After watching this video I decided to formalize a trade plan. There are some really good insights here, its worth watching.

You can download the trading plan from the link provided in the video. Here is what it looks like.

Michael Roth’s Trading Plan

Version 1. August 27th, 2021

Statement of Objective:

To engage in live trading in the ‘Micro’s’ (MES,MNQ,2RTY,MYM) for the purpose of training myself to be proficient at trading the Micros by working out my plan, errors, edge and other key pieces at the lowest cost and capital requirement possible.

Key Elements:

How long will I give this process to work?

I will continue to work as long as it takes for the process to work, or proves to be impossible.

What are my performance goals to validate this plan?

My performance goal to validate this plan is to achieve a net profit of a minimum of 10 points MES or the equivalent on a weekly basis, with the target being 20-40 points per week. If this proves impossible, I will then find another performance goal.

How will I measure the quality of my performance? For example, how many errors would be considered an improvement and is tolerable?

I will measure the quality of my performance using weekly targets. If I am able to achieve the minimum weekly target over a 50 trade sprint sample I will then consider moving from SIM to trading live.

How will I be able to increase the quantity traded?

I will be able to increase the quantity traded after I validated this plan, proven that it can be successfully traded live, and have the margin required for the desired quantity.

Financial Considerations:

What is the minimum number of contracts needed to execute the strategy properly?

There isn’t a minimum number of contracts needed to execute the strategy properly, rather my strategy is to trade a set number of contracts as long as I make the weekly minimum, and increase the number of contracts traded based on how many weeks I have met my targets.

Check the minimum capitalization by margin. Do I have enough to use initial margin per contract as a minimum? Check the minimum capitalization by stop size. Do I have enough capital to keep my risk per trade to 2% or less of initial equity?

These last 2 questions are difficult to answer based on my experience trading thus far. The best answer I can give at this time is this; Because I have little experience and capital, my trade plan is to invest $1000.00 after I am able to validate my plan in SIM. If I am able to double my initial investment trading live, it is at that point that I will consider the process to be working.

What are my fixed trading costs per month?

My fixed trading costs per month are actually quite small because of the platform I use and the amount of trades that I take on a weekly basis. I expect my fixed cost to be at or below $50.00 per month.

When can I add more funds to my trading account? What will be done differently?

I will add more funds to my trading account when my strategy proves to be effective in SIM over a period of 50 trades.

Launch Plan:

When can I begin to trade live? What performance metrics must be met?

I will begin trading live when my strategy proves to be effective in SIM over a period of 50 trades and meets my weekly targets.

Which days can I go live on?

I can go live on any day as long as my strategy has proved profitable in SIM and I have sufficient time that day to trade.

What should I do if my expected edge doesn’t materialize in live trading?

If my expected edge doesn’t materialize in live trading, but was there in SIM, then the problem isn’t in my strategy, it’s in my head. That's where I’ll need to look to fix the problem.

Methodology:

Preparation:

What is my consistent process for preparing for the day?

My consistent process for preparing for the day is pretty simple. I use price action to mark up swing highs and lows on the 60 minute chart to determine the market bias and whether or not I will be making trades in a particular market.

What is my process for finalizing my preparation before the open of trading?

My process for finalizing my preparation before the open of trading is my consistent process.

Logging:

What information will be added to my Trading Log?

I do not plan on keeping a trade log, rather I will be keeping a detailed journal that I will add entries to after I trade. The information I plan on capturing in the journal will be as complete as I can make it, using all the tools provided to me by my platform and computer to better understand why I took any particular trade, and what I might be able to improve upon.

How often will I update my Trading Log?

I will update my journal after I trade, and before I trade again.

Will I keep a separate Journal? If so, what goes into it?

I keep separate journals both public and private.

Time frame:

What will my trading time frame be?

I trade the 60 minute timeframe. My plan is to develop a strategy that only uses this timeframe.

What will I do if my trade exceeds the time frame mentioned above?

If my trade exceeds the 60 minute time frame I will evaluate the last candle to determine if I am going to stay in the trade.

How many trades do I expect to take per day?

I expect to take 1-4 trades a day. Like most things, it depends on the day.

Risk Management:

How much will I risk per trade as a % of equity?

Because my initial account balance will be small, my initial trades will most likely use a larger percentage of equity, making them riskier, but this will have to be done in order to initially grow my account balance. If my account survives this, rather than relying on a fixed percentage, my plan is to use daily and weekly targets and limits as a way to manage risk.

How much will I risk per day?

I am willing to risk $100.00 per contract per day, and up to $200.00 per contract, per week on micros. I am willing to risk $1000.00 per contract per day, and $2000.00 per contract per week on minis.

How many losing trades in a row will I allow?

I will allow as many losing trades in a row it takes to reach my daily loss limit.

How will I handle economic releases?

I will handle economic releases by staying out of the market when they occur.

How do I make sure that I can always contact my broker in case of an emergency?

I hadn’t thought about this. Before I start trading live again I will make sure I have emergency contact information for my broker in my wallet and on my phone.

What is the maximum leverage that I can use in terms of initial margin?

I wish I understood this better, but at this time I just don't. The best answer I can provide at this time is that I plan on starting with $1000.00 in my live account and trading micros very carefully until I have doubled my account.

Are there times of day when I wouldn’t trade?

I am planning on only trading at those times where I understand the price action and am confident enough to place a trade, but my primary focus time wise is 7:45 AM mountain until 2:00 PM. Monday through Friday.

Trading Tools:

What charts, trading platform and data feed will I use?

I am using the NinjaTrader 8 platform, with the NinjaTrader Continuum data feed. My chart is simply a 60 minute candle chart with VWAP and the previous day's high/low/close.

Will I have a live news service to support me?

At this time I do not see the need for a live news service.

Trade Execution & Management:

What will I monitor in order to start stalking a trade?

In order to better understand the price action in any one particular index my strategy is to monitor all the indexes to better gage market sentiment and determine the current bias.

What types of trades can I define?

I’m not really sure what this question means. I plan on answering it when I do.

How much information is enough to execute on consistently?

My plan is to develop a strategy that uses the least information possible to determine the current bias for the asset and how long it might move in that direction, i.e. which way and for how long.

How far (in ticks) can I chase a trade before passing on it?

I don’t plan on chasing trades, rather I will place my stop loss at the logical swing high or low and will strictly honor it.

What is my trade management scheme?

After determining where the stop loss and take profit levels are for any given trade the only time that I plan to interfere are those times where I become unconvinced of the bias, at which point I will kill the trade, or unconvinced the trade will reach its profit target. In this case I will attempt to close the trade at or above my daily profit target.

Information Limits & Priorities:

What information will I look at in order to establish my bias and to execute it?

I will look at price action and multiple indexes in order to establish my bias.

What information can I remove to simplify my charts and still execute properly?

Like many traders I have tried many combinations of charts, time frames, candle styles and indicators. Having decided to focus on price action, there is nothing more I can remove from my charts to simplify them.

Educational Support & Growth:

How often will I review my Trading Log and Journal and reset my goals?

The goal has always been to become financially independent through private equity. That will never change as long as there is a market to trade and I am not yet financially independent. My plans and strategy will evolve until I reach my goal. I review my journal on a weekly basis in order to better plan and strategize.

What will I use to keep ideas flowing and to keep growing?

I will use anything and everything imaginable to keep ideas flowing and to keep growing. Trading is guerilla warfare.

How often do I expect to adjust my plan based on new ideas?

Now that I have had 6 months to learn the basics and have ‘gotten my feet wet’, I now plan to utilize a development cycle where I come up with a strategy and plan to use it, try that strategy in SIM, and if that works, live trading, and if my strategy or plan fails here I will start the cycle anew.

Accountability:

Is there someone I can team up with to hold me accountable?

Not everybody needs somebody to hold them accountable. When people grow up, they can hold themselves accountable. My plan is to grow up.

Does my accountability partner know my goals and plan?

My partner, that would be my girlfriend, my family, my co-workers, everybody who reads my journal on futures IO- All know my plan. Another way to hold yourself accountable is to be transparent.

What are the consequences of not following my plan?

The consequences of not following my plan is not knowing whether the plan is a success or a failure.

Health & Mindset:

What will I do to keep a positive attitude and growth mindset?

To keep a positive attitude and growth mindset I journal and have taken a holistic approach to not only trading, but life in general. The strategy I employ to achieve this is called ‘The aggregation of marginal gains’. Basically it states that an individual can make large gains over time by focusing on smaller gains on a smaller time frame. This is getting 1% better everyday. It works. Additionally, the gains that I make in other areas of my life have a positive impact on my trading, and visa versa.

What will I do to ensure my focus during market action?

To ensure my focus during market action I do several different things. First, I plan what days and times I am in the market. Next I use price action to determine whether or not I will trade a particular asset. Finally I use the 60 minute time frame so that I don't have to focus every minute, but for just several minutes every hour.

How do I ensure that I allow myself time away from the market and to maintain outside interests and relationships?

I ensure that I allow myself time away from the market and to maintain outside interests and relationships by having a weekly plan that accounts for how much time I will devote to any particular activity.

What physical activity will I commit to in order to stay sharp and to manage stress?

I have started a strength training regime in order to stay sharp and to manage stress. It's X3 bar. I love it.

It was this frame in the video really spoke to me, saying this is where you are.



I'm looking forward to adding to my sprint sample next week. I have the whole week off work, so it's the ideal time gage edge.

Which way. How Long- AND (now) How Long

I'm now looking at volume when I trade. Volume equals momentum. Strong Momentum equals good direction and distance (Long). Its something like that in my head today. Speaking of long, I seem to hold losers too long. My best positions develop quickly and last little more than an hour at longest. In order to facilitate the development of such positions I'm dropping down to the 15 minute chart, which now looks like this.



I'm still looking for something that that I know is there but haven't yet found. Today's success was holding my losses to under $100.00, however, I still felt that I held on too long and missed other opportunities. There is a great big thought about my trading I'm having right now, but I don't have time to fully develop it here, so I'll now be getting on to my chores and try to hash it out while I'm hanging fascia. Here's today's trading performance, there's not a lot of useful information here, other than I hold my trades too long.



I'll try again tomorrow. Hopefully I can incorporate some of what I learned today, and get a little closer to trading like I want to.

Hey @michaelroth, glad you're doing well.

michaelroth 

I'm now looking at volume when I trade. Volume equals momentum. Strong Momentum equals good direction and distance (Long).

"Volume equals momentum" ... Not really. Volume equals one thing: participation. Sometimes heavy volume in a consolidation leads to a reversal, sometimes it leads to continuation. Volume is really the cornerstone of my entire trading model, FWIW, and I've been thinking about what volume means for the better part of 12 years now, and what I've learned is that there is no right answer, and there is no one catch-phrase that sums up how you can use volume, and no "buy if green, sell if red" use for it either. Volume can stop the market's momentum in its tracks. Or, it can fuel squeezes that carry the market farther than you would think possible.

The old TA books from decades ago would say that increasing volume "confirms" a breakout. This is nonsense, FWIW. Jim Dalton, the godfather of modern-day MP, and others parroting him, say that volume 'confirms the success of the auction.' I'll slightly disagree with that, and say it's not quite that simple (which he'd probably agree with). Markets can drift higher for long periods of time on anemic volume. Increased volume means one thing for sure, and that is that participation is higher.

You may find some interesting nuggets in the VSA (volume spread analysis) and Wyckoff methodologies. I know nothing of the methodologies these days, but they were formative for me back when I was learning what trading was all about. They taught me to think about why things were happening, and to really understand, as Wyckoff put it, "effort vs result." It's huge, and maybe the most important concept in my world.

I think they key may be to admitting that volume is NOT predictive, as nothing is! Nothing works all the time. What you can do, is to see how you can derive some edge from it that works well enough, in enough cases, for you to have an edge. Volume tells you the level of interest. Spikes in volume often mark short term tops and bottoms--it's all about positioning. Time of day matters greatly. For example, why do we see late day selloffs in the last 30 minutes? Plain and simple, weak longs running out of time, with margin requirements changing soon. How about late day rallies? How about the massive liquidity machine that is the options market...huge factor. Think about the market from the perspective of how people are positioned. How would *you* feel if you were currently long or short from a particular price? Then work from there.

michaelroth 

Speaking of long, I seem to hold losers too long.

If there's one thing you can do to really improve, it's having the discipline (and taming of the ego) to cut losers. Holding losers that aren't going much against you (say, the market is in a range), but aren't working well, is NOT a terrible thing to do, IF you have small size on ("small" being, say, 10-25% of your max size). What you can NOT do, is have half of your max size on, or your full size, and let the market just squeeze you one way. That's when a losing day becomes 5x greater than your best winning day, and that's where accounts go to die.

If you're not an Elite member on FIO, I'd say you might consider joining just for the ES thread that was started years ago. It's not as active as it has been in the past, but there's some good content posted there.

josh 

If you're not an Elite member on FIO, I'd say you might consider joining just for the ES thread that was started years ago. It's not as active as it has been in the past, but there's some good content posted there.

Totally agree with @josh on that thread, which is usually called the spoos thread. If you haven't looked into it, you should spend some time just wandering around and taking in anything that strikes you as interesting. It's the classic thread on nexusfi.com.

Don't try to read the whole thing -- 37,235 pages over many, many years. Just wander. You'll probably like it.

Spoo-nalysis ES e-mini futures S&P 500 Lame Ducks Both Fed Chairman Bernanke’s remarks yesterday and President Obama’s speech last night about his jobs plan; combined, failed to reassure the market that a solution to the country’s economic woes was at hand, and the …

Lots in there by josh, by the way, and a lot of other heavy hitters.

Bob.

There's never a lot of time.

I didn't get the chance to journal yesterday. Trading went well. Here is how I performed.

Deep in my brain

I'm just spit balling here, but its possible that admitting you are wrong is the hardest part about being human, and also the number one reason that people have difficulty trading. I think its the reason that I have held on to bad positions for too long. So with that in mind, even though I ended down for the day $23.82, I'm feeling pretty good because none of the losses I took were from holding on. I think this development is going to be an important part of how I trade, because for me its about dealing with loss, like really dealing with it, like really being able to admit to myself when I am wrong. The sooner I know that I am wrong, the quicker I can get to finding what's right, which in this case, is profit.

Despite ending in the red, today's trade performance has some really good stats. There's still something missing, something to do with how I find my good trades, like being able to identify and then replicate it. It feels like the right stuff is there, now its just a matter of putting it in the right order. All in all- pretty good day.

michaelroth 

Deep in my brain I'm just spit balling here, but its possible that admitting you are wrong is the hardest part about being human, and also the number one reason that people have difficulty trading. I think its the reason that I have held on to bad positions for too long. So with that in mind, even though I ended down for the day $23.82, I'm feeling pretty good because none of the losses I took were from holding on. I think this development is going to be an important part of how I trade, because for me its about dealing with loss, like really dealing with it, like really being able to admit to myself when I am wrong. The sooner I know that I am wrong, the quicker I can get to finding what's right, which in this case, is profit. Despite ending in the red, today's trade performance has some really good stats. There's still something missing, something to do with how I find my good trades, like being able to identify and then replicate it. It feels like the right stuff is there, now its just a matter of putting it in the right order. All in all- pretty good day.

Great progress. Knowing what you just said is almost half the battle. You realize that you, the guy in the mirror, can really make life difficult, and you develop that self-awareness which can short-circuit destructive behavior.

And then at some point the "you" in the equation begins to fade. It took me a long time to even understand how important this was, and it's always a work in progress. But at some point the "you" part just takes a back seat, and trading becomes mostly about what the market is doing. Your opinion, and even your position, do not become that much of a concern, and you're no longer fighting and resisting or imposing your will, because you don't even care what happens. It's quite enjoyable.