A simple and effective trading plan is needed if a trader wants to be successful. Why? Because it allows the trader to duplicate their good trades on the live edge of the market. While some trading plans can be quite long and detailed, sometimes simpler is better because you need to be able to implement the plan on the live edge. A one page trading plan is much quicker to implement than a ten page analysis. Here is an example of the simplest trading plan that I use.
Simple and Effective Trading Plan
The 15 minute chart of the USDCHF and the TradeFlow Analysis is side by side in the image below.
It all kicks off with price being at an ATR, followed by having 2 ATRs in your direction (below for longs and above for shorts), and then you need the Stochastics confirmation. Also notice that each decision making process is either answered with YES or NO, eliminating the trader’s ability to say “maybe”.
Here’s another one on the AUDUSD:
Same criteria, just a different forex pair. And on futures, it works exactly the same as shown on the Nasdaq chart below because price was at the ATR and there were both red and white ATRs above with a target at the blue ATR (with Stochastics showing hidden divergence):
How quickly can you scan the charts for this setup? Fairly easy. Here are three currency pairs from this morning. The only potential is the EURUSD. However, there is no confirmation on the Stochastics. The EURJPY has the stops splie (white above and blue below). The AUDUSD shows that price is not close to the ATRs that are above price.
Here are the next three currencies with a quick analysis using the simple and effective trading plan. The only two that are close to an ATR are the USDJPY and the GBPUSD. While both need to be closer to the ATR, you would also need Stochastics confirmation. The closest one to the Stochastics confirmation would be the GBPUSD. In order to confirm the potential hidden divergence, a reversal bar to the upside is required. But this currency could be “watched” for potential entry. Then the USDJPY also is close to the ATR but again, a reversal bar confirmation for the hidden divergence would be required.
Do the trades come in?
The GBPUSD closes under the white ATR and now the ATRs are flipped (one above and one below) so there are no longer viable trades are the GBPUSD using the simple and effective trading plan.
The USDJPY reaches up to the ATR but then forms a reversal bar to the downside with the Stochastics confirmation complete (hidden divergence on highs). Out of six currencies, the USDJPY has the only valid entry.