Building My Trading Plan

www.TradeTheMarkets.com

Trading Plan Template for 2010

www.tradethemarkets.com

A. What Markets Should I trade?

1.
2.
3.
4.

eMini S&Ps
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Why these markets? Trading Strategies:

Example: Emini S&Ps: used for intraday trading setups including tick/tiki
fades, gap plays and moving average crossovers.
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NOTE: Parameters are NEVER TO BE CHANGED once a trade is entered. If it is

entered as an intraday trade, you will not update the parameters to then make it a swing
trade, and so forth. Parameters are determined before a trade is entered.

B. Size: Number of Contracts

The total amount of funds under management can change on a month to month basis.
Therefore, I am basing the amount of contracts to trade on a per hundred thousand dollar
basis. The number of contracts to be used is as follows:

Contract
Emini S&Ps

$100,000
6

$1,000,000
60

$2,000,000
120

$5,000,000
300

C. Account Size
Your personal futures account: $XXX
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Why withdrawal profits? This is the best way to protect profits. It also is a reminder that
the numbers on the screen are real and represent real cash.
D. Execution Methods
Contract
Emini S&Ps

$100,000
2, 2, 2

$1,000,000
20, 20, 20

$2,000,000
40, 40, 40

$5,000,000
100, 100, 100

Specific examples of execution methods in the S&Ps are as follows:

Tick Fade: Ticks hit +1000 on a day you are bearish. Short 2 contracts with a 6
point stop and a 3 point target and a 30 minute time limit. If in the next 5 minutes
you get readings of +1100 add 2 more and +1200 add 2 more. If you get readings
like this later in the trade, such as 15 minutes, do not add additional contracts. After

30 minutes if neither your target or stop have been hit, you have to finesse your way
out.
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E. Drawdown Rules
If you are down 12% for the month, cut position size in half for the rest of the
month.
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F. Profit Rules
$500 per day average per $100,000
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G. Grade Card
Track all trades and rate as follows:
5: Target Hit
4: Out at a different price than target, but profitable (time stop)
3: Out at even (scratch, time stop)
2: Out at a different price than stop, but a losing trade (time stop hit)
1: Stop hit
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Add up your daily score and divide by the number of trades to get an average. This keeps
a grade point average of the number of trades you made that are profitable. Track by
trading method used as well. At the end of the month, you should have something that
looks like this:
Moving Average Trade: 4.2
Conjunction trade: 4.5

 Monkey Trade: 4.2

Gap Trade: 3.4
TOTAL OVERALL SCORE: 4.075
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TOTAL OVERALL SCORE: _____

This way you can rate each method or tweak as necessary. IMPORTANT: Any trade you
take that does not fall into a specific setup or chart pattern you have outlined, you need to
label as follows:

IMPULSE PLAY
This is your weakness and if you succumb to this temptation you must track it and see the
impact it has on your trading. Jot notes on each trade. Did you jump in too soon? Did
you miss a fill? Did you chase?
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H. Momentum vs. Distraction

Track daily, weekly, monthly momentum: Track your trading grade card as well as
your daily report card. Focus on consistent profits and smaller drawdowns. How many
days did you start off losing but ended up on the plus side? How many days did you start
off strong only to give it all back? What was going on that day in terms of interruptions,
phone calls, family stuff, etc.? You get in trouble when you are doing well and want to

then go for that bigger piece of cheese. Keep track of any days where you let greed get
the best of you, then work on reducing the amount of those days.
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J. Rewards for Performance

When you hit 60% for the year, take the next 6 weeks off. If it occurs in Q4, take
the rest of the year off.
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K. Vulnerability
After a $5,000 per $100,000 day, escape walk on wateritis by taking the next day
off and doing something that humbles you: like playing golf or flying a plane.
Do not trade S&Ps between 12:00 and 2:00 except if you are managing an
existing position.
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L. Spread the Wealth

5 % of your profits and earnings to be given to individuals and causes that you
would like to support. This includes helping out family members.
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Personal Life and Trading

You have a lot of stuff going on, other businesses and trading. You already know
that trading is the real job that you want to do, and it is possible you will drop
other projects if they become a distraction. Compartmentalize and focus on
trading during trading hours.
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O. What to Track
Look at the major indexes (Dow, SPX, OEX, NDX, Composite, Russell 2000)
and major sectors (Banks, Brokers, Semis, Computer Technology, Internet,
Retail) and note the weekly, daily, and 60 minute action on the following: RSI,
MACD, Stochastics, Volume, key chart formations in play, and position of
moving averages. You can make a Buy, Sell or Neutral rating and put this in a
spreadsheet each night. This will help to pinpoint when a key sector like banks is
starting to fall apart, etc. The purpose of this exercise is to give you a visual of
how these markets are unfolding.

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Miscellaneous Trading Tips

1. The more you trade, the worse you will do. Focus more on the swing trades.
Maximum of 5 intraday trades per day. Set them up, post your parameters and
dont screw around with them.
2. For intraday trades, always trade a setup, no impulse trades.
3. Dont stare at the P&L. Cover it up and focus on the trade execution so you are
not trading from a position of being ahead or down.
4. Focus on mechanical signals that dont care about what you are feeling about the
markets.
5. If your parameters are not clearly written down before you enter the trade, dont
enter the trade.

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