Overview

This course module covers the fundamentals every trader should be familiar with and act as the foundation for developing your comprehensive trading plan.    

Learning outcomes

At the successful completion of this course, you should be able to:  

01

 

• describe the 3 key pillars of the plan,
• answer the 5 Ws of What, Why, Who, When, Where and the How of your trading,
• differentiate between monetary, human and intellectual capital, and
• complete the corresponding sections in the trading plan template.

   

02

 

• explain the various costs of your trading business,
• evaluate the probabilities of win and loss trades,
• objectively assess the viability of active day trading,
• describe the critical input factors for successful trading,
• weigh the advantages and disadvantages of trading your own or other people's money, and
• set both general and specific SMART goals in your trading.

   

03

 

• explain how cognitive biases may influence your trading decisions,
• evaluate your own strengths and weaknesses related to your trading,
• apply methods to recognize your cognitive biases and mitigate and/or eliminate them,
• understand how emotions may impact your trading decisions,
• differentiate between temporary and permanent stress reactions, and
• use regulation techniques to control emotions and remove unfavorable emotions from your everyday trading.

 

04

 

• describe how changes in various input variable impact probability distributions,
• use trade- and time-based risk limits to avoid catastrophic loss of your trading account,
• perform simple Monte-Carlo simulations and interpret corresponding probability distributions,
• calculate the expectancy value and risk-over-reward ratio of a trading strategy,
• use the Kelly Criterion to define optimal position size and loss limits, and
• select corresponding trading vehicles that match your risk profile.