Acknowledgments xiii
Introduction 1
Chapter 1 Everyone Needs a Plan 7
The Hanging Curveball 7
A Typical Bad Trader 9
A Typical Good Trader Prepared with a Plan 9
The Trading Plan and the Game Plan 11
A Disclosure or Two before We Continue 13
Chapter 2 The Trading Plan 15
What is a Trading Plan? 15
A Simple Trading Plan 16
Why a Trading Plan? 17
A Business Plan for Traders 18
Making a Trading Plan 19
Breaking Down the Trading Plan 20
Closing Thoughts 23
Chapter 3 The Game Plan 25
Always Be Prepared 25
Why a Game Plan 26
The Basics of the Game Plan 27
Know Yourself 27
Drawing up Scenarios 27
Making Your Plan Work 29
Closing Thoughts 32
Chapter 4 Get to Know Yourself 33
Different Types of Traders 34
Figuring Out Who You Are 35
The Importance of Knowing Your Style 36
Two Sides to Every Story 38
Closing Thoughts 39
Chapter 5 Trading Strategies 41
Trading Strategies 41
Your Strategy Needs to Fit Your Style 42
Technical Strategies 42
Building Systems 45
Don’t Be Stubborn 50
Why Should You Have a Strategy? 51
What Goes into a Strategy? 51
The Entry 52
Exits 52
Times Frames and Holding Times 54
Stick to Your Trading Strategy 55
Closing Thoughts 55
Chapter 6 Know Your Markets 57
Markets Differ 57
Know What You are Trading 60
What’s the Real Risk? 62
Time Frames and Charting 63
Who Moves the Markets? 68
Know Any Correlations 69
Getting the Big Picture 75
Closing Thoughts 75
Chapter 7 After the Close 77
Let’s Review 78
The Open Trades 79
Thinking about Tomorrow 88
The Closed Trades 89
Getting Ready for Tomorrow 91
Review Your Plans and Strategy 92
Closing Thoughts 93
Chapter 8 Before the Market Opens 95
To Each His Own 95
Getting the News 96
Know Your Markets 97
Look at Overseas Markets 98
How are the Markets Opening? 98
Making Adjustments 99
Were There Any Big Moves Overnight? 100
Look for Possible Trading Situations 101
Draw Up Scenarios 103
Adjusting Size 103
Make Your Daily Game Plan 104
Closing Thoughts 105
Chapter 9 Drawing Up Scenarios 107
Know Your Markets—Revisited 107
Getting the Big Picture 108
Getting a Better Picture 109
End of the Day 113
Back to Monitoring Open Positions 114
Once the Trade is On 115
The Day Trader 122
Making Scenarios for the News 123
Generic Stuff to Look at with Open Positions 125
Closing Thoughts 130
Chapter 10 Taking the Gamble Out of Trading 131
Good Trades Can Be Losers 132
Two Parts to a Trade 135
Same Market, Two Views 136
Going Long 136
Going Short 139
Waiting for the Right Opportunities 143
Measure the Risk-to-Reward Ratio 143
Ways to Get the Odds in Your Favor 145
Closing Thoughts 148
Chapter 11 Getting In 149
Spotting the Opportunity 149
Planning the Trade 150
Drawing Scenarios for Getting into the Trade 152
Don’t Chase the Market 154
Timing the Trade 154
Look For Patterns within the Long-Term Trade 155
Knowing the Risk 159
Deciding How Much to Trade 159
Closing Thoughts 160
Chapter 12 Getting Out 161
Preestablish Your Exit Strategies 161
Cutting Losses and Letting Profits Ride 162
Using Stops in Your Game Plan 163
Planning Your Risk 164
The Setup 165
Trading the Gap 167
Another Trade 170
A Crazy Day 171
Planning Your Target 173
How Will You Exit? 174
The In-Between Area 175
Closing Thoughts 175
Chapter 13 Reviewing and Managing 177
After the Trade is on 177
Looking Ahead 182
Reviewing Your Trading 184
Keeping a Journal 188
Closing Thoughts 189
Chapter 14 How to Keep from Overtrading 191
Why Have a Plan 192
You Don’t Always Need to Be in the Market 192
Stop Being in Too Many Positions 196
Using a Game Plan to Help if You Trade Too Many Positions 198
Keeping to Risk Management Limits 200
Closing Thoughts 204
Chapter 15 Money Management 207
Don’t Take Risk Lightly 208
Another Gambling Analogy 209
The Money Management Basics 211
Incorporating Your Money Management Plan into Your Trading Plan 220
Incorporating Your Money Management Plan into Your Game Plan 221
Establishing Money Management Procedures for Open Positions 223
Closing Thoughts 223
Chapter 16 Trading Rules 225
Trading Rules 225
Using Your Rules to Make a Trading Plan 226
My Trading Rules 227
Appling the Money Management Rules 228
Applying the Entry Rules 229
Applying Your Exit Rules 231
Applying the Discipline Rules 232
The Top 25 Rules 233
Closing Thoughts 240
Chapter 17 Focus and Discipline 241
Staying Focused 242
Distractions 242
Have a Routine to Help You Write a Game Plan 244
Following Your Plan 245
How to Stay Focused if You Have Trouble Staying Focused 246
Mental Side of Discipline 248
Keeping Tabs 251
Unwinding after the Day 253
Closing Thoughts 254
Chapter 18 Learning How to Win 255
Clean Out Your Closet 256
Don’t Blame Others for Losses 256
Think of It as an Expense and Not a Loss 257
Self-Destructive Behavior 257
Learn from Mistakes 257
Trade, Trade, Trade 258
Curb Your Emotions 258
Losses are in the Past 258
Money Management is More Important than Trade Selection 259
Treat Yourself 259
Preserve Precious Capital 259
Have a Cutoff Point 260
Jumping in Too Soon or Getting in Too Late 260
Do Not Let Big Winners Turn to Losers 260
Make a List of Rules 261
Trade Your Style 261
Use a Proven Strategy 261
Tips are for Bartenders 261
Learn as Much as You Can about What You are Trading 262
Keep Learning 262
Read and Learn 262
Trade with a Plan 264
Fill in Your Own 264
Final Thoughts 264
About the Author 267
Index 269
