Greetings,
I was going thru files in order to get ready for '08 taxes and found some notes
I had scribed on a piece of pasteboard maybe 3 or 4 years ago entailing some things
that I would look for each day before trading. At one time, it was posted next to my monitor
so I could see it each day and remember/remind myself to repeat this routine.
Eventually, I knew to do these things by nature and incorporated them into my routine.
By having them stare me in the face day after day so as not to ignore or forget that part of the routine,
I found them helpful and avoided many nasty situations back then and would like to post them here.
I mostly day traded then and rarely kept any trades open for more than a few hours.
Not saying these should be your routines, these just were some that I found helpful
in locking in profits, keeping losses small enough to recover from and knowing when to stop .
These were my BIG 5:
1st) Yesterday's Range: High,Low and Last price @ 4:59PM Eastern
This provides the daily range for the daily candle just ended.
a) if Sunday, get Open,High,Low,Close to check for a post weekend gap.
b) has price already retraced a percentage of daily range just ended ?
2nd) Pivots for the day: have Daily PP, S1, R1, M1 and M3 loaded on the chart.
a) 5PM EST open: is price above or below Pivot or other significat level ?
b) current price (bid): is it at or near or over/under a significant level ?
3rd) open Hourly chart - What color is the candle ? Red or Green or Doji ?
a) Buy Green candles only. Sell Red candles only. Stand by if it is Doji.
b) compare 1HR to Larger time frame - look for both to be same color.
if not, use tighter stop or trade 1/2 size if counter to the trend
c) reversal/contra trades are okay after 3 or more candles same color.
d) If candle changes color, don't even ask - GET OUT. Wait for next one.
4th) Money management: use a stop. use a stop. always use a stop.....
(I wrote this dozens of times about half way down the page)also,
a) thresholds: 2% max loss per trade. Can be less but never more.
Daily: 5% Weekly 10% Monthly 20% if any of these levels are hit
trading must cease until the next period. End of story.
b) Profits: set limits within reason on each trade. each trade is different.
Daily: 10% Weekly 25% Monthly 50% if any of these levels are hit
trading must cease until the next period in order to protect profits.
c) No double down. Take the stop. Let it go. Wait for next candle.
d) remove some profits regularly, no less than twice per month. mandatory.
if no profit, no withdrawal = no money for you ;-(
5th) Preservation - Peace of Mind: No trading if any of the following:
tired, sleepy, sick, upset, pissed-off, waiting for visitor, phonecalls,
loss limit circuit breaker was hit 2/5/10/20, cannot be in front of screen,
internet problems, any type of distraction whatsoever.
That was fairly much it. Notice the only indicator I was interested in,
besides the price itself, was the daily pivots. Using yesterday's price(s) as a guidepost
and this hour's candle for a short-term sentiment, I went about my trading
making sure not to lose too much on any one trade or during any one day, week, or month.
I remember lots of days where I has to cut myself off at 5%. That was just the way it was.
I made the 10% profit days too and it would be much more difficult to quit on those days.
I remember one month when a 20% DD happened and wouldn't quit and lost about half an account.
Can't recall if I still had this hanging near the computer at the time, but it might have helped.
The money management was key however, and the part about distractions was important too.
Often, I might grab something like 40 or 50 pips and would call it a day, leaving lots of money on the table.
But, if anything was distracting me, I didn't want to even see my trading platform open.
I would unplug the computer and take the power cable and put it in the trunk of my car so not to turn it on.
Whatever I had to do to force some discipline into the equation.
As I've found in the time that has passed since, forced discipline is not true discipline.
Wanting to do something compared to having no choice but to do that same thing are
2 different schools of thought. I forced myself to do things to improve, often leaving no choice.
Nowadays, I go a bit easier on myself (and others) and smell the roses a little more often.
Hope this helps someone. Even if not, I hope you find something that does.
I was going thru files in order to get ready for '08 taxes and found some notes
I had scribed on a piece of pasteboard maybe 3 or 4 years ago entailing some things
that I would look for each day before trading. At one time, it was posted next to my monitor
so I could see it each day and remember/remind myself to repeat this routine.
Eventually, I knew to do these things by nature and incorporated them into my routine.
By having them stare me in the face day after day so as not to ignore or forget that part of the routine,
I found them helpful and avoided many nasty situations back then and would like to post them here.
I mostly day traded then and rarely kept any trades open for more than a few hours.
Not saying these should be your routines, these just were some that I found helpful
in locking in profits, keeping losses small enough to recover from and knowing when to stop .
These were my BIG 5:
1st) Yesterday's Range: High,Low and Last price @ 4:59PM Eastern
This provides the daily range for the daily candle just ended.
a) if Sunday, get Open,High,Low,Close to check for a post weekend gap.
b) has price already retraced a percentage of daily range just ended ?
2nd) Pivots for the day: have Daily PP, S1, R1, M1 and M3 loaded on the chart.
a) 5PM EST open: is price above or below Pivot or other significat level ?
b) current price (bid): is it at or near or over/under a significant level ?
3rd) open Hourly chart - What color is the candle ? Red or Green or Doji ?
a) Buy Green candles only. Sell Red candles only. Stand by if it is Doji.
b) compare 1HR to Larger time frame - look for both to be same color.
if not, use tighter stop or trade 1/2 size if counter to the trend
c) reversal/contra trades are okay after 3 or more candles same color.
d) If candle changes color, don't even ask - GET OUT. Wait for next one.
4th) Money management: use a stop. use a stop. always use a stop.....
(I wrote this dozens of times about half way down the page)also,
a) thresholds: 2% max loss per trade. Can be less but never more.
Daily: 5% Weekly 10% Monthly 20% if any of these levels are hit
trading must cease until the next period. End of story.
b) Profits: set limits within reason on each trade. each trade is different.
Daily: 10% Weekly 25% Monthly 50% if any of these levels are hit
trading must cease until the next period in order to protect profits.
c) No double down. Take the stop. Let it go. Wait for next candle.
d) remove some profits regularly, no less than twice per month. mandatory.
if no profit, no withdrawal = no money for you ;-(
5th) Preservation - Peace of Mind: No trading if any of the following:
tired, sleepy, sick, upset, pissed-off, waiting for visitor, phonecalls,
loss limit circuit breaker was hit 2/5/10/20, cannot be in front of screen,
internet problems, any type of distraction whatsoever.
That was fairly much it. Notice the only indicator I was interested in,
besides the price itself, was the daily pivots. Using yesterday's price(s) as a guidepost
and this hour's candle for a short-term sentiment, I went about my trading
making sure not to lose too much on any one trade or during any one day, week, or month.
I remember lots of days where I has to cut myself off at 5%. That was just the way it was.
I made the 10% profit days too and it would be much more difficult to quit on those days.
I remember one month when a 20% DD happened and wouldn't quit and lost about half an account.
Can't recall if I still had this hanging near the computer at the time, but it might have helped.
The money management was key however, and the part about distractions was important too.
Often, I might grab something like 40 or 50 pips and would call it a day, leaving lots of money on the table.
But, if anything was distracting me, I didn't want to even see my trading platform open.
I would unplug the computer and take the power cable and put it in the trunk of my car so not to turn it on.
Whatever I had to do to force some discipline into the equation.
As I've found in the time that has passed since, forced discipline is not true discipline.
Wanting to do something compared to having no choice but to do that same thing are
2 different schools of thought. I forced myself to do things to improve, often leaving no choice.
Nowadays, I go a bit easier on myself (and others) and smell the roses a little more often.
Hope this helps someone. Even if not, I hope you find something that does.