Simple Trading System Update

-
Good afternoon and Sunday everyone. I just wanted to post a quick update to highlight the many refinements I've made to my simple trading system. I've tried my hardest to condense and simplify as much as possible because it's very difficult for me to keep track of all of this stuff while trading. The more I can condense and simplify, the more I can remember and apply in trading every day. Let me know your questions or comments below, thanks!

Trade Process
Journal thoughts and emotions (context, sup/res, MMs, BO follow-through vs reversal pressure)
Trade the Best Setups (trading range reversal, BOPB, spike BO swing, trend PB)
Plan your trade (context, risk, targets, trade management plan)
Trade your plan (become systematic and rule governed intuitively, can always get back in)

Technical analysis
1. Context to the left (pattern), bet this continues
Trends are either in:
2. Trading ranges, then bet AGAINST trend traders, BLSH scalp
Trade reversals near top/bottom
a. get in where trend traders get out, especially if they had a great buy signal bar
b. get in where trend traders get in, especially if a great buy signal bar
3. Trends, then bet against reversal traders, scalp and swing
Trade with trend, don't trade reversals
a. get in where reversal traders get out, especially if they had a great sell signal bar
b. get in where reversal traders get in, especially if a great sell signal bar
4. Always-in direction (long or short)
5. Follow-through vs Reversal pressure

Risk
Initial Risk (swing H/L or signal bar)
Actual Risk (signal bar or entry bar)
Trade Management Risk (immediate two bar reversal, trailed swing Hs/Ls, or strong trend bars)

Targets
Trend Spikes/Breakouts
MM target based on height of the spike
Trend Channels or Trading Ranges
1st entry, 2R target+
2nd entry+ or excellent 1st entry signal bar, 1R target+

Patterns and Rules
Trend Spikes and Strong Channels (consecutive trend bars, little overlap, strong closes)
Bet trends succeed and reversals fail

Trading Ranges and Weak Channels (overlapping bars, many reversals, wicks)
Bet reversals succeed and trends fail at top/bottom of ranges

Always-in Direction
If you had to enter right now, would you go long or short?
Changes when major trendline breaks or after several bar spike reversal

Signal Bars
Good for the bulls (strong bull trend bar closing near the highs, small or no wicks)
Good for the bears (strong bear trend bar closing near the lows, small or no wicks)
Bad for both (doji bar, big wicks)

Positive Trader's Equation (1R vs 2R vs swing)
Low probability setup - uncertain trade - 2R target minimum
High probability setup - good looking trade - 1R target minimum

Support/Resistance
Importance is a function of times tested
HOD/LOD, daily, weekly, monthly
TLs, TCLs
MMs

"The ONE Thing" book ideas
#1 Master one trading niche and build progress one small step at a time
#2 Set a trading routine, stick to it, set punishments if you don't
#3 Find fun outside of work and trading

 Other Notes
Use “I don’t care” share size to trade objectively. "I'd rather be rich than right." -ModernRock.
The market has inertia and tends to keep doing what it has been doing.
Accept that trading is hard and comes with guaranteed losing trades (at least 30% of trades or more).
Stop caring about making a ton of money. Care about having fun, analyzing charts, and reviewing trades.

Best of Al Brooks Videos
Entries and Stops 
Probabilities and Actual Risk
Price targets, Initial risk, and Actual risk 
Always-in and Stops

Comments

Post a Comment

Popular posts from this blog

Why Trading Stocks is the Best Therapy in the World

-
I’m writing this post in an effort to condense numerous lessons I've learned from several different sources I've studied in the course of trying to become a better trader. Trading options and futures is a zero sum game--there is a winner for every loser. Equity trading isn't much better. Moreover, most traders fail (you can also consult the Google for several research papers that further support this point). Failure invokes powerful emotions and memories, that, as a result, invoke future behavior that tries to avoid failure at all costs. Furthermore, fear and greed become more commonplace--which insidiously undermines traders by influencing them to avoid the very trading rules that gave them an edge in the market in the first place. Any edge in the market can be easily and effortlessly undone by emotion.
Read more

The Laws of Trading

-
Disclaimer Trading is one of the hardest endeavors/professions on the planet. Navy SEAL BUDS selection graduates a higher percentage of trainees than the percentage of successful traders . So if you aspire to become a successful trader and want to smoothen your learning curve now, review these Laws of Trading. Let me know your thoughts in the comments below. A successful trader needs a growth mindset (my skills can always be improved) instead of a fixed mindset (my skills cannot be improved because of excuse X, Y, and/or Z). Watch this video by Stanford University professor Carol Dweck, Ph.D., on the power of a growth mindset. Or check out this shorter and just as great video by Bite Size Psych about the growth mindset and how it's absolutely vital to success in any endeavor. Discover your vision of the future. What do you want your ideal future to look, feel and sound like? A clear vision helps identify the right goals to navigate you to your personal idea of success. Bu
Read more

How to Perform F2G Technical Analysis

-
Image
Disclaimer I use technical analysis instead of fundamental analysis to take as much money from the markets as possible for several reasons. The most important reason is that a stock's price chart reveals areas where I have a higher probability of making money. A close second reason is that "Only price pays" - Brian Shannon aka @AlphaTrends . Everything else is noise in my opinion. Lakai (the most successful futures trader I follow)  and many other successful traders ( especially Tim Grittani ) taught me to keep things simple and master your trading niche. These lessons helped me crush the trading competition at work by turning $100k into $214k in just two weeks! The closest competitor to me turned $100k into $169k! But back to why technical analysis is so essential to extracting money from the markets. For example, Apple could crush earnings and for some reason the stock sells off. This happens to many stocks every quarter, year in and year out. Why not cut out the
Read more