Trade Plan

One of the hardest things for traders, or anyone for that matter, is to adapt to change. Mostly we get stuck when things change, which makes trading difficult since the very nature of markets is change. This is where the cliché ‘going with the flow’ originates, but simply understanding the cliché isn’t enough; we must internalize and practice it and get it in our bones.

In this post, I will outline a trade plan for RNG. This is a part of our ’30 Planned Trades’ series, where we plan every aspect of the trade ahead of time and then execute what we have planned.

One aspect of a trade plan is the method or setup. Setups don’t happen in a vacuum, there is a context that determines the meaning of the content. I’m going to approach context very simply here as the thing that decides if the market is going up or down.

I often read things about how I should follow the trend or go with the flow or don’t fight the market, but exactly what trend or flow should I follow? It’s too abstract, so I’m going to fix a cycle to follow and learn to let go and change when it changes.

In the video, I show the basics of a simple practice you can try, using a rolling 100-bar cycle to determine if we are looking for long setups, short setups, or in a transitional or neutral phase. I not only want to be precise and consistent in my Trade Plans, I want to be consistent in my methods.

By adhering to a fixed cycle and adapting to changes, I avoid the need to guess or predict market directions, maintaining balance in my approach. Think about this: If you charge your mind with the impossible task of predicting a market when markets are unpredictable, you will end up a nervous wreck and then wonder why your trading is so emotional.

I encourage you to try this practice. Since it keeps you from constantly looking to the left of the chart or at higher time frames for more information, it will likely push you out of your comfort zone into the unknown, which is a good start.

Traders often talk about the need to be patient but to be patient, we must know what we are being patient for. That is why we have a trade plan and know ahead of time exactly where to enter, where to place a stop, where to exit, and how much size to put on.

In this post, I continue with our trade planning exercise of 30 planned trades by making a trade plan for LEN. Keep in mind that the exercise is all about learning consistency and discipline and not about the method or whether the trade wins or loses.

In the video, I speak of not being worried about losing all 30 trades in a row. It’s not that I have steel nerves, it’s that I have planned ahead of time for 30 losses with my position size.

In this post, I’ll be sharing a trade plan for IOT, demonstrating the importance of creating a consistent and structured approach to trading. A well-defined trade plan offers the only control a trader has in the ever-changing and unpredictable environment of the markets.

Initially, the process of developing a detailed trade plan may seem tedious. This is a natural resistance from our minds, which often shy away from structured approaches. However, the focus of this post is to encourage you to move beyond searching for the ‘perfect’ method and instead build a solid foundation of learning discipline and consistency.

Implementing a focused, consistent method is like a framework that you can learn from and even design new methods from within that framework. The key is to focus on being consistent in what we do.

In the accompanying video, I show the components and processes of a swing trade and how I incorporate these elements into my trading methods. Instead of thinking purely in terms of technical analysis, I encourage you to consider structuring your approach around the simple dynamics of buyers and sellers, to gauge who is in control at any given moment.