Trading Plan

 
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Trading Plan

Position Trades

  • Longer term positions
  • Determine expected price path
  • Identify buy and sell “zones”
  • Stagger entry orders throughout zone (full position at target cluster)
  • Identify trade target – Minimum 3:1 risk/reward
  • Stop Loss where trade is proven wrong
  • Maximum 2% capital risk on any individual trade
  • Maximum 5% capital risk on correlated trades
  • Take 1/2 to 3/4 off at minimum C = A target (always take profits)
  • Trailing stop for residual position
  • Give trade TIME and do NOT exit until it does something wrong (at the timeframe you are trading)
  • Move Stop Loss to Break-even when possible
  • Determine key levels and size trades according to risk/reward and probability
  • EXECUTE with a carefree state of mind

Intraday Trades

  • 1/4 to 1/2 position size
  • Minimum 3:1 risk/reward
  • Take 100% profits at first target
  • Be nimble – long and short
  • Controlled aggression – be decisive, no room for uncertainty
  • Micro manage trades
  • Exit at: pattern completion; support / resistance; Bollinger Bands; momentum divergence; and reversal candles

Key Themes

  • Discipline: analysis; execution; journal
  • Take opportunities as they present themselves
  • Only get paid if you win
  • Document and Journal all trades
  • Regret Minimization Techniques: always take partial profits; move Stop Loss to break-even when possible; stagger entry orders to avoid missing trades
  • Monitor risk every day
  • Volume is the footprint of the herd
  • If it doesn’t “look” right, don’t trade
  • Never chase
  • Trade the system, not the noise
  • Document all trades and analysis for review and learning
  • Be patient and wait for the right trade (not the trade that makes you right)
  • Emotion always exist – embrace emotion but do not let it alter the PLAN

Trading Tools – Build a Body of Evidence

  • Elliott Wave Analysis – correct labeling of all charts with alternate counts
  • Fibonacci Retracements / Extensions
  • Trend Channels and Broadening Formations – Base; Acceleration; Deceleration; and Termination
  • RSI & MACD momentum divergence and zero line reversals
  • Daily Moving Averages – 5 ema; 10, 20, 50, 100, 200 sma
  • Intermarket / Intramarket Analysis – Confirmation / Fragmentation
  • Candle & Bar Patterns
  • Keltner Channel / Bollinger Bands

Putting the Wave Principle to Work

  • Do I see a wave pattern I recognize?
  • What evidence supports my assessment?
  • Valid setup waves: 2, 4, 5, B, X
  • Tradable waves: 1, 3, 5, A, C
  • What is the most likely course prices will travel?
  • What is the best alternate labeling?
  • Where am I wrong?
  • Does the analysis warrant taking a position?
  • Where do I enter a position?
  • Where do I place a protective stop?
  • Where do I take profits?
  • How will I manage the position once it’s open?

Paul Tudor Jones

  1. Find a trading type that fits your personality
  2. Good money management is NOT enough. You need an EDGE that puts the odds in your favor
  3. Successful traders are hard workers
  4. Research and preparation are hard work, but good trading is effortless
  5. Risk management can be very simple (eg max 1% risk per trade)
  6. Be independent
  7. Most traders lose because they won’t take losses
  8. Be patient
  9. Successful traders view it as a game
  10. You must love what you’re doing

 

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