Trading Plan

[cujo]

Hi Neal and fellow subscribers,

I'm having trouble drawing up my overall trading plan rules so that I can take advantage of my subscription to Daily Forex Charts. I am finding that my entry rules get fuzzy when trading with the TRSI and things are too subjective. I think I need to have the rules laid out in front of me, but I'm not very clear on the exact entry, exit and stop loss rules and which timeframes I should be partnering together to make an entry decision and also what the signal is to get me out of a trade before I am in profit. Does anybody have a sample overall trading plan they could share to help me get started?

I guess my question is how do I turn all this information into an action plan that I can implement consistently and build a trading routine around because I am a bit lost at the moment and although I went well at the start I am beginning to find quite a few errors and losses creeping in? :confused:

[FibMaster]

Great question! I could write a book on this topic.

Trading is a complex business, and you need to adjust any trading plan to match your personality. Unfortunately there is no one-size-fits-all answer. You can benefit from the trading strategies that other use, so I hope someone posts a few ideas here for you.

You really should join me in the live chat sessions. These are workshops, so I can give you some practical help there;
http://dailyforexcharts.com/chat.html
Those workshops are free to subscribers.

Also, these seminars will be very helpful too;
http://www.fibmarkets.com/pro_seminars/index.html
Since you are a subscriber, you can save up to $50 on those live lessons.

If you post some specific questions, I'll try to help. In the mean-time, I hope someone posts some general guidance for you. Anyone?

[Lifesong]

Hi Cujo & Neal

As said, one could write a book or two on the subject, but I believe the following would shed some light on my approach.

Firstly, I am more of a swing trader than an intraday trader and would generally hold my position for a few days even a week or two. The reason why I follow such an approach is that I hold a day job and I cannot monitor the trade on a fulltime basis. Due to the volitality of the Forex market and my approach I have to endure bigger swings than that of an intraday trader. On the other hand I perhaps compromise by trading smaller lot sizes and pursuing more pips than some intraday traders.

Secondly, with this in mind I apply the following rules and in most instances I have to be very patient for price action to confirm trading potential:

1. Identify the pair I want to trade,
2. Establish the overall trend of the pair - in my case the daily trend,
3. Entries will be set with the direction of the overall trend by identifying Fiblevels (SK levels) on 4h charts after calculating the potential risk/reward ratio. If SK level is respected on 4h chart, I'll wait for the 1h TRSI cross to confirm entry or place a limit order at a retracement level of the last move.
4. My stop is set just beyond the next Fiblevel e.g. if SK is confirmed by .618 of a shorter swing and .382 of a longer swing, I'll set it just beyond the .618 of longer swing or if more appropriate just beyond the previous swing level of the shorter swing.
5. Generally my profit objective is identified by using Fib expansions or the previous swing level i.e previous high or low. Sometimes I might even have multiple trades and would let some run to the next Fib expansion level or liquidate some at different points.
6. If for some reason, I am in trade for a day or two and I notice that momentum is lost on the 4h chart, I'll use the TRSI cross to exit the trade before price reverses towards my stop or move the stop to either breakeven or smaller profit/loss level.

What I've found with this approach is that I have to scan many pairs to identify trade set-ups and I have to be very patient before entering trades. The majority of times that I've entered a losing trade it was mainly due to impatience or not being willing to ride the draw downs due to excessive volatily or even trading too volatile pairs like GBPJPY/GBPCHF/EURJPY/etc.

I hope this will shed some light on my approach and I'm looking forward to hear what other traders do!

[FibMaster]

Hi Cujo & Neal

As said, one could write a book or two on the subject, but I believe the following would shed some light on my approach.


Great post Lifesong!

[Graham_S]

Odd this shouold come up as i've been trying to get my head around writing one for this type of trading. I am definitely 'a need tick box' type person, certainly until the routine becomes 2nd nature. My mind tends to wander, say from a good start looking at trend, supp, res on the 4h, then summat catches my eye on the 5 min and all of a sudden i havent a clue what's going on in between, so have to waste time retracing steps gong around in circles. (Not just trading, either)
If you are 100pcent rule based a trading plan can be easy to put together, but if it's judgemental, the framework and absolute rules as in the rule based system are easy to put in, but it's the variables in between that cause me the grief.
For a system i was using last year, rule based, I did a flowchart - I like flowcharts - flowcharts force one to revisit the the process flow numerous times to get the flow chhart working with no dead ends, endless loops or cliffs. Once it's working, the system it's describing, by association, is working. An added bonus is that as the author has visited the process so many times he's very familiar with it.
For info, I've attached it, (I think this was draft 2) although, unless you know the basics of the system behind it, it will probably be double dutch.
Maybe i'll have a go at another one - or just pinch bits of lifesong's:-)

Cheeers.

Graham.

[cujo]

Thanks Lifesong and Graham,

These are really great responses. I am in the process of mulling over them and drawing up a plan for my own routine. Like Graham without a detailed routine laid out before me my brain takes all sorts of tangents and I end up confused. You've both given me some excellent ideas to work with.

I'll let you know how I get on.

Regards,
Cujo.

[FibMaster]

Hi Cujo & Neal

What I've found with this approach is that I have to scan many pairs to identify trade set-ups and I have to be very patient before entering trades. The majority of times that I've entered a losing trade it was mainly due to impatience or not being willing to ride the draw downs due to excessive volatily or even trading too volatile pairs like GBPJPY/GBPCHF/EURJPY/etc.



Patience is the one of the toughest aspects of higher time-frame trading. The chart moves slowly, and a "little" whipsaw is actually a large move on the price scale. So it takes a lot of patience, determination.

[toyogo00]

Hi FibMaster,

I would like to suggest you conduct a lesson on this topic - "How to create a viable trading plan with Fibonacci System".

Regards,
Toyogo

[lori]

i would really LOVE a seminar on that as well!!!! such a good idea, toyo! just make sure that all attendees have seen the videos and all the seminars; becuz it entails ALL that, i'm sure!

[FibMaster]

Hmm, what would be in that seminar? What questions would be answered?
How about making a course outline, what would you like to see in it?

[paddycal]

hi neal

i think that sort of seminar would be great. Being new to your methodology i'm still struggling to formalate a plan to take whats mentioned in the daily updates and have a plan of attack for the charts.

i want to trade the shorter timeframes , but often spend a lot of time relooking over the higher timeframes charts to see what i should be doing on the lower timeframes.
it's maybe more of an organisational thing, and i've signed up to some of your upcoming seminars , so maybe what i am looking for will be delivered in there.

so for example, what are the steps required to take info from the daily updates and make a 5 min or 10 min trading plans.
outline of where to place stops at that timeframe.
how to recognise when the trade is going against you.
scaling in or out....
maybe setting alarms to notify you when price is in long/shorting area , otherwise ignore it.

maybe all these are covered in other webinars , but it would be good to have them all in one , as a complete package.
as someone mentioned , maybe have the requirement that all attendees are familiar with the basics , so that these do not have to be covered.

anyways just my thoughts on it ...
would be great if something like this did eventuate !

thanks

Patrick

[Graham_S]

Well - I've got over the massive mental block that was my trading plan, and to be honest that has completely derailed my trading this past month or so. I've piddled myself off big time.
It sounds daft, but if i produce a plan, then I have to keep to it and I don't like conforming, so not looking forward to it. LOL! Bloody psychology!
The engineer and ex Navy man in me has come out in full force to produce version 1 of the plan. Can't help it - sorry. It looks overly complicated, and probably is as it stands. However, even when I read it again there is nothing in there that I wouldn't normally be looking at on the charts - I've just never put rules against most things. It's amazing how much info the human brain analyses without realising until u try to put it on paper.
All i did was list things i look at on the charts on bits of paper before transferring them to the pc and the plan.
From it I would like to produce a simplified tick list/flow chart to help me identify trade entries especially and then the exit method/points, although the latter may be difficult in fast moving markets. The exit rules especially have fried my brains so far!

For info, the main bulk of the plan is based on the Hughes/DiNapoli methodology and assumes a working knowledge of it. There are no fib or expansion action levels mentioned nor chart patterns as these would be determined by dynamics of the chart action - the judgemental bit with a few rules around it. As Joe Di sais - take as much judgement out of a judgemental system as possible - or words to that effect.
There is some mention of 'BRV' which is the 'No Brainer' trade method on Forex Factory - or to sum it up, bounces off major and obvious supp/res lines on 1h charts and above.

Please feel free to comment or critisise the plan and its contents - but please, not the grammer nor things like getting numbering wrong - its only vers1. All comments welcome however damning - we're all in this together:-))

I'm off for a beer or three now!:-))))))))))))

Cheers.

Graham..

[lori]

just leave the beers alone when u go to trade this plan!!
rule #1: never trade drunk.:D

[Graham_S]

How's the trading plan, Cujo?

[cujo]

Hi Graham,

Its going quite slowly. Thanks heaps for submitting your trading plan - it has been of great assistance to me and has helped me to understand the process I need to go through but also helped me to realise that I just don't have the understanding of strategy to back up thought process that I need to go through to take and manage each trade which might explain why I'm having trouble documenting my trading plan. So I keep referring back to your plan and am trying to fill the gaps in my knowledge so that I can come up with a process that makes sense to me and I will have the confidence to trade with on a consistent basis.


Regards,
Shane

[Graham_S]

Let's have a peek at it then:-))

If you want further inspitration as to style, if not content, here's another part of a plan - not sure of the link is 100 pcent as images don't show up here.

http://www.trading-strategies.info/node/1465#comment-19626

G

[cujo]

Hi Graham,

I've attached where I'm at so far (at least I think I attached them). Its quite a long way from complete, obviously and I haven't put any 'Yes' 'No' captions in my decision trees so hopefully its fairly obvious. My trading plan at the moment relates to stocks but I'll be using much the same plan for forex. Otherwise I'll get confused.

I had a quick glance at the link you provided me and it looked quite helpful so I'll take a longer look later.

Regards,
Shane

[Graham_S]

Hello Shane,

Well done on your plan.
Slight delay on replying - been unable to view pc past few days. Looks like you are a flowchart man:-)) I bet there are people looking at them wondering why it's taken so long to produce them - but if you're like me, to produce those few boxes and lines means going over the process dozens of times.
I'll take a closer look at the detail in a while to see what's worth pinching:-0

Cheers.

Graham.