Interview with Ray Barros - Part 2
** Trading Plan ** Q. We could spend days comparing technical and fundamental analysis, and many traders tend to favour one and dismiss the other – do you prefer one over the other? Do you use a combination of both? Briefly, why? My conscious decision making process is technical: because it suits my visual-kinesthetic nature. But because I read an immense of material, I form subconscious long-range scenarios that result in 'feelings' about the technical picture. When the technical picture and my feelings are in harmony, I will take my trades. If my feelings clash with the technical picture, I tend to skip a trade. Q. Do you have written trading plan detailing your approach? How would you describe it (e.g. long/short, detailed/broad, complete/work in progress)? Yes – complete and relatively detailed. Q. On a scale of 1 (simple) – 10 (complex), how would you rate your trading approach(es)? Do you have any comments on the simplicity or otherwise of them? This is a difficult question because 'simple' and 'complex' are so subjective. Let’s put this way, apart from my long-range scenarios, I consider the impact of two higher timeframes on the trend of my timeframe, the trend of my timeframe to decide my strategy. Once I have that, I then determine if I have low risk entry and the necessary risk reward. Finally I determine the risk management parameters. Q. Many traders acknowledge that having a trading plan is a key to success – it is essential. Yet, most people don’t know where to start to begin writing one, even though they understand the basics of trading. What would be your advice to someone stuck in this situation? First commit to writing a plan. Then decide if you are writing a mechanical plan or a discretionary plan. Learn the differences between the two. Then find a mentor to guide you in the writing of the plan. Read more from Ray in the Trading Mindset section ... Return to the Index of Interviews ... |
