Trading Plan Template

This is a discussion on Trading Plan Template within the Educational Resources forums, part of the Commercial category; Originally Posted by dbphoenix Yes, I have a well-structured plan and it helps my trading. --Db Good to see that ...

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Old Jan 22, 2006, 11:42am   #31
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Originally Posted by dbphoenix
Yes, I have a well-structured plan and it helps my trading.
--Db

Good to see that you're still around dbp - you've been keeping a very low profile of late.

"As for Tim's work, he has yet, unfortunately, to open a journal." I'm sorry to disappoint on this front but, until I have a better idea of what I'm about and where I'm going trading wise, I fear that a journal would be counter productive. This is because it would lack two of the things that it is supposed to achieve: focus and direction.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

On a general note. . .
Thanks for the feedback one and all. While I'm a sucker for praise, I also welcome the constructive criticism, as this is the only way the template can be improved. However, when this will be, I really can't say. Perhaps when I'm casually, fearlessly, strolling across the tightrope - to borrow charliechan's delightfully visual analogy - will be an appropriate time to revise and update it. So folks, don't hold your breath!
Tim.
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Old Jan 22, 2006, 4:40pm   #32
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if you do have the motivation and need, a plan will help, but it isnt the determining factor.
What do you consider to be the most predominant determining factor Charlie ?

Is there one factor for you that stands out above all else ?
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Old Jan 22, 2006, 6:03pm   #33
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Originally Posted by Chicken Curry
What do you consider to be the most predominant determining factor Charlie ?

Is there one factor for you that stands out above all else ?
no, not 1, but quite a few things. i wont mention them all here, as the likely hood is that posts and threads get deleted often round here so i would only be wasting my time.

being able to pull the trigger would be 1 though - overcoming your bias and emotion - your opinion of what you think the market will do v what the plan says to do.

a poor plan well executed is more desirable than a great plan poorly executed. an old management/marketing saying with some truth (for once).

also, knowing when to go against the plan. rules are for breaking.

any plan or mechanical system focuses the attention to a particular condition which inturn switches off the awareness to other information the market is saying - where there could be more profit. perhaps this is the later stages of development

these 2 points contradict of course.

flexibility is key. know when to stick to your plan, but also when to change it. no plan works for ever.

does the trader know (planned) for when this is?

im not trying to say there is no place for a plan at all. there is. i m just saying it is one part of the issue.

we tend to go from developing comprehensive trading plans for the whole business, to daily plans for the markets we trade, then to no plan - just a set of guidelines we intuitively know and understand. they become part of us.

there is a lot of stuff on www.elitetrader.com about goal setting, plans etc.

dpb - there are no way near 50k members here. many of them are created by the owners to make the place look more active and bigger than it is - i am sure. this is probably done to increase advertising revenue. when we look at who is advertising here though v 'the other site', it becomes clear where the big names in the industry want their names to be seen.
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Old Jan 23, 2006, 7:01am   #34
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If you never stop rationalising your inability to begin, then you'll never begin.
A very pertinent comment.
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Old Jan 23, 2006, 11:25pm   #35
 
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on the tightrope

Hi all,

Had my first decent day trading today. Am using a free charting program called Medved Quote tracker, seems OK for my needs at the moment is available on
http://www.quotetracker.com/
Have taken on everyones comments thanks.

Charliechan, thanks for the site, a post there led me to
http://www2.barchart.com
Another free site which seems pretty useful. Loads of different types of analysis of shares. (Think is only 4 US shares though )
Have used Tim's template for a good sound basis, and am working on filling my gaps in knowledge. Helped whilst on the tightrope.
Was good to live trade with charts, and items that I have read on this site started to make some sense at last..
Still will be down overall though on all my trades so my monthly aim is to get back to square one. Have realised shares are not get rich quick unless you are willing 2 put in some time and work in... (think u r more likely 2 lose)


Navalese
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Old Jan 24, 2006, 2:01am   #36
 
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Tim,

Forgive me if I speak bluntly and and at tedious length.

One trouble a person has when (s)he engages in the market is the boundless abstraction it presents. I'm not referring to the "random" vagaries of price action, as that is a problem to tackle later - indeed delving into the "why" behind price action is probably the greatest joy trading can offer - but rather the fact that the trader must impose some boundaries and rules onto this great heaving mass that represents a small group of humans taking money from a larger one. This imposition of structure is the "boring" bit that we all have to go through first before we can be allowed to tackle the sublime crossword on a mentally even footing with the predators.

There are, literally, endless ways of dipping your beloved metatarsal into this foreboding soup. You can choose intensely to scalp size for an hour a day with the intuitive feel (which must be earned through hour upon hour of gruelling experience that eventually becomes stamped into the subconscious) of an air traffic controller who regularly juggles 15 angry 747s safely onto an icy runway, or you can perhaps trade with supreme objective aggression once a year with 10% of your capital, but only when everything perfectly lines up with a vast number of esoteric rigorously backtested criteria.

The point is that you have to decide where you fit in and that is, I think, the purpose of your excellent template. It is clear that you have grasped this perennial traders' problem. So don't worry so much about how the market works for the moment. The important thing is to decide on an approach first and then conduct your testing around it. The price action which is relevant to your chosen approach will then slowly reveal itself, because you will be comfortable, in your element and downright eager to watch, test, hypothesize and refine your plan till the heifers come home. Because you have chosen a comfortable niche the idea is you can remain objective and unlock all your ability to concentrate intensely, but also cooly, almost passively. This is simply not possible when you're flitting around from instrument to system to time frame. Set some boundaries, then focus freely. Of course there is a paradox here: how can you possibly decide where you fit in without trying a number of approaches? Well, that's where section 5 of your template comes in, as db mentions. He's not trying to be antagonistic or unhelpful, I think, rather saying that only you can answer the questions within it. Question yourself mercilessly based on previous experience. If you don't know the answers to some then at least choose some that don't seem to contradict the grain of your personality and knowledge. At least then you will have a framework in which you can progress to the interesting stuff, even if your initial choices prove ultimately to be a little off message.

For instance, how patient are you? Do you like making quick, repetitive decisions or do you like to sit back, diligently sift data and only strike when the iron is suitably hot for tackling linen? Do you want results in the next minute, the next hour, the next day or the next few months? Perhaps you can entertain a combination of two or more depending on what the market has presented.

Do you lust after a rollercoaster, something more sedate, or something in between?

e.g USD/JPY / a utility / the Dow

How much information can you process at once? Is price action alone enough (?Forex), or would you like some confirmation such as volume, breadth, tick, put/call, sectors, lev 2 etc.?

Do you want your product to be very or less vulnerable to news? (single stocks / forex / indices).

What about leverage, liquidity and popularity? Futures / fat stocks/ ickle stocks , for instance.

Anyway, I witter inaccurately, but I hope I'm making some sense. For each and every niche, there will be a corresponding and sensible way of managing your risk and maximising your reward.

Answering this sort of question, which I will patronisingly emphasize yet again as being DEEPLY PERSONAL, will narrow your chosen field of battle down considerably.

*take this with a pile of salt* - If you subscribe to the view that all price action is fractal (there is no such ting as noise) then in some ways it really doesn't matter which time frame you choose, as long as your money management is consistent with the R:R available. Have a look at a daily chart and pretend it is a one minute chart. They look much the same really. So, all you have to do is decide where you fit in and then scale your positions accordingly. e.g I can't handle waiting days with a 50 point stop, a 200 point floating target and a little 1 lot on the line. I'd rather find out much sooner what my fate is, so I'll trade 10 lots with a 5 point stop and a 20 point target, repeatedly. Ignoring scaling in/out etc. Gross oversimplification I know. but I hope my message is clear. You will know where you feel (un)comfortable.

Don't you just hate it when you know what you're trying to say but can't put it into words?

Anyway, I had a crack at the first question. Your template is demanding and seeks savage self-questioning, as it should do. I have probably done it a disservice by answering in a facile manner.

I want to be a trader because -

I value autonomy extremely highly
I am an atrocious team player, especially when it involves following company protocol with which I am uncomfortable
I am introspective and enjoy working abstract problems out by myself
I am an INTP personality
I relish a challenge, especially one that is palpably different from more conventional forms of work. Every day can be wildly different on the surface, yet the underyling forces are always the same. This is the sort of delicious paradox that sets my etiolated brain racing.
I don't require public recognition of my capabilities
I relish the notion of being paid purely to think and act decisively
It is absurdly easy to keep score of my performance in a concrete, binary way (P/L)
I admire the abstract, intangible nature of the business. Virtually no overheads, no physical raw materials or end product, no pollution, no employees, no hard sell, no dependence on demand for my product, no creative/artistic torture as, say, a writer or painter might suffer, no travel, no meetings etc.
There is immense scope for career and skill development

My primary objective is to provide an income sufficient to support myself, with the potential to increase this with no fixed boundaries as my skill increases (as opposed to an income that increases proportionally with the hours I work and/or my place on a conventional career ladder)

These objectives are important to me because I am not content with spending my life on a treadmill. I have little interest in creating or maintaining a certain status level in the eyes of others. I value freedom (although ... "Seek freedom and become captive of your desires. Seek discipline and find your liberty." --Frank Herbert)

I believe I can achieve these objectives because I am diligent, disciplined, creative, intuitive, empathetic and capable of rigorous analytical thought. Okay I heinously flatter myself, but beware the self-limiting belief!

---

All well and good. But personal, rather boring/irrelevant to someone else and doesn't tell me how I should be positioning myself in the market. I won't bore you with my answers to the other subsections 5.x, especially as some are "after the fact", as it were. But fear not, answer the sections you haven't completed yourself, honestly, and I think you will be surprised at what you learn. Just dive in and do it. The next stage will become clearer only when you have sorted out your initial niche as it relates, for instance, to your personality and risk tolerance.

Then you can worry about what those nasty big boys with their special smart currency are up to.

Please tell me to insert a sock in any orifice you choose if all this wittering is as useless and patronising as I suspect it may be. As usual I have used 500 words where 50 would have sufficed. And thanks once again for your template - it has been a joy to revisit and thanks to it I have discovered more than the odd patch in need of darning in my methodology, that's for sure.

Start a journal please, Tim, whether I public or not (I'd recommend private myself as there will doubtless be vultures eager to piggyback your resultant edge/method if they can) and don't whatever you do feel that you need do so in a certain way. The questions are Waterford clear and the answers, at least to the observer, cannot be right or wrong.

I am as guilty as anyone of flitting from product to system to timeframe to approach in my career and I can state with no shame that after a cornucopia of losses things only turned around when I concentrated my efforts in a small, psychologically comfortable area and damn well stuck to it. The techniques naturally follow.

Best of luck mate.
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Old Jan 24, 2006, 3:28am   #37
 
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Quote:
Originally Posted by frugi
Tim,

Forgive me if I speak bluntly and and at tedious length.
<< >>

Best of luck mate.
Good post Frugi. Worth reading and may explain part of why it takes people some years to find their niche and trade successfully.
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Old Jan 24, 2006, 3:03pm   #38
 
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Great post frugi.

Now you see them, now you don't... Where's all the posts gone?

Anyway, reading this thread reminds me of one of Koppel & Abell's anecdotes regarding a woman who consulted a family counsellor regarding her marital problems.

"Do you have grounds?" asked the therapist. "Yes," replied the woman, "Two and a half acres." "No," he replied, "I mean, do you have a grudge?". "A grudge?" answered the woman. "No, but we have a carport." Growing more frustrated the counsellor shot back, "Does he beat you up?".

"Beat me up?" came the response, "Hell no! I'm up an hour earlier than that old dog every morning!".

"Mrs. Brown!!" exclaimed the consellor, "You are seeking help from me because of of a problem you are having with your husband. For God's sake what is his problem?".

The woman hesitated for a moment and then unloaded, "The man just doesn't know how to communicate!".


Anecdotal gibberish aside..... I agree with chuckiechans sentiments re: the tightrope. However, it is undoubtedly true that "state of mind, focus and personal belief systems" are the deciding factors in whether you hack it and not trading systems or methods. I believe that what Frugi and db are eluding to is that it isn't about developing a plan to teach you the mechanics of crossing the tight rope, it's about developing a plan that examines whether you can really be arsed and if you can, allows you to develop the confidence, beliefs and mind set necessary for crossing. Whether you then cross a tightrope or walk on hot coals or go white water rafting is irrelevant.

This post will self destruct in 5 minutes......
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Old Jan 24, 2006, 3:19pm   #39
 
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I love jokes like that.

After my wordy flailing, the elegant, concise paragraph after the joke finally grabs the distinction by its proverbials. Certainly sums up what I was alluding to. I only wish I'd written it. Cheers sandpiper.
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Old Jan 24, 2006, 5:32pm   #40
 
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Originally Posted by dbphoenix
Since, on the whole, they amounted to clutter, I deleted them. Hope you weren't too discombobulated.

--Db
I was. But I'm sure I'll recover. Thought perhaps you'd absquatulated for some reason...
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Old Jan 24, 2006, 6:35pm   #41
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Deleted Posts

In light od Dbp's decision to delete his posts, I have followed suit as most of mine were in response to his, if you catch my drift.

Thanks for your posts Frugi and Sandpiper; I take note of your comments and welcome the humour.

Tim.
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Old Jan 24, 2006, 6:39pm   #42
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FWIW I used Tim's template. It took me 3 months to get version 1 done including all the research. For me the most important part was "knowing myself" which can be easily glossed over, because it's not the techie bit (if techie bits turn you on that is). In this area I went a great deal further than the template prescribes, if you like.

If I'm honest, it (the plan) was a pain in the ass to do, but was something that was absolutely necessary. For me what came out was:

1) What I need to do on the "me" side (still working on that one)
2) Identified trading training requirements (since undertaken)
3) Specific practical actions required to ensure that I have the practical wherewithal to trade to hand (almost done!)

Once you've been through the whole process once and hve a complete document, you are then in a position to condense the whole thing down to a very simple document on 1 side of A4 (A0 if you like posters!) - and I don't mean reduce the font size so that it fits either! Once you have done all of that, then you are some of the way there. My own view of course!
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Old Jan 24, 2006, 6:49pm   #43
 
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Originally Posted by jimmy1jag
FWIW I used Tim's template. It took me 3 months to get version 1 done including all the research. For me the most important part was "knowing myself" which can be easily glossed over, because it's not the techie bit (if techie bits turn you on that is). In this area I went a great deal further than the template prescribes, if you like.

If I'm honest, it (the plan) was a pain in the ass to do, but was something that was absolutely necessary. For me what came out was:

1) What I need to do on the "me" side (still working on that one)
2) Identified trading training requirements (since undertaken)
3) Specific practical actions required to ensure that I have the practical wherewithal to trade to hand (almost done!)

Once you've been through the whole process once and hve a complete document, you are then in a position to condense the whole thing down to a very simple document on 1 side of A4 (A0 if you like posters!) - and I don't mean reduce the font size so that it fits either! Once you have done all of that, then you are some of the way there. My own view of course!

Good for you, Jimmy. Sounds like you're well on the road to becoming a winner.

--Db
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Old Feb 20, 2006, 11:24pm   #44
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Tim has done a great job, I personally use his template. I commited myself to write out each and every of his questions to develop and fine tune My Trading Plan.

If you are a beginner than you need the written-commitment ie 'Learning Plan' above it and to get yourself condition to the markets and overcome the emotions what the markets put you through you need the 'Psychology Plan' too ie to know yourself as a trader. So make sure to include these factors too.

Now put yourself through the live one contract trading. Learn more about your set system and when you become an extention to execute your system consistently and timely than consider Phase I of your trading career set. And you can't achieve this without keeping a Trading Journal And Realistic Targets & Rewards.

One tip: Not only read your plan & methodology but study it too and keep it current do not ignore it.

Remember: Markets only rewards Consistence actions AND Consistency breeds Confidence and Control.

Many thanks to Tim for making & collating this Template.
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Old Feb 21, 2006, 11:29am   #45
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Originally Posted by jimmy1jag
For me the most important part was "knowing myself" which can be easily glossed over, because it's not the techie bit (if techie bits turn you on that is).
I posted the text below on a different thread but thought someone might be interested to have look at the process I personally went through:


This seems like a reasonable place to post something about knowing yourself.- a bit off topic (US day trading) I know but relevant here. In addition to all the advice posted above, you need to know yourself. If you don't know yourself, then you can't take steps to improve. To get to know and understand myself I used and adapted an exercise when I was defining my trading plan last year. I originally did this exercise a while back in completely different circumstances. I dug it out and adapted it for trding purposes.

Below are the questions I asked myself (which I then answered in written form). This takes a while to complete, but if you've never worked on yourself before is well worth the effort.

Once you've completed the self inventory, you then need to identify you key weaknesses so that you can work on them in a structured manner. I am not a shrink or a psychotherapist; I take things which I find help me. What I did helped me and it may help you too, hence my reason for posting. (For obvious reasons I have deleted my own answers as they are highly personal). You can only do this if you can admit that you've got some problems in your trading. This helps you to identify where they lie. If, however, you don't have any psychological issues, then you don't need to bother with all this.

False Pride

Being so thick skinned that we have trouble admitting any human weakness at all. Another word for this is grandiosity. How would you describe yourself in this respect?


Humility

Humility means accepting ourselves, strengths as well as weaknesses; not being defensive. How capable are you of doing this- both in general and in relation to your trading?


Perfectionism

Setting unrealistic standards for ourselves. This can lead to impatience which can lead to frustration and ultimately (costly) mistakes. Are you a perfectionist? Do you set unachievable targets for yourself? How does perfectionism affect your trading?


Admitting Mistakes

Can you think of instances of being in the wrong and admitting it? Is it OK to make mistakes?


Impatience

When impatience gets the better of us, not only do we want what we want, but we want it now. This leads to us not trading our plan and subsequent losses. This can turn into a vicious circle as we become even more impatient as a result of the previous failure. How do you see yourself in this respect?


Resentment

Resentful people hang on to angry feelings. Resentment is a good excuse for irresponsible behaviour. Do you honestly feel that this resentment is justified? Do you feel resentment towards the markets for example? Or towards other traders because they do better than you do?


Understanding

Are you able to accept the things that you cannot change? Does this form part of the way you trade? This is also very much linked to “hope”. How do you trade when faced with the inevitable? Do you carry on regardless “because you know better”?


Being Honest

Are you able to be open and honest with yourself? Does this bring a sense of relief and a kind of calm? Or if not, why not?

Dishonest Thinking

When you are dishonest with yourself, you lose contact with reality. This results in believing that which you want to believe. What effect has this had on you and your trading?

Putting Things Off

Often we put things off until it becomes critical that we do something, and until everything is just right. This can lead to impatience and irresponsibility. What sorts of tasks have you put off in the past/ still put off? What effect has this had on your trading? If you had done these things how would things be different now?

Guilt

Sometimes we hang on to bad feelings about ourselves in the same way as we hold onto resentments about other people. This again can become a vicious circle and can affect our trading.

Fear

Sometimes we are afraid of specific things, afraid that a plan won’t succeed, afraid that we’re going to fail, and of the results that actions we have taken might have, for example, on our account. Describe the fears you have right now/ when you trade, the fears that destroy your peace of mind.

Acceptance and Greed

As acceptance of ourselves grows, so does our acceptance of the world around us. We don’t have to be fearful and defensive because if you’re doing what you’re supposed to be doing, there’s not much to worry about. You can only take what the market offers you. Are you able to let go when things don’t go according to your plan? Or when things go right for a while and then start to go against the way you planned? Describe how you feel in such situations.

Taking Things for Granted

Many of us tend to take things for granted when they are going well. We sometimes forget the effort, action and discipline which finally straightened things out for ourselves. Complacency and boredom are real dangers. Can you recall instances when complacency or boredom caused you to trade irresponsibly? To slip back into trading without your plan?


Being Grateful

How do you feel about how you are now? Do you feel gratitude towards those who helped you on your way? Can you see how a feeling of gratitude can help you in a positive way? And help you avoid the pitfalls of complacency and boredom?

The above questions are just a guide. There well may be others which aren't included here, but are just as relevant. Don't be restricted by the above.

Once you've answered these questions, if you can, go through them with someone you know, ideally your mentor (if you're lucky enough to have one) by reading them out aloud. Read through your original answers every now and again and see if things have changed.

I hope this is of use to someone.
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