Mental Side of Trading
I will ensure that my mind is ready. I am properly rested, properly awake, and feeling good. I will use the 3-minute breathing exercise before or during trading when needed.
Firstly I will Remind Myself every day about
The 5 Fundamental Truths and 7 Principles of Consistency.
First I will Establish whether it’s a Trend or Trading Range
- I will always check charts on the H1 time frame first.
- I will identify Support and Resistance Levels and establish if it’s a Trend or Trading Range
- I will NOT enter short trades when entry is just above support.
- I will NOT take long trades if entry is just below resistance.
When Trading inside Tall Trading Range
- If it’s a trading range on the M5 but Tall/Wide, I will look for M1 setups between the trading range highs and lows.
- If trading within a tall trading range, Short entries must be within the upper ½ of the TR and long entries should be within the lower ½ of the Trading Range.
What will I do at the open
- I will trade based on the LOBOT or NEOBOT concept at the open which I now call Momentum Breakout Setups.
- I will look for Breakout of the levels I have identified and wait for a pullback.
- I will identify if it’s a trend or trading range before the market opens.
- If it is a Trend candle and it breaks the Trading Range that I have marked before the open, then I may trade a pullback or pullback and retest signal. (Using m1 chart)
Daily Risk Management Action Plan
What will I do if my first trade is a winner and I’m up 3R on the first trade?
- When I’m up 3R and the market is raging bulls or growling bears then I will go for the killer trade of 2% and set a 3R Target. If successful I will win the challenge.
- If the market is slow I will stop trading and wait for the US Session
What will I do if the market is moving and I’m down -2R during London Session?
If I’m down 1R I will see if the market is moving or if it’s faking. If the market is clearly moving and the rent was just a normal loss trade, it was not a DS0, it was not a wrong signal, then I may try again for a clean clear setup. If the 2nd attempt fails and I am down 2R then I will stop trading until the US session.
What will I do if I’m down 1R or 2Rbefore Starting US Session and what will I do if I’m down3R:
- If I’m down 1R and the US session provides good clean setups then I will trade normally. Risk will be defined as per Risk Management Section below.
- If I’m down 2R before the US session I will be VERY careful and only take the BEST and CLEANEST Setups within CLEARLY moving markets. If my first trade is rent, I will stop and come back tomorrow.
What will I do if I’m Up 2R on the Account?
- If I’m up 2R my next trade will be 2% Risk. If I win this, I will win the challenge.
- If I lose the 2% trade I will trade with 1R (post loser) risk and can trade until I hit Daily Stop Loss.
- If I have a winner and the account is above Breakeven I will go for the killer trade.
- If I lose 3 trades in a row I will stop.
- If I’m up 2% or more I will go for the killer trade but if it fails, I will drop to 1% trade until I lose 3 Trades. Finish at BE and come back tomorrow. Next day I will start with 0.7% risk.
Risk and Trade Management
Account Profit Target: $16000 (8%)
Account Maximum Loss: = -12% (-$24,000)
Daily Stop Loss: $-4000 (Official Stop Loss for the Day is -$6,000)
Total Risk at any point in time?
Only take one trade per pair or market.
How much to risk per trade?
Asymmetric Risk Management Model: Risk Per trade will be conditional
Condition 1: Account is at or Above 200K
- As Long as the overall account balance is above 200K the Risk Per Trade should always be 0.7%.
- If it’s the first trade on the account or first trade of the day or if the last trade was a loser the risk will always be 0.7%.
- If the First Trade is a winner and gets 2% then the next trade should be 2% with 3R Target.
- If the Next trade is losing trade then Risk will go back down to 0.7%.
Condition 2: When Account drops below 200K
- Risk per trade will drop to 0.5% and if the last trade is a winner, the next trade will be a 1.5% Trade with a 3R target.
Daily Stop Loss:
The daily Loss Limit is $6000.
Where to Setup up Target Points:
Always set a 3R Target Point. (3R target is a must for this method to succeed) .
One Caveat with Trading Indices
MyForexFunds have a limit of 100 lots. You might not be able to get in that 2% trade. So for the killer trade will have to wait for a Setup on the m5 chart with wider than 25 Stop Loss on DAX40, US30 or Nas100 at the US Open or may even find a good setup during the London session.
Or you may try to get in 2 trades of 1% Each. Try which one works
This method will work on 100K accounts without a problem.
But, you can still trade Dax when the risk does not require 100 lots. e.g. if trading m5 chart and you need 30 stop loss looking for 90 Target, you may be able to trade Dax as well.