Do you have a new year trading plan?

Do you have a new year trading plan?

November 8, 2013 / Ken Bailey

About this time of year businesses start to have their employees write their 2014 objectives and record their 2013 accomplishments. Management will use the
accomplishments and input from co-workers to give the employee feedback. They will use the information to determine raises and bonuses for each employee.
In some companies they will use the information to determine who will be promoted and even who might get the opportunity to “pursue other interests”. It is
important to check those objectives and accomplishments throughout the year to ensure employees are on track.

Objectives can cover a lot of aspects of a position. Typically they want them to have objectives that are specific, measurable, attainable, relevant and
have a date that they will be completed. They may include training needs or requirements. They typically include “stretch” objectives, objectives that
challenge the person to grow and try new things. Some even include other jobs they will investigate. They want them to state deliverables and the dates
that they intend to complete those deliverables. Their objectives range from individual objectives to supporting company objectives . It is ultimately up
to each individual to accomplish their objectives for the year.

One of the characteristics of a successful trader is that they treat trading like a business. That means a trader that wants to be successful needs to do
the things that make businesses successful. A trader should take the time to honestly critique themselves and their trading. They should also plan the
coming year. I tend to do that about this time of year.

I sit down and look at each equity and how I traded it. I look at entries, exits and adjustments to see if I could have done better. I look at position
sizes and trades to see if something would have given me greater profits. Of course I ALWAYS could have done better in hindsight. I don’t always find
better trades to use though. I use this information to help mold my plan for the coming year. If I didn’t do well with an equity, I decide if I will
continue to trade it or drop it. I use the past to set up my future.

I know how much money I need to make and how much with which I have to work. History and testing give me a very good idea of what to expect from my trades.
My trading plan consists of trades that I always have on like long term Iron Condors. I also have trades that I place each quarter. I have opportunistic
trades that I place when the right set up happens. I allocate the amount of funds to each of the regular trades that will give me the income that I need.
The opportunistic trades are my bonuses. I don’t include them in my budget to pay the bills.

My trading plan is my business plan. It is my written objectives. I am specific about the trades and the amount allocated. I can measure my success with
dollars. They are attainable based on the past and my testing. They are relevant to my business since making money is my business.. I know within a couple
of weeks as to when I will place them. The triggers to place the trades are well documented. They are specific, measurable, attainable relevant and I have
documented when to expect them. I do not expect every trade to work. So I have also documented my adjustments to make them work.

Just like an employee, I look at what training I should do. I look at trades that I have not considered in the past. This past year I looked at and placed
long term IC’s for the first time in my trading history. It is now my most profitable strategy. That was a stretch objective with a huge payoff. I also
started trading butterflies but I have more work to do there so that is a 2014 training objective.

When I was a manager in a multi-billion dollar company, I noticed that people tended to ask for a lot of things near the end of the year. They were trying
to make their objectives and pad their accomplishments with quick hits. Don’t do that with your trading. Plan through the year and execute. I know my best
time of the year for trading so I hit that the hardest. I don’t wait until the end of the year and scramble to find trades that will give me the profit I
want for the year.

I had some great training at that company. One bit of training I remember well was that you should not spend a lot of time working on your weaknesses. It
takes too much time away from improving on your strengths. You can more readily improve your strengths so spend time on that. I know the trading style that
I am best at. I focus on that and try to get better and better at it. I know my weaknesses so I make sure I’m not trading that way.

Treat your trading like a business and it will improve. Determine your best trading style and develop it. Review your 2013 trading plan and develop your
2014 trading plan. Then trade your plan.

Good trading,

Ken Bailey
OptionsANIMAL Instructor

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