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Elements of a Trading Plan

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If you are trading currencies it is similar to an order book I believe if your broker offers that. DOM is just Depth Of Market. It is a brilliant thing but a real problem for many futures traders as it is a little bit like a flashing fruit machine unless you know how to use it!!

 

The reason I mentioned the other candle types was just because you won't see every tick on them and get an itchy trigger finger.

 

A question I have for you on the early exits, have you got much data of past trades? It might be a useful exercise for you to look at specific early exit triggers. At the moment, it sounds like you enter based on well structured planning but exit based on feeling. Am I right? I don't know but it's an easy thing to do for sure even if it's not what you do. I do think that if you allow a number of set conditions for early exit which you have studied the efficacy of, in general you will feel more confident.

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If you are trading currencies it is similar to an order book I believe if your broker offers that. DOM is just Depth Of Market. It is a brilliant thing but a real problem for many futures traders as it is a little bit like a flashing fruit machine unless you know how to use it!!

 

No - I have never seen DOM on the broker's platform I use. The broker is a CFD Market Maker' date=' but prices are accurately reflected, and consistent with MT4 quotes at all times.

 

A question I have for you on the early exits, have you got much data of past trades? It might be a useful exercise for you to look at specific early exit triggers. At the moment, it sounds like you enter based on well structured planning but exit based on feeling. Am I right? I don't know but it's an easy thing to do for sure even if it's not what you do. I do think that if you allow a number of set conditions for early exit which you have studied the efficacy of, in general you will feel more confident.

 

Unfortunately I don't have much data - I have not traded regularly for a quite a while, until recently (3 weeks). But you would have been correct previously - I did tend to take early exits.

 

Now I do set my TP according to support or the DPP in a short (opposite in a long trade). at the time I set the trade, I set both SL and TP. To be candid, I would be better served turning off the computer and coming back later. It is the screen watching that creates the desire to lock in early profits. But I am doing fine this past week in resisting that, and I can relax a bit more.

 

I firmly believe that as I begin to trust what I am doing a bit more that I will eventually harden right up to this issue. The other thing I am doing is cherry picking my trades and reducing risk. I simply prefer to miss an opportunity to take a trade if all the parameters are not in line. My record over the past few weeks is good, but the losers were due to incorrect placement of SL - the TP was eventually hit as planned, though of course I had been stopped out an hour earlier!

 

I have stopped allowing such things to rattle my confidence - it was a technical error - not a fundamental strategy error. Carelessness had more to do with it, because I had constructed the trade on the 15M TF and didn't take into account the R1 level that was lurking! Had I looked at the 1H it would have been clear, but I had been stalking the trade in the 15M for about an hour, and simply "thought" I had the bases all covered!

 

But exits is definitely an area in which I would easily improve profitability.

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Well it definitely sounds like you are at the very least moving in the right direction. If a trader can execute their plan efficiently and effectively, then the outcome of no one trade should matter too much.

 

By the way, thanks for being so open about your experiences. Very refreshing and I'm sure very helpful to others!!

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*Greater understanding of navigating complexity & chaos

 

*Stronger awareness and scenario planning to better evaluate trade offs of choices made

 

*Better ability to communicate strategy both inside and outside of your company

 

*Greater corporate agility—resilience responsiveness reflection

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The final cardinal principle of trading overlays all the rest. It is Manage Risk. This is as crucial as the others because it is by managing risk that you limit losses and preserve your capital.

 

The most important element of managing risk is keeping losses small, which is already part of your trading plan. Never give in to fear or hope when it comes to keeping losses small. Preventing large individual losses is one of the easiest things a trader can do to maximize his chance of long-term success.

 

Another element of risk is the market you trade. Some markets are more volatile and more risky than others. Some markets are comparatively tame. If you have a small account, don't trade big-money, wild-swinging contracts like the S&P 500 stock index. Don't be above using the smaller-sized Mid-America contracts to keep risk in proportion to your capital. Don't feel you have to trade any market that might make a move. Emphasize risk control over achieving big profits.

 

The biggest risks to commodity traders come from surprise events that move the markets too quickly to exit at their pre-determined give-up point. While you can never eliminate these risks entirely, you can guard against them by advance planning. Pay attention to the risk of surprise events such as crop reports, freezes, floods, currency interventions and wars. Most of the time there is some manifestation of the potential. Don't overtrade in markets where these kinds of events are possible.

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A good trading plan should contain the following elements: personal trading rules, time frame for your trade (you either choose the long timeframe or the short timeframe, choice of the currencies you want to focus on trading, your entry points, number of trades and finally, your exit point

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