25 Rules of Trading Discipline

Quote from osho67:

ZAL

you said

The Bond market is a much better (easier) market to trade than the ES. Set a goal for yourself of 4 full tics per day for ten days. If you can achieve your short term goal then you did it by skill, not luck, and your should increase your trade size to a 2 lot.

I am not familiar with the bond market. Please give a short education and ticker symbol to be used. I use IB

Thanks
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The 30-Year Treasury Bond Futures Market (ZB) is derived from the US Treasury's 30-Year Debt Security. The US Treasury's Debt Security market and the corresponding Futures market (up and down the yield curve) is the largest financial market in the world, on a notional basis.

A full tic in the 30 - year is worth $31.25 per contract. The market trades in 1/2 tic increments. Buying a 2 lot at 114.12 and selling it at 114.16 would yield a $250 gross profit.

4 Full tics in the 30 - Year Bond Futures = one basis point in the 30-Year cash market.

Our TIE Traders Room spends most of the day trading Bond Futures. You might consider coming into the TIE Traders Room to see for yourself the Bond market in action.

www.iiedge.com
 
Quote from buylo:

Daily goals were one of the largest inhibitors to taking off as a trader for myself.

DO NOT set daily goals.

If the markets are shitty, you will not make your goal and prob lose money, putting pressure on you to not only make your daily goal, but to also make yesterdays loss back IN ADDITION TO the daily goal not achieved.

If the markets are good, you will be satisfied when you made your "daily goal" and miss out on opportunity after shuttin'er down.

When you're seeing it, take all the money you can out of the market. When not seeing it, stay out and don't try to "just make a little."
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Many of my peers in the Bond Market do not set daily goals and many do set daily goals. We can agree to disagree.

I like to set a daily goal. I like to achieve my daily goal and then turn the PC off.

My goal is always stated in tics per contract not dollars. For instance: if my initial trade size is 10 contracts then at the end of the day I'd like to have 40 tics in my pocket. Sometimes I get there real early, sometimes it takes all day.

The Bond market is rarely shi__y. It moves in 4 - 8 tic rotations with consistency. There is a reason for this and it is related to basis point fluctuations in the Cash Bond Market.
 
Quote from MarkBrown:

i have traded just about everything and years ago i decided to focus on debt (bonds, notes, etc.) and the index, i say "the index" because to me there is only one of course the sp. i like many of the indexes but place the most faith in the sp.

in the old days to trade really big money and positions. of the two choices above only debt's could carry the volume and provide the necessary liquidity. the e-mini sp has somewhat, though not solved but rather progressed to point it is much improved.

i am speaking in terms of hundreds of contracts like 100 to 500 lots one way and flipping twice as many. so if i were to spend my time developing a way to make consistent profits. i would agree to spend that time in a market which i could easily scale. bonds fit that parameter especially if your not an in and out trader but an always in trader.

funny but as licensed vendor (not active for many years) of the cbot market profile and a very devout observer of it. i would class this thread as a very upsetting exposure of an edge. yet what the heck most people will dismiss all this really good advice published here and life will continue as i know it. the markets don't change because people don't change. so let the carnage continue and for the few welcome aboard as this guy tells you more hopefully. for i am listening.

mb
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Thanks Mark Brown for your comments. The Profile and our TradeMaven Inside Edge does offer one a greater probability for good trade location.

What separates the men from the boys is the ability to manage the trade once you put it on. Greed is typically what kills what starts off as a good trade.

Really understanding the market that your trade, it's unique personality and it's rotational bias will help one to manage their trade with more skill and less greed.

I like to stick with 4 tic rotations in the Bond. Sometimes I get more, sometimes I get less. It is very, very rare when I take more than 8 tics on a trade.

A lot of guys paid a lot of money in the 1980's to stand in the Bond Pit to get the edge. Once they got the edge they didn't know how to manage it very well and most ended their pit trading carreers with less money than when they started.

The same is true in the electronic markets. If you know how to properly manage your trades, without greed, your likelihood for success is very high.
 
ZAL,




What is your long term average ticks you make daily and in what instrument ? (based on 1 contract, 5 ticks with 10 contracts is 5 ticks not 50)
 
Quote from ZAL:

The 30-Year Treasury Bond Futures Market (ZB) is derived from the US Treasury's 30-Year Debt Security. The US Treasury's Debt Security market and the corresponding Futures market (up and down the yield curve) is the largest financial market in the world, on a notional basis.

A full tic in the 30 - year is worth $31.25 per contract. The market trades in 1/2 tic increments. Buying a 2 lot at 114.12 and selling it at 114.16 would yield a $250 gross profit.

4 Full tics in the 30 - Year Bond Futures = one basis point in the 30-Year cash market.

Our TIE Traders Room spends most of the day trading Bond Futures. You might consider coming into the TIE Traders Room to see for yourself the Bond market in action.

www.iiedge.com
More...


Thanks ZAL. much appreciated. I will visit the room as well
 
Quote from fluttrader:

ZAL,




What is your long term average ticks you make daily and in what instrument ? (based on 1 contract, 5 ticks with 10 contracts is 5 ticks not 50)
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I no longer trade every day. Managing an FCM, trader education company and software company takes up a good part of my day now.

I do find time to trade, however it's usually at the most inopportune times of the day when the markets are not as volatile as I would like. I typically try to take 4 full tics out of the market. My trade size varies with my level of confidence and the success or failure of my most recent trades.

My recent "batting average" is probably around: 50% of days I achieve my goal, 30 % of days I don't achieve my goal but I'm up on the day and 20% of the days I'm down on the day.
 
Rules #14 #19 #21

I understand where you are going with this but I think your wrong.

In the days of the Pit trader when you could transact for .50 rt and there were .10 spreads these were legit.

If your a 70% winner with a 50% win loss ratio that 20% left over will be eaten by commission, slippage and normal execution error.

The only one these 3 rules benefits is the broker and no offense but that's your business now isn't it. :cool:
 
Quote from Joab:

Rules #14 #19 #21

I understand where you are going with this but I think your wrong.

In the days of the Pit trader when you could transact for .50 rt and there were .10 spreads these were legit.

If your a 70% winner with a 50% win loss ratio that 20% left over will be eaten by commission, slippage and normal execution error.

The only one these 3 rules benefits is the broker and no offense but that's your business now isn't it. :cool:
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We can agree to disagree, however:

#14 reminds traders not to speculate. Perhaps I should change the word to 'gamble'. Scalping and short-tem trading are one and the same. Short term trading removes much of the risk of a trade due to reduced time in the market. The less time you are in a trade the less chance the market can hurt you.

#19 again reminds traders to accept smaller gains on a trade. It is much more likely for a trader to make 4 tics per trade 4 times a day than to make 16 tics on one trade.

#21 reminds traders to scale out of their winning position. If you are right on a trade for 4 tics (a rotational move) then the liklihood of the market moving another 1/2 tic or full tic in your favor is a fairly high probability.

The second part of your statement regarding commissions:

I agree that "over-trading" will increase your cost of execution. However, I don't approve or recommend over-trading. Over -trading is a discipline problem. Most traders are guilty of over-trading when they are down on the day and they begin to trade more frequently or with more trade size.

If you condition yourself to trade with discipline and follow the rules then commissions are statistically insignificant as related to your gross P&L on the day.
 
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