LOL 6 out of 150 trading days ? So my simple rule is wrong 4% of the time. I'm sure you can show me lots after the fact.
Nothing wrong with going all in as long as you have a stop that fits your risk management. But even then sometimes things are out of your hands.
What Blotto is trying to say is you can do a lot of damage psychologically to yourself by trading live before you are ready. It will be hard to unlearn these bad habits.
Sorry in advance for the large number of questions, but I'm not sure how to implement this rule... What do you mean by cash? The futures, or the actual index / equity itself? Can you provide a concrete example using ES at some value and $SPX at another?
Cash is SPX. Cash closed at 80.29 So ~ 79 ES I don't follow gaps on es because the premium changes as it moves towards expiration. Cash stays constant.
Not to belabor the point, but how did you guys get over bad habits when you first started? How do you still break bad habits? If a "new" bad habit forms, what does it usually take to reconize the habit?
http://prismintraday.com/readings/Disciplined_Trader.pdf Sim is good for testing strategies and risk managment and getting familar with the platfrom. It is a great tool for development of edge. If your system is not profitable in sim first, then going live with itwill cause you to battle some serious emotional demons within.
I think I've got it now... Yesterday: ESU10 closed at 1079.25 $SPX closed at 1080.29 Let's suppose the mkt opened today with $SPX at 1082.00... your rule would say don't go long here because the gap is already higher than yesterday's close... simply don't go long with yesterday's $SPX close below the $SPX open today (presumably due to the risk of a gap fade at the open). I assume that would also work in similar manner for short positions... Is that a correct implementation of your rule?
From Trading in the Zone: by Mark Douglas A probabilistic mind-set pertaining to trading consists of five fundamental truths. 1 Anything can happen 2 You donât need to know what is going to happen next in order to make money. 3 There is a random distribution between wins and losses for any given set of variables that define an edge. 4 An edge is nothing more than an indication of a higher probability of one thing happening over another. 5 Every moment in the market is unique. <*)))><