Writing A Trading Plan

All professional traders have a trading plan. Trading futures is a zero sum game and those with a plan (and the discipline to apply it) will succeed over those that have no plan. A plan details the particular market anomaly that you intend to exploit - your edge. Human emotion creates anomalies - essentially, the fear and the greed of those that have no trading plan.

Creating a trading plan and rigidly applying that plan allows the professional trader to eliminate emotional responses from his trading.

Let's look at what your written trading plan should cover:

Trading concept - What anomaly is your trading strategy intending to exploit?

Timeframe - The shorter the timeframe the more trades that can be made. However short term trading leads to lower reward:risk ratio's and higher commission costs.

Instrument - There are many different ways to trade essentially the same idea - options, futures, exchange traded funds etc. Which offers the most reward for your trading concept?

Entry - How will you open your trade?

Exit - How will you close your trade - A stop loss should be placed at a point where the trading concept become invalid, this could be a specific price or a certain length of time. A profit exit must also be established - again either a certain target price or a timed exit.

Money Management - How much capital is required to trade the strategy and how much should be risked on each trade to maximise returns whilst minimising the risk of blowing the account?

End of Day Routine - At the end of each day every trade should be compared to the trading plan and any variances should be addressed. Remember the plan is their for a reason and you must trade it exactly. If a change is required then it should be properly tested before being added to the plan. No decisions should be made whilst a trade is live.

Brokers - Which broker will you use and how will you trade? Automating a trading plan through the broker's API will help to eliminate any emotional responses.

Your plan will require constant revision as the market dynamics change. If you have noticed a market anomaly then it's very like that many of your competitors have as well.

"If you don't know where you are going, any road will take you there." Lewis Carroll

Tim Wreford runs Online Futures Trading, a website that provides information and resources for traders. Tim also provides a free day trading system, the results of which are updated daily on the site.

---

Factors Influencing a Currency Pair Exchange Rate

IntroductionThe exchange rate refers to the value of the US... Read More

A Fools Game

I received an email this week with a question (below)... Read More

How Currencies are Traded in the FOREX Market

Currencies are traded in dollar amounts called "lots". At 100:1... Read More

Why Hedge Foreign Currency Risk?

International commerce has rapidly increased as the internet has provided... Read More

Online Forex Trading

Foreign exchange currency trading is also known as Forex trading,... Read More

E-currency Exchange Trading

If you are reading this article you are probably one... Read More

Forex Trading Online - 7 Reasons Why You Should!

Forex trading online is a fast way to use your... Read More

Stopping Yourself

I read on a bulletin board a traders comment that... Read More

Online Forex

Q1: When you consider that the foreign exchange market has... Read More

Day Trading the Index Futures - How to Judge Good Entries

QUESTION: If the SP futures fall through support and go... Read More

Day Trading Success- The Key Is Survival

Most new traders tend to focus just about all their... Read More

Choosing A Forex Broker

With currency trading becoming ever more popular, the number of... Read More

Money Management - The Holy Grail Of Trading

Money management determines how much to risk on each individual... Read More

Business and the Forex

The business world is a complex web of supply and... Read More

Forex Options Market Overview

The forex options market started as an over-the-counter (OTC) financial... Read More

Forex Trading

Foreign exchange market, or better known as FOREX, is the... Read More

Your Mother Could Make Money In Forex Trading

The question would be not whether she could but rather... Read More

Forex Currency Trading

It is possible to buy and sell money from different... Read More

Learn Forex Trading - a Guide for Beginners

One can learn forex trading as easily as one would... Read More

The Secrets of the Super-Traders

The first and perhaps most important "secret" is to realize... Read More

How to Trade Currency

We all know when you go on a trip to... Read More

Writing A Trading Plan

All professional traders have a trading plan. Trading futures is... Read More

5 Questions You Need To Have Answered Before You Back-Test Your Forex System

As 90-95% of new forex traders lose money within the... Read More

Adaptation to the Realities of the Market

Do you think adaptation to the realities of the market... Read More

Momentum Trading: A Practical Day Trading Strategy to Get Profits from Hot Stocks

Momentum day trading can be extremely profitable when done correctly...Day... Read More

Day Trading Course or Day Trading Technique Seminar: Learn Day Trading Education

Profitable day traders recognize that momentum trading is among the... Read More

The Nature of the Trading Business

Consider the following: As a trader you are in a... Read More

Forex Broker Involvement Optional

To trade on the forex market, the largest financial market... Read More

The Secret of Reduced Margin Spreads

One of the best kept secrets in trading is that... Read More

How To Handle A String Of Losses

Everybody hates to lose and unfortunately no one is blessed... Read More

How To Control Fear And Greed In Trading

There is an old saying that the market is driven... Read More

Assessing the Opportunities Presented by the New Iraqi Currency

Could it be possible that you are staring right into... Read More

Welcome to the World of Currency Trading

Indeed large multinational and individual banks and other major financial... Read More