STOCK INDICES TRADING PLAN - EXAMPLE OF STOCK INDICES TRADING PLAN
Illustrated Below is example of a stock indices plan that a trader can use as a template to come up with one of their own.
JUSTIFICATION FOR A TRADING PLAN
1. Trade IS A BUSINESS, BUSINESSES WHICH ARE SUCCESSFUL ALWAYS HAVE PLANS
- Businesses that are successful always begin with a plan.
- Successful business plan will guide you to success, think of your plan as a map: it's a constant reminder of how you'll consistently pull profits from the trading stock indices .
- Difference between a successful Indices trader & a losing trader is the plan.
2. TO KEEP ME IN THE RIGHT DIRECTION
Consistency is important in your trading routine to measure how successful you are as a trader.
Keep you on target, read it every day and stick to it.
IF YOU HAVE A GOOD TRADING PLAN AND YOU ARE DISCPLINED ENOUGH TO STICK TO IT YOU WILL BE SUCCESSFUL.
INDICES TRADING STRATEGY
Our Stock Indices strategy will only open bullish trades, this is because stock indices moves are based on the principle that stock prices always move up over time, therefore the stock indices that track these stock prices movement will over time move in a general upward direction. To open a buy trade we shall wait for a price pullback and buy these dips.
TREND DIRECTION
· BULLISH BUY TRADES ONLY
· WAIT FOR PULLBACKS - BUY THE DIPS
TRADING SYSTEM
GOALS OF THE SYSTEM
- Ability to IDENTIFY TREND AS EARLY AS POSSIBLE .
- Ability to AVOID WHIPSAWS .
A Trading System should find a compromise between the two Goals,
Get a way to identify a trend as early as possible but also find ways to help you distinguish fake signals from the real ones.
FUNCTIONS OF EACH INDICATOR
MA - Identify a new trend as early as possible.
RSI - Confirm the start of a new trend.
TIMEFRAMES
- Main time frame is the 1H.
- Signals are generated on the 1H time frame.
1H
- 5 & 7 L MA
- RSI (14)
RULES
LONG ENTRY
1H Chart
- Both MAs are moving UP
- RSI greater than 50
LONG EXIT
- MA gives opposite signal
TRADE ROUTINE
- Signals are generated using 1H time frame.
- Signals to be executed immediately rules are met ( Not Before ) .
- Entry signals should be executed during daytime.
- Close all trades at the end of the day.
TIME OF DAY TO WATCH MARKET
Watch market during daytime
MONEY MANAGEMENT
· Day trading - Low risk High return method
· Trade when I have a high risk to reward ratio 3:1 or more
· Never trade more than 10 % of account total account balance
· Never risk more than 2 % on one trade.
MINDSET/PSYCHOLOGYMINDSET--and--PSYCHOLOGYMINDSET--&--PSYCHOLOGY
- Trade without Emotions (greed, fear, anticipation, impulse, bias, over-excitement)
- I trade what my-eyes see not what I feel.
- I'll be patient.
My job description isn't to be the system!
It's not to decide which trades looks promising.
That's the job of my system. My system has a set of rules which tells me this is what I follow. Don't get caught-up in price action & make rules as you go along.
MY JOB IS
To sit patiently & wait for my system to indicate that it's time to enter or it's time to exit. And then with great focus I execute trade as planned.
Taking trades not given by the system, second guessing system & not taking trades given, hesitating & getting in late, anticipating and getting in early are all common place and boil down to lack of faith in system & not having a burning desire on accurate execution.
GOAL: To have 100% undivided focus on mastering my ability to execute my Indices system accurately.
The more you develop your ability to step back from market movements and watch the market dispassionately, waiting for a signal to trade, the easier it will be to witness the fluctuations of your emotions without getting sucked into them allowing them to throw you off your game.
WEAKNESS
- I am greedy.
- I overtrade
- Make a list of all your weaknesses that are interfering with your trading. This is the first step to help you to over-come the weaknesses. Use psychology to help you overcome them.
Note: by noting down your weaknesses you will start recognizing them as you trade, once you do this you will start to avoid this mistakes and your trading will improve.
GOALS
- To focus on exit just as much as I do on entry.
- Always protect my account using stop loss, money management strategies, trading with the trend and always following the rules of my system & plan.
- Never second guess or go against my system. To always keep up my discipline.
- Follow all the rules of my system and never break them.
- Trade fewer times and execute all my trades correctly. Trade what I see, what the system + charts are telling me.
- Sit patiently & wait for signals from my system.
- Achieve consistent profitable results.
Write down goals and focus on achieving these goals in your trading
FOLLOW THIS SYSTEM
This is the most important part of making the system.
Always follow the rules
Stick with the rules
Be disciplined and patient enough
JOURNAL
Log all my trades in a journal so as to track my progress.