Trading Plan

[KGTrader4]

As I’ve mentioned before, I’m new and trying to “figure it out”, more specifically how to go about starting to trade (swing/position, not day) with a methodology. Former Financial Advisor, did asset allocation in my work, and plannng, trading was not a focus.

So I figure why not document my trading plan as it develops, here, so I always have a reference, and so I can get feedback (although I may not always follow the feedback if I have high conviction on some issue)

First part of a trading plan seems to me to be, what to trade. Do I do scans, do I trade one instrument, many, etc.
I’m thinking I want to keep it simple. So for now, my trading plan starts with…

1. trade only the 11 State Street S&P 500 SECTOR Spyders.
I think there will almost always (but not always) be some sector worth a trade, whether it’s defensive or offensive.
I’ll keep listing my trading plan items as they develop in my head.

since I’m hew here, if you think this exercise makes no sense, that’s fine, just tell me. But tell me why.

 

[smallfil]

As I’ve mentioned before, I’m new and trying to “figure it out”, more specifically how to go about starting to trade (swing/position, not day) with a methodology. Former Financial Advisor, did asset allocation in my work, and plannng, trading was not a focus.

So I figure why not document my trading plan as it develops, here, so I always have a reference, and so I can get feedback (although I may not always follow the feedback if I have high conviction on some issue)

First part of a trading plan seems to me to be, what to trade. Do I do scans, do I trade one instrument, many, etc.
I’m thinking I want to keep it simple. So for now, my trading plan starts with…

1. trade only the 11 State Street S&P 500 SECTOR Spyders.
I think there will almost always (but not always) be some sector worth a trade, whether it’s defensive or offensive.
I’ll keep listing my trading plan items as they develop in my head.

since I’m hew here, if you think this exercise makes no sense, that’s fine, just tell me. But tell me why.

Your trading plan applies mainly to you. There are probably, 1,000 ways to make monies in the stockmarket. Each trader is different and has his own biases. A trading plan should have rules that you follow. Start with risk management. Risk no more than 2% on each trade. I limit my exposure to 10% of my capital as another rule. I am more risk adverse being 65 years of age and retired. You might be younger and can afford to be more aggressive. If so, maybe, risk 20% of your capital. This risk management is designed to not blowout your account and lose all your monies, before you figure it all out.

 

[KGTrader4]

Your trading plan applies mainly to you. There are probably, 1,000 ways to make monies in the stockmarket. Each trader is different and has his own biases. A trading plan should have rules that you follow. Start with risk management. Risk no more than 2% on each trade. I limit my exposure to 10% of my capital as another rule. I am more risk adverse being 65 years of age and retired. You might be younger and can afford to be more aggressive. If so, maybe, risk 20% of your capital. This risk management is designed to not blowout your account and lose all your monies, before you figure it all out.

thanks for the comments. Rather than say “I may be younger” I’d like to say “may I be younger” LOL.
I’m 71, retired. Plan to commit what amounts to 2% of my total investable assets to start with.
And yes, part of my plan will be how much of my total trading capital to risk on any one trade, it’s just math. But I’m not quite there yet.
I’m old, I’m moving slow ;-)

 

[smallfil]

thanks for the comments. Rather than say “I may be younger” I’d like to say “may I be younger” LOL.
I’m 71, retired. Plan to commit what amounts to 2% of my total investable assets to start with.
And yes, part of my plan will be how much of my total trading capital to risk on any one trade, it’s just math. But I’m not quite there yet.
I’m old, I’m moving slow ;-)

In that case, we are both Seniors and probably, share the same goals with our trading. Would suggest that you focus on trend following and swing trading as strategies, where you can manage positions more effectively, and probably, would be less stressful for you too. Both strategies can complement each other as I use them in tandem myself. Swing trading to generate short terms gains and Trend following for longer term, larger gains. Feel free to ask me questions and I will be happy to point you in the right direction. I am a self taught trader, so made a lot of mistakes at the start. There were no gurus to teach me. I probably, spent atleast, $10,000 learning to trade. Most of that amount spent on black box type software that ended up duds. So, feel free to ask and I will answer your questions.

 

[fan27]

What is your setup (conditions under which you enter and exit a trade)?

 

[KGTrader4]

In that case, we are both Seniors and probably, share the same goals with our trading. Would suggest that you focus on trend following and swing trading as strategies, where you can manage positions more effectively, and probably, would be less stressful for you too. Both strategies can complement each other as I use them in tandem myself. Swing trading to generate short terms gains and Trend following for longer term, larger gains. Feel free to ask me questions and I will be happy to point you in the right direction. I am a self taught trader, so made a lot of mistakes at the start. There were no gurus to teach me. I probably, spent atleast, $10,000 learning to trade. Most of that amount spent on black box type software that ended up duds. So, feel free to ask and I will answer your questions.

Thanks smalfil, yeah I will reach out from time to time. I like swing and position trading rather than day trading, because I’ve got other things I like to spend time on, like golf, and guitar, and don’t want to be in front of a screen all day.

I’ve always thought Swing trading WAS trend following, in a sense, just short term trades.

for longer term, I mean as investing not trading, I just use index ETFs and a few stocks I’ve owned for a long time, as sort of buy and hold, like AAPL, MSFT, GOOG and AMZN. Although I sold AMZN two weeks ago, didn’t like the double top I saw, but I plan to buy back at some point.

 

[KGTrader4]

What is your setup (conditions under which you enter and exit a trade)?

Not there yet. Working on it (which is why I’m not trading yet)

 

[smallfil]

Let me suggest Stan Weinstein's book, Secrets for Profiting in Bull and Bear Markets. It costs only $22.87 for the paperback copy. If you have Kindle, you can get a copy for $9.95 on Amazon. Worth every penny. Stan Weinstein wrote only this 1 book. Read it cover to cover. For trend following, I suggest Michael Covel's book Trend Following, $26.31 paperback, kindle version $14.87. In his book, Michael Cover breaks down the actual returns of the top successful hedge funds using the trend following strategy to trade the stockmarket. If top hedge funds, are employing trend following, why shouldn't the retail trader? It is far easier to place a trade, making sure your trade is aligned with the major trend. Odds are already in your favor, with the backing of top hedge funds on top of that.

 

[smallfil]

Thanks smalfil, yeah I will reach out from time to time. I like swing and position trading rather than day trading, because I’ve got other things I like to spend time on, like golf, and guitar, and don’t want to be in front of a screen all day.

I’ve always thought Swing trading WAS trend following, in a sense, just short term trades.

for longer term, I mean as investing not trading, I just use index ETFs and a few stocks I’ve owned for a long time, as sort of buy and hold, like AAPL, MSFT, GOOG and AMZN. Although I sold AMZN two weeks ago, didn’t like the double top I saw, but I plan to buy back at some point.

When swing trading, you are following the short term trends and taking advantage of them. Buy and Hold is a flawed strategy in my opinion because it involves buying a stock and leaving it alone. Hoping for the best? What happens you buy XYZ stock at $10, after 20 years, you check on it and it is worth only $5? You lost 50% of your monies waiting 20 years? In those 20 years, your stock could have gone up and down and you could have trend followed it, reduced your risk and drawdowns, and made more monies. Read Stan Weinstein's book on trailing stops.

 

[Scataphagos]

What is your setup (conditions under which you enter and exit a trade)?

That's the best question anyone could ask.... not only for noobs but for the more experienced.

The answer is basic technical analysis...
Buy Support
Sell Resistance
Chase Breakouts
Trade with Stops

I recommend a subset of TA which I call "Price TA". The reason I call it "Price" is to exclude volume consideration in trades.

The best way to learn Price TA is to have somebody teach you. It's easy to understand. Unfortunately most traders themselves don't understand it well... neither do those who purport to teach.

So that leaves you with figuring it out for yourself. I think the best way to do that is to have a futures account where you receive real-time data and do live intraday charting.... like "5-minute" charts. Within the charts there are correlations where "after _______, usually comes _________" The "usually comes" is market/issue goes up or down depending upon the correlation. The "after ______" are the setups a trader needs to learn. And there are LOTS of them! Good news is that a trader doesn't need to learn them all... just maybe a half-dozen. The bigger, more obvious ones... the "low hanging fruit".

More good news... everything you learn studying intraday price charts is equally applicable to daily charts. All markets, all time frames!