MY TRADING PLAN
My Objective
In September 2016 my youngest children will be entering secondary school and I need to be in a position to either move or pay school fees. In order to achieve this I need to clear as much of my mortgage as possible by then. The repayment part of my mortgage is due to be repaid by April 2018 and my current strategy of slight overpayment and offsetting should ensure that this part of the mortgage is repaid by September 2016. The remainder £190K is interest only and it is this part I want to repay through trading. The plan is to fully invest the Stocks and Shares ISA allowance each year. This part of the mortgage needs to be fully repaid by April 2023 either by the present repayment vehicle the sale of our second property or preferably from the proceeds of trading.
My Strategy
I plan to start my trading with a cash sum of £10,660 in November 2012 after a period of paper trading with an account of £10000. I propose to trade in shares in the UK share market whilst I learn the basics of trading. I will use technical analysis to identify shares to trade and to confirm my research on shares.
My Strategy
I plan to start my trading with a cash sum of £10,660 in November 2012 after a period of paper trading with an account of £10000. I propose to trade in shares in the UK share market whilst I learn the basics of trading. I will use technical analysis to identify shares to trade and to confirm my research on shares.
Share Selection
I will select my shares based on the following criteria
1. Shares must always be researched before being traded
2. The maximum share price spread I will trade is 4%
3. The Exchange Market Size must be at least £2000 preferably £5000
4. Shares can be from any sector
5. I will trade shares with a market cap of between 50million and 900million
6. I will not trade a share where the net debt is more than 3 times the full year pre tax profit or likely pre tax
profit, except oil, mining and property shares.
7 I will not trade a share where the market cap exceeds 15 times profits
Trading Rules
I will only have four trading rules which will be as follows :
1. Every trade that I open will have a stop loss in place
2. I will always place the stop loss at the same time as my trade
3. I will only move my stop loss in the direction of my trade.
4. No trades to be made in the first or last 30 minutes of trading
Money Management
My money management rules will be dictated by the following rules.
1. The maximum risk per trade to be 2% of capital including commission and expenses
2. The maximum risk at any one time to be 6% of capital
3. Trade size to be set by risk size and stop loss position
4. I will cease trading for the rest of the month in any month where my total realised risk in that month reaches 6% and close all open risk trades
5. The amount of capital will be calculated at the end of each month and the risk adjusted accordingly for the next month
6. No trades will be open and closed in the same day
7. Income from dividends to be reinvested in trading capital
Trading Target
A minimum increase of 8.5% in trading capital in the first 12 months after deducting commission and expenses.
Trading Records
1. A trading diary to be kept every day
2. A manual record of each trade to be kept including the following:
Share
Date bought and sold
Quantity bought or sold
Price bought or sold
Position of stop loss
Profit or loss on the trade
Cost of the trade
3. A daily balance of the overall account position, including cash in the account and open positions value
4. A weekly summary of the total capital at risk
5. A monthly P/L summary of closed positions
That's all folks
Wow! I cannot believe how quickly you have got your head around all of this. Is your husband up to speed and doing this with you or are you leading the helm? I feel really excited for you and wish you all the luck and dead flying fish in the world! : -D
ReplyDeleteErr my husband and money are not really a good mix although he has improved and is quite a canny shopper at the supermarket now. He leaves all money stuff up to me although we do talk about it and he knows what I am trying to do but he wouldn't have a clue how. He is also IT illiterate as well which doesn't help, but give him a car to fiddle with and that is a different matter altogether.
ReplyDeleteI have been contemplating this for a few months but started thinking about it and studying seriously about two months ago. I still have a lot to learn and of course I don't know whether I will in fact make any money.
The only consolation is that I have read that more mature people of the female persuasion are more likely to have the necessary qualities to succeed so at least I have something in my favour.
If I don't post tomorrow it will be because I am having dongle trouble as I did last time I was in Cardiff not because I am too lazy to post I am determined to keep up the discipline of daily posting.
ha ha!! I shall be kind if you don't make it on here until you get back ;-D Hope the trip goes well with your new little man.
ReplyDeleteSounds good! I'm really rusty on share picking, but these are the questions that come up for me:
ReplyDelete- What are the technical indicators and signals you'll be using?
- Are you going to use AIM shares?
- What are you going to research, when you do Number One on your list?
- is there a minimum target you want to have before you invest?
- how will you decide where to place your stoploss? Straight percentage, or based on a technical chartpoint?
- how long are you aiming to hold shares before selling on?
One thing I'd highly recommend is to add to your trading diary by keeping a record of the emotions - when you get a profit, when you get a loss, on buying, on selling, all of it.
Hope this isn't too much ...
Thanks Jan it is good to think about these things.
ReplyDeleteThe indicators will depend on the share and how long I intend to hold I am researching but charts obviously, moving averages and channels if more short term. I will be adding more as I get used to them.
I am generally not going to use AIM shares because most of them can't be in an ISA also liquidity problems. I will be looking at AIM shares that have indicated they are going to join the main market.
Minimum target for what?
Research - Net debts, trading statements, market cap, profits as a percentage of market cap, dividends, shares going up (not going to do shorting yet) room for growth, profits increasing, PE ratio, spread range
Stop Loss will be based on a 10-15% range combined with looking for bounce points
How long to hold shares will depend on the share if I am trading channels will depend on the channel, otherwise probably medium to long term I am finding it harder to set a sell point than a stop loss probably looking for 20-30% profit on longer held shares and then reassess the shares at that point to see whether to sell or hold.
Oh yes I am keeping a trading diary.
Hiya! Minimum target - target for the share price, what you're expecting it to reach. Looks like you have - 20-30%.
ReplyDeleteOnly thing I'm *really* wondering about is the indicators depending on the share - bit confused about that; chart patterns are great, though, I really love them, and some indicators are fascinating ... much more accessible, and yet subtle, than fundamentals :)
I am really talking about that if I was trading a share that had regular tops and bottoms in a particular channel and I was trading to take advantage of those then I would be looking for different indications than if I was looking at a share as a long term riser. I suspect that you are more into indicators and charts than I am they are secondary to my research into the company. A chart may make me look at a company but if the research didn't come up to scratch then it would go no further I would only look at the charts again if the research was promising and to confirm what I already knew about them.
ReplyDeleteI am not into bollinger bands, kangaroo tails etc. but there are one or two things that I want to try out and see if they work for me.
Thats what I thought, Mandy, that you *weren't* into that stuff - I was getting confused because in the third paragraph of this blogpost you said "I will use technical analysis as my predominant method for choosing shares to trade", whereas the trading, the PE ratio etc, are about the fundamentals, not the technicals ... absolutely suited to the longer-term trading that you're planning.
ReplyDeleteSo pleased to hear you've placed your first fantasy trade! Positive vibes aplenty for you :)
And guess what, I've never *heard* of kangaroo tails - that'll be interesting to google now!
oops you are right I need to amend that bit of my plan. These kangaroo tails and dead cats bouncing are all very confusing mind you as the Naked Trader says I am sure they do this just to keep outsiders out a bit like lawyers with their messuages etc :)
Delete