Trading plans for 2016

Here is a New Years message from Dave: Happy New Year! I am so thankful that you have shown interest in my blog and in my trading this past year. In 2015 I really started to take this personal trading blog more seriously and I hope you have noticed it. I wanted to take it to a higher level and make it interesting to read for more people then just my close friends and relatives. I cleaned out old trading journals that were still on this blog. And I am trying to make this blog as valuable as possible to new and experienced traders as possible.

In 2015 I also started to trade in a systematic way and luckily 2015 was a profitable year.

My trading results over 2015
My trading results over 2015
In this post I will look back at 2015 a bit. But mostly I am writing this to tell you my plans for 2016.



2015

My equity curve was starting to look pretty nice going into the third quarter and I realized that over the past years I have learned a lot about trading. Family, friend and colleagues are always asking me about finances and trading. And I noticed that I always had a lot to tell them about it. So in October 2015 I wrote my first article in a series of articles that are my way of explaining absolute beginners How to become a trader. It is not that I think everyone should become a professional trader, nor is it that I want to be a professional trader myself. However, I do think trading can be fun for some people and it is certainly necessary to understand trading for anyone who wants to build wealth or preserve wealth. So many people with money in the bank asked me this year: "what should I do, I get less than 1% of interest from my bank and I pay taxes on my savings. Adding up the inflation, my retirement savings are shrinking". I do not give financial advise, because I am not a financial planner and giving advise is not my thing, but teaching is. I like to show others how I do stuff, so they get inspired to do something of a kind themselves. So I wrote a post about how I invest for my retirement. I guess, to sum it up, the main points in 2015 were:
- I started trading successfully
- I started explaining how I trade and invest.

2016

These are my trading plans for 2016.
First of all I will finish the getting started trading series in which I will show you what method I traded profitably throughout 2015.

After that I will take you on my trading journey. This journey will be guided by the following goals:

  • Trade more systematically
    The way I trade, it is like an art form. You need to be skilled, but has a high level of subjectivity and interpretation. I want to develop a more strict rule set, that should lead to more consistent trading performance.
  • Trade more systems
    In 2015 I started trading reversals and later added breakout trades. In order to spread risks and rely less on specific market conditions I would like to trade more than just these two systems.
  • Spend less time trading
    My way of trading required me to look at the charts every day and I would monitor open positions on my phone every hour. If I want to scale my trading, I need to find a way to spend less time finding and monitoring trades.
  • Do more research
    I have many trading ideas. This year I want to test many of them and them into effective trading systems. 
  • Automate (parts of the) trading (process)
    Automation is one way of shortening the amount of time spend on trading. Automation does not only mean the use of computers to analyze the markets. I can also mean testing and implementing set and forget trading, which will eliminate the need to monitor the trades.

More systematic trading in 2016?

In order to achieve these goals I have planned to do the following, while keeping you all informed on how I am doing:

I will develop further my algo trading skills in python by doing the Machine Learning for Trading course at Udacity. This is a free course conducted by Professor Tucker Balch from Georgia Tech. I will do a run through of the course material. The first two modules should be familiar because I already know how to manipulate financial data in Python (mini-course 1) and I already completed the course Computational Investing Part 1 at Coursera in 2013 (now mini-course 2 at Udacity I presume). It will be good to refresh old knowledge and learn new skills. Machine learning (mini-course 3) should be interesting, although I do not want to complicate trading, but let's see, maybe it is do-able.

After that I will start researching (and sharing) my trading ideas and automate the generation of end of day trading signals. I will then trade these signals on CFDs and Binary Options. The idea is that the trading process will be much simpler this way. My researched and tested algorithms will generate buy or sell signals at the end of each trading day. I can have them emailed to me. All I do then is enter the market long or short (manually). If the trade is executed on a Binary Option, then that is it. If the trade is executed on a CFD, then I need to close the trade the next day; win or lose.

So why binary options? Well, because they:
- are set and forget kind of assets
- are simple to understand
- are simple to execute trades with
- have a limited and exact risk per trade.
- have a preset risk to reward ratio per trade
Most of these points will make sense if you have read all the articles in the getting started series (which I haven't finished writing yet). Also I will explain more about these options later.

I have already done research to find out which Binary Option Broker is best for me. I have settled for now on StockPair. You can use my aftfiliate link to open an account at StockPair. I will probably write a review on this broker later this year when I have started trading with them.

I have been hesitant to trade binary options, because of the seemingly disadvantages risk to reward ratio, but I have concluded for now, that you cannot compare this R/R ratio to the R/R ratio that is defined by stop losses and take profits in 'normal' trading. Therefore I plan to test each systems performance when traded on CDFs (opening and closing at end of day) and when traded on Binary Options (next day expiration). This way we can make an honest comparison.

For CFDs I will use a broker that I have used before: Plus500. You can use my affiliate link to open an account at Plus500.
Why Plus500:

  • They are regulated in the EU (Cysec and MiFiD)
  • They have an easy to use platform for order entry
  • They have a mobile app
  • They offer negative balance protection
  • They offer a wide choice of CFDs


Please note that Plus500 does not accept US residents as a customer.

I think that most of the systems, that I will develop will be for trading on Forex, Spot Metals and Index CFDs, but still it is good to have more options available.

I hope you are as exited as I am to start this journey. I hope 2016 will bring you health, happiness and steady trading profits. And I only hope that I have somehow helped you with this.

Please let me know in the comments what you think of my trading plans for 2016!