Revision to Trading Protocol
After 6 weeks it was time to check I was still doing what I said I was
A few revisions.
Trading Protocol
Trading one contract of near month Eurostox 50 at a time.
Postions will normally be held for less than one hour.
Method.
1) Direction of medium-term trend established though the 10-minute chart.
2) Trades will only be entered in the direction of the 10-min trend.
3) Chart set up will be 1 minute, with EMAs, 30 low, 10 close and 30 high and 14 CCI.
4) Long if 10ema above 30 high. Short if 10ema below 30 low.
5) Entries will be made on pullback to trendline in existing trends, this will be confirmed through the use of CCI on the one minute chart.
6) Entries will also be made on support/resistance/pivot points.
7) Patterns such as triangles, double bottoms and tops and head and shoulders will be traded on confirmation of breakout, at pullback. Patterns will be traded both in the price and on CCI.
8) Candlestick patterns on the 10-minute chart will also be traded, this chart will have stochastics, bollinger bands and pivot points marked on it.
9) A daily chart will also be open.
10) On the 1 min chart gaps between the Mas of more than 5 will be heeded as warning signs, on very large gaps, +15 and above reverse postions may be taken on their presence, provided this is confirmed by CCI.
11) Low risk entries are where Mas have closed up after trend, CCI moves above 0 and actual price is above 10 close EMA.
* I am currently evaluating the use of a 3 min chart with the same settings as the 1 min chart to be used for monitoring/watching. This would be used to set up entries then to be traded from the 1 min chart.
Capital protection
Stops will be placed at 1% of the total account value (ie risk no more than 1% on any one trade). In reality the system I am trading should allow stops to be set closer than this but this is the maximum drawdown on any one trade. Trailing Stops (6 or 7) will be set as soon as position is opened.
On the basis of the previous weeks closing acccount balance I will not trade with real money during any one week should my losses amount to more than 2% of my weeks opening balance. The reason is that when I am trading badly I need a rule to take myself out of the market for a while.
In an emergency, if a position is open and not covered with a stop I will open a hedging bet on the FTSE via D4F. Should power be off and I am not able to use the on-line service I can use the mobile phone to open the bet.
Record Keeping
A simple A4 sheet with the following layout:
Date
Long/Short
Price
Duration
Rationale for opening
Rationale for closing
Points won/lost
Grade on the following criteria:
1 - Entry and Exit excuted as plannned, followed protocol.
2 - Poor entry/exit, followed protocol
3 - Poor entry and exit, ignored protocol.
Exiting trades.
1) When stop is violated
2) Via trailing stop/CCI or Price trendline break.
3) By discretion – trade “feels” wrong, price stalling.
