One of the key characteristics your trading plan definitely needs to have is the ability to match your personality and lifestyle. If you like quick “in-and-out” trades then your trading plan should have rules in place to make sure you scalp safely. If you can only trade certain hours during the day, then the trading plan should enable you to run “set-and-forget” systems, etc.
As for myself, I work a full-time job so there will be no time for me to babysit any running trades except perhaps during lunch breaks (I personally do enjoy my breaks so I do not see myself trading on my breaks though). So the most important factor of a trading plan for me is the ability to set it up and let it run its course without my further intervention, i.e. I should be able to place stop/limit orders before I go to work and let either my stoploss or takeprofit level close the trades. That is what I loved about the Turtles strategy I have been using. All entries and exits are calculated also so there is little room for subjectivity. However, the downsides to this strategy I personally found are:
- They focus more on swing positions which can last for weeks
- It requires a big chunk of risk, depending on the range of the instrument you are trading
- It can be quite challenging to see your profits and not touch it
I have made a stupid mistake to open multiple positions at once which luckily went in my direction at first. At one point my account was up over 50%, but I did not take any profits from that as this was not part of the trading plan. Then the tables turned and almost all positions ended up losing until it hit my stoploss. This resulted into a drawdown of over -40%. Ouch!!!
Of course, starting out with such a small amount makes it a bit more challenging also. So I have toyed with the idea of earning small, but consistent profits instead. I have been testing a new system during the last couple of weeks and I was quite pleased with the results so far. It is a quick, simple, and easy system which quite nicely fits around my schedule as well. I have started trading it this week but have only made execution trades so far so I still need to practice a bit more on that. I guess I just got too excited!
Anyway, here is the breakdown of my new system. If you are looking to apply this for yourself then please do so at your own risk!
- I will be trading the DAX from market open onwards (08:00 UK time)
- I am looking to earn 5 pips a day only. If the initial 5-pip target is hit then I will let a remainder of my profits run.
- Entry is the direction of the price after the first 5-minute candle. I will also add a 2-pip buffer for confirmation.
- Stoploss is 15 pips
- I am also considering adding a reversal trade strategy to this but do not have enough data yet
I have tested this system from 22 March – 09 Apr 2015 and these were the results:
- 32 trades in total
- 25 wins (78%)
- 7 losses (22%)
- Total pips: 502.9 (607.9 pips wins – 105 pips losses)
So where does the whole technical analysis come into this, you may ask. Well, that’s the best part (at least for me). This does not require any technical analysis at all as it simply follows the price action. The results are quite appealing albeit only representing 32 trades. I will continue documenting the results and we shall get the full picture after trade # 100. Time will tell whether this system will be profitable in the long run or not.
On this note, I will be putting my war mask on and fight another battle.