Quest 2012 Trading Plan

Developed by Ryan Jones

March 1, 2011

This document may not be copied, reproduced, transferred, disclosed or in anyway

revealed to another person or entity, in whole or in part, electronically or otherwise,
without the express written permission of Ryan Jones. All rights reserved.
(Note All Shaded Areas are my added commentary for further explanation of
parts of the trading plan for those who are seeing the plan for the first time.
This trading plan is the exact trading plan being used in a trading program called
Q-2012 Live Forex. The goal of Q-2012 Live is to take a $5,000 account and turn it
into $100,000 in just 1-year, providing members the exact signals so they can
follow along in their own account.
There are two Q-2012 Live programs. One for the Forex and one for the S&P Emini. If you would like more information on joining this unique program and
possibly following along in your own account, go to the following link for more
information:
www.SmartTrading.com

Introduction
A trading plan to trading is as important as a business plan is to business. It is no
coincidence that businesses fail at about the same rate as traders fail. A poor
business plan with improper capitalization causes the same problems in trading.
Only with trading, it is usually not the lack of capital, it is risking a greater amount
of the available capital than should be risked.
There are, of course, other contributing factors as well, but for the most part, a
trading plan can help in all areas.
Table of Contents
Starting Capital. 3
Beginning Risk.. 3
Risk Levels. 3
Goal. 3
Quest 2012 Summary. 3
General Strategies to be Used. 4
General Risks Explained 4
Money Management Strategy.. 5
Category 1 Trade Size Table. 5
Category 2 Trade Size Table. 6
Rate of Decrease 7
Additions of Strategies.. 8
Summary of Beginning Systems.. 9
Evaluations. 10
Back Up Plan. 11

Starting Capital
$5,000
Beginning Risk
40%
Risk Levels
1.

Semi-Aggressive with Initial Capital

2.

Semi-Aggressive with Profits up to $100,000

3.

Semi-Conservative with Profits Above $100,000 (risk = approximately 20%)

4.

Conservative if 40% Initial Risk is Realized

Goal
To Reach $100,000 by end of Year 1
To Reach $1 million by end of Year 2
The average monthly profit needed to reach year 1 goal based on a lot size of $50,000
without money management is approximately $1,500 per month. See Money Management
section below.
Quest 2012 Summary
The general approach to achieving the goals of the Quest 2012 trading plan is to start off
with lower risk, high probability trades based on a combination of mechanical trading
systems and semi-mechanical trading signals. Within 6-months, the goal is to transition
into all 100% mechanical trading systems once the account has some breathing room
(account level reaches approximately $10k - $15k).
As the account grows, Q-2012 will increase diversification, while attempting to decrease the
overall risk on a per trade basis. The underlying goal is to achieve a minimum monthly
profit based on a constant unit of trading ($1,500 per month based on $50,000 lot sizes).
As the account grows, adding additional diversification will add profit potential without
having to necessarily increase lot size at the same rate.
General Strategies to Be Used
The first few strategies will be based on trend-following patterns and seasonal influences.
We will quickly add at least 1 intraday mechanical strategy that will focus on shorter-term
profits (through auto-execution). As the account grows, we will continue to add strategies
based on a wide range of approaches. Some will be trend following looking for the bigger
moves. Others will be range trading looking for 8 12 pips per trade with small risks, and a

host of other types of strategies. At all times, the goal is to create optimum diversification
to diminish correlating drawdowns during certain types of market cycles.
General Risks
The initial risk of Q-2012 is small at $2,000. Accordingly, the initial lot size will be
approximately 2 minis ($2 per pip) on lower risk trades. The maximum stop on lower risk
trades is at 30-pips. This means a loss at that maximum risk would yield a loss of about
($60).
The larger risk trades will sometimes be as big as 100 pips, but will quickly decrease as the
market allows. We will start larger risk trades with 1 mini ($1 pip). The average risk will be
around 60 pips, or a potential loss of ($60). These trades will be looking for 100 400 pip
moves, but will be quicker to exit at the beginning so as to not give back profitable trades.
The trade size will increase according to the tables below.
It would take approximate 33 losses in a row without a winning trade to reach our $2,000
initial risk level. However, we will decrease trade AND conduct an evaluation of the trading
strategies if the account realizes an initial $1,000 loss from the starting balance (see section
Evaluations).
NOTE Initial risk does not equal maximum risk. Initial risk is the risk amount prior to a
required change in how the account is being traded. If initial risk levels are hit, further risk
is possible, however, the Q-2012 trading plan will go into more of a capital preservation
mode until ground is regained. (See section Q-2012 Backup Plan)
Money Management Compounding Strategy
{The money management compounding strategy is fully explained in the Mission Million
online course that comes with Q-2012. This is a 10-hour course that will forever change
the way you look at trading. Rather than focusing on the holy grail of trading strategies,
you will realize and see just how important it is to instead focus on money management, for
both the profit and the risk potential in trading.
Every trader, bar none, makes a money management (trade size) decision EVERY single
time they get in the market. Every trade you have ever made required a money
management (trade size) decision. Yet, most spend little time thinking through the
consequences of making the wrong trade size decision. It is, by far, the greatest
contributing factor to being able to substantially increase wealth through trading.}
We will be using the Fixed Ratio strategy and implementing separate ratios based on system
categories (also known as the Ratio Efficiently Valued, or REV strategy). In other words,
systems with more risk will be assigned a larger ratio while strategies with less risk will be
assigned a smaller ratio. Category 1 systems will have a ratio of $200 per mini. Category 2
systems will have a ratio of $750 per mini increase. Both tables are below:

{The Fixed Ratio strategy is a very specific, and straight-forward algorithm that lets us
know exactly when to increase trade size, and when to decrease trade size based on the
risks of the strategy and profit goal of the trader. The Fixed Ratio strategy is the most
efficient money management strategy for smaller accounts and is fully explained in the
Mission Million Money Management Course, which is included FREE to Q-2012 members.}

Category 1 Trading System MM Table

Account
Equity
$5,000
$5,400
$6,000
$6,800
$7,800
$9,000
$10,400
$12,000
$13,800
$15,800
$18,000
$20,400
$23,000
$25,800
$28,800
$32,000
$35,400
$39,000
$42,800
$46,800
$51,000
$55,400
$60,000
$64,800
$69,800
$75,000
$80,400
$86,000
$91,800
$97,800
$104,000

Delta
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200

Lot Size
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32

No MM Perf
$5,200
$5,400
$5,600
$5,800
$6,000
$6,200
$6,400
$6,600
$6,800
$7,000
$7,200
$7,400
$7,600
$7,800
$8,000
$8,200
$8,400
$8,600
$8,800
$9,000
$9,200
$9,400
$9,600
$9,800
$10,000
$10,200
$10,400
$10,600
$10,800
$11,000
$11,200

Lot Size is based on Minis.

In other words, a lot size of 2
means 2 minis. Each pip is
worth $2 with this lot size.
At the end of this table, the
account has grown to
$104,000 with money
management, trading only
3.2 standard lots (each pip is
worth $32).
Compare this to NOT
applying money management
to the strategy. The end
result is growing the account
from $5,000 to only $11,200.
The money management
strategy alone increased the
profit potential by a factor of
15.9!
Do not discount the power of
what you are seeing here. At
$104,000, the risk per trade
on a 20 pip loss is LESS than
the risk at $5,000 (% basis).

Category 2 Trading System MM Table

Account Equity

Delta

Lots

No MM Perf

$5,000
$5,750
$7,250
$9,500
$12,500
$16,250
$20,750
$26,000
$32,000
$38,750
$46,250
$54,500
$63,500
$73,250
$83,750
$95,000
$107,000
$119,750
$133,250
$147,500
$162,500
$178,250
$194,750
$212,000
$230,000
$248,750
$268,250
$288,500
$309,500
$331,250

$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

$5,750
$6,500
$7,250
$8,000
$8,750
$9,500
$10,250
$11,000
$11,750
$12,500
$13,250
$14,000
$14,750
$15,500
$16,250
$17,000
$17,750
$18,500
$19,250
$20,000
$20,750
$21,500
$22,250
$23,000
$23,750
$24,500
$25,250
$26,000
$26,750
$27,500

Both category 1 & 2 systems will review and possibly adjust the delta and MM Table at the
$50,000 level to reflect account performance and drawdowns.

{Money Management Tables Explained

Account Equity As your account reaches these levels, you increase your lot size on new
trades according to the lot size column. For example, if you start out with $5,000 trading 2
lots (mini), and your account increases to $5,750, on the next category 2 trading signal,
you will place it with 3 lots.
Delta This is a variable in the Fixed Ratio money management equation that indicates
how aggressive the growth rate is. The delta is different based on the different types of risk
that are involved with individual strategies. Higher risk strategies require a higher delta.
Lower risk strategies require a lower delta
This is FULLY explained in the 10-hour online Mission Million Money Management course
which is available at no cost to all Q-2012 members.
No MM Perf This column shows what the account performance would be if there were no
increases in trade size. With category 2 strategies, if our system makes only $10,000
based on a single mini-lot, the money management will turn that into over $70,000 in
profits. At around $13,000 in total net profits based on a single mini-lot, the money
management turns it into over $100,000. This represents an increase of almost 10-fold!}
Rate of Decrease
The rate of decrease represents the levels at which risk (lot size and/or strategies) are
decreased if equity drops below a certain amount. The first table is the initial decrease
based on an equity drop below the starting amount:

Account Equity
$5,000
$4,000
$4,000
$3,500
$3,000

Category
No decrease
Category 1
category 2
Category 1
Evaluation Plan

Lots
1
Evaluate Strategy
Evaluate Strategy
Change Strategy

If the equity drops to $4,000, we will decrease 1 mini lot category 1 strategies. We will also
evaluate category 2 strategies to make sure they are not overly contributing to the equity
drop. At $3,500, we will all category 1 systems. If the account hits an equity value of
$3,000, an evaluation will be conducted to determine if a different direction needs to be
pursued altogether (with strategies).
Decreases After Increases
We will use a delay of 1 level for decreases levels. What this means is if we increase from 2
to 3 lots at $5,400, we will not decrease back to 2 lots unless the equity drops below $5,000
again. An increase to 4 lots at $6,000 will not decrease back down to 3 lots unless the

equity drops below $5,400, and then back to 2 lots at $5,000. Re-increases will be at the
original increase levels.
If 2 decreases occur, the Rate of Decrease will then change to decreasing at a 2:1 ratio of
the increase rates. For example, if the account reaches $13,800 trading 10 lots (minis) in
category 1 systems, the next drop to 9 lots will occur at $12,000, and then 8 lots at
$10,400. However, a 3rd drop to 7 lots would occur at $9,700 (instead of $9,000). A drop
to 6 would occur at $9,000, so that at every increase level, our capital preservation strategy
would drop 2 lot sizes instead of just one.
Accordingly, if the decrease started at the 10 lot level, in theory, we would be back to 1 lot
at an equity of $6,800. In reality, we will have stopped trading the strategy responsible for
dropping the equity long before (probably around the $8,400 level).
Decrease Table

Account Equity
$6,800
$7,300
$7,800
$8,400
$9,000
$9,700
$10,400
$12,000

Delta
$200
$200
$200
$200
$200
$200
$200
$200

Lot Size
2
3
4
5
6
7
8
9

This table is based on a drop in equity. As

equity drops below $12,000, the lot size drops
to 9. At $10,400, the lot size drops to 8. Etc. If
the equity begins to increase again, the lot size
also begins to increase again at these same
levels.

This decrease table enacts a preservation of capital approach should the base drawdown of
a specific system or the account as a whole increase beyond expectations.
If 3 decreases are made, an evaluation of the performance will be conducted to determine
the cause of the excessive drawdown. Strategies and the overall plan may be adjusted
should such an event occur.
Note It is extremely important to understand the power of money management from a
risk capital preservation perspective. The power of the compounding creates a situation
where the strategy can then turn around and lose everything it gained based on having
never increased trade size, but because of the money management plan, it retains a
significant profit.
For example, if we have a category 2 strategy that makes $10,000 based on never
increasing lot sizes, but then turns around and goes into a $10,000 drawdown, the person
who did not use the Fixed Ratio money management plan has $0 profits to show. They lost
everything that was gained. However, the same situation with the Fixed Ratio increase
strategy takes the account up to over $63,000 during the profitable streak, but in the
drawdown, if all the decreases are allowed to happen, it drops to an account level of

$12,500. In other words, the net result is +$7,500 instead of nothing. Remember, the
trader who does not use the Fixed Ratio money management strategy had an equity high of
only +$10,000. So after the worst possible scenario drawdown, the trader using money
management is almost at the equity high of a trader who didnt use it.
Of course, in this scenario, the trading plan would never continue trading a strategy to that
account level. After 4 5 decreases, most strategies would be replacedand they would be
replaced having netted a significant profit in this example (around $15,000 in profits)
instead of having nothing to show for it.

Addition of Strategies
Category 2 Systems

Category 1 Systems

Account Equity
$5,000
$9,500
$26,000
$75,000
$250,000
$500,000

Add System
1
2
3
4
5
6

Account Equity
$5,000
$12,000
$25,000
$50,000
$100,000
$250,000

Add System
1
2
3
4
5
6

These levels are tentative and may be adjusted based on actual account performance and
type of systems being added.

Summary of Beginning Systems

Category 1
System 1
The first category 1 system we will implement is Time Code. This system is based on
various cyclical moves in the currency markets at certain times during the trading day.
There are 5 major opening and closing times in the currency markets. The first is the
Sydney open and the last is the Asian Open. Time Code uses a combination of these
cyclical times combined with price action.
Risks associated with the Time Code system average out to be 15 pips per trade. The
average profit averages out to be 12 pips while the win % at upwards of 75% - 80%. The
one drawback with the Time Code system is that it can go several months gaining little or
no ground and then experience bursts of extremely high win rates.
Time Code averages about 4 trades per week per currency pair. We will be placing trades
on 3 pairs after the first month of trading (we will limit to one pair the first month of
trading).

Category 2
System 1
The first category 2 system we will implement is based on a combination of my PowerTrade,
Reloaded and Power Pattern Strategies. PowerTrade was a system developed back in 1997
and used both times I entered the live account Trading championship**. The system is
based on trading in the direction of the trend after a retracement. The average initial risk
per trade is between 60 and 100 pips, while decreasing that risk as the market moves in our
favor. There could be times when the initial risk exceeds 100 pips. During those times, we
may decrease the lot size accordingly. Most of the time, the average risk is around 60 pips
with a trailing stop in place. Reloaded is a spinoff of PowerTrade.
This strategy will be applied to major currencies with only one entry at a time per pair. If 3
major pairs have correlating entries working at the same time, I will choose the best one
available as opposed to entering all 3 at the same time. If we are in one pair and locked in
at a profit while another pair has a setup, we will take the setup in the 2nd pair for
diversification. At no time will we have more than 1 open position that could turn into a loss
at any time.
Power Pattern Strategies are high-probability patterns that I have refined over the years.
These are only going to produce an average of 1 2 trades per month. I will search
multiple pairs for setups.
PowerTrade and Reloaded are fully revealed to Q-2012 Live Trade Members. Power
Patterns is available to anyone, however, the signals are exclusive to Q-2012 Members.

---------------------------------------**PowerTrade was traded in my first World Cup Trading Contest when I entered the 12month context with less than 1-month left and took 3rd place in the contest with a 42%
return. This was traded on daily bar charts in 3 different markets. The following year, I
entered the contest again and traded the PowerTrade on a 10-minute bar chart of the S&P.
My account increased from $15,000 to over $107,000 in 73 days.

10

Evaluations
Monthly:
There will be regular monthly evaluations to monitor progress.
Account Performance:
1. If account drops from $5,000 to $4,000 there will be an evaluation.
2. Anytime there are 2 decreases in lot size there will be an evaluation.
3. At the following increase levels, additional evaluations will come at:
A. $10,000
B. $25,000
C. $50,000
D. $100,000
E.

$250,000

F. $500,000
Performance evaluations are mainly to determine whether number of strategies are
adequate to maintain growth level and/or drawdowns are within limits.
(NOTE Evaluations are not meant to micro manage the trading plan, merely to ensure
verify that changes are not needed at any given level. Most modifications to a trading plan
are minor and occur more at the beginning to more accurately align the trading plan with
the real-time performance of the plan).

Back Up Trading Plan

Evaluations are scheduled at $4,000 and any time there are 2 decreases in the lot size.
Should the account reach the $3,000 level (40% loss of starting account value), the back up
plan will be implemented. The back up plan will consist of trading 1 mini contract on one
high-probability strategy while capping the risk by taking trades that are limited to 50 pips
or less ($50).

Time Expectations
The slowest growth period is to be expected during the first 3 6 months of the trading
plan. This is due to the smaller trade size and limited number of strategies that are being
traded in the beginning. As trade size increases and the number of strategies being
implemented are added, the growth rate begins to become more geometric. Below are the
range expectations of performance provided that strategies perform within expectations.

11

Month
1
2
3
4
5
6
7
8
9
10
11
12

Min Exp
$4,500
$5,500
$6,500
$8,000
$10,000
$12,500
$17,000
$23,000
$30,000
$40,000
$52,000
$65,000

Max Exp
$6,500
$8,000
$10,000
$12,500
$17,000
$24,000
$30,000
$40,000
$52,000
$65,000
$80,000
$97,000

These expectations are not the absolute, but the general ranges of account performance
should strategies perform as expected. If the account is falling below the minimum
expectations, the strategies are not performing and it will be addressed during the monthly
evaluations or other evaluations set up. It is also possible for the account to over-perform
with growth to the $100,000 mark as soon as the 6-month period, but this would be an
improbable exception.
These are general guides and AVERAGES only.

End.

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