The Dynamic Trading Plan
What we need to know before we construct our Trading Plan is that while we may use the same set-ups and triggers, and even conduct the same overview beforehand, the specific signals we take will still depend on the type of market we are in: trending or counter-trending, and for trending in particular what stage of maturity the individual trend in a market is displaying: congruent or diverging? Regardless of your set-ups and triggers you’re not going to be successful if you’re taking trend signals in a counter-trending market or taking counter-trend signals in a trending market. Bottom line: your Trading Plan has to be as dynamic as the markets.
While your plan has to account for different variables, thanks to the analysts and traders who have gone before us these variables are measurable. And as complicated as all this sounds, it is not, as long as you learn it one layer at a time, and understand the importance of starting with an overview that gives you trend on the appropriate time frames, and momentum.
And it is in conducting that overview where you will determine the stance of the individual markets which will determine the tools and triggers you will use. The market’s behavior will determine the appropriate variable to use in your Trading Plan. And your Trading Plan will dictate your actions. The key to remember is that it’s a dynamic process which always starts with price and can only advance by a change in the behavior of price.
Jay Norris
www.trading-u.com
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. Risks include the potential that changing political/economic conditions may substantially affect the price/liquidity of a currency. Investors may lose all or more than their original investments.
Yep trading markets, of in my case Forex spot, is indeed “dynamic” and one of the most enjoyable “jobs” in anywhere.
I find that one day you can be extremely Bearish about an FX pair, only to find the very next day your stance has changed to very Bullish! But with a plan in made front of me, I have “control” over my emotions and “actions”. Even if it’s a “perceived” control, it is certainly better than nothing and a “Gang-Ho” approach to trading. And even with a plan, thing can go wrong IF you don’t follow it….!! It’s Easy to hit the BUY/SELL buttons on your consol, but it is much harder to “Follow your Trading Plan” like when you are training for an event like a long run or the sort! Gotta learn some diciplene to do that, but it’s well worth the effort! (There must be books that can help)
My plan is interpreted in an excell spreadsheet ie. My “Trend Map” that I update, sometimes on an hourly basis! This does reflect how “Dynamic” the markets are in Trading, especially Day Trading; but that will apply to a trader who wants to hold a position for a less than a week!
And having the spreadsheet (Trading Plan) “reflect” my charts…ie. Daily, 240m on one screen and 60m,15m and 3m on another, really help to see my “plan” in action!
What I can tell ya, is following the plan is NOT easy – because we are human, I just gotta accept that.
Iam using the holiday break to revise my Trading plan so I am ready for market Dynamics in 2010. Hope everyone can do the same….LOL…Happy 2010