt"....so no more of that........quick way to the poor house!!) OK.... can you recommend software that would be a suitable starter ?? Acually, let me search the forum cause I bet there are plenty of threads around here and I'll report back and then you can advise if I'm on the right track. Cheers.

 

[tech/a]

I'll just comment on why I went the Technical track.

Firstly there is nothing wrong with fundamentals.If I could test them the way I can technical methods Id certainly do that and incorporate that in any trading methodology.
Even so there are corporations which reseach fundumentals inside and out (Superfunds) some perform others dont.

I trade on Margin and part of the reason I do this is that Margin lenders wont allow many stocks to be traded on margin.
They have a universe of stocks which I figure they have had a team of people quantify as being sound enough to have as a margin stock.---They have doe a lot of work for me. The BT list is roughly the ASX 300

Technically I can devise all sorts of theories and test them over multiple years with software in Minutes (Mind you coding the theory and finalising the testing can take weeks and months).

I use a combination of Metastock and Tradesim Enterprise Edition.
Thats over $2500 in software.

Amibroker does as much if not more (In the right hands,although no Montecarlo analysis YET).and is much cheaper around $350 I think.

Both M/S and Ami have some great contibutors and help is always easily found.

 

[hardmoney]

I recently switched from Metastock 7.2 to Amibroker.I found the change over to be somewhat of a challenge, but well worth the effort.AB is much more feature rich than MS, however I found the documentation to be somewhat terse and sketchy.

It took me about two weeks worth of evenings and early mornings to get moving with its progamming language and to port over my MS trading systems.

Now that is done, I am a convert to AmiBroker.Freely avaliable 3rd party stuff like the IO systems plugin and Monte Carlo excel spreadsheets make this $200 packgage an absolute bargin for systems traders.It does true portfolio backtesting and I can knock up a trading system and get meaningfull preliminary results pretty quickly.


Rgds,

HM

 

[Phantom_Trader]

Is anyone familiar with JBL Risk Manager? Found it at www.paritech.com.au/AU/products/software/jbl.asp

Tried the other one called TradeRisk but found it only told me when I was in trouble after the event and was too complicated. This JBL program actually calculates your trade size, stop loss and while trading, your profit stop and much more. I have always been told the importance of Money & Risk Management but could never get my teeth around it or the books that try and explain make it more complicated. I need something that controls my emotions and this seems to be the one. Its $99 has anyone got one. Is there anything else out there that does what jbl does? My mates seems to rave about it.

 

[Phantom_Trader]

Is anyone familiar with JBL Risk Manager? Found it at www.paritech.com.au/AU/products/software/jbl.asp

Trialled the other one called TradeRisk but found it only told me when I was in trouble after the event and was too complicated. This JBL program actually calculates your trade size, stop loss and while in the trade, calculates your profit stop based on % retracement and volatilty using ATR and much more. I have always been told the importance of Money & Risk Management but could never get my teeth around it or the books that try and explain make it more complicated. I need something that controls my emotions while trading and this seems to be the one. Its $99 has anyone got one. Is there anything else out there that does what jbl does? My mates seems to rave about it.