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Strategies & Market Trends : TATRADER GIZZARD STUDY--Stocks 12.00 or Less..... -- Ignore unavailable to you. Want to Upgrade?

To: Bart Hoenes who wrote (24659)	8/1/2001 9:43:06 PM
From: bazan	Respond to of 59879

Here's an email I get weekly from Pristine that seems worthwhile sharing here..... The Trading Plan - The Key to Your Success By Paul Lange, Moderator of Pristine's Educational Trading Room, and Private Mentor in Pristine's Private Mentorship Program -------------------------------------------------------------------------------- There is an old cliché..."If you fail to plan, you will plan to fail." I bring this up now because I feel there is no area in life where this holds more true than in trading. During many of the previous Lessons I have referred to a common element - a reference to a "Trading Plan" - something I said "would be the subject of future lessons...". Now is that time. Explaining a Trading Plan is not that difficult. Explaining WHY you must have one is always a challenge because most traders do not have one. While they all agree it is a good idea, they never seem to take the time to write one. Do you know which strategy is your best morning strategy? Do you have exact criteria WRITTEN that explain that strategy, including what the stock must look like on the daily, where it must open, and what the futures must be doing for you to take that trade? Can you, right now, find in writing, how much is the maximum amount you are willing to lose and any one trade? Do you have a daily goal to hit financially? What do you do when you hit that goal? How much are you allowed to lose before you quit? What do you do after 3 winning trades? 5 winning trades? Most people just go through the day 'drifting'. Any amount of money made is never enough. Any loss does not stop the need to 'get back'. Most trades are the result of chasing someone else's idea, not following a strict strategy. If you answered 'Yes' to all of the questions above, nice going. If not, let me try to convince you. The mind responds better to things that are written. It activates a different physical part of the brain when we write or type something. It is necessary to write. I have often made reference to the fact that we would all like to be "emotionless traders". The closest you can come to that is to separate yourself into two people. One who does the planning... who writes a trading plan, puts that plan into effect by finding trades during the day, takes those trades and develops entries, stops, and targets and puts them in writing. Then a second person, the "executioner," is the one who has no power to change things. This person's only job is to carry out the plan. If you are able to find successful trades consistently, but you are not making money, find out why. It is likely because the "executioner" in you has taken over the "planner". He has taken you out of trades before the target or stop to your detriment. Or he has ignored stops thinking he knows better. You should have at least 4 parts to your trading plan. The first part should be a very simple chart of what you would consider to be your maximum lot size on any trade for any give price of stock. You may have a maximum for $30-40 stocks, and a higher maximum for $20-30 stocks. Spell it all out. This is NOT necessarily your trade lot size, just a maximum you would never exceed. Next, you need to define some financial things. How much are you willing to lose on a trade? How much are you willing to lose in a day before quitting, or before quitting for the morning? What is your goal per day? Per week? What do you do when you hit it? Quit? Trail stop your day's profits just like you would a good stock? The answers you chose are not as important as having the discipline to follow them. In this section you should also have the calculation for your lot size per trade. You should look to risk a constant amount of money per trade. This means you need to look at the stop on a proposed trade, and calculate the share size needed to make sure a stop does not violate the maximum amount you are willing to lose on a trade. In the third section you will need to spell out the strategies that you will use throughout the day. If you are new, pick one or two of your favorites only. Spell out the exact requirements of the stock that you will be watching. Detail what your entry will be based upon. What will the market have to be doing for you to take the trade? What time of day is this trade acceptable. Pass on all trades that to not fit the criteria. Try tracking your trade results by strategy for a while to see which ones truly do work best for you. You may be surprised that the results may be different from what you now think. Lastly, have a section for your own goals as a trader. Continuing education is important to us all. Do you want to learn options to supplement your trading? Do you want to take another seminar? Do you have a list of good books you would like to read. Need some relaxation classes? There is a sample Trading Plan we have devised for use in the Educational Trading Room. It is available to view or to download and change to your own liking. You can find it on the resource page which you can access through the Educational Trading Room. You will find that having a trading plan and following it will improve your results almost immediately. It will keep you calmer and less stressed. It is a business plan for your trading business. Don't trade without it. --------------------------------------------------------------------------------