Trading Plan Execution

Trading Plan Execution In the next series of slides I m going to discuss the very BASICS of how to learn to execute your trading plan, how to manage yourself and your trading business, and how to progressively build your knowledge and skills so that you can safely trade consistently. Trading Concepts, Inc. 2

It s a journey that no active trader ever truly finishes; once they accept that successful trading comes from the inside, they relish the journey more than the destination. Trading Concepts, Inc. 3

Trading is not about fun, excitement, and adrenaline. Trading is going up against the very best in the world, truly remorseless warriors whose only job is to separate you from your cash. You re trying to return the favor. To have any chance at all of long-term survival, you need to run your trading like a business! Trading Concepts, Inc. 4

So how do most traders go about trading? Everyone is different. I certainly can provide you with examples from thousands of traders that I have worked with over the years. Trading Concepts, Inc. 5

Many went something like this: Find an entry point to a trade based on a friend s tip or based on the feeling that the train was leaving the station without you on a particular market. While in the trade, manage the position based on how well the position felt like it was doing to meet the earlier vision. This usually means taking profits at the first hint of green or letting losses run. Get angry at the person/newsletter/tv channel that encouraged entry into the trade and blame them for the results. Ask a friend what to do to exit the position now that it s well underwater. After the trade is over, ignore it and move to a different issue/strategy to avoid taking any responsibility for any of the negative results. Trading Concepts, Inc. 6

I hope you don t recognize too many of these negative traits in your trades up to this point, but in general, most traders come into trading through those exact steps in the cycle. Don t be surprised if your initial process mirrored the examples that I have just shown you. Trading Concepts, Inc. 7

Here s what they were doing wrong: They didn t have a clear, objective reason for getting into the trade in the first place, beyond an emotional feeling that this trade is going to do well. They didn t pre-define our risks prior to entering the trade. They didn t pre-define profit and loss objectives prior to entering the trade. While in the trade, they felt strong feelings of either elation or fear depending on whether the trade was working out or not. The decisions that they made while in the trade came from these emotions and not from pre-defined stops and limits. Once the trade was over, they neither learned from it, nor used feedback from the trade to adjust their approach. Their most common reaction to a losing trade was to blame others. Trading Concepts, Inc. 8

It s the rare individual that does NOT begin their trading career by operating in this manner. This is why I have decided to put this very important discussion in this Start-Up Edition to impress upon you that the trading knowledge that you have learned in this program will be useless if you do not have the skills to execute your trading plan! Trading Concepts, Inc. 9

Trading from Home For most of you, making the leap to a full-time separate trading office outside of the home is unrealistic and very likely might create additional financial pressures to your trading. Trading Concepts, Inc. 10

Some advice that I would like to give you about trading from home (if you decide to trade at home) is 1) Designate some space in your home as a trading office so you can avoid distractions. 2) You absolutely MUST lay down the ground rules ahead of time for your privacy and for respect for your work. 3) This is a serious profession, and it demands to be treated as such. Get this issue straight up front. 4) One of the biggest reasons for avoiding the home-front for your trading office is the myriad distractions that it may bring. 5) Regardless of where your physical office is, you MUST manage your physical surroundings during the trading day, or they may manage you and your results. Trading Concepts, Inc. 11

Your Trading Setup and Environment Just grab a PC and set it up in the corner of the living room, right? Instant trading office! Don t forget that this is a BUSINESS, so let s discuss some of the tools and issues to consider. Trading Concepts, Inc. 12

The Workstation If you are a swing trader that is using the daily charts, following just a few charts, then you can likely get by with a relatively simple system perhaps even a decently-equipped laptop computer. On the other hand, those that are day-trading will have far more intensive system requirements, necessitating faster computers, larger/more monitors, and faster network feeds. Trading Concepts, Inc. 13

You will need: a computer with an internet connection, money to invest, and an online broker. These are only the minimum requirements for anyone. To be a successful trader you will also need training, time, patience, discipline, a positive mental attitude and a strong desire to succeed. Trading Concepts, Inc. 14

Disaster Recovery/Business Continuity What will you do if you lose power for several hours? Lose the Internet for days? Lose vital utilities or even your building? How will your business survive? The time to think about these situations is NOW while you still have all of your facilities available to you. Trading Concepts, Inc. 15

Some additional items to consider: Telephone/cellphone with your broker s number on speed-dial in case of data/computer issues while in a trade Direct (vs wireless) internet connection Backup power source / Uninterruptible Power Supply (UPS) Pens/pencils and daily worksheets (daily worksheets can be hardcopy or online as well) Journal/notebook to track trades/performance Trading Concepts, Inc. 16

Do Your Homework Before The Market Opens The Number One, Cardinal Sin for every day trader is to not be prepared for the trading day thereby later telling yourself, Ooops! There it was! You missed a signal. An obvious entry point, a pullback to the Moving Averages, whatever it was. Trading Concepts, Inc. 17

You didn t do your pre-market homework. You weren t prepared. You decided to tackle a trading day by shooting from the hip; this is a classic rookie mistake, and unfortunately even one that experienced traders can fall victim to if they get complacent. How many times have you heard conversations with other traders about a missed move? How OBVIOUS does a past move look now that you have the benefit of history to look at it? Trading Concepts, Inc. 18

The ONLY way that you can make effective decisions on the hard right edge where the future is unknown is to be PREPARED! Prepare yourself ahead of time for the days trading activity. Trading Concepts, Inc. 19

The Pareto Principle The principle simply states, 80% of effects come from 20% of the causes. It also has been called the 80/20 rule. When used in time management, it means that 80% of the results that you generate are coming from 20% of your efforts (your time) and that 20% of the results are coming from 80% of your time! Trading Concepts, Inc. 20

So the question is, If 80% of our time is not generating any results, what are we doing with that 80%? You guessed it, we are wasting it! This is where planning your day can help to give you a concrete set of activities and to prioritize them so you can get more done! Trading Concepts, Inc. 21

First off, if we have been wasting our time, do these sound familiar?: Check your e-mail 50 times per day? Surf the net out of boredom? If you are in an office, how many days do you come in and shuffle some papers on your desk, check your e-mail, stare at the screen, take a break to talk to other co-workers, etc. just to pass the time? Update your Facebook or check on your friends? Take extended lunches? Trading Concepts, Inc. 22

Your mission is find out what 20% of activities you are doing to generate 80% of your results and to go spend your time in those activities getting better at them and finding other activities like them. These are what we call high value activities. Trading Concepts, Inc. 23

Move Around I m being blunt here, but if you don t get up and move around during the day, you may end up being the shape of a Bartlett pear. Now, I am NOT saying that you have to have the physique of a Lance Armstrong, but I think we can all agree that we feel better and act sharper when we re active, yes? Just some moderate activity is all you need to keep your edge. Trading Concepts, Inc. 24

Quick Summary Trading Plan Execution I sincerely hope that this module has been an eye-opener for you. My wish is that you make an honest and sincere effort to evaluate yourself; only if you re truly honest with yourself will you get down to the real work required to acknowledge your liabilities and to learn to trade around and to overcome them. I hope that by now, you re beginning to realize how serious an undertaking it is to run your trading empire like a true business. Trading Concepts, Inc. 25

Continuous improvement through corrections is NOT bouncing around from trading strategy to strategy as you go from trading futures, stocks, FOREX, and/or options. What you have learned in this mentoring program is a very consistent and disciplined trading approach to the markets. Trading Concepts, Inc. 26

E-Mini Futures Brokers If you do not already have a broker lined up, here are some online brokers we recommend: FuturePath Trading (Jared Putnam) TradeStation (Pedro San Juan) Global Futures (Vinny or Greg) http://futurepathtrading.com/ http://www.tradestation.com/ http://globalfutures.com/ Interactive Brokers https://www.interactivebrokers.com/ind/en/main.php Trading Concepts, Inc. 27

Legal Disclaimer No claim is made by Trading Concepts, Inc. that the trading strategies shown here will result in profits and will not result in losses. Trading may not be suitable for all recipients of this Training Program. All comments, trading strategies, techniques, concepts and methods shown within our Course are not and should not be construed as an offer to buy or sell stocks, ETFs, futures, foreign currencies, and/or options they are opinions based on market observation and years of experience. Therefore, the thoughts expressed are not guaranteed to produce profits in any way. All opinions are subject to change without notice. Each trader/investor is responsible for his/her own actions, if any. Your purchase of the Trading Concepts EMINI SUCCESS FORMULA Start-Up Edition constitutes your agreement to this disclaimer and exempts Trading Concepts, Inc. from any liability or litigation. Trading Concepts, Inc. 28