WhipItAround.com

I don’t have time to get into the specifics but take note– I have my reasons.  I will trade the market I see so if the technicals prove me wrong– big deal. I will still bank coin.

I was on Matt Trivisonno’s trading blog (www.Trivisonno.com) and Stringm reminded me that I never posted my trading rules.  Below is an explanation of why it is important to have a set of personal trading rules followed by my own set of trading rules.

It is crucial for traders to have a set of rules and adhere to such rules under all circumstances.  I have developed a set of rules that help me trade with a very high rate of accuracy and eliminate most of the emotion from my trades, provided the rules are followed.  The hardest part about a set of rules is actually following them. You can be the best analyst or stock picker and still lose money if you do not have a set of trading/investing rules that are strictly followed.  My rules may not be suitable for your trading style, but once you develop a set of rules that, it will eliminate a significant amount of emotion from your trades and I bet your profits will increase substantially.  I did not become a profitable trader until the hedge fund I worked for went bust and I began trading my own capital full-time, at which point I realized I needed a set of rules.

 Below are my trading rules, which I consider before trade execution (I actually read all of these rules before each trade).  Are there any rules that work for you that I have not included below?  Feel free to share with the group.

1. Verbalize the reasons for each trade aloud
2. Exit prices must be predetermined (stops and limits—can be mental or electronic) and cannot be changed unless there is a very good reason.  Identify the circumstances that will justify breaking the trade (strong TICK, strength in leading indexes/stocks, etc)
3. Identify if the trade is a scalp or longer trending trade.  If the trade has a lot of potential, sell fractions prior to resistance levels, but leave a portion on until a lower high is made
4. Size trade based on maximum loss if stop is triggered and verbalize maximum potential loss.
5. Treat each trade independent of prior trades (size, duration, stops/limits, etc).  Don’t let prior bad trades affect objectivity
6. Check indicators and other indexes prior to trade (TICK, stoch, XLF, IWM, GS, AAPL) – Do they confirm the trade? 
7. Is it the right time to execute the trade?  For example, afternoon reversals and large continuation moves usually occur during the last hour or last 15 minutes; channel formations usually last longer than you expect; breakouts usually do not occur until the VWAP (volume wtd. avg. price) is tested and held; securities usually bounce on their first test of the VWAP
8. Exercise patience: if stock is following a trend line, wait for a pullback unless breakout appears imminent
9. If angry, step away for 15 minutes and engage in another form of stimulation
10. Trade light during the first 15-30 min of trading or until there is a clear breakout
11. Goal is to follow the rules: Strict adherence to the above rules will “make it rain”

There isn’t a single TICK reading below -400 (lowest reading was -383) and there have been several readings above +1,000.  There was a pattern of lower highs and lower lows, however the lack of signicant selling pressure does not support initiating a short position.