The Daily Market Forecast... your trading plan is alive
Friday’s Blog Results: The suggested long entry never triggered. The short did fill but too late to enter minutes before the close. Team Members had a tough day with Volume Profile but made most it back with Volatility Reversal. Diversification of trading strategies helps.
Today’s Trading Tip: Your trade plan is alive.
In your trading plan you’ve established a set of rules that when followed, show a positive outcome. You have edge.
Most trade plans start simple. When to enter and exit. Which asset to trade. Which tools to use. How much to risk.
That’s a good start but the real meaty rules come from live trading experience. We can’t possibly consider all outcomes and influences in the beginning. We need to trade live, observe, document, and mine the data for new rules to improve. This means your trading plan is a living document. It should evolve.
Add to all that the fact that markets change character. This means you will eventually experience enough change to add conditional rules to your plan. These are rules you never thought of until you witnessed the result live trading.
Beyond the typical stats you’re keeping, here are few data points you should be keeping record of for every trade triggered in your plan, taken or not.
- Time based stats including time of day, day of week, day of month.
- Sentiment of major world markets.
- Correlated assets including inverse.
- Catalysts.
- Technical indicators. Your favorites and a few you never use.
- Alternative entry and exit rulesets.
That last stat is critical. While you already have an entry/exit ruleset with edge, how do you know it will endure? What happens to those rules when the market changes character? Does their performance stay positive but become better or worse and in what market conditions?
Here's an example of a “hard-won” rule we found regarding exits. How you move your stop loss has a big impact on your results. If you kept track of different exit rulesets; never moving the stop, trailing the stop, and setting rapid breakeven exits for winners, you would have a rich database to mine for edge… based on market conditions. Or for that matter, compared to ANY of the other stats you’ve kept. Our preferred exit strategy is updated periodically. This gets our “living” trade plan in harmony with present time action. Good to know!
If you want to see the difference this makes, join us Saturday in our LookBack (5) session. Bring your questions. Get answers. Click the button below to register.
Today’s Best S&P Futures Turning Points:
Short Level: Sell 4736.25 stop 4740.00 (3.75 risk).
Long Level: Buy 4698.00 stop 4693.75 (4.25 risk).
Trade Well,
Mike Siewruk
P.S. Join us every Saturday morning @ 10:00 ET for our weekly LookBack (5) trade review session. Every trade for the week is analyzed. Now open to the public. Meet the team. Ask questions. Register here for the December 18th session.