Trading for Success:

Creating a Trading Plan

By: Tim Racette

timracette@gmail.com

Treat trading as a business not a hobby, hobbies cost money, successful businesses make money.

Use the questions below as a prompt for creating your own trading plan, examples are in italics

Mission Statement
The mission statement is simply your overall goal as a trader.
To manage money with 1M assets under management producing net returns of 30% per year.

Market Theory
This is your ideology towards the markets.
The market is ALWAYS right.
Old support becomes new resistance
At any split second the market will take from you, that which you worked hardest and longest to obtain.

Goals
Motive: Why do you want to become a successful trader?
What drives you to succeed as a trader?
What makes you different than the thousands of other traders who wish to become successful?

Time Commitment: How much time are you willing to devote to achieving success as a trader?
Financial Commitment: How much capital are you going to allocate to your trading?
Expenses: Know your current expenses, minimize them.
Monetary Goals: How much money do you wish to make each month? (Dream goal and realistic)

Define Market Specifics: Pick a Market: Stock, Options, Futures or Forex (and a specific market within them)
Time Frame: Day Trader (Intraday trader)
Swing Trader (Overnight positions 2 days to 2 weeks)
Trend Trader (Overnight positions months at a time)

Time to Trade: 5 Sessions of the day (Eastern Standard Time)

Open 9:30 AM to 10:00 AM
Morning 10:00 AM to 12:00 PM
Lunch 12:00 PM to 1:00 PM
Afternoon 1:00 PM to 3:30 PM
Close 3:30 PM to 4:00 PM

Trading Methodologies
Risk--
Loss Limits: Max per Trade loss: $______ (1% of Trading Account Balance)
Max Daily Loss: $______ (2% of Trading Account Balance)
Max Weekly Loss: $______ (4% of Trading Account Balance)
*Cease trading for rest of week if weekly breakpoint is hit. Go on Trading Probation.
Trade Size:
How many contracts or shares will you trade?
Futures: Stick with one contract until you become consistently profitable.
Options: Begin with one contract.
Stock: Number of shares = Risk per trade / Risk per share

Stops: Always use them!

timracette@gmail.com TIM RACETTE www.TJMacTrading.com

 Trading for Success:
Creating a Trading Plan
Rules:
It is important to become consistent. Work to develop rules based on learned experiences.
1. Plan your trade and trade your plan.
2. Keep things simple.
3. Remain focused and disciplined.
4. Fully understand the markets in which you are trading.
5. Only place trades when you are in a calm state. Do not trade if youre in a time crunch or frustrated.
6. Be selective with your trades!
7. Place stops at the time you enter a position. A stop can only be tightened, never widened.
8. Keep honest and meticulous records.
9. Dont chase trades.
10. Read rules EVERYDAY!

Systems:
Be selective!
You MUST define your Entry, Exit, Profit Target, and your edge
What market indicators will you use to get a feel for the markets? Internals, moving averages, oscillators, etc.

Business Management & Development

Record Keeping--
Keep meticulous records each day relating to market action, trading account, and your individual trades:
Market: Indices, ES, Gold and Oil Settlement Prices/Volume
Internals Closing Readings
Leading Sectors & Industry Groups
Notes/Comments

Account: Daily, Weekly, and Monthly P/L (Gross and Net)

Trades: # of winning, losing, and scratch trades

Total # of trades
Time spent in trades
Commissions

Calculations: Winning and Losing % # of Winners/Total # of Trades

Losing % = 1 - Winning %

Avg. W & L $ Amount Sum of Profitable Trades/Total # of Winning Trades

Sum of Losing Trades/Total # of Losing Trades

R-Multiple (Reward/Risk Ratio) Avg. W / Avg. Loser

Expectancy (W % x Avg. W) (L % x Avg. L)

Routines:
Develop a trading routine and use checklists.
Pre-Market Routine
Intra-Day Routine: Stick to trading plan! Follow rules!
After Hours Routine
Checklist:
Reboot computer each day
Get at least one hour of exercise or physical activity every day
Eat quality meals on and around trading days
Check account balance each night
Back up hard drive each night
Contingencies:
Brokerage Trade Desk, Clearing Firm, Computer Repair, Internet provider, Electric Company

timracette@gmail.com TIM RACETTE www.TJMacTrading.com