BackTestWizard.com. Simple Trading Plan Template. Please feel free to share this document.

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1 BackTestWizard.com Simple Trading Plan Template Please feel free to share this document. For advanced trading strategies, risk management rules and tips for improving your trading psychology Please purchase a copy of the The Honest Guide to Stock Trading available at Amazon 1. Goals. Our Goal is to make at least 25% profit on our account by the end of the year with a maximum drawdown of no more than 30%. We also aim to raise an extra $100,000 from outside investors in that time. Our overarching goal is to completely stick to our trading rules and execute every trade that our system signals for us to do so. Every Stop-Loss will be adjusted and adhered to in line with our strategy rules. We also never risk more than 2% on a single trade. 2. What Type of Trader Do We Want To Be? Our strengths are that we have advanced expertise in the building and testing of mechanical trend-following trading strategies. We have always found it easy to stick to our predetermined stop-losses. Our main weakness is that we do not enjoy spending more than a few hours each week studying fundamental data.

2 When we first began trading we would sometimes increase our bet size and chase losses after a losing streak. After studying our strengths and weaknesses we think that we should be a long-term Mechanical Trend-Following Position and Swing Trader. 3. Which Markets Will We Trade? Because we are going to be long-term Position and Swing Traders we are able to trade a large number of uncorrelated assets. We will focus on Equities listed on the NASDAQ and NYSE. We will also trade all major FOREX pairs and we will trade CFD s in the S&P, FTSE, DAX, NIKKEI, 10yr GILT, 30yr T-BOND, BUND, 5yr T-NOTE, CORN, SOYBEANS, SUGAR, WHEAT, GOLD, PLATINUM, SILVER, COPPER, NATURAL GAS, CRUDE and BRENT. 4. What Time-Frame Charts Will We Use? Because of our style of trading and the large number of markets we will be covering we will only trade using weekly and monthly Charts. The monthly Charts will be used to Gauge the long term trend and the weekly Charts will be used for our Entry and Exit Signals. 5. Which Brokers Will We Use?

3 For Our equity Charts we will use Interactive Brokers because they are a listed company with a very good reputation at providing transparent and fast executions. They also permit shorting stocks and let you trade on margin. Their pricing structure is also transparent and cheap. For our Forex Trades we will use a spread-betting broker called IG INDEX. They have a very good charting package and the profits accrued will be tax free. For our CFD trades we will use Oanda because they have good Mobile support and enable you to place very specific unit sizes instead of lots. With a $100,000 account it would be impossible to trade all of the actual futures markets that we would like exposure to. 6. Strategy Rules Our strategy will be to Trade Breakouts and Counter-Trend trades in the direction of the overall trend. Both the Breakout and Counter-Trend Trades will be executed on the weekly charts. For Equity Trades we can only buy stocks that are from a sector that has outperformed the Russell 2000 over the past 52 weeks. We can only short stocks that are from a sector that has underperformed the Russell 2000 over the past 52 weeks. Use Finviz.com for our research ENTRY RULES FOR BREAKOUT TRADES Long positions in Forex and Futures markets will only be allowed if the 26 Month EMA is above the 52 Month SMA. Short positions in Forex and Futures markets will only be allowed if the 26 Month EMA is below the 52 Month SMA. For a Long Entry there must be a close above a 26 Week Donchian Channel. The 26 Week EMA must be above the 52 week SMA.

4 The volume of our Entry Signal Week must be higher than the 26 week average volume. If all Criteria are met we place an order to buy the market between 2c and 20c above the signal candle high. If the stock is under $10.00 we use 2 cents above the high. If the stock is between $10.00 and $20.00 we use 5 cents above the high. For stocks between $20.00 and $40.00 we use 10 cents For stocks above $40.00 we will use 20 cents above the high. If at the end of the week following our signal our order hasn t been executed we will cancel it. Reverse each of the rules for shorting the markets. EXIT RULES FOR BREAKOUT TRADES Our Stop-loss will be placed 4 x the value of a 26 week ATR away from our entry price. Every time a new high is made our stop-loss will be trailed behind the new high. Because our stop-loss is quite large we will not worry about trading equities into Quarterly results. At the end of the year we will analyse whether we would have made better returns or smaller drawdowns if we did choose to close all trades a week before earnings. ENTRY RULES FOR COUNTER TREND TRADES Long positions in Forex and Futures markets will only be allowed if the 26 Month EMA is above the 52 Month SMA. Short positions Forex and Futures markets will only be allowed if the 26 Month EMA is below the 52 Month SMA. For a Long Entry there must be either an inside or outside bar close between the 26 Week EMA and the 52 Week SMA. The 26 Week EMA must be above the 52 week SMA. The volume of our Entry Signal Week must be higher than the 26 week average volume.

5 If all Criteria are met we place an order to buy the market between 2c and 20c above the signal candle high. If the stock is under $10.00 we use 2 cents above the high. If the stock is between $10.00 and $20.00 we use 5 cents above the high. For stocks between $20.00 and $40.00 we use 10 cents For stocks above $40.00 we will use 20 cents above the high. If at the end of the week following our signal our order hasn t been executed we will cancel it. Reverse each of the rules for shorting the markets. EXIT RULES FOR COUNTER TREND TRADES Our stop-loss will be placed 2 x the value of a 26 week ATR away from our entry price. Once we make a 1:1 Risk Reward profit on the trade we close half of the position and trail the stop-loss behind each new high for the remainder of our position. Because our stop-loss is quite tight we will close open equity trades a week before Quarterly results. At the end of the year we will analyse whether we would have made better returns or smaller drawdowns if we didn t choose to close all trades a week before earnings. PORTFOLIO AND RISK MANAGEMENT We will only risk 0.5% of our start of year account balance on each Equity trade. We will only risk 1% of our start of year account balance on each Forex and Futures CFD trade. Our position size will be calculated by dividing the percentage account risk value by the stop-loss amount. A maximum of 16 Equity trades are allowed at any one time. 13 Long and 3 Short.

6 If the 26 week EMA of the Russell 2000 goes below the 52 week SMA then we will permit 10 Long Equity trades and 6 Short Equity trades at a maximum. To avoid over concentration of highly correlated Forex pairs and Futures markets we will utilise a correlation matrix. If we are already in a position and there is a signal to enter another position from a highly correlated market then we will reduce the position size of the most recent market to give us a signal. If we experience a drawdown of over 38% we will stop trading. According to our 15 year tests that should not happen If it does, we have reason to believe that something fundamentally different has occurred in the market place to make our strategy ineffective. 7. Daily and Weekly Routine Each day I must take ten minutes to double check that any orders are the correct size and are still with the broker. Daily routine is to read at least one new topic relating to trading specifically to do with new programming skills and risk models. Each week I plan to test at least one new strategy over at least 5 years worth of data. Forex Tester is a great place to do our testing. Also keep up to date with the latest Hedge-Fund news from Barclayhedge.com Every 3 or 4 days update my trading blog Backtestwizard.com Each Friday night after the markets are closed I will make sure that any trailing stop-losses that have moved are placed with the broker. I must check where the Russell 2000 weekly moving averages are and I must also make a note if any Sectors have dropped above or below the 52 week Russell 2000 performance. Any trades that were exited during the previous week must be recorded in a spread-sheet and I must take a screen-shot of closed trades to publish on the blog. Nothing keeps you more disciplined than recording and publishing your trades live! Once a Month I will publish my returns on the blog and compare them to a Hedge-Fund Index. I must update my watch-list of all trade signals made this week and place the relevant orders with my broker. Any orders that were not filled last week must be cancelled.

7 Close all positions on the 20 th December and only resume trading on the 4 th Jan. At the beginning of New Year pay yourself and your investors a 6% dividend from the account and buy something nice for someone I care about. If we have had a losing year no gifts or dividends I m afraid!! If we have managed to increase our assets under management we need to also reevaluate whether we can move from costly CFDs to the actual markets. Disclaimer - Forex, futures, stock, and options trading is not appropriate for everyone. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can guarantee profits or ensure freedom from losses. Nor will it likely ever be. No representation or implication is being made that using the BacktestWizard methodology or system or the information contained within any BacktestWizard material will generate profits or ensure freedom from losses. HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. Backtestwizard.com may receive compensation from companies linked to within the further resources section of this document. We will only ever recommend products that we use ourselves and can wholeheartedly say that said products offer traders tremendous value. Copyright BacktestWizard.com - All Rights Reserved

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