A good system and a good plan

A personal but professional design of handling money and risk.

As stated in different pages of this site, Petit-Trader will not advise you on which trading plan you should follow.
One reason for this is that this website must not provide financial advice. A more concrete reason that well represents the trader's philosophy is that attempting to provide this advice would not make sense; otherwise there would be a billion versions of this website for a billion personal situations.

What it does stick to however is the importance of building proper trading systems and trading plans, keeping risk management as the inflexible heart of any design, any decision, any action, any accounting. Keep your money first.

Incredibly enough, there are financial institutions called brokers to convince a mass of retail customers that trading is easy. You put 100 euros in a margined account and guess what after a year you can become rich and retire. More incredible when thinking of what 100 euros can represent on say the Forex market, the biggest market in the world. Go outside, put a drop of water in the air and this is exactly what 100 euros become once they are on that margined account.
But those brokers need an endless flow of fresh, easy to convince, newcomers to lose their money.

A good trader however establishes a number of success assets – a good system with good tools, a good plan with a good risk management.

He does research, develops systems, then develops plans, with the management of risk & money always carefully considered.

What is a "system"?

That's an efficient way that you have proven to be able to find good opportunities on markets and potentially generate profit. A good system is designed to let you keep an edge on the market.

Its content would include:

  • technical indicators,
  • suitable time-frames,
  • suitable instruments,
  • compatible brokers,
  • execution platform,
  • opportunity detection programmes,
  • trailing-stop programmes,
  • entry signals,
  • signals filtering,
  • market entry - Market, Stop, Limit
  • exit signals,
  • entry/exit strategy(ies),
  • Risk management tools
  • system devices (workstation application, online platform, Mobile App...),
  • technicalities (Platform configuration, API services, mobile configuration...),
  • range of system configuration (Script settings, Expert Advisor settings, compiled objects parameters...),
  • ....

What is a "plan"?

In a word this is You. Now that you have designed a system, how should you implement it within your financial and personal life & expectations?

The plan establishes the rules that will govern trading, and therefore yourself.

How do I handle the risk? How will I keep my money? How much money to start with? When to trade? For how long? Does it fit with my family's expectations? How much money am I allowed to start with? In case I fail, how much money could I afford to lose? Will I handle the psychological effect of loosing on a number of trades?

In a perfect easy world, a plan is documented. A central document would gather all details that apply to an optimised execution of the plan.

Speculation firms develop strong plans. Employed traders follow plans and get fired if they don't follow it.

As a private trader, the reality makes that a plan might not be formally documented. However, it is created and it does exist at any instant when you trade.

Any doubt should find an answer in the plan. I am close to the stop loss that I have set up: should I close the trade before it hits the loss, or should I wait? All opened trades are at the moment generating a negative Profit&Loss: should I close all of them, some of them, or none?

Its content is versatile and could include:

  • time management,
  • chosen indicators with their configuration,
  • system parametrisation,
  • chosen time-frames,
  • list of target instruments,
  • broker(s) and account(s),
  • platform install & requirements,
  • configuration of opportunity detection programmes,
  • configuration of trailing-stop programmes,
  • connectivity design of system devices (workstation application, online platform, Mobile App...),
  • "signed-off" technicalities,
  • inclusion of Script + specific settings, Expert Advisor + specific settings, compiled objects + specific parameters...),
  • trading schedule (e.g. 4 days a week, between 8 am and 10 am, then 5 pm to 9 pm),
  • funding / initial margin or cash,
  • potentially, financial objectives (e.g. 5% after a month and review),
  • entry criteria / filtering (decision marking),
  • trade setup (entry checklist, order's properties, order type...),
  • trade cycle,
  • exit policy,
  • positions management (number of manageable positions, trades per day/week/month...),
  • money management (historic spreadsheet, funding monitoring, weekly review, objectives alignment...),
  • risk management (% of risk per trade, % of cleared equity or % of current available margin...),
  • emergency procedures,
  • external risk management (power outage, network outage, multi internet connections, log backups...),
  • ....

Money and Risk management

The biggest part of a plan is how to keep an account alive.
To make money, a private trader needs to put his money in and take risks. But keeping this money is the only way to generate an income! Therefore, only a strictly controlled risk management can be considered.

Petit Trader offers a number of tools that automate risk management while enforcing it. See the product pages for details.

An example of simple but solid trading pathway could be:

1 – Prepare yourself

Research, Read, Test.

>> You can add Petit Trader’s tools to your analysis toolbox.

2 – Design a Trading System

As above, technical indicators, suitable instruments and time-frames, valuable tools, edge on market, entry & exit strategy, system devices, risk management tools etc etc
Testing and Paper trading

>> You can bring Petit Trader’s tools into your new system.

3 – Design and test a Trading Plan

As above, targeted instruments, funding, Risk management (risk per trade ...), Money management (funding, withdrawals, reinvestment ...), Position management (number of manageable positions, trades per day/week/month ...), Time management etc etc
Testing and Paper trading

>> You can use Petit Trader’s tools in your demo account.

4 – Trade wisely and rigorously, with the appropriate and quality tools

Follow your System’s rules
Take your trades according to your Risk management rules
Execute your Plan, stay rigourous and grow slowly, Trade in and Trade out

>> You can use Petit Trader’s tools in your live account.

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