You would have heard the Trading Wisdom nugget - Plan your Trade and Trade your Plan. Well that's one of the most important things that contributes to your overall success as a trader.
You need preferably an hour to prepare for your trades to be executed at C4 @ 5PM as per our Trading System. So you need to buckle up and start preparing @ 4PM particularly when you are new to our Trading System. As you become more experienced, this time can reduce.
What are the steps to prepare for your trades?
Determine the long term weekly and daily trend of our basket of chosen commodities and US indices (please refer to the relevant post from the previous section) and tabulate. This is important as we want to take trades that are in accordance with the larger trend.
Identify and mark out Support & Resistance on the 2H/ 4H charting landscape such as Horizontals, Pivots, Congestion and Gap (please refer to the relevant post from the previous section).
Check 2H charts of our chosen basket of commodities for identifiable setups (to be discussed in the next section on setups) which have already formed on C3 or about to form on C4. If not, wait for C5. Any good setup forming should be immediately recognizable. If you struggle to locate the setup, it is not worth trading.
Tabulate all tradeable setups. Once tabulated, check the following and mention alongside: i) Win % of the setup (to be discussed in the section on Trade Selection) ii) Is the setup a part of a larger 2H chart pattern? iii) The S&R in the vicinity of the setup. If the setup is bullish, is it just below resistance? Is it at support? The table above is used in Trade Selection (to be discussed in the section on Trade Selection) where a trade is objectively selected based on the above variables.
Once a trade is selected as above (before the clock strikes 5PM), populate the table for Stop Loss, Profit Targets and number of lots. Calculate Total Risk which is same as the Maximum Loss that can be incurred if all positions hit Stop Loss. See if this is tolerable. Else trim the number of lots or forego one of the contemplated trades.
All the above is part of Trade Preparation that happens in the window between 4PM and 5PM. Some of the activities like determination of Long Term Trend should preferable happen before 4PM to save time. The 2H charts should be checked twice in this window, once around 4:20 PM for tabulation and next around 4:50 PM to see if there any last minutes changes based upon the latest price action.
The same cycle would repeat for trades to be executed on C5 @ 7PM but would take lesser time because some of the prep would have already been completed in the earlier cycle. This should ideally start by 6:20 or 6:30 pm.
The key takeaway is that you should know which commodities to trade, how many lots, SL, Profit Target, number of lots and the total risk on all positions (assuming all are executed), BEFOREHAND!! All this has to be done before completion of C4 or C5 as the case may be.
If the above looks like a tall order, do not panic!! It might take you longer in the beginning but you will surely get there with practice and experience. We would talk about the Trade Selection process in detail including the Win %, SL and Profit Target of individual setups for each commodity in the subsequent sections on Strategy and Trade Selection. Please refer to the Navigation Guide (link below) for more information.
Please click on "Next Post" to move to Trade Execution.
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