Business and Trading Plan

I've always thought to be a successful trader, you need to ensure you consistently follow a method without jumping from one method to another as soon as you start seeing a losing streak. A key part to being able to stay consistent with a trading approach is to have both a business and a trading plan. At least, for me, I found both improved my results considerably and kept me much more focused on the things that most effected my bottom line.

This forum seems to have quite a few talented (and more importantly, profitable ;) traders). So this got me curious ... how many of you have a business and a trading plan written down? I ask this because most of the literature expounds on the importance of these two. My own personal experience seems to be in line with this conventional wisdom. However, I'm eager to see if there are many successful traders who don't have a business / trading plan? Maybe it's all a waste of time for some people?

So what do I mean by a business and a trading plan. A business plan, in my opinion, covers topics such as:

• 
  1) What is your overall goal with trading? Beyond making money (which is obvious ... although what kind of money? A steady stream of cash (i.e. income growth)? An increase in your total equity (i.e. wealth creation?), what other goals do you have of your trading?
  2) What are your fundamental beliefs about the markets?
  3) When you try a new trading approach (maybe you are going to try trading a new market? Maybe a new entry / exit strategy?) what kind of restrictions are you going to place to make sure that as you experiment with the new strategy, you do not blow a serious hole in your existing trading capital?
  4) What kind of position sizing algorithms do you plan to use?
  5) What are your maximum acceptable drawdowns / minimum desired profit levels?
  6) What kind of tools do you want to use with your trading?
  7) When do you know you need to stop trading because your losses are too much and you need a time out?
  

In contrast, a trading plan, in my opinion, would cover topics such as:

• 
  1) What is my ideal setup to enter a trade?
  2) How am I going to enter the trade (pyramid in? Single entry?)
  3) How am I planning to manage my trade (exit? Stop loss? Trailing stop loss?)
  

While you will probably have one business plan, you might have multiple trading plans depending on how long you have been trading.

So yeah ... all this typing :P ... back to the topic ... how many of you have written a business / trading plan?

Re: Business and Trading Plan

Hi fork4k

This is an interesting topics. I think I mix up both of them.

So maybe with other contributing to this thread, we can learn

and share with other.

Re: Business and Trading Plan

Hello,

I like the topic also. Maybe more than a topic it could be a section of the forum in the future.

Currently I’m working on those aspects, and it takes time a lot of time…

A section with different topics such as your position sizing, best ebook or video on the subject… could be so helpful. I know some great stuff is already share in different section and that could be great to put everything together.

Just an idea.

I will share my plan when it will be ready…

Regards,

Re: Business and Trading Plan

Here are a couple good examples of a trading plan:

http://www.nigelb.net/Trading/SampleTradingPlan/tabid/83/Default.aspx

http://www.elitetrader.com/vb/showthread.php?s=&threadid=5329&postid=104235#post104235

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