If you just stumbled across this post...I highly recommend you read the 1 and 2 in the series first, then come back to this. Here’s the links below:
Click here to read Series 1
Click here to read Series 2
Let’s face it, talking about a trading strategy (unless to traders) is enough to make anyone's eyes glaze over in boredom. Trade strategy evolves with markets, seasonality and new and exciting instruments to trade. However, to a novice trader, arriving at a Trading Strategy and the importance of having one, is typically through the crucible of losses. Why? Because you have to do the work to get paid. Just like a 9 to 5 job, if you don't show up and put in the work, the long hours, you don't get a paycheck. Trading for your own account is no different. Wait, I take that back, the boss doesn't fire you when you fail to put in the work, the boss just goes into your bank account and deducts a bunch money. There’s a million clichés about trading market. None more applicable than, “Nothing humbles a man quicker than the stock market”. Markets have no room from egos, bombastic traders, and braggers. Those types traders all have wax wings (Icarus reference). lol
But I get it. Learning this stuff can be boring. Think of it this way, if trading for profit was easy then everyone would do it. Trading successfully for profit consistently over a long period of time is undoubtedly NOT easy.
The below is my complete trade strategy. The items are my tactics.
Trading for Profit Strategy:
1. Trade Strategy Allocation-Discussed
2. Execution Strategy
3. Trade Plan Worksheet
4. Accounting-Tracking Drawdown & Measuring Risk
5. Analysis
So just to recap, we went over Trade Strategy Allocation. 60% trend, 30% premium sales, and 10% scalps and day trades. That’s is similar to portfolio diversification with Growth, Income and Speculation. But I am not an investor, I’m a trader. I’ll explain the technical difference another time, suffice to say, my goal is to grow my account over time consistently (Full Stop). My instruments of choice are, Crypto and Futures Options. With respect to crypto, I only trade tier-1. That’s BTC, ETH and SOL. I stick to the best. I do not delve in other crypto at all.
In this post, we will discuss Execution Strategy and Trade Plan Worksheet.
Execution Strategy
Off all my holdings, the only thing I own is crypto currency. I would even love to not own crypto but there’s no options to sell, so I have to go out on the market and buy or short. This brings me to my trade preference. I want to ALWAYS be a seller. Owning something outright adds to my risk profile. So, for example, let’s say I am bearish on the stock market. Instead of buying puts or outright shorting the indices...which can be expensive, I like to sell. So, I’ll sell out of the money calls.
Click here for a previous trade I posted to Trading View.
In my opinion sellers will always have the statistical advantage over a buyer. I won’t spend a lot of time on this in this series, suffice to say, I gravitate towards being a seller to advantage myself. My orders are 98% always limit orders or in some rare occasion, “OCO” (One Cancels the Other) or “If This-Then" orders, (If price gets here, then sell this, at this price.) But generally, I like to keep things simple with Limit orders. I honestly can’t remember if I have ever done a market order. I don’t think I have, but I’m not going to swear to it. Market Orders means you should’ve never owned or sold in the first place and the analysis quite frankly stunk on that trade. Now a lot of stock traders do market orders due to company announcements of accounting irregularities, fraud, something that cannot be analyzed. Hence why I did NOT include stocks in my instruments of choice. I never buy stocks. NEVER. Too much safer money to be made elsewhere. My orders are mostly placed in advance. I let price come to me versus the other way around. So, to sum it up, I try to be a seller who uses limit orders.
Trade Plan Worksheet
I’ve heard some successful traders do a journal. I tried that early on. The reason I abandoned that is I never went back and looked at previous trades and the conditions at the time of trade. It just became a diary of sorts with no value to the process of placing successful trades. I do a trade worksheet. I had pads of these worksheets printed and padded. After I do a trade I 3-hole punch and keep in a binder for future reference. My binders are labeled INDEX, OIL, NATGAS, GOLD, SILVER and CRYPTO.
The fields of data on the worksheet are:
Date, Execution Time, Qty, Description, Price, Stop Price, Commission, Trade Goal (What I am anticipating to make on this trade?) Reason for Trade (Typically Chart Attached and stapled), Other information (If I want to add something specific to recall at a later date).
The above worksheet may seem like a lot and that’s by design. You see when I was a novice trader, I lost a lot of money. It got so bad, that I started noticing myself think before doing a trade, “why are you in a rush to lose money”? I always thought back then when I had a trade in mind, I had to place it right there and then. I spent little time analyzing, and most of the time watching the screen. The inactive time of watching the screen would cause my mind to wonder if I had made the right decision. That indecision would cause me to make premature or outright bad decisions. Therefore, I started little by little adding things that eventually lead to a process occurring before doing every single trade. Today, I spend 90% labeling charts (as shown above in my current Ethereum chart). As I do so, I eventually see set ups, and then set alerts based on my analysis. If I get an alert, I can go back into that chart and review my analysis and decide to enter a limit order at that time, or continue to watch. I actually try to trade less and less. I would rather put on 20 trades per year that each average 20%, then 20 trades per month and risk the heightened activity would result in a monthly loss.
Lastly, every trade gets a stop limit order the moment I initially get filled. All those details need to be worked out in advance, and the worksheet ensures I have done the work.
I’ll conclude this series in my next post.
Best to all,
Chris
Click here to read Series 1
Click here to read Series 2
Let’s face it, talking about a trading strategy (unless to traders) is enough to make anyone's eyes glaze over in boredom. Trade strategy evolves with markets, seasonality and new and exciting instruments to trade. However, to a novice trader, arriving at a Trading Strategy and the importance of having one, is typically through the crucible of losses. Why? Because you have to do the work to get paid. Just like a 9 to 5 job, if you don't show up and put in the work, the long hours, you don't get a paycheck. Trading for your own account is no different. Wait, I take that back, the boss doesn't fire you when you fail to put in the work, the boss just goes into your bank account and deducts a bunch money. There’s a million clichés about trading market. None more applicable than, “Nothing humbles a man quicker than the stock market”. Markets have no room from egos, bombastic traders, and braggers. Those types traders all have wax wings (Icarus reference). lol
But I get it. Learning this stuff can be boring. Think of it this way, if trading for profit was easy then everyone would do it. Trading successfully for profit consistently over a long period of time is undoubtedly NOT easy.
The below is my complete trade strategy. The items are my tactics.
Trading for Profit Strategy:
1. Trade Strategy Allocation-Discussed
2. Execution Strategy
3. Trade Plan Worksheet
4. Accounting-Tracking Drawdown & Measuring Risk
5. Analysis
So just to recap, we went over Trade Strategy Allocation. 60% trend, 30% premium sales, and 10% scalps and day trades. That’s is similar to portfolio diversification with Growth, Income and Speculation. But I am not an investor, I’m a trader. I’ll explain the technical difference another time, suffice to say, my goal is to grow my account over time consistently (Full Stop). My instruments of choice are, Crypto and Futures Options. With respect to crypto, I only trade tier-1. That’s BTC, ETH and SOL. I stick to the best. I do not delve in other crypto at all.
In this post, we will discuss Execution Strategy and Trade Plan Worksheet.
Execution Strategy
Off all my holdings, the only thing I own is crypto currency. I would even love to not own crypto but there’s no options to sell, so I have to go out on the market and buy or short. This brings me to my trade preference. I want to ALWAYS be a seller. Owning something outright adds to my risk profile. So, for example, let’s say I am bearish on the stock market. Instead of buying puts or outright shorting the indices...which can be expensive, I like to sell. So, I’ll sell out of the money calls.
Click here for a previous trade I posted to Trading View.
In my opinion sellers will always have the statistical advantage over a buyer. I won’t spend a lot of time on this in this series, suffice to say, I gravitate towards being a seller to advantage myself. My orders are 98% always limit orders or in some rare occasion, “OCO” (One Cancels the Other) or “If This-Then" orders, (If price gets here, then sell this, at this price.) But generally, I like to keep things simple with Limit orders. I honestly can’t remember if I have ever done a market order. I don’t think I have, but I’m not going to swear to it. Market Orders means you should’ve never owned or sold in the first place and the analysis quite frankly stunk on that trade. Now a lot of stock traders do market orders due to company announcements of accounting irregularities, fraud, something that cannot be analyzed. Hence why I did NOT include stocks in my instruments of choice. I never buy stocks. NEVER. Too much safer money to be made elsewhere. My orders are mostly placed in advance. I let price come to me versus the other way around. So, to sum it up, I try to be a seller who uses limit orders.
Trade Plan Worksheet
I’ve heard some successful traders do a journal. I tried that early on. The reason I abandoned that is I never went back and looked at previous trades and the conditions at the time of trade. It just became a diary of sorts with no value to the process of placing successful trades. I do a trade worksheet. I had pads of these worksheets printed and padded. After I do a trade I 3-hole punch and keep in a binder for future reference. My binders are labeled INDEX, OIL, NATGAS, GOLD, SILVER and CRYPTO.
The fields of data on the worksheet are:
Date, Execution Time, Qty, Description, Price, Stop Price, Commission, Trade Goal (What I am anticipating to make on this trade?) Reason for Trade (Typically Chart Attached and stapled), Other information (If I want to add something specific to recall at a later date).
The above worksheet may seem like a lot and that’s by design. You see when I was a novice trader, I lost a lot of money. It got so bad, that I started noticing myself think before doing a trade, “why are you in a rush to lose money”? I always thought back then when I had a trade in mind, I had to place it right there and then. I spent little time analyzing, and most of the time watching the screen. The inactive time of watching the screen would cause my mind to wonder if I had made the right decision. That indecision would cause me to make premature or outright bad decisions. Therefore, I started little by little adding things that eventually lead to a process occurring before doing every single trade. Today, I spend 90% labeling charts (as shown above in my current Ethereum chart). As I do so, I eventually see set ups, and then set alerts based on my analysis. If I get an alert, I can go back into that chart and review my analysis and decide to enter a limit order at that time, or continue to watch. I actually try to trade less and less. I would rather put on 20 trades per year that each average 20%, then 20 trades per month and risk the heightened activity would result in a monthly loss.
Lastly, every trade gets a stop limit order the moment I initially get filled. All those details need to be worked out in advance, and the worksheet ensures I have done the work.
I’ll conclude this series in my next post.
Best to all,
Chris
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