Trade Plan Strategies

Dynamic Trader Workshop – Trade Plan Strategies – Page 1

“If you fail to plan, you can plan to fail.” Every successful trader has a written trade plan. Most unsuccessful traders do not have a written trade plan. That is one reason why they do not make consistent and logical trade decisions. If you want to be a consistently successful trader, you will have a written trade plan. The trade plan does not have to include completely objective conditions before any trade is taken or exited. In fact, a “mechanical” system which gives buy and sell signals with no user input is a one way ticket to the poor house. Trading is like every other business in the world. The trader must learn to make decisions based on the information at hand. The trade plan should describe the guidelines for the conditions that are necessary before a trade is taken, the objective entry and initial stop strategy and the guidelines for the exit strategy. Below are two trade plans based on the Dynamic Trading approach. It should keep you on the right side of the market momentum and prepare you for the best trade conditions.

Copyright 2005, Dynamic Traders Group, Inc. – www.DynamicTraders.com www.DynamicTraders.com


Trade Plan #1 With Exit Strategy at Minimum Price Target Part 1 – Trend Reversal Conditions For Trade Setup

1. Trade in the direction of the larger time frame indicator unless it is in the OB or OS zone. a. OK to go short on smaller time frame indicator bearish reversals if the higher time frame indicator is Bullish but OB. b. OK to go long on smaller time frame indicator bullish reversals if the higher time frame indicator is Bearish but OS. 2. Identify the probable pattern position. a. Is the market making a trend or a correction? b. What is the position of the market within the probable pattern? 3. Identify S/R or EOW price zones. 4. A trend reversal trade should be considered if at least two of the three trend/momentum, pattern and price factors are in a position for a trend reversal. Part 2 – Objective Trade Entry

1. Trail a buy/sell stop one tick above/below the 1BH following a smaller time frame indicator reversal. 2. Place the initial protective sell/buy stop no more than one tick below/above the low/high made prior to entry. Part 3 –Exit Strategy: ½ Position at Minimum Target

1. What is the minimum pattern anticipated to follow the trade entry? a. If there is a clearly defined E-wave pattern, what specific pattern should follow? b. If there is no clearly defined E-wave pattern, should a trend or counter trend pattern follow? 2. What is the minimum price target anticipated if correct about the trend and pattern position of the market? 3. What is the typical price target that should be reached if incorrect about the trend and pattern position of the market? 4. Trail the protective stop very close to the market on ½ of the position if the min price target for 2.a is reached. Copyright 2005, Dynamic Traders Group, Inc. – www.DynamicTraders.com


Part 4 – Exit Strategy: Second Half of the Position

1. If a clearly defined E-wave pattern develops, adjust the stop on the second half of the position no further than a pattern reversal signal. 2. If no E-wave pattern, only trail the stop close to the market if the higher time frame indicator reaches the OB or OS zone. a. Adjust the stop no further than one tick below/above the high or low made prior to a lower time frame reversal once the higher time frame reaches the OB or OS zone. b. If the higher time frame indicator is in the OB or OS zone and price is at a S/R target, trail the stop one tick above/below the 1BH or L following a smaller time frame indicator reversal.

Copyright 2005, Dynamic Traders Group, Inc. – www.DynamicTraders.com


Trade Plan #2 With Dual Time Frame Indicator Exit Strategy

Part 1 – Trade Entry Plan

5. Trade in the direction of the larger time frame indicator unless it is in the OB or OS zone. c. OK to go short on smaller time frame indicator bearish reversals if the higher time frame indicator is Bullish but OB. d. OK to go long on smaller time frame indicator bullish reversals if the higher time frame indicator is Bearish but OS. 6. Identify the probable pattern position. a. Is the market making a trend or a correction? b. What is the position of the market within the probable pattern? 7. Identify S/R or EOW price zones. 8. A trend reversal trade should be considered if at least two of the three trend/momentum, pattern and price factors are in a position for a trend reversal.

Part 2 – Objective Trade Entry

3. Trail a buy/sell stop one tick above/below the 1BH following a smaller time frame indicator reversal. 4. Place the initial protective sell/buy stop no more than one tick below/above the low/high made prior to entry.



Part 3 – Indicator Exit Strategy (Long trade example)

This exit strategy is completely objective. It does not consider the potential price or pattern position. It only considers the indicator position on two time frames to adjust the stop.

a. ½ Position: Trail the stop on the long position one tick below the 1BL following the first indicator bearish reversal after trade entry. b. ½ Position: As long as the higher time frame indicator is bullish but not in the OB zone, adjust the stop on the second half of the long position to one tick below the price low made prior to each smaller time frame indicator bullish reversal. c. If the higher time frame indicator makes a bearish reversal before reaching the OB zone, trail the sell-stop on the long position one tick below the 1BL following the next smaller time frame indicator bearish reversal. d. If the higher time frame indicator reaches the OB zone and the second half of the position is not stopped out, trail the stop one tick below the 1BL following a bearish reversal on the smaller time frame.


Trade Plan Strategies

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