Options trading plan
New Year, New Trading Plan: Ask Questions and Don't Skimp on the Answers! Before you begin online stock trading next year, devote a great deal of thought to the online stock trading plan. Here's one online stock trader's method of planning that trading get you thinking. In this first-person article, author John Carter makes a case that every trader should write out a detailed -- and we do mean detailed -- trading plan. Carter shares actual questions from his own trading plan that he asks plan each year and goes on to answer them. Everyone's plan will be different, of course, but this is a good template for any trader to consider as the New Year rolls around. A two-foot long Arrowana is a voracious predator fish. A single-minded creature, it has one basic rule of thumb that plan follows each and every day: If it thinks something will fit into its mouth, it will eat it. When online stock trading traders visit my office to watch me trade, they often are surprised to learn that their first assignment is to feed Martha, my two-foot long pet Arrowana. They have to take the net, dip it into the feeder tank filled with goldfish trading choose a victim. Martha is used to this routine by trading and begins to shimmer with excitement and anticipation. The goldfish is released. The water boils trading churns as the predator lunges, and a few seconds later all that remains of Nemo is a few scales and a bit of fin. Whereas one is merely a meal for an Arrowana, the other is routinely preyed upon by professional online stock traders. At least with the goldfish, the pain is over quickly. Online stock traders without a plan can stretch out their torment for years. My first online stock trading plan was created ineight years after I started online stock trading. It was a one-page document that has evolved over the years into the current page plan that I use today. I update this report annually. My plan expanded as the following truths came to light:. Every trader I've worked trading has mentioned that the comprehensive business plan I make them write has been the deciding factor in his own performance. I'm going to show you the exact questions I make myself answer every year and take you through them step by step. What follows are the questions and excerpts of the answers from my trading trading plan for Yours will be different, of course, but the structure will hold you in good stead. This is the first question Trading ask myself each year. Although this might seem obvious, it is important to deliberately choose this online stock trading occupation over everything else that's available out there. This is applicable not only to full-time online stock trading traders, but also to those who are trading part-time while holding down another job. The main reason I'm going to continue online stock trading in is that I enjoy the financial independence and freedom that online stock trading has to offer. I also love the fact that I can do online stock trading from anywhere. I've never been good at taking orders, so I appreciate that I don't have a boss that has to be placated. I enjoy meeting other online stock trading traders, as they are the most random, eclectic and interesting people on the planet, and the mental options and trading of trading is tremendous-- if I stopped, I would miss online stock trading. What Factors Going on in the Rest of My Life Might Affect My Online Stock Trading? This is where I take stock of everything else that is going on in my life and how it might impact my online stock trading. By doing this, I have figured out when I needed to hire my first assistant, when I needed to bring on another partner, and whatever else needed to be done to streamline my life for online stock trading. I have a lot of activities going on in my life besides options stock trading. I'm actively involved in real estate investing, coin collecting, traveling and have a lot of stuff going on with the website. My wife and I are starting to plan for a family and are looking at moving from Boston to Texas, where most of our family options located. I plan that online stock trading is my main occupation, and the only way to continue with these other things is if I'm making profits from my online stock trading. It is possible that I will drop some of these other activities if they become a distraction. I will compartmentalize and focus on online stock trading during trading hours. To help with this, I have someone who runs the day-to-day operations of the website and someone else who helps manage my other investments. I will look at modifying the newsletters I write to focus only on the short- term investments on which I am focused. Right now, I am still writing some portions of my newsletters that don't readily apply to my current trading. In reality, these newsletters are mostly for me. Writing the newsletters helps force me to clarify my own research and continue to find new online stock trading ideas. Trading won't try online stock trading if I am traveling or on vacation. It's fine to have swing trades on and manage existing positions, as long as I have a stop and target in place and don't try to out-think the position intraday. If distractions are in the picture, I will not trade. Get rid of the distractions first, such as having uninvited guests over, morning phone calls, people instant messaging you in the morning asking about a trade and so forth. Ignore phone calls and instant messages until after Or better yet, turn them off. Don't be accommodating just to be nice. The path to hell is paved with good intentions. This is where I lay out all of the markets I'm going to trade. Beginning online stock trading traders should only be focusing on a few markets. Once a trader decides, he or she should stick with them for a year instead of always looking for the "next great thing. For swing trades, E-mini Nasdaq NQyear note TYcorn Cwheat Wsoybeans Scrude oil CLgold GCsilver SIsingle stock futures, individual stocks and stock options. I will allocate my total trading funds as follows:. This is a really important part of the online stock trading plan. A online stock trader should have a specific setup for each market he or she is trading. The setup can then be tracked for performance. Each setup should be independent of itself. This means a online stock trader could have plan short on the YM for a gap play and a long on the ES for a moving average play simultaneously, and then track the performance of each setup separately. This, of course, is critical. The key is to find options allocation that doesn't cause any stress, allows the options for a trade to do its work and doesn't violate any daily drawdown rules. One of the biggest problems with newer traders is that they are trading way too big in relation to their account size. Yes, you can do it, but that doesn't make it a good idea. The trading of contracts or position size to be used is as follows:. This is where I decide my primary execution method. Am I scaling in? Getting all in and all out? This is a lengthy part of the plan, as I will write down sample plays for options categories. There's not room to do that with all of them here, but for the sake of example, here are my parameters for gap plays. For all intraday plays in online stock trading, I will get in all at once and scale out as the position goes my way. The target on the first half of plan play will be small, the equivalent of one to two ES points. Once I have this initial profit, I will give the second half more room to play out. For swing plays, I will get in all at once and get out all at once, trailing my stop to protect any gains. For example, for a point gap, use a point stop. Take off half of the position when the market hits the level that is equivalent to 50 percent of the gap fill. At this point, move the stop to breakeven. The target on the second half is the gap fill. I do this for each of my plays so there is no question as to how they should be executed. This is crucial as it ties in directly with the next portion of the plan. This is where I detail how I am going to track each of the setups I trade and how they are working. I track this information in excel so a running average can be calculated. Any trade I take that does not fall into a specific trading setup or chart pattern I have outlined will be labeled as follows: Indeed this is a weakness, but if I succumb to this temptation, at the very least I must track it and see options impact it has on my trading. I know from past experience that the results of any impulse plays over time are poor, and this reminder keeps me from taking these trades. I will jot notes on these online stock trades. Did I jump in too soon? Did I miss a fill? I also will note any overall trends in my online stock trading trading. How many days did I start off losing but end up on the plus side? How many days did I start off strong only to give it all back? What was going on that day in terms of interruptions? I know from past experience I get in trouble when I start off strong and start to go for "bigger trades with house money. If I am down 15 percent for the month, I will cut options position size in half for the rest of the month. If Plan am down 20 percent for the month, I will stop trading the rest of the month. If I hit a percent total drawdown, it is time for a six-week break from trading. If at the end of the day I exceed this level, I am on probation the next day. This is my punishment for breaking trading rules. I plan hedge commodity swing trades in volatile markets with options. This means I don't have to trade every day. I know from past experience my best trading days are Tuesday, Wednesday and Thursday. Thus, I will focus more on trading on these days. Options will track my daily equity curve by using an excel spreadsheet. I will withdraw 50 percent of my online stock trading profits at the end plan each quarter. I will never add money to an account that is down and will never plan a margin call. I will add money to an account that has proven itself with positive returns. The reason I will withdraw online stock trading profits is because this is the best way to protect them. These profits allow me to invest in other asset classes, pay for family vacations and fund other projects. It also is a reminder that the numbers on the screen are real and represent real cash. Plan have a separate condo that is set up specifically for online stock trading, with five computers and 12 monitors. I have cable internet access with back-up dial up, plus two phone lines, a fax and a cell phone if things go wrong. My goal this year is to get another assistant who helps only with order entry and to trading more of my trading setups to generate mechanical signals. I have looked at regular office space but find the plan and general banter too distracting for trading. There are pictures on the wall and a large fish tank to watch when it's time to take a break from watching the computer screens. This is where I establish goals that motivate me to stick to my online stock trading plan. I know that if I stick options my online stock trading plan, my trading has a better chance of succeeding. And if I succeed, I get to do these things. When I hit 60 percent for the year, I will take the next four weeks off. If this occurs in the fourth quarter, I will take the rest of the year off. I could go for more money, but it is enough. I want to spend two weeks in northern Italy and Switzerland, or take four long weekends and go to a beach and do nothing. I want to visit Australia, Hong Kong and New Zealand this year, whether on business or for pleasure. I like to watch movies, and I would like to upgrade my home theatre system. I saw a Rolex that I want to buy, and my goal is to get it this year. But I realize trading I need to focus on the online stock plan setups, not on the money needed for the rewards. If I focus on the money, I will lose. If I focus on the setups, I will win. Are There Any Groups, People or Organizations I'd Like to Help Out This Year? Last year I sent some money to the Salvation Army, but I don't really feel any impact when I donate money to big charities. I would rather help out individuals. Forfind a struggling artist who has talent and support them for a year. Provide start-up funds to an inner city youth who wants to launch a business. Pay for a ten-day vacation that brings all of your family members together. What Are My Specific Online Stock Trading Plans for Staying on Plan throughout the Year? This is where I add any notes I have gained from my own experiences to help me stay profitable in my trading. In the day trading chat roomlet people know you will not answer questions during this time. Minimize the day trading chat room window so you do not read what is going on in the day trading chat room. Do not trade anything during the overnight session. Better yet, don't watch it either. If you quit early due to a percent month, physically get away so you cannot trade. Do not trade after noon on Fridays. Focus on trading lighter during the last three days of options expiration, or consider not trading at all. Review your performance during this time and consider this as your time off during the month. For the past year the market seems to do absolutely nothing during this time. Focus heavily on the first two trading weeks of the month. After the first two trading weeks are over, take the next two trading days off and get away from the markets. Give your brain a rest. Take off entire week of Thanksgiving. Take off last two weeks of the year. Plan your vacations in August, as you won't be missing anything. This is the online stock trading plan. The key here for me is complete and accurate daily records so that I can assess my trading, review my progress on a month-by-month basis and make changes in strategies based on my performance. The fun in online stock trading comes trading the plan of the hunt, the anticipation of the kill. Clearly, all of the research and work culminates in a single moment in time when a trader makes a decision to pull the trigger and shortly thereafter is presented with the results. If a online stock trader can string enough consistent winners together, it opens the door to a whole new life of independence. The lure of this challenge draws people from all ages and all walks of options into the markets. Those who can face up to the challenge of drawing up a plan to pave the way will have the odds of success in their favor. The number of contracts or position size to be used is as options What Execution Methods Will I Be Using? What Parameters In My Online Stock Trading This is where I decide my primary execution method. How Am I Going to Track and Rank My Online Stock Trades? I will track all of my trades and rate them as follows: This keeps a grade point average, so to speak, of the number of trades that are profitable. It's also possible to track by trading method. At the end of the month, I will have an average by setup as well as an overall cumulative average. Quite clearly, this helps to weed out the setups that aren't working. For example, I may have something at the end of the month that reads, "gap plays: What Are My Drawdown Rules for in my online stock trading? What Are My Profit Rules for in my online stock trading? My Office Setup for Online Stock Trading? What Are My Rewards If My Online Stock Trading Is Going Well? Going Forward This is the online stock trading plan. Digg This Bookmark on del. Reproduction without permission prohibited. Click to tell your colleagues via your Outlook email. Join Today Meet Our Trading Team. John's Trading Service The Live Trading Room Options Videos. Live Seminars Trading Indicators Trading Courses. How To Videos FAQ Free Day Trading Videos. Home Day Trading Articles Online Stock Trading Plan. This site is powered by MemberGate Membership Site Software.
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