Without a clear plan no one can make money consistently. A trading plan allows the trader to execute his/her trades in a consistent manner and without letting emotions get in the way. Clear entry points, stop-loss and profit targets are predefined by in the trading plan, allowing the trader to focus on execution of the trade rather than havng to interpret each trade as it unfolds.

For me, over my so far thirteen years in this business I have learned much and packed most of it into one extensive trading plan.

A Trading Plan should include the following:

• Different high-probability trading and investing setups
• Charts describing each setup visually
• How to setup your charts for each trade setup
• Where to place profit limits and stop orders
• How to manage risk in each trade setup
• Rationale for each trading setup
• Asset allocation guideline
• How you handle market psychology, money management, keeping score

A Trading Plan should also include the time-frames you decide to trade in.

This sounds more complicated than it is. You must decide what time-frames day trading, swing trading, or longer-term investing best fits your style and/or how you want to combine those three time-frames.

For example:

1) (Bucket 1) Time Horizon - 1 day or less: A few select intraday setups in the E-Mini S&P500 Index futures contract and individual stocks.

2) (Bucket 2) Time Horizon - 2 days to 3 weeks: Trades in various mid and large cap stocks and ETFs, also possible via the options market.

3) (Bucket 3) Time Horizon - 3 weeks to 6 months: 1) A bucket of long stocks and/or net short options trades in various mid and large cap stocks and ETFs.

Today’s dynamic markets demand flexibility in trading timeframes and adaptability of trading ’systems.’ An approach of trading in multiple timeframes tries to capture opportunities in those specific time horizons. The objective is to thereby reach more consistent profits.

The benefits of trading in multiple time-frames are many and to some extent also depend on the trading/investing strategies used. Bust mostly the benefits are as follows:

• Greatly decreases the correlation of his portfolio vs. the market
• Automatically ‘hedges’ his portfolio by having ‘long’ and ’short’ trades allocated to different timeframes
• Gains significantly better perspective of the market’s current standpoint and opportunities
• Find more trades with the most favorable risk/reward ratio
• Act from a more neutral standpoint and without emotions

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