I was not able to paper trade yesterday, big grant deadline that kept me busy from 7am to 8pm. Right now I have work, house projects and family (two kids under three) competing for my attention and I am having trouble getting back to prioritizing trading, though I still don’t want go to the extreme where I’m obsessed with the markets.
Overall, last week was a good start to getting back to trading. Most off all, by the end of the week, with every simulated trade, I was reflexively putting in a Stop Loss order in immediately without hesitation. This is my goal right now is to create automatic trading behavior routines that will then hopefully carry over to when I return to real money trading.
But most of all, I was able to show myself that I am capable of following a very simple set of rules. I was wondering if I was constitutionally incapable of basic compliance to my own intentions, and for me internally, now in reflection, I have more belief in myself that I can be disciplined.
Here are my aims next week:
1) Prepare for the market between 9:00 to 9:45am every day, and paper trade every set up that meets my criteria from 9:45am to 10:15am.
2) Execute all my paper trades with a 0% error rate. I know this is not sustainable, mistakes happen with trading since we are human. But with me, they can happen less. I just need to pay more attention and not be lazy in my mental focus. These mistakes include: entering a stock I already have a position in, shorting/longing when I intend to do the opposite, using the wrong type of order method, putting in the wrong price (especially with stop orders), typing in the wrong ticker, etc.
3) Introduce concept of entering on pullbacks into my simple trading rules. This is what I plan to do:
When a stock crosses over its Opening Range High (ORH) or Opening Range Low (ORL), instead of automatically longing breaks of ORH or shorting breaks of ORL, I will wait for a pullback and then a continuation of the breakout before entering. I’m not going to strictly define what constitutes a pullback and then a continuation of the move, however, for me successfully following this rule means:
- Not entering on the first move across ORH or ORL.
- Not entering a pullback or bounceup that doesn’t first show a continuation in the other direction.
- Entering every set-up that has an initial break, retreats a bit, but then shows a return in the breakout direction.
This adds a little discretion to the plan, but will hopefully give me better price entries, will be more apt to prevent stop orders getting filled on whiplashes, and keep me out of positions that fail to breakout, at least on the first cross of ORH or ORL.
I’m keeping things really simple right now and leaving out a lot of other determining factors in successful trading, but I want to see if I can follow this plan. And you usually can never go wrong with a trading tactic based on “buy only on pullbacks”! Here is my updated full set of paper trading rules:
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Overall
1) Paper trade all set-ups between 9:45 to 10:15am.
Ordering
2) 100 share positions
3) Market orders.
4) Accuracy in price/order type/position size/trade direction/correct ticker.
Entries
5) With all stocks on gapper watch list that break the 15 minute opening range high (ORH) and then pullback in price, enter long if there is a continuation of strength after the pullback.
6) With all stocks on gapper watch list that break the 15 minute opening range low (ORL) and then bounce in price, enter short if there is a continuation of weakness after the bounce up.
Stops
7) Immediately place a .20 cent stop loss on ALL stocks after entry.
8) After stock moves 30% of average daily range in my favor OR if I can no longer monitor the stock because of work, place a trailing stop of 30% of average daily range.
Exits
9) Let stops hit or exit end of day.
