Detailed Trading Plan for Beginners

I. What to Trade:

  1. Trade the front month Russell 2000 e-mini Futures using the OEC platform and the Aleafa algorithm(Check for a new contract every 3 months.)
  2. Trade valid setups only when they are aligned with the direction of the trend.

II. How to Trade:

  1. Determine the market trend using the 700, 800 and 900 charts. Beginners only trade with the trend. On an uptrend only buy. On a downtrend only sell.
  2. Determine the direction and strength of the current trend based, angle, and width of separation of the teal, dark blue and red momentum lines.
  3. Use the 300, 400, and 500 tick charts for entries and exits.
  4. (After the beginner becomes more skilled, use the 200 chart to add contracts in the direction of the trend after it dips or bounces )
  5. Mark the Hi and Lo of the Day on all charts being used before the market open.
  6. Trend change is possible if a divergence line shows up (and OBOS is OB or OS), or by looking at OBOS in relation to Momentum lines.
  7. If momentum lines are trending down, and OBOS is flat or rising, trend change is imminent. Look for leading indicators on any chart to tell when to buy.
  8. If momentum lines are trending up, and OBOS is flat or falling, trend change is imminent. Look for leading indicators on any chart to tell when to sell.
  9. Beginners wait for two leading indicators (see later) and momentum lines to confirm the new direction before entering the trade.
  10. At 10:00 a.m. watch for a Reversal signal to develop. There is almost always a significant trade available around10:00 am eastern. Don’t trade the reversal until momentum lines indicate it clearly.

II. When to Enter

  1. As beginners we trade from 9:30 to 10:30 or 11:00 maximum. Make one trade before 10:00 and one trade after 10:00. Do not enter a new trade after 10:30.
  2. (When more skilled, can learn how to take additional safe trades between 8:00 am and 9:20am using 100/200 chart. Can scalp between 3-4 pm. Not for beginners.)
  3. As beginners we trade only 100% trades.
  4. To enter a 100% trade we need either:
  5. Two leading indicators (as defined below) aligned with the trend. The two indicators can appear on two different charts. Or
  6. Holy Grail aligned with the trend.
  7. We continuously scan the charts for these entry signals. When we see one we mark it on the chart so it is easily identifiable.
  8. When there is a valid setup for 100% trade, enter the trade.

SevenAlgorithm Leading Indicators for Beginners

  1. Flat OBOS in areas +60 and -60
  2. Divergence (positive and negative) when OBOS +60 and -60.(Otherwise it confirms Dips and Bounces.)
  3. High/Low of the Day
  4. Death Cross when OBOS is in +60 and -60 areas.
  5. OBOS overbought and trending down or

OBOS oversold and trending up

  1. 3 Momentum Lines cross each other in vicinity of one candle
  2. Two stars line up. (Enter on the next candle or check on the top frame number. It indicates how many contracts left before another candle starts to form. Closer to Zero, safer to enter the trade.)

Holy Grail:

When Gold Star appears before Red Star in downtrend,or
Dark Blue Star appears before Light Green Star in uptrend.
Need no other indicator to enter trade in direction of trend.

III. How Much To Trade:

  1. Can add contracts when stars appear.
  2. Can add contracts when the teal crosses the dark blue and the red, preferably in the same or next candle.
  3. When there are three leading indicators combined with the trend, combination of any three, can start with two contracts and add another on the second candle.
  4. (More advanced traders can learn to use dips or bounces to add contracts until we exit the trade.
  5. Use the 100/200 chart to identify a dip or bounce during a trend.
  6. When a dip or a bounce is confirmed on the 100/200 chart add a contract.
  7. This is not for beginning traders.

IV. When to Exit

  1. Exit the trade when the OBOS red line reaches OB or OS on the entry chart (a slower chart, not the 200.)
  2. If momentum lines are strong and separated, the trend can continue further. In this case, leg out of a trade. Exit 80% of contracts when OBOS crosses above +60 or -60 and exit the rest as OBOS starts to turn direction.
  3. If the dark blue has crossed the red momentum line, the trend is still strong for at least another candle or two.
  4. Feel good taking small profits until you become a more skilled trader. When account size has been built this way from $5,000 to $10,000 then ask to learn the next set of skills

VI. Routines

  1. Daily
  2. Before the Market Opens
  3. Evaluate Trend (see above)
  4. Set up trading range bars and high / low of day on the charts.
  5. After Day’s trading is done
  6. Do trade analysis and homework and send to Leo
  7. Create account P/L report and send to Leo
  8. Send Leo appropriate commission.
  9. As needed
  10. When account size becomes significantly more than $20,000 take out the amount over $20,000 and bring it home. Use it as needed / invest it elsewhere

Rev 3Page 1 of 4Revised: 6/12/13