I mentioned this before, but I need to revise and update my original trade plan, it was put together in 2007 back when I was trading FOREX, the plan's structure is still very valid, but obviously a lot has changed since the plan was first put together.
Still in the subject of a trading plan, here is the template I used to create my own plan:
http://www.trade2win.com/media/knowledge/tim-wilcox/T2W_Trading_Plan_Template_2005.pdf
I plan on publishing my trading plan on this blog, but if you want to work on your own, the link above should help.
Cheers to our success!
Gustavo
Friday, December 18, 2009
2010 Goal: Have a plan and stick to it
Needless to say, I trade with a plan and stick to it! That has helped me to remove a lot of the anxiety associated with making a decision on the fly, specially when the position is in trouble.
Moving into 2010, I will take this to the next level, publishing a trading plan for each strategy I use will help me and fellow readers to understand what exactly that I'm doing for each position.
Having a plan and backing it up with contingent orders will help me to be hands off (another 2010 goal) and at the same time activelly involved in the market.
My plan should also include Exceptions (a list of weird scenarios I delt with in the past). Documenting these exceptions and what to do in case they happen again, is part of this 2010 goal.
Moving into 2010, I will take this to the next level, publishing a trading plan for each strategy I use will help me and fellow readers to understand what exactly that I'm doing for each position.
Having a plan and backing it up with contingent orders will help me to be hands off (another 2010 goal) and at the same time activelly involved in the market.
My plan should also include Exceptions (a list of weird scenarios I delt with in the past). Documenting these exceptions and what to do in case they happen again, is part of this 2010 goal.
2010 Goal: Active Engagement through practice
Trading non-directional income strategies with options isn't an active type of trading. You place your trades and the best positions are those that you don't have to touch again until you need to take your profits. While this is great in theory, in practice one has to learn to control some degree of anxiety that comes up when you are looking at the positions from day to day, specially when profits begin to show.
I have realized that one of the best ways for me to control the activity anxiety is to use my time backtesting the systems and strategies I'm using over time.
Backtesting gives me a clear sense for how a certain strategy migh perform, but in addition to that, it gives me an active way to "stay busy" sort of speak without actually trading or touching up the positions all the time. When you backtest, you need a set of rules, and by using these rules over and over, month after month, you begin to learn how a certain trade performs, and you also learn to not touch the position just because you're anxious about a certain scenario/condition.
Keeping track of past performance, also helps you to identify how good of an edge you are trading. Will your strategy make money over time? The very first way to test this is by testing with historical data, then you start to build up live results to compare/contrast with your backtesting. Having some sort of "backing" to say that the strategy I'm using has a positive edge is another major benefit from backtesting.
I'd actually say, that having a clear picture of the position win-loss ratio, and its risk : reward profile is a MAJOR benefit for me, specially when I have to enter a new trade after a losing month. Having some information allows me to look past the most recent negative experience and see the long-term benefit of the strategy.
That being said, one of my goals for 2010 is to use a good portion of the time I dedicate to the trading business to backtesting.
I have realized that one of the best ways for me to control the activity anxiety is to use my time backtesting the systems and strategies I'm using over time.
Backtesting gives me a clear sense for how a certain strategy migh perform, but in addition to that, it gives me an active way to "stay busy" sort of speak without actually trading or touching up the positions all the time. When you backtest, you need a set of rules, and by using these rules over and over, month after month, you begin to learn how a certain trade performs, and you also learn to not touch the position just because you're anxious about a certain scenario/condition.
Keeping track of past performance, also helps you to identify how good of an edge you are trading. Will your strategy make money over time? The very first way to test this is by testing with historical data, then you start to build up live results to compare/contrast with your backtesting. Having some sort of "backing" to say that the strategy I'm using has a positive edge is another major benefit from backtesting.
I'd actually say, that having a clear picture of the position win-loss ratio, and its risk : reward profile is a MAJOR benefit for me, specially when I have to enter a new trade after a losing month. Having some information allows me to look past the most recent negative experience and see the long-term benefit of the strategy.
That being said, one of my goals for 2010 is to use a good portion of the time I dedicate to the trading business to backtesting.
12/18 Daily Summary
The MNX position is working great, have not touched it and it is up over 10%, the RUT trade still around the B/E levels. The market is in a choppy channel, no signs of break out, the 5-day price action charts are looking really good.
Position's Details:
12/18 MNX Iron Butterfly
12/18 RUT Iron Condor
Position's Details:
12/18 MNX Iron Butterfly
12/18 RUT Iron Condor
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