Week 22: Plan The Trade and Trade The Plan

Every weekend I analyse charts and plan trades for the following week . One of the problems that I had when starting out was that I didn’t always follow my plans when it was time to execute. Frustrated with this problem, I changed a few things to ensure I executed my plans accurately. Hopefully these tips will help other traders too:

1. Be specific – When drawing a trade plan, be specific. Don’t just draw arrows going up and down. You need to be able to anticipate structures and price action before and after turning points. Spending a little bit of extra time and adding more detail to your plan will help give you confidence to take the trade.

2. Use different trade sizes – I used to trade with full risk (a fixed % of account balance every trade) but found that by having different trade sizes I could manage my risk better. For example, instead of using 1% each time, I would introduce half sizes and could choose between 0.5% and 1% depending on the setup and overall exposure to any given move.

3. Follow the plan blind – Every trade idea will have one or two factors against it. This is ok as participants in the markets do not agree all the time. The key is to know which factors are stronger than the others. After you get some data on various factors in your trading method, you will develop a stronger conviction to take and hold trades. You will end up being glad that there are people going against your opinion because those are the people that are going to get crushed and pay for your trade (just being honest!).

4. Give yourself a rating – Did you follow your plan accurately? Forget about the P&L and rate yourself on whether you followed your trading plans. If you didn’t then ask yourself why not? and what are you going to do about it next week? Over time, your execution will improve because you will be focusing on the process and if your trading plans are good then the results will come.

Thoughts on The Trading Week

The final week of May was a good example of patience and planning. The dollar weakened which sent markets into a trending environment with not a lot of opportunities to get on board using my entry criteria.

The only trade I made was a long on gold (from a trade plan made on the weekend) which I held for most of the week. It wasn’t an amazing trade but my entry was a limit order so it was simply a case of identifying the entry area and then leaving the market to move to the price. It was triggered in the early part of the week and there were no other major opportunities I was interested in so there was not much trading going on.

Currently reading: “Born a Crime” by Trevor Noah

 

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