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A trading plan should answer the following questions.
What am I going to trade
How much am I going to trade (position size)
Why am I taking this trade now (set-up & reason)
When and at what price will I enter the trade
Where will I exit the trade. (target& stop)
Once you are in a trade your plan should answer the question;
"What do I do now?"
Your plan should be specific and measurable.
I swing trade stocks. My process is a follows.
I have a checklist that I go thru to determine which stocks I will trade.
I have a spread sheet to calculate Risk/Reward & position size
Set-up criteria determines entry & exit price
I have a fairly comprehensive list of If/Then scenarios that cover most of what could happen while in a trade. Everything from the price gapping to a power failure.
I review each trade by asking "Did I follow the plan?" If not ; why not?
"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
You can enter a trade any time, the hard part is knowing where to put a good stop and where to put a good take profit and something I continue to improve upon. Do you want to scalp for a few points or extend your stop and let the trade go for several hours?
This is the most difficult question. Are you okay taking a 2 point scalp? Or you could let the trade go the rest of the day and end up with 100 points.
Overall, I found you have to rely on your instincts to be a good trader. This is something computer algorithms don't have.
That's a pretty general statement. If we are going to learn anything from your comments, possibly you could share a mistake or two you have made using your instincts when trading and what you have done to avoid them in the future.
The thing about having a well thought out plan is that you either follow it or you don't. It's easy to measure and to determine where the problem is. If after following the plan you find that you are not getting the returns you planned at least you know the problem is the plan not the trader. If you're trading by instinct, you never know for sure.
"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
I have seen this thread here and then asked myself whether I should give an absolutely alternative answer to this question at all, because there can be, depending on what someone is specialized in trading, quite different trading plans.
In the options area, I can show something that is not necessary here in pure futures trading. I do not go into the individual details here, but I want to point out that there are not only THE one trading plans.
Behind most of these folders is a specific trading plan for the particular situation in the market.
You can work them all out if you want, but in the end I recommend that you settle on a few favorite trading plans regarding to what markets are doing or to what patterns or what so ever you look out.
But do work out this trading plans at begin in written forms, step by step with analyzing pictures, even clear entry and corrections steps levels and at final exit strategies.
If you want I will show you such a worked out trading plan in option trading, even it has not much to do with future trading.
I definitely agree that you should write your plan down. Put it on paper. For whatever reason you are more likely to follow your plan if you write it down. If your plan is in your head it's very easy to rationalize changing it in the heat of the moment. If it's written down it's there in black and white and it's harder to justify changing it.
It's a little like sharing your plan with anonymous posters on a trading forum. You are more than likely to do what you say, rather than to try and explain you actions to a stranger.
"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
