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DIAMOND FOREX TRADING PLAN

DIAMOND FOREX/ THE FOREX FAMILY

ALEX KIRUI

FOREX6GOD

THIS PIECE OF TEMPLATE IS DEDICATED TO HANS SCHNEIDER AND RYAN SANTOS FOR
HAVING THE WORST TRADING PLANS IN THE HISTORY OF TRADING PLANS

WHAT IS A TRADING PLAN?


A trading plan is set of rules that cover every part of your trading career. (This is
not your edge or strategy), but it is a plan helps you cover your edge over the
markets. Most amateur traders do not have any sort of trading plan, and most
likely you will find them getting onto a chart simply because he heard that his pair
is falling, he quickly stack sells without scant regard to their risk and profit
objectives, a trading plan is designed to prevent such mistakes by including a
comprehensive risk and money management strategies among others.

With a trading plan, you will have the ability to monitor your performance, you
can evaluate your progress, your daily goals, etc., in a way that is comprehensive,
following your plan religiously will make you trade without emotions and more
importantly with minimal stress or no stress at all.

Those traders without a trading plan will never trade without emotions and
stress, their trading mainly relies upon, gut feeling, tips and signals, this kind of
trading is nail biting, emotional roller-coaster full of stress and as a result as ted
put it financial suicide
As Waqar EMAS Ajmal states that a trading plan is not a trading strategy, as it would be soo simple.
However, a good plan, that is adhered tp strictly will help minimise losses and enable you to stay in the
game much longer than those traders who don’t have a trading plan.

WHO NEEDS A TRADING PLAN?


Well unless your name is Nenoh, Reza or MLM, just to name a fe, then you need a trading plan, if your
name appears above, you don’t really need a trading plan because affiliate links don’t need it, so you
are okay lol.

Anyone who is embarking on trading, a trading plan is a roadmap for your journey which to most traders
that journey is to attain consistency. To embark on your trading career without a clear idea of where you
are going and how you are going to get there will certainly result in financial loss and lots of stress.

WHAT WILL A TRADING PLAN DO?


Your trading plan will certainly make your trading a whole lot simpler, than if you traded without having
one. It will also limit your opportunity to make bad trades, prevent many psychological issues from
taking over, Most importantly if your trading is going badly you will be able to know it’s because of two
things

Either your plan is not working, or you are not adhering to it.

If you are losing money without a trading plan, it’s impossible to point out what you are doing wrong,
because you have no way of evaluating things.
A trading plan should take much of your trading decisions, when you are in a losing trade and equally
when you are in a winning trade, that way at the heat of the moment you do not make an emotional
decision, you just follow what your trading plan tells you

KNOW YOURSELF AND YOUR PURPOSE


You need to know why you are trading.

What is your purpose?

What does being a consistent trader mean to you?

Decide on what it is you want to achieve, then ask yourself why and how trading is going to provide it,

List your primary and secondary goals.

WHAT KIND OF A TRADER ARE YOU?


Scalper, day trader or swinger.

Define your trading style


I am a …………….. Trader and my style is . . . ….I understands that I cannot predict the market, as iam not
a binary signal provider. Thus I cannot claim to control the markets. However I can control myself
because I understand the markets does not owe me shit, which I will do by………….

WHAT ARE YOUR STRENGHTS AND WEAKNESSES?


List all your trading strengths and weaknesses, thereafter specific on how you will maximize and
minimize on each,

Check your background and examine it, Give for example, a trader named Ted Safranko, He used to
work in a finance company, this is a highly disciplined environment with strict procedures, so this might
give him strength because he can organize his trading like his previous job. However he is a poker player
which is addictive, and may lead him to be reckless, (weakness)

So with your strengths and weakness highlighted in your plan, overtime it will be revealed in it, for
example

My primary strength is . . . (allowing my profits to run and closing trades in accordance with my exit
strategy. This contributes to ‘my edge’ and helps me towards my goal of being consistently profitable in
the markets). My secondary strength is . . . My primary weakness is . . . (wanting to recoup a loss quickly
which, almost inevitably, results in increased losses). The following aspect of my trading plan will help to
control this weakness and prevent losses from spiraling out of control . . . (I have a pre-defined daily stop.
If it is hit, I stop trading for the day). My secondary weakness is . .
DAILY QUESTIONS
I’m I okay to trade today?

Are the market conditions in line with my trading plan?

What time will I trade?

Your mindset is the key to your success, have you had enough sleep? Are you relaxed? Are you tired or
distracted by other things?

Markets, Instruments & Timeframes


Decide on what pairs you would like to trade, and the reasons for trading it!

As a general rule of thumb, professional traders tend to restrict their focus to a limited number of
currency pairs maximum two!. By contrast, amateur traders tend to trade gold one day, currency pairs
the next and exotic sounding commodities like pork bellies the day after that, etc.!

Which Timeframes will You Trade?


Now you need to focus in on your timeframes within the category of your choice. Be very clear in your
own mind about the number of timeframes you use and why you use them.
What is Your Daily Pre-market Routine?
These are the things you do every day to ensure that when the time comes to ‘pull the trigger’; the
probable outcome is in your favor.. . It is essential to undergo a daily pre-market routine to ensure that
you are prepared fully for the trading day ahead.

Have You Analyzed Yesterday’s Trades?


Have you completed your analysis of yesterday’s trades, logged them and updated your journal? Did
you adhere to your plan and, if not, what effect does this have on your trading activity today? In other
words, your ability (or otherwise) to stick to your trading plan yesterday, should determine your trading
activity today.

Risk & Money Management


Let us define the difference between risk and money management. Risk management focuses on the
steps necessary to minimize losses by assessing market conditions, risk-reward, probability and the use
of stop loss orders etc. Money management, on the other hand, focuses on the steps necessary to
maximize profits by the use of trailing stops and adjusting position size etc. cut your losses!!!

What is the Overall Market Risk?


Now decide the maximum amount of capital that you will put at risk at any one time. Be prepared for
the worst. Many traders will not risk more than 1% on any one trade, with a maximum exposure on all
open positions of 5% in total. In other words, if all the positions you have open at any one time were
stopped out simultaneously, the drawdown on your account would not exceed 5%. Nasty, but not
disastrous.

Where Will You Place Your Stop Loss Orders?


Every trade you make MUST have a stop loss. Unless you are a seasoned professional trader, make sure
it is an actual pending stop order in the market, NOT a mental stop! This will ensure that all losses are
cut short. Also, if at all possible, make it market controlled and not a fixed percentage (i.e. 2%) of your
equity

When Will You Stop Trading?


Knowing when to stop trading is both good discipline and good risk management. Additionally, it helps
to prevent chasing losses on losing days and helps to prevent greed from rearing its ugly head on
winning days. Every single trading day should end in one of three ways, namely: 1. On a winning day,
you have a very simple rule for stopping trading once you have reached your target. 2. On a losing day,
you have a daily stop and cease trading as soon as it is hit. 3. Some days there are not any trading
opportunities to be had, so you do not trade at all.

SPECIFIC MONEY MANAGEMENT


Trailing stop to lock in profits once the trade is on the right side of break even has two clear advantages.
1) At worst, you may end up with a scratch trade – but no losses.

2) At best, it allows profits to run which enables you to take a sizeable chunk out of the expected move
Exit Strategy
Exit strategies are harder to get right than entry strategies. Unfortunately, they are much more
important because, self-evidently, they control the profit and loss. A dynamic, market controlled exit
enables you to take some money off the table offered by the eventual losers and let the big winners run
to realize a greater proportion of the increased gains on offer. These additional profits could transform
an overall trading strategy from one that barely breaks even into one that is very profitable indeed.

Trade Strategies, Setups & Entries


Which Strategies Will You Trade?

What are Your Setups?

How Will You Find Your Setups?

Which Signals Will Trigger Your Entry?


After the Market Closes
This is what happens

Have You Recorded Today’s Trades?..... After the market closes, I will . …….

Did You Execute Your Trades According to Your Plan?........ In addition to recording all my trades, I check
to . . .

Have You Completed Your Trading Journal?...... I regularly update my trading journal with . …..

Discipline
Having a comprehensive trading plan with detailed entry and exit criteria and excellent risk and money
management procedures all count for nothing if you lack the necessary discipline to implement them.
Ensure that you stick rigidly to the commitments that you have made to YOURSELF in adhering to your
plan; this is relatively easy during periods of profit. However, the real test will be your ability to stick to it
when your trading is not going so well.

What are Your Promises to Yourself? These are promises that are designed to enforce self-discipline.
What sanctions will you impose upon yourself if you break one of your trading rules? Worse still, what
about if you break two in a row?
For example your plan should be like

If I break one of the rules detailed in my trading plan I will . . . (stop trading for a full day and focus on the
reasons why there was a breach of discipline).

What Questions do You Ask After a Winning or losing Trade?


After a winning trade, there are some questions that need to be answered before moving on to the next
trade. Did you do everything right; was the trade well planned and executed? Although it was profitable,
could you have extracted more profit whilst adhering to your exit strategy? And vice versa for the losing
trade
Golden Trading Rules
#1. PROTECT & PRESERVE YOUR CAPITAL!

#2. ALWAYS SET A STOP LOSS. ALWAYS!

#3. CUT THE LOSSES SHORT – LET THE PROFITS RUN!

#4. TRADE WHAT YOU SEE – NOT WHAT YOU THINK!

#5. NEVER CHASE YOUR LOSSES. EVER! Unless you are rakeel

#6. KEEP EXCELLENT RECORDS!

#7. MAINTAIN DISCIPLINE!

#8. KEEP IT SIMPLE! KISS; KEEP IT SIMPLE STUPID- SAMI LAJARDI

#9. PLAN THE TRADE – TRADE THE PLAN!

#10. PICK YOUR POISON AFTER TRADING, MINE IS CODEINE+MIDGET


CONCLUSION

Alpesh B. Patel states, “While a plan cannot predict the future, it can lay down how you react to the
possible outcomes. This is why a plan is essential. It is a list of strategic responses to events beyond your
control. You control the only thing you can control – yourself”.

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