Big Mike's Trading Blog

Day trading futures, discussing money management and trade management techniques, and more

My own trading method

I continually receive requests on what I use for my own trading method.  While this info is spread out all across the forum in the form of my replies and chart markups, I did write this one post and I wanted to share it here on the blog as well.


I only trade discretionary setups, I have no automation. Within my pre-defined method and plan, I have clear concepts of when to put on trades and when to exit them. 

I am always evolving and hopefully doing so in a positive manner  You can just read the first few posts of this thread blog to even see how my method has continued to evolve. I am more and more and more focused on price action solely, trading completely naked without indicators, and just focusing on what price is telling me, and pairing that with good money management and experience.

There is no hard fast rule of when to place or exit a trade. I just have concepts which are based on price action patterns. I prefer to follow trends and buy breakouts and sell breakdowns.

I don't use a calculator and say that this trade is 0.8:1 or 1.5:1 risk/reward. But, I do have a max risk, and if the max risk is not sufficient to properly place my stop, I don't trade that setup. I always aim for a big pay off. I position myself to reap rewards. By scaling out, I take some quick winners to help build my confidence and play to some psychological needs, and then I position other targets to reap maximum rewards. The targets are all based on pre-defined support/resistance areas. I know my targets before I ever enter the trade, and they are never a static amount.

I may take some trades that have a lower than 1:1 R/R, but I don't do so intentionally. They may just be something like 0.8:1 and I didn't judge it quite right. When you place a trade, you have no way of knowing if this trade is going to hit your target or not. Even if it does hit your target, you have no way of knowing if it will then blow through that support/resistance area and then continue running to the next level. All you can do is make smart decisions and position yourself to reap maximum rewards.

I do have daily targets. I've got a lot of other stuff I work on each day (forum, for instance), so I find that having a pre-defined target helps me trade to a goal, then stop. The goal is always evolving. The goal also does not have to be based on profit and loss, it can be based on how well I am trading, or how well the market is moving.

I don't anticipate the type of day. I do, in general, find Wednesday's to be some of the best days because of the increased volatility usually present due to the inventory reports (oil). Other than that, I trade what I see. I mark trendlines on bigger time frames and take note of key s/r areas. I then just focus on 'what-if' scenarios. If the market does abc, then I will do xyz. If the market instead does abc2, then I will do xyz2. I don't care which one the market does, and I have no interest in trading in the middle. I'm waiting for someone big to move the market, and I then hop on and ride the move. I don't want to be in the middle and try to do the moving. This method works with trend following.

Many people want me to say:
- Here is my magical indicator that says when to go long and short.
- Here is my stop and target amount.
- Here is why I entered the position.
- Here is why I exited the position.
- Here is when to trade.
- Here is when not to trade.
- Here is what your daily goal should be.
- Here is what your daily stop loss limit should be.

These answers don't exist in this way. And if you (not talking to you rassi, but everyone) are still searching for answers to these questions then I think you need a wake-up call because I personally believe you are on the wrong path.



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