Trading Plan

Change history
Version 1 (11th October, 2011) : First version

Trading Goals
Lifestyle Considerations
I live in the UK. I have a day job. I also have a family. Travelling to work means that I miss the important London open; and family stuff in the evening means that I miss the US close. This is unfortunate, as these are often very productive trading times due to the volatility. In the medium to long term I plan to reduce my working hours and work from home more (e.g. as a consultant in my current profession). This should allow me to capture more opportunities during the aforementioned important times of London open and US close. Furthermore, I intend to semi-automate some of my trading using 'Expert Advisors'. NOTE: as a professional s/w engineer I am more than fully aware of the limitations of EAs, but I also realise that they can have uses too.

Short-term (e.g. until end of 2011)

To develop trading skills (Forex) o Learning here at IT; developing my own edge by demo/live trading (small risk) To have a profitable trading account o Not aiming for very profitable in this time-frame, just enough to keep the account in the black even with draw-downs. Of course, if I do better than this, it would be great

Medium-term (e.g. until end of 2012)

To expand and refine trading skills (Forex and others) o More learning by myself; maybe some paid courses? To develop more general macro-economic skills o Night class / distance learning, e.g. Open University? To provide additional income to supplement my day-job o Target is 20% of my day-job salary, to be taken monthly To increase my trading capital / savings o 50% of my trading income will be ploughed back into increasing my trading capital

Long-term
To continuously hone trading skills o Learning is continuous; even with a working 'system' I will continue to develop and hone it and/or expand into other areas To quit my day job, and become a full-time trader

o This is my ultimate goal. I want the financial freedom. I want to work for myself. I want to spend more time at home with my family.

Trading Targets
Reward / Risk : 3:0 or greater Strike rate% : 60% wins or greater Trade frequency : 15 trades per week (approx. 3 trades per day)

Markets, Instruments & Timeframes

Market : Forex Instruments : pairs of the main traded currencies, i.e. USD, EUR, GBP, CHF, JPY, AUD, CAD, NZD Time-frames : 1H / 15min for trades, higher timeframes (4H, daily) for further analysis Trading style : Swing trading, day trading, news release trading

Tools of the Trade

Broker : FXCM Software : Trade Station II, MarketScope, Strategy Trader Indicators : Price action, Supply/Demand, Support/Resistance, Relative Currency Strength

Risk & Money Management

Risk (per trade) : risk no more than 2% of trading capital per trade Risk (total) : risk no more than 6% of trading capital at any one time Lot size : scaled to meet the risk, i.e. if a smaller stop loss can be used, then lot size can be increased to maintain 2% risk limit if possible (obviously this is limited by the need for whole number lot size increments) Trading limits : 5 trades per day max; after 2 consecutive losses, back-off and stop trading for the day Over-night trades allowed, but all trades closed before Friday close

Planning / Diary
Evening (22h00 24h00)
Look at the scheduled news releases for the following day, paying particular attention to the big ones like end of month / end of quarter reports, etc. Make a list of these, or better still paint them onto the appropriate charts via a suitable indicator. Study main charts o Whats the general market conditions? o Specifically what the strong/weak currency pairs doing? o Are any pairs near supply/demand levels, etc. o Create a watch list of instruments for the following day Look at possibility of placing entry orders to catch any moves in Japan session. o NOTE: Japan session is normally quiet, but breakouts do sometimes occur, particularly if there was notable activity / news from the previous days trading which can follow through into the Japan session.

Morning (06h00 07h00)

Review of main charts o Have the conditions changed significantly from last nights study? Reasses if necessary. Look at possibility of placing entry orders to catch any moves in the London session open. o NOTE: actual moves usually occur 08h00-09h00, but these hours are currently not available to trading for me.

Day (09h00 - 17h00)

Monitor instruments for possible setups. Using indicators / alerts were possible to avoid being glued to the screen. Actively manage any live trades. Pay particular attention to news events, and US session open.

Day (17h00 18h00)

Look at possibility of placing entry orders to catch any moves in the late US session. o NOTE: trading the late US session hours are currently not available to trading for me.

Evening (22h00)
Log the day's trades (if any) into my journal/spreadsheet, and review any notable good/bad points.

Monthly Review (1st Friday or Saturday in the month)

Review the journal, and trading account statement for the previous months trades, paying particular attention to any notable good/bad points. Make changes to trading plan as required. Pay myself income if I'm in profit. Review risk %, lot sizes etc.

Trade Strategies, Setups & Entries

TBD

Exit Strategies
TBD

Golden Trading Rules Dos and Donts

Dont trade whilst distracted Dont chase a trade after missing the setup : Stay disciplined and wait for retest or pull-back Dont try to make back any losses : Losses are part of trading, accept them Dont get frustrated about missing a trade : The markets will still be there next week Dont over-trade Dont ever trade without a stop-loss

Do preserve capital : Cut losers early, let winners run, dont let a winning trade turn red Do stay disciplined : Plan the trade; Trade the plan Do keep good records