Trading plan

TRADING PLAN

Last updated

15th May 2012

Source of my edge

I look for price action signals during the retracement of a strong trend to a previous support/resistancel level. These price signals increase the predictability of future price movement, providing me with an edge.

Price signals I trade

1. Inside bars
2. Pin bars
3. Engulfing bars
4. Two-bar reversals

Timeframes I trade

- Daily TF only

Indicators I use

- 21 SMA to measure the trend.

Entry

- 21 SMA must be strongly trending. 
- Enter at the break of the price action signal only.

Trade Management

- Enter pending orders with an expiry of 24 hours at the start of the market day.
- Do not interfere with stops once the trade is triggered. Exception: release of big news.
- Take profit some distance before the first and second levels of support or resistance.
- Split the trade into two equal-sized orders: 50% will take profit at the first level of support or resistance, 50% will take profit at the second level of support or resistance. 

Stops

- Place a take profit stop some distance before the first level of support or resistance.
- Place a take profit stop some distance before the second level of support or resistance.
Risk per trade

- Risk maximum 3% of account balance per trade.
- Using Kelly formula, a 1:1 R:R with 60% win rate would require an optimal risk of 20%.