The Proper Way to Journal Entries and Set Up A Trade Plan

Beginner Questions
1

[B]Trading Plan[/B]

I would like to know from anyone who has been through this process the proper way to set up an effective trading plan for whatever strategy one trades. I am sure a lot of traders struggle through this stage in the journey to reach consistency (I being one of them) because we don’t know how to properly write the rules. Too many contingent factors, “if this then that, ect.”

If someone would be able to go ahead and give an example or share their trading plan it would be greatly appreciated. Not like I want to go ahead and copy but its like for me its almost as if It’s too many rules. I have many pictures and visual cues of past trades taken. I also know my predefined risk per trade is 1.5%. But I am not sure on setting up an effective trading plan.

I’m a bit confused when it comes to ways to set up rules, I feel that there is a very effective outline on how to properly write a trading plan and encourage my fellow babypipsters to post some “trading plan outlines” on how theirs looks in order to have ideas flowing into free space. I feel like when your trading plan is written on a sheet of paper it makes it a bit difficult to follow because the format looks like a boring old document probably with columns or numbers separating each rule.

[B]Journal Entries[/B]

When it comes to Journal entries they are not difficult but it’s interesting when you reflect back and notice negative behavior and you tackle you’re problem at its root, you reach another level of power and simultaneously build confidence. What are some better ways to do this? Would it be too much to insert something that I consider as a “remedy” for the behavioral problem? To a certain extent this then becomes an emotion log, tracking disruptions in your emotions that effect your trading.
I am dedicated to tackling emotional deficiencies when they kick in and I look to improve trading but most of all starts from within. At the same time you must come up with a strategy and set up parameters to kill off certain scenarios which would lead your trading subconsciously in a downward spiral.
Example: One of the big things for me includes not placing a trade live until Tue, New York Session. I feel like there is more money in the market and I’ve given the charts enough time to go ahead and set up something that has a higher chance. Also I’ve noticed, a lot of times traders are hype to trade after the weekend to trap moves and ranges are not uncommon for Mondays.

Some may think other wise and may feel the need to execute as soon as Monday New york or Monday London Session but most of all I use time away from the charts to help me so that when I look at the charts around the correct time I see something forming or a pattern being made that is worth my risk, also its easy to get drawn into over trading. Easier then what you think, its part of the reason why trading is slightly a bit difficult.

[B]Traders Psychology & Emotional Log Reflection[/B]

Last but not least I realize and understand that it is also effective to reflect back and bring unconscious damaging trading habits to realization but the next step (which is where I get lost ) is how do I get rid of this negative trading habit consciously, once and for all. I still have no solution, it causes you to think and figure out a solution. I would like to know some solutions some of our Babypipsters have.

Also, I would like to pose a random question very important questions and serious professional traders may have better insight then some Forex Noobs but at the same time this question/answer poses a very important point I feel.

There are two traders, Trader A and Trader B which both are utilizing risk the same way. (2% per trade) Trader A Started with a 1,000.00 Trading account and turned it into 15,000.00 over a period of time.
Trader B started with a 10,000.00 trading account and brought it up to 150,000.00 over the same period of time. (Lets just say the period of time is not a variable, its constant… so 1.5 years) Which trader will succeed in the long Run.

2

Hi!

With questions like these I think you’re gonna have a lot of fun in the School of Pipsology’s Junior section (babypips.com/school/undergraduate/trading-plan/).

Here are my thoughts though, if you’re interested:

[U]Trading plan:[/U]
-Start with the basics. What pairs do you usually trade? Which time frames? Which trading sessions? Which indicators have worked well for you in the past? How much should you risk per trade? How much drawdown can you tolerate in a day? A week?
-You don’t have to have one big trading plan. You can have several trading plans that work for different market themes. Also, they don’t necessarily have to have rigid rules. Change some rules if they don’t work anymore.

[U]Emotional Log Reflection[/U]
-I do a weekly review of my trades every week. It forces me to identify which strategies/behavior work and which don’t. I don’t want to write down the same trading psychology issues every week, so I usually end up correcting them as soon as I can.

Hope this helps!

3

Your trading plan is based on
1 what you are trying to achieve trading
2. how you’re going to get there.
3. what are the rules you will follow

  1. So first what are you trying to achieve. Example. For me:
    #1 is doing something that does not take away from my current family time. I don’t want to do anything that takes away from time I have with my family. I don’t want to do anything that takes like 14 hours a day, 7 days a week. Not even 8 hours a day and 5 days a week.
    #2. I want to add to my current income, while limiting losses.
    #3. Has to be something I enjoy doing.

4. Has to be something that follows by general business philosophy; Some times things work out, sometimes they don’t, so what next. And individual parts come and go, but looking at the long term this was the best I could do with the info and options I had.

Currency trading fits perfectly for me in all of the above.

  1. How I’m going to get there.
    #1. Use a trade plan that is based on sound principles that limits losses
    #2. Only trade with the proper mindset. (lots of previous experience)
    #3 Trading plan is based on sound Money Management

  2. Rules by which you want to get there.
    #1 Actual trading is less than 3 hours a day. Learning and socializing is less than 3 hours a day. Trading is only done between Monday NY open and Friday London close.
    #2. I add to my income by setting my trade rules and my risk. I don’t risk anymore than 5% of my account balance including monies set aside for leverage.
    #3 I thoroughly enjoy every part of trading, learning and socializing
    #4 I have a very strict rules by which I trade during those times (Method) Some trades work. . .Some trades don’t. . .So what next. I do this by calculating stop losess, take profits open and pending trades before I enter my first trade. Whether I’m day trading or scalping the rules don’t change.

I use a spread sheet to enter my individual trades date, contract #, buy,s ell, buy stop/limit, sell stop/limit, stop loss, take profit, loss if any, exit signals, comments .

I also do a daily activity log, outlining my strategy for the current session and why

I hope this helps Good Luck
Gp

4

When you take a look at your trading journal and see the mistakes you made it should be rather a straightforward path on how to get rid of your mistakes consciously. It does take time, so do not rush it, but a trading journal can go a long way in shortening your learning curve.

5

When you mention having several trading plan that work for different market themes are you referring to market conditions? Also, I understand the idea behind them not having rigid rules but what’s the point ?
I didn’t think a trading plan would include the pairs you trade as well, I find that very interesting. I thought it only included your methodology and what you look for, I’m glad you pointed that out. When it comes to correcting your behavior how successful have you been in ruling out the bad weeds? Do some behavioral issues/mind-states repeat themselves after you’ve clearly documented them in your emotion log?

What’s the proper mindset, I noticed you have “lots of previous experience” in parenthesis

What would be an example of a strategy? What if what you thought would happen doesn’t occur? Does the outline each session help when you review? Do you notice sometimes that the same strategy you used in one session is the same strategy you will use again? Thanks for your help!

For some reason I agree, but at the same thing the trick is getting rid of the mistakes and not making them anymore. Thats where we all get stuck at.

6

Proper mindset is absolutely crucial if you want to be successful. If I had to pick only one between method mindset and money management. It would be mindset every time. You might be able to get by with out a plan, or money management, but there’s no chance without mindset. Proper mindset is the ability to remove emotion from your trading by realizing that individual trades will come and go so trade for the long term not by individual trades. For example everyone has winners and losers, I don’t care who it is the difference between profitable traders and people in the traders grave yard is mind set. But again you do need all three.

I got my mindset from playing poker and being in business. It’s the same type of thing. You get good cards have a good read on your opponent, the money in the pot is right, so you start building your opponent keeps calling and the last card catches a case miracle card and wins. That can happen over a short period of time which seems endless but if you apply the proper mindset by remembering individual hands come and go, so play for the long term you should be profitable, of course having a plan and using proper money management are as important as well.

My strategy is simple. There is no 100% in your favour when trading. Doesn’t matter what if any indicators, time frames, education, experience, mentors, coaches etc. You can not calculate odds there is no holy grail magic formula. All you can do is increase your edge so the probability or chance of a winning trade is more in your favor. Before I enter a trade I map out entry, exit, take profit and stop loss and confirm on 3 time frames. Once I enter I don’t move take profit or stop loss lines, I place pending orders. I do not deviate under any circumstances. My trading plan rules are rigid. I don’t change mid course.

7

Yep, I was referring to market conditions. I do detailed weekly reviews of my trades and I usually get rid of my bad habits in about 4 weeks. They do go back once every couple months but by then I already know how to effectively deal with it so it takes less time each time for me to get rid of it.