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The 'plan'

Discussion in 'Beginner's Lounge' started by Johnny Oddsocks, Jun 28, 2020.

  1. Johnny Oddsocks

    Johnny Oddsocks

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    My 'plan' after having a play, making and losing the gains and arriving back at the start. Wiser and no worse off.

    I have a starting total of $10,000 to trade with and have the ability to put more savings in if i choose. After some reading books and watching youtube combined with various podcasts I decided swing trading was more my speed than day trading and the long hold game for retirement was not either. The following is based on what I have so far learnt by book, Google, podcasts and youtube... and by a bit of experience:

    #1. Formulate a workable plan and be a robot in following it. My plan is not fully fleshed out but i believe the basics are there and probably need work. The robot part will be the hardest I'm sure.

    I aim to spread the 10K among 5 or 6 ETF's and am not interested at this time in CFD's or shorting the market. Leverage scares me too much right now.

    When buying for a longer hold before (weeks) I did set a wide stoploss to allow for more fluctuation and adjust if i wanted to later. (I found on CMC if I didn't set one at buy I couldn't go back and add one later)

    For shorter swings I intend to use a 4% trailing stop loss at market and depending on how much the ETF seems to be fluctuating I may go to 10%. Why 4%? Because a couple of authors say that is what they do and at least it makes sense! Maybe some will think it is too tight? (I am wary of limit only as a recent gap down failed to trigger it and I had to rush in and do it manually. Fortunately it was on a stock that went from about $10 to $17 and I sold at $16.)

    I am uncertain of whether to set a sell at price at the same time although I have read it can be a good idea to do so to sell 50% of the stocks at a 7% gain and let the rest rise more if they go above that. I have in the past manually raised stops as a stock price rose. I'm lucky that in my day job i can have the stocks displayed while i work so i can sort of keep an eye on them through the day if I saw a reason to sell. So I guess I am yet to strategize the exit beyond saying ''that's enough thank you'' and taking the gain.

    There is not yet a defined profit per week or month plan, more just a don't lose all your money plan and make some as well while getting the hang of it. If anyone has a suggestion as to what a sensible % growth per week/month amount is please feel free to tell me...otherwise I might just get stoopid numbers in my head.

    Of 3 real trade losses in the last 6 weeks two were knee jerk emotion driven sells and the last was a calculated sell out of a bad position before it took my initial starting capital of 10K. I felt regret at the two knee jerk losses and calm as can be over the last one that I took as a pure math equation. It was interesting to experience the emotional difference between panic selling and sticking to a predetermined plan of selling when enough was enough.

    As of now i'm not holding any stocks and for the last week have been doing paper trades each day for the day or overnight to test my understanding of analysis. I have been using the RSI, the MACD, volume and Bollinger bands. I seem to have a little harder time reading the candlesticks but i'll get there. Regarding these I am merely trying out what other traders say they do and how, as a way to understand the charts better. I have stayed away from you tubers who say they know what is going to happen and those who tell people what to buy.

    So far 10 paper trades with 2 loss and 8 wins. One of the wins would not really be worth it if was executed in real life as fees would have eaten it. I have no idea of what normal or expected ratio might be... So far it is just how it's turned out. Beginners dumb luck? I intend to keep doing the paper trades to boost my confidence. I have been using the above mentioned chart patterns to plot entry and exit points. I have ignored the feelings of ''wow it's low it must be going to trend up real soon I better get in'' thinking. That's easy on paper but harder when you see it shoot up and wish you took a gut chance on making money.

    My focus so far has been on stocks above $10 although I have done ok with some around $4 as well.

    I'm in no hurry although my goal is to grow my capital through trading and injecting savings into it over the next 27 months to the point where I can make consistent earnings enough to get off the tools a few days a week

    I endeavor to learn something new most evenings. I'm also learning to pay attention to such things as when companies release reports, what news events can do and how the market really seems to be about emotions, feelings and opinions. And that the skill needed is to not be one of those operators as much as possible.

    I guess that is pretty much where I am at. Looking forward to tightening up the 'plan'...What am I missing?

    Thanks
    J
     
  2. tech/a

    tech/a No Ordinary Duck

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    Your missing the ability to test
    Your plan to see if it has an edge.
    Plus the ability to know what you need to know.

    Youll end up with an hypothesis.

    Just like any business start up.
    Plans are fine but proven track records
    Give greater confidence to succeed.
     
  3. peter2

    peter2

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    I think you're missing lots of important details and there are too many for me to mention. Instead I'll ask this, would someone else be able to use your trading plan and do the same trades as you?

    Which ETFs/stocks are you going to trade? (trading universe)
    When are you going to buy them? (strategy, setups, trigger)
    How many shares are you going to buy? (position sizing)
    How much of your account are you going to risk on each trade? (risk management)
    How will you know when to use 4% or 10% as an initial stop loss? (risk management)
    When will you sell? (exits)
     
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  4. Johnny Oddsocks

    Johnny Oddsocks

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    Thanks Duck although i'm not sure I fully understand. Do you mean by paper trading it is too theoretical and not real enough... That the test is in the execution?
    As for not knowing what I need to know, that's why I'm here asking questions.
     
  5. Johnny Oddsocks

    Johnny Oddsocks

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    That is a good way to put it thank you. I have written 'how to' plans before for other types of work so I get what you mean there.
    I will give consideration to learning more about those questions you have posed me.
    Thanks.
     
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  6. ducati916

    ducati916

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    The shorter the trading timeframe, the harder the trading task. Why?

    (a) decision making time is reduced;
    (b) emotional input is magnified;
    (c) natural volatility is amplified as entry/exit points are compressed, amplifying (a) further;
    (d) overnight news plays greater part in managing positions, which is relevant for swing trades.

    Clearly your choice of time frame is not driven by comfort (psychological) but rather by a desire to earn income and reduce working at/in your job. This is by far the most dangerous variable driving choice of a time frame. Why?

    (a) the need to earn, forces you into taking trades you should never take,
    (b) hold onto trades far longer than you should, trying to save or squeeze,
    (c) amplifies the already high emotional component,
    (d) puts a clock on trades,
    (e) will disrupt sleep patterns as after hours bad news is released that could affect your positions.

    Paradoxically, those that struggle with this time frame often drop into the day trading time frame, where all the above is even worse. Underpinning this behaviour is the desire to earn a living trading.

    jog on
    duc
     
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