Time to get Trading Rules into Place

Discussion in 'Strategy Building' started by KGTrader4, May 31, 2022.

  1. KGTrader4


    1. trade only ETFs, sector, industry and index
    2. Do not open positions in any ETF in a down trend
    3. Never Open a position under the 50 and 200 day EMA
    4. Never open a position when the 50 day is below the 200 day EMA
    5. Risk no more than 2% of total capital on 1 position
    6. Have no more than 10% of total capital at risk at any one time
    7. Limit loss on any one position to 8%

    Not sure about strategy , i.e., what i should be looking for in a setup Thinking breakouts, but not sure. So thinking that way but wont make it a formal rule yet.

    ab_trader and qwerty11 like this.
  2. BKR88


    Rules 3 & 4 could be viewed quickly with a ribbon indicator.
    ***Rules 3 & 4 eliminate the need for rule 2 IMO.
    ***Rule 6 not needed IMO. Why keep 90% of your account in cash? Keep ___% available for investment opportunities. Your "8%" rule protects the account.

    Last edited: May 31, 2022
    Axon likes this.
  3. tomkat22


    Cool.Where do you plan on taking profit on a position? Up 10%? 20%? Use a trailing stop? Scale out?
  4. KGTrader4


    Thanks for the feedback. i don’t think I have the ability to add ribbon indicators on Think or Swim, but I’ll check. But even without, it’s easy enough as I have the EMA’s on my charts as default.
    Re 10% I think you misunderstand, when I say max 10% of capital at risk, I mean total of max losses on all positions can’t be more than 10%
    Maybe that doesn’t work out, I should look at it, I didn’t do the math. If not I’ll adjust
  5. KGTrader4


    Trailing stops and scale out. I have found I don’t love hard initial targets. Since I’ll probably focus on position trading I’d want to let profits run
  6. easymon1


    Here's a tool that might be useful to get or to look at if you put one together in a spreadsheet.
  7. KGTrader4


    easymon1 likes this.
  8. SunTrader


    8. Read a good book or two or three or four (who knows how many) if market continues downtrend rest of year.

    Since it appears the rules above don't allow for going short. o_O
  9. KGTrader4


    Nah I don’t short. Just not my thing. Being a non professional trader I have the luxury of just sitting on my hands when necessary. something I find hard to do but know I need to work on
  10. SunTrader


    Sitting on hands, not going short, hard time following your rules .... that would be a non trader, professional or otherwise. Just sayin'
    #10     May 31, 2022