FUN AND PROFIT Trading Plan
Welcome to the comprehensive "FUN AND PROFIT TRADING PLAN" - a meticulously designed guide to navigate the complexities of futures trading, with a focus on DAX spreading. This plan aims to establish a systematic approach, eliminate emotional decision-making, and provide the necessary tools for successful trading. It covers key aspects such as preparation, technical analysis, risk management, and profit-taking strategies, ensuring a well-rounded understanding of the trading process.

by daniel

Trading Logbook and Diary

1

Trading Logbook
The trading logbook is an essential tool for tracking trades and maintaining discipline. It should include details such as the date, time, entry and exit points, trade size, and the rationale behind each trade.

2

Trading Diary
The trading diary captures your emotions and thoughts during trading, helping you understand how psychological factors influence your decisions. It should record your emotional state, psychological factors, and lessons learned.
Daily Preparation Routine

1

Evening Preparation
In the evening, review your trades from the day, analyze what went well and what could be improved, and update your trading logbook and diary.

2

Morning Preparation
Begin your day by reviewing the news and checking for any market-moving events. Conduct a technical analysis of the markets you plan to trade and set up your charts and trading platform.
System Evaluation
Backtesting
Backtesting involves running your trading system on historical data to see how it would have performed in the past. This helps identify strengths and weaknesses and provides a statistical basis for the system's performance.
Forward Testing
Forward testing, or paper trading, involves testing the system in real-time without risking actual money. This phase is crucial for understanding how the system performs under current market conditions.
Stop Tools and Risk Management
Initial Stops
An initial stop is set at the beginning of a trade to limit the potential loss, based on the maximum amount you are willing to lose on a single trade.
Trailing Stops
Trailing stops move with the market price, locking in profits as the price moves in your favor, while still allowing for potential upside.
Time Stops
Time stops are used to exit a trade after a specific period, regardless of the price action, helpful in reducing the impact of time decay on options trades.
Chart Representation
Candlestick Charts
Candlestick charts show price movements and provide visual patterns that can indicate market sentiment.
Line Charts
Line charts display closing prices over a period and are useful for identifying long-term trends.
Technical Indicators
Moving Averages
Moving averages smooth out price data to identify trends. Commonly used moving averages include the simple moving average (SMA) and the exponential moving average (EMA).
Relative Strength Index (RSI)
The RSI measures the speed and change of price movements to identify overbought or oversold conditions.
MACD
The MACD (Moving Average Convergence Divergence) indicates changes in the strength, direction, momentum, and duration of a trend.
Bollinger Bands
Bollinger Bands use standard deviation to plot bands above and below a moving average, indicating volatility.
Order Placement and Execution
1
Market Orders
Market orders execute immediately at the current market price.
2
Limit Orders
Limit orders set a specific price at which you want to buy or sell. The order will only execute if the market reaches that price.
3
Stop Orders
Stop orders become market orders once a specified price level is reached. Used to limit losses or lock in profits.
4
Stop-Limit Orders
Stop-limit orders combine stop orders and limit orders. The order becomes a limit order when the stop price is reached.
Position Sizing and Risk Management
Position Sizing
Position sizing involves determining the appropriate amount of capital to allocate to each trade based on your risk tolerance and trading strategy. It is calculated using the formula: Position Size = (Account Size * Risk Per Trade) / Stop-Loss Distance.
Risk Management Techniques
Effective risk management involves diversification, hedging, regular reviews, and staying disciplined. These techniques help manage risk and protect your capital.
Profit-Taking Strategies

1

Fixed Targets
Setting fixed profit targets involves defining a specific price level at which you will exit the trade, providing clarity and reducing emotional decision-making.

2

Trailing Stops
Trailing stops allow you to lock in profits as the market moves in your favor, securing your gains while still allowing for potential upside.

3

Partial Exits
Partial exits involve taking profits on a portion of your position while allowing the remaining part to run, balancing securing profits and capitalizing on further potential gains.
V-Formation Strategy
1
Sharp Decline
The V-Formation strategy begins with a sharp decline in price, indicating a potential reversal in market sentiment.
2
Steep Rise
Following the decline, an equally steep rise in price occurs, confirming the change in market sentiment.
3
Entry Point
Traders enter the trade at the bottom of the "V" formation, capitalizing on the potential upward momentum.
Narrow Range Bar Strategy

1

Low Volatility
The Narrow Range Bar strategy focuses on identifying periods of low volatility, where the price range is narrow and trading activity is relatively calm.

2

Breakout
After a period of low volatility, a breakout occurs, with the price moving beyond the narrow range, indicating a potential shift in market sentiment.

3

Entry Point
Traders enter the trade after the breakout, capitalizing on the potential momentum and volatility increase.
Hidden Smash Day Strategy
Hidden Patterns
The Hidden Smash Day strategy looks for hidden patterns in price action that are not immediately apparent, indicating potential significant price moves.
Large Price Moves
Once a hidden pattern is identified, traders enter the trade, anticipating a large price move that may not be obvious to the untrained eye.
Hedging Techniques
Options
Buying put options to protect against declines in the value of an asset.
Futures
Using futures contracts to lock in prices and protect against price fluctuations.
Inverse ETFs
Investing in inverse exchange-traded funds that move opposite to the market.
Pairs Trading
Going long on one asset while shorting a related asset to hedge against market movements.
Long-Term Investment Strategies
Value Investing
Value investing involves selecting undervalued stocks that have strong fundamentals and holding them for the long term, with the goal of buying low and selling high.
Growth Investing
Growth investing focuses on companies with strong growth potential, investing in stocks that are expected to grow at an above-average rate compared to the market.
Dividend Investing
Dividend investing involves selecting stocks that pay regular dividends, providing a steady income stream and potential capital appreciation.