Today is officially the last day of the Explosive Growth Mentoring Trading Room. That being said, Casey has decided to continue to open the room for the foreseeable future. Not only have we learned a lot about Explosive Growth, we find that trading with a group is very helpful because there are more eyes looking at charts and finding trading opportunities. As I’ve said, I have been trading profitably for quite a few years now, but I refined some techniques during the training that will allow me to grow my small account (I seeded this account with $240) to easily rival my regular trading account in very short order.
I would like to outline my new Explosive Growth trading plan that was a result of this three-week journey:
- I’m trading fairly large size (0.10 lots – one mini lot for each $250 in the account) for now. I will size this down proportionately to reduce risk as the account grows.
- I enter when price touches a zone that has at least three reversal signals:
- Fibonacci retracement level of a prior move
- Points where the Daily or H4 price stalled or reversed in the past – especially prices that reversed with a pin bar
- Daily or H4, 20 or 40 period simple moving average line
- Price ending in 00 or 50
- Current or Prior High of Day (HOD) or Low of Day (LOD)
- G2/R2 or G3/R3 levels using our StrikeScalp-Exhaustion indicator (RSI Oversold or Overbought)
- I look for a 5 to 10 pip (or more) bounce and close the trade when the price move stalls – especially if it is near a previously identified support or resistance level.
- If the trade goes against me without making the five pips (or if I miss the spike up – which is sometimes the case), I measure prior swings on the hourly chart to see how far the pair could potentially move against me. I calculate how many pips I would have to have between positions to have a maximum of four positions in that space. Each additional position must be a minimum of that number of pips from each other.
- I look for support or resistance for another turn location and enter another position when price reaches that location. The positions must meet the distance criteria in #4 above.
- The take profit for each additional position is the price of the position immediately before it. (i.e. the take profit price for the second position is the entry price for the first position.)
- When a position is closed in profit, I will replace the pending order for that position in it’s original location in case price moves back to that location.
- When profit on all closed positions exceeds the negative equity on open positions, all positions should be watched closely and be closed if the market appears to be turning.
- All entries will be made using pending orders (limit orders) to be sure I get a good price in the exact location I desire. (That curbs my impulsive nature to enter when it gets down near there – but wasn’t as near as I thought.)
- The maximum loss (max loss) on any trade is 50%. That number will be reduced as the account increases in size.
- Daily profit target is 10%. Stop trading when that target is hit and all positions are closed.
- Don’t be stupid. 😉
My rules in the beginning were somewhat different and I had to take a max loss on a GBP/USD trade a few days ago. You can read about it here. Had I been trading with these rules, I would not have taken that loss and would have easily doubled my account by now. As you can calculate, looking for a daily profit target of 10% (although I’ve had as much as a 25% daily gain with these rules), recovering from a 50% loss would take less than 8 trading days. My account was around $300 when I took the max loss. I was unable to get my positions closed (tech issues) until I had lost almost $170 to just over $130. In three days’ trading, I’m back to $190. I expect to be back to my original loss point by next week some time.
Here are more important rules you should observe:
- Never trade more than a few percent of your total portfolio in the manner. This is VERY high risk trading and could potentially decimate an account in short order. I will always maintain my primary trading account using the low risk trading methods that I’ve always used there.
- Never trade with “scared money”. Don’t use your grocery money, mortgage money, car payment money, child support money, power bill money, or any other money that you can’t afford to lose. You cannot trade objectively with scared money and you will just end up giving it to the market.
- Stick to your rules! The rules are there for a reason – especially the max loss rule, the rules are what assure your continued profitability. If you’re uncomfortable with the max loss rule, you don’t have to risk 50%, you can make it 25% or 10% – whatever makes you happy, but STICK WITH IT. If you blow out your account you’re done trading, so stick to the rules!
- Don’t jump into a trade because you’re bored. I guess this is just another version of #3 – STICK TO YOUR RULES!
- Be sure you have rules to stick to. Start with a trading plan. Don’t enter a single trade without a plan. Plan the trade, trade the plan. Did I mention, STICK TO THE RULES!?
Have a great weekend and we’ll see you back in the trading room Monday!
P.S. – I only wish that was my 24-monitor trading station in the image.
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