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5Cs + SMART + KISS = Easy and Effective Trading Plan!
There’re books and seminars on developing an effective trading plan. Yet how many have created one that’s easy to implement and execute in real life? It’s now time to follow 5Cs + SMART + KISS!
Beth said: "Many have stayed at the “knowing” mode and chose not to map out the trading plan in details. Without visualizing a trading plan inclusive of specific goals on paper, most do not have an incentive and/or motivation to start working wholeheartedly on the plan. Some might have set the bar too high and often became discouraged with their trading performance.”
Let’s walk through the suggested steps to develop an easy and effective trading plan!
First thing first. Find a trading system that speaks to you and matches your personality and expectation. It’s like searching for a soul-mate. Research indicated that most trading professionals spent 90% of their time looking for a holy grail. It’s no news that they often switch to a new system every two weeks or every month. It’s always tempting to try a new system or indicator when they trip over one. Only until they answer Yes to the following 5C questions, the system search will continue:
Comfort (Are you comfortable to trade with your system?)
Confidence (Do you have enough confidence to trade live with your system?)
Concentration (Does your system engage you 100% so that you can concentrate on the market?)
Commitment (Does your system secure your commitment to use it to trade live?)
DisCipline (Are you disciplined in using your system to manage a trade, ie before, during, and after its completion?)
B. Start with a SMART Plan
After validating your system with 5Cs, spell out a SMART trading plan on paper.
Specific (Agenda on your trading session covering Who, When, What, Where, Why and HoW)
Measurable (Quantifiable goals such as profit target, stop, number of trade, and position size)
Achievable (Reasonable expectation on both system and your performance)
Realistic (Realistic goals based on your system’s WIN rate and market in question)
Time Bound (Time schedule with milestones and projection)
Pause here for a moment. What do you think about the following trading plan?
~ 8:00 to 10:00 EST
~ 6E, CL and TF (3 Futures markets)
~ 15 trades/week (begin with 1-contract trades)
~ $1,000 daily goal
~ $500 daily loss
~ 10 ticks stop
~ 20 ticks profit target
~ Win rate @80%
~ $1,000 for each additional contract
Does it qualify for a SMART label?
C. KISS - Keep It Small and Simple!
You have heard very often that one should always aim high. Trading is a very different game. Intermediate and Long terms Yes. Not recommended when you want to develop confidence in a trading system plus the required consistency and discipline on the trader YOU!. Up-front KISS will help making you feel comfortable to trade. Once you build up your confidence, you can adjust your position size and advance to multiple-contract trades. Just like a baby, learn to crawl first. After overcoming the initial reluctance and fear, everything becomes your second nature.
Compare this to the previous so-called SMART plan. It qualifies for a SMART label. It is very modest yet still generates an impressive report.
Hopefully it will strike home and convince you to KISS! A do-able and humble KISS start will cultivate long-term success. Number 1 goal in Trading: Preserve Precious Capital. You may be a visual person. Let’s witness the earlier SMART plan with KISS and growth projection:
EZ Color Trading Website: http://ezcolortrading.com
Disclaimer: All trading involves high risk; past performance is not necessarily indicative of future results. No implication is being made that anyone utilizing the system has or can obtain such profits and results. This information is merely a presentation of trade strategies.
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EZ Signal - Your Gateway to the Futures World!
Trading can be Simpler - EZ is the answer you have been searching for!
Stay with the overall trend
No more guesswork
Tighten stop almost instantly
Above-average reward/risk ratio
Let your trade run
Page Updated Last on: Aug 24, 2011