My "Steps to Success"

These are the steps I'm following on my journey to trading success.

1. Identify my trading objectives, goals and targets.
   
   • What would my ideal trading plan look like?
     

     My ideal trading plan is one that fits my schedule. I want to be able to study charts in advance of placing any trades, such as the evening hours after 9pm when kids are asleep. I would scan for any potential or ripe trades at that time, and setup alert triggers accordingly. I will also notate exact trade entry orders so that in the event I am entering the orders during middle of the night, there will be minimal thinking involved.

     
     
   • How would I keep my emotions in check during a trade?
     

     I will have a clearly defined strategy that dictates, mechanically, exactly what should be done in every situation. Therefore, there is no need to get emotional or even "watch" trades in progress. No changes to trade strategy will be made unless one of the exit criteria is reached.

     
     
   • What triggers would I have in place to deal with unanticipated activity or movements?
     

     All trades will have (at least) an emergency stop. This stop will come into play in the event of an extreme geopolitical event, such as bombing, terrorist activity, or similar affecting the markets. This stop is different than the discretionary stops that may be used as well.

     
     
   • What procedures would ensure that no single trade could ever cause massive damage?
     

     All trades will have an emergency stop in place. Additionally, discretionary stops may be used and moved on active trades as the trade develops. The discretionary stop represents the highest desired risk of the given trade. As such, the leverage on the trade itself will be based on this initial discretionary stop, and limited to a percentage of account equity. The discretionary stop may be tightened during the trade development, but never loosened.

     
     
   • What are some things I would/wouldn't do to improve my psychological stability?
     

     I will try to workout regularly (3+ times/week), and preferably before trading studies. Additionally, I will not study trades in the midst of other distractions such as children, television, or the dayjob.

   
   
2. Identify some ways that I will give back to the open community.
   

   I will maintain a public blog to share my travels. I will share any tools, worksheets or methods I develop that help me find or execute my trading strategies.

   
   
3. Identify the chart timeframes, pairs and markets I want to focus on in this round.
   

   Tentatively looking at trading 15min EURUSD, GBPUSD, USDCHF, USDJPY but will focus on one pair for initial studies.

   
   
4. Identify the indicators that I want to have available to me during research testing.
   
   • What is a specific reason for choosing each indicator?
     

     (indicators not selected yet)

     
     
   • Are any indicators closed-source?
     

     (hopefully not, as that would be against my Rules to Live By)

   
   
5. Create ground rules for strategy research project.
   
   • What protocol will be required for testing?
     
   • Is there a defined maximum time a trade can be held open?
     

     Yes, there needs to be a time stop. This should be answered during the study period. I expect to find good setups succeeding within a percentage of time. After that percentage, the likelihood of success would be less. Therefore, I should identify this sweet spot and plan to automatically close trades that are outside this window (free funds for other opportunities). Also, I believe that a short-term trade strategy is not valid if entry triggers are met but no followthru.

     
     
   • What criteria would indicate that it's time to take a loss?
     

     a) Discretionary stop reached; b) Time stop reached; c) Other criteria dictated by trade rules

     
     
   • What criteria would indicate that it's time to close at profit?
     

     a) Target reached; b) Time stop reached; c) Other criteria dictated by trade rules

   
   
6. Begin strategy research project on paper.
   
   • Review strategy research project and make adjustments periodically.
     

     (this is discussed further in the Research Goals section)

   
   
7. Gather all data from research project and attempt to assimilate into a trading strategy.
   
8. Write tentative trading rules that complement the above research findings.
   
9. Backtest the rules for a reasonable period, refining rules as necessary.
   
10. Forward test the rules for a reasonable period, refining rules as necessary.
    
11. Begin live trading on a micro account using the refined ruleset.
    
12. Review progress on an identified schedule.