Winning Rules

[Grey1]

There are rules in market that seasoned traders don’t not break . These rules are simple
and we all know about them but only few people stick to them .

The first rule of trading is stop loss. A trader must know when to stop . This could be a money management stop or a TA stop . I use the second one for variety of reasons.
A stop loss is not negotiable and must not be broken under any circumstance. I don’t break this important rule . I cannot afford to break the rule. Once I break this important rule I might as well pack it in and work for some one else. My destiny is in my own hand . Either stick to the rule or pack it in . We have already discussed in details over the years on this BB where to put the stop so I wont go over it again

The second rule of trading is SOFTWARE POWER . you need some software power to assist you in this game. This is 21St century trading and your opponents all have software power. YOU need that too .

The third rule of trading is letting your profit run . This is very difficult and most traders close position too quick . This could be the root of people losing . The nearest I have come to a crystal ball is exhaustion engine both on stock and the market . Learn how to use it . It can be the between success and failure

The forth rule of trading is acknowledging what phase market is going through .. market trends 230-430 PM 730-900 PM and oscillates in between ( times are approximations ) . when it oscillates we use the strategy 3 when it trends use your own trend following strategy . A good trader can tell when market is trending or oscillating

The fifth rule of trading is a TOP DOWN approach . before opening a position you MUST ( this is not negotiable ) know where market is heading and then move to stock ..

MARKET FIRST STOCK SECOND .

The sixth rule of trading is Risk management. You must learn this . You cannot ignore this . It is not all about entry or exit . I bet if I gave you my vwap engine you would lose if you ignored risk management.

Learn about ATR and how you position size yourself according the stock’s Volatility. I have outlined that in jerry’s thread some where.


The seventh rule of trading is realising this is not a game for second rated traders. Learn all above or market gets ya.

The trading game is really simple . You have no idea how simple it is but it needs education. Correct education . some of you been trading for 5 years now. 5 years is a long time but I bet with you I can make a trader out of the worse of you in 24 hours if you sat next to me and watching me trade. This is called Education . Education does not come with coaches. Most coaches are like vampire and holy water. Ask them to trade live their own strategy and it is as if you have given them the holy water .

I insist trader not to give up on this awesome business as sooner or later you get there. I mean that . Trust me


Grey1

 

[Trader333]

Grey1,

Are you willing to expand on the method you use for determining your own stop loss ? If not then I do understand why.

Thanks


Paul

 

[kako]

Hi

market trends 230-430 PM 730-900 PM and oscillates in between ( times are approximations )

are this times in GMT? i'll also appreciate if u could post the mkt open/close time in GMT.

i also thank u for the contribution(as always). it's a good bundling to the scattered techniques/tips around this BB. very much appreciated.

Regards
...........................
Kako

Ps. lmao to this quote:

Most coaches are like vampire and holy water. Ask them to trade live their own strategy and it is as if you have given them the holy water

 

[ianh]

Hi



are this times in GMT? i'll also appreciate if u could post the mkt open/close time in GMT.

Kako,

Grey1 always posts in local time in the uk which at the moment is GMT +1, but the easy way is that it is 5 hours in front of New York.

 

[Trader333]

Grey1,

I have another question I am interested in your view on the following scenario. Let's say that you have a signal to trade a stock and that the Implied Volatility is at 12c on the1 minute timeframe. You enter and the stock moves 12c in your favour. The move now hesitates so would you consider holding the trade or close the 1 min quantity of stock that you have traded ?


Paul

 

[wheezergeezer]

market trends 230-430 PM 730-900 PM and oscillates in between ( times are approximations )

OR : the first 2 hours of trading and the last 2 hours of trading wherever youre located
I think thats what Grey1 means

 

[Grey1]

Grey1,

I have another question I am interested in your view on the following scenario. Let's say that you have a signal to trade a stock and that the Implied Volatility is at 12c on the1 minute timeframe. You enter and the stock moves 12c in your favour. The move now hesitates so would you consider holding the trade or close the 1 min quantity of stock that you have traded ?


Paul

The term hesitates is subjective. I would not close any postion based on pause in stock movement.

You have to learn to be objective and in this case the answer is NO let it run .

grey1

 

[deepete]

I have some basic questions for you Grey1,

What do you use to determine the market trend for the times you suggested, is it the market as a whole, such as the NYSE or DowJones, or do you look at sectors, and where would the info be available.

Sorry if this is elementary for some

 

[Nastrader]

I have some basic questions for you Grey1,

What do you use to determine the market trend for the times you suggested, is it the market as a whole, such as the NYSE or DowJones, or do you look at sectors, and where would the info be available.

Sorry if this is elementary for some

:

I believe Gray1 uses the DOW, go to the thread listed below:

Hopefully this answers your question (Start Quote):

GREY1's APPROACH TO TRADING US STOCKS (Item #1)
--------------------------------------------------------------------------------

There are many many ways to win the stock market . I will set a foundation for all levels of traders during the course of this thread.

Generally speaking there are two different approaches to intra day trading of US stocks

1) TOP DOWN APPROACH

2) BOTTOM UPAPPROACH

A top down approach is used by professionals.

A top down approach is when a trader starts with analysis of market direction first and thenmoves on to do the stock analysis .

A top down analysts there fore does not move to do any analysis what so ever on the stock unless he has done a full analysis on the market direction .

A top down analysts wants to know where market is heading ( UP, DOWN , SIDEWAY ) during the time frame that he is trading before any analysis done on the direction of the stock . A top down approach is a must for scalper to postio traders of many weeks

There fore if you ever decided to go long or short any stock you must have a definite view on where market going before taking a position . DONOT START WITH STOCK FIRST . DONOT SAY WELL APPL IS STRONG SO I AM GOING TO GO LONG . MOST TIP SHEETS YOU GET IGNORE MARKET DIRECTION AND THEY ONLY GO BY STOCKS VAL UATION DERIVED FROM FUNDAMENTALS.

Now, I want to take this issue slightly further,

The TOP DOWN approach can be expanded into

1) MARKET DIRECTION
2) SECTOR DIRECTION
3) STOCK DIRECTION

This technique is used amongst many technical or fundamentalist ( institutions/Hedge funds).

Now that we know what TOP DOWN is we introduce a strategy ..

STRATEGY 1


IF MARKET IS LONG AND SECTOR X is OUT PERFORMING THE MARKET THEN LONG STOCKS THAT OUT PERFORMING THEIR SECTOR



( REVERSE OBVIOUSLY FOR SHORT MARKET AND UNDER PERFROMING SECTORS AND STOCKS)


2) BOTTOM UP APPROACH

This is opposite of TOP DOWN and often the newbies play this game. When i say newbie i donot mean those who ae new to stock market i mean those who still have a lot to learn to make money from the market.


I will also discuss high frequency strategies in due course which reduces the need for market direction by slicing the time frame and increasing the exposure.


PS:_- There are software available that performs a TOP DOWN Approach automatically and in real time ( AIQ , OMIN TRADER )


Grey1

--------------------------------------------------------------------------------
Last edited by Grey1 : 18-06-2006 at 06:46 AM. (End of Item # 1 Quote)

(2nd Quote from Item # 3 - same thread as above):

The first strategy was a sector strategy . Some traders prefer not to look into sectors and just watch market and stock .

Lets say Trader’s analysis results in a LONG view for the market ( remember we are using TOP DOWN approach,, so if you feel you aren’t sure about the market direction then you don’t move to second phase which is stock direction )

Stock direction

There are some basic rules for stock direction .

These are the rules

1) Stocks that have gapped up the most and stayed in positive territory are LONG candidates ( reverse for SHORT )
2) Stocks that stay positive when market oscillates into negative before moving back to positive are LONG candidates . ( reverse for short )

STRATEGY 2

If MARKET is LONG THEN GO LONG rules 1 and 2

Remember I have still have not told you about the entry techniques . I am just telling you that you have more chance of winning if you are trading in the direction of the market and stock . ( even if you throw a dart at your entry price as long as you are trading according to above rules you have more chance of eventually moving into profit.

Grey1


(End of Quotes for Item #2)

Hope this Helps!

As i am new to this BB, & thus haven't used the Attachments yet - sorry for long post.

Gray1 has more on this subject - Go to his thread Labeled as:

GREY1's APPROACH TO TRADING US STOCKS