Trading Rules

“If someone else can do it, so can you.”

Discipline = Always following rules

General Rules:
- Entering a Trade
o Use other people’s trade ideas as confirmation with my own thoughts, not based only on their trade
o Profit margin: 3:1 or greater
o Max risk: 1% of account or 10% of ticker price
o Scale in using 1/4ths of position size
o Never play backside of trade (except using demand zone)
 When using demand zones, use half size, then add rest after a higher low
- Exiting a Trade
o Cut after lower lows
o After two Loses, size down half until two wins
o Scale out at 5%, 10%, 15%, then the rest rides until VPA shows weakness
 May need to exit whole position early based on VPA/vol. (low vol. highs/high vol. selling)
 “If things are so bullish, why are there all these wicks?”
 Consistent singles > homeruns
o Never hold through earnings/news
o Never let a winner turn to a loser (move stop up throughout the trade)
 Thought: better to be stopped out for a profit than ride backside of the trade down
- 84% Rule
o On a good setup, if stopped out, submit the exact same entry/stop again
o If activated again, the trade should work 84% of the time the second time
 Thought: good trade, wrong time
- Technical Analysis
o HL/HH’s vs. LH/LL’s
o Trend lines
o Supply/demand
o Support/resistance (round up to whole numbers if close)
o Volume (breakout vol. used to determine low volume pullbacks and VPA selling pressure)
o Patterns (flags, pennants, double tops/bottoms, head and shoulders/inverse H&S)
- Supply/Demand
o Use descending bids for entering a demand zone
o Never use zone blindly, use VPA and look for patterns around these zones to form
o Look for consolidation zones after a trend line break or at turning points
o Mark swing high/lows at major trend changes
o When zones are stacked, closer ones may be ignored so use farthest zone
o Odds enhancers:
1. How strong was the move away from creation zone (gap or LDC best)
2. How many candles did it take to make zone (at least under six)
3. How far did price move away from zone (determines potential reward)
 Use “novice zone” to help create price target, don’t trade near “novice zone” (middle of
chart)
4. How fresh is the level (don’t trade after first 25% of zone is used)
 Check smaller timeframe to determine if zone was left and filled at creation point
Evening Routine:
- Chart plays from the day to determine what I should have done/what I failed to see and upload to discord
o Write why trade worked/didn’t work
o Journal my emotions/thoughts throughout the trade
- Update charts on watch list
Swing Trades:
- Technical Analysis
o Check on monthly/weekly/daily/hourly
- EMA Clouds
o Entering a Trade
 Only enter on strong move above 34/50 (except when using demand zone)
 Use 8/9 or 5/13 for pullbacks
o Exiting a Trade
 Scale out when extended from 5/13 cloud
 Cut trade under 34/50 on hourly
- Golden Rule for IPO’s
o Opening day high/low are key pivot points creating a range (or 10min candle for intraday or
weekly/monthly for longer term)
o Long/short when breaking out of range
o Use a resistance level in range as stop
- Scanning
o All time low hammers with volume
o High volume tickers (breaking above 34/50 on daily/hourly
Day Trades:
- Pre-Market
o Determine gappers/chart them
 Mark pre-market high/low
 Weekly/daily resistance levels for price targets (3:1)
 Look at 5m:5d chart
 Locate support/resistance, HH/HL or LL/LH, reoccurring patterns, fibs 50-62% bounce
 Potential dip areas to enter with confluence? (increasingly smaller red candles w low
vol.)