Trading Plan – Explanatory Notes
Table of Contents
Trading Plan – Explanatory Notes
Cover Page
Heading
Self explanatory!
**Next trading plan review date
**Insert the date for your next trading plan review. As mentioned, I recommend initially reviewing your plan on a monthly basis, extending to quarterly and then biannually or annually as your consistency and profitability improve.
**Emergency contacts
**Enter contact details for your broker, including account numbers and account names and any other relevant details (NOT PASSWORDS). When something goes wrong and you need to contact your broker immediately, you’ll be happy that you took the time to include these details on the FRONT PAGE of your trading plan. It will also be included on the front page of your Procedures Manual (article 81).
Preface
Aim
Enter a statement describing the aim of the trading plan document. Something like, “This plan is intended to document the general principles and strategies that will allow me to produce income from the ____________ markets. It provides the foundation for the Procedures Manual, which details all information for day to day implementation of this plan.”
**Table of Contents
**Self explanatory!
Introduction
**Mission Statement
**One or two paragraphs briefly outlining:
- Why are you trading?
- What are you trying to achieve?
Here I recommend documenting your “reasons why”, which we discovered when discussing the trading psych prerequisites in article 74.
Goals
Business Goals – document your target win% and WLSR, or your 70/90/100 plan, as discussed in article 73.
Daily Goals – include a note on the importance of process goals rather than outcome goals, during the heat of daily trading battle. Daily goals must not include any outcome or level of performance.
The Trader
Responsibility
A statement of personal responsibility!
For example, “I alone am responsible for all trading outcomes. My success or failure is a result of my own decisions and actions. I therefore trade with a focus on managing risk. My number one goal each day is to ensure I survive to trade another day. Only I can ensure that occurs.”
**Current State
**Successful trading requires an understanding and acceptance of our current strengths and weaknesses, in order to maximise our strengths and overcome or minimise the impact of our weaknesses.
List your current trading strengths and weaknesses, and your plan for managing these.
Health
Successful trading requires a healthy mind and body. It’s essential to manage your personal health and to ensure a healthy work/life balance.
Outline how you will achieve this under three sub-sections:
- Mind
- “I will achieve a healthy mind through the following means:”
- Body
- “I will achieve a healthy body through the following means:”
- Social
- “I will achieve a healthy work/life balance through the following means:”
Further Education
Consistent trading success requires ongoing education and growth.
- Outline your plan for further education.
- What will you currently work on? When? How often?
The Trading Business
**Business Management
**Outline your plans for the following:
- Tax or Business Structure
- Accounting / Business Software
- Advisors (i.e. accountant, bookkeeper etc.)
Capital Management
- What funds have you allocated to your trading venture?
- Where are they located?
- What is your maximum loss limit?
- What is your reinvestment plan?
- What is your plan for further contributions to your account equity, if any?
- What is your plan for withdrawal of funds from your account equity?
**Resource Management
**List the trading resources you will use in your business, under the following headings:
- Broker
- Charting
- Data Providers
- Journals
- Article 89 will discuss the various logs and journals used in our business.
- List them here, along with a sentence describing their purpose:
- Trading Log
- Trading Journal Spreadsheet
- Trades Journal
- Market Structure Journal
- Lessons Learnt Journal
- Motivational Journal
- Economic Calendar
- The economic calendar I use will be kept updated on the YSTC Resources Page, in the section, “Business Management:”
- https://www.ystc.com/resources
- Education Resources
- Additional Tools
- Timers, screen-capture software etc.?
That’s all I list. Your business may require additional resources such as:
- News Sources
- Earnings Calendar
- Market Scan
- Back Testing Software
- Portfolio Management
- Instant Messaging
**Operations Management
**This will simply reference the Procedures Manual. For example:
- The Procedures Manual is to detail daily routines, including all pre-session, during session and post-session routines.
- The Procedures Manual is to detail the recording of trade and trade session stats, within both the Trading Log and Trading Journal Spreadsheet.
- The Procedures Manual is to detail a daily review process, for the purposes of personal growth and development.
**Contingency Management
**Once again, the trading plan will simply reference the Procedures Manual. For example:
- The Procedures Manual is to detail plans for dealing with any contingency which may occur during the trading session.
**Review Process
**When will you conduct reviews? How will you do it?
- Daily
- Market Structure Review
- Setups / Trades Review
- Personal Performance Review
- Weekly
- Trading Performance Review
- Trading Log Review
- Personal Performance Review
- Monthly
- Trading Performance Review
- Journals Review
- Trading Plan Review
- Biannual / Annual
- Goals Review
Reference the Procedures Manual for review procedures.
**Time Management
**Outline the time that you can commit to your trading business and your ongoing education.
- What time can you allocate for trading (including pre and post-session procedures)?
- What time can you allocate for your weekly, monthly and longer reviews?
The Trading Process
Overview
Provide a short overview of your approach to trading. For example:
- I will be trading the YSTC Price Action Strategy, with the following amendments:
- For the current month I am limiting myself to with Volume Accumulation and Trend Setup only, due to…(reason)
Market & Timeframe Selection
- Which markets are you trading? Why?
- Which timeframes are you trading? Why?
Market Analysis I include here a simple reminder of the importance of price action, and then a reference to the Procedures Manual.
For example:
- Market analysis is to be conducted with a primary emphasis on price action. All indicators are a derivate of price and lag, and shall therefore be considered as decision support tools only.
- The Procedures Manual is to contain a step by step process for conducting market analysis.
Roles and Responsibilities Optional section – I don’t use it anymore, but did once with great effect. We’ll talk more about this in article 96 “employ a team of traders”, when discussing challenges and difficulties.
- In order to minimize the negative psychological impact of “being a trader who tries to make a profit“, I will not trade as a trader.
- Instead I will assume the following roles at various times within my trading business:
- Market Analyst,
- Order Entry Clerk,
- Risk Manager,
- Operations Manager,
- Trading Coach, and
- Compliance Officer.
- The Procedures Manual is to assign an appropriate role to each procedural step.
If using this, then you’ll need to update the procedures manual to assign the appropriate role to each procedural step. I also recommend including a short job-description for each role within the trading plan.
Risk and Money Management
- Risk management – every trade entered in the market MUST have an attached stop loss order.
- Money management – include notes as discussed in article 71.
Psychology
For me, this section simply references the Procedures Manual:
- The Procedures Manual is to outline routines designed to manage emotions and trade with focus, consistency and discipline.
- This will include a plan for relaxation, a plan for clearing my mind and regaining focus following a trade, and a plan for recovery following any negative occurrence such as a significant error or loss, as detailed in article 75.
Trade StrategyNOTE: This section may be duplicated within your trading plan, once per strategy, to cater for those of you who trade multiple strategies.
Describe your trading strategy. This is a chance for you to summaries the YSTC Price Action Trader strategy.
It may be as simple as referring to the summaries I’ve provided in article 100.
However, great benefit will be gained through putting all you’ve read into your own summary words and diagrams.
You may wish to do so under several headings:
- Principles
- Screen Setup
- Position Sizing
- Analysis
- Setups – Description & Diagram
- Trade Entry
- Trade Management and Exit
Further Development List areas of focus for further development of yourself and your trading strategy.
Annexes
Add anything else you wish to add!!!