I have recently been working with several traders to help them improve their trading results and it became apparent to me that a vast majority of these traders did not have a trading plan.  I would suspect that this cross section sampling of traders is fairly representative of the larger group of retail traders.  Without a plan, you are destined to be pushed around by the whims of the market.  A lack of direction and continuity in your trading is the result of not having a plan.   Several of the people that I have spoken with have been trading for 20 plus years with spotty, inconsistent profits. 

 So, in an attempt to encourage you to realize the value of a trading plan, I have constructed a Trading Plan Template.  The template is comprised of a series of questions that are designed to make you think about your trading as a business.  Trading is, in fact, a business.  If you enter into business without a business plan you are setting yourself up for failure.  I hope that it gets you started in the right direction.  Best, Robin

Trading Plan Template

General

·     My Trading Day – Outline my typical day and the procedures I follow.

·     What Time Frame(s) Do I trade? – My approach will vary depending upon the timeframe.  Explain.

·     How Much Time Am I Willing To Spend in My Trading Business?

·     What is My Time Horizon – am I trading for monthly income or am I trading for growth and when will I need the money.  Explain.

·     Do I have a thorough understanding of the risks involved with trading?  Explain.

·     Do I have a clear understanding of my risk tolerance?  Explain.

                       My Account

·     How large is my account and what percentage of my account am I willing to put at risk?

·     Is my account qualified or non-qualified.  (IRA or Regular)

·     How will I allocate my capital? (diversification and position sizing)

·     Who is my broker?  Is this the best choice for me?

                     Trading Goals

·     Outline my specific goals and objectives and present justification as to how I am to reach these goals.

·     What strategies and methodologies will I implement in order to achieve my expectations?

·     Do I have the knowledge required to implement the aforementioned strategies?

·     If I am lacking in that knowledge, what is my plan to acquire that knowledge and experience?

                   Account Management

·     What is my plan for capital preservation?

·     When will I make my trading decisions?  (During market hours or end of day)

·     What is my process for performing my due diligence and when will that due diligence be done?

·     Do I have clear and precise entry and exit criteria? Explain.

·     What is the maximum number of positions that I can effectively manage at any given time?

·     Will my time allocation and strategy implementation allow adequate time to monitor my open positions? Explain.

·     Do I keep a daily anecdotal journal to record my trades as well as my emotional response to the trading activity?  Explain.

·     What is my procedure for managing my open positions?

                  Psychology of Trading

·     Is my psychology well balanced regarding the market and how it integrates with the rest of my life?

·     What are my strengths and weaknesses?

·     Have I designed a plan to reduce or eliminate my weaknesses? Explain.

·     Do I have a trading partner(s) to exchange ideas with and to hold each other accountable to our respective trading plan?

·     Have I planned periodic vacations from the trading business?

·     What is my plan for the Market while on vacation?

                       Miscellaneous

·     Do I have a continuing education plan?

·     Who are my resources for assistance?

·     Do those closest to me support my efforts in the Stock Market?

                        Plan Summary

·     Summarize the plan.  The plan must be a “Living, Breathing Document” that will be strictly adhered to.  Include a list of trading rules that must not be violated.