ZLBT Chats

Friday, October 12, 2012

A Trading Plan >>> With 9 Questions & Sample Answers


Let’s assume I am currently trading Crude Palm Oil Futures (FCPO) market. The following is a brief example of my trading plan.

#1 Know Your Purpose

a) Why do you want to be a trader?

Sample Answer: As a source of extra income on top of my salary. I also enjoy it as I like to read and assess the financial markets and news.

b) What sort of trader are you?

Sample Answer: A passive trader, risk averse. I do not want to take unnecessary risk and will only enter into a trade if I am extremely confident on the trend direction.

c) What are your strengths and weaknesses?

Sample Answer: Strength may be able to spot opportunities using both technical and fundamental analysis. Weakness is that I may be too greedy and not stick to my exit strategy.

d) What are your income targets?

Sample Answer: My income target is RM2000 – RM3000 a month from trading FCPO.

#2 Trading Goals

a) What are your annual trading goals?

Sample Answer: My annual trading goals are such as mastering new trading strategies. This includes mastering more aggressive trading strategies that will give me a higher margin on profits and to trade on different time frames. I would also develop my own concrete strategies with a high probability of winning a trade.

b) What are your monthly trading goals?

Sample Answer: My monthly goals are to explore new trading systems and strategies. I will start paper trading with these new systems and strategies.

c) What are your weekly trading goals?

Sample Answer: To assess how I performed during the week and how did the market perform during the week. To be able to forecast how the following week perform based on the weekly outcome.

d) What are your daily trading goals?

Sample Answer: To be able follow my trading plan daily and stick to my strategies.

#3 Markets, Instruments and Timeframes

a) What markets will you trade?

Sample Answer: The Crude Palm Oil Futures (FCPO)

b) Which instruments will you trade?

Sample Answer: The Crude Palm Oil Futures (FCPO)

c) Which timeframes will you trade?

Sample Answer: Will start as a day trader, will close any positions before the market closes.

#4 Trading Tools

Questions to answer about your tools of the trade:

a) Which broker and trading platform will you use?

Sample Answer: AMFutures as my broker and use AMTrader as my platform.

b) Which software and data feeds will you use to trade?

Sample Answer: OSK188 online charting software. I also refer to OSK188 daily market commentaries, and websites such as cnn.com, cnbc.com, yahoo finance, google finance etc.

#5 Before Market Opens

a) What is your daily pre-market routine?

Sample Answer: Check on the news and assess yesterday’s market performance.

b) Have you analyzed yesterday’s trades?

Sample Answer: No/Yes, yesterday’s trade volume is unusually high due to the news release of the governments proposal for a crude palm oil export tax cut.

c) Do you have any overnight or open positions carry forward?

Sample Answer: No open positions at the moment.

d) What will you do today – hour by hour?

Sample Answer: Monitor the FCPO 15 minutes chart and enter positions based on my current trading strategy.

e) Which instruments are on your watch list?

Sample Answer: The Crude Palm Oil Futures (FCPO)

#6 Risk & Money Management


a) What is your attitude towards risk?

Sample Answer: Risk adverse.

b) What is the strategy’s risk?

Sample Answer: Low risk, low return strategy.

c) What is the probability of a successful trade?

Sample Answer: High probability due to very short-term trading.

d) Where will you place your stop loss orders?

Sample Answer: At previous high or lows or at support / resistance.

e) When will you stop trading?

Sample Answer: When my stop loss is triggered.

Money Management

a) Which money management approaches will you utilize?

Sample Answer: I will trade about 10% to maximum 20% of my total funds.

b) Will you lock in profits?

Sample Answer: Yes, my objective is to have a gain of 10% in profits.

#7 Trade Strategies, Setups and Entries

a) Which strategies will you trade?

Sample Answer: I will use price breakouts to trade based on previous high and lows according to major support and resistance levels. I will watch for retracements as well.

b) Which signals will trigger your entry?

Sample Answer: Once it hits a major support or resistance levels, I will enter my positions.

#8 Exit Strategies

a) Losing trades - will you exit before your stop is hit?

Sample Answer: No, my stop loss is already very risk conservative, I will exit at my stop loss.

b) Winning trades – which signals will see you exit completely?

Sample Answer: My target is to make 10% in profit, so if I can gain 10% in profit, I will exit early.

#9 After the Market Closes

a) Have you recorded today’s trades?

Sample Answer: Yes/No, I was rushing, but I will record it tomorrow.

b) Did you execute your trades according to your plan?

Sample Answer: No/Yes, it is all according to plan.

c) Have you completed your trading journal?
Sample Answer: No/Yes, I have make notes in my trading journal.

This is just an example of a trading plan. You may elaborate with more details and specifics according to your trading methodology.


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