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Trading Strategy Manual

How to create a trading strategy
Stoic Investor
Any trading strategy need, at least, to have the following steps and considerations:
Direction: this is the most important aspect, you should always trade with the market direction, not against it.
Trigger: which change in the market price makes you think the price will reverse or continue that leads to a trade.
Entry: after the trigger is hit, where should you enter.
Stop Loss/Take Profit: every trade should have an exit target, either in loss or in profit. This is usually defined in the trigger and entry phase. This is a must so you can know which trade you can enter based on your risk/reward
Back testing: After you create your trading system you need to back test to see if it’s profitable or not and what’s the win rate.
Risk/Reward:

Strategy Example

Direction

How to establish direction?

PA - Swing High/Swing Low
Indicators - MACD, EMA, DMI

Trigger


Entry


Stop Loss/Take Profit


Back testing


Risk/Reward

Risk/Reward vs Win rate
20%
5
30%
5
40%
5
50%
5
60%
5
1:1
5
Not Profitable
Not Profitable
Not Profitable
Break Even
Profitable
1:2
5
Not Profitable
Profitable
Profitable
Profitable
Profitable
1:3
5
Not Profitable
Profitable
Profitable
Profitable
Profitable
1:4
5
Break Even
Profitable
Profitable
Profitable
Profitable
1:5
5
Profitable
Profitable
Profitable
Profitable
Profitable
⁠

Risk/Reward Calculator

Risk/Reward
Entry
Take Profit
Stop Loss
1
1.67
100
120
88
There are no rows in this table
⁠

Risk/Reward Break Even Calculator

Use this to calculate your break even. You should always trade above the R/R of
1.25
⁠
.
Win %
R/R
Winning Trades
Losing Trades
Total of Trades
Loss %
1
20%
1.25
1
4
5
80%
There are no rows in this table
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1
⁠
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Strategy Example
Direction
How to establish direction?
Trigger
Entry
Stop Loss/Take Profit
Back testing
Risk/Reward
Risk/Reward Calculator
Risk/Reward Break Even Calculator
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