Plan Your Trades, Then Trade Your Plan

As a trader, you need to have a trading plan. This trading plan must be written down. It is like a goal. If you don't write it down, there's no way a goal will be accomplished. The same goes for any trading plan. This plan will give you rules to follow and tell you what to do when you encounter a specific situation.

A trading plan must consist to three separate parts: Setup, Entry and Exit. It will cover almost every scenario you might encounter. You will know what to look for in the market: when to get into a trade and when to get out. Keep it simple. Then follow it religiously.

Below is my trading plan as I develop it. This is a work in progress.

I keep it very simple. I trade using the Daily Pivot Indicator and take trades at the beginning of each day. I trade off the 1Hr. charts.

I trade 4 pairs, EURJPY, GBPJPY, EURGBP and GBPUSD. I have a daily strategy that only places 1 trade a day at the beginning of the day for these pairs.

I have been developing an EA, that has turned into 4 EAs, that place and manage my trades.

When and How To Trade:

I trade 4 days a week. I do not trade on Thursday.

GBPUSD - TP - 125, TS - 30, SL - 50. Takes trade at 0:00 Broker time. Closes on TS, TP,  SL or at 22:00 Broker time. Trades on Mon and Tues.

EURJPY - TP - 125, TS - 30, SL - 50. Takes trade at 0:00 Broker time. Closes on TS, TP,  SL or at 22:00 Broker time. Trades on Mon, Tues and Fri.

GBPJPY - TP - 125, TS - 30, SL - 50. Takes trade at 0:00 Broker time. Closes on TS, TP,  SL or at 22:00 Broker time. Trades on Wed and Fri.

EURGBP - TP - 125, TS - 30, SL - 50. Takes trade at 0:00 Broker time. Closes on TS, TP,  SL or at 22:00 Broker time. Trades on Tues only.

I have back tested all pairs to determine the best times and days to trade each pair. I only test the last 12 months to be able to know what the current trends are NOW. I am not interested in how they preformed 3 - 6 years ago.

I am now forward testing and will tweak my EAs as needed. If the pairs begin to trade better at another time or day than what they are set at then I will change them.

All the pairs have to average at least 60% Profitable trades before I will trade them. Most perform at 70-85%. With a risk factor of TP - 125 to SL - 50 they do not have to even be at 50% to profit consistently. 

Listed below, as of 11/02/09, are the pips gained for each pair. I will update this monthly.  Tests run from 5/04/09 to 11/02/09.

GBPUSD -  Overall  Pip Gain -  1594 / 6 months = 266 pips per month.

EURJPY -   Overall  Pip Gain -  1282 / 6 months = 214 pips per month

GBPJPY -   Overall  Pip Gain -   735 / 6 months = 123 pips per month.

Overall Pip Total = 3611 / 6 months = 602 pips per month.