List of Trading Rules!

Discussion in 'Trading' started by EMini-Player, Sep 10, 2003.

  1. It's worth giving up some potentially 'good trades' if you can increase your chances for the other trades. Remember, it's about optimizing the way you make money. You want to get your hitrate up, profit-per-cycle up, risk-per-trade down, stops smaller etc etc. and last but not least save on commissions through overtrading.

    You should try to statistically quantify what you mean with "some good trades". I suspect you'll find that in reality you will enter a lot more dogs that way. Don't trust me. Try it yourself.

    ~Scientist
     
    #31     Sep 11, 2003
  2. lescor

    lescor

    The number one rule that governs my trading is that I absolutely do not know what will happen next. I can have hunches and figure probabilities and put money on them. But I never allow myself to think I KNOW what will happen. This makes taking losses pretty easy.

    2. When the day is over, forget about it. Assess what you did right and wrong, make notes or write in a journal or something. But when you power down the monitors, let your frustrations or gleefulness be gone. Come in the next day fresh.

    3. Don't stress over the daily P/L. Trading is a journey and you need to look at the bigger picture. It's a numbers game and the occasional bad day, or even a string of them, is a statistical probability at some point. You need to look past the trees and see the forest. This viewpoint makes it easier to follow rule #2.

    4. Be humble. No matter how hot a hand you have, keep it in perspective. Bragging about how you're killing it is bush league. A true professional (in any endeavor) keeps things in perspective and knows that things will come full circle at some point.

    And one of my favorites from Todd Harrison- Hope is not a viable strategy.
     
    #32     Sep 11, 2003
  3. mg_mg

    mg_mg

    One more rule: unless you truly believe an indicator, otherwise take it from your indicator list. Only work with what you truly believe, this avoid second-guesses.
     
    #33     Sep 12, 2003
  4. ROFL

    Best

    Natalie

    p.s. My biggest rule - The market is always right - don't fight it - go with it...
     
    #34     Sep 12, 2003
  5. I have a simple method for this.

    I work with fairly tight stops. I look at the trade as it is presenting, where my stop would be etc. Then look to place the order where my stop would be (providing that my new stop level is far enough away to hold). This is based upon small stops almost always get taken out, so that is the place to get in. If the new stop level is still likely to get taken out or tested close to it, then move the price level for entry down a bit more and the stop with it until the best balance is found. That way I am getting close to optimal entry price and a better profit potnetial from the move.

    I might miss 1 or 2 trades that way, but overall it's worth missing an entry point or two because it's just a touch further than the market does go back, and anyway there's always another good entry point just around the corner...

    Best

    Natalie
     
    #35     Sep 12, 2003
  6. LOL! Excellent, Natalie! Now this really is a tactic - And it's a pretty ingenious trading secret revealed... :p

    I do exactly the same thing. People always ask me how I can use such small stops on the futs.
    I tell them I just subtract the average "fake-range" of the issue.

    Basically, like the discount I was talking about, the big boys want to have a good 'discount', too (they almost only trade on discounts as a matter of fact). So whenever people see an entry, they put in like 3-point stops in order to protect themselves from the adverse price-excursions of discount/stop - hounding pro's. Why?

    It's like: How can people assume that they can get into the market at current price and still turn a profit when 100,000 other people are seeing the same obvious thing? If it's not the pro's doing size themselves, it's the market that will always be trying to get a discount to shake out the majority of people before continuing wherever it needs to go / the smart money wants it to go.

    Essentially, "the market", or more clearly the sum of it's smart money participants tends to continue only when the largest number of participants has been shaken out and the smallest number of participants is still holding on, to take money off the largest part of participants. This is a fundamental requirement in any zero-sum game.

    I.e. now the majority of people are convinced that price is going to continue down, the ask is fat with dumb money bears, and the smart money bulls are looking at a great feast of bear-meat, giving them huge buying momentum. This is often graphically reflected by the pullbacks or dips that occur before a large breakout.

    A lot of people just don't understand this. They think "go with the flow" and "heavy ask means more sellers and price will go down".
    They'll all be fried bear-meat sooner or later.

    The reverse applies for a downmove, of course.

    It's like the Titanic : There weren't enough vessels to get everybody in. They had to hit the swimmers trying to get in the boats on the heads with paddles to keep their own boats from sinking. Hardly anybody talks about this today because it seems so cruel. However, the market does exactly the same thing everyday. The 'ships' in the market are trends / moves and they keep travelling, hitting icebergs and sinking, all day long.

    If you use flaw cards and logs like Jack Hershey teaches, you can even identify these "icebergs" before all the others do and sneak off the ship long before panic breaks out.

    So, as a conclusion of all this, we'll have to almost assume that small stops WILL get taken out via stop-hounding, so why not subtract that from a large stop in the first place and halve your stops? This way I can, rather than using a 3 pt-stop, use a 1.5 pt stop and literally halve my risk and almost double my returns. There are still so many traders out there using 3-pt stops in the ES today, I can't comprehend it.

    Well, this is the (comprehensive) answer as to why I advocate small stops... :)

    Compliments,
    ~Scientist
     
    #36     Sep 12, 2003
  7. Simple common sense.

    If every time you take a trade- your stop gets taken out and the move then continues in the direction you called it etc., then you just call the trades in the usual way (don't change that bit) but get in where your stop used to be and you end up with winners instead of losers from stops...

    Best
    Natalie

    It is better to be the shark than the shark's dinner.
     
    #37     Sep 12, 2003
  8. Yeah. Precisely! To even refine this to perfection, you can use stop logs like Jack Hershey, giving you a diary-type statistic as to where stops are usualy taken out and then turn the skewer around by putting your entry stops there! :D

    Doing it this way, you can almost triple your profit-making potential, it's absolutely phenomenal.

    Not many people seemed to even bother listening when Jack was talking about these brilliant methods. It's a real shame he's left ET. :(


    Compliments,
    ~Scientist
     
    #38     Sep 12, 2003
  9. LOL! And that from the trader who sees trading as a process of "squeezing an orange" rather than a fight for survival? :p
     
    #39     Sep 12, 2003
  10. Maybe I should add them both as a signature line??? LOL

    Anyway - I don't think the shark has to fight his/her dinner - it's a kind of uneven contest don't you think? - to the shark eating dinner is probably more like squeezing juice out of an orange... :)

    Best

    Natalie
     
    #40     Sep 12, 2003