Trading Plan - Trade for a living, invest for life   
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Trading Plan Spread Betting

Trading Plan - Spread Betting: Hopefully the last few pages have shownonline stock trading plan writer you how to develop an online trading plan for stock and forex trading. Now it would be possible to write many, many plans for different scenarios, but I hope that it has shown you the type of 'internal conversation' you must have with yourself in order to arrive at the overall plan. The template I have laid out is only my own idea, it is not cast in stone, but if you would like to use it for your own plan, please feel free to use it. Now rather than set more fictitious, nameless and genderless people, I feel that this should have made the point in the overall approach, so I propose to present two more trading plans and to just go through the main points. The first of these is a spread-betting trading plan and the second is for US options.

Online Trading Plan - Spread Betting

My Spread Betting Trading Plan

My Overall Objective

I have insufficient capital to trade in stocks and shares, but would like to try my hand at trading, and see if I can make some money as a supplement to my current income. I know that trading is risky but I would like to try anyway. I do not have any plans to change my job or give up work, but I would like to learn a new skill, and it would be nice to know that I have experience of something else if required. I am very nervous but determined to give it a go as I will always regret never having tried.

My Strategy

I plan to start my trading with a cash sum of 2000 GBP which I have saved in the last few years. I have read many articles on spread betting and whilst I understand that it can be very risky, I can trade in very small amounts,  so I do not need to take very big risks. In addition all the spread betting companies offer free training courses, and demo accounts for me to learn. I will not start until I have been on a training course, but will start trading in a live account but with using the smallest trade size possible. I propose to start by trading UK FTSE 350 stocks only, and by using a fundamental approach to share selection, based on PE ratios and analysis of the markets, management and accounts of the company.

Financial Instruments

I will only trade FTSE 350 UK shares


Trading Rules

I will have the following trading rules which will be as follows :

1. Every trade that I open will have a basic stop loss in place
2. I will always place the stop loss at the same time as  my trade
3. I will never move my stop loss down.
4. For the first 6 months all my trades will be using the minimum amount possible - 50p per 1 p movement in the share price
5. I will trade these shares both long and short
6. I will trade the nearest contract periods
7. I will roll contracts forward if required


Money Management

My money management rules will be dictated by the following rules. 

1. The maximum loss per trade to be 0.5% = 10 GBP
2. Stop loss to be set at 20p below market price
3. I will not trade on margin
4. I will only have a maximum of 2o trades open at the same time which represents 10% of my trading capital at risk in total

Trading Targets

I feel that a return of 10% on my trading capital should be achievable in the first year after costs. As I have no previous experience or track record I have divided this into 12 equal amounts giving a monthly target of £16.66 . This may not seem very much, but if I can repeat this consistently I will be doing better then most and can always factor the amounts up as my experience grows. I would be happy of this target is achieved in less than 12 months or alternatively all in the last month!

1. A target of £16.66 per month in the first twelve months, or a total of £200 in the year.

Trading Records

1. A trading diary to be kept every day
2. A manual record of each trade to be kept including the following:

           Share details
           Price bought or sold
           Position of stop loss
           Time trade opened
           Time trade closed
           Profit or loss on the trade
           Contract expiry date
       
3. A daily balance of the overall account position, including cash in the account and open positions value
4. A weekly summary of the total capital at risk
5. A monthly P/L summary of closed trades

OK - one more as I'm sure you're getting the hang of this now and how to develop your online trading plan - I hope so anyway!!

 

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