Friday, June 05, 2009

The Trader's Business Plan Review

The Trader's Business Plan is an important starting point for anyone interested in the business of trading. Trading is about capital preservation but handling the business of trading is about managing the emotions involved in preserving and growing that capital. Having built an account up from nothing and given the majority back on the failings of a constructive plan I can dwell on the benefits of a plan in hindsight.

The Traders Business Plan offers a simple goal:

To provide you with the structure and tools necessary to create a thorough trading plan that will prepare you to achieve long-term trading success.

So what does Traders Business Plan offer?

The Trader's Business Plan sets out to make your trading a successful business and not a losing excuse for a hobby. There are four core areas The Trader's Business Plan offers:

[1] Organisation
[2] Analysis
[3] Trading Psychology
[4] Trading Business Entity Creation

The first step defines and monitors your trading habits. It is unclear as to whether the organisation of the "information you have now" includes the ability to process existing trades such as a CSV import from a brokerage account but as the company states:

The Trader’s Business Plan is a patent pending process of structure and organization that incorporates trading objectives, defines rules and routines, establishes trading goals, tracks trades and expenses, and logs the time spent running your trading business.

Once information is processed a trading plan is developed. Webinars are available to help and look to be scheduled once a week on Wednesday's at 9:00pm ET.

I was given an opportunity to try their Trading Psychology Test. I have not included screenshots from the test to maintain test integrity. I did think the test was very useful but part of me would have liked to have stopped/saved at some point (although I admit I started late at night which is probably not the best time to do this test; take the test at time when you are normally trading to get the most out of it). [*Update* you can stop the psych test and it will save all of your answers up to that point. Then, when you go back, you will pick up where you left off. I will include more instructions on this at the beginning of the test to clarify so users know this is the case.] Suffice to say, it had no problem picking out my flaws, especially the charge of over-analyzing!

My results were processed into a 25 page PDF document containing background information on each aspect of the test and how your scored with respect to each. The psychology test is a premium service and costs $199 ($349 for both it and the plan development program) but for readers of this review The Trader's Business Plan has offered a rate of $149 for the test or $269 or both test and the plan development program - just use the promo code "discount" on registering.

Upon logging into my account a wide range of video tutorials were available:

These covered the basics of the site but also how to create your business plan. Each step of the process includes a video tutorial

The Business Plan Included:

[1] Cover Sheet: Name of Company and Principals of the Company
[2] Objectives: Mission and Vision Statement but also a trading calculator. For the purposes of this review I wanted to know how big an account I would need for a $2,000 monthly income in a 23% Fed/State Tax Bracket, a projected Annual Return of 25% and a Growth Surplus of $10,000. The Trader's Business Plan calculated I needed an acccount of $158,675

[3] Personal Summary: Define your goals, trading environment and add accounts.
[4] Routines: A diary to outline the to-dos over daily, weekly, monthly, quarterly and annually timeframes
[5] Market Forecasting
[6] Money Management (Limited to text based rules)
[7] Trading Rules (text based rules)
[8] Trading Goals: Broken down into actionable steps
[9] Results and Analysis: Can only be completed once a trading account is defined
[10] Market Observarions
[11] Expenses. This is handily broken down into categories and automatically keeps tally of the totals

[12] Retirement/401K
[13] Time Log: Keep track of the number of hours worked
[14] Trade Log: Enter trades but there didn't appear to be a running total view for the trades entered. A day trader would find this process cumbersome with no means to import trades(?) [*UPDATE*: There will be a batch upload feature that will allow for importing trades in bulk provided the columns get formatted the right way. That update should be in place within a matter of days, so users will have a CSV import function soon.]
[15] Print the Plan: All of the previous information is converted into a PDF file
[16] Print Trade Log: As above, but listing trades only.

As I had not entered a series of trades I can't comment on the Analyze option on the main menu bar but the options are given to apply two filters which presumably breaks down the trades into its component types e.g. stock, currency and complex option trades.

A mentoring service is also available for subscribers featuring 10 structured sessions and supporting PDF manual. There is also a more pricey one-on-one mentoring service. A newly created forum is also available for members.

The company offers consultations which can answer queries or can be contacted directly.

One of the most intriguing services was the all-in Trading Entity LLC Creation. Here The Trader's Business Plan will do the necessary haulage in setting up your trading plan as a fully fledged business. It would be good to see S-corporations as an alternative although there is more paperwork on the part of the business in maintaining S-corporation status. Where third party involvement is not required (such as the selling of research services) the LLC route is perhaps the easier route to take.

I really liked the all-in-one approach The Trader's Business Plan has put together. What you get out of it will depend on what you are prepared to put in; ultimately, the responsibility lies with you in defining your goals and there are no easy shortcuts here. The Psychology Test was nicely done and bar a couple of minor bugs (which will likely be corrected by the time you read this) the site worked very smoothly. Babak over at Traders Narrative ran an interview with Scott Beck of the Trader's Business Plan on how to write a business plan.

So if you are interested in taking the The Tradeer's Business Plan for a spin register for free and consider adding the Psychology test and/or plan development program at $149 each or $269 together (a greater than 20% discount) when you use the coupon code "discount".

The Trader's Business Plan has offered to give away a combo free psych test and free access to the trading development program of retail value of $398 (or $269 if using the promotion here). To win this prize you will need to pick a stock which will give the highest return over 22 trading days. To do this you will require registration with Zignals (free registration) as I will administrate this competition through our YourCall service.

[*POINT* One more thing: The Analyze tab has the ability to sort by five different filters including account, system used, trade type, long or short (credit or debit for options traders), and date range.]

How to win the Trader's Business Plan prize?

[1] Register at Zignals.
[2] Go to Charts and select a stock (you will be prompted to download Microsoft Silverlight)
[3] Click on the YourCall Icon

[4] Enter a Call by giving a stop and target price; make sure the Time Period is set to Short (month)

[5] Enter as many calls as you like up until the end of June; these can be long or short signals
[6] Send me your Zignals Userid so I can track the calls made ( or post it in the comments section of this post. In your email make reference to the competition.
[7] The Zignals member with the stock giving the highest return from either a target hit or expiration after 22 trading days will win the prize. Only stocks or FX prices listed on Zignals qualify for entry (no pink sheet stocks). The announcement of the prize winner will be made at the end of July.

Good luck!

For the purposes of disclosure I was compensated for my time to do this review.