Tag Archives: Trading Plan

There Are Days When You Should Not Trade

 

Last Monday was the US Labor Day public holiday.

So I was surprised to see an email on Tuesday from a trader who was caught unaware by the low volume.

Here's an excerpt from the email:

  • "Today was some USA holidays (I did not even know it) and most of the markets were completely dead and made small range during whole day."

 

You absolutely MUST be aware of the holiday schedule, as it relates to your market.

Any decent economic calendar should show them.

I use this one (due to my trading journey coming through the forex markets a few years back) – http://www.forexfactory.com/calendar.php. It's not the only one. Search around for some alternates and find the one that best suits your market and your circumstances.

It's a holiday... take a long weekend.

Some people like to trade every day. That's cool. We all get to make our own decisions; and alongside that have to accept responsibility for the outcome. If you're net profitable on holiday sessions… good on you. I just don't think the risk is worth the effort.

There are days when you should NOT trade.

For me, these days are:

  • All US holidays
  • Any other holiday relevant to the instrument being traded (eg. UK holidays for GBP/USD)

 

And there are days when you should trade cautiously (and even consider not trading). For me these are:

  • A couple of hours prior to any significant news release (such as NFP or FOMC… or market specific releases such as the Crude Oil Inventories report for CL)
  • The day before holidays or long-weekends (or at least just the afternoon of these sessions)
  • Rollover day (for futures)

 

There may be others applicable to your markets. Options expiry days are one that some people avoid.

Take some time out this weekend to update your trading plan to (a) check the economic calendar on the weekend (for the upcoming week) and again pre-session (for the upcoming session), and (b) document which days you will avoid, and which you will trade cautiously.

Happy trading (or not… on certain lower probability days),

Lance Beggs

 


 

My Post-It Note Trading Plan

“Simplicity is the ultimate sophistication.”…Leonardo da Vinci

How detailed should your trading plan be?

There is of course no right answer apart from whatever works best for you. Some people need detail – lots of it. Others will never need more than a single page, with anything longer simply gathering electronic dust as it sits unread on your hard-drive.

But here’s my thoughts…

You need to create both!

  1. A large detailed plan
  2. A small conceptual plan

Why?

Well, firstly, even if all you want is a small summary plan, then you can’t properly write that unless the detailed one is produced first. To be effective, a small plan must summarise the key components of a thorough and detailed plan.

But there is a deeper reason as well… the process of producing both versions will provide you with increased clarity regarding both how you trade and why your plan should work.

Produce a large and detailed plan because the process of getting every aspect of your trading business onto paper will ensure a thorough and detailed knowledge of your business operations; increasing likelihood of considered and pre-planned actions rather than emotional and unplanned reaction to price movement. It doesn’t matter if you don’t refer to it again, preferring to use your summary version. It’s the process that is important.

Produce a single page summary because the process of simplification helps cement in your mind a deeper understanding of the key aspects of your plan. It doesn’t matter if you prefer to work from a detailed plan in future; again, it’s the process that is valuable.

I also recommend you take it one step further:

  1. You need to be able to define your whole trading approach in one short paragraph; something that fits on a Post-It Note*.

Why?

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The Need for Trading Rules

Question:

Hi Lance,

I read from another resource that in order to detach your emotion in every trade you need to have a set of written specific rules about your entry, your position size, your exit and any other possibility that might happen in that trade and you need to follow it with “marine discipline” to make your success in trading business. What do you think about this statement? Do you also have specific and written trading rules?

Thanks and Regards

G

Answer:

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