Day Trading For Beginners – Trading Plan Project

 

Day trading, as I understand it, involves the art and science of managing risks. To achieve success in this field, it is crucial to separate greed and emotions from analysis and strategy. With that in mind, here is the plan I intend to implement:

Initially, I will begin trading with paper money for a minimum of one month. When entering my second month, I will only invest real money if I have had two consecutive weeks of making a profit. Initially, the maximum amount of real money I will invest will not exceed $2,500 CAD. I will increase this to $5,000 ONLY after three consecutive weeks of profit. Furthermore, I will raise this amount to $10,000 only after recording another three consecutive weeks of profitability. By sharing this plan with the community, I aim to hold myself accountable for following a profitable strategy.

 

 

How are you going to calculate your position size?

I will not be willing to accept a maximum loss of more than 2% of my total portfolio size for a single trade. To determine the position size, I will divide my maximum loss (2% of my total portfolio) by the stop loss for that specific trade. This risk management strategy will ensure that I do not blow up my account.

How do you determine where to put your stop loss?

I will set the stop loss at the level where my analysis of stock picks’ price movement is wrong.

What is the minimum Risk:Reward ratio that you are willing to accept?
           
The minimum ratio I’ll accept should not be less than 1:1.5. Ideally 1:2+, but won’t trade below a 1:1.5 risk-to-reward ratio.

How many bad trades in 1 day before you walk away?

3 consecutive bad trades indicate that I must stop trading for the rest of the day - this is a personal rule that I must adhere to.

Where do you plan to journal your trades?

Initially, I plan to practice trading with paper money. During the practice period, I will use basic Excel sheets to record my trades. However, once I start using real money, I may reevaluate and consider using TraderSync based on Zac’s recommendation.

 

What is your morning routine?

I am in the PST time zone, so this is going to be quite challenging for me. I intend to do most of my research the night before. I plan to wake up at 5:45 am, take a quick shower, and eat breakfast. I’ll aim to be at my desk by 6:15 am at the latest (i.e., 15 minutes before trading begins). I will look for relevant news as per my checklist, observe the pre-market movement of indices, and get ready for action. This is my plan for now and I’ll see how it pans out. :)

 

What exchanges/markets are you going to trade?

I plan to trade in North American markets, like NYSE, TSX, and NASDAQ, with a special focus on companies in the technology, banking, energy, and pharmaceutical sectors.

 

Where are you going to get news about how those markets are doing?

I have already joined your Discord group. In addition to that, I will also monitor Yahoo Finance, CNBC, Earnings Whispers, and Finviz for updates on market performance.

 

Do you have a broad market watchlist and a sector watchlist setup so you can see how things are doing in the big picture?

This is on my to-do list. I need to conduct more research on it before I formally begin my practice trading session. I will make sure to have a comprehensive market and sector watchlist prepared beforehand. I will continuously refine and adjust this list until I start trading with real money. Initially, I will focus on identifying market leaders in each sector.

Where are you going to check to see if there is any economic news happening today?

When it comes to economics, it is crucial to closely monitor the GDP, inflation, and interest rates. These three indicators are widely reported by the mainstream media. However, here is a list of official websites for monitoring these indicators in both the USA and Canada.

GDP (US)  - https://www.bea.gov/data/gdp/gross-domestic-product
Inflation (US) - https://tradingeconomics.com/united-states/consumer-price-index-cpi
Interest Rate (US) - https://www.federalreserve.gov/releases/h15/

GDP (Canada) - https://www150.statcan.gc.ca/n1/daily-quotidien/230531/dq230531a-eng.htm
Inflation (Canada) - https://www.statcan.gc.ca/en/subjects-start/prices_and_price_indexes/consumer_price_indexes
Interest Rate (Canada) - https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/

 

What indices are you going to look at to determine market direction?

Dow, NASDAQ, S&P, TSX, VIX

 

 

What indicators are you going to use on your chart?

I’ll start with MACD, and as I become more comfortable, I might conduct further research and explore other indicators as well.

 

What are the main technical setups that you are going to be looking for?

I’ll be looking for key levels of resistance and support. For long trades, I’ll watch for the breaking of the previous resistance levels. And for short trades, I’ll be watching for the breaking of the previous support. The technical analysis has to be in sync with the relevant news and the overall mood of the market for that day.

 

Have you set time aside for you to review your trading performance and try to improve
your trading plan?

I will dedicate a minimum of 1 hour each day to record all my trades and critically examine each move. I will closely monitor the strategies that are effective and those that are not, and based on this analysis, I will adjust my strategy for the next trading day.