Structuring A Trade Plan

In recent live sessions, we have been going over how and why to structure a trade plan so that we are not making ineffective emotional decisions on the fly while under pressure. In this video, I demonstrate making a precise trade plan on SAP. Use this example as a guide to designing your own trade plan where you:

Know our method and design precise rules for:

  • Entry: Know what gets you in
  • Initial stop: know where your stop goes
  • Money management: Know your position size and trade management after in trade
  • Exit: know what gets you out

Simple Swing Trading-Part 2

In Simple Swing Trading part One, I went over the components of a swing and described what simple swing trading is. In this video, were going to take our swing and learn how to see it in two different contexts that will produce the swing. The first will be the first pullback after a breakout of a range. The second will be a balanced reaction leg. In both, we wait for a pullback and a swap of price as a confirmation. I talk about confirmation parts of the swing in “Learning To Read Price Action Part 3″ and” Left and Right Side of a Pivot Entry”.

Foundations of Trading Part 6: A Balance Of Structured and Discretionary Trading

Trading is simple, but difficult due to the uncertain, uncontrollable, ever-changing nature of markets. It’s normal to have emotional reactions to having to make many decisions in an everchanging environment where our money and self-worth are on the line. We can talk endlessly about the phycological side of trading and of dealing with trader’s bad habits, but all it does is make you think there is something wrong with you. Instead, there is something we can do that handles many of these so-called bad habits in one swoop. We can structure a trading plan where we control the things that we can control and make many of these decisions ahead of time so that we are not doing it on the fly while under pressure. I walk through some of this in the video.

Know your method and design precise rules for and know ahead of time:

  • Entry: Know what gets you in
  • Initial stop: know where your stop goes
  • Money management: Know your position size and trade management after in trade
  • Exit: know what gets you out

Now you have limited your decisions down. You can choose to follow the plan or not. If over a period of trades you find that the plan sucks, re-work parts of it and do it all over again for another period of trades. After you have developed the discipline of following your plans, you can have flexibility within your structure.

There is a balance we must find between being too loose and being too rigid. Too loose, and we are all over the place and can’t get any consistent results to evaluate. Too ridged, and we risk not being able to adapt to markets. No plan you can design will be perfect, they all will have possibility and limitation, but I have found in my own trading that having a mediocre plan is better than having no plan. Mostly, we need to match up to our particular method with the money management plan that works well with that method and then follow the plan. You may have some resistance to all of this structure, but take it one step at a time as your ready.

Simple Swing Trading-Part 1

This is going to be a series on simple swing trading with the objective of capturing swings that have a minimum 3:1 risk-reward. We will take what we have learned about the components of a swing and put it all together into simple swing trading. Swing trading doesn’t have to be complicated and can be quite relaxing. It’s just a solid impulse up showing intent, then a reaction pullback, then the sellers in that pullback getting swapped and showing us a possible new leg up to new highs. This kind of swing trading applies to futures, forex, or stocks in any time frame. In this video, we look at a swing trade in the GBP/USD and SBSW.

Stops That Adapt With Market Volatility

One of the few things we have some control over in the markets is in defining our risk. We don’t want to use some out of touch arbitrary stop method to define risk. There are no perfect formulas but if we can develop an understanding of volatility and market structure, we can come up with logical places to place stops. In this video, I show 2 simple methods for calculating stops using swings and ATR, and these are based on price flow itself and adapt to its everchanging volatility. Traders seem to devote all their time to entries but we should study everything we can about stops because a well thought out stop can also be an entry idea. It’s a matter of seeing where buyers/sellers made effort and where that effort got reversed.

Following Live: Theory Into Practice November-December 2020

Keep in mind that when I use the word “follow” I’m not just talking about trailing along behind a market. The word is describing an experience of setting yourself aside and learning from what they are doing. Using a simple swing framework, we learned a few ways we could trade the S&P E-Mini and AUD/USD that we were following. This month we will follow Soybean futures which have been running up smoothly and USD/CAD which has been running down smoothly.

The Swap, a Simple Frame for Markets

It’s easy to get overwhelmed when looking at all the crosscurrents in markets along with all the technical analysis that is out there. Trading does not have to be complicated, it’s a matter of using our tools to see if the buyers or sellers are in control and where that changes. We have several simple ways to map and read markets. In this post, we are going to focus on the simple swap area of a swing and use that as a framework to read and trade markets. The swap area of a swing turning up or down is a significant market structure where the balance of power changes. Learn to see it and then make observations as to how price interacts with that area. Then design ways to read and trade it.

Following Swings Into the Gap on the Left

In the previous post “Gap On The Left”, we looked at a simple, relaxed way to read and follow markets. In this post, were going to combine that with relative swings and follow price down into the gap on the left and let it tell us when it wants to turn back up. So often as traders, we ignore “what is” occurring in favor of what we think or want to occur. You can reference the post “One-Line Practice For Personal Insight” for practice in following swings.

The Gap on the Left

In this video, I will show you a simple visual way to read the flow of the market. Big Gaps are easy to see on the chart, our eye naturally gets drawn to them. A gap is a quick supply-demand imbalance that pushes all the guessing traders (contraction) into or out of their positions (expansion). Use this simple framework to make observations then create your own ways to trade it using those observations.

Following Live: Theory Into Practice. October 2020

This month we’re going to follow the E-mini S&P and Aussie 240 minute swings. Last month saw a big jump in volatility as we followed silver and the Swiss currency. We learned a lot from these charts as bigger swings carved themselves out and the USD/CHF did a transition from down to up. It’s good to see these transitions take place live as you follow and learn to change with change.