{"id":54823,"date":"2021-04-19T09:37:19","date_gmt":"2021-04-19T13:37:19","guid":{"rendered":"https:\/\/www.t3live.com\/blog\/?p=54823"},"modified":"2021-06-19T08:08:29","modified_gmt":"2021-06-19T12:08:29","slug":"sami-abusaad-perfect-trading-plan","status":"publish","type":"post","link":"https:\/\/blog.t3live.com\/2021\/04\/19\/sami-abusaad-perfect-trading-plan\/","title":{"rendered":"How to Write the Perfect Trading Plan"},"content":{"rendered":"<p><iframe title=\"YouTube video player\" src=\"https:\/\/www.youtube.com\/embed\/Xdi8xSbSmnY\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p><span style=\"font-weight: 400;\">When the market turns unstable, what do you do?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Panic sell? Seize the moment and start gambling?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you want to wade through the treacherous waters of a volatile market and come out with your P&L &#8212; and your dignity &#8212; intact, you need a trading plan.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Creating a trading plan can help you<\/span><i><span style=\"font-weight: 400;\"> reset<\/span><\/i><span style=\"font-weight: 400;\"> so you can take advantage of market volatility.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">I can\u2019t guarantee that a trading plan will make you successful.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But I can guarantee that you\u2019ll fail if you don\u2019t have one.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is an ambiguous topic that a lot of people struggle with, including myself in the beginning.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this article, I\u2019ll show you how to make a trading plan that will work for you.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><b>HOW TO WRITE THE PERFECT TRADING PLAN<\/b><\/h3>\n<p><b>Most people are terrified to make a trading plan.<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Once you commit to a plan, YOU are responsible for the results. As humans, we prefer to avoid taking responsibility when things don\u2019t go our way.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But when you have a plan that tells you what you can and cannot do, you have no choice but to take responsibility.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this process, your ego will get bruised and you\u2019ll have no one to blame but yourself.\u00a0\u00a0<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">This is required for growth.<\/span><\/i><\/p>\n<p><b>A plan is ESSENTIAL to boosting your P&L long term.<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Having a plan will allow you to move forward <\/span><i><span style=\"font-weight: 400;\">systematically<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You\u2019ll be able to notice what is working and do more of it. You\u2019ll also notice what isn\u2019t working and eliminate it from your trading.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As you look over my trading plan, keep these things in mind:<\/span><\/p>\n<ol>\n<li><span style=\"font-weight: 400;\">This is a <\/span><i><span style=\"font-weight: 400;\">template<\/span><\/i><span style=\"font-weight: 400;\"> to create your own plan<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Start conservatively. Set easy, modest goals and create simple rules.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Tweak your plan as you gain experience<\/span><\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<h3><b>My Trading Plan Table of Contents:<\/b><\/h3>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone size-full wp-image-54824\" src=\"https:\/\/www.t3live.com\/blog\/wp-content\/uploads\/2021\/04\/tableofcontents419.png\" alt=\"\" width=\"622\" height=\"581\" srcset=\"https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/tableofcontents419.png 622w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/tableofcontents419-300x280.png 300w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/tableofcontents419-150x140.png 150w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/tableofcontents419-80x75.png 80w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/tableofcontents419-220x205.png 220w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/tableofcontents419-107x100.png 107w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/tableofcontents419-161x150.png 161w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/tableofcontents419-255x238.png 255w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/tableofcontents419-444x415.png 444w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/tableofcontents419-521x487.png 521w\" sizes=\"(max-width: 622px) 100vw, 622px\" \/><\/p>\n<h3><b>GOALS AND OBJECTIVES<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">To start your trading plan, define your goals and objectives.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cGoals\u201d are your overarching intention. \u201cObjectives\u201d are the criteria you need to establish so you can meet those goals.<\/span><\/p>\n<p><b>My Goal:<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Trade well by finding setups that strictly meet my strategies (as outlined in my trading plan), and execute them flawlessly.<\/span><\/i><\/p>\n<p><b>My Objectives:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Batting Average: &gt;= 60%\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Sharpe Ratio &gt;= 2.0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Risk to Reward &gt;= 1:2\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"># of Trades\/Day: 7<\/span><\/p>\n<p><span style=\"font-weight: 400;\">* <\/span><span style=\"font-weight: 400;\">Batting Average<\/span><span style=\"font-weight: 400;\"> &#8211; Number of winning trades divided by total number of trades<\/span><\/p>\n<p><span style=\"font-weight: 400;\">* <\/span><span style=\"font-weight: 400;\">Sharpe ratio<\/span><span style=\"font-weight: 400;\"> &#8211; the average winning trade divided by the average losing trade<\/span><\/p>\n<p><span style=\"font-weight: 400;\">*<\/span> <span style=\"font-weight: 400;\">Risk<\/span><span style=\"font-weight: 400;\"> &#8211; the difference between entry price and stop price\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">* <\/span><span style=\"font-weight: 400;\">Reward<\/span><span style=\"font-weight: 400;\"> &#8211; the difference between entry price and target price<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You can tweak these objectives to best suit your lifestyle and reach your goals, but I find it\u2019s best to avoid improving one stat at the expense of the others.\u00a0<\/span><\/p>\n<p><b>There are four things that make money:<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<ol>\n<li><span style=\"font-weight: 400;\">The frequency of your trades<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The risk per trade<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The sharpe ratio<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Your hit rate<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">Below are some examples of how altering just one of these factors can drastically impact your P&L:<\/span><\/p>\n<p><img decoding=\"async\" class=\"alignnone size-full wp-image-54825\" src=\"https:\/\/www.t3live.com\/blog\/wp-content\/uploads\/2021\/04\/pic1419.png\" alt=\"\" width=\"822\" height=\"505\" srcset=\"https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic1419.png 822w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic1419-300x184.png 300w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic1419-150x92.png 150w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic1419-768x472.png 768w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic1419-80x49.png 80w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic1419-220x135.png 220w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic1419-163x100.png 163w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic1419-244x150.png 244w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic1419-387x238.png 387w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic1419-676x415.png 676w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic1419-793x487.png 793w\" sizes=\"(max-width: 822px) 100vw, 822px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">In example 1, by hitting those four metrics in one year, you can make over half a million dollars (gross).<\/span><\/p>\n<p><img decoding=\"async\" class=\"alignnone size-full wp-image-54826\" src=\"https:\/\/www.t3live.com\/blog\/wp-content\/uploads\/2021\/04\/pic2419.png\" alt=\"\" width=\"512\" height=\"315\" srcset=\"https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic2419.png 512w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic2419-300x185.png 300w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic2419-150x92.png 150w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic2419-80x49.png 80w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic2419-220x135.png 220w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic2419-163x100.png 163w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic2419-244x150.png 244w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic2419-387x238.png 387w\" sizes=\"(max-width: 512px) 100vw, 512px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">In example 2, if your risk per trade<\/span><b> doubles<\/b><span style=\"font-weight: 400;\">, your gross profit <\/span><b>doubles<\/b><span style=\"font-weight: 400;\">.<\/span><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-54827\" src=\"https:\/\/www.t3live.com\/blog\/wp-content\/uploads\/2021\/04\/pic3419.png\" alt=\"\" width=\"816\" height=\"500\" srcset=\"https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic3419.png 816w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic3419-300x184.png 300w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic3419-150x92.png 150w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic3419-768x471.png 768w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic3419-80x49.png 80w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic3419-220x135.png 220w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic3419-163x100.png 163w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic3419-245x150.png 245w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic3419-388x238.png 388w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic3419-677x415.png 677w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic3419-795x487.png 795w\" sizes=\"(max-width: 816px) 100vw, 816px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">In example 3, by reducing your number of trades per day from 6 to 4 (by only jumping on the \u201cperfect trades\u201d), you see a <\/span><b>33% drop<\/b><span style=\"font-weight: 400;\"> in your P&L.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-54828\" src=\"https:\/\/www.t3live.com\/blog\/wp-content\/uploads\/2021\/04\/pic4419.png\" alt=\"\" width=\"815\" height=\"495\" srcset=\"https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic4419.png 815w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic4419-300x182.png 300w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic4419-150x91.png 150w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic4419-768x466.png 768w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic4419-80x49.png 80w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic4419-220x134.png 220w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic4419-165x100.png 165w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic4419-247x150.png 247w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic4419-392x238.png 392w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic4419-683x415.png 683w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic4419-802x487.png 802w\" sizes=\"(max-width: 815px) 100vw, 815px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">In example 4, if the sharpe ratio changes from 2.0 to 1.5, P&L is again severely impacted.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-54829\" src=\"https:\/\/www.t3live.com\/blog\/wp-content\/uploads\/2021\/04\/pic5419.png\" alt=\"\" width=\"817\" height=\"498\" srcset=\"https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic5419.png 817w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic5419-300x183.png 300w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic5419-150x91.png 150w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic5419-768x468.png 768w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic5419-80x49.png 80w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic5419-220x134.png 220w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic5419-164x100.png 164w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic5419-246x150.png 246w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic5419-390x238.png 390w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic5419-681x415.png 681w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pic5419-799x487.png 799w\" sizes=\"(max-width: 817px) 100vw, 817px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">In example 5, if the batting average is<\/span><b> lowered<\/b><span style=\"font-weight: 400;\"> from 60% to 50%, P&L again drops by one third.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">By even slightly messing with these four metrics, your gross profits can be altered dramatically.\u00a0\u00a0<\/span><\/p>\n<p><b>Step by step, set goals for yourself to see if you can improve these metrics over time.<\/b><\/p>\n<p>&nbsp;<\/p>\n<h3><b>MONEY AND RISK MANAGEMENT<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">This is what keeps the account safe. These are rules that tell you when you need to quit.\u00a0\u00a0<\/span><\/p>\n<p><b>My Goal: 2R\u2019s per day, or 10R\u2019s per week<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Figure out how you are going to protect the majority of your gains for the day.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When unrealized gains (gains on open positions) reach 2R\u2019s, I trail to protect gains to break even.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">ex: If I am up 5R\u2019s, my stop goes up to 3R\u2019s<\/span><\/p>\n<p><span style=\"font-weight: 400;\">I also have rules for realized gains<\/span><\/p>\n<p><span style=\"font-weight: 400;\">ex: If I am up 5R\u2019s, I protect 4R\u2019s<\/span><\/p>\n<p><span style=\"font-weight: 400;\">I have rules for Open Exposure, rules for Maximum Loss for day and week, and what to do if they are reached.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the past, when I maxed out for the day or week, I would \u201cescape,\u201d not wanting to face the music and take responsibility.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Now I have rules in place to prevent me from experiencing maximum losses and help me get back on track if I do.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><b>ENTRY REQUIREMENTS<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">In order to enter a trade, I look for:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A trade that fits a strategy in my trading plan and has a clear setup<\/span><\/p>\n<p><span style=\"font-weight: 400;\">ex: if i have a gap strategy, that doesn\u2019t mean I can trade anything that gaps. I have to have a clear setup.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A stock that has hit the entry price<\/span><span style=\"font-weight: 400;\"> (unless it\u2019s a base breakdown or the stock is on an uptick).<\/span><\/p>\n<p><b>NO RE-ENTRY<\/b><span style=\"font-weight: 400;\"> unless it\u2019s a Climactic Buy or Climactic Sell Setup.\u00a0\u00a0<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Most people are better off not trading the same positions because they end up \u201crevenge trading.\u201d Instead of taking a small loss, they end up taking a huge loss.<\/span><\/i><\/p>\n<p><b>Decide for yourself what will make you pull the trigger on a trade. What does the chart need to look, feel, and smell like?<\/b><\/p>\n<p>&nbsp;<\/p>\n<h3><b>ENTRY TACTICS\/STRATEGIES<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The bulk of my trading plan is made up of three strategies that best <\/span><i><span style=\"font-weight: 400;\">suit my personality<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><b>Gap strategy<\/b><span style=\"font-weight: 400;\"> for the morning session.<\/span><\/p>\n<p><b>15 min Strategy<\/b><span style=\"font-weight: 400;\"> to plan certain strategies off the 15 minute chart. I chose this strategy because it\u2019s the perfect length of time for trading in the afternoon. Stops and patterns don\u2019t hold on shorter time frames later in the day.<\/span><\/p>\n<p><b>Climactic Buy Setup<\/b><span style=\"font-weight: 400;\"> I use for late morning and early afternoon.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">List any and all entry criteria for your patterns and strategies. I have different criteria for different strategies.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Below is an example of <\/span><b>how I document the different criteria<\/b><span style=\"font-weight: 400;\"> for one of my strategies, the climactic buy setup (CBS):<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-54830\" src=\"https:\/\/www.t3live.com\/blog\/wp-content\/uploads\/2021\/04\/cbs419.png\" alt=\"\" width=\"868\" height=\"602\" srcset=\"https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs419.png 868w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs419-300x208.png 300w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs419-150x104.png 150w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs419-768x533.png 768w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs419-80x55.png 80w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs419-220x153.png 220w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs419-144x100.png 144w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs419-216x150.png 216w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs419-343x238.png 343w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs419-598x415.png 598w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs419-702x487.png 702w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs419-858x595.png 858w\" sizes=\"(max-width: 868px) 100vw, 868px\" \/><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-54831\" src=\"https:\/\/www.t3live.com\/blog\/wp-content\/uploads\/2021\/04\/cbs2419.png\" alt=\"\" width=\"868\" height=\"603\" srcset=\"https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs2419.png 868w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs2419-300x208.png 300w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs2419-150x104.png 150w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs2419-768x534.png 768w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs2419-80x56.png 80w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs2419-220x153.png 220w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs2419-144x100.png 144w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs2419-216x150.png 216w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs2419-343x238.png 343w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs2419-597x415.png 597w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs2419-701x487.png 701w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/cbs2419-856x595.png 856w\" sizes=\"(max-width: 868px) 100vw, 868px\" \/><\/p>\n<p><b>Must haves<\/b><b>:<\/b><\/p>\n<p><b>Pattern Requirements<\/b><span style=\"font-weight: 400;\">: (What does the chart need to look like?)<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">For CBS, how many red bars in a row should you see?<\/span><\/i><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Do the bars need to be getting progressively bigger?<\/span><\/i><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">How far does the price need to be from the 20?<\/span><\/i><\/li>\n<\/ul>\n<p><b>Other\/Additional Requirements:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Stock\u2019s relative weakness to the market?<\/span><\/i><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Multiple time-frames?<\/span><\/i><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Does the daily chart need to look a certain way?<\/span><\/i><\/li>\n<\/ul>\n<p><b>Market Requirements:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">What are the ideal market conditions for CBS?<\/span><\/i><\/li>\n<\/ul>\n<p><b>Can\u2019t Haves:<\/b><\/p>\n<p><b>Stock:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">List the \u201ccan\u2019t haves\u201d for the stock<\/span><\/li>\n<\/ul>\n<p><b>Market:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">List the \u201ccan\u2019t haves\u201d for the market<\/span><\/li>\n<\/ul>\n<p><b>Would Like to Have: <\/b><span style=\"font-weight: 400;\">(optional criteria)<\/span><\/p>\n<p><b>Stock<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">for CBS, the daily is extended on both the daily and 5-minute chart<\/span><\/i><\/li>\n<\/ul>\n<p><b>Market<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">for CBS, market is extended toward the downside<\/span><\/i><\/li>\n<\/ul>\n<p><b>Trade Metrics:<\/b><\/p>\n<p><b>Entry:<\/b> <i><span style=\"font-weight: 400;\">Wait for prior bars high to get breached? What time frames are you using?<\/span><\/i><\/p>\n<p><b>Stop: <\/b><i><span style=\"font-weight: 400;\">Low of the day<\/span><\/i><\/p>\n<p><b>Target:<\/b> <i><span style=\"font-weight: 400;\">Where are you going to exit?<\/span><\/i><\/p>\n<p><b>Management<\/b><b><i>: <\/i><\/b><i><span style=\"font-weight: 400;\">If you get into a trade without knowing in advance how you will measure it, it will be very difficult to manage it well. You\u2019ll end up trading randomly, which is not compatible with successful trading.\u00a0<\/span><\/i><\/p>\n<p><b>This isn\u2019t a walk in the park as many \u201cinfluencers\u201d would have you believe. <\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is a real business. Be thorough, systematic, and put in the time it requires. Eventually, remembering your own strategies will become second nature.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><b>GLOSSARY<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">This is where I keep all the definitions for every term I use in my trading plan.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Pre-define terms like \u201cstrong stock\u201d or \u201cstrong support\u201d so you won\u2019t have to guess if a stock is strong in the heat of market hours.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is something to work on over time &#8211; Rome wasn\u2019t built in a day and your trading plan won\u2019t either.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The remainder of my trading plan is notes I\u2019ve collected over the years that I like to revisit from time to time.<\/span><\/p>\n<p><b>Now that you have an outline, make your own trading plan!\u00a0<\/b><\/p>\n<p><b>When in doubt, keep it simple and conservative.<\/b><\/p>\n<p>&nbsp;<\/p>\n<h3><b>HOW A TRADING PLAN WILL HELP YOU MAKE MONEY<\/b><\/h3>\n<p><b>The P.E.A.R. Strategy:<\/b><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-54832\" src=\"https:\/\/www.t3live.com\/blog\/wp-content\/uploads\/2021\/04\/pear419.png\" alt=\"\" width=\"512\" height=\"359\" srcset=\"https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pear419.png 512w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pear419-300x210.png 300w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pear419-150x105.png 150w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pear419-80x56.png 80w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pear419-220x154.png 220w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pear419-143x100.png 143w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pear419-214x150.png 214w, https:\/\/blog.t3live.com\/wp-content\/uploads\/2021\/04\/pear419-339x238.png 339w\" sizes=\"(max-width: 512px) 100vw, 512px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">Write your trading plan.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Execute a batch of trades.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Analyze your results &#8211; figure out what is working and what isn\u2019t.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Refine your plan &#8211; once you\u2019ve analyzed the trades, make necessary adjustments and apply them to your plan.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Using this strategy will improve your trading plan over time, <\/span><b>which will grow your P&L<\/b><span style=\"font-weight: 400;\">. You will slowly learn what causes you to lose money and eliminate it from your plan while keeping the things that work.<\/span><\/p>\n<p><b>CAUTION: DON\u2019T TRY TO MAKE THE \u201cPERFECT\u201d TRADING PLAN<\/b><\/p>\n<p><span style=\"font-weight: 400;\">For the first two years of my trading career, I adjusted my trading plan <\/span><i><span style=\"font-weight: 400;\">every day<\/span><\/i><span style=\"font-weight: 400;\"> while finding what worked and what didn\u2019t.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Everyone who starts trading wants to make money right away.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Instead,<\/span><b> focus on experimenting<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Try different ideas.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are many ways to succeed in trading. You have to find your own path and adjust your plan as you go along.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So, start with a simple plan and evolve over time. Make conservative goals for yourself.\u00a0 Measure your results. Keep the good and eliminate the bad.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With time, you\u2019ll have a trading plan that works <\/span><i><span style=\"font-weight: 400;\">for you<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>When the market turns unstable, what do you do? Panic sell? Seize the moment and start gambling? If you want to wade through the treacherous waters of a volatile market and come out with your P&#038;L &#8212; and your dignity &#8212; intact, you need a trading plan. Creating a trading plan can help you reset so you can take advantage of market volatility. I can\u2019t guarantee that a trading plan will make you successful.\u00a0 But I can guarantee that you\u2019ll fail if you don\u2019t have one.\u00a0 This is an ambiguous topic that a lot of people struggle with, including myself in the beginning.\u00a0\u00a0 In this article, I\u2019ll show you how to make a trading plan that will work for you. &nbsp; HOW TO WRITE THE PERFECT TRADING PLAN Most people are terrified to make a trading plan. Once you commit to a plan, YOU are responsible for the results. As humans, we prefer to avoid taking responsibility when things don\u2019t go our way.\u00a0 But when you have a plan that tells you what you can and cannot do, you have no choice but to take responsibility. In this process, your ego will get bruised and you\u2019ll have no one to blame but yourself.\u00a0\u00a0 This is required for growth. A plan is ESSENTIAL to boosting your P&#038;L long term. Having a plan will allow you to move forward systematically.\u00a0\u00a0 You\u2019ll be able to notice what is working and do more of it. You\u2019ll also notice what isn\u2019t working and eliminate it from your trading. As you look over my trading plan, keep these things in mind: This is a template to create your own plan Start conservatively. Set easy, modest goals and create simple rules. Tweak your plan as you gain experience &nbsp; My Trading Plan Table of Contents: GOALS AND OBJECTIVES To start your trading plan, define your goals and objectives.\u00a0\u00a0 \u201cGoals\u201d are your overarching intention. \u201cObjectives\u201d are the criteria you need to establish so you can meet those goals. My Goal:\u00a0 Trade well by finding setups that strictly meet my strategies (as outlined in my trading plan), and execute them flawlessly. My Objectives: Batting Average: &gt;= 60%\u00a0 Sharpe Ratio &gt;= 2.0\u00a0 Risk to Reward &gt;= 1:2\u00a0 # of Trades\/Day: 7 * Batting Average &#8211; Number of winning trades divided by total number of trades * Sharpe ratio &#8211; the average winning trade divided by the average losing trade * Risk &#8211; the difference between entry price and stop price\u00a0 * Reward &#8211; the difference between entry price and target price You can tweak these objectives to best suit your lifestyle and reach your goals, but I find it\u2019s best to avoid improving one stat at the expense of the others.\u00a0 There are four things that make money:\u00a0 The frequency of your trades The risk per trade The sharpe ratio Your hit rate Below are some examples of how altering just one of these factors can drastically impact your P&#038;L: In example 1, by hitting those four metrics in one year, you can make over half a million dollars (gross). In example 2, if your risk per trade doubles, your gross profit doubles. In example 3, by reducing your number of trades per day from 6 to 4 (by only jumping on the \u201cperfect trades\u201d), you see a 33% drop in your P&#038;L. In example 4, if the sharpe ratio changes from 2.0 to 1.5, P&#038;L is again severely impacted. In example 5, if the batting average is lowered from 60% to 50%, P&#038;L again drops by one third. By even slightly messing with these four metrics, your gross profits can be altered dramatically.\u00a0\u00a0 Step by step, set goals for yourself to see if you can improve these metrics over time. &nbsp; MONEY AND RISK MANAGEMENT This is what keeps the account safe. These are rules that tell you when you need to quit.\u00a0\u00a0 My Goal: 2R\u2019s per day, or 10R\u2019s per week Figure out how you are going to protect the majority of your gains for the day. When unrealized gains (gains on open positions) reach 2R\u2019s, I trail to protect gains to break even. ex: If I am up 5R\u2019s, my stop goes up to 3R\u2019s I also have rules for realized gains ex: If I am up 5R\u2019s, I protect 4R\u2019s I have rules for Open Exposure, rules for Maximum Loss for day and week, and what to do if they are reached.\u00a0\u00a0 In the past, when I maxed out for the day or week, I would \u201cescape,\u201d not wanting to face the music and take responsibility. Now I have rules in place to prevent me from experiencing maximum losses and help me get back on track if I do. &nbsp; ENTRY REQUIREMENTS In order to enter a trade, I look for: A trade that fits a strategy in my trading plan and has a clear setup ex: if i have a gap strategy, that doesn\u2019t mean I can trade anything that gaps. I have to have a clear setup. A stock that has hit the entry price (unless it\u2019s a base breakdown or the stock is on an uptick). NO RE-ENTRY unless it\u2019s a Climactic Buy or Climactic Sell Setup.\u00a0\u00a0 Most people are better off not trading the same positions because they end up \u201crevenge trading.\u201d Instead of taking a small loss, they end up taking a huge loss. Decide for yourself what will make you pull the trigger on a trade. What does the chart need to look, feel, and smell like? &nbsp; ENTRY TACTICS\/STRATEGIES The bulk of my trading plan is made up of three strategies that best suit my personality. Gap strategy for the morning session. 15 min Strategy to plan certain strategies off the 15 minute chart. I chose this strategy because it\u2019s the perfect length of time for trading in the afternoon. Stops and patterns don\u2019t hold on shorter time frames later in the day. Climactic Buy Setup I use for late morning and early afternoon. List any and all<\/p>\n","protected":false},"author":21,"featured_media":39779,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[644],"tags":[],"class_list":["post-54823","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-sami-abusaad"],"_links":{"self":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts\/54823","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/comments?post=54823"}],"version-history":[{"count":8,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts\/54823\/revisions"}],"predecessor-version":[{"id":56049,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts\/54823\/revisions\/56049"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/media\/39779"}],"wp:attachment":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/media?parent=54823"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/categories?post=54823"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/tags?post=54823"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}