Novice traders believe there is such a thing as a Holy Grail or a perfect winning rule that works for everyone.
Professional traders know that the key to successful trading lies in good risk management, and that everyone has his own set of tools that work for himself, and not necessarily for others.
There are 2 reasons why I want to share my Trading Plan here:
1- so that you all can follow and better understand the process
2- accountability: I know that by sharing with you I’ll be even more motivated to follow it.
A Trading plan is composed mainly of Trading Strategy and Risk Management Strategy, and here it is.
First of all: I believe that every trader need to have a bit of knowledge about economics and politics, it suffices to spend 10 minutes a day reading the news. I use this service daily to keep me up to date Financial Juice, great service and free at the moment.
I am going to trade purely S&P500 and Gold.
I believe it takes a lot of effort time and experience to get to know a product well, so to trade 2 products seems more than enough and it will present plenty of opportunities; besides to obtain live data from CME costs 105$ a month per product!
1- S&P500 is the main American stock market index based on 500 large companies and a very good indicator of how American economy is going (more on Wiki), high volatility and less expensive than say the Nasdaq.
Talking technical: I trade Mini S&P500 because are more affordable, everyone does so, the code for the contract is ES and being now on December (month with highest volume at present) 2018 the full code is: ESZ8.
2- Gold is gold! Is the commodity with the highest volatility, and again a very good indicator for how global economy is going, and the product of reference when diversifying a portfolio.
Talking technical: the code for the contract is GC and being now on December (month with highest volume at present) 2018 the full code is: GCZ8.
Inverse correlation: read in my post how I could take profit in a ZERO RISK trade by exploiting the inverse correlation.
For example : having a clear chart with a strong trend in S&P can be helpful to interpret a Gold chart that is displaying an uncertain trend.
I try to limit my trades into the European session: more precisely from about 8 to 14 (GMT+1), up to 8am New York Time.
Two main reasons for this choice:
1- while the European session may offer lower volatility and fewer opportunities, it definitely isn’t as wild as the US session. Remember: our job here is to control risk!
2- I have become a trader to improve my lifestyle, my dream is to work mornings only, and over trading is a dangerous activity.
I am purely a technical trader, don’t work with fundamental analysis; yet it’s very important to keep up to date with the news so to be able to interpret the moods in the markets, but do not believe for a single minute that this will help you foresee price movements.
I trade with the help of the Slope Rider Strategy that I purchased from Savius (not affiliated):
– the Slope Rider by Savius is a counter trend strategy: identifying on the chart by coloring the bars when a strong divergence is active (based on up to 10 indicators, I don’t know the secret recipe unfortunately) hence the move is over; it signals with red and green arrows when the counter trend has began!
– I use Pivots (see my free indicator on TradingView) and Point of Control (PoC) from the Volume Profile as references for entries and targets when possible. This allows me to time well the entries of my orders, and avoid being stopped out: stops are always small losses, yet have a big negative psychological effect on everyone’s trading, so let’s improve our timing and we won’t have to suffer as much.
– At the end of 2018 I have participated and WON The Gauntlet by Earn2Trade, this is the challenge I would recommend because is the closest to real live trading: with fewer rules (no more fear of losing our challenge or funding because we are in a trade during a news release or at markets close) it lasts 60 calendar days, therefore you have plenty of time to prove your discipline and commitment.
It may seem more expensive, but trust me when I say that resetting Combines in Oneuptrader and Topsteptrader can easily amount to a much larger sum, and worst of all it lowers your accountability and discipline pushing you to take larger risks, be very careful!
I am affiliated with Earn2trade, yet I have renounced all payments to myself in exchange for a 10% discount to you for The Gauntlet and their training material! Find link and code over here!
Disclaimer: I am affiliated with Earn2Trade, Oneuptrader, Topsteptrader and TopstepFX.
I trade with 2 contracts: I find this easier to manage for my level of experience, and it allows me to better control the risk.
I insert every trade as a bracket order: with Stop Loss at -20 ticks, and Target at +20 for the first contract, and +40 for the second contract; once price reaches +20 ticks the Stop Loss moves automatically to break even; this will then change depending on the situation.
The objective is to make on average 20 ticks a day!
Think about this: 20 ticks is about double the money an average employee in Italy makes in a normal day of work at the office; and that is 20 ticks with 1 contract only, any accounts allows to trade at least 3 contracts. You do the maths!
Remember: greed is your worst enemy!