stock market trading plan. What is a trading plan and why does a trader need it? Profitable and unsuccessful trades

The stock market can hardly be called a bulwark of stability. Buying and selling securities is a rather risky business, because real money is at stake. The human factor also plays a big role in this, since bidders - traders, are subject to emotions, as a result of which they make many mistakes.

To minimize risks and try to reduce the number of errors, successful traders make a trading plan, which they then steadily adhere to in the process. The trader's trading plan not only ensures stable trading, but also allows you to obtain the necessary statistical data and make adjustments in case of difficulties in work.
It can be compiled both in paper and in electronic form, based on your own ideas or using existing examples.

A well-designed trading plan for a trader is based on 5 main components.

1. Determination of the market, timeframe and tradable financial

First of all, it is necessary to choose the most favorable financial environment for trading, i.e. the market to be traded. It can be not only Russian, but also European, Asian or American markets. The latter is characterized by the largest trading volume, transparency and high profitability, and therefore is often recommended as the most promising.

Then you need to decide on financial instruments. These include: stocks, bonds, options, etc.

Operations with each of the varieties of securities have their own specifics. For example, stocks and bonds are the most risky, while stocks and bonds are more stable. A separate and, moreover, an extremely important role is played by the timeframe. You must clearly understand the possibility of combining trading with other types of employment; time allotted for trading; degree of activity; the decision interval that is optimal for you. From the choice of timeframe comes .

A significant part of beginner traders prefer swing or day trading. But the process of making deals on timeframes of 1 minute, of course, needs more activity than on timeframes of 1-4 hours. Decide in advance whether you plan to trade actively on one- and five-to-ten-minute charts, or choose medium-term trading based on daily and weekly charts.

A significant percentage of experts believe that this is necessary, but the final decision is determined depending on which particular style or strategy was chosen.

2. Risk limitation and money management

Even professional traders cannot trade without a single mistake - losing positions or even a series of losses is an integral part of being a trader. That is why, in order not to lose everything in one day or in one transaction, it is necessary to determine the allowable loss limits both for each of the transactions and for certain periods - a day, a month, etc. Professionals are able to hold a position for a long time, while planning both profits and possible losses for several weeks and even months in advance.

• risk per position should not exceed 1% of the total amount available on the account;
• it is necessary to set the basic size of the position in relation to the acceptable risk;
• it is necessary to determine the possibility and admissibility of opening several positions simultaneously, the size of each of them and the degree of their relationship.

If you have enough trading experience, you can open more than one position, but it is worth remembering: the relationship between them should be as small as possible. Otherwise, if there is an unfavorable price movement, both trades will incur losses.

It is also worth defining an action plan when certain limits are reached, for example, after reaching the daily limit, stop trading until the next day.

3. Determination of specific signals for entering a position

The moment of entry into the transaction should be defined and indicated as detailed as possible. At this stage, the trader is required to make a prompt decision, without much thought, so it is extremely important to set specific signals for opening a trade. Often they use specialized indicators, overcoming a certain price threshold, technical analysis patterns or the prerequisites of fundamental factors - it all depends on the specific trading strategy.

You should combine the signals of a specific strategy with the general parameters of market movements in order to increase their effectiveness. Therefore, it is important to develop a number of additional criteria, which can include an increase in volume, the formation of graphic figures, the presence of a trend. This set is set depending on the overall chosen strategy and trading style. It is also necessary to first determine the types of used orders that will be used to open positions. They can be both limit and ordinary market. It is possible to practice using them using a demo account.

4. Determining the main conditions for closing deals

Undoubtedly, the entry point is important, but even more important is the correct definition of exit criteria. Moreover, these criteria should be applicable not only in the conditions of a profitable, but especially for a loss-making transaction.

In order to fix the loss in a timely manner, stop loss orders are used - in this case, the transaction is closed automatically, at the moment when the set price level is reached. With the closing of successful deals, the situation is somewhat more complicated, since it is more difficult to do it psychologically. But delaying the close, you must be aware of the possibility of missing a reversal or becoming a victim of a corrective wave.

To close a profitable trade, a floating stop loss is used or a take profit position is fixed when the target profit is received. It can be calculated using the P / E ratio (risk to reward ratio). Another option is to close the position at the moment when the conditions that were the basis for opening are completely reversed.

5. Job statistics

Trading activity statistics is carried out through a detailed description of all processes - entry and exit on transactions, grounds for opening and other factors. To do this, a professional stock player maintains a separate one, in which all indicators are recorded.

Summary statistics allows you to determine the most profitable / unprofitable trading patterns, instruments, and even time periods or specific days. In general, this provides an opportunity to customize and adapt the trading plan to market factors or to identify changes in the market in a timely manner.

Trader's trading plan. Results

Everything mentioned above is extremely important, because put together it forms a general system of professional exchange trading. The thoroughness with which the trader's trading plan is thought out and developed is a guarantee of the convenience of conducting the trading process itself and its effectiveness.

Those who manage to achieve a good indicator of income in most cases work strictly according to the trading plan and keep detailed statistics, which allows you to track potentials and shortcomings in an individual case. Regular income in two-thirds of transactions, received from month to month, is a sign of a true professional in this field.

When working on exchange markets, it is necessary to take into account the volatility of the market. It is important to show the ability to adapt to new conditions. A trader's trading plan will undoubtedly help with this.
As the system progresses, the existing system may require adjustments, but in any case, it will be based on the basic principles described.

A sensible person starting a new business in finance develops a business plan to determine possible profits and risks. Trading plan- a kind of business plan for a trader. This is a document, without which successful activity is impossible, a program that determines behavior, taking into account all the personal qualities of the developer.

Goals of developing a trading plan

Only people without motivation, gambling, living with emotions do not plan their activities in any area. The main one is greed, which is not subject to reason. It is based on the hope of making a big profit. When working with binary options, it is better to be guided by the calculation.

The second destructive emotion is fear. It appears along with losses and paralyzes the trader. Fearing to lose even more money, he enters into unreasonable and mutually exclusive contracts. Planning helps to fight fear, to act reasonably and clearly.

Trader's trading plan , developed by or for another person may not be useful. This is a theoretical base based on someone else's experience and someone else's intuition. They cannot be teleported to your brain.

You need to develop your document. He must take into account the accounting and work algorithm, personal strengths and weaknesses. The program should be understandable and clear only for its developer, not to cause him doubts about the method of use.

The main task is to determine what to do, for what reason, when. Therefore, it is necessary to assess your own personality, behavior in the process of preparing for work. Important components are also the management of funds, time, risks. External factors should be taken into account: periods of volatility, technical and fundamental analysis data, news release time.

The composition of the plan for trading binary options

Beginners often confuse a plan with a system. This is not true! The system is just one part of the program.

Binary options trading plan consists of:

• determining the goals of the activity;
• determination of one's own psychotype, assessment of emotional indicators;
• analysis of risks, means, time;
• income planning;
• description of the transaction preparation process;
• criteria for choosing a broker and trading instrument.

Goals are short-term and long-term, they depend on the type of trading. Scalpers and day traders prefer short-term contracts, while investors favor medium- and long-term contracts. The program designer must define a goal for the month and for the year. If trading is a source of adrenaline or a hobby, then the type of transactions does not matter.

According to the psychotype, three types of traders are distinguished: intellectuals, instinctive and intuitive. The first type includes those who are based on analysis, quickly make objective decisions. The second type is characterized by increased emotionality that interferes with trading. The third type has good intuition, therefore, makes decisions at the subconscious level.

With increased emotionality, it is necessary to clearly establish in what state the activity in the market is completely excluded. In any case, you should not even approach the computer during an illness, in an embittered or depressed state. Fear and excessive excitement are also bad helpers.

• when will the transition from a demo account to a real one be made;
• how much money will be in the trading account;
• for what amount (as a percentage) of the deposit each contract will be concluded;
• what will be the profit and loss;
• behavior in case of profit.

The main theses of the trading plan

Only "free" funds can be transferred to the trading account. Experienced traders believe that for one contract do not use more than 2% of the deposit amount. When it comes to profits, you can set yourself a different framework. For example, if 20% of the deposit volume is earned, trading stops until the next week.

The time spent on trading is individual. A working person will write down how many hours a day he will trade, a non-working person - how many days a week. It is advisable to choose the time so that no one interferes. It should be noted that a short timeframe (one minute) requires more time to study the news and charts.

When determining the level of planned income, you should not immediately draw a plate with attractive numbers. You cannot compare the stock exchange with an investment deposit with a certain interest rate. There is no specific income in binary options.

But you need to plan the return on invested finances. The basic rule of deposit management is not to plan to conclude contracts for an amount exceeding 2-5% of the deposit volume. An increase to 7-10% is allowed only by experienced traders. Another important condition is to trade exclusively with the trend.

To reduce risks, you need to plan the number of transactions and profit from them at the beginning of each day. For example, you need to earn 10% of the deposit amount. The initial investment can be approximately 70-75% of the planned profit. If the first trade turns out to be profitable, the second one can also be made with the same investment. The session ends immediately after the amount set at the beginning of the day is earned.

Before starting work, it is also desirable to determine the number of unsuccessful transactions after which the trade will end. You should not hope that a large profitable trade will cover losses on the same day. For example, stop trading until tomorrow if 5 transactions turned out to be unprofitable.

The use of one well-studied strategy helps to avoid financial losses. Before choosing a trading instrument, you need to look through all the available ones, study in detail the one that seemed to be the best. In the process of trading, it is worth at least 10% of the planned time to devote to other instruments. This will allow you to find a more profitable tool, based on the accumulated experience.

It is advisable to think over in advance all the steps that precede the conclusion of each transaction. This may be the study of previous contracts, acquaintance with news related to the asset, the choice of a trading session. You can also draw support and resistance lines for all time frames. All this must be indicated in the program in order to avoid headaches before the start of each working day. It will be enough to review and follow all the indicated steps.

Some traders include in their binary options trading plan a list of criteria they will use when choosing a broker and the methods chosen to control profits and losses. Everyone can develop the program at their own discretion. The main thing is that this document helps to avoid making transactions dictated by emotions. What is important is not the exact observance of some scheme in the development process, but the ability to take into account your own shortcomings and clearly follow the plan.

A correctly drawn up plan is already half of any business, the main thing at the initial stage of planning is to correctly determine all the strategic tasks, and then paint the sequence of their solution.

Many novice traders are mistaken in thinking that the forex work plan concerns only the trading process itself, namely, trend analysis and transactions in the trading terminal.

Forex plan - will include setting goals, determining ways to solve them and, of course, the practical part of trading.

Target.

In our case, the goal determines the entire further strategy. If you want to make Forex the main source of income, then the approach to planning should be completely different.

For example, in order to simply earn some extra money, it is quite enough to have a couple of thousand dollars and open one transaction every few days.

In the same case, if you want to live on what you earn, on the stock exchange, income requirements are already skyrocketing, and if you do not have the opportunity to use a large starting capital for forex, you will have to resort to more risky trading strategies.

And so, at this stage, the main thing is to decide what you want, but this should be done taking into account real possibilities. Unrealistic goals are almost always doomed to failure.
For example, such a task as earning $ 1,000 a month, having only 100 in your pocket, will most likely end up with you losing the first 100.

Therefore, earning $10 out of $100 would be a more realistic task to complete.

Choice of strategy.

After setting the task, we proceed to the choice of a trading strategy for its implementation. The more ambitious your goal, the more risky strategy you will have to choose. You can get acquainted with various trading strategies in the section of the same name "Forex Strategies"

Planning the trading process.

Typically, this stage consists of the following elements:

1. Analysis of the current market situation.
2. Drawing up conclusions on the most favorable places to enter the market and the size of stop orders.
3. Determining the size of the lot, and the amount of which you are currently willing to risk, the more confident you are in your forecast, the greater the ratio of the transaction volume to the trader's deposit can be.
4. Receiving entry signals and directly opening the deal itself.
5. Control of an open order, its modification (transfer

Freedom in the financial market does not mean the absence of working discipline. A trading plan is an example of how you can combine your goals and means, strategy and tactics, preparation and execution of transactions, money management and analysis into one working tool.

The financial market respects a professional approach to business. The main "business document" - a Forex trading plan should clearly define your goals, methods for achieving them, actions in any situation, as well as the amount of funds necessary for the business and the acceptable level of losses. Otherwise, it is not difficult to lose your investments.

When creating a personal trading plan, you must learn to combine the skills of an analyst, financier, risk manager, and only then a trader. A carefully planned plan and its mandatory implementation give you an undeniable advantage. The general scheme of how to draw up a trader's trading plan consists of mandatory sections arranged in order of importance for trading.

Forex goal setting and trading plan

Starting work on Forex, it is imperative to define the following goals for yourself:

1. Personal: ambition, professional development and discipline.
2. Financial:
   • by profit: long-term (for the next year or more), medium-term (1-3 months), daily, in each transaction;
   • by risk: acceptable level of losses and subsequent actions.

All goals should correspond to the actual level of experience, the size of the deposit, the correct self-assessment and be adjusted if necessary.
The trading plan should contain a detailed description of your actions in any trading situations.

When choosing and setting up a trading strategy, the following must be determined:

1. Trading and technical parameters for using various trading strategies.
2. A set and parameters of technical instruments or a trading advisor.
3. Conditions are defined separately for each asset:
   • to open a deal (price levels, indicator signals, graphic designs, direction, timeframe);
   • exit from the transaction (based on indicator signals, reaching the profit level, stop loss or manual closing);
   • for applying various types of orders (limit / market);

Money management conditions

Mandatory points of the money management plan:

1. Separation of investments according to their intended purpose (initial, working and guarantee capital).
2. The critical level of risk in general and in each transaction - in % of the total amount, in trading points or in monetary terms.
3. Methodology for determining the min, average and max trading volume (for different types of transactions).
4. Money management plan in case of:
   - incorrect entry or drawdown situations;
   - excess of the number of trade transactions for the trading period;
   - decrease in the level of free margin below the minimum;
   - upon reaching profit or loss above the calculated level.
5. Conditions for:
   - application of dangerous money management methods;
   - adjustments to the trading plan;
   - skipping the next trading signal.
6. The mechanism for withdrawing funds and distributing profits (consumption, covering losses, reinvestment).

Ultimately, you decide how to create a trading plan for a trader, but this section should be in it, if not the first, then the most important point. Only strict implementation of these rules will keep the trading account in working condition.

Choosing a financial asset and trading conditions

Before opening, each transaction must be checked for compliance with the trading strategy (see above). When choosing a trading asset, you need to pay attention to:

1. The complexity of technical analysis, the availability of information and the reaction to fundamental events.
2. Cross-correlations with other assets.
3. The time of the greatest liquidity and dynamics, as well as the correspondence of this period (day, night) to your physical condition.
4. Trading parameters:
   • costs: spread/swap/commission/collateral conditions;
   • technical conditions and stability of the broker's work with this particular asset;

You need to trade assets that are optimal for the chosen strategy and risk levels, during periods with the maximum number of possible trading signals.

• Comprehensive market analysis (see below);
• Stable physical condition and positive mood (see the section "Psychology");
• Availability of comfortable working conditions and technical support;
• Current trading plan (in a form convenient for work).

The result of trading will depend on the quality of the preliminary study of any trading situations.

Fundamental and technical analysis of the trading situation

The need for a preliminary market analysis is beyond doubt. The mechanism for conducting the analysis must be clearly worked out, tested, and its general scheme must be indicated in the trading plan.

When conducting fundamental analysis, special attention should be paid to:

• Reliability and relevance of sources (news, economic calendar, official announcements, analytics, reports);
• Stable access to information (free or paid);
• Mandatory volume and mode of work with information;
• Rules for applying the results in practice.

In technical analysis, you need to pay attention to:

• The result of the analysis on different periods (round levels, support/resistance, max/min, volumes);
• Graphical analysis (figures, trend, patterns);
• Conditions for positions - entry/exit/reversal, Take Profit/Stop Loss (according to money management);
• Scheme of work in different trading situations and analysis of related markets.

Analysis of the result and trading actions

The obligatory keeping of a trading journal, regardless of the results of trading, allows you to find "weak" points in time and adjust your trading strategy. Even the simplest trading plan of a trader (a sample is given below) should contain an analysis of trading actions:

As a result, you should evaluate:

• Your reaction and actions during trading (entry/closing/maintenance of transactions);
• Fulfillment of the conditions of money management and actions according to the trading plan;
• Mistakes, transactions made not according to the strategy and the reasons for the violation of the trading plan;
• The correctness of strategy signals and the fulfillment of the profit plan.

Psychology and personal development

In the process of working on Forex, you should analyze:

• Your behavior in the process of opening deals;
• Personal reaction to a loss, behavior during periods of drawdowns;
• Personal weaknesses, inadequate emotions and peculiarities of thinking;
• The state of non-fulfillment of goals.

It is necessary to develop personal methods of protection against stress. During critical emotional states, trading is prohibited!

Trading plan correction conditions for:

• Increase in deposit load - if the risk is below critical;
• Asset substitutions - the presence of effective dynamics;
• Strategy replacements - only after testing.

You yourself must constantly develop and improve your trading skills, and therefore the trading plan and the trader's diary can be changed if this does not worsen the final result.

Freedom in the financial market does not mean the absence of working discipline. A trader's trading plan is an example of how you can combine all your goals and means, strategy and tactics, preparation and execution of transactions, money management and analysis into one working tool. But a successful result is possible only if all the conditions set for yourself are honestly fulfilled.

Ask 100 traders to send you a copy of their trading plans and you can be 99% sure that you will get one rejection.

Unlike entrepreneurs who use business plan , in order to strategically evaluate their employees and focus on the primary specialization, most traders never spend time on, that is, .

There are over a million articles on the web on the topic of trading plans, but this article will tell you how to create a plan in 10 minutes by answering a series of simple questions. This survey is intended for active intraday traders, however, the same principles can be applied to almost any trading time frame.

The purpose of the survey is to allow you to quickly create your own trading plan. The article will reveal 10 elements that should be present in it, and examples of a trading plan for intraday trading.

#1: How many trades do you use to measure results?

In business, time is the main factor in evaluating results. Companies publish their reports quarterly, and fundamental analysts frantically work through the data to assess their potential for future growth.

How long do you have to wait to evaluate your trading results…years, months, days?

The answer is very simple. Evaluate by the number of trades placed, not by the elapsed time.

In the world of trading, time is irrelevant. Trading is one of those areas of this reality where the constancy of space and time is not essential.

Those who have been trading for some time know that a flawless rise for a year can turn into a two-month crash that easily wipes out everything you have worked so hard to earn.

To track the results, you can take a certain number of trades and evaluate them against key performance indicators, which we will touch on later.

You need to determine the appropriate number of trades to evaluate, that is, high enough for completeness of the data, and low enough not to continue the destructive trend in trading.

The optimal number is 10. It is very good for medium-term and intraday trading, if you take about 3 months to make 10 swing trades and about 4 days to make 10 intraday trades. Time is mentioned here so that you understand how long it will take to place so many trades according to a non-aggressive trading style. For your trading system, you can easily calculate everything yourself.

So how many trades do you take into account to evaluate trading activity?

#2: Define Key Performance Indicators

To do this, it is good to use the KISS method or “keep it short and simple” (for those who are not familiar with the term) to measure your trading performance, you need to consider the following indicators:

This is the ratio of profitable trades to losing trades. For example, in a cycle of 10 trades, it turns out $1,500 (profit) / $500 (loss). As a result, the indicator R = 3. This means that the total is three times the loss. You can measure the indicator at each cycle. It has no maximum or minimum values. By tracking results over time, you can quickly identify when a score has been below the historical average.

1. Maximum drawdown

This is the lowest intraday account balance within a trading cycle. Peaks are needed to mark maximum drawdowns. But this approach is not entirely correct, because you can spend a number of trading cycles before you reach the peak. It is much more useful to mark as a percentage how empty your account has been since the beginning of the cycle. For example, initially there were $10,000 on the account, and for a cycle of 10 transactions, its amount reached $8,000. This means that the maximum drawdown will be 20%. As with the R indicator, there are no clear rules here. Gradually, you should reduce drawdowns. This will balance the portfolio, which will continue to grow with small pullbacks.

#3: What time of day will you be trading?

Novice intraday traders and those who have little trading experience are better off limiting their trading activity. The best time to trade would be between 9:50 am and 12:00 pm. Before and after this period, it is better to simply observe what is happening.

#4: Define Your Trading Criteria

As with the time of trading, define a few criteria before you start trading. The more strategies you hope to master, the more difficult it will be to consistently profit in the market.

Below is an example of the details of trading criteria:

Increase in volume before breakout points