Businessplan - Tradingplan

[ElectricSavant]

So is a business plan rigid? and a trading plan discretionary and changing?

if so, could one imagine deviations to accuratly construct a "feasability study"

AND....

could this feasability study reveal what is needed to overcome the OVERWHELMING odds of losing?

Guys I really got to go to the gym now...I'll be back! said in the Guv's voice

 

[5Pillars]

Yes I would say that my business plan is more rigid as to my yearly business goals and longer term objectives of my trading career (I am about to rewrite my business plan in December as I may go into a different realm of trading for the experience and potential scale-up).

 

[IV_Trader]

Quote from 5Pillars:

Simple.....if you have SPECIFIC rules in your trading plan to exit all trades against you by 8 ticks (lets say emini s&p positions), then you have a plan as to what should happen once price is against you by 8 ticks. If you do not have a plan (written down and is followed) then every time you have a position against you by 8 ticks you will most like do something different every time.

When you have developed a consistent and profitable method through backtesting and forward testing, it must then be put into a specific written plan of execution. If you try to trade your system without a specific plan that is followed, you are doomed to degrade the systems performance potential......written plans followed are a key part to successful endeavors in trading.

you described a strategy (tested , with some kind of edge) with pre-defined entry and exit conditions. It goes without saying that if you don't have a winning strategy (product) then you don't have a business. Lets just assume for a second that your strategy is automated and you don't have to remind yourself every day to exit at -8 ticks , what other paragraphs will be in your Business Plan ?

 

[5Pillars]

Quote from ElectricSavant:

AND....

could this feasibility study reveal what is needed to overcome the OVERWHELMING odds of losing?

Guys I really got to go to the gym now...I'll be back said in the Guv's voice

The feasibility study would be coupled to what your trading systems profitability is (or potential profitability). This should all come in the development of your specific trade system (that you would eventually formulate your written plan for).

 

[5Pillars]

Quote from IV_Trader:

you described a strategy (tested , with some kind of edge) with pre-defined entry and exit conditions. It goes without saying that if you don't have a winning strategy (product) then you don't have a business. Lets just assume for a second that your strategy is automated and you don't have to remind yourself every day to exit at -8 ticks , what other paragraphs will be in your Business Plan ?

Your BP should incorporate the specific yearly and even longer term objectives of growing your trade systems. What do you have as objectives/goals for the growth of your business as it relates to your systems and your dreams. Your Business Plan is the true map to get from where you currently are (point A) to where you want your business to be in 1 year, 5 years, etc (point b).

The ship should not leave the port until the maps are on board and the lines have been drawn, as to your journey's objective (destination).

Some specifics in your BP would be;

Where are you going to trade

What are you going to use to trade your systems

What is the system or systems you are going to trade and with what monthly objectives of profitability

How will the business be funded, how will you be paid

What percentage of profits go back into the business for future growth

etc, etc, etc ............the business plan needs to be real specific imo. Take the time in the initial planning and it will pay-off....just ask the Japanese car manufactures if their extra product pre-development planning pays off.

 

[slacker]

Quote from paulus:

has anyone got an example (wesite, personal, ..) of a businessplan to get a more concrete idea of what it is
or is supposed to be ?

Trading Plan = 'Conduct of the Trade', system entries, exits, markets

Business Plan = 'Conduct of the Business' global P&L, taxes, legal organization, etc.

John Carter who wrote "Mastering the Trade" has a good chapter on developing a trading plan in the book.

He also did 2 CBOT webinars that can be viewed at:

"Developing a Trading Plan:
http://www.cbot.com/cbot/pub/cont_detail/0,3206,1058+29704,00.html

and "Developing an Annual Trading Plan"
http://www.cbot.com/cbot/pub/cont_detail/0,3206,1058+35469,00.html

(Some overlap in content in the two seminars...)

Good Planning!

 

[IV_Trader]

Quote from 5Pillars:

Your BP should incorporate the specific yearly and even longer term objectives of growing your trade systems. What do you have as objectives/goals for the growth of your business as it relates to your systems and your dreams. Your Business Plan is the true map to get from where you currently are (point A) to where you want your business to be in 1 year, 5 years, etc (point b).

The ship should not leave the port until the maps are on board and the lines have been drawn, as to your journey's objective (destination).

Some specifics in your BP would be;

Where are you going to trade

What are you going to use to trade your systems

What is the system or systems you are going to trade and with what monthly objectives of profitability

How will the business be funded, how will you be paid

What percentage of profits go back into the business for future growth

etc, etc, etc ............the business plan needs to be real specific imo. Take the time in the initial planning and it will pay-off....just ask the Japanese car manufactures if their extra product pre-development planning pays off.

I agree with you , but all the above can be put in one sentence "Don't trade without proven edge". And again , this is the part of strategy development and not overall BP . I don't think you can compare trading to traditional business (Japanese car makers) ; many failed businesses can be turn to profitability under new management , by cost/labor cutting , higher productivity ect ect...
But in trading , even the best written BP or the best money management approach or increase in margins/capital or even drastic reduction in commissions will not turn an edgeless strategy into a winning one.

 

[5Pillars]

Quote from IV_Trader:

I agree with you , but all the above can be put in one sentence "Don't trade without proven edge". And again , this is the part of strategy development and not overall BP . I don't think you can compare trading to traditional business (Japanese car makers) ; many failed businesses can be turn to profitability under new management , by cost/labor cutting , higher productivity ect ect...
But in trading , even the best written BP or the best money management approach or increase in margins/capital or even drastic reduction in commissions will not turn an edgeless strategy into a winning one.

Yes and that is why the plan is written AFTER the strategy is developed....no sense writting a plan for a strategy that is not proven through some period of forward testing.

The Japanese are currently executing a better plan than many of the worlds other car manufactures.....you can't escape the need for a very good plan. New management that turn companies around are a result of a newly developed and executed plan.

 

[4re]

I know my opinion goes against what all the big guys say but let me explain before you jump my ass for it.

When I was in medical sales every year we had to prepare a territory business plan and present it to all the other reps and VP's all the way up to the CEO. Year after year I noticed guys that would spend a lot of time on these and it really showed. Six months later most of them had been fired because they couldn't sell a damn thing. I spent about an hour figuring what to put in the blanks and another hour typing it out. I was always in the top 10% of reps in the country. It isn't that I didn't care or I was a maverick or anything I just wanted to be out there selling.

Now I own a medical diagnostic company. Until recently I never had a written business plan. I didn't need one because I paid cash for everything in my company. The only reason I have one now is because I am looking to sell half of my company and the buyers need to know certain things about how I run it. So now I have a need for one.

I have been trading since 1993 and while I do have my trading rules written down but only because several people wanted to see my rules and I had to write them down for those guys. I am not saying that it is bad to have these things but I would rather spend my time trading than at a desk figuring out how to write down what I am going to do.

Just wanted to give another perspective on this matter. Say what you will but my trading acount has gone up and my business has continued to grow.

 

[IV_Trader]

Quote from 5Pillars:

Yes and that is why the plan is written AFTER the strategy is developed....no sense writting a plan for a strategy that is not proven through some period of forward testing.

got ya ...
profitable trading to all ( even to ones without good BP)