[Cory2679]

In addition...

One thing I haven't done but I'd like to do, has to do with adding to successful positions. Obviously not every trade will qualify, and I'm not sure that I'll be doing it right away, but it's something I'd like to eventually do...

I'd like to be doing something like this...

Originally Posted by thalestrader »

Basically what we'll do is this: Suppose we enter long 20K (2 mini lots or 20 micro lots or .20 standard lot) on a breakout, and the move quickly moves 20 ticks or more in our favor, and then consolidates in a small range, perhaps 2-5 ticks at the extreme of the breakout. We will put our stop loss at say +10 ticks, and we will place a buy stop to add another 20k if a new BO high is made. We then continue to add after small consolidations. With the first add, we will have our stop so that the trade does no worse than whatever the initial risk was on the first lot, but more likely we will be in a BE situation. On subsequent adds, we will be adding in such a way as to insure an overall profitable result even if we take a loss on the last entered position.

[sevensa]

This is a solid and important start and well done, but I don't think a trading plan is something you can put together in an afternoon. To give you an idea, my trading plan is about 50 pages long and took a few weeks to create. It cover things like:
Account numbers (primary/backup), broker telephone numbers (primary/backup), ISP support phone numbers (primary/backup), chart interval, procedure to upgrade my chart and execution software, trading hours, morning routine before I start trading (i.e. looking for economic reports released for the day, when will I stop trading for the day, how will I reward myself after an exceptionally good week/month, chart layouts and screenprints of them, what statistics I will collect on a daily/weekly/monthly/quarterly/yearly basis, what I will capture in my trading log, detailed rules and screen prints of all my setups and where, why and how I will exit.

My idea of trading plan is it to be more of a manual that I can give to someone else and he would be able to use it to set-up his charts and start trading the way I am.

Some of the things I think are still a bit vague in your plan:

Timeframe: 15 minute (primary), but also referencing other timeframes.

Which other time frames and what are you looking for in them?

I'm trading long off of "low-high-higher low" sequences, and short off of "high-low-lower high" sequences.

How do you define a valid low-high-high low pattern?

I also take support/resistance into strong consideration

.

How do you define support/resistance?

I will also potentially take a trade off of a break of a "chop zone"/consolidation.

How do you define a chop zone/consolidation?

I do pay attention to trendlines, channels, triangles, EW, ending diagonals, "three pushes," etc.

What is a valid trendline, channel, triangle, etc? How do you define them? What do they tell you? If you see a triangle, for example, what does it tell you?

I will focus primarily on the "intermediate" degree of swing. I am also game for a trade on a "major" degree of swing, if the opportunity presents itself.

What is your definitition of an intermediate and major swing?

OR, if I get filled, and price basically doesn't go anywhere for a very long time, I'll temporarily move my stop-loss very tight.

What is very long time?

There is nothing in my plan allowing for "gut feel," good or bad. I don't trust that I truly have "good" gut feel at this point.

Maybe not explicity, but your plan still allows for a lot of unecessary, imho, subjectivity that will force you to use gut feel.

You learn alot by really trying to answer these type of questions above and force you to really think about how you are trading.

Just my two cents... In the end this is your plan and something you should be comfortable with; not someone else.

[Cory2679]

Originally Posted by sevensa »

Some of the things I think are still a bit vague in your plan:

Thanks for the post...I appreciate it.

The only thing I thought I'd say in response is that what you say is vague in my plan, which as written I agree that it is, is not vague to me. I immediately know all of the answers to your questions.

Originally Posted by sevensa »

...I don't think a trading plan is something you can put together in an afternoon. To give you an idea, my trading plan is about 50 pages long and took a few weeks to create.

My idea of trading plan is it to be more of a manual that I can give to someone else and he would be able to use it to set-up his charts and start trading the way I am.

I guess rather than a comprehensive trading plan, what I really did was just provide myself with some general guidelines.

Perhaps a comprehensive trading plan is something I should eventually consider tackling/gradually putting together...

-Cory

[sevensa]

Originally Posted by Cory2679 »

The only thing I thought I'd say in response is that what you say is vague in my plan, which as written I agree that it is, is not vague to me. I immediately know all of the answers to your questions.

The only danger I see with this is that you might think you know the answers, but while in the heat of the battle it is easy to convince yourself that a certain situation fits your definition because you want to take a trade because you feel the market should do something and fudge your rules a bit, which is easy to do since there really aren't any clear rules. And once you start doing that, you are quickly right back where you started, trading on gut feel.

Originally Posted by Cory2679 »

Perhaps a comprehensive trading plan is something I should eventually consider tackling/gradually putting together...

Ask yourself this question: Would you open a new business based on general guidelines and create a business plan on the fly while running it?

[Cory2679]

Originally Posted by Cory2679 »

Trade management:

My default is to use the fibonacci extension tool. The 127% level is the level at which I'll move my stop to break-even, the 161.8% level is PT1, the 227% level is the level at which I'll move my stop to PT1, and the 261.8% level is PT2.

HOWEVER, depending on the setup, this may not be the very best scenario. The chart comes first...levels of support/resistance, etc.

I will trail my stops along the highs/lows of the same degree of swing that I took the trade on.

Also, if price comes very close to a PT, I will get very aggressive with my stop for that portion of the position...for example, I won't let a price get within 2 ticks of PT1, and move all the way back to my entry without taking some profit.

I have something to add to the "Trade Management" section...

Basically, if I get a sequence against me while I'm in a trade, it may cause me to move my stop to BE/PT1 "ahead of schedule." If it's a bona fide setup, I may even reverse.

For example, say I get long, price rallies, pulls back to my entry, then rallies again but appears to be having trouble/falling short of breaking the high...at that point I'll move my stop to BE.

[Cory2679]

One more addition...

I've basically been through my notes and picked out some select notes/quotes to list at the top of the page that I find particularly important...

• Support, resistance, trend, consolidation.
• Buy support and breaks of resistance, sell resistance and breaks of support.
• Just as important as how price acts at support/resistance is the manner in which it got there.
• Study HOW price is moving. – “Is price moving in clear and distinct swings or is it simply meandering, drifting seemingly without purpose? Is price marching with purpose, spending little time at any particular price before mounting its assaults on subsequent levels, or is it coiling around itself, overlapping again and again, making no headway one way or the other?”
• “When you get a large move in either direction with obvious momentum behind it, do not fade that move. Wait for a choppy pullback and then a push to a new high that stalls and presents a clear 123 going the other way.”
• “I always prefer to short into the abyss and buy into open sky, rather than acting in the middle of a current or recent.”
• “…attempt to take the other side. If looking for a short attempt to build the case for a long. Because your mind is designed with a bias to confirm your current idea this is a useful step.”
• Use your eyes, not your brain.

[BlowFish]

Originally Posted by sevensa »

Ask yourself this question: Would you open a new business based on general guidelines and create a business plan on the fly while running it?

Funilly enough many do! The failure rate of traders and small businesses is remarkably similar too. As are the reasons, under capitalisation mainly, poor planning is significant too.

Cory you might want to ask yourself why you want to trade based on guidelines rather than a proper plan? It is a common malaise, probably something we have all made excuses for in the past. I have a couple of theories why which where true for me at least.

When you think about it there are a remarkable number of things you have complete control of. There is no excuse not to plan for those comprehensively. In fact about the only thing you don't is where price might go! If you look at a few examples in this thread you can quickly see that price will either do this, that, or the other. (You could substitute hit your target, hit your stop, or drift sideways if you like ). They are still eventualities that you can plan for in quite a simple fashion.

[thalestrader]

Originally Posted by sevensa »

The only danger I see with this is that you might think you know the answers, but while in the heat of the battle it is easy to convince yourself that a certain situation fits your definition because you want to take a trade because you feel the market should do something and fudge your rules a bit, which is easy to do since there really aren't any clear rules. And once you start doing that, you are quickly right back where you started, trading on gut feel.

Take heed, young Cory. Wise words, indeed.

Originally Posted by sevensa »

Ask yourself this question: Would you open a new business based on general guidelines and create a business plan on the fly while running it?

Funnily enough (love that word, Blowfish), I've done so twice myself (three times if you consider trading a business). I do not have a business plan nearly so comprehensive as that which both Sevensa and Blowfish advocate. For what its worth, Linda Raschke is a strong proponent of having, maintaining, reviewing, and revising a comprehensive business plan. I'm just not that guy. But, that is not to say that you aren't that guy, and there is no reason to avoid putting such a plan to paper, especially as you are young, inexperienced, and far too emotional to hope for success while winging it.

I have a trade plan for each market I trade. I consider each to be extremely comprehensive. Anyone could read, for example, my day trade plan for trading stocks (it is a very simple plan that can be quickly and easily pieced together in a few of my earliest posts here at TL), and, if that person wanted, he or she could sit down the next day, and start trading stocks exactly as I do. I know this to be true, because two folks with whom I have been in contact from TL do so, and both are now, after coming to terms with their own emotions, doing quite well,if they are to be believed. And as each is but a lurker, I have no reason to doubt them.

As to your plan, I think it is a good start. But, the fact that Sevensa was able to come up with a list of questions, each valid, indicates that your plan is not where it needs to be, yet. But it is a good start, and it is far more than most who try this ever come up with to guide their development.

And, if I were you, I would heed Sevensa's above noted danger, and Blowfish's admonition. I know you said that you know what you mean, even if it isn't clear. Well, then, make it clear. You may find you do not know all that you think you know. And that will be a good thing. I did not make any real progress in any area of life, and certainly not in trading, until I was willing and able to admit how very little of what I thought I knew could correctly be considered "knowledge." And this is an ongoing process. I cannot begin to tell you how much more clear my own activity has become to me as a result of participating here at TL. Putting yourself and your actions in writing with the goal to be understood by another human being has a wonderful side effect - you come to understand yourself in the process.

Best Wishes,

Thales