Writing a Trade Plan

In trading there's no single method or formula that is used for trading the market successfully. The market requires traders to learn and acquire the skills required to trade the markets successfully. Indices traders need to learn and know how to interpret the stock index market movements. Indices traders then need to come up with a plan of how to come up with a way of combining this knowledge & the strategies they have learned so as to design their overall trading method.

By developing an effective trading plan your chances of success will improve significantly/greatly. A indices plan will help you to effectively analyze the market and know when the best time to open a trade is and when it is best to close the trade.

Before starting to trade the trading you must be prepared with a plan. Just like in business where all successful businesses start & begin with a biz plan and also successful traders must also begin with a plan.

Sections of a Trade Plan

Indices Chart

The first section of a plan will specify the instruments which a trader will be trading. Investors & Traders should specify the instruments which are best fitted for their trading method.

Before deciding the most suitable trading instrument to trade a trader will have taken time to test their strategy on various charts on a practice after which they will select the instrument which produces most profitable results. Trader will then listing this trading instrument on the trading plan as the instrument which they trade.

Chart Time-Frame

The trader also will have to specify the time-frame they will be using to transact with. For example a trader might find that the best chart time frame for their system is the 15 minute chart time frame and therefore they will specify their chart time frame as the 15 Minutes time frame.

The time-frame that a index trader chooses will depend on the type of trader they are. For day traders who have a lot of time to watch and monitor the trading charts they can select & choose the 5 Minute or 15 Minutes trading time frame and trade with these trade charts. For swing traders who don't have a lot of time to watch and monitor the trading market they can trade using the 1H chart time frame so that they can be able to follow the medium term market trends that will last for a one or 2 days.

Indices scalpers on the other hand can trade with the 1 minute chart time frame and trade the short term market moves. These traders will make a lot of trade positions during the day and just like day traders they'll also have a lot of time during the day to watch the market moves.

Stock Index Strategy

This section will specify the system which the trader will be using to trade the markets. This section will list the rules which a indices trader will follow when opening a buy/sell position. It also will listing the rule that a stock index trader will follow when closing their trades - for example it will note the take profit order levels & also stop loss levels that a indices trader will set after they have opened a trade.

The trader will write-down if they will be using an indicator based trading strategy to generate signals or the trader will write if they will be using support & resistance levels to open and close trades or any other technique that the trader will be using for trading. For examples a trader may specify that they will be using automated trading systems and they'll write the parameters of the automated robots on this section.

Prior to writing the system that a stock index trader will be using, the trader will have back tested this stock system on a practice account until the time when the trading strategy is producing & generating profitable trade positions on a consistent basis and after creating a profitable trading system the trader will then write down the system on this section of their plan.

Mindset

This section will specify the mindset that you will be following when trading so that to ensure that you as a trader become successful when trading.

Discipline - This will list that you will be disciplined enough to adhere to the system rules of your stock system and trading plan. Discipline will mean that you will be patient enough to wait for a trading signal from your system before opening a trade. This section will specify that you will only trade the signals which are derived & generated by your stock trading system and you will not second guess your stock system & open trades which are not indicated by your trade system.

Trade Without Emotions - when it comes to the market you should not let the emotions of fear and greed control you when you're trading. You should always trade based on the rules of your plan. Avoid becoming greedy and wanting more profit from the same trade instead of closing the trade transaction at your take profit level.

Index Capital Management

One must specify their equity management guidelines that they will use when trading. For example a indices trader can specify that they'll use a high risk to reward ratio which means they will place their takeprofit level at two times what they set their stop loss order level. This will make their trading strategy more profitable in the long run because they stand to make more money from their winning trades and lose less money from their losing trade transactions.

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Trade Stock Indices