PeterD

So, 7pm seems to be the popular choice for a time. Puesto at The HQ sounds good, it's within walking distance of our hotel and it (apparently has parking)So, 7pm seems to be the popular choice for a time. Puesto at The HQ sounds good, it's within walking distance of our hotel and it (apparently has parking). Looks like we currently have 12-13 attendees. I've listed the names below. Andrew BrianP PeterD MikeB True cthennebry juargas2108 Marek raminzand + guest rizza0907 (maybe) Esam E. awm3186 Let us know if your name is not above, if you would prefer a different time or location. Otherwise, We'll get busy confirming a reservation. Thanks!

Looking forward to seeing everyone in San Diego next Friday. Anyone have recommendations on the best place to meet?

I believe the objective of all trading rules is to manage risk. As such, daily targets are important, but only insofar as it helps the trader manage their risk profile. I will state up front, however, that I very firmly believe that a daily targets should not be solely (nor primarily) profit based. On any successful trade, I think we can all agree that you would never completely exit a trade just because you’ve made “too much” money. However, smart trade management tells you that you should scale out of a successful trade to lock in profits and manage downside risk. You should also move your stop-loss point, as appropriate, to avoid profit slippage on any shares you still carry. And eventually, you will exit the trade when the technical indicators dictate…and not(!) based on our achieved P&L. Likewise, I think traders should set a daily target. Not to specifically tell you when to stop trading, but to set a risk parameter that will allow you to reduce downside risk. Personally, here’s how I do it. Before each trading day I set my daily trading target along with my max loss target for the day and my max loss per trade. For illustration, let’s assume those values are as follows: Daily profit target: $500 Max daily loss: $300 Max loss per trade: $100 Minimum per trade risk-to-reward ratio: 1:2 * *(note that this value rarely changes) This tells me that on this day, I cannot, at any point in time, have more than 3 more losing trades than I have winning trades or I will hit my max loss and have to stop trading. The daily max loss is unalterable once set. No exceptions. However, the daily profit target is a guideline only, and here’s the rules I use to manage my risk: 1. Throughout the day (approximately hourly) I self-assess on how tired I am. If at any point I determine I am too tired to be effective, I will force myself to stop trading no matter the time of day or what profit level I am at. This, of course, is much easier said than done. But, through years of practice I have gotten very good at self-regulation and am able to put down my tools and stop trading. 2. Equally, I will also assess how distracted I am. If at any point I determine I have become distracted from the markets for any reason (emails, family, the chatroom, YouTube(!), etc.) and am not “in the zone” for trading, I will take a forced break of a minimum of 10 minutes (up to 2 hours) depending on the situation and time of day. I will then re-assess whether I can, and am willing(!), to re-focus on the markets to make some successful trades. If not, my trading day is done. If I am good to go, I will look at my P&L. If I am over my daily target, then I will not re-enter the market. If I am red but not a max loss, I will stop trading. If I am green but below my target I will consider resuming trading. My reasoning for this is that if I allowed myself to get distracted once today, it’s more likely to happen again if I am over target and feeling comfortable than if I still need to hustle to hit my goal. If I am red and got distracted, then I am obviously not in the game and any continuation of my trading will very likely lead to me hitting max loss. 3. If I am over my target, but not more than 1 loss over (i.e. between $500-600), then I will reduce my trade size by 50% until: a) I have achieved a profit of more than $600 where I can return to full trade size if I like, b) my profit dips below $500 and I must stop trading, or c) I remain between $500-600 through 2 more trades when I will also require myself to stop trading as my trades are obviously not achieving their individual risk-to-reward targets. 4. If I am over my target of $500 but not yet at 2x my target (i.e. $1000 in this example), then I can continue to trade until either: a) I have 2 consecutive losses, or b) I come within 1 loss (i.e. $100) of my $500 initial target. In either case, I must stop trading immediately 5. If I have had an exceptional day and am more than 2x my target, then I allow myself to risk any amount over $1000, if I feel like it. However, note that based on my fixed daily rules, I must still NEVER exceed my maximum loss (risk) per trade of $100. If I slide under $1100 (i.e less that 1 loss away from 2x target), then I must stop trading immediately. The above rules cover most scenarios. I hope this wasn’t too convoluted. It makes perfect sense to me and because I have been applying them for so long I am able to assess the above rules in seconds throughout the day, almost automatically. However, I know they might seem complex, especially when seeing them for the first time. At the outset of this article, I mentioned that I believe targets should not solely be profit based. Embedded in the above rules are my personal ‘targets’ on effectiveness, focus, risk, and fun! Yes, fun! Rule 5 is completely fun based. I allow myself to play with any ‘extra’ money, if I so choose. If that day it feels more fun to keep the money than to trade it, I will. However, if it’ll be more fun to keep trading, I can…as long as I stick within my rules thus limiting my risk exposure. Also note that rules 1 and 2 are done hourly throughout the day, irrespective of my P&L. They precede any consideration for how profitable I am on the day. As a final note, I have the habit of not looking at my daily P&L unless absolutely necessary. I used to stare at it constantly and it led to some bad behaviours. So, now I keep it hidden so as not to distract me or affect my decision making on any given trade. (I do however, look at my P&L on any open trade). So, how do I know my P&L and apply my rules if I can’t see where I’m at? I’ve found that I generally have a pretty good feel for where I’m at. I know if I’ve had a good or a bad day. I’ll usually only check when I’ve either taken a distraction interrupt, if I believe I am near max loss (that one is usually easy), or if I’m not sure if I am just above or below break-even. If I’ve made it to lunch without those happening, then I’ll check before I get up for lunch and apply my rules as appropriate.

Great articles and I love the thought process. The key in this is not only to understand the principals of OODA but to practice them to be able to apply them rapidly and without hesitation in high-pressure situations (eg. active trading). Seems to me we can play with this during the slower times of the day (late mornings and afternoons) and as we get better and faster, move them forward to the early morning and the open.

Robert, thanks for putting these together. Some excellent reminders for all traders- no matter how new (or not!) you may be!

Meet up last night was fantastic. Great to meet so many fellow BearBull traders in person...as well as the 'man' himself, our mentor and demi-God (to be continuously honoured with offerings of news, poor chatroom jokes and lifetime dues), Mr. BearBullTrader himself.

11. Peter 12. Eli See everyone in Montreal tomorrow night!

We were just talking about Ronald yesterday (Friday). Haven’t heard from him for a while in the chat. I think he was from the US somewhere, though. It would be great to hear his wry humour again if he’s still kicking around. I am truly looking forward to meeting you in person Andrew, after studying with you for the past year and listening to your wise words (seriously!) every trading day. See you in Montreal!

Joseph, parking in Montreal is always difficult, but if you can cope with NYC, Montreal should be no issue.

I don't speed up my stop orders too much on the theory that if you're setting a STOP, you shouldn't be looking for an immediate out. I use a pop-up from Montage. I'm not positive which setting gets it, but under Setup -> Trade Settings I have both the "Disable Stop Order Confirmation" and "Enable Fast Stop Limit Order" buttons unchecked. When I go to enter any STOP (limit, range, trailing, market*) in Montage I just change my Route to STOP the pick SHRT or BUY. Then, the window pops up and I fill the rest. *NOTE: I DO NOT use Market Stop orders. I have been screwed by them several times being filled VERY far from my target price when a stop moves too fast. I will note that if you use a Range or Trailing stop it also becomes a market order at execution, but this is unavoidable.