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Thread: PLAN your trade and TRADE your plan

  1. #1
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    PLAN your trade and TRADE your plan

    Hi, everybody.

    How many times we've been telling this phrase to ourselves? Why really small amount of traders have a trading plan and able to follow it?

    First, let's define what trading plan is.

    It is set of rules that describe your entry, exit and position management technique.

    It's important to distinguish mechanical trading system and discretionary trading plan.

    Mechanical trading system describes setups in very detailed mode, often it looks like "buy when MACD crosses it's medium line after sequence of 3 white candles closing at upper 75% of their range". This detaliization at the first sight simplifies work of a trader, but it offers less flexibility, you can't just adapt your trading system to recent changes in market activity - you should design a new one.

    Trading plan can be less rigid in describing your actions. For example: "Buy after pullback, when price breaks out from the trading range and we've seen signs of big money accumulating before". This describition does not stick your attention to bars, candles or color of indicators. You can be more flexible with your decisions, yet you know the price action you want to capture.

    How to know what plan to trade?

    First of all, it's useful to analyse - what trades can be done over there?:


    1. Breakout momentum trading.

    2. Trading pullbacks on stair-stepping trend

    3. Fading breakouts

    4. Trading sideways market


    There are other trading styles but basically every trade is a variation of one of those trades described above. To be able to consistently follow your trading plan, you should decide - is your trading style for you?

    Every style is absolutely not easy, and your should find that frustration you can live with.


    1. Breakout momentum trading.


    If you like fast markets and don't want to "nurse" bad trades, probably this is for you.
    Your profits will be relatively small (you will take only 20-30% of the whole trend, oh my God).

    Drawback of this style - leaving some money on the table, benefit - perfect timing of the trade. In most cases you will know pretty fast whether you have winning trade or not. Also, in most cases you can at least cover your risk when you are wrong.

    To trade this way, you should have a lot of patience and ability to pull the trigger when moment comes.



    2. Trading pullbacks on stair-stepping trend


    The obvious benefit of this trading style - maximized profit because you get good, often best prices that market can provide. Best winning trades can look very attractive - bought low, sold high.

    Drawback - you go against the market, you can be wrong about how deep correction is or is it a correction at all. You should be ready for some frustrating situations when market takes your stop and finally goes in your favor.
    For example in momentum breakout trading you can close your bad trades to breakeven in 80% cases. When you try to trade pullback, you may be stopped out quickly and several times in a row.



    3. Fading breakouts


    Same drawbacks and benefits like in pullbacks trading. You go against the market, you may be wrong very quickly but you can get very quick nice profits. Also you should have very good timing for your trades.



    4. Trading sideways market


    Sideways markets are often dull enough, but some traders like this slow tempo.

    Benefits: you can have enough time to enter a trade, you might not sit neat the monitor, most of the time you can use limit orders in "set and forget" mode.

    Drawbacks are wide stops, slow tempo (you don't know whether you are right ot not quickly).


    So, you should decide what trading style matches your personality.

    Of course, there can be sort of combination of one and another, but think about your "A-class trades". What do you expect it to be?


    Good luck!

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    Last edited by Value trader; 08-07-2013 at 09:10 PM.

  2. #2421
    Trader layigold's Avatar
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    Trading without a plan is like running without direction , it will end up in nothing and if you do not want your trading career to have a dead lock end , you must do everything within your power to have a plan and make sure you following your plan without considering any third party opinions. It is only few traders that have trading plans and that may be one of the reasons why only few make it well in forex trading

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  3. #2422
    Trader ara's Avatar
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    Quote Originally Posted by erespe View Post
    Yes it is true that trading is a complex activity. In addition to what you have mentioned above, we must also be quick and precise in taking decisions when what we have planned does not run smoothly. For that we need to continue to train ourselves to face unexpected situations, so that when our trading plan fails, then we will not panic and already have a way out.
    That's why we need to build at least 3 scenarios in our trading plan, as what I've discussed in here. When we have 3 scenarios in our trading plan, then there will be no such failed plan as what you mentioned. Because everything is out of our heads, when we open a buy position, and then the price goes down, that is not to say our plan is failure, because it is already in our trading plan and we can already anticipate with other scenarios of our trading plan. Whether it's exit from the market or using stop loss or hedging or other scenarios that already exist in our trading plan.

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  4. #2423
    Trader debian's Avatar
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    Quote Originally Posted by erespe View Post
    Yes it is true that trading is a complex activity. In addition to what you have mentioned above, we must also be quick and precise in taking decisions when what we have planned does not run smoothly. For that we need to continue to train ourselves to face unexpected situations, so that when our trading plan fails, then we will not panic and already have a way out.
    I think this is reality when we do in forex trading , As my observation that rules made by traders in order to get profits and minimize losses are sometimes even violated by trader self just because they feel less on the profit earned. Hence the great loss can come only because of the greed of self that feels greedy,

    So back again to the principle that the trading plan needs to be applied in a disciplined manner so that traders will always be careful when taking decision with the ever-changing market conditions. Because the risk of losing all balances needs to be prioritized so that trading can be in safer conditions.

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  5. #2424
    Trader layigold's Avatar
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    One the things that makes one a trader in deed is having a trading plan because that is what guides your decision and action on how you approach each trade setup . Trading without A plan is like walking down the street with your eyes closed .Inside your plan , you have your risk well spelt out and that will increase your confidence level in trading . He who finds himself taking positions without an appropriate trading plan is nothing but a gambler who may not last long in trading industry

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  6. #2425
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    planning trading is the most important process in the trading success. so by having food planning fro what currencies we can enter at and when to enter and exit the trade with knowing well the targtes and the stop losses , all this can be very effective to show us the real trading strategy we have , for many reasons this can be possible with professional trading

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  7. #2426
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    Effectievly we can make our trading using the money managenent methods which can help us make the right lot size ,the right take profit and stop loss .all this can be very helpful to show us the plan successfulor no .but the most important thing is to be able to be obligated to our strategy.and be patient ,to get good results

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  8. #2427
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    the planning for the trading is really very good manner for the trading and using the market according to a studied plan is a very good and effective thing to be used from time to another and all of the required tasks is to have the real strategy which can contain the plans and the arrangements built up on them in general . so the executing the plan as it was put is a very important thing

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  9. #2428
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    Planning will facilitate a trader the appropriate use of capital and management of risks. Every trader must go through efficient development of trading plan which can guide him how to manage his all trading activities in preferred way. But if you are opt to craft trading plan you can feel some disadvantages. Such as: you can make money from any sort of trading but without plan your activities will lack some systematic manner.

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  10. #2429
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    The period that each candle depicts depends on the time-frame chosen by the trader. A popular time-frame is the daily time-frame, so the candle will depict the open, close, and high and low for the day. The different components of a candle can help you forecast where the price might go, for instance if a candle closes far below its open it may indicate further price declines.

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  11. #2430
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    i totally agree with you mate
    Quote Originally Posted by Abraham Chrils View Post
    Planning will facilitate a trader the appropriate use of capital and management of risks. Every trader must go through efficient development of trading plan which can guide him how to manage his all trading activities in preferred way. But if you are opt to craft trading plan you can feel some disadvantages. Such as: you can make money from any sort of trading but without plan your activities will lack some systematic manner.

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