A trading plan could be as simple as:
Buy two contracts whenever the market (for the rest of this book market
can mean stock, index, futures, or anything you trade) is in an
uptrend and it has been down for two days and on the third day it
opens positive and stays positive after 30 minutes. Exit with a stop
loss if the market goes below the low of the previous day, exit with a
profit if the market has moved up five points or after three days. This
trade may only be done if the risk is less than two points.
This is a trading plan I just made up, and I have no idea if it works.
Though simple, it includes a trading strategy both for entry and exits, and
a money management parameter in the sense of a stop, position size, and
total risk. Someone could follow this every day and not have to think very
hard about what he is doing. However, before one does follow it, he should
take the time to check and see if it has been successful in the past. Later in
this chapter I’ll discuss how to make a more professional trading plan. For
now I just want to show the basics.
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