Breakout Play (trend Following) - Trading Plan - Full (sample).docx

ABS Trading System Breakout Play / Trend Following (TF)

Trading Plan Version 1.31 (Note: This trading plan serve as an example and for study purpose only. Please don’t use this trading plan in your live trades. Choose only what matters to you and has added value to your own trading plan.)

I want to help you in your trading endeavor with the best as I can. My only request is to respect me by keeping my trading plan in private and not distributing it. Thanks and best regards,

1

General Trading Rules 1. No Plan, no trade. (Entry) 2. Cut without mercy, no ego (Stop loss) 3. Locked profit (Profit taking) 4. Find a trading style that suits you: “You must focus on being the best on a single trading setup. Study the markets, study yourself and find a trading edge that suits you.” - Henri Simoes 5. Trading Plan: "It is necessary to have an organized method to make the important decisions involved in trading, such as what market to trade, when to trade, how to enter, how to set stops, how to exit, and what leverage to use." Peter Brandt 6. Risk Management: “You have to be in risk management mode all the time.” Paul Singer 7. Conditions of your trading setup: “To be a good trader, you need to trade with your eyes open, recognized real trend and turns, and not waste time of energy on regrets and wishful thinking.” - Alexander Elder 8. Stop Loss: I believe that whenever you enter a trader, you must know the point at which you are willing to say, “I was wrong about this trade” and get out. This is your stop loss point. - Van K. Tharp 9. Target Profit: “Never let a profit run into a loss.” - William D. Gann 10. Execute your trading plan: “A mistake is when don’t follow your rules. If you don’t have a rules in trading, everything you do is mistake” - Van K. Tharp 11. Execute your trading plan: “I would rather get stopped out of trade five times in a row, taking a small loss each time, than take a large loss.” - Mark Minervini 12. Records and Review your trades: “Successful traders know that a consistent and systematic review of their daily trading activity is the direct play to growing and improving.” - Van K. Tharp 13. Trading Psychology: “It takes effort to create the kind of disciplined approach that is necessary to become a consistent winner.” - Mark Douglas

2

Trader Profile Time Availability: (Part time)   

Monday – Thursday (9:30am to 12nn Ph Time) - home Monday – Thursday (1:30pm to 3:30 pm Time) – alt+tab warrior at office Friday (9:30am to 3:30pm) - home

Note: need to wake up as early as 4:00am KSA Time

Type of Trader: Trend follower (1 day to a few months)

Trade Preference: Breakout Plays focus on:     

3months consolidation breakout ATH 52wk high Multi-year high 6months high and 9 months high

Risk Appetite: 1% to 2% VAR per trade

3

Routine

4

Trading Process

Phase 1: Plan 1. Make Watch List – The process of filtering/screening stocks base on specified criteria. Ideal is around 10-15 stocks.* 2. Trade Planning – From watch list, identify the possible entry/exit based on specified criteria. These includes entry, exit: stop loss, TP or trail stops, position sizing, etc.  

Full planning session will be done during Sunday. Few updates will be done after market hours on weekdays. Use ABS Risk Management Simulator™ for position sizing and allocation

Phase 2: Execute 1. Monitor the Watch List – Monitor the watch list if price move to my favorable entry point. 2. Monitor the Current Position – Keep the eyes on price. Be physically and mentally present during market hours. 3. Cut without Mercy – If stop loss point has been triggered cut with mercy 4. Protect the profit – Protect the profit by applying trail stops Phase 3: Record & Review 1. Make screenshot of the chart (entry/exit) – After trading hours, make screenshot of the chart for entry/exit. 2. Quick recording and review – Quick update and review trading journal after trading hours. 3. Full Update and review – Full update and review the trading journal during Saturday.

5

Component of Comprehensive Trading System

1. Market – What stock to trade? Blue chips are best buy when cheap, basuras are best buy on breakout with momentum. 2. Time Frame – (intraday, daily, weekly, monthly) a. Short term – 20MA b. Medium term – 50MA c. Medium-Long term– 100MA d. Long term– MA200 3. Risk Management a. Position sizing – how much to buy. Example not risking 1% of total account b. Stop loss c. Risk reward ratio – at least 1:2 d. No. of trades – how many positions? How many trades per day. e. 4. Condition of set-up (Parameters) – tactics, strategy, set-up a. Downtrend – bottom fishing, reversal, technical bounce, etc b. Uptrend – trend following, swing, momentum, etc. c. Sideways – range trading 5. Entry – The trigger point when to buy. 6. Stop Loss – The trigger point when to get out of a losing position. To protect the capital.

6

7. Profit Taking – The trigger point when to get out of a winning position. To protect the gain.

7

Trade Set-up: AOTS (Buy on Breakout) Trade Objective: Trend Following (Exit on 20SMA Snaps) I. MARKET    

2nd liners Basuras (Penny Stock) No illiquid stocks No blue chips

II. TIME FRAME 1. Looking at Big Picture: [Weekly (Parallel Universe Alignment (PUA)] 2. Entry/Exit: Daily

III. RISK MANAGEMENT 1. 2. 3. 4.

Risk Threshold: Not risking more than -1 to -2% of total portfolio per allocation Stop loss – Around -3% to -5% stop loss Risk/Reward Ratio – 1:2 or better Other Rules: Position sizing and allocations  NO ALL-IN;  Minimum of 8K pesos  Maximum of 3 positions  Maximum of 2 trades per day  Max of 33% per allocation*

8

IV. SET-UP Price > 20MA > 50MA > 100MA and MAs are pointing higher (2 o’clock*) Steeper MAs means strong trends, flat MAs means weak trends. RSI(14) >= 70.

Technical Indicators: 1. Simple Moving Averages (SMA or MA)  SMA20 (Red)  SMA50 (Pink)  SMA100 (Blue) 2. Relative Strength Index (RSI)  RSI 14 Period  RSI 70 upper limit; RSI 30 lower limit 3. Darvas Box  ATH  Multi-year  52wk High  6months  3months (consolidation)

Screener/Filter (AOTS+):    

MA (20 Days) = Price is above average MA (50 Days) = Moving Average below SMA 20 MA (100 Days) = Moving Average below SMA 50 Value Average (10 Days) = Value Average >= 40M

9

Sample Chart

Note: This is old chart from version 1.0

10

V. ENTRY Entry Point  1st Tranche:  Breakout from at least 3 months consolidation (Primary consideration)  Breakout from the resistance (Secondary consideration) o ATH o Multi-year o 52wk High o 6months  10% range from entry point to nearest resistance or better nd  2 tranche:  Longest candle in past 10 trading days  Price closed above pivot point of day’s range (50%+)  Breakout must supported by volume Entry Execution: 1. 1st tranche: 50% (2-3 ticks above breakout point) 2. 2nd tranche: 50% (End of Day (EOD)) 2:45pm, – 3:15pm

VI. STOP LOSS a. -3% to -5% per position b. When price break the 2-3 ticks from support c. Execute a or b which ever triggered first

VII. PROFIT TAKING - When Trail stop hitted, sell half (lock profit) a. Healthy Trend: 20SMA trail (last resort 50SMA trail) b. Price is in Parabolic: Trailing stop

11

ABS Trading System (Checklist) No.

Parameters

Yes/No

1

AOTS+

Yes

2

Breakout of resistance

Yes

3

Surge of Volume

No

4

RSI above 70

no

1st Tranche

10% range from entry point to nearest resistance or better

Yes

2nd Tranche

Longest candle in past 10 trading days

Yes

Price closed above pivot point of day’s range (50%+)

Yes

Parameters:  AOTS+  Breakout of resistance  Surge of Volume  RSI Above 70 Buying Trigger:  1st tranche: If all criteria met Then Buy 2-3 ticks above breakout point  2nd trance: If all criteria met Then Buy on near/EOD Selling Trigger  20SMA Snaps: Sell Half  20SMA breach at EOD: Sell All position

12

Trade Set-up: AOTS (Buy on Breakout) Trade Objective: Trend Following (Exit on 20SMA Snaps)

Note: most of the charts were taken from trend following version 1.0. Version 1.2 is finetuned of previous version.

13

Other Golden Rules for New Trades 1. Find a trading methodology that fits your personality 2. Never add to losing trade 3. Never lose more than 1% to 2% of your trading capital on any one trade 4. Never trade anything you don’t understand 100% 5. Trade in the direction of the trend in your trading time frame 6. Only look for low risk/high reward trades, or high probability setups. When you don’t have any signals, don’t trade 7. Trade you plan, your system, your signals, the chart, and price action, and not your opinions, bias, or predictions. 8. Don’t trade before you have a completed trading plan, including rules entries, exits, and risk management 9. The size of your wins and losses determines you trading success 10. You risk management rules will determine the success of your technical trading system

14

Reference: Zeefreaks, March 2, 2013, Zeus' Strike and the Alignment of the Stars, https://zeefreaks.blogspot.com/2013/03/zeus-strike-and-alignment-of-stars.html North Star, July 10, 2017, Trend Following - Reverse Engineering ZF System, http://findingyournorthstar.blogspot.com/2017/07/trend-following-reverse-engineering-zf.html Kashiwagi A., 2018, Money Grower #Uptrend2018 Challenge General Guidelines UPTREND Strategy | #Uptrend2018 | Part 1 https://www.youtube.com/watch?v=OnAvNkn7Kpc UPTREND Strategy | #Uptrend2018 | Part 2 https://www.youtube.com/watch?v=-Y3ZxhRB1lU Teo R., January 2016, Trend Following Trading Strategy Guide https://www.tradingwithrayner.com/trend-following/ Kairos C., 2018, Cosmos Kairos’s Trading System Cam, J., 2015, The Trading Code – The Trading Code Checklist

15