Criteria for Trading

When I set out to develop my trading method and trading plan there were criteria I set that had to be met for me to trade. Those criteria are below:

1) It had to be fun. I know this might not seem that important but if you are not having any fun you will not continue to trade. No one wants to trade all day long and be frustrated even with profits. But by fun I do mean profitable to the extent that I look forward to trading not dreading sitting down at my trading desk. I am in this for the long haul and I want to continue to enjoy the process of trading as my career evolved no matter how long I have been trading. It’s been said “When you love what you do, you will never had to work another day in your life”.

2) It had to be profitable. This goes without saying but the important point here is you have to define profitable beyond positive or negative for the day. You have to have some framework to reference where you are in your daily weekly and monthly trading. That’s where my 2 10 40™ Trading Plan comes in. My minimum goal is 2 points a day. But I know anything over 2 points is bonus money, it’s beyond what I have personally defined as profitable trading. So I know if I have 4 points, I can walk away feeling good about my day and my trading. If I walk away with 1 point maybe it’s just not my day. Maybe coming back tomorrow refreshed is the best course of action rather than push or force trades. That’s where making 4 points the day before comes in real handy as I know it’s 2 points per day on average.

3) It had to be simple. I have tried all of the complicated methods/systems. 3 timeframes, 4 indicators on the charts, when everything lines up, etc. you know the drill. This is just not an efficient use of my time. I want my trading decisions, long, or short, to come from one timeframe while using one higher timeframe prior to the open for upside and downside targets, a road map if you will. The main timeframe should be complete in and of itself. It should be fast enough to catch some nice reversals but slow enough to eliminate the noise factor in the trading. It had to have 3 variables or less in the decision process. 2 indicators and price, that’s all we use and it’s very effective on a day to day basis.

4) Nothing proprietary. I did not want to have to lease nor purchase anything special to trade. It had to be able to be traded on any standard charting platform with out of the box indicators and standard settings. I wanted a method that I could trade on any platform with consistent results. You don’t need anything proprietary to make money, you just need to know how to read a chart.

5) It had to be portable. I used to have multiple monitors, 5 in fact. Now I have one for my charting and one for my room which is my laptop. Yes I trade off of my laptop and have been for over 5 years. It’s clean, compact and portable. If I travel I want to be able to trade if I wish without having to drag a lot of equipment around and I want to be able to trade without all the extra stuff everything thinks you need to be profitable. You just need one laptop to trade and you can hit your daily goal.

So there are the 5 criteria I set forth and have met with what and how I trade. It works day in and day out because the method is founded on sound basic principles of trading and they are never going to change. That is why it worked today, worked yesterday, and will continue to work tomorrow.

Good Trading!