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Breakout Play (Trend Following) - Trading Plan - Full (Sample)
Breakout Play (Trend Following) - Trading Plan - Full (Sample)
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.)
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General Trading Rules
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
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Trader Profile
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Routine
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Trading Process
Phase 1: Plan
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
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.
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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.
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
6. Stop Loss – The trigger point when to get out of a losing position. To protect the
capital.
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7. Profit Taking – The trigger point when to get out of a winning position. To protect
the gain.
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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
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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
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Sample Chart
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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
2 tranche:
nd
Entry Execution:
1. 1st tranche: 50% (2-3 ticks above breakout point)
2. 2nd tranche: 50% (End of Day (EOD)) 2:45pm, – 3:15pm
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
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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
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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 fine-
tuned of previous version.
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Other
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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
Cam, J., 2015, The Trading Code – The Trading Code Checklist
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