create a plan
- Thread starter junkone
- Start date
here's how I do it (just started, wish I had done it when I was younger)
Pick a number for your account, it could be starting balance or something you have attained, but that is your " number"
Each month on a date certain (first Monday of the month/last Friday of the month) withdraw 50% of amount above your "number"
If you are profitable, you will need that for taxes anyway.
In a losing month, if you are still above the number you still get a check.
If you are below the number, no check, time to get a part time job.
Pick a number for your account, it could be starting balance or something you have attained, but that is your " number"
Each month on a date certain (first Monday of the month/last Friday of the month) withdraw 50% of amount above your "number"
If you are profitable, you will need that for taxes anyway.
In a losing month, if you are still above the number you still get a check.
If you are below the number, no check, time to get a part time job.
As you have heard from posts to you, no one has a plan (except Donna).
Donna also told you she did something before she had her plan.
She developed a strategy and then, by her plan, she sweeps her life style costs and surpluses over her capital requirements.
To becme a successful trader, you need to establish a strategy that, while you work, gets you the capital requirement for trading.
That strategy will then keep you in a good life style and, perhaps you will not need to trade full time after a while. People who have to trade full time have neither a good strategy nor the required capital.
To obtain a strategy you must doument what you are doing and be able to "report" your progress.
I recommend using "Trade Sense" to articulate your trading approach. When you have this documented, then you can use its reports output variables to lay out a specific financial plan. Trade Sense will also allow you to go forward and have automatic "alerts" appear on your screen(s) which tell you to trade according to the strategy you inputted to Trade Sense.
As Donna showed ET, she increased her skills , to be able to arrive at an operating point using the capital she requires.
As time passes you can iteratively refine your strategy (do tests on Trade Sense) and then modify your plan.
For plans, it is best to do monthly's for the two upcoming years and then do quarterly's for the next three years.
There are a couple of caveats regarding the future.
Take the time to read Bob Woodward's latest book so you can make a list of of alternatives to trading in the future and protecting your family.
Both of these things will affect: your capital requirement and the time you spend trading and the markets you trade.
like one year, I had just a superb 1'st quarter, the kind you only dream about. But by then I had been trading long enough to know that these things don't last. So I figured, why the hell should I send it to the IRS when I am just going to lose it next quarter anyway? It just so happened that the next quarter was also exceptional, not as good as the first, but enough if it keeps going this way I willl never have to worry about money aqain.
So now, I think I am on to something and I press. Sure as shit, the third quatrer I am about back to break even and glad I never sent the IRS anything because I need it, not for money, but just psychologically.
Well, the fourth quarter is the best of my life, now I am in hot shit with the IRS, I haven't sent them a penny the whole year, thinking surely it willl go bad like it always does, and I get involved in some year out DEC corn and all through January it is moving just horrendously against me, and I have no money to pay the previous years tax obligation.
that's what happens when you don't have a plan.
So now, I think I am on to something and I press. Sure as shit, the third quatrer I am about back to break even and glad I never sent the IRS anything because I need it, not for money, but just psychologically.
Well, the fourth quarter is the best of my life, now I am in hot shit with the IRS, I haven't sent them a penny the whole year, thinking surely it willl go bad like it always does, and I get involved in some year out DEC corn and all through January it is moving just horrendously against me, and I have no money to pay the previous years tax obligation.
that's what happens when you don't have a plan.
your plan should not be money oriented.
take my trading as an example
1. I trade 10% of my account per position, not all in. I always give myself 10 times of chances to survive and grow.
2. I follow Jessie Livemore's trading principles to trade
3. I trade just options using the simplest directional strategy , no margin involved strategy.
4. Timeframe: daily chart to spot big move, intra-day chart to accurately time the idea to get in and get out.
5. Trail the market to lock in profit.
6. not trade everyday, only take trades I understand and I see under my experience and my trading principles.
7. withdraw 80% of profit when a trade ends. not withdraw profits like regular paycheck. 50% withdrawal set aside. and 50% withdrawal for daily living expense.
8. depsoit setaside funds if my account is bleeding and affects my operation.
take my trading as an example
1. I trade 10% of my account per position, not all in. I always give myself 10 times of chances to survive and grow.
2. I follow Jessie Livemore's trading principles to trade
3. I trade just options using the simplest directional strategy , no margin involved strategy.
4. Timeframe: daily chart to spot big move, intra-day chart to accurately time the idea to get in and get out.
5. Trail the market to lock in profit.
6. not trade everyday, only take trades I understand and I see under my experience and my trading principles.
7. withdraw 80% of profit when a trade ends. not withdraw profits like regular paycheck. 50% withdrawal set aside. and 50% withdrawal for daily living expense.
8. depsoit setaside funds if my account is bleeding and affects my operation.
most people put money in the focus.
that is misleading.
every trade is unique, some produce unexpected good returns. some may be just sctrach. some are plain vanialla losers when you get in.
we traders are like sales agent. sometimes, we may make a lot, far more than our living expense needs at that moment. but sometimes we dig a hole and bleed. those home sales agents sometimes sell out lot, some season, nothing they can sell.
make it smooth. this is the reality.
so you need factor all those in. trading business has its uniques not like a CAFE shop, after running a while, you know the average customer basis, so you can easily make a good sound estimation. trading is not. maybe just one or two trades, your one year living expenses is earned. or maybe work all days all nights months, nothing earned, even need deposit
but you need think those lean times, so you need set aside funds either from saving or from profits, to resume your normal operation as soon as possible.
that is misleading.
every trade is unique, some produce unexpected good returns. some may be just sctrach. some are plain vanialla losers when you get in.
we traders are like sales agent. sometimes, we may make a lot, far more than our living expense needs at that moment. but sometimes we dig a hole and bleed. those home sales agents sometimes sell out lot, some season, nothing they can sell.
make it smooth. this is the reality.
so you need factor all those in. trading business has its uniques not like a CAFE shop, after running a while, you know the average customer basis, so you can easily make a good sound estimation. trading is not. maybe just one or two trades, your one year living expenses is earned. or maybe work all days all nights months, nothing earned, even need deposit
but you need think those lean times, so you need set aside funds either from saving or from profits, to resume your normal operation as soon as possible.
Quote from NoDoji:
...The trading methodology that I found works with all liquid instruments in most trading (short term) time frames thru varying market conditions, and appears to have been working for as long as price charts have been documented is Price Action trading....
I'd wish you good luck, but consistently profitable trading is a matter of hard work and proper mindset, with luck playing a very minor role.
Here's a couple of those ET gems I keep trying to tell people about.
See, doubters, it's not all noise here on ET.
(Note to ND: Don't tell anymore unless you charge them.)