Trading Rules

Chuck Krug

Chuck Krug

Trading Rules


Basic strategy is to trade around a bias. Bias forms short, mid, and long term. We’re mainly focused short term. For short term trades, we’re looking for trades that we’d be comfortable holding overnight. If not, we work to get an average we’re comfortable with (these are major/minor pivots i post)


Forming a bias

  • What's the underlying story/ market dynamics / risk on or off
  • Where is the risk
  • How significant is the risk
  • What's the price action/tempo like
  • Calendar events/catalysts/risks
  • How are others positioned. Risk on/off?, offsides?, crowds?, HFs, etc
  • Any sentiment reads

Types of trades


  • Positioning for swing (what price/size are you comfortable holding overnight)
  • Intraday - scalps 1:1 (hit and run action, till we get to major/minor levels)

Positioning for swing - Setups based on levels and time.

  1. Major - pivots for bias or theo avgs.
  2. Minor - levels provided daily overnight. Used to improve theo avgs/ around major
  3. daytrades/scalps - can be used to improve avg but r/r is 1:1 usually

Intraday scalps -

  1. Better when Intraday range less than expected range, else trend scenario
  2. How extended are we from vwap (globex and day)
  3. What's the profile/structure type.. Trend day vs Ranged?
  4. Ranged - use minor levels - #2 above
  5. Trend Day - use intraday setups #3 above
  6. How are deltas (bid/ask)
  7. What are vols doing.. Also underlying vols. Vol can be hidden in one stock/sector that can cause mkt moves.

Tools

  • Theo worksheet:

Money Management

  • Patience for trades
  • Hit the trades you really like HARD (learn your probabilities, note, they can change)
  • Trade in rhythm, step back when not in sync.
  • Avoid big draw downs.
  • Adapt as needed

Other

  • Stay happy, not stressed
  • Have a life outside of desk, explore
  • Workout hard, golf, walk etc.. something daily. Sun, sweat, etc
  • Read
  • Keep in touch with influencers you like.
  • Learn from others outside of your wheelhouse


Note: these are not mine but from https://twitter.com/vader7x But I thought they could help some fellow traders or at least start an interesting discussion.
 
Intraday scalps -

  1. Better when Intraday range less than expected range, else trend scenario
When range exceeds usual avg daily range, isn't it too late? If you were doing Mean reversion scalping you are already deep in shit loss or stopped out. If you were looking for trends it will be quite late to enter.
 
Chuck Krug said:
Trading Rules


Basic strategy is to trade around a bias. Bias forms short, mid, and long term. We’re mainly focused short term. For short term trades, we’re looking for trades that we’d be comfortable holding overnight. If not, we work to get an average we’re comfortable with (these are major/minor pivots i post)


Forming a bias

  • What's the underlying story/ market dynamics / risk on or off
  • Where is the risk
  • How significant is the risk
  • What's the price action/tempo like
  • Calendar events/catalysts/risks
  • How are others positioned. Risk on/off?, offsides?, crowds?, HFs, etc
  • Any sentiment reads
...

Money Management

  • Patience for trades
  • Hit the trades you really like HARD (learn your probabilities, note, they can change)
  • Trade in rhythm, step back when not in sync.
  • Avoid big draw downs.
  • Adapt as needed

Other

  • Stay happy, not stressed
  • Have a life outside of desk, explore
  • Workout hard, golf, walk etc.. something daily. Sun, sweat, etc
  • Read
  • Keep in touch with influencers you like.
  • Learn from others outside of your wheelhouse


Note: these are not mine but from https://twitter.com/vader7x But I thought they could help some fellow traders or at least start an interesting discussion.
More...

The info about having a bias and what to look for is something I think is critically important that must occur prior to the appearance of any trade signal (trade).

Without it, the trade signal that shows up has no merit even though its a valid trade signal.

Money management and the Other categories are great too...many forget about them or underestimate their importance.

wrbtrader
 
here is my check list; i mostly trade short term time frames 5 min and 30 min:

ma: if market is trading below the ma,for example only take sell signals which are provided by the indiacators. if ma is flat then trade both ways.

bollinger bands

stoch and money flow
 
Chuck Krug said:
  • Hit the trades you really like HARD (learn your probabilities, note, they can change
More...
Interesting point that probably varies for everyone..in my trading I've found the opposite, the more "like" (confident) of a trade, are usually the losers.
 
padutrader said:
ma: if market is trading below the ma,for example only take sell signals which are provided by the indiacators. if ma is flat then trade both ways.
More...


Or you could try "Enter long only when prices are above a rising MA and short only when they're below a falling one; if MA is flat then don't trade". I'm just saying ...
grinning-smiley-041.gif
 
Do an MAE and MFE study on going long or short when you midterm ma in rising or falling with a stoch, rsi ...etc trigger.

ES

P.S. your longs will give you wider stops and targets just now (those are your higher probability trades that you post about).
 
Xela said:
Or you could try "Enter long only when prices are above a rising MA and short only when they're below a falling one; if MA is flat then don't trade". I'm just saying ...
grinning-smiley-041.gif
More...

Depends on how you define "flat." The slope of a MA is seldom zero. I would recommend a signal-to-noise calculation to determine if a MA is range bound and non-trending.
 
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