Resources: Trading Plan

This page provides resource links help develop a solid Trading Plan as outlined.

Articles

Trading Plan Template - This is a 2-part article which first takes a general overview of what constitutes a trading plan and why it is prudent to have one, then goes in to an analysis of the various aspects that should be considered during its creation.

Developing a Trading Strategy - This article (and its second part) go through a similar process as the one in the book in determining an overall trading strategy.

Why Trade? - Understanding why one is motivated to trade is an important part of helping define a Trading Plan. This article goes through some of the reasons.

Before you start, have you got what it takes? - Each new trader needs to ask a number of questions of her/himself, and answer them honestly before taking on the serious task of trading.

Personality Traits of Successful Day Traders - Some of the important personal characteristics needed to be successful at day trading.

Markets

Different markets are suitable for different traders. The table below presents some basic pros and cons for each major market to help in the process of selecting the one/ones which is/are the best fit. Be sure to check out the Reader Forum to ask questions and see what others have to say.

Market	Pros	Cons
Stocks/Equities	Most people have at least some basic understanding of the stock market. Stocks can be traded fairly easily and accounts are quickly set up. The determination of risk is pretty straightforward. Small accounts are possible. The stock market has a clear long-term upside bias which makes trading (at least from the long side) an easier game than in other markets.	While there is a great deal of publicly available information, there will always be things the common trader cannot/will not know. There is always the possibility for market manipulation and accounting fraud is a risk. Since the stock market is the most visible of them all, it tends to also have the most extreme of psychologically driven action. While small trading sizes are possible, commissions can eat in to net results for active traders.
Indices	With indices one can play the stock market without delving in to individual issues. There is very high liquidity and a number of trading alternatives (ETFs, futures, options). On the futures side there are popular e-mini contracts which allow for less well capitalized traders to get access and good execution, in some cases nearly 24 hours a day.	Indices, because they are often dominated by large institutional traders (like hedge funds) can be very choppy, especially in the shorter-term timeframes. This can make them difficult to trade profitably. While e-mini contracts do allow for smaller account trading in the futures market, one realistically needs to have $5000 or more to index trade futures or options.
Commodities	Commodities is an incredibly diverse market offering many different possible areas of focus. Several of them have quite low margin requirements (futures), making them accessible to any trader.	Commodities can be very volatile. Because they are exchange-traded with little electronic or overnight access available to the smaller trader, the potential for slippage can be increased over other markets. Fundamental data, while available, is less public, requiring more work from the trader.
Foreign Exchange	The only true 24-hour market, and by far the largest and most liquid, foreign exchange can be traded by virtually anyone these days. Small accounts are available, as are small trade size denomination. Spreads on the major currencies are very tight, keeping transaction cost low. The futures market is starting to grow with the advent of more electronic trading.	Because the market is round-the-clock, the trader can run the risk of being caught on the wrong side of a news event (or miss the opportunity to benefit from one) simply because he/she is asleep when it happens. The foreign exchange market is largely un-regulated, which implies a certain risk. The futures market is a way around that, but it remains a very small portion of the daily volume. Trading in non-major pairs can be difficult and costly due to wide spreads.
Fixed Income	One looking for an active market with a lot going on would do well in fixed income. There are lots of data events, speakers, and supply considerations coming in to play, making fixed income one of the most complex markets for a trader. There is also a wide diversity of tradables. On the futures side, short-term instruments like Eurodollars can be traded with fairly small accounts. One can trade longer-term instruments such as bonds through stock brokerages with a lower risk profile, and fixed income can be combined with elements of the stock market when looking at corporate bonds.	Volatility can be problematic for fixed income futures traders, which is what most active participants are. The steady stream of data releases and news events can lead to very dramatic short-term price moves (as shown in the book). While one can trade Eurodollars and other short-term instruments with fairly low margin, the trader realistically needs a $5000+ account to trade the longer maturities.

Instruments

Click on the links below to learn more about specific types of tradable instruments.

Stocks

Fixed Income

Futures

Options

Spot

Exchange Traded Funds (ETFs)

Trade2Win Knowledge Lab and Forums

The Trade2Win Knowledge Lab and Discussion Forums provide a wealth of information to help a trader learn more about the various markets.

Market	Knowledge Lab	Forum
Stocks/Equities	Δ	Δ
Indices	Δ	Δ
Commodities	Δ	Δ
Foreign Exchange	Δ	Δ
Fixed Income	Δ	Δ

Books

Trade Your Way to Financial Freedom
By Van Tharp

This book is an outstanding resource for traders of all levels. The author discusses many very important concepts and topics related to the big picture Trading Plan development, as well as to the mores specific trading system design process.

Trading in the Global Currency Markets
By Cornelius Luca

A very thorough discussion of the foreign exchange market, including history and recent developments, plus market analysis and trading methods.

The Bond Market
By Christina Ray

These are two books worth looking at in terms of the fixed income market. The Fabozzi book is considered the bible among market participants and academics alike. The Ray book is not nearly as comprehensive, but is a very practical guide to the markets in application.

The Handbook of Fixed Income Securities
By Frank Fabozzi

Commodity Trading Manual
By Chicago Board of Trade

This book covers the broad spectrum of trading in commodities and other futures markets.

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