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THE TRENDWAY COMPOSITE TRADING PLAN
The definition of a composite trading plan is: “A conceptual plan made up of complicated and related parts”. Each part has an important role to play and the end result is dependant on the full utilization of all the parts.
The four related parts that make up the plan are:
1. A systematic objective “positive expectancy” trading system that is profitable No matter what else you do, you can’t make a positive out of a negative. 2. A money management approach that governs how many contracts you trade each and every trade. An absolute necessity following the implementation of a positive expectancy trading system. Proper money management is GREAT for geometrically increasing the profit of any strategy. However, if that strategy does not produce profits, money management is equally great for making sure you do not put yourself into a devastating situation while the strategy is in a drawdown. 3. The discipline to follow exactly the rules of your 100% objective trading system. If you don’t follow the rules, don’t expect the profits. 4. Patience. You may go for 2 weeks without a trade so you must wait for just the right moment (as dictated by your trading system) to enter a trade – and not just on a whim or because you are bored. Those who try to make lots of money fast without patience and preparation, end up losing a lot of money fast. Those who have the patience and take the time to prepare, end up making far more than they ever could have by not taking the time.
My TRENDWAY II TRADING SYSTEM fulfills all the requisites required of a successful and profitable trading system. The system has as its basic fundamental purpose the requirement to preserve your capital so you can come back and fight another day when things are going against you. It is a 2 contract per trade system. Unlike many experts who decry the necessity of a stop loss, my system has a stop loss plus a trailing stop. It also has 2 profit target exits and has incorporated an 80% safety rule. You can lose a lot of trades and still make money. Over the last 7 years, the % accuracy of all the trades was 60%.
You can’t ask much more of a system than that.
Accompanying the trading plan is an Excel spreadsheet that incorporates, as best as I can determine, the finest position sizing strategy (fixed ratio money management strategy) set of trading parameters. It is necessary to increase the number of contracts per trade as your net equity increases, but without endangering your starting equity. Basically it stops overtrading – one of the most insidious reasons for going bankrupt. The spreadsheet automatically determines everything after you have put in the entry and exit prices. It’s quite well thought out.
Following is a chart showing the results of trading the TRENDWAY TRADING SYSTEM on the large S&P 500 market for the last 7 years:
You will notice that the fixed ratio profits are over 8 times those of the standard trading approach – and all this while trading exactly the same signal parameters as those used by the standard approach of 2 contracts per trade throughout the 7 years.
It is obvious that you would not have to trade a system for 7 years that produced results like the above without taking out some of the profits each year. Besides, it would be rather daunting to get into that stratosphere unless you had a pretty big parachute or the endurance of a bull.
If you had traded the above TRENDWAY II TRADING SYSTEM since SP H2000, you could have withdrawn the following monies: At the end of the 3rd year – take out $2,000,000 At the end of the 4th year – take out $2,000,000 At the end of the 5th year – take out $2,000,000 At the end of the 6th year – take out $1,000,000 At the end of the 7th year – take out $1,000,000 And you are still left with $500,000 as trading equity,
That shows the ability of the fixed ratio money management approach to magnify your results over the standard trading approach and with no more risk to your starting equity.
All the prerequisites of a full and complete trading system are included in this package of trading manual, fixed ratio spreadsheet and procedural manual that will enable the trader to fully organize his/her trading plan.
So, it all boils down to you, the trader, considering the use of a positive expectancy trading system coupled with a fixed ratio money management strategy. Tie that in with your new-found patience and discipline, and you just cannot get any closer to trading utopia than that.
GOOD LUCK AND GOOD TRADING (HAVE PATIENCE…….THE MONEY WILL COME)
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