Quote from vertigo3:
this was something (I believe) volente posted on 9/9/07 about how he uses rule of 10
09-09-07 11:16 AM
I use rule of 10 for entries and exits. Yes I trade countertrend. WHY ? Because of reversion to the mean. How many days do you get each month that just go straight up or straight down ? You can't play around when trading this way. You have to be disciplined and always set your stop upon entry. I have a rule where i only am allowed 1 stop out for the day, unless I already have profits. Mostly I cover half at 2 or so points and let the rest ride to break even or into 5 or more points depending on what the market wants to give. Rule of 10 is not set in stone, sometimes it marks a turning point for a 2 point bounce, sometimes it is moves 10+ points from there, and sometimes it is just flat wrong and I take a 2 point loss and move on. The other day there were 4 rule of 10 trades in a row. I don't use it just for entries or exits on intraday, It is useful for finding a point to fade when it moves 10 above previous older s or r from previous days.. You can't control the market, all you can control is the risk. For the month of august my winning trades were 84%. Uusally they average 70-75. The crowd is chasing so I do not want to be a part of them. All I can say is you have to be confident when you step in front of the train and have 100% discipline or you can get spanked if your emotions are unchecked.
I am a fader, give me a spike and I will take my shot. For those of you who say it is easier to trade with the trend, How the hell do you know what the trend is when a econ number gets released and ES jumps 7-10 instantly one way ? How can you see a trend when ES is up 20 points one day, down 30 the next, then up 15 the next ? Buy when others are selling, sell when others are buying. It works for me, but to each his own.
