Trading Plan Overview

Key Components of a Trading Plan

1. Trading Schedule
   • Importance of consistency in trading.
   • Different approaches for day traders and swing traders.

Trading Schedule for Day Traders

• Select a block of time (2-8 hours) where you have no other obligations.
  • Use this time consistently for trading daily.

Trading Schedule for Swing Traders

• Example: Checking the 4-hour chart at the close of a 4-hour candle.
  • Advantages for those with other commitments.

2. Trading Strategy
   • Focus on mastering one strategy before learning multiple ones.
   • Example strategy: Reversal Strategy using the 50-period EMA

Steps for the Reversal Strategy

• Price below the 50-period EMA initially.
  • Break above the 50-period EMA.
  • Identify and break the first resistance level (1-2-3 move).
  • Wait for a pullback to the broken resistance level and look for buying pressure (engulfing candle, hammer, or close above candle).
  • Set stop loss below the swing low.
  • Target next level of structure.

Bullish Example

• Break of 50 EMA, identify major pullback, break of resistance.
  • Enter on buying pressure candle, set stop loss, and targets.

Bearish Example

• Price above 50 EMA, break below 50 EMA, identify major pullback, and break of support level.
  • Enter on selling pressure candle, set stop loss, and targets.

Risk Management Plan

1. Importance of Risk Management
   • Essential due to the probabilistic nature of trading.
   • Example: 7-10 losses in a row are possible with a 50% win rate strategy.

Key Points

• Risk per Trade: Risk a small percentage of your account (1-2%).
  • Overall Exposure: Limit total risk exposure (e.g., 10% of account across multiple trades).

2. Managing Risk with Position Sizing
   • Use stop loss and adjust position size to risk a specific percentage.
   • Utilize online calculators or brokerage tools for accurate sizing.

Advice for Beginners

• Start with small risk percentages.
  • Increase risk only after becoming consistently profitable.

Final Thoughts

• Challenge: Use this trading plan on a demo account for 90 days.
• Key to Success: Follow the trading plan consistently and avoid emotional trading.
• Takeaways: Screenshots of trading strategies and risk management plans for reference.