Do I need to write it down?

[glyder]

Should I have a written plan for my trading?

Does everyone else trade with a written plan, do you think it helps you?

Might it hinder?

I trade several set ups on varying timeframes.
I always use stops (btw cutting my lossses was one of the first things I ever read
about trading but one of the things it took longest to learn !!!).

I have never writen all this down eg like a full plan that
incorporates stop position placement, circumstances when to
and when not to trade (eg times / news situations) money management .
Its all just stored in my head.

 

[barryb]

If you have any problems following your plan, writing it down will help. It's then not so easy to pass off mistakes as 'discretionary judgements'.

 

[shadowninja]

If it stops you punting and makes you take things seriously, then write one so you treat it like a business, not like a bit of fun and excitement. If you honestly don't punt and are clear about the rules then don't bother. For most, it is useful for getting your head straight. I tend to scribble something down on paper when investigating a new idea. Right now, I'm investigating sports trading and so my head is back to noob land. I therefore have lots of bits of paper with notes that I re-write, cross things out, make notes around.

Another thing to consider - how is your current performance? If it's going well then you've got past the point where a written plan might be needed. If you keep making monumental **** ups then perhaps get typing.

Also, if in the heat of the moment you are not diverting from the plan in your head, then that's fine. If, for instance, (I note you're now using decent stops) you were moving the stop back every time the price got close then something isn't right.

 

[tomorton]

Definitely, write it down. Then follow it to the letter and note your success. You will certainly find you can also develop the plan and improve your performance. Remember, “If you cannot measure it, you cannot improve it.” (Kelvin)

 

[shadowninja]

Definitely, write it down. Then follow it to the letter and note your success. You will certainly find you can also develop the plan and improve your performance. Remember, “If you cannot measure it, you cannot improve it.” (Kelvin)

That's a good point - otherwise you're going on vague memories of trades you may have taken months ago.

 

[glyder]

Thanks for your responses.
I know all the books all say 'have a plan'!! so I expected a 'yes' response but its interesting to know whether many traders actually use a plan.

I think the point about avoiding making discretionary judgements is a good one.
I am prone to some of that, usually for the best ...but a plan will help stop it getting out of hand.

Shadowninja - in terms of performance I think I am getting to the stage you suggest, following the plan well without having it written, however writing a plan may help me keep at that stage rather than let my trading 'evolve' unecessarily. I have a tendency not to leave well alone. A plan may help with that.

 

[tomorton]

I admit to getting a bit obsessive about trading rules. I now have them distinguished from each other by version numbers, v1, v2, v3 etc.. When I change something int he trade rules, I keep tracking what would havebeen the trade outcome if still using the old rules - sometiomes i have to change the rules back again!

 

[Bint_Crusher]

Only write it down if you are going to follow it. After you lose half your account and don't know why then you might take the right advice.
Some of the best trades are made when you can overcome your fears, the answer is to plan your trades in the morning, go to the pub and get drunk, then sip whiskey all through the afternoon whilst you trade.

 

[shadowninja]

I admit to getting a bit obsessive about trading rules. I now have them distinguished from each other by version numbers, v1, v2, v3 etc.. When I change something int he trade rules, I keep tracking what would havebeen the trade outcome if still using the old rules - sometiomes i have to change the rules back again!

Yep. It's a good approach.

 

[iota]

I bought a small ledger about 9 months ago and started scribbling things down. It helped more with my terrible memory than a trading plan.
All those times when you think 'that's interesting', scribble it down then you can follow it up at a later date instead of abandoning it to vague memory.

 

[tomorton]

iota makes a good point. Some people just cannot start an activity by making a plan first - in which case, record what you're doing and let the plan grow organically. It's definitely going to help to keep a trading log and observe what you did, what happened, and why.

 

[shadowninja]

I have a huge spreadsheet and record trades particularly if I am changing one aspect at a time. I've got a system that seems to work and make sense for me, now, so I no longer record trades in it.

 

[glyder]

iota makes a good point. Some people just cannot start an activity by making a plan first - in which case, record what you're doing and let the plan grow organically. It's definitely going to help to keep a trading log and observe what you did, what happened, and why.

That is a good point I'm hopeless at writing plans down for myself (OK its because I do enough of it for my real job).
I think I'm at a stage now where some consolidation of my thoughts is in order. And TBH if I haven't got the discipline to write a trading plan that is already 90% formed in my head, I probably shouldn't consider myself disciplined enought to trade at all.

 

[Dinos]

I have a huge spreadsheet and record trades particularly if I am changing one aspect at a time. I've got a system that seems to work and make sense for me, now, so I no longer record trades in it.

Agree with your sentiment, I don't have it wrote down, its a KISS system, and it doesn't need writing down, I'm intelligent enough to know what my entry, exit and stop criteria are. I still keep stats, nothing more, gives me peace of mind of the statistical outcome of my trading, and help keep me aware or slight changes in the win/lose ratio, when I maybe more prone to paying more attention to my trading rather than the mechanical nature at the minute.:cheesy:

 

[Benji871]

I do. However i spreadbet (if its anything).

I do it so i can see my "why i bought/sold-thoughts" in comparison to my "after i succeeded/failed".

Since i am paying money anyway to get in/out and then on whatever i win/lose i may aswell record it to see why - hence paying for the experience you could say - least its something tangable. Least then if i lose i have some psyical "experience" to be able to look back on that won't change since its recorded.

I can use this to see what is going right/wrong. Then i can do a quarterly review about what i think i should/should not be doing.

My recordings have have helped me to pick "targets" in advance and then plan before i make the trade.
One of the things my recordings also showed me that i could not handle taking mental stop losses and it was causing me more problems than it was worth - because of seeing the problems that psychological block caused (financially) i can now take mental stop losses far earlier due to having records saying that in all likleyhood i am going to suffer far worse if i don't - it also showed that my market timing was awful in general because i lacked patience even though i could see what was going to happen on average - i always felt like i had to get in a bit earlier incase i missed it which then cost me in roll feels if the price took its time to go anywhere.

For example i make a word document and it states:

Company: (Or Commodity/Forex etc)

Action: (Buy or Sell)

Price:

Bet per point:

Stop:

Stop loss at % of Capital Funds: (Capital funds are total account size - after any losses which you may make in your current trades).

Date:

Reason for purchase:


Post-Action:

Profit/Loss: (of how much)

Price:

Date Sold:

Time held (Inc non-trade days): (Shows if you are holding on too long or not. Non-trade days are weekends).

Roll charges: (if spreadbetting these can add up).

Reason for sale:


I also include a before chart and an after chart printout to see where i went right/wrong and if i am seeing the same thing from both sides - I can input where i bought/sold on the after chart and any trend lines - which may help in the future.

However this is just me. It may or may not be your cup of tea.

Hope it helps. (And anyone can feel free to add anything to it as it may benefit me and others).

 

[glyder]

That is a good point I'm hopeless at writing plans down for myself (OK its because I do enough of it for my real job).
I think I'm at a stage now where some consolidation of my thoughts is in order. And TBH if I haven't got the discipline to write a trading plan that is already 90% formed in my head, I probably shouldn't consider myself disciplined enought to trade at all.

I was right on this - not enough discipline to write down my plan = not disciplined enough to trade.

So my answer to my question is I've discovered I definitely need to write it down (& I still haven't yet).
I look back to the trades I was taking when I wrote the first post in this thread and things have mutated. First my entry reasons are slipping. Then my exits and stops are slipping, soon I'm moving far away from any trading ideas I started with and I can't be sure if I'm taking good set ups or not. Not knowing when to take a profit, when to stay in a trade because I've gone too far off plan. And to me that is too close to gambling which is not where I want to be.
So glyder's going to go against his nature and write down a plan.

 

[bbmac]

Although I have my entry and exit rules firmly fixed in my head I have an idiot note in full view when trading saying 'IS IT PER PLAN ?' I also have a flow chart summary of 'the plan' on my desk at all times and actually log whether the entry/exit I took was 'per the plan' or not.

Writing it down helped me to stick to it..hope it does for you too.

G/L

I was right on this - not enough discipline to write down my plan = not disciplined enough to trade.

So my answer to my question is I've discovered I definitely need to write it down (& I still haven't yet).
I look back to the trades I was taking when I wrote the first post in this thread and things have mutated. First my entry reasons are slipping. Then my exits and stops are slipping, soon I'm moving far away from any trading ideas I started with and I can't be sure if I'm taking good set ups or not. Not knowing when to take a profit, when to stay in a trade because I've gone too far off plan. And to me that is too close to gambling which is not where I want to be.
So glyder's going to go against his nature and write down a plan.

 

[glyder]

Although I have my entry and exit rules firmly fixed in my head I have an idiot note in full view when trading saying 'IS IT PER PLAN ?' I also have a flow chart summary of 'the plan' on my desk at all times and actually log whether the entry/exit I took was 'per the plan' or not.

Writing it down helped me to stick to it..hope it does for you too.

G/L

Thanks bbmac,
I'll let you know how it goes. I need a bit of back to basics.