Plan Your Path Ahead In Wild Market

2021-05-17

Ready for an updated trading plan to take on this market?

Every market session seems like another “new” something takes place — new highs, new lows, new uncertainty, new crazy news.

Without a sound trading plan in place, this environment can easily distract traders, tease them with claims of grand success, or fake them out into taking bad trades too often. Risk in trading is as real as ever in this market.

Those who have been around Simpler Trading know that we promote planning ahead to minimize risk and protect capital. The foundation of our trading is a predetermined trading plan.

There are very real decisions that traders need to make about how they want to risk their money. No one can focus on everything that is going on in the markets. There are simply too many assets to follow all at once and this past year is an historic example of how fast the market moves and changes… without notice.

Traders must learn how to understand and take advantage of the market as it is trading now.

A great place to start for a trading plan is to define your trading management strategies (how you want to trade) and develop a way to track your work.

To figure out which trading strategies fit your personality and trading goals, it helps to see how other traders have created a trading plan. They narrow down a strategy and time frame that works with their schedule, risk tolerance, and trading goals to figure out what works for them.  (If you're past this stage, and want assistance honing your strategies and improving your equity curve, check out our online community of traders.)

  • Here are a few points to consider for your trading plan:
  • Why are you trading?
  • What are your goals?
  • What time frames will you trade? For example, swing trades, day trades, etc.
  • Which setups will you trade, such as butterflies, iron condors, etc.?
  • What strategies will help develop and execute these setups?
  • Entry and exit rules that you will put in place for each trade?
  • Risk management rules to follow?

Try this example of a starter trading plan — free to use.

One of the best parts about trading is that each trader’s plan can vary based on their goals, time available, skills, and experience.

Be sure to track all trades. This is important because trading is all about recognizing patterns. Tracking trades is much more difficult when you don't take screenshots and document your trades and ideas. Your trading plan should be a living document which changes as you improve and hone your strategies.

The market is always changing and a solid trading plan helps you adapt to all the market gives.

We Saw: Manic Monday stopped the market rally — 

  • Gas pumps dry up in nation’s capital, elsewhere
  • More nationwide companies begin lifting mask mandate
  • Nasdaq leads pack of major indexes in down day

We’re Watching: How this back-and-forth settles down —

  • For good charts with good signals
  • Where the plays will pan out
  • Not chasing fakeouts or weak setups