12 Oct Writing a trading plan — part 5

Writing a trading plan

Part 5

One of the best sources out there for learn­ing any­thing about trad­ing is def­i­nite­ly with­out a doubt; Investo­pe­dia. So many high­ly pro­fes­sion­al con­trib­u­tors and knowl­edge to be found there. That is also where I found this arti­cle on ‘Build­ing the Per­fect Mas­ter Plan’ by Matt Blackman.

So thanks to Matt and thanks to Investopedia.

Part of a series

This is the fifth part of ‘writ­ing a trad­ing plan’. Not sure how many parts it will have because that all depends on how much work each part will take to write. I will con­tin­ue this series until I have a work­ing trad­ing plan that I can be con­sis­tent with. I will men­tion all mis­takes and things that did go well to the best of my abil­i­ty and in all hon­esty. Thanks for tak­ing the time to read it.

Writ­ing a trad­ing plan. Part 1.

Treat­ing trad­ing like a business.

Writ­ing a trad­ing plan — part 2

Writ­ing a trad­ing plan — part 3

DISCLAIMER

Click here for my dis­claimer. It basi­cal­ly says that I am on my path to becom­ing a trad­er and these are just my opin­ions on how to approach learn­ing to trade. Feel free to check it out and com­ment on it.

Here it goes…

Sum­ma­ry so far

In the first part of writ­ing a trad­ing plan I talked about things like skill assess­ment. You first have to learn some basics before you have a bet­ter under­stand­ing on how to make a plan. Then I took a look at ‘men­tal prepa­ra­tion’ and made a mantra for myself. A mantra I will say before I start my trad­ing ses­sion. After­wards, I estab­lished the amount of risk I am will­ing to take. This was pri­mar­i­ly based on my bal­ance chart, take a deep­er look into my bal­ance chart here. At the end of the first part I wrote about my per­son­al goals regard­ing trading.

In the sec­ond part I wrote about doing your home­work. The things that, in my case, crude oil has cor­re­la­tions too. News to read. Finan­cial instru­ments to watch in order to pre­pare myself for a trad­ing ses­sion. Then I con­clud­ed that because I trade the very small time frames I don’t have to take them into con­sid­er­a­tion that much.

In the third part I wrote out my thoughts on ‘trade prepa­ra­tion’ and defined my exit rules. The exit rules come before the entry rules because they are more impor­tant. Most peo­ple tend to neglect these think­ing the entry rules are more impor­tant. I defined my trade prepa­ra­tion as doing the tech­ni­cal analy­sis on the charts that I am trad­ing at. On top of this the men­tal prepa­ra­tion that goes into start­ing your trad­ing session.

In the fourth part I wrote about surf­ing the waves  by set­ting entry rules. I dove into what time frames I use and how I look at them. I even dis­cussed how my trad­ing set­up is, well,.. Set up. I also dis­cussed my strate­gies a lit­tle for dif­fer­ent time peri­ods of the day and week. 

In this fifth part I will con­tin­ue fol­low­ing the trad­ing plan out­lined by Matt in his arti­cle on Investo­pe­dia. The remain­der of the items are:

• Keep Excel­lent records 
• Per­form a Post-Mortem

So let’s get start­ed with work­ing on the next item which is ‘keep excel­lent records’.

Keep excellent records

This is prob­a­bly the most impor­tant part of your trad­ing plan. By keep­ing excel­lent records of your trades you can get first-hand insights into the mechan­ics of how you trade. Makes sense right?! By doing this you will learn what you are doing right, but even more impor­tant, what you are doing wrong. So let’s get to it. 

Where to track?

I have been using Trel­lo for a long time for orga­niz­ing my thoughts on learn­ing and work, and basi­cal­ly life in gen­er­al. I use Trel­lo for basi­cal­ly every­thing. If you don’t know what that is… Just click here! It is a fan­tas­tic piece of online soft­ware and the best thing of all… it’s free. Go on and give it a try at Trello.

What to track?

In keep­ing excel­lent records you need to know what to keep track of first. So I made a list of the things I want to keep track of and I’ll explain each point fur­ther in detail if need be.

• What are my targets?
  • Prof­it tar­get for the day/week/month
  • Loss tar­get for the day/week/month
• Entry and exit of each trade
  • This one is going to be hard since I take many posi­tions because of my scalp­ing nature. How­ev­er, I will still have to record these if I want to learn from them. I have the option to either write it down on a notepad or use my Sam­sung Note Pro 12.2 tablet that has a sty­lus pen. With this I can direct­ly upload it in dig­i­tal for­mat to Trel­lo so this will be the option that I choose. 
• I will have to record the time, sup­port and resis­tance levels. 
  • The sup­port and resis­tance lev­els I will plot on the 4 hourly chart. THe high­er the time frame the more the lev­els are ‘valid’.
• Keep track of the dai­ly open­ing range, mar­ket open and close for the day. For me this means to keep in mind what that dai­ly range is and where we are at now as opposed to it. I will use the infor­ma­tion off www.investing.com for this purpose. 
• Com­ment on your trades
  • Why did you make the trade and what have you learned?
• Print out the trades for that day by mak­ing an account state­ment report or what­ev­er the plat­form you are using calls it. Some­thing that shows your trades, when you opened and closed them, etc.
• Save trad­ing records in a cen­tral place, which for me is Trel­lo. Every week­end I’ll go through my trades for the pre­vi­ous week. More on this when I make my sched­ule that out­lines all tasks for the week. I’ll post this as well so that you get a bet­ter idea on how I sched­ule these things and set myself up for trad­ing that day. 

Performing a Post-Mortem

At the end of each trad­ing day I need to write down my con­clu­sions of that day in my trad­ing jour­nal. This way I can go back and see how I felt on a par­tic­u­lar day and what I did right and wrong. Some­times I feel too excit­ed and because of it I will over-trade. Some­times I feel too ‘down’ and I’ll still over-trade but in a dif­fer­ent way. The lat­ter has more to do with try­ing to make up for loss­es by over-trad­ing. The first one is more about rid­ing the ‘high’ of mak­ing some prof­it in the market. 

Wrapping things up

This was a five part series on ‘writ­ing a trad­ing plan’. This helped me to focus more on the sep­a­rat­ed parts of how my plan should be writ­ten and what I should be focussing on. Makes sense huh. Now the next thing for me is to make the actu­al sched­ule where I allo­cate time to each task on a reg­u­lar basis. 

Thank you

As always thank you very much for read­ing. Please let me know in the com­ments what you think and how your path to becom­ing a trad­er is going like.