Trading System Rules (Sep-Feb): Re-evaluate after first 6 months
Max Tier Size, Max Stop Loss, Max Daily Shares
100, $120, 10,000
200, $150, 15,000
300, $175, 20,000
400, $200, 25,000
500, $225, 30,000
600, $250, 40,000
700, $275, 50,000
800, $300, 60,000
900, $325, 70,000
1000, $350, 80,000
Ways to increase Share Size
1) Gross $200 over 5 day period
2) Net 3x max stop loss in one day and over 50% of max shares allowed
2A) Up 7/10 trading days
2B) Up 5 days in a row >=$500
Ways to decrease share size
3) Violating the max number of shares rule
4) Violate max stop loss by 20%
5) Trading more than 5 stocks a day not profitably
6) Getting stopped out once
7) If gross loss is greater than 2 x your max stop loss during a 3 day period
8) Violating Max position size
Ways to get tiers size downgraded to 100 from any size
9) Violating the max number of shares by 30% and TA <-4
10) Violating max stop loss by 50%
11) Losing more than $1 on a stock valued at $10-$80
12) Getting stopped out two days consecutively ( Unless max is already 100 then stop loss is reduced by $25 each time this happens.)
General Rules:
13) A trader must trade on the demo on take a day off for 1 day if he/she gets stopped out two days consecutively.
14) If the trader is stopped out 3 times in a row his/her max stop loss and max number of shares will be reduced by 50%. Things will go back to normal tier size schedule once the trader nets 2 times his/her reduced max stop loss.
15) The trader should trade only one stock at a time. Ther is one exception to this rule: if the trader is making a support/resistance play around an important intraday level and the stock is not moving and a stop is entered to manage the position.
16) A trader may exceed his max number of shares traded daily if their ticket aerage is 8 or better. If at anytime their ticket average drops below 8, after they have exceeded their max numbr of shares then they must cease trading for that day.
17) Stop loss for the month is 10% of Equity
18) Can only trade maximum of 3 different stocks unless up at least 3x max stop loss.
19) No pre-market or afterhours trading is allowed for 6 months and then not allowed unless net positive MTD as of the trade.
20) For first 6 months or until I am positive, I will not take more than .15 risk per 100 shares.
So far, three weeks into trading live with real money, I have violated a few rules that I had in place already before I started trading with real capital, and created a few others after noticing bad habits forming. But even after establishing rules I have still broken them a few times.
ReplyDeleteIn September I hit my max stop loss for the month of 10% of my equity contribution. This is a moving target every month. It is based on my starting balance at the start of the month.
After careful analysis of my trading I have calculated of the $534.74 that I lost in September $342.49 was attibuted to breaking a trading rule. So with out violating any rules I would had finished gross flat for the month and net negative because of about $200 in commissions.
Just trying to have full transparency.
ThanX for sharing Dom.
ReplyDeleteI think it's just going to take time to get there with trading. There's a reason why so many people fail and give up. It's f*&^in hard and only the well capitalized or those who can manage their losses during the learning process make it the profitable end. It's punishing, frustrating and brutal and can beat you down permanently. It's like what the Spartans did to their children to test their metal. From everyone I've talked to and read about day trading takes at least a few years to get consistently positive. This acceptance has helped me deal with bad days BUT I'm learning and trying different things as part of the process of discovery. And this week has been extremely encouraging for me (all positive days) and I'll be looking to continue trying new things on the road to profitably.
Still looking at this time next year to go live that way I should feel comfortable, have a daily process in place, have a proven style, have a stronger sense of the market and individual stocks and sectors and be financially ready for the long haul.