Monday, January 19, 2009

My Trading Rules

I'm going to use this post to keep track of some common sense trading rules:
  1. Do Not put on a trade if you're on a time crunch
  2. Do Not put on a trade in the first half hour (8:30 AM - 9:00 AM Central)
  3. Do Not put on a trade if you're frustrated or not in a calm mindset
  4. Do Not rush into a trade. If you feel like the trade is running away from you, Let It Go! There will be another setup a few minutes later.
  5. Do Not widen your stop once you're in the trade.
  6. If Price is above the Mid-Point; Only take Longs unless Price is rejecting a higher area of resistance such as the Upper Value Area.
  7. If Price is below the Mid-Point; Only take Shorts unless Price is rejecting a lower area of support such as the Lower Value Area.
  8. Do not even attempt to catch an absolute Top or Bottom. Let price make a higher low prior to going Long from a Bottom; and let price make a lower high before taking a short position from a Top.
This is a working document and will continuously be updated as I pay my dues and the market teaches me more lessons. Btw, the learning never stops!


  1. Sounds like solid ideas and relatively cheap tuition! Win Win!

  2. how do you define your mid point?

  3. Mid-point is the average price for the day. Simple formula:
    (High of Day + Low of Day)/2

    I have an indicator that dynamically plots the mid-point in real-time. So when a new high is made, the mid-point automatically adjusts on my chart. The mid-point is the white or gray looking line on the Balance Charts I post, and you can see how the mid-point slopes up and down with price action.

  4. and what is your strategy??

  5. Anon, you'll have to search and read through my existing posts to figure that out. My end of day annotated charts pretty much tell how I read and interpret the markets.

  6. What made you change your mind and delete the rule about trading the first 30 min? I ask because I used to think I should ONLY trade the first half an hour and lately have thought I NEVER should. Thanks, great stuff.

  7. Nymeca, these rules were posted on the Blog over a year ago, and at that time I found the early trading to be too hectic and fast for me. But with more experience and proper preparation, I'm now able to take some trades early in the morning as well. I'm still extra cautious during the first 30 minutes since it's a high volume and emotionally charged time of day, but I've eliminated the hard rule to allow myself to capitalize on setups regardless of when they show up. Lately, some of the best setups are actually prior to the U.S. cash open.

  8. Do you trade only one lot? I have been trading 5 lots before but have been losing a lot, eg moving stop loss, breaks because I am unaware of the S and R.Now I am happy that I am learning a lot from a 26 yo genius. Now its ok to ask how many ticks you win in a day or whats your batting ave. with your trading. Keep p the grerat site.

  9. travelbug, the most I've ever traded in the ES is 10 contracts. I usually stick with 1-3 contracts. I'll be increasing size once I've transitioned to trading full-time.

  10. Hi
    great site you my first time here
    Just like to know what time frame you are using
    Is it chicago time session begin 3:15 and close 3:30 Or something diifernt?

  11. Yes, all times on the Blog are Chicago/central times.

  12. I notice many of your rules are phrased as "Do not..." Why not state the rule positively? Like "I trade only when I'm calm and relaxed." This way it's more of a directive to your mind. From what I have read about hypnosis and affirmations, the subconscious doesn't understand "don't" and u may be suggesting to your subconscious to do something that is the opposite of what u really want.


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