Many people have asked me what a trading business plan should look like and it usually takes me some time to explain it. Provided here is a copy of my business plan. Maybe some things are missing, and if anyone has some suggestions that would be useful that would be great. It has served me well for the past several years.
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Bastiat Group, LLC. An Iowa Based LLC setup for the sole purpose of trading equities. The accounts are to be traded by Brandon Fredrickson, who will serve as President, Agent, 3rd party and will have power of attorney over all accounts.
My mission is to become the best trader in the wold. I will invest my time and money in seminars, books and focus workshops to reach this goal. I will associate with as many of the top professionals in my field as possible and will work to consistantly be the most professional. I will strive to have a win ratio of 70% with a 2 to 1 risk reward min. on all my trades. I will read at least 1 new trading book a month and attend at least 9 focus workshops and or seminars.
In order to achieve my goal of being the worlds best trader I must protect my business at all times. I must stay in a very confident, yet humble mindset. I must stick to the basics which have proven themselves time and again.
I will provide my business with the tools needed to trade. This will include the best charting system, execution platforms, computers, monitors and working conditions available. I will always come to work prepared for the battles of the day, and if I am not prepared I will not trade. I will get a minimum of 6 hours sleep each day, be awake by 7am day. I will provide at least 30 minutes per day for exersise and at least 30 minutes a day of quit time to clear my mind of clutter. If I am unable to focus properly for any reason I will not trade.
I will protect my business from undue influance in trading by others by not watching financial media during the day. I will not talk to other traders during the day, again to avoid undue influance from others. I will protect my business by not taking any trade that does not fit into criteria of my methods. I will protect my capital by not trading after having 3 losses in a row.
My goal is to make a min. of 5 trades per day and average 5 points per day in my trading. I will strive for a ratio of 3 winning trades, 1 stop and 1 scratch. On my winning trades I will take 50% of the trade off the table when I have achieved a 1 point profit. At this point I will insitute a trailing stop when appropriate and strive for an average gain of 3 points on the remaining shares. This will allow me an average profit of 2 points per trade total. I will not risk more than 1 point on a single trade. While striving for a min. of 5 trades a day, I will also not exceed 12 to avoid overtrading.
My monthly goal is for a gain of 100 points, which will give me a trading income, before expenses, of $50,000 per month. (500 share trade size). I will increase my shares size every other month until such a time as I can average 2000 shares per trade.
As with any business mine will require proper funding in order to last. I will fund my business with $100,000 in risk capital. This will allow me to trade 500 shares using 2 to 1 margin. My Data and Chart Provider will be PCQuote provided by MBTrading($300 per month) Intraday alerts will be provided by MWatch ($75 per month) Storm Tracker ($175 per month) and First Alert ($500 per month). I will need 2 computers that can handle 6 (3 each) 19" monitors for my trading activities. I will set aside $1500 per month for workshops, travel and books. I will need a reliable Internet connection, available to me is a HyperNet connection. ($525 per month). This business will be home based and rent of $325 per month will be paid for the office space. Total fixxed costs $3400 per month.
I will commit the hours of 7am to 4am to monitering the markets and trading. I will also provide an additional 3 1/2 hours per day to reasearch study and admistrative work associated with my business.
In the event of a lack of professionalism on my part a severe drawdown could occur. Should I experiance an account drawdown of more than 30% I will stop trading immediatly. I will take 1 1/2 weeks off to rejuvinate myself and evaluate my trading, current market conditons, risk control, my mental state and take a vacation. I will not return to trading until I have found and corrected the cause of the drawdown.
I will avoid trading in choppy, narrow range markets. This is to preserve both capital and state of mind.
I will focus my attention on trending stocks and markets. I will look for 3 to 5 day 38 to 50% retracments from highs and lows, looking for both price and moving average support, and wide range bar trap setups. In a trending market I will look for intraday flag and breakout patterns on 15, 30 and 60 minute charts.
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Brandon |
