Trading Plan Template Note: Transactions in futures, options and forex is speculative in nature and involves a substantial risk of loss. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. Motivation and Goals Why do I want to trade? My starting capital is? Monetary Goal in 5 years: Monetary Goal in 1 year: Monetary Goal in 6 months: Monetary Goal per month: What rate of return does this represent? Are these goals realistic? How do these goals in line with my trading style? Additional thoughts?
Risk and Money Management It is crucial in money management to understand the pip/point value, the bid/ask spread, any trade related commission and the volatility of each instrument traded. You should know each of these before attempting to trade any instrument. What is the maximum % of my equity I will risk on any one trade? How many trades in a row can I lose before I am out of equity? I will not have more than % of my total account equity at risk at any one time (over multiple trades) Post Trade (also see section on Trade Documentation): What is my winning percentage? (Initially, when there is a small sample size, this percentage may vary greatly, as you place more trades you will get a better idea) What is my true (post trade) Risk/Reward Ratio? What are my additional costs? (Data, Internet, Supplies, etc.)
Timing When What time(s) of day do I plan to trade? What markets / banking centers / stock exchanges are open at that time? What currency pairs are most active then? How do I typically feel at that time of the day? Is that feasible with my current schedule? Timing How Long** Do not worry if at first you do not know. Everyone has a different psychological make-up and the type of trader you are should become self evident very quickly. Never ever, ever let anyone else determine your style for you! Also, please keep in mind that it is entirely possible, depending on your strategy and instruments traded, to have a combination of trade durations. These categories based on time-frame for holding positions is subjective. What type of trader am I? Scalper: Hold trades from a few seconds to several minutes Intraday: Hold trades from typically for hours attempting to seek out the major price movement(s) within a single trading day Swing: Hold trades for several days or even over one week Position: Hold trades for weeks, months or years
Tools Fundamental and Technical I am going to use the following for fundamental news analysis and information (and why): I am going to use the following technical analysis tools (and why)? Trade Documentation Below is a list of suggested items that you will want to track for each trade. This is by no means exhaustive; please feel free to add to this list, based on the needs of your methodology. Date and time of trade Instrument traded Pip or point value of instrument Spread Account balance at time of trade Result and method of analysis (technical / fundamental or both) Entry Price Price level of stop order(s) Price level(s) of limit order(s) Pre-trade Risk to Reward Ratio Trade progress (if limits are moved, closed out partial positions early, etc) Result of trade What went well with the trade and what did not go well? The key is to always keep learning!
Two Second Trade Log: When looking at a chart, mark the levels of your entry order(s), stop order(s) and limit order(s) or targets using horizontal lines at the appropriate levels. Some traders color code theirs, but feel free to do what works best for you. Many trading platforms will also display your orders on the charts which makes this process much easier. The reason we do this is to capture all of the information listed above in the screen shot and not have to retype it later on. Step 1: Once the chart is set-up (should be part of your trading routine) or your orders are entered simply hold down the CTRL and ALT keys and hit the Print Scrn/SysRq button (some laptops may just have a PRT SCRN or some variant). This will take a snap shot of your active window; however, you will not see anything happen. Step 2: Open a word processing document such as Word, place your cursor at the desired point, right click the mouse and choose paste (shortcut for paste is CTRL + V). This will apply the screen shot to the document. Depending on the trade, you may have just a screen shot of the trade opening and one more after the trade is completed; however, if it has been an actively managed trade, you may have multiple shots. Also, you may want to consider typing a few notes if there is anything that you notice or have done with the trade. Taxation and Trading Entity Consider meeting with a qualified tax accountant or attorney to discuss the pros and cons of trading in an individual account versus a flow-through entity such as a limited partnership or limited liability company (LLC). If I am trading in an individual account, do I understand how futures contracts are taxed under IRS Section 1256? What record-keeping will I need to keep, depending on whether I am trading as an individual or as a flow-through entity?
Continuing Education What areas need work? General market knowledge and terminology Trading platform Order entry and exit strategies order types Analysis tools Technical or Fundamental Trading strategies Money management Trading psychology All of the above Need to hone your trading skills using a Demo Account? Look for a platform that best fits your trading style: Futures or Forex? Futures contracts or options on futures? Day-trading or position trading? Request a demo account from Zaner Group by submitting a Request for a Demo, at http://www.zaner.com/3.0/platforms/demo.asp Opening Your Trading Account Ready to take that next step toward putting your trading plan to work? When you are ready to open your account with Zaner Group, the starting point is a brief, one-page Zaner Agreement: http://www.zaner.com/3.0/account/account.asp Transactions in futures, options and forex is speculative in nature and involves a substantial risk of loss. Trading is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources.