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Trading Education Posted by Team Topstep June 15, 2021

Coach T - Setting Up Your TraderIQ Trading Plan

Rubicks Cube

In part one of our Coach T Prep–Trade–Reflect™ series, we talked about the importance of establishing a well-rounded routine and having an optimized trading plan before you start the trading day. Now we’re going to take things a step further and talk about how the TraderIQ Trading Plan in the Topstep dashboard can benefit you in your journey to becoming a professional trader.

Setting Up Your TraderIQ Trading Plan

Once you’ve done the leg work and determined what times you will be trading, which markets you will be participating in, and you have your workspace set up for maximum efficiency, you will be ready to start putting together your daily trading plan.

Start Your Trading Plan

Daily Loss Limit

Suppose you’re like the majority of retail futures and forex traders out there. In that case, you probably don’t have access to an unlimited supply of trading capital, so it’s essential to set limits on losses and targets for profits.

In the Trading Combine® and Funded Account®, daily and weekly loss limits are already pre-defined for you. So, wouldn’t it make sense to get ahead of the curve and set your own limits so you’re never at risk of breaking a rule and losing your account?

Take, for instance, the Topstep $50K Trading Combine. The daily loss limit is $1,000. If you hit that number, then you broke a rule and just lost your account. At some point, you have to call a bad trading day for what it is; a bad trading day. If you’re down $900, what do you think the chances are of leveraging the remaining $100 you have left into a break-even or breakout trading day. Let me tell you, the odds are slim. Cut your losses and reflect on your trading. Stay alive to fight another day. That’s the game.

Max Number of Trades

It’s easy to start firing away at every setup you see when you’re down money. But, on the other hand, you won’t typically get an itchy trigger finger when you’re having a decent trading day. So why do we do it?

A few years ago, in a BBC article, Chris Baraniuk explained why gamblers get high even when they lose. According to one of Baraniuk’s sources, Mark Griffiths of Nottingham Trent University, “even when you’re losing while you’re gambling, your body is still producing adrenalin and endorphins.” Of course, the adrenaline rush you receive when you’re losing a lot of money is just as intense as the rush when you’re making a lot of money, but our reactions to it are slightly different. That’s where impulsive trading comes into play.

We will take a lesson from a recent funded trader interview with Tawnya M. from New Mexico. Chances are that the days you make a lot of trades are the days you lose the most money. So Tawnya’s first piece of advice is to figure out the average number of trades you make per day and then try to cut it in half. Another excellent recommendation is to start journaling each trade you make. If you’re trading so much that you can’t keep an accurate record in your journal, then you’re probably trading too much.

Max Losing Streak

Any trader will tell you that when are you’re on a losing streak, it’s best to take a step back and reevaluate what you’re doing. If your trade setups all have the same risk parameters, then you know ahead of time what your max losing streak should be before you shut it down for the day. 

If you don’t know, then figure it out quickly. Letting your emotions take over is one of the quickest ways to blow out of a trading account. Set a limit and stick to it!

We Built This For You—Use It!

Our job is to help you set yourself up for success. Setting up your TraderIQ Trading Plan and monitoring your daily stats and scores will put you on the right track. Remember, passing through the Trading Combine to earn funding is only the beginning. Long-term success in this business requires thinking far beyond a single winning trade, and Topstep is here to guide you every step of the way.

Trade Well!