Every Trading System Needs A Trade Plan

Posted in: Secrets from Successful Traders, Trading Article

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You just picked up the latest and greatest trading strategy and have started to trade it.

You have already shot yourself in the foot for any long term success.  You may as well write a check to your favorite charity for the balance of your trading account.

Bold statement?

Absolutely, but it is true.  You haven’t even taken the time to back test and forward test this system which means you have zero idea of the the potential expectancy of the system.

 

Does The Type Of Trading System Matter?

The best way to answer that question is with an example.

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This is the Counter Punch Trader that we have here at Netpicks.  On the right side are all the trading details needed (also plotted via dots on the chart):

  1. Entry price
  2. Stop loss price
  3. Different target levels
  4. Trailing stop price levels to run the trade

It would be so tempting to see the results in the trade room or blog and just jump in with real money.  We could certainly promise “easy trading” and “profit tomorrow” but you won’t hear any of us say that.

“Look!  Over 600 pips swing trading Forex.  You can just follow the dots!”

We will never say that

Why?

Because unless you can prove to yourself and trust the system works, you will never fully commit to it.  We will constantly talk about back testing, forward testing, and getting your trade plan down on paper because they are vital.

The trading systems work, but only for those that put the time in.

Without doing that, forget about trading success.  It will remain a dream….a goal without a plan…..a waste of your time.

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Can you have day trading success?  Sure you can.  What you see here are two day trades and depending on your account size, this can be a great day.

But what if the last few trades were losing trades?

Could you keep stepping up to the plate and taking the swings?

Probably not.

Because you have not taken the time to fully grasp the potential ( or lack thereof) of the trading strategy.  You did not “dig the ditch” to help build the foundation on which you can set the beginnings of trading success.

 

Is Your Trading Plan Important?

Without a trading plan, you are flying blind.  You will not be consistent and without consistency, success will not remain.

  • Do you move your entry around certain levels and if so, how much?
  • After a large momentum move that comes out of nowhere, what do you do?
  • What do you do when there is a pending news release?

Those are some of the many question you must have an answer to when trading.  The only way you can come up with a good answer is through testing and logging your trades.

I spoke with TJ who not only develops many of our trading strategies but also runs the trade room that uses that exact same systems.  I asked him to give me a quick snapshot of a trade plan that he uses.


Hmm.. hard to answer that because it differs from chart to chart, CPT or SPT. I have created many trade plans for different situations, there are many hundreds of traders using my strategies in over 100 countries.

I’ve got some basic Forex trade plans for Spotlight Power Trader, for example for day trading the Asian Session, Euro Session or US Session. They basically go to a minimum target to scale out 25% and move to break even and begin trailing.

The next 25% comes off at T2, 25% at T3 and the final 25% exits with the trailer if the price exceeds T3. Asian start time is 18:00 et, Euro start time is 2 am et, US session is 8:30 et but work around news releases.

For futures, it depends on the chart and goal. But, the overriding trade plan for everything uses the key principal to quit with a positive result, a vast majority of the time, taking what the market wants to give us, while controlling our draw down with minimal and efficient trading.

My personal plan is to trade the Russell eMini, beginning at 9:30 et, get a T2 winner and be positive. I usually can do this in the first 1 to 3 trades, sticking to the key principal I just described. I also trade the CL Inv Report with CL, using the same idea. I wait 2 minutes after the report, then go.


Notice that his trading plans are different not only with the system he uses, but also the instrument that is being traded.  Not all markets are the same and each trading system aims to exploit an edge that has been found through extensive testing.

  • Profit targets are determined in advance before entering the trade
  • What time the trading session will be traded
  • How many trades to take

Even when price points are plotted on the screen, Troy still have an exact % that he will scale out when price reaches the targets.  In this example, Troy left out what we call “the art of trading” which includes when and by how much he will adjust around “roadblocks”.

 

See This All In Action – Live

The best way to sum up this trading article is to get you into our trade room for a trial.  You will get to see not only the trading systems that are doing very well in the markets but also trading plans at work.

I want to give you a 3 step process to getting on the right path to using a trading system and trading strategy.

  1. Click here and sign up for the free trial to the trade room.  Watch the trades play out live (especially the 1 minute crude oil trades) and see how the systems work.
  2. Download this trade analyzer where you will plug in the back testing trades you take when testing your trading strategy.
  3. Join traders just like you in the Inner Circle for trading systems and education that have the potential to change your life.

CLICK HERE

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CoachShane

Trader at Netpicks
Shane his trading journey in 2005, became a Netpicks customer in 2008 needing structure in his trading approach. His focus is on the technical side of trading filtering in a macro overview and credits a handful of traders that have heavily influenced his relaxed approach to trading. Shane started day trading Forex but has since transitioned to a swing/position focus in most markets including commodities and futures. This has allowed less time in front of the computer without an adverse affect on returns.

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