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Developing a Trading plan

Developing a Trading plan . By Stefan Juriansz Markets Never Lie ( P vt ) Ltd . What makes a successful trader . The most important element of successful trading is having a trading system that fits your personality Jack Schwagger Eat, Shit and drink Trading

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Developing a Trading plan

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  1. Developing a Trading plan By Stefan Juriansz Markets Never Lie (Pvt) Ltd

  2. What makes a successful trader The most important element of successful trading is having a trading system that fits your personality Jack Schwagger • Eat, Shit and drink Trading • Personally responsible • They see the Big picture • Logical, analytical and organized • Trading system • Has a plan and trades a plan • Various strategies to adapt to market conditions • Unemotional with losses and wins with strong discipline to follow plan • Continuous improvement • Self reflects

  3. Trading success

  4. Why and how do we trade ? You do not trade the markets. You can only trade your beliefs about the markets.—Van K. Tharp • The market is a dangerous place to invest. (You are right.) • The market is a safe place to invest. (You are right.) • Wall Street controls the markets and it’s hard for the little guy. (You are right.) • You can easily make money in the markets. (You are right.) • It’s hard to make money in the markets. (You are right.) • You need to have lots of information before you can trade profitably. (You are right.)

  5. Questions • What is your trading edge/strength ? • What are your weaknesses and how do you plan to improve them ? • What is your strategy ? And how do you develop a trade idea ? • How do you decide market direction ? • What is your ideal time horizon for trades ? • How do you know when to get in and out of trades ? • How do you control your emotions ? • How do you deal with a loss ? • What are your beliefs about the market ?

  6. Example Trading plan : JKH Trade Idea from 2nd July 2013 • Buy JKH @ 255 • Target 350 • Cut below a close of 238 • Investment time horizon : 6 - 12 months Risk/Reward • LKR risk 17 • LKR reward 95 • R/R 95/17 = 1/5.5 Risk/Reward % • Risk 6.6% • Reward 37%

  7. Example Trading plan : JKH Strategy : Break out pivot point trend trade Portfolio/Risk • Portfolio risk allocation to trade 15% of 5m = 750,000 • Portfolio risk per trade 1% of 5m = 50,000 • Risk per trade: 6.6% of 750,000 = 50,000 • Reward per trade 37% of 750,000 = 277,500 Liquidity : 700k average volume per day

  8. Example Trading plan : JKH Trade execution : Scale in • Buy 1st block of 50% of 750,000 @ 255 = 375,000 • Buy 2nd block of 35% of 750,000 @ 280 = 262,500 • Buy 3rd block of 15% of 750,000 @ 305 = 112,500 (after 300 support formed) Trade execution: Scale out / cut loss • Cut first block of 50% (375,000) on a close below 238 • Bring up stop loss to 255 after 2nd block is purchased @ 280 • Bring up stop loss to 275/280 after 3rd block is purchased 305 Trade execution: Taking profit • Sell first block of 50% @ 320 • Sell second block of 35% @ 340 • Sell second block of 15% @ 350

  9. JKH chart

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