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Coach's Playbook Posted by Team Topstep January 13, 2020

5 Steps for Creating a Great Trading Plan in 2020!


Following up on last years list years list of ‘5 Steps For Creating A Great Trading Plan In 2019’, Jack, Dan, John and Mick are back to give you a fresh perspective for 2020!


Plan Your Work

First things first. Before you even take a seat in front of your screens, you should already have a plan of action in place. You should know which markets you’re going to trade, when you’re going to trade them, and have a pretty good idea of your position size.

When you pick a market to trade, it’s important to know what outside markets have an impact on its daily price action. Study those markets also. Compare charts, look at the fundamentals, and know what news events are creating volatility. Keeping a trading journal is a great way to do this.

As a rule, we always recommend not trading during major news cycles. You never know when a rogue headline is going to hit the tape, and having a solid trading plan can keep you from getting run over at a time when you typically wouldn’t even be in the market.

Work Your Plan

Mick gives a good piece of advice in this video about trading from a “top down” position. Know what the trend is and follow it. Start your analysis process by looking at longer term charts. Bigger time frames reveal the bigger picture. Swing and position traders are the ones in charge, so take a step back from the micro to review the macro. If you do decide to take a counter trend trade, then you really need spend some time on a good risk management plan. Cut your position size, and know where you’re getting out before you get in.

Follow the big money. Every day at 2:45 PM CT the NYSE reveals its closing imbalance. This imbalance represents the cash value of all the MOC orders that will be traded that day on the close. It makes up roughly 7% of the daily volume, and it’s when the majority of institutional investors open and close their positions. Tracking this imbalance will give you a better idea of what the “big money” is doing.

Be Aware Of Your Surroundings

What is your ideal trading environment? Where will you be most comfortable? What are your major stressors and how can you avoid them? Is it at home, in an office setting, alone in your garage, with a group of strangers? Ask yourself these questions, then act on them.

If you need to be around people to constantly bounce ideas off of, then seek out a community of like minded traders. They do exist and they’re always looking for new members. Whatever it is that you think is going to make you a better trader, you owe it yourself to make it happen. Trader psychology is a real thing, and putting yourself in the best possible situation to succeed is key to optimal performance.

In short; plan your work, and work your plan!