finding your sweetspot
DESCRIPTION
Finding Your Sweetspot. Self. Market. System. Self. Market. Stay aligned. System. Get aligned. Market condition. Volatile. Normal. Quiet. Bull. Sideways. Bear. Top down or Bottoms up?. Top down. Bottoms-up. Inductive approach Evidence-based rulemaking - PowerPoint PPT PresentationTRANSCRIPT
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Finding Your Sweetspot
Self
System
Market
Self
System
Market
Get aligned
Stay aligned
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Market condition
Bull
Sideways
Bear
QuietNormalVolatile
Top down or Bottoms up?
Top down• Deductive approach…• If….Then Hypothesis:
– Swing trade patterns alert you to short term favorable conditions
• Higher probability of a directional move?• Higher probability of an outsized move
compared to normal?• Both?• When the move begins to happen as
templated intraday…• When the price triggers the entry as the
“official” mechanical entry• When price is moving towards the trigger
and all other signs point to “Yes”…
Bottoms-up• Inductive approach• Evidence-based rulemaking
– Price behavior “demands” an explanation; people seek patterns to make sense of the world
• Momentum in one time frame is a signal in other time frames
• Reinforcing feedback loops can generate more stories/narratives
• This looks like it could be a …, in which case• The intraday trade grows into a swing trade a
day at a time• Skill: trade framing, reward:risk management• Question: does it HAVE to make sense to you in
the moment, or is price action sufficient?
Criteria are met on the set-up day
Initial stop (iStop)
entry
Reasonable price target if the hypothesis of the swing-trade turns out to be “true”
stalking
Perfectly efficient line if we get the hypothetical return over the average number of days in the trade
If the trade outperforms and we get our gains faster than average
Is there some time by which the trade “should” start working if it’s going to work?
Long term average return of buy and hold
The system’s
edge
Good enough to stay in
Top-down trade framing
Day 1 Day 2 Day 3
Swing systems
Day 5Day 4
Remember the market…
The market, in all its complexity, which influences our swing trades, and which can change faster than, and independent of the forces moving our swing-trade…
Stalking… Stalking…
What’s the relationship between your trade and the market condition?
Frog opportunities
RLCO opportunities
Patterns beginning to emerge that carry over the next day?
An active swing trade (swing trade exit signal hasn’t fired yet)… Core position
Intraday “Turbo” position, based on intraday trade logic
Intraday “Turbo” position, based on intraday trade logic
+ -Intraday “Turbo”
position, based on intraday trade logic
+
Bottoms-up trade framing
Independent, intraday trades, no continuations …
