Rules Based Trading
The research, the knowledge, the understand of the macro environment is but a tiny fraction of how you make money trading.
Technique & Discipline is 90% of how the Money is made.
The way you Define Discipline is through a Rules-Based-System
Short-Selling is a strategy that can be particularly complicated.
I would love to put on heavy short bets & walk away for a couple years. I do believe that this market is going down & going down hard for quite some time.
However, it is Not That Easy. The Central Bankers & the Algorithms have turned this into an algo casino. A Fed Member can start rambling nonsense & create stunning rallies that go on for days, weeks & months at a time.. The Risk is Enormous.
I know I can make money trading because I have before many times. What I lack is Discipline.
I think that why I have so much trouble adhering to Discipline is well honestly it's primarily been because I have so much damn conviction in the Bearish Thesis. I have done thorough research and written quite extensively about my predictions. I have no doubt that ultimately I will be proven correct. However, what you must realize is that the thesis is not good enough on it's own. The market does whatever the fuck it wants at any given time & you just can't mess around with highly leveraged futures. You can't hold futures through a move that is going against you. You will bleed too much, they will kill you! So the Thesis determines the Bias. They say don't trade with a bias but I think that's nonsense. You can trade however you want but the only way you can survive doing that is by creating a Rules Based System.
The system can & should be simple. It doesn't really matter what it is, anything can work. The difficulty in trading comes in having the Discipline to actually follow it.
Trading is a profession that can do sick things to the mind. Trying to predict the future with conflicting signals bombarding your senses from all angles twisted with all the emotions that come with money spinning around at a rapid pace is tough.
Anyways I think that what I should do from now on is create this Rule that should theoretically protect me from financial ruin.
I don't need to top tick. If it's going down, it can go down fast but if it's going down it's first got to get below VWAP.
It's on the charts. It's the dividing line. It's the level of the average market player.
I've been here before. Way back before the market dipped & I got greedy...
Pivots & VWAP. Daytrading with a Day Traders mindset.
Those are the only levels you need to care about.
You can trade against those levels and you can make money.
In futures trading, you cannot simply hold & hope.
If price starts moving against you: You better GTFO Quick!
VWAP Stop. Short Below. Cover Above.
Here's the other part of Trading that is perhaps one of the most difficult concepts to understand & things to do.
When there is no set-up, no trade. Price is above VWAP & chances are it's grinding higher all day. You can't waste your time staring at the screen. The market will suck you in & you are liable to make stupid mistakes.
If there's no trade: The best way to maintain your discipline & not hop back in foolishly is to just walk away & do something else.
Play Guitar, Go on a walk, Do some errands. Get your mind off of the markets. You might as well do something that is more productive with your time.
No Trade: Walk Away. Patiently Wait For The Next Setup
The research, the knowledge, the understand of the macro environment is but a tiny fraction of how you make money trading.
Technique & Discipline is 90% of how the Money is made.
The way you Define Discipline is through a Rules-Based-System
Short-Selling is a strategy that can be particularly complicated.
I would love to put on heavy short bets & walk away for a couple years. I do believe that this market is going down & going down hard for quite some time.
However, it is Not That Easy. The Central Bankers & the Algorithms have turned this into an algo casino. A Fed Member can start rambling nonsense & create stunning rallies that go on for days, weeks & months at a time.. The Risk is Enormous.
I know I can make money trading because I have before many times. What I lack is Discipline.
I think that why I have so much trouble adhering to Discipline is well honestly it's primarily been because I have so much damn conviction in the Bearish Thesis. I have done thorough research and written quite extensively about my predictions. I have no doubt that ultimately I will be proven correct. However, what you must realize is that the thesis is not good enough on it's own. The market does whatever the fuck it wants at any given time & you just can't mess around with highly leveraged futures. You can't hold futures through a move that is going against you. You will bleed too much, they will kill you! So the Thesis determines the Bias. They say don't trade with a bias but I think that's nonsense. You can trade however you want but the only way you can survive doing that is by creating a Rules Based System.
The system can & should be simple. It doesn't really matter what it is, anything can work. The difficulty in trading comes in having the Discipline to actually follow it.
Trading is a profession that can do sick things to the mind. Trying to predict the future with conflicting signals bombarding your senses from all angles twisted with all the emotions that come with money spinning around at a rapid pace is tough.
Anyways I think that what I should do from now on is create this Rule that should theoretically protect me from financial ruin.
I don't need to top tick. If it's going down, it can go down fast but if it's going down it's first got to get below VWAP.
It's on the charts. It's the dividing line. It's the level of the average market player.
I've been here before. Way back before the market dipped & I got greedy...
Pivots & VWAP. Daytrading with a Day Traders mindset.
Those are the only levels you need to care about.
You can trade against those levels and you can make money.
In futures trading, you cannot simply hold & hope.
If price starts moving against you: You better GTFO Quick!
VWAP Stop. Short Below. Cover Above.
Here's the other part of Trading that is perhaps one of the most difficult concepts to understand & things to do.
When there is no set-up, no trade. Price is above VWAP & chances are it's grinding higher all day. You can't waste your time staring at the screen. The market will suck you in & you are liable to make stupid mistakes.
If there's no trade: The best way to maintain your discipline & not hop back in foolishly is to just walk away & do something else.
Play Guitar, Go on a walk, Do some errands. Get your mind off of the markets. You might as well do something that is more productive with your time.
No Trade: Walk Away. Patiently Wait For The Next Setup
RSS Feed
