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My Discretionary TradingPlan

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My Discretionary TradingPlan

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  #1 (permalink)
Posts: 60 since Nov 2014
Thanks: 20 given, 13 received

Below is my trading plan.
However a lot of what I do is discretionary.
Some people will say this is just gambling if you dont have 100% fixed rules.
My answer to that is, im not sure
Many professional traders do not have fixed rules as the market requires a lot of flexiblity when for instance their stop needs just 2 more ticks of wiggle room.
My personality doesnt suit greenlight redlight entries as I dont believe the market works like that and I havent found a good greenlight redlight system!

But here is my trading plan. Feel free to critique it or quiz me on it. What I would really appreciate is a succesful discretionary trader that understands this kind of plan to tell me if I can add or take away anything.

I will start posting my trades here if the thread gets any traction.

Trading Plan:

 Why am I trading:

To make a lot of money and feel successful. TO achieve financial freedom and let that propel me in other areas of life.

 What is my Approach?

I primarily look at support and resistance, Playing bounces off these levels.
I look for moves to retrace and revert to mean at exhaustion or extreme points of action where either 1. price has really extended, 2. Price has hit a strong area 3. A certain time of day or other event creates a now or never situation for a turnaround.

 What are my Goals?
* Monthly - I aim to go live and make 10 ticks a day after commission
* Yearly - I aim to be trading 5 contracts or more and have reached a calm comfortable confidence in my trading.
* Long Term Ė If I havenít set up other businesses with my money I would aim to be trading 10 contracts or more.

 What Markets will I trade?

Primarily Oil.
YM/NQ opens can be worth trading but yet to be proven profitable.
Possibly FGBL but yet to be decided

 What Timeframes will I trade?
I trade whatever timeframe is in play. This generally means entering on the 30sec- 1 min chart after 5-30min analysis, but if a play sets up on the hourly I am more than happy to hold for a big target if I have correct position size to hold comfortably.

 What Setups will I trade?

Setup 1. Exhaustion.

Price has overextended by a very large amount 50+ ticks. At the highs/lows I am looking for either 1. A low volume test of new top. 2. Heavy Iceberg absorbtion. 3. Strong capitulation move uncharacteristic from the previous momentum.
Entry should be at the moment of 1 2 or 3 but if they happen too quickly find a low risk momentum area to get into the move.
Stop should have less than a $200 risk.
R.R should be at least 3.1

Trailing: After an impulse of 15+ticks in my direction I am looking for a pivot to use as my protective stop. Generally on these trades as they are big targets I am happy to take a first target and let the rest run at breakeven to give it room to get the 50+tick target.

Setup 2. Level Bounce

Price has preferably extended into a strong level. At this point I am looking for 1. A low volume test of new top. 2. Heavy Iceberg absorbtion. 3. Strong capitulation move uncharacteristic from the previous momentum. Furthermore given this is not always so volatile a shakeout entry is always preferable.
Stop should have less than a $200 risk.
R.R should be at least 3.1

Trailing: After a first impulse target I am looking to use a pivot after a 6+tick impulse. Level Bounces are a lot more choppy and less potent than exhaustion moves so protecting profits is more important.

Setup 3. Momentum Continuation

Price has began moving with high volume or fast speed with higher timeframe alignment (not at resistance- with space above- With some reasoning behind the move).
Find an entry with low risk and take a fast 5+ ticks and let the rest ride to the next resistance area or until the momentum stays strong.
Entries will usually be a breakout with defined low risk <8 ticks. Or a pullback that has had either 1. A low volume test of new top. 2. Heavy Iceberg absorbtion.
Stop Should have less than $200 Risk
R.R should be at least 3.1

Trailing: After taking a first target I want to get breakeven as soon as possible. These trades are all about fast momentum so I dont want to be sitting in it leaving profits on the table. Tight trails as it goes in my direction. The potential target must be considered when trailing but a 10tick move off momentum is fine.

Setup 4. OrderFlow Scalping

This setup requires VOLUME. Using either 1. A low volume test of new prices. 2. Heavy Iceberg absorbtion. 3. Strong capitulation move uncharacteristic from the previous momentum and 4. DOM sup/res IF!! The market is volatile and volumous we can trade using TIGHT stops and FAST targets. This is similar to momentum trading but usually happens on a news release or unexpected volatile moment where the direction is undecided. The key to this is using TIGHT stops and being Extremely Flexible in directional bias.
R.R should be 1.5/1
Stop should have less than $200 Risk

 Exit take profit (and/or) trail-stop rules:

 Risk Management rules:

 Pre-market activities or routine:
Macro analysis of Bias and areas of interest

 Post-market activities or routine:
If still energized or finished early evaluate days trades

 What Tools will I use for my trading business?
DOM, Intraday Charts, News Calendars

 Review process:
Was risk managed? Did I have sound entry? Did I trail appropriately?

 Continuing Education:
Always branch out to other traders and try to implement/ learn from others ideas.

 Discipline & Mindset notes:
Feel comfortable not trading, try not to let time and money force you to trade.

 My Golden Rules (and/or) Trading Commandments:
No emotional trading.
No fun gambles
Try to see it only as a money making tool and not an ego gratification excersise

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  #3 (permalink)
Market Wizard
Prince George BC Canada
Experience: Advanced
Platform: IBs TWS
Broker: IB
Trading: Stocks
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Posts: 849 since May 2013
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Congratulations; Iím betting that most beginning traders donít have a written plan. Itís is one of the first things that I recommend a trader do.

Iíll critique your plan a little at a time until you get tired of me harping at you then Iíll quit.

Discretionary vs rules based trading vs your golden rule of no emotional trading.
If you have no rules then how will you be able to tell if emotion played a part in your decision making?

I think it is a case of having to define the rules. For instance where a stop needs 2 more ticks of wiggle room, you should be able to come up with a set of circumstances (rules) that define when that situation occurs. If you tell me that it is a gut feeling then you are operating on emotion.

Iím biased because I am a rules based trader but it is much easier to avoid emotion when you have a specific set of rules. It then becomes quite simple to review your trades. Did you follow your rules or didnít you?

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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