A Day in the Life of a Successful Trader – A Simple Trading Plan
By Jody Samuels
This article in The Trader’s Pendulum Series reviews a successful trader’s simple, abbreviated trading plan to move you from hobby to business in your trading. In the last article we discussed the importance for a trader to develop a trading system, strategy and plan as part of the ‘A Day in the Life of a Successful Trader’ series. Your mission in developing these habits is to get out of the Technical Trader’s Trap and transform into an Entrepreneurial Trader so that you can start being accountable to your trading. By now you have completed the Scorecard (www.fxtradersedge.com/scorecard) and are ready to get down to business.
The Minimalist Trading Plan
In my book, I define the Trading Plan as a Trading System, which is a collection of trading strategies. Having a plan is always better than not having a plan. Even a discretionary trader will have a trading system with some rules to follow even if it is only a checklist.
The first suggestion for you when you set up a trading system is to follow it, so keep it simple and straightforward. Make it easy to refer to and not too complicated. A minimalist recommended template consists of only four parts:
- The specific chart setup. The market(s), time zone(s), and time frames(s) that you want to trade in are defined here. You will also specify the indicators, tools, or price action (including candlestick patterns) that help you to identify a new trend, and indicators, tools, or price action that confirm the trend.
- General rules. This lays out a set of rules that hold true for every trade. It mainly serves as a reminder for you to stick to the trading system.
- The specific entry rules. What should trigger your buy/sell decisions? Be specific when you state them.
- The specific exit rules. These include the stop-loss and take-profit criteria.
Here’s a tip that might be useful for you when you set up your trading system. Some traders write out a list of general rules they want themselves to follow before going into the more specific and “formal” rules and these can be read before each trading session.
Here are a few:
- Avoid buying or selling after a large move in the market.
- Avoid emotional trades that do not follow the trade plan.
- Do not change the trade parameters once they are entered in the trading platform, unless it is part of the trade monitoring process.
Nowadays in the market, there are about as many trading systems as there are traders and a myriad of variables and correlations discovered that claim to help traders win big in trading. The nonexistence of a perfect trading system might sound discouraging, but this is where the excitement in trading comes into play. No one trading system is suitable for everyone. It is up to you, as a trader, to apply your creativity and insight to develop a system that fits your unique personality and preferences and to test it and tweak it until it produces consistent results.
If you’re interested in adopting these habits and working through the business planning template for Habits 1 – 10 discussed in this article series, the book is a detailed blueprint for you to follow and make your own. The book is also supplemented by a companion website with downloadable tools.
If your mission is to become a trader or investor who stays out of the Technical Trader’s Trap, then take the leap to grow into an entrepreneurial trader.
I created the FX Trader’s EDGE Coaching Program modelled after the “10 Habits of Successful Traders”, which is the title of my newly published book by Wiley.
Excerpted with permission of the publisher John Wiley & Sons, Inc. from The Trader’s Pendulum: The 10 Habits of Highly Successful Traders. Copyright (c) 2015 by Jody Samuels. This book and ebook is available at all bookstores, online booksellers, and from the Wiley web site at www.wiley.com.