Between March 23 to May 1st, I’m going into an extensive and intensive paper trading period of training. Depending on the outcomes, I hope to go back to trading with real money in my prop account, though still using 100 share positions on May 4th. Here is how I’m going to track my results:
| # | % Rule Compliant |
Behavior Chain | % Wins | Shares Gross | Shares Net |
| 100 | 70% | -5 | 48% | $2.18 | ($0.62) |
# – This means the total accumulative number of trades made.
% Rule Compliant – A 70% means I followed my rules 70 out of 100 trades.
Behavior Chain – This is the recent number of trades in a row in which I have or not followed my rules. A -5 means the last five trades I broke my rules. Once I complete one rule compliant trade, this would go to +1.
% Wins – Number of winning trades (commissions factored in) divided by total number of transactions.
Shares Gross – This is the accumulative gain or loss on my trades over time – I will be paper trading one share at a time.
Shares Net – This will be accumulative gain or loss minus commissions – one share per trade.
So here is my overall plan of action:
1) Trade at least one hour a day, but ideally either a whole morning or afternoon session – giving me 30 full trading days.
2) Publish a list of 5 trade prospects every night to give me a focused watch list. Add 5 pre-market movers (winners or losers in the morning).
3) Turn off email, Twitter, chat, blogs and other distractions in the morning after 9:30am. I do allow myself to check Twitter updates every 20-30 minutes to gauge the pulse of what other traders are seeing, but I do not keep signed in. In the afternoons, I do take advantage of trading alerts in chat and catch up on blog reading while waiting for my trades to unfold.
4) Write up a detailed post about my trades each and every night reviewing what worked and what didn’t.
5) No paper trading of Forex or Futures during this time (I’ve started to dabble and find if fun as well as educational, but I only have so much time in the day). I will do some real money swing trading a couple times a week, but if this starts to become distracting or if I start having a bunch of losers in a row, I will shut that down to focus on my sim-trading intraday.
Here are my rules that I will be grading each trade by. I must follow these 14 rules 100% to count it as a rule-compliant trade for the score card above.
A) Focus: [1] Between 9:35am and 10:30am, only trade from my 5 pre-market movers; [2] between 10:30 until 1pm, add into the mix the night before 5-stock prospect list; and [3] 1 to 4pm – utilize chat alerts and my larger watchlists.
B) Overtrading – [4] Wait ten minutes after entering a trade before entering a new trade; and [5] no more than four open positions at a time (my current restriction in my prop account).
C) Entries – Every trade needs at least [6] one entry signal or confirmation (as listed on my worksheet) before longing or shorting;and [7] buy on a dip/short on a bounce – don’t chase.
D) Monitor -Enter and watch stocks on the [8] 5-minute chart (not 1 minute) and make sure to [9] look at longer time frames as well.
E) Exits – [10] Immediately put in a stop order, [11] do not move stop order, and [12] stay in trade until stopped out or exit rules met – [13] then close position immediately. Do not leave because of fear or boredom – or for a small profit scalp. Let your winners run, cut your losers – following my exit guidelines (I based my stop order on technical analysis now rather than a pure .10 cent stop).
F) Tracking – [14] Record every individual trade on my worksheet.
Since I am not worrying about position size at this stage, I don’t have rules about scaling in and out of positions – though eventually this will be part of my trading tactics.
My aim is to build discipline and consistency. And to fine tune my trading rules.
Before I go back to my prop account, I must write up my trading plan.
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For those into March Madness, I have two horses in the race. My homer fav – University of Michigan (my alma matter won last night!) and another home state pick with maybe a little more hope – Michigan State (hate ’em during football season but not more than the Buckeyes).
Go Blue! To date myself, I went to college in the era of Webber, Rose, Howard, et al.
