My trading plan template.

Hello all. Thanks for all the help you have given me so far.

I have started to work on my trading plan template and would like to open each step of it up to comment. I am not sure if it is proper to do this here, but if it isn't then please let me know and I will edit or delete this message.

My template is based on the template posted right here in the beginners forum stikied under the title "Trading Plan Template" I am using v1.2 posted by Isotonic.

Any comments or constructive criticism is welcomed.

thanks,

Matt

1. Self Assessment

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1.1 Why do I want to be a trader?

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· I want to be a trader because . .

o I want to become a trader because it seems like a natural progression for me and I love the idea of being able to formulate a system of my own design which I implement for the purpose of a profit. I like the idea of being able t omake my own decisions and run my trading my own way.

· My primary objective in wanting to be a trader is to . . .

o My primary objective is to, of course, make money. I have come to accept this to be a time consuming process and that it may take a few years to fully accomplish my monetary goals, which is to be able to trade in a fashion so as to create a suitable income for my wife and I while having enough trading capital left over at years end to allow for a (theoretical) increase in income each following year.

· These objectives are important to me because . . .

o These objectives are important to me because, if achieved, I believe they will allow me to lead a happier life in which I am able to achieve far greater success and self fulfilment than what I believe is possible with the path I am currently following.

· I believe I can achieve my objectives because . . . <o></o>

o I believe I can achieve my objectives because I am already familiar with money management and pushing small edges (thanks to online card playing which has been profitable for me). I also believe my prior experiences in system development (and participation in already setup systems) will help in this process. (Thanks to Jerry White for showing me my first fully functional exceptional system and to God for pointing my life in a direction where I was able to work with GC/MS system and macro development).<o></o>

1.2 What is my style?

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· I am a mechanical trader and my style is very . .

o Precise. I want to spend my time creating, writing, and testing computerized trading methodologies; and then run those methodologies within the specific markets and time frames in which they were designed and tested for. I understand this approach to trading may not produce as much profit as one in which the actual trader is involved with all trades at all times, and that some trading methodologies may be difficult or impossible to program. I would like these methodologies to trade in the short term because I like to constantly monitor my results and I believe shorter time frames will lead to more timely review of my progress and allow me to make more timely adjustments if/when necessary.

· I understand that I cannot predict the future …

o and I accept that I cannot control the markets. I accept that I must take what the markets are willing to give me, not what I want to take from the markets.

· However I can control myself, which I will do by . . . <o></o>

o Reviewing my trading template to remind myself of my goals and objectives, and by removing myself from the markets at times when I am not of sound mind, rest or emotion to handle trading. <o></o>

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1.3 What are my strengths and weaknesses?

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· My strengths are . . .

o Ability to stick to a well done regimented play.<o></o>

§ This strength will help me remove emotion from my trading and allow me to stay consistent when I experience exceptional profit or loss swings.

o Mathematical concepts in statistics and probabilities come easy for me.<o></o>

§ I can utilize this skill by quickly checking to see if the actual results I get from trading are within an expectable statistical range of what I expect, and if not in range, possibly be alerted to a problem earlier than I might otherwise be.

o Pattern recognition comes easy for me.<o></o>

§ This skill can be utilized in looking at data/charts to see if there is any similarities of recurring events which could be profitable. This skill will also be helpful in seeing if my computerized processes are picking patterns the way I would like them to.

o Playing cards for money has given me money management skills as well as allowed me to learn how to properly handle emotions when experiencing spiked profits or downdrawls.<o></o>

§ I can utilize this as a transfer skill for managing money in trading properly, especially in risk management. This skill can also be utilized as a foundation on how to separate emotions from winning or losing.

o I have the most loving, caring, wonderful wife any reasonable man could ask for, who adores me regardless of whether I’m winning or losing.<o></o>

§ Less a skill and more an asset. This person is best utilized as a support and emotional safety net when everything else is going wrong.



· My weaknesses are . . <o></o>

o I’m lazy.<o></o>

§ I can best minimize this weakness by having written goals, and scheduled times when I will work on my trading.<o></o>

o My mind wonders and I lose interest in many subjects quickly.<o></o>

§ I can best minimize this weakness by having written timely goals. If I am having difficulty focusing on one aspect of trading I can choose to focus on a completely different aspect of trading as a way to combat this weakness.<o></o>

o I need to learn a new programming language to write computer processes for my trading.<o></o>

§ I can minimize this weakness by avoiding script writing in any language other than the one which is used to help in my trades.<o></o>

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1.4 Do I tend to get compulsive? (i.e., get caught up in the excitement of trading), have personal conflicts? (i.e., have a history of conflicts with my family, at my job, or during past trading experience), or have any emotional issues that constantly crop up, such as fear or anger?

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· I can be compulsive, but always in a controlled way. I might get on a project and not stop for hours because I’m in a ‘groove’. While doing this I am always following my protocol for what I am doing so I do not see this as being a problem. I currently have no personal conflicts that would effect my trading and I am very good at putting emotions at bay when working on a project which can be adversely affected by emotion. I do not harbour any fear or anger.

1.5 Am I in the right frame of mind?

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· I will only trade on days when . . .

o I am well rested and in a relaxed focused mental state.

· I will not trade on days when . . .

o Plagued by emotional hardship or loss or have trouble maintaining my focus. I will stop involving myself in trading activities if I find I am making consecutive errors.

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1.6 How much time during the day do I have to devote to trading?

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· I have about two hours a day Monday to Thursday. All day on Friday, Saturday and Sunday (dependent upon my social schedule, vacation and family time).<o></o>

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1.7 When I'm trading, how many distractions can I expect to have? How will I deal with those distractions?

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· Most days I will not have many distractions. When I am distracted I will have to stop trading until such time as I have delt with the distraction of found a way to put off the distraction until I am done with my trading work.<o></o>

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1.8 How much time do I expect to devote to developing my trading system? And to doing my personal psychological work, and to working on my business plan for trading?

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· I hope to devote one hour a day Monday to Thursday, three hours on Fridays and 5+ hours on Saturday and Sunday (when I am in town). My overall goal is to put forth no less than 10 hours a week into trading related activities.

1.9 What are my computer skills? What skills do I need before I begin this trading venture?

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My computer skills are medium. Using most programs comes intuitively to me but I do have to work at learning the minutia of most programs I use on a regular basis. I need to build up skills in the programming language for the trading platform I will be using.<o></o>

1.10 What do I know about statistics?

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· Statistics are not difficult for me. Statistical math is almost intuitive for me, however I do tend to need to review mathematical equations before putting them into use.<o></o>

1.11 How would I rate my market knowledge?

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· Poor. I am starting from scratch. I have very little market experience other than a few trades. I have suspended all my trading activities until I learn how to trade correctly and start to develop positive habits.

Nice words Matthew, however, you need to remember the Forex Market is no respector of person. No matter what you psychology may be, training or anything else, it will not put you in any sort of position to tell the market what you want it do. The key is never to stop learning, I'm trading live for about 3 months now and I'm still continuing testing strategies on the demo platform.


My trading strategy is to set and forget (set your trade and forget about it - obviously using customized indicators) and I'd return to find my profit - 10 pips a day, no mess, no fuss.

Greed is a killer, eat that elephant piece by piece.

Enjoy your trading.

nice post matthew.

one thing i would add is that your being a card player comes in very handy when reading the ticker. much like poker where its primarily about reading your opponents, you could apply that to the ticker as well, ie not just the money management aspect.

so if you dont like what youre seeing as far as price action, you seriously think of folding (closing a position or not opening a position).

as a matter of disclosure i'm not really a TA guy nor a fundamental trader, altho i use both in support of what i do. also i came from equitities and i cant tell you how many times the "hmm-that-dont-feel-right" feeling saved my ass .

i personally sucked at cards , but i did well off of the "tells" ( i think its called ) of the equities participants

good luck dude.

Thanks for the comments so far guys! I appreciate each and every one of them!

Sorry the formating is so poor. I'm cutting and pasting from a word document and I can't seem to get indents or tabs to work when posting here.

Here Goes Part 2: Defining my Objectives.

2. Defining My Objectives

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2.1 What are my annual trading goals?

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· My annual trading goal is to . . .

o My annual trading goal is to finish the research and system development portion of my overall trading plan. This can be done using the following steps:

§ Finish, and update accordingly, a written plan which states how I will handle myself as a trader.

§ Create, or find and modify (if needed) a trading methodology which fits into my trading style.

§ Test, both back testing and forward testing, my chosen system in my chosen markets at assure profitability.

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· I expect to achieve these goals because . . .

o I expect to achieve these goals because I have already developed the proper emotional support system as well as designated the appropriate amount of time to this endevor.

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· When I achieve my goal, my reward will be . . .

o When I achieve my goal, my reward will be a trip to Mancy’s Steakhouse for a great meal with my wife.

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2.1 What are my monthly trading goals?

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· My monthly trading goal is to . . .

o My monthly trading goal is to achieve consistent profitability from month to month, and to review my trading activity for problems or leaks.

· I expect to achieve these goals because . . .

o I expect to achieve these goals because I have found the resources to guide me in the right directions as I undergo this process.

· When I achieve this, my rewards will be . . .

o When I achieve this, my reward will be baked stuff lobster for two at Tia’s, <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" /><st1lace w:st="on"><st1:City w:st="on">Boston</st1:City>, <st1:State w:st="on">Massachusetts</st1:State></st1lace>.

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2.2 What are my weekly trading goals?

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· My weekly trading goal is to . . .

o My weekly trading goal is to keep working on the creation of my complete trading system, and then once that is accomplished, proceed to constantly review my trades to see if I can improve upon them, I will also keep up with other traders by reading and participating in forum message boards.

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· When I achieve this goal I will reward myself by . . .

o When I achieve this goal I will reward myself by taking one day off of all work for the purpose doing anything I want to do.

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2.3 What are my daily target goals?

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· My daily target goals is to . . .

o My daily target goal is to spend the first hour of every weekday working on my trading. Also daily, my goal is to identify what parts of my system need to me address, and then list those parts and address them.

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· Assuming that I stick to my plan, I will reward myself by . . .

o I feel the satisfaction of having moved forward in my process is reward enough.

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2.4 What are my income targets?<o></o>

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· My financial targets are . . .

o My financial target is to achieve a return of 40% per year, which equates to an annual income of $20,000 without the draw-down on my account exceeding a maximum of 25%.

o This equates to an average monthly income of $1667, and average weekly income of $385, and an average daily income of $55.

o Therefore I have a daily target of 0.38% of my total equity (based on 5 business days a week)

2.5 What is my advantage or edge in trading? What is the particular concept that I'm trading that gives me an advantage? <o></o>

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· My concept is to create a computer based trading system where my trading methodology is executed by a computer process. This gives me several edges: Emotions will be removed from the trading process. Using a program like I plan to write will also allow me to be ‘active’ in the market many more hours a week than most traders can spend themselves. This process will also allow for detachment from the market and allow for more focus on the results produced by the process.<o></o>

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2.6 How much money do I have personally? How much of that money could I afford to lose? For example, most funds stop trading at 50 percent. How much risk can I afford to take on a given trade?

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· I have $50,000 to put into trading and I could afford to lose 20 percent of that comfortably. I will not risk more than 2.0% per trade.

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2.7 How much money do I need to make each year? Do I need to live off that money? What if I don’t make enough to live off? Can I make more than I need to live off so that my trading capital can grow? Can I stand regular withdrawals from my trading capital to pay my monthly bills?

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· I do not need to make any money each year as a trader. I will not be living off of the money I make as a trader until such time as I can comfortable live off half my profits.

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2.8 How much social contact do I need?<o></o>

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· I enjoy being social when the occasion arises for it. I also enjoy making time for friends. However, I do not have a need to be constantly social.

2.9 Can I work by myself day after day? Do I need one or two other people around, or do I need a lot of other people around? How much do those other people influence me?<o></o>

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· Yes I spend a lot of time working by myself already. I do not need a lot of other people around, but I do enjoy having one other person around. Generally, those around me have little influence on my trading because they are not traders themselves.<o></o>

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2.10 How will I know my plan is working, and how will I know when it’s not working? What do I expect from my system in various kinds of markets? Trending? Consolidating? Highly volatile?

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1. I will know my plan is working or not from the constant trade reviews I will perform as my system runs. I expect my system to identify market conditions such as trending, consolidating, and highly volatile markets and to adapt to those markets, or stay out of trades when market conditions become dangerous.<o></o>

Keep up the good work Matthew - how is the rest of it going?

I like some of your answers - it's made me rethink some of mine already!

Thanks for the encouragement Iso. I've got the easy 80% done. Need to upload the rest. I'll upload what I have done tonight. I'm still working on my actually trading system, took a good look at Sidus, but I'm moving towards Vegas 4 Hour. I just signed up for James16 so I could take a look at Knife as that is based around the Vegas 4 hour.

A lot of this template has already changed, primarily because I'm learning more every day. At some point I will revise the entire template and add a risk management section as well as a methodology section. I'll also be more specific in many areas as this template is vague in places bacause of my lack of education in Forex when I first wrote it.



3. Markets, Instruments & Time-frames

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3.1 Which markets will I trade?

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· I will trade in the Forex markets, hopefully M-F 24 hours a day. The forex markets provide me the ability to trade more hours a day and at times more convenient to me.

3.2 Which Instruments will I trade?

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· The quantity of currency pairs I will trade will not exceed 4 pairs total and not more than 2 highly correlated pairs. I will only trade the larger, well established, currencies.<o></o>

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3.2.1 What kind of markets do I want to trade? Is it appropriate to specialize? Do I want to trade only liquid markets, or are there some illiquid markets I’d like to trade?

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· As for forex, I’m a generalist only bound by the parameters listed immediately above. I will not trade any currency pairs which proves to have liquidity problems. I will only trade pairs for which I have a written methodology which has been backtested.<o></o>

3.3 What beliefs do you have about entering the markets? How important do you believe entry to be?

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· Entry is one of the two most vitally important aspects of trading. The other being exits. Entering at a point when the risk/reward ratio is at its highest (for the trading method) is very important.<o></o>

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3.4 Which time-frames will I trade?

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· Day trading to swing trading. Once in a position I will not exit until I reach my exit points.


4. Tools of the Trade?

4.1 Which broker and trading platform will I use to trade?

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· I will trade with Interbankfx as my broker and Metatrader as my platform. I will, however, keep an eye on Tradestation (as both broker and platform) as I go through this process. If Tradestation shows itself to be a better platform for programming my systems, then I will switch to it.




5. Trading Process Maintenance and Monitoring
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5.1What it my daily ritual for assuring my trading system is working and operating properly?

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· Every day I will check the status of my computer and network setup and correct any problems. I will also give my most recent trades a quick review to check for anything out of the ordinary.<o></o>

5.1.1 How will I monitor my trades when away from home?

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· At the point where I am auto trading and not home I will have to have the phone number of my broker on me at all times as well as computer access available to me to assure I can monitor my trades at all times and, if needed, call in and fix any problems. I will look into getting a Blackberry or Palm Pilot with internet access so I can monitor my trades when away from home. I will however experience times when I cannot actively monitor my trades such as when I am asleep.

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5.2When will I analyze my trades?

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· I will analyze my trades on a daily basis going through each one to assure proper execution. I will address large winners and losers individually so I can continuously monitor what is working and not working.<o></o>

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5.3How will I know trades are executing as planned? What will happen if they are not?

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· I will know my trades are being executed as planned from the analyses procedure stated above. If my trades are not being executed as planned I will stop my trading until such time as I can identify why my trades are not being executed as planed and correct the problem.

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5.4When will I record my trades and complete my trading journal?

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· I will record my trades and complete my trading journal in no greater interval than weekly.<o></o>

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5.5 How will I keep up with changes in the markets and how will I continue to learn as I trade?

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· I will participate in online forums, such as forexfactory.com, as a for of keeping up with the markets, as well as read one book every three months on forex trading.<o></o>