Breakout Trading on Emerging and Strong Stocks

[deaddog]

Regarding what I call the strategy: risk, which stocks, setups, targets, I have it clear and on paper.
Regarding the plan, what I can say is that I have some chapters on paper and some others only in my mind. Maybe now is the time to write all that down so it's definitely clear in my mind and have a road map to follow.

My plan is a series of if/then scenarios. If this happens, I will do that.
I refer to it as my operators manual. In theory I could give it to a novice and they could trade my strategy.
When you have a plan in writing it's easy to determine if you followed your plan or not. When it's in your mind, it's easy to rationalize changing things on the fly.

 

[almx]

My plan is a series of if/then scenarios. If this happens, I will do that.
I refer to it as my operators manual. In theory I could give it to a novice and they could trade my strategy.
When you have a plan in writing it's easy to determine if you followed your plan or not. When it's in your mind, it's easy to rationalize changing things on the fly.

Then yes, I have it.
All my answers that I gave you regarding my trading come from there but I tend to call that more the strategy than the plan but I know that for a lot of people this is the same.

But your question raised my interest in writing a larger trading plan and I think it's an excersice woth doing. After merging proposals from different sites , I ended up with the one below. In bold is what I already have writen in paper, for the rest I know the majority but I have to state it formally.

If you see something missing, please don't hesitate.


1. Motivation

• Why I trade.
• How much Time I'm decided to commit to trading.

2. Goals

• Define Long term goals, the ideal position to reach financially and personally.
• Define yearly Realistic goals in terms of capital growth.

3. Initial Capital & Trading style

• State what is my initial Capital.
• Define what is my trading style, frequency, Market, etc.

4. Strategy Development

• Establish Risk management principles and trade allocation.
• State how to identify which intruments to trade.
• Set a realistic risk-reward ratio.
• Identify proper setups to trade.
• Establish a trade Management Plan.

5. Trading Routine

• Establish a trading routine, daily, weekly, monthly.
• Keep good records for every trade.
• Asses Market Direction and trade accordingly.

6. Personal Development

• Continuous education
• Improve Market Analysis
• Improve Instrument Analysis

 

[deaddog]

If you see something missing, please don't hesitate.

The outline look pretty complete.
My only suggestion is to not set monetary goals.
Set the goals more along the line of controlling emotions, eliminating mistakes and following you plan. You have no control over the market, you can only control what you do and how you act, set your goals accordingly

 

[almx]

The outline look pretty complete.
My only suggestion is to not set monetary goals.
Set the goals more along the line of controlling emotions, eliminating mistakes and following you plan. You have no control over the market, you can only control what you do and how you act, set your goals accordingly

Good point, thanks.
I had forgot that, usually when you trade well, results follow...

 

[almx]

I spent the whole weekend thinking and writing down my trading plan and the least that I can say is that it has also been eye opening. It will shake my portfolio again.

What I got from it and my action plan.

1. My goals give me plenty of time to improve and develop my trading.
   
   
2. I haven't proven to myself yet that my trading system is profitable.
   Action => Allocate initially only 25% of my capital instead of 100% until I can fully assess what is my win rate and my real risk-reward ratio and progress from there.
   
   
3. Being only invested in a few stocks prevents me from testing more setups in real rather than paper.
   Action => I Will trade at least 20 stocks. That sets my risk at 0.5% per trade which means that even being very bad and losing all the trades, the total loss would be 20*0.5=10% of 25% = 2.5% of my capital.
   
   
4. Being able to trade more stocks allows me 2 things, if and once they are in profit.
   a) Let the winning stocks run until they break their up trend.
   b) Trade additional opportunities as they become available as cash is available.
   
   
5. Point 4a could even allow me to have a lower win rate and be as profitable as with my desired initial win rate as my reward ratio would be higher.

That's where I am. Now it's a question of more walking the walk than talking the talk, get used to my routine and acquire experience.

 

[almx]

Portfolio Status as of July 2024

This is almost a start snapshot of my current portfolio as my oldest trade is only one month while the most recent have only a few days.

I will keep adding as long as the market trend keeps going and I see new opportunities.

23 Trades in total so far, from which 4, where already closed at a definitive loss.
The statistics are still irrelevant as this is only the beginning, next month when I give the next update should be more interesting.

I have found some peace of mind with my plan and strategy updated. Dividing my capital for more entries allows me to trade more opportunities which I like and The losses are small which removes any pain when taking them.

 

[almx]

There are days like the last 3 ones where it's better to not over-intellectualize about what happened !

The markets went into the toilet and so did my trades. I Got 19 trades in total stopped out since 1st of August on which 10 where closed today! Only 5 survived but are at a few percents of being stopped out.

It will certainly be one of my worst trading days in my career but also maybe one of the most important ones, not only because I'm learning to take my losses but also because I'm progressing with my trading and it's why, despite the negativity, I still made 2 purchases today but from a different setup that I hope will be a game changer for me and this is why I wanted to write this down here.

The account is now down 12% and my win rate was beaten to 9,7% !