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A bit overdue, but here are some of the changes that I've made to my original rules. I've failed on my weekly goals on this for the last 2 weeks and I won't fail a 3rd!
So here it goes!
My Golden Risk Management Rules These are rules that I will not break under any circumstance. As I develop as a trader I will be tweaking the numbers on these rules, and introduce additional rules.
Max 1% risk per trade
Max 2.5% loss per day - This is down from 3.5% loss per day
Max 5% loss per week - This is down from 7% loss per week
Max 10% loss per month - This is down from 12% loss per month
Should I break these rules under any circumstance (within my control), I will not trade the next day as a 'penalty'.
These will be tweaked in the future once I start trading 2 contracts.
Rationale for the changes -
Daily - As I am currently only risking 1 contract, and doing a max of ~4 trades per day, there is no reason to have these up so high on a daily basis.
Weekly - I would have to lose 10-12 trades in a row for me to hit this, and if I'm doing that bad I need to stop
Monthly - This would be about 2-2.5 weeks of straight losses or 3-4 weeks of mostly losses to hit this. Again, if I am doing this bad I should definitely take a breather
My Silver Risk Management Rules These are similar to my golden rules in the sense that I don't want to break these under any circumstance. However, right now I am not emotionally strong enough to never break them. I read these every day to myself before the market opens to remind myself though.
I now feel I am strong enough psychologically to enforce this rules all the time, but I'm still going to differentiate between these rules and the golden rules. I don't plan on ever breaking these rules, but I am not going to penalize myself with 1 day of no-trading should I break them.
Walk away if you feel emotionally unstable
If you execute a 'bad’ trade, walk away for 5 minutes - Changed to 1 instead of 2
If you execute 1 ‘really bad’ trade, walk away for 15 minutes - Changed to 15 minutes
You will not take any pre-market setup that is not already part of your trading plan
How I grade my trades Shortly after starting to trade I realized that grading performance on P/L isn't effective. I decided to come up with a way of grading my trades that is tailored to my issues. I’ve been using this every day and it needs some tweaking
Really Bad
Not in plan
Knew I shouldn’t have entered or Past my trade limit
or I made some execution mistakes on a ‘bad’ trade
Bad
Not in plan
Bad entry point or target
Feels like a gamble
Ok
It may or may not have been part of my setup plans but at least aligned to my scenarios
Some signs were there
Decent (but not good) target and/or stop
Good
It was in the plan
Observed signs of entry
Good target and stop
Excellent
Everything a good trade has but also adapted to the market either by modifying entry for better potential, or exited early/late depending on the market conditions
The one thing I want to add is that trades can move up and down this list based on how I execute based on my trade management rules. If I execute everything well, an 'Ok' trade can become a 'Good' trade. If I execute bad, an 'Ok' trade can become a 'Bad' trade.
I'll have to find a way to measure this meaningfully and as to whether or not this will be effective. Time will tell.
Trade management process / rules
New addition
Dos
Once you enter into a trade, move your stop and target to adjust to your market expectations
Screenshot entry, and enter data into spreadsheet
Add alarms for 8, 10, and 12 pts of profit
Do not move your stop / target for at least 8 points your way. If you get stopped out, then you get stopped out.
Consider moving stop up after 8-10 pts
Guarantee profit (or B/E) with stop once up 12-15 points
If aiming for higher targets you must secure a higher guaranteed profit through your stop
Do Nots
Do not move target more than 3 times
Do not move stop more than 3 times after securing a profit
This sounds confusing at first, but I think I need a starting point and I can tweak it later.
I feel that this process puts most of the weight into entering the trade. I'm in the best state of mind when it comes to trading when I'm not in a trade that skews my bias.
Will I take some losses because I am choosing not to micromanage my trade once I get into a trade? Yes, but my data has shown that I lose more money by managing my trades bad, than I do by exiting a bad trade early.
As I grow as a trader, I can change this.
Any thoughts would be greatly appreciated.
Cheers.
Yesterday's excellence is today's standard and tomorrow's mediocrity
International trtade came in at a bigger deficit than expected, although not that big. First time this year that it's a higher % change over last year though
Productivity came in lower than consensus, but within consensus range
Unit labour costs above consensus, but within consensus range
Open up bull until we hit the ~4800 area, fail to go higher and trend down until we find a strong support zone. This could be ~75 (ON Low), ~55, or ~40. Then range between those 2 points for the rest of the day
Open up bull, test the 4800 but we don't break it. We then pullback a bit close to the 75-80 area, we continue bull move up but we don't break the 4825 area
Open up bull, hit the 4800 area and trend bear for the rest of the day or until ~4720
Open up bear until we find a resistance zone at either ~4775, ~4755, ~4768 or ~4740. Trend bull for the rest of the day but not quite break the 4800 area
Open up bear until we find a resistance zone at either ~4775 or ~4768 or ~4755, move up bull and slightly break 4800
Open up bear until we find a resistance zone at either ~4775 or ~4768 or ~4755, then move up bull, break the 4800 a
Areas I want to enter that align to my scenarios
NAme change from setups I'll take as I'm really looking to align setups to my scenarios. These are just areas that I'm looking for entry / exit points.
~4825
LF Short
Exhaustion or reversal signs should be present
Stop behind 4830 is ideal
Safe target is 4812, stretch target is 4803, 3rd stretch is 4793
Be careful about the time of the day when taking this
~4825
LF Long
You are looking for strong continuation of a bull trend
Not expected in my scenarios, but just because my scenarios don't take it into account doesn't mean it's not possible
You need to see some very strong buying
14day RTH volume starts to pick up after the 30 mark, so keep that in mind
Safe target is 14 pts, stretch is 4837
Do not hold past 4840 mark unless news calls for it
~4800
LF Long
You are looking for a break out trade here
You want to see force
Be careful about entering a pre break out setup, as we could see some resistance ~ 4805
Think about timing when entering this
Safe stop behind 4795
Safe target is 4814, stretch is 4818, super stretch is 4823
Don't get greedy on this
~4800
LF Short
You are looking for strong reversal signs
Stop behind 4806 is ideal
Target 4882 is safe, 4876 is stretch, 4768 is stretch, 4758 is 4th stretch, must secure 15 pts of profit to aim for this
~4775 (ON Low)
LF Long
You are looking for signs that this is the support zone our scenarios are looking for
Stop behind 4768 is ideal
Safe target is 4789, stretch is 4794, 3rd stretch is 4798. If we hit this early and the sentiment is strongly bullish then consider holding past the 4800 mark, but make sure that you move stops up to guarantee 10-12+pts of profit
~4768
LF Long
You are looking for signs that this is the support zone our scenarios are looking for
Stop behind 4760 is ideal, but might be tough to get
Safe target is 4789, stretch is 4794, 3rd stretch is 4798. If we hit this early and the sentiment is strongly bullish then consider holding past the 4800 mark, but make sure that you move stops up to guarantee 15+pts of profit
Watch ON Low for a potential reveresal
~4768
LF Short
You are looking for a break out trade here
This setup is very hard to take because 4760, 4755, and 4750 could all be at play to reverse this trend. So take that into account and don't get into this unless we see a strong move
Safe stop is behind 4775
Safe target is 4756, stretch is 4752, 3rd stretch is 4746 but guarantee 12 pts of profits for it
~4755
LF Long
You are looking for signs that this is the zone where we will reverse
Stop behind 4748 is ideal
Safe target is 4774, stretch is 4786, 3rd stretch is 4794, You may hold for 4800+ if we hit this area early and the sentiment is strongly bullish, but guarantee 20 pts of profit to do so
~4755
LF Short
You are looking for a continued break down trade here
Tough trade to take as there's only one target that you'll want to aim for that doesn't depend on there being OTF driving prices down
Safe target is 4742, stretch is 4731 but only if we break through 4740 easily
~4740
LF Long
Stop behind 4737 is almost a must
Safe target is 4754, stretch is 4764, 3rd stretch is 4774, 4th stretch is 4778, you can aim for higher but must secure a 25 pt+ profit
~4740
LF Short
You are looking for a continued bearish sentiment trade
We are in a bear trend day is the only reason why you would take this
Aim for the 2 best trades of the day. Only take a 3rd if losing it won't net you more than a 0.75% loss for the day. Only take a 4th if you will still be up 0.75% despite a loss
Re-read your psychology prep every hour while trading
Remember, you are going in assuming that things will be slow, don't go crazy on FOMO just because things are moving fast. You are however pretty prepared for things to go off on either side.
Yesterday's excellence is today's standard and tomorrow's mediocrity
Boring day today, 0 trades taken. I haven't done that in a while
About 10 minutes into the open I was going to take a long at ~ 4768 area, but it came down to 4768.50 for just a couple of seconds before it bounced up.
I was expecting a bigger drop to ~ 4765 so I could hop on board ~ 4767, it didn't end up happening.
Then when the market got near yesterday's high I was hoping we'd see the 4799 area at least tested as I had an order at 4798.50 ready to go. Again, this wasn't filled and I chose not to chase it.
Apart from those 2 times, I never got close to taking another trade again for the day.
Aim for the 2 best trades of the day. Only take a 3rd if losing it won't net you more than a 0.75% loss for the day. Only take a 4th if you will still be up 0.75% despite a loss- Passed
Do not look at P&L- Passed
Re-read your psychology prep every hour while trading- Passed
Let's hope tomorrow picks up, see you then!
Yesterday's excellence is today's standard and tomorrow's mediocrity
4768 area tested 4 times in last 2 days, did not get there ON
4795 being tested 4 times in last 2 days, twice ON
One of these is more likely to give today, question is which one will do it first?
Biotech is down today, GILD, CELG, BIIB, and REGN all down more than 1%
Banks are slightly in the red pre open
CL close to the 50 area
News
Job Openings @ 10
EIA Report @ 1030- I normally don't care about this but with ups and downs lately in CL, this might be worth taking a look
BoC announcement @ 10
Costco earnings Post-Close
Japan GDP @ 650
Scenarios
Continue bear ON movement until we find some strong resistance. This might be the 4768 area again, we pullback from this until we find a good resistance area, we then trend and break the 4768 area, head to 4740. Trend between that and the ON high for the rest of the day
Correct the ON move and open up bullish, until we find a strong resistance area. We then move down and break the 4768 area and trend bear until at least the 50 or 40 area. We then move up but we don't break the 4768 area on the bulls ide
Open up bull correcting the ON move, we then move into 4800 territory, we pullback from that at first contact and break it on 2nd contact
Open up bull correcting the ON move, we again test the 4800 area but for one reason or another we again fail to break it, we then trend bear for the rest of the day, potentially breaking the 4768 area
Open up bull correcting the ON move, we test 4800, we move down and can't break 4768, same day as yesterday
Continue bear ON movement until we find some strong resistance. This might be the 4768 area again, range between those 2 points - same as yesterday
Setups I'll take section
I'm going to try something new today. I won't be having 'setups I'll take'. I've highlighted certain support / resistance areas and I will trade them based on my 'scenarios'.
Aim for the 2 best trades of the day. Only take a 3rd if losing it won't net you more than a 0.75% loss for the day. Only take a 4th if you will still be up 0.75% despite a loss
I saw your grading trades post.
I was wondering if you considered measuring your mental aspects on a scale as well as your technical ones.?
Grading before, during, after.
I took 3 trades today. I lost 2, made 2 ticks on one (break even)
Not a good day to be a bear lol
First trade taken
Opening looks bearish. I wait for the market to move up slightly as I do expect a pullback and then I get in.
Unfortunately I got in about 2 points too early and did not survive the pullback.
Trade grade - Ok
It may or may not have been part of my setup plans but at least aligned to my scenarios
Some signs were there
Decent (but not good) target and/or stop
Second trade taken
I was still confident with the scenario and I hadn't seen any reason that I was wrong, apart from picking a bad entry point.
So I get into the trade again.
I expected to go sideways after slightly breaking the bottom, but I did not expect it to shoot up after that. At least not yet...
Trade grade – Ok
It may or may not have been part of my setup plans but at least aligned to my scenarios
Some signs were there
Decent (but not good) target and/or stop
Third trade taken
Over here I'm still thinking that the same scenario is about to happen. We are going to trend down and break the 2 day balance area low. So I wait for a pullback, I look for signs of a reversal, and I look to get as good of an entry as possible.
Entry point was great, stop was great, target was great, everything I want to see in a trade was there.
I ended up being wrong, which is okay. But I'm wondering if my bias didn't allow me to see things clearly? I definitely missed something.
Aim for the 2 best trades of the day. Only take a 3rd if losing it won't net you more than a 0.75% loss for the day. Only take a 4th if you will still be up 0.75% despite a loss- Passed
DO not look at P&L- Failed, I needed to see whether 3rd trade loss would put me less than 0.75% for the day
Re-read your psychology prep every hour while trading- Failed, but I didn't trade that long
I'm wondering if the 2nd last goal needs to be adjusted. I need to look at whether or not I meet the criteria to take a 3rd and 4th trade, so I will almost always need to look at my P&L unless I win both trades
I'll tweak it tomorrow.
Overview Not a good day to be a bear, that's for sure.
I was expecting to either break the 4800 or the 4768 mark today, and I chose wrong that we were going to sell off on the short side lol
We saw some OTF step in and raise the price. 200% Relative volume on an hour basis right after lunch, wow. Wonder what happened there...
For a day where I'm pretty wrong on what's going to happen, I ended in the red less than 10 pts so I'm ok with that.
See you tomorrow!
Yesterday's excellence is today's standard and tomorrow's mediocrity
So I tried something a bit different today when it came to my prep. Instead of detailing the potential setups I should take (based on my different scenarios), I didn't highlight any setups to take and would trade strictly off my scenarios. I feel this will give me better results and honestly I'm just trying it out. I'm not one to change things after ONE failed attempt, but here are my thoughts.
It obviously didn't work out today.
The big fault I have right now is that I'm not good enough of a trader to be able to switch scenarios on the fly. Today I traded the scenario that we were going to break the 4768 area and trend to 50-40 area. All 3 trades were aligned to that, and I did not change that at all. I got too tied up with one scenario and when that scenario was wrong, I didn't make money. The first and second trade I think were good to do. I had signs that the scenario was happening, and the first one I got killed by pullback and in the second one I wasn't proven wrong until AFTER I got into the trade (and I didn't lose money on it).
However, for the 3rd trade, I don't know if I did good or not. Was I already set on the scenario? Were the signs for the same scenario still strong? Did i unconsciously ignore the signs that the scenario was no longer valid? I don't know honestly. But something went wrong because thinking about it, I didn't even consider the option that we could trend to the 4850 area
I like this approach to scenarios and not setups, but I think I need a better process to doing it. I don't know what that would look like yet though, I'll have to give it some thought in the next few weeks. For now, I'll go back to my 'setups I'll take today'. Those give me sufficient flexibility and are aligned to my scenarios either way.
Also, I found it a bit hard to grade my trades because how do I grade what is a good entry point? When I'm looking for a long setup at let's say 4,500 and I take a long at 4512, yeah that's not a good entry point. But when my scenario is to go long, how do I say whether something is a good entry or not? I mean I can grade it after the fact, but I don't know the future when I take the trade.
Today I graded my 3rd trade as having a good entry point, but that's just how I felt when I took the trade. I don't want to start grading my trades on my 'feelings', because then I leave my grading system open to unconscious correction. It needs to be backed by something that I can say based on data "yes, that was a good entry point"
Another thing I'll have to think about
Feel free to comment or ask questions about this, I'd love some input.
Cheers!
Yesterday's excellence is today's standard and tomorrow's mediocrity
A defense or counter attack in something like a sport in response can be done before, during or after.
There are other subtleties, but those are the basics in almost anything and good reference points to start with.
I recognized it in part in a doctors office where there was a sign for foreigners with a happy face(10)to crying face(1), with other faces in between.
For Trading.
Breaking grading down to Before, During, After... with grades of 1to10 is a decent way to do it than grading something 1x using horrible, weak, average, good and super.
I would consider grading
Technical 1 to 10
*Entry - timing, placement
*Exit - ^
Mental using 1-10 with notes you could grade your composure, confidence or anything else you feel of merit to track
*Before -
*During -
*After -
1 could be you felt horrible and scared with 10 being your percieved ideal state.
Note these grades are relative, but give you a piece to anchor off of and reflect.
Even low range during Draghi's announcement, although we did have a spike in volume at ~ 8EST (800% relative volume). This left a big wick so although I wasn't there to see it, I'm assuming that we saw a big amount of buying that didn't let price fall more than 10 points
We have been on a 4 day bull run, low range day followed by trend day. If that pattern continues we would see a low range day, although not likely with Draghi's conference and Friday tomorrow
With a big move up yesterday, do we have a reason to trend bear? Or are we going to continue this until we get to new all-time highs? We are about 80 points below NQ's all time highs
Jobless claims came in a bit higher than consensus, but not enough to create a down move
No key news today
EU extending bond buying program to March
Scenarios
Open up slightly bearish to ON low, we see some strong buying there and we push up. We break the 55 area and continue our bull move. We might see some slowing down and a pullback at ~4870-4875, but we don't see strong resistance until 4880. We then range between 4880 and 4840
Open up slightly bearish until ON low, we then continue the bull move until ~ 4900, we then pullback to close between 4880 and 4860
Market opens up bull until ON high, we then move down to ON low and break it. We continue trending bear until we find a strong support zone, we then continue our bull rally
Market opens up slightly bull and we just inch past the 4855 area, we trend bear for the rest of the day until ~4820 or ~4800
Market hasn't wanted to close above 4880 on the bull side since October 24th
Stop behind 4905 is ideal, although might not get that close
Safe target is 4883, stretch is 4876, 3rd stretch is 4861 but guarantee 18 pts of profit to aim for that
~4880
LF Short
You are looking for longer term exhaustion signs or daily reversal signs
Stop behind 4885 is ideal
Safe target is 4863, stretch is 4856, 3rd stretch is 4851, 4th stretch is 4842 but you must guarantee 20 points of profit to aim for it
~4855 (PDH)
LF Short
You are looking for reversal signs
Stop behind 4856 is a must, behind 4860 is ideal
Safe target is 4836, stretch is 4831, 3rd stretch is 4826. Don't aim for anything higher unless we see some OTF selling
~4855 (PDH)
LF Long
You are looking for a break out trade here
Stop behind 4850 is ideal
Safe target is 4874, stretch is 4879, 3rd stretch is 4884, 4th stretch if we look like we are having a bull day is 4897 but you must guarantee 20 points of profit to aim for it
~4840 (ON Low)
LF Long
You are looking for a reversal here
We might not be at this area for a while so you want to be prepared
Stop behind 4835 is ideal
Safe target is 4854, stretch target is 4863, 3rd stretch is 4869, 4th stretch is 4874 and you could ohld for more but you must secure 15-20-25 pts of profit depending on the target
~4840 (ON Low)
LF Short
You are looking for a break down trade
Stop behind 4840 is ideal
Safe target is 4826, stretch is 4821, 3rd stretch is 4816
~4820
LF Long
You are looking for signs of a reversal
Stop behind 4815 is ideal
Safe target is 4833, stretch is 4838, 3rd stretch is 4847