Rules-Based Trading: quotes and resources

[studentofthemarkets]

For me the plan is a stress reducer. The more detailed the better. All it has to do is answer the question "What do I do now?"

It's an If/Then criteria. If this happens then I will do that.

I like to think of it as an operators manual. In theory I should be able to give it to anyone and they should be able to trade my system.

That sounds like a good plan. I like the idea of thinking of it as a stress-reducer.

 

[easymon1]

For me the plan is a stress reducer. The more detailed the better. All it has to do is answer the question "What do I do now?"

It's an If/Then criteria. If this happens then I will do that.

I like to think of it as an operators manual. In theory I should be able to give it to anyone and they should be able to trade my system.

Something tells me that you have ironed out your setups triggers and exits to the extent that an average 5th grader could learn one of them end to end in a couple of hours max? Third grader? They could not derive the setups most likely but if patiently rewarded and instructed over a Sunday afternoon, they could trade your setups when presented to them especially if they are of average duration of weeks or months. No bad habits to unlearn. "Hey Pup, let's go see if the market left any bags of money laying in the corner, what say, then we'll go toss the rock around?"

That sounds like a good plan. I like the idea of thinking of it as a stress-reducer.

If you have a name for each of your tested setups, it makes it easier to keep your error log current.
If your setups have triggers, it makes it easier to keep your error log current.
If you review your error log once a week, it makes it easier to single out the most costly mistake, isolate it, diagnose it, get your head right and move on.
If you do this for a half a year, it makes it easier to weed out recurrant errors and move on to being a rules based trader.
If none of this works for you, then you may not be a rules based trader at heart and the sooner you recognize that the sooner you can become an artistic intuitive trader, but I've yet to see the detailed plan of action for that other than step one which is to be prepared for years of pain?

 

[deaddog]

Something tells me that you have ironed out your setups triggers and exits to the extent that an average 5th grader could learn one of them end to end in a couple of hours max? Third grader?

That's my objective. Years ago I took a technical writing course. The only thing I retained was that you should write your reports with the vocabulary that a 3rd grader could understand.

I manage a couple of small portfolios for private companies and service clubs.(strictly volunteer) and need to show how I'm making decisions so someone else can take over.

Once you have a plan it's simple to follow the process. It's the emotional part of fear and greed that throws most. Taking a couple losses that reverse right after you close the position messes with your mind. Convincing a new trader that taking the loss is a good trade is difficult if not almost impossible.

 

[studentofthemarkets]

Something tells me that you have ironed out your setups triggers and exits to the extent that an average 5th grader could learn one of them end to end in a couple of hours max?

That's my objective.

This is a good way to evaluate how clear a trading plan is!

 

[studentofthemarkets]

If you have a name for each of your tested setups, it makes it easier to keep your error log current.
If your setups have triggers, it makes it easier to keep your error log current.
If you review your error log once a week, it makes it easier to single out the most costly mistake, isolate it, diagnose it, get your head right and move on.
If you do this for a half a year, it makes it easier to weed out recurrant errors and move on to being a rules based trader.
If none of this works for you, then you may not be a rules based trader at heart and the sooner you recognize that the sooner you can become an artistic intuitive trader, but I've yet to see the detailed plan of action for that other than step one which is to be prepared for years of pain?
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Thanks! Reviewing trades has got to be one of the most important things to do in order to improve, imo.

Why would someone have a hard time following their plan?

I think for me it's because I haven't worked out some details so I leave room for making decisions in the moment. I stared at my charts today and think these are the only consistent problems I can see that I make:

1. Not timing the trade right, either by being too early or too late. FOMO plays a big part. Also boredom plays a big part in not timing a trade entry accurately. I have a difficult time waiting and want to be doing something.

2. Using too small of a stop loss instead of using market structure to place the stop loss behind.

3. Not holding onto trades. I traded demo today and could have done much, much better by doing nothing else except holding onto trades for as long as my plan says to hold onto them. I see profit and don't think price will keep going so close the trade before it needs to be closed.

I wonder if these are the same things everyone else struggles with?

I'll think of some rules to add to my plan for each of these three areas, including a rule to follow the rules.


"Tomorrow is a new day with no mistakes in it yet!"