Trading Plan Template

This is a discussion on Trading Plan Template within the Educational Resources forums, part of the Commercial category; I think the template being so long might no attract all traders, but it certainly a good thing, trading plan ...

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Old Sep 3, 2005, 10:28am   #16
 
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I think the template being so long might no attract all traders, but it certainly a good thing, trading plan is not something you can plan over night, it needs time to evolve, and persuing your plan correctly can improve your chances to be a profitable trader.
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Old Sep 3, 2005, 11:33am   #17
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An invaluable guide,thanks, Tim.
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Old Sep 5, 2005, 9:58am   #18
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remember to update it as well

As a newbie this plan saved me drawing up my own from scratch and has forced me to answer all the questions before putting money on the line. I've been testing with demo and real trades, and have realised where I was unrealistic and gone back to the plan to make changes

-TPO.
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Old Sep 9, 2005, 1:37am   #19
 
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I still dont have an established finished trading plan..
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Old Sep 9, 2005, 7:43am   #20
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Quote:
Originally Posted by Tomerep
I still dont have an established finished trading plan..
Tomerep,
If there are aspects of the plan that you are struggling with, then this is as good a place as any to discuss any sticking points. Feel free to post any concerns that you may have. Even if your comment doesn't relate to the template itself but, say, to establishing an effective exit strategy for example, I still recommend that you post here, as there are many members who could help or at least direct you to other forums and/or sites where answers to problems such as this may be found.
Tim.
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Old Jan 17, 2006, 9:26am   #21
 
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Tim, I have gone through the plan and it's a very good document the length notwithstanding. Like very many articles talk about our psyche/emotions et al., I have found it difficult to trade when it's actual money on the line. Silly mistakes have come up quite often while they weren't present in the demo, clearly an indication that something needs to be done on my part. Keep up the good work.
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Old Jan 17, 2006, 10:11am   #22
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Quote:
Originally Posted by tech/a
I personally cant fault the theory.Im where Tim would like to be,and can say that the adaptation of all rules(certaintly in my case) has lead to profit consistantly trading my style (Position trading stocks) over the last 3 yrs.I'm not a fulltime trader and dont wish or have to be.

Tim I have a question.With faultless theory why then are you not profitable?What are the reasons do you think?

Finally something to offer those here.(As Tim asked for some examples in the artical he wrote---(its suprising who maybe reading!)).
My trading methodology is available free to the public and has been/is being traded live(The ASX-------BT Bankers trust Margin list of stocks.) on an Australian Forum---Reefcap.----and is nicely profitable--- well I think it is!
The host is currently undertaking an extensive forum upgrade and will be off line for around 2 weeks I believe.When back I will direct all to the links showing the method---and the results.
Really all of your theory in living practice------well for 3 yrs anyway!
The initial $30,000 starting capital is around $170,000,as of last friday

The method was designed using Metastock and Tradesim and is a long term portfolio based long method.While I have been in the market for the last 3 yrs there are times (Being a long method) that my method wont be---but not yet!.

My apologies that I cannot direct you to the site yet.

Hello.
Been a while since I visited this site back in March.
Now Janurary and the method mentioned above now has a capital holding of $265,000 + $60000 bank.
We developed it now nearly 4 yrs ago and has been trading live for the full time.
Everything is disclosed and there are 100's of pages of discussion on the site.

Here is the link http://lightning.he.net/cgi-bin/suid...ubb=forum;f=74

Its free not selling anything,its a longterm mechanical share trading method.
The original $30000 in starting capital is now $250,000 after paying back the margin lender his $70k

For those looking at a simple way to trade taking minutes a day and your not glued to the screen then this maybe for you.
All formulas and test results as well as weekly updates of all trading shown.

Hope it is of help.
tech
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Old Jan 18, 2006, 1:06am   #23
 
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Quote:
Originally Posted by Tomerep
I have a question, by not exposing more than 5% of your account you mean that if I have a 100k$ account I can have like 5 positions of 1k$ each? that wouldnt move the account anywhere.. I'm serious I dont know what you mean, I've read "come into my trading room" and its says there the same thing, not exposing your account to more than 6%(almost the same), did I get it wrong or do people earn money by only having 6% total of their account exposed(which means that even if they have an imaginary 100% profit of that 6%, their account move only 6% a month).... so how come they get 20% a month avg? thanks for any further answer
Because, as your stocks gain or get stopped out, your exposure frees up. Say your stock movse up significantly so you can move your stop to your entry price. Then if you get stopped out you lose only commission. So you have effectively no exposure, which means you can trade another lot. Dr. Elder's 2%/6% rule allows for this:

3 positions, risking 2% of portfolio each = initial exposure of 6%. As the first position moves into a gain, say... 10% gain, and you lock in profits at say 8% with a stop, you will have free (and infact decreased exposure) so that way you can put out another position. So now you have 4 positions, 1 with a locked in gain and 3 with 2% risk = 6% exposure etc. Anyway, the idea is, as your stuff moves up, you have more positions, but if you're losing, you trade less.

Good theory, in my experience when markets are moving sometimes its a necessary evil to be a little overexposed. But always set your stops and know how much exactly you are exposed, so if you get stopped out of all trades you'll know how much you lose, before you plant your trade.

Anway back on topic -- template is a great start. Alot of ppl don't think about this stuff I sure didn't when I started...
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Old Jan 20, 2006, 1:19pm   #24
 
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great document 4 all traders

TIm,
Is a great document and it will provide invaluable to myself, and many other traders. I have been reading a lot of different articles in the last couple of weeks and rate this as the best and most important "trading edge" that any trader who is or isn't trading could use.
Congrats, and to those whose source you have used.

Ten out of ten


Would recommend one thing though....

As other posts on this board mention, it is quite long. The writing style is great, and keeps the reader interested, but for a beginner like myself there are many questions which I find difficult to answer, and some which I would rather not even think about

From this point of view is there any possibilty of a more concise version, or a version for novice or newbie dealers. Maybe posting some suggestions to some of the more difficult questions might help. I have been searching for a lot of answers to some simple questions, and have found these hard to find on this site, either because some of the basic guides are getting a bit out of date or some of the information posted is too advanced, or reliant on a single review (ie knowledge labs).......
A couple of basic questions which I am still struggling with and the plan has thrown up are

Which is the best data feed to use for US position and day trading?
Which is the best live charting package to use, also including backtesting, measuring and analysing my trades?
Are there any mentor/ news/ info sites which are worth subscribing to?
Am going to buy the JJMurphy book, can anyone recommend good literature to start reading, or viewing?

Will try to post my full answers when finished, more holes than a swiss cheese at the minute, but am working on it. Has anyone else posted their answers yet,couldn't find any?

My thinking is that any posts with people's answers will really help any newbies or even more experienced dealers.

Many thanks looking forwards to the infinity pool in Andulucia, although need to get the Miles Davies cd first to listen to when I'm there. "nice""great""

Thanks

Navalese
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Old Jan 20, 2006, 11:50pm   #25
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I'm interested in the way this thread is.

Great detail and even papers on a "Trading Template".
Developing one is fine but one question.

How do you know that once developed and placed into practice it will be profitable?
Worse still having traded it for a few weeks/months and then finding its not profitable.

I'm not seeing any discussion on WHAT makes a Trading Plan profitable.

Unless you know WHAT there is little cahnce in answering WHY and HOW a Trading Template should be designed.

If anyone had one that was longterm consistantly profitable these questions would be answered and discussion would be less on the "mechanics" of a template and more on the OUTCOME.

There are only 3 ways to increase profitability anyone hazzard a guess?

Tims work is excellent but I'm sure I can put my finger on why he is yet to have consistant profit.

Last edited by tech/a; Jan 20, 2006 at 11:58pm.
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Old Jan 21, 2006, 12:25am   #26
 
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Quote:
Originally Posted by tech/a
I'm interested in the way this thread is.

Great detail and even papers on a "Trading Template".
Developing one is fine but one question.

How do you know that once developed and placed into practice it will be profitable?
Worse still having traded it for a few weeks/months and then finding its not profitable.

I'm not seeing any discussion on WHAT makes a Trading Plan profitable.

Unless you know WHAT there is little cahnce in answering WHY and HOW a Trading Template should be designed.

If anyone had one that was longterm consistantly profitable these questions would be answered and discussion would be less on the "mechanics" of a template and more on the OUTCOME.

There are only 3 ways to increase profitability anyone hazzard a guess?

Tims work is excellent but I'm sure I can put my finger on why he is yet to have consistant profit.
The template asks you to define your setups - the reasons you enter, and exit, and to state the risk/reward and sharpe ratio for each of these. I don't see how you can state the r/r or sharpe ratio if you haven't defined a setup (including back and forward testing in real time).

If your real trading outcome differs from your forward testing, then it's likely that your setup definitions are inadequate (you don't recognize them in real time), or you are not following your plan(because you don't really believe it).

I suspect there is a little bit of a catch-22 involved. People who can sit down and knock out a trading plan may already be successful and probably don't need to do it. Those of us who are still working on it are missing pieces of knowlege that has become second nature to those who are consistently successful.

For me, the value of the template continues to be it's ability to point out the gaps in my knowlege.

JO
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Old Jan 21, 2006, 2:03am   #27
 
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If you were starting a business, I fear if you have no _written_ business plan. Not only would you fail to raise capital, but chances are your business would fail. Trading is the same thing. A plan defines the way you handle your trading. What you do in certain situations, how you go about daily, monthly, operations. Setting goals. You don't necessarily have to have a plan to do all of these things, but having a reference like this will help you spot and avoid potential problems before you experience them.

Quote:
Originally Posted by JumpOff
For me, the value of the template continues to be it's ability to point out the gaps in my knowlege.

JO
Exactly. Having a plan does not necessarily mean you will succeed. However, I would venture to say that your chances of success WITH a plan such as the one Tim made would be better than if you didn't have a plan.

Not only does this plan force you to think about things you might otherwise not think of until you experience a long drawdown (what will you do in the event that you experience drawdown? How much do you ACTUALLY plan on risking per trade? How much exposure will your portfolio have?, etc) Like mentioned above, most seasoned traders have at one point or another thought of all of the questions and come up with answers for those in the plan, but for those who are new to this or who are looking for some guidance this is a great reference. 10/10 in my book.
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Old Jan 21, 2006, 5:19am   #28
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Quote:
Having a plan does not necessarily mean you will succeed. However, I would venture to say that your chances of success WITH a plan such as the one Tim made would be better than if you didn't have a plan
Part "A" Very true.
Part "B" I disagree strongly an untested Plan has no more chance of success than no plan.

There is an important Missing Link.

Doesnt it then make sence that before you trade any plan you make every effort to test that that plan will be profitable.In otherwords you backtest it so that you can define constituents like.

(1) Initial Drawdown
(2) Maximum run of losses.
(3) Best stop loss positioning.
(4) Parcel size allocating relative to Capital.
(5) Expectancy of return on every $$ invested.
(6) Reward to Risk Ratio (This cannot possibly be defined without rigorous testing )It is not sufficient to have a setup which if it plays out would have a positive result! as Tim explains.
(7) Peak to Valley Drawdown.
(8) % Profit

There are many other "Numbers" however the above will determine consistant profitability.And Risk to Ruin,a statistic no one should trade without!
To be as well placed as possible your "Plan" should be Montecarlo tested.
Simply this is like giving 10000 people your trading plan and your initial capital and asking them to go off and trade your plan,then report back with detailed results in X Years.

Yes you need a testing capability and these days we have serious testing software available at very reasonable pricing.
Tradestation (Best for Futures)
Amibroker
Metastock/Tradesim combination (I use this)
Wealthlab
To name a few.

I'm not berating nor deminishing the fantastic effort and the enormous amount of time Tim has devoted to his work,its one of the best I have seen.
However as Tim says he is still to find a longterm consistantly profitable way to trade.
I'm suggesting that this is likely to be the missing link! (The Numbers)

With them you have a blueprints of parameters of success,your plan maps the
path and your Numbers tell you if your on the CORRECT path.
If your tested numbers tell you your longest string of losses in a row is 6 and you now have 10 even while your trading your plan,then----?
If your initial drawdown was 8% over 10000 tests and its now 12%---then?

Anyone can trade a number of winners but very few can trade consistantly profitably and Consistancy is where confidence and longterm profitability lie.

Ponder this.
To launch a shuttle you have a "Plan"
To stop the Launch or diagnose in flight problems you ahave a "Blueprint" of what is expected,anything out of this "expectancy" and alarms go off.If your not quick enough --disaster.
No blueprint---nothing to correlate to for an alarm.

So I'll just add another dimension to Tim's already fantastic effort.

"The Numbers Blueprint".

The missing link.
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Old Jan 21, 2006, 7:24pm   #29
Joined Jun 2005
Quote:
Originally Posted by tech/a
I'm interested in the way this thread is.

Great detail and even papers on a "Trading Template".
Developing one is fine but one question.

How do you know that once developed and placed into practice it will be profitable?
Worse still having traded it for a few weeks/months and then finding its not profitable.

I'm not seeing any discussion on WHAT makes a Trading Plan profitable.

Unless you know WHAT there is little cahnce in answering WHY and HOW a Trading Template should be designed.

If anyone had one that was longterm consistantly profitable these questions would be answered and discussion would be less on the "mechanics" of a template and more on the OUTCOME.

There are only 3 ways to increase profitability anyone hazzard a guess?

Tims work is excellent but I'm sure I can put my finger on why he is yet to have consistant profit.

there is a tight rope from you on 1 side of the grand canyon and the other. on the other side of the rope/canyon is a big pot of gold.

anyone can tell you how to walk across, some even tell you how to develop a plan on how to walk across.

yet few people can actually walk across. why?

keep planning. it wont help you find your guts though!!

if you dont want to walk across, you wont walk across - no matter how much you imagine how much better life will be on the other side. truth is, life isnt that different on the other side. your brain knows this, but you dont.


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Old Jan 21, 2006, 7:30pm   #30
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so....

why do you want to cross?

a plan could help, but if you dont have the real motivation and need, a plan wont help.

if you do have the motivation and need, a plan will help, but it isnt the determining factor.

dont slip on that rope!!
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