Trading plan. Alexander Gerchik’s tips on how to do homework

Are You Doing Your Homework the Right Way?

16-10-2020

Does it ever happen to you that you entered the trade without following the trading plan but simply because the price of an instrument suddenly skyrocketed and you were itching to snatch the profit no matter what?

Or here’s another scenario. You are scolding yourself for making a losing trade while sticking to your trading plan while desperately looking for possible flaws in your strategies to make it absolutely perfect. Sound familiar?

Alexander Gerchik cannot afford trading recklessly without an everyday trading plan. He also doesn’t treat losing trades as a complete and utter disaster.

Trading plan: Alexander Gerchik’s comments

Alexander Gerchik believes that one of the biggest mistakes traders make is treating losing trades as terrible trades, although even the coolest traders do mistakes every now and again.

The statistic which includes 50% of profitable trades is considered solid. But in order to reach 70% of winning trades, you need to continuously improve your strategy and trading plan.

So, in essence, there’s no such thing as a good or a bad trade. There are simply trades that are made according to the specific scenario and those that violate it. This very scenario forms the backbone of the trading strategy’s success.

Trading plan: Tip from Alexander Gerchik

When the market opens, you don’t have much time for decision-making. If you are going to trade without doing proper homework and using a trading plan (example of Gerchik’s trading plan is given in the article), it will be very tough for you. Why? That’s because the human factor will eventually affect you.


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How Does Gerchik Do His Homework

During every webinar, Alexander Gerchik says that he doesn’t enter the market without an elaborate trading plan. Risk Manager solution helps you to eliminate a human factor and not get lost in a whirlwind of your thoughts when the market offers an entry.

Alexander Gerchik shares how he preps for the trading day. Watch the webinar at the end of this article and see it for yourself.

So, here are the rules on how to do homework correctly or how to create a trading plan

1. Create a file and write down scenarios for long and short trades (separately).

E.g.:

  • Tradable instrument
  • Level
  • ATR
  • Volume
  • Closing lirice
  • Comments

Trading plan: Homework example

2. Analyze instruments. In order for the assets to be included in this list (your homework list), you need to carefully examine them.

What To Know!

Alexander Gerchik chooses instruments that provide him with a clear picture of what’s happening in the market and the precise direction of the price movement.

3. Evaluate the potential of each instrument.

The evaluation plan looks as follows:

  • Make sure that you have a clear liicture of the instrument.
  • Analyze whether there is an accumulation in the channel and how long it lasts. The bigger the consolidation, the stronger the exlilosion.
  • Check out how the instrument behaves near levels (whether it “sticks” to them or breaks them out). When it sticks to them, there is a good chance to catch a solid lirice movement at the stage of its emergence.
  • Evaluate the quality of the false breakout of the levels, and see where the lirice of the instrument moved after the false breakout.

4. Fill out the table in accordance with your goals.

With a list of scenarios for each asset in front of you, you will be able to trade in a logical and unbiased manner. By doing homework, you will be able to avoid the human factor which pushes you to overstay positions or trying to catch up.

What else do traders forget about

They forget to analyze the performance of a particular scenario. Trading plan and trading journal are the go-to tools for successful trading. All trades, both losing and winning ones, need to be analyzed. Why? Because analysis is the one thing that can actually reveal whether or not your scenario works.

If the direction of the price for 70–80% of instruments was indicated correctly, you can safely trade this scenario. If not, it’s time to rethink your strategy.

Let’s sum it up

  • First. You must have a trading plan (scenario).
  • Second. You should check out how well it performs.
  • Third. All of your trades must be made according to the trading plan.

Last but not least, here’s another tip from Gerchik:

“Create a file named “My Perfect Trade.” When you see that the deal you made was actually perfect, you will understand what and how should be done to achieve that again and again.

May your trading plans always work. And don’t forget about the Risk Manager!


Watch Alexander Gerchik’s webinar to learn more about rules for doing trading homework.


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