My Day Trading Action Plan (Feedback Appreciated!)

[gundamzd 3]

Hi all,

 

I have created a "day trading action plan" in Google Slides, and I am planning to post it next to my monitor so I can go through it every morning. Could you give me some feedback as to what you would add / remove in the slide?  I am in the 4th month of SIM and still have a lot to learn. Thanks in advance!

 

Click on the image to enlarge:

 

[Abiel 475]

Good rules! The keep watching for setups is a good one because usually when I´m stopped out I look for another stock just to return to the loosing one to discover I miss a good move…

 

I just finished my 3rd month in sim and I reviewed my performance and revisited my rules. What I realized is that two factors made my sim account go down: keeping losing trades and adding to losing trades.

 

After this review, Jason W shared this in the chatroom:

 

11:51 am Jason W : hey guys you know what i realize ?

11:51 am Jason W : if i dont count my losing trades, I'm a very profitble trader

11:51 am Jason W : i mean big losers

11:51 am Jason W : so if we just cap our losses, our winning will take care it selfs

11:52 am Brendon D : exactly right jason

11:55 am Brendon D : managing trades is simple by principle but hard to act out in real time, unless you are a robot

 

 

So I ran a new calculation without all my losing trades > $100 (around 20 out of 300) and it was amazing how my equity curve goes up! So this hit me in the head and I made a commitment to cut my losing trades early.

 

You can see by yourself how my capital behaved with and without big losses.

 

 

 

The pattern in the first chart seems to be: big losses after a streak of mid winners, so I guess I became overconfident after these streaks.

 

The second chart still shows losses, but they are small and with the winners they would allowed my capital to grow… amazing how stubborn I was…

 

So thank you Jason W for your simple but powerful insight!

 

Then I read an article about how all the best performing trading strategies had one thing in common: SMALL LOSSES. They showed numerous small losses mixed with a variety of gains, some small and some large. The small gains and small losses tended to cancel each other. What remained were the larger gains. There were no large losses in the loss column to cancel them.

 

So a very important rule is to keep our losses small, and develop a mindset about how having lots of small losses its ok as long we avoid big losses and achieve mid / large profits. Also, keeping losing trades with the hope to exit breakeven or with a reduced loss is a waste of time, we are missing other opportunities in the market.

 

The next rule that I´m reinforcing is not adding to losing positions. If I stick to the first rule (keep losses small) I don´t have to add to losing positions, but the rule is still there in order to grow the right mindset.

 

Another rule I´m following is related with ATR and position size. My share size is more moderated with huge ATRs ( > $1 USD) and I allow more shares in lower ATRs (< $1 USD).

 

Number of trades is another of my rules. I know I can have a winning day with 3 trades, and in lossing days I make 8 -10 trades, so I limit myself to 3 – 6 trades, or reaching my profit target (this one could be a rule by itself).

 

Quit my trading day with a loss of .5% of my account is in my rules too.

 

Don´t gamble: don´t trade IPOs and earning reports

 

More recently, I´ve experimenting watching 3 stocks with good results. I can keep more focused really following three stocks than randomly watch 6-7 stocks and adding more as they are called in the chatroom. (this idea comes from Brian who watches 2 – 3 stocks every day).

 

I´m trying to trade ORBs at the open, and watching 3 stocks and muting the chatroom has helped me a lot.

 

I have a more comprehensive trading plan based on Adrew´s book and the Traders Business Plan from the book “Mastering The Trade” by John Carter but the above are the rules I´m reinforcing after my first 3 months in the sim, learning from my mistakes and stubbornness.

[Robert H 455]

Great tips, Abiel!

 

gundamzd, this detailed trading plan might be of use to.

[David from CT 29]

I concur with Robert, excellent analysis of your trading Abiel. gundamzd, that's a solid straight forward plan. One additional thought, if you are new to trading, I would recommend not adding to any trade. Size your position based on your risk parameters and account size, then enter the trade. Exit your full position on trades that are not working and scale out of trades going in your favor. Without the proper discipline you may get into the habit of trying to improve your average cost on losing trades and will usually end up with a bigger loss. Better to get out fast with a smaller loss as Abiel refers to, and then re-enter with another trade once you get a better handle on the particular pattern or price action. I have done similar account analysis as Abiel and definitely definitely without the big losers, my equity curve is a thing of beauty. Good luck on your trading journey!

[gundamzd 3]

Very insightful tip Abiel, Robert and David! Thanks a lot!

[Erwann 13]

On 5/12/2018 at 3:30 PM, Robert H said:

Great tips, Abiel!

 

gundamzd, this detailed trading plan might be of use to.

Could you please share a new link to it?

[Robert H 455]

41 minutes ago, tardi44 said:

Could you please share a new link to it?

Fixed the link.