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Rulesbasedtrading

🔜RULE FOLLOWING CHALLENGE, join to improve your trading 💪Did you know that most beginner traders can't follow their rules for 7 days in a row? Unfortunately, they start overtrading or changing the rules of the system, entering random trades, overrisk, etc. I've been there many many times myself, but then slowly started focusing on this part and made my first 7, then 10 days of rules following, broke with another tilt, started again, reached 17, 30 days, and failed again. Each time it became better and better, and now I'm on my way to 50 days of rule-following. I developed a routine and system that allows me to keep doing it, day after day. It includes mental technics, as well as simple EAs for Metatrader to help with over-risking and overtrading issues. If you want to step out of your comfort zone and improve your trading, join this 7-day rule-following challenge by leaving a comment below. It will be hosted here on TradingView, probably using the Stream feature, but I'll let you know later when we will gather up.
OANDA:XAUUSDEducation
by Yelli_trades
3
Follow your Plan! Must have rules to avoid being liquidityFollowing your trade entry rules is the key to avoiding Following your trading plan is the key to being a consistent trader! Make sure you have thought out objectives that are being hit prior to entering a trade. We want to create a system where once your initial signal is hit (such as a HTF supply zone mitigation, strong level hit, FVG mitigation), we then have further rules that help us avoid false breakouts/liquidity grabs and stop loss hits. The simple truth that all traders eventually find out is the market doesn't do what you expect it to do when you expect it. Even the most advanced and sound calculations will be losers if the point of entry is treated as a secondary factor. Our psychology refuses to account for smaller (LTF) price fluctuations but they happen at usually prior to doing exactly what we predicted! So, have your strict rules - a set of guidelines that this, this, and this need to happen before entering a trade - and if they do, you did your job win or lose. On this trade specifically, I had pointed out the potential for a wedge breakout and had a bias toward the downside. As mentioned and as I highlight above, if I would have entered the trade prior to awaiting my entry signals, I would have been stopped out on a major liquidity grab to the upside. Therefore, when preparing for the trade, I identified upper zones that were potential price objectives that went against my bias. If price did reach these zones and other factors were still supporting my former bias, this upper liquidity grab would be an even greater opportunity for my short trade - but only once the LTF entry signals start blaring. TL;DR: Even though the HTF signs and confluence for a drop were there, I awaiting a lower time frame CHoCH and reversal (my trade entry rules) in order to enter the trade. This led me to a winning trade as opposed to being stopped out earlier for a losing trade. This is the key to consistency!
Short
by ReigningTrades
1
🧠Remember: THE base on Trading.🙃 When I see all these desperate or panicked publications/posts, it makes you wonder if these people have just discovered #cryptos or if they are in complete denial...  ↪️ We just finished the 2nd important wave of 📉 #BTC  ⏰ Wake up and start with THE base ⤵ 1) Have a proven Trading #method, thanks to 2 main #indicators of quality and evaluation of #Trading: ↪The “Profit Factor” (P.F.). ↪The "Max DrawDown" (M.D.D.). 2) Fix yourself: ➡ Trading #rules. ➡ Money-Management (M.M.) rules. ➡ rules to best manage your #Psychology. ✔️ This is THE base before you start. ✔️ This is THE base for the long term Trading. ✔️ This is THE basis to really share your experience.
by TradeAtHome
Emotional Responses are Dangerous in this EnvironmentMarkets across all asset classes hate uncertainty because it causes traders, investors, and all market participants more than a bit of indigestion. Fear and greed are emotions that drive impulsive behaviors. Effective decision-making depends on a rational, logical, and reasonable approach to problem-solving. The Fed finally addresses inflation Recessionary risks are rising Stagflation creates the worst of both worlds Tools impact the demand side- The supply side is a challenge Tools and rules for keeping emotions in check during scary times Reducing impulsive, emotional responses is a lot easier said than done. While it is easy to mitigate emotion during calm periods, they take over and trigger fear or greed-based actions in the heat of the moment. In mid-May 2022, the markets face a crossroads. The current market correction is a function of rising interest rates, the potential for an economic decline, a rising dollar, the war in Europe, supply chain issues, geopolitical tensions between nuclear powers, and a host of other domestic and foreign factors. It is now the most critical period in decades to take an emotional inventory that will avoid catastrophic, impulse-based mistakes. Wide price variance in all markets could accelerate, and those with a plan are the most likely to succeed and protect their hard-earned capital. The Fed finally addresses inflation The US central bank had an epiphany after mistakenly believing that rising inflationary pressures were “transitory” in 2021. The Fed woke up smelling the blooming inflationary environment late last year when CPI and PPI data showed the economic condition rose to the highest level in over four decades. At the May 4 meeting, the central bank hiked the Fed Funds Rate by 50 basis points to 75 to 100 basis points. The central bank told markets to expect 25 or 50-basis point hikes at each meeting for the rest of 2022 and into 2023. The Fed also laid out its plans to reduce its swollen balance sheet, allowing government and debt securities to roll off at maturity. While the Fed has switched to a hawkish monetary approach, it remains behind the inflationary curve. Last week, April CPI came in at 8.3% with PPI at 11%, meaning real short-term interest rates remain negative, fueling inflation. While wages are rising, they are lagging behind inflation. Consumers may be earning more but spend even more on goods and services each month. Recessionary risks are rising The US first quarter 2022 GDP data showed a 1.4% decline or economic contraction. The war in Russia, sanctions and retaliation, supply chain bottlenecks, deteriorating relations with China, political divisiveness in the US, and many other issues weigh on the US economy. Meanwhile, rising US interest rates have put upward pressure on the US dollar, pushing the dollar index to a multi-year high. As the chart shows, the dollar index rose to 105.065 last week, a two-decade high. A rising dollar is a function of increasing US rates, but it makes US multinational companies less competitive in foreign markets. The falling GDP in Q1 2022 increases the threat of a recession, defined as a GDP decline in two successive quarters, putting pressure on the Q2 data this summer. Stagflation creates the worst of both worlds Recession and inflation create stagflation, the worst of all worlds for central bankers seeking stable markets and full employment. The most recent economic data has put the US economy on the road towards stagflation as rising prices and a sluggish economy require competing monetary policy tools. The Fed is addressing inflation with higher interest rates and quantitative tightening, but recession requires stimulus, the opposite of the current hawkish monetary policy path. The central bank must decide on which economic condition threatens the economy more. The Fed seems to have chosen inflation, but it is more than a reluctant choice. Tightening credit treats the inflationary symptoms, but it can exacerbate recessionary pressures as higher rates choke economic growth. Stagflation is an ugly economic beast. Tools impact the demand side- The supply side is a challenge Meanwhile, the US and other central banks have deep toolboxes that address demand-side economic issues. While inflation and recession require different tools, the Fed faces other compelling factors from the global economy’s demand side. The war in Ukraine is distorting prices as sanctions on Russia and Russian retaliation distort commodity prices. Moreover, the “no-limits” alliance between China and Russia creates a geopolitical bifurcation with the US and Europe. With nuclear powers on each side of the ideological divide, economic ramifications impact the economy’s supply side. China is the world’s leading commodity consumer, and Russia is an influential and dominant raw materials producer. Energy and food prices are the battlegrounds. Central banks have few tools to deal with supply-side shocks and changes, which can create extreme volatility in the prices of goods and services. The Chinese-Russian alliance transforms globalism with a deep divide. Global dependence on Chinese demand and Russian supplies distorts raw material’s supply and demand fundamentals. While the US Fed faces a challenge balancing inflation and the potential for a recession, the supply side issues only complicate the economic landscape, increasing market volatility across all asset classes. Tools and rules for keeping emotions in check during scary times The best advice for dealing with anxiety came from US President Franklin Delano Roosevelt, who said, “the only thing to fear is fear itself.” Conquering fear requires a plan that mitigates emotions no matter the market conditions. The Fed’s toolbox is bare in the current environment, creating a volatile landscape. Chasing inflation and dealing with a recession in the face of supply-side shocks is a potent cocktail for price variance. Investors and traders need to change their orientation to markets to adapt to the current conditions. The following tools and rules can assist in mitigating the human impulses that lead market participants to make significant financial mistakes: Hedge portfolios using market tools to protect the downside and allow for upside participation. Hedging reduces the impulse to liquidate portfolios because of fear. Since volatility creates opportunities, approach markets with a clear plan for risk versus reward. Remember that the market price is always the correct price. A risk-reward plan only works when risk levels are respected. Markets are never wrong, while traders and investors are often wrong. A long or short position should constantly be monitored at the current price, not the original execution price. Positions are long or short at the last tick. Adjust risk and reward levels based on current market prices. Follow trends, not news, “experts,” or pundits. Trends reflect the crowd’s wisdom, and collective wisdom reflects the sentiment that drives prices higher or lower. Never attempt to pick the top or the bottom in a market, let the price trends do that for you. The rules are simple, but emotions are tricky. The emotions that trigger impulsive behavior cause market participants to ignore the rules. The critical factor for success in markets is discipline, defined as “the practice of training people to obey rules or a code of behavior, using punishment to correct disobedience.” When it comes to our hard-earned savings and portfolios, the punishment is losses. Tuck those emotions away and face the volatile market landscape with a plan. Hedge your nest egg, and you will sleep better each night. Remind yourself that fear is the only factor you should fear. -- Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility , inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
ICEUS:DX1!Education
by Andy_Hecht
1
Investing Requires Patience and Nerves of SteelA perfect trading environment? Volatility is a mixed blessing. Day traders love lots of action as it creates opportunities to make or lose money. Day traders are action junkies, looking for price moves and technical patterns like predators hidden in the reeds to pounce. Trade or investment- Make a choice before pulling the trigger Trading- One set of rules Investing- another set of rules Common factors The differences and pitfalls Investors have a long-term view of markets, waiting for prices that they believe are too low or too high. While some look for prices that could be tops or bottoms, the most successful investors realize that markets can move to illogical, irrational, and unreasonable prices, so they often scale into risk positions over time. Rising inflation can be a vicious cycle. In 2021, inflation turned out to be a lot more than a transitory event. At first, the US central bank and Treasury explained away higher prices as a symptom of pandemic-inspired supply chain bottlenecks. They never cited the tidal wave of central bank liquidity and tsunami of government stimulus. However, it was those factors that lit the inflationary fuse. The Fed waited far too long to adjust monetary policy to counter inflation as they didn’t account for the central bank’s policies that were a root cause. Russia is one of the world’s leading commodity producers, and China is the most influential global consumer. The invasion of Ukraine, ongoing war, a Russian-Chinese “no-limits” alliance, and sanctions and support for Ukraine from the US and Europe, create an almost perfect bullish cocktail for commodity prices, pouring gasoline on the inflationary fire. The Fed can do little with monetary policy to extinguish the flames. Since the February 24 invasion, market volatility has dramatically increased. The market price variance creates a highly attractive trading environment, but it also offers investors a chance to profit long-term as volatility creates bargains or overpriced assets. The current environment requires short-term traders to be on their toes while patience and perseverance are necessary for longer-term investors. Trade or investment- Make a choice before pulling the trigger A common mistake made by market participants is many do not distinguish or classify a risk position as a trade or investment before executing a buy or sell order. The vast difference between a trade and an investment is the time horizon. Trades are often short-term, while investments are medium to long-term. Categorizing any position as a trade or investment before pulling the execution trigger leads to a different set of rules and can minimize losses and allow profits to run. Trading- One set of rules Any successful trader knows that the key to success is discipline. They also know that they will never call the price direction correctly 100% of the time. Moreover, most have less than a 50% average on the path of least resistance of prices. Baseball players who rise to the top of the game and wind up in the Hall of Fame in Cooperstown, NY, have an average batting average of just over 0.300, meaning they do not get on base nearly 70% of the time. The same holds for the trading hall of fame. What separates winners from losers is discipline. In trading, it amounts to a risk-reward approach that increases the odds of long-term success. When risk-reward is in your favor, it allows for wrong directional calls to outnumber correct ones and leads to more profits than losses. Risk-reward should be at 1:1 at a minimum, and the reward should often be higher than the risk level. When a price hits the risk level, disciplined traders will exit, admitting they were wrong. Moreover, the formula for long-term success means a trade can never become an investment because the price moves contrary to expectations. Investing- another set of rules Investing is another animal, as a value investor tends to go against the market’s sentiment, taking a contrarian approach. Charlie Munger’s current risk position in Alibaba shares (BABA) is a perfect example, but it applies to markets across all asset classes. Mr. Munger saw long-term value in the Chinese e-commerce and technology company, believing it is inexpensive compared to US stocks. At the end of Q4 2021, he was willing to take the Chinese country risk in the stock. Mr. Munger has been buying BABA shares since mid-2021 when it peaked at over $230. His disclosures show he purchased shares in Q3 2021 and Q4 2021. At below the $87 level at the end of last week, his investment is underwater, but he has plenty of capital to support the risk position. Mr. Munger added shares as the price declined, using the principle if I liked the prospects at a higher price, I love it at a lower price. While time will tell if he sticks with BABA, he has scaled into the position at a comfortable level, given his total capital. Successful investors do not put all of their eggs in one basket, nor do they amass a full risk position at one price level. They often leave plenty of room to add if market sentiment drives the price to a more inexpensive level when buying or a more expensive level when shorting. Investments require patience, perseverance, and a portfolio approach. Charlie Munger has substantial exposure to BABA, but it is only one of the stocks in his overall portfolio. Common factors While trading and investing are different market approaches, some common factors are critical: Successful traders and investors never risk all of their capital on one risk position. Success requires a plan before buying or selling to initiate a trade or investment. Risk-reward and leverage dynamics are critical. Success requires the acknowledgment that the price of any asset is always the correct price because it is where buyers and sellers meet in a transparent environment, the marketplace. Successful traders and investors eliminate the emotional impulses from fear and greed. These principles guide successful traders and investors. The differences and pitfalls Trading and investing are different because: Time horizons - Trading requires a short-term orientation while investing is medium to long-term. Technical versus fundamental - A trader tends to use short-term technical factors driven by market sentiment. Investors are more likely to react to fundamentals and longer-term trends. Approach - A trader tends to be more dynamic, reacting to each price movement in a market. An investor is often passive, watching market action over more extended periods. The critical pitfalls are: Traders and investors should never assume an assets’ price is wrong and they are right. The current price is always the right price. Attempting to call tops and bottoms in any market is dangerous as prices often move to illogical, unreasonable, and irrational levels on the up and downside. Never allow a trade to become an investment because the price move contrary to expectations. Changing a game plan during a trade or investment’s life refutes the original thesis. A change should be considered a new risk position, requiring abandoning the existing trade or investment. Failure to account for the worst-case can lead to disaster. Risk involves price, liquidity, and the accessibility to an exit. No trade or investment should prevent others. Allocating too much capital can cause devastating losses. In early March 2022, market volatility has created a paradise of opportunities for traders as wide price variance is fertile ground for short-term risk-reward dynamics. Investing in the current environment where inflation and geopolitics create the most uncertain landscape in decades. An investment plan requires patience and nerves of steel. The old saying, “look before your leap,” is appropriate for traders and investors as they should always plan before executing purchases or sales to enter a risk position. Highly volatile markets make planning critical. -- Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility , inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
SP:SPXEducation
by Andy_Hecht
2
8OC and the S&P seasonal tradeI am working on indicators for Jake Bernstein. The 8OC is a simple and powerful indicator for viewing trends and also serves as the timing trigger for Jake's seasonal trades. 8OC gave us an early warning on the recent stock market decline. We triggered on the September S&P short trade this year and reached our first profit target easily. I am now waiting patiently for the next big seasonal trade in stock index futures. (Hint: it is a long trade)
CME_MINI:ESZ2021
by UnknownUnicorn28244186