Trading Plan

Trading Plan

9 components of a good trading plan1. Choose your trading medium2. Psychological preparation3. Know your risk level4. Goals5. Do your homework6. Prepare your workspace7. Know your exit and entry conditions8. Keep a trade journal9. Reflect on your performance

1. Choose your trading medium

1. Choose your trading medium

Keep It Simple

2. Psychological preparation• Be psychologically and emotionally ready to

trade

Remember, trading should be a rational process, NOT emotional.

2. Psychological preparation• Be psychologically and emotionally ready to

trade• Routine is good

Remember, trading should be a rational process, NOT emotional.

2. Psychological preparation• Be psychologically and emotionally ready to

trade• Routine is good• Don’t take things personally

Remember, trading should be a rational process, NOT emotional.

2. Psychological preparation• Be psychologically and emotionally ready to

trade• Routine is good• Don’t take things personally• Have your trading plan written down

Remember, trading should be a rational process, NOT emotional.

3. Know your risk level• How much cash are you willing to risk on a single trade?

3. Know your risk level• How much cash are you willing to risk on a single trade?

Example:

Cash balance = USD 10,000% Risk = 2%Total cash you are willing to risk on a single trade = 10,000 x 0.02 = USD 200

3. Know your risk level• How much cash are you willing to risk on a single trade?

Example:

Cash balance = USD 10,000% Risk = 2%Total cash you are willing to risk on a single trade = 10,000 x 0.02 = USD 200

• How much cash are you willing to risk in a single day?

4. Goals• Short-term goals

• Long-term goals

4. Goals• Short-term goals Daily profit targets

• Long-term goals Weekly, monthly and annual profit targets

5. Do your homework• What happened to prices

overnight?

• What data came out overnight?

• What data is coming out today?

Non-Farm PayrollsISM Manufacturing IndexConsumer Price IndexConsumer ConfidenceExisting and New Home SalesFOMC rate decision

6. Prepare your workspace• Ensure your workspace is clear of distractions

6. Prepare your workspace• Ensure your workspace is clear of distractions

• Log into your SaxoTrader 2 and make sure everything is set up properly

6. Prepare your workspace• Ensure your workspace is clear of distractions

• Log into your SaxoTrader 2 and make sure everything is set up properly

• Identify support and resistance levels

6. Prepare your workspace• Ensure your workspace is clear of distractions

• Log into your SaxoTrader 2 and make sure everything is set up properly

• Identify support and resistance levels

• Post up a list of important news and data due out today

7. Know your exit conditions• At what price would you exit the market with a profit?• At what price would you exit the market to limit your losses?• Do not try and make mental notes of exit prices!!

7. Know your exit conditions• At what price would you exit the market with a profit?• At what price would you exit the market to limit your losses?• Do not try and make mental notes of exit prices!!

How to choose exit levels:• Risk-reward ratio• Support and resistance lines• Technical analysis (ie. Moving Averages, RSI, Ichimoku Kinko Hyo)• Fundamental analysis

Know your entry conditions• Once you know your exit prices, you can identify your entry

price

• You should have a good reason for the entry and exit levels of every trade that you execute.

Know your entry conditions• Once you know your exit prices, you can identify your entry

price

• You should have a good reason for the entry and exit levels of every trade that you execute.

How to choose entry levels:• Risk-reward ratio• Support and resistance lines• Technical analysis (ie. Moving Averages, RSI, Ichimoku

Kinko Hyo)• Fundamental analysis

8. Keep a trade journal

9. Reflect on your performance• Add up your profit/loss for the day

9. Reflect on your performance• Add up your profit/loss for the day

• Understand why you won or lost that day

9. Reflect on your performance• Add up your profit/loss for the day

• Understand why you won or lost that day

• Assess the market’s volatility for the day

9. Reflect on your performance• Add up your profit/loss for the day

• Understand why you won or lost that day

• Assess the market’s volatility for the day

• Make a note of what is happening tomorrow which may affect the markets

If You Fail To Plan, You Are Planning To Fail!

Summary1. Choose your trading medium2. Psychological preparation3. Know your risk level4. Goals5. Do your homework6. Prepare your workspace7. Know your exit and entry conditions8. Keep a trade journal9. Reflect on your performance