Primary goal this week will be to test my ability to follow my trading rules (i.e. maintain discipline).
PREREQUISITES
Charts - 5 min candlesticks
Fib levels - Generally calculated over the high and low of the opening 15 minutes. In some instances, opening range might be expanded to 30 minutes due to a large initial swing
Moving averages - 5ema, 100ema
Intraday vwap
Source of watchlist - Gap open scan via TradeStation
SETUPS
The following two setups will be in scope:
(1) Pullback to retracement zone [pb2rz]
- This is the "classic pullback" or "perfect pullback" as described by Trader-X
- Trade entries only between 9:55 to 10:30 AM
- Breakout/breakdown of a consolidation (4+ bars) occurring at a significant level
- No trade entries after 2:00 PM
SETUP EVALUATION CRITERIA
Risk/Reward - Prior to entry, evaluate if potential profit is 2x risk (ideal is 3x+). If not, pass!
Setup quality - The quality of the setup should be A or solid B.
PROFIT TARGET
Profit target - Place limit order at the FE at time of order entry.
STOP MANAGEMENT
The stop will be place above/below the setup bar, unless there is clear and compelling reason.
The stop loss will remain at the original location unless:
(1) There is a clear candlestick pattern showing a reversal pattern
OR
(2) There have been 4 bars elapsed since entry, and a clear level or pivot point has formed which will indicate a reversal of the trade
TRADE RISK MANAGEMENT
Risk per trade = 30 basis points (0.3%) of portfolio size. Shares will be rounded off to the nearest 100.
ACCOUNT RISK MANAGEMENT
Max daily account loss = 1% of portfolio
Max intraday drawdown = If profits > $500, drawdown will be kept < 30% of max profits (i.e. highwater mark)
GENERAL REMINDERS
Find ANY REASON to pass up a trade -- I don't have to trade
ZERO trades a day is encouraged!
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