Hmmm, shame that there were no responses. Anyways I worked on this a bit today (in between chasing points on the DAX around the 9,000 level). Here's what i came up with (maybe somebody else will find it useful). It's divided into two sections - one of principals and one of practicalities. Happy reading!
Position Management
General Rules & Principles
• Don’t make up the trade management rules whilst in a trade. It’s going to be easy to justify the creation of new rules and adjusting of existing rules. But, as with trading rules elsewhere, there should not be a “just this time” excuse. Instead rules should be developed on the basis of reviewing my completed trades and learning from various sources.
• Less stress is good. More stress is bad. Less stress will allow me to observe the market more objectively.
• Less time in the trade is probably preferable to more time in the trade – assuming that the final result is the same.
• Not being in front of the screen lowers my edge in managing the trade. This is based on my observations and experiences when I trade using the lower timeframes (15M and below).
• Having a documented trade management plan and rules is better than not having it
• It’s very bad if I let my emotions handle the decisions regarding trade management. That’s equally as based as entering a trade on the basis of my emotions.
• The trading rules need to be applied consistently.
• The trade management plan needs to cover the following points:
o Movement of stop loss
o Setting of targets
o Manual closing of trades
o Handling of scheduled news announcements (e.g. UK data at 9.30)
o Handling of unscheduled news (e.g. news on development on geo-political events such as the Ukraine crisis)
o Re-entry of a trade after initial position was closed
o Adding to a winning position
Technical Aspects (the actual rules)
• I need to identify potential support & resistance levels when entering the trade.
• I need to be aware of any scheduled news events that are relevant to the trade. An open position must be closed at minimum 2 minutes prior to any Tier-1 news announcement.
• On the release of unscheduled news, I have the option of closing the trade manually immediately.
• Based on the identified support & resistance levels, I will set the level for the 1st target (“T1”) and will enter a limit order to close half the position at that price.
• Except for situations where the XTF is the 1M timeframe, I will close the position if a wrong XO occurs on the XTF. For trades off the 1M timeframe, I will close the position if there is a wrong XO on the 5M timeframe.
• I will close if the trend ceases to be in place. The trend ceases to be in place if, on the basis of completed candles, HHLH rule is violated. I will move the stop loss accordingly.
• If price moves into the favourable direction very quickly, then I need to be alert to be ready to close the trade on the basis of appropriate price action (as discussed with my trading coach)
• Handling of positions that have not really “moved a lot” in “x” minutes – I need to quantify the italic terms.
• I will not risk more than 1R in a single trade.
• I will always enter the trade risking 1R. If I don’t feel confident enough to risk 1R then the trade is not worth taking.
• Make some rules for trades that are not working – do this by looking at recent trades that have been partial losers. With trades that are not working, the quicker I get out the better
• Document how to handle adding to winning positions
