A written trading plan helps keep you from making poorly conceived, spontaneous, thoughtless, emotional trades. An unwritten plan often gets changed when the trader?s mood changes. A written plan keeps you from many trading pitfalls such as greed, fear, boredom, a need to be right, a need to be a victim, and masochism. While a trading plan may contain many elements, at minimum it should at least contain the following characteristics:
1.Select your investment universe (ie. Futures market and the contract/s - SPI 200)
2.Appropriate account size (capital you can afford to lose. Allow for diversification).
3.Define your style of trading (aggressive, medium , conservative)
4.Define your time frame (day / short / medium / long term trader)【交易知识macd.org.cn收集整理】
5.Have an entry rule (eg. 21 day break out)
6.Add risk management parameters stop loss (fixed dollar, trailing, swing)
7.Outline your money management
How much to risk - percentage based on capital
Percentage of money to risk on each trade
Where to place stops
When to add to a winning position
When to liquidate part / all of a losing position
When to liquidate part / all of a winning position
Profit objective for trade / week / month / year
Impact of commissions and fees on trades u individual and overall
Are you overtrading?
8.Back test the system as well as forward testing (referred to as paper trading)
9.Performance measurement (risk / reward ratio)
10.Determine your expectations
11.Determine your necessary requirements (resources to get the job done)
12.When should I start trading
13.Is trading for me?
A good trading plan is always complimented by a diary of your trading successes and mistakes. What you learn from your mistakes is more important. You paid for them, you may as well learn something from them, if you don?t remember them you are bound to repeat them. It often takes courage and cold hard unemotional judgement to stick with your trading plan【交易知识macd.org.cn收集整理】
