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My Trading Philosophy:

In my approach the market’s action is dictated
by technical indications. Thus, entry & exit
signals are determined based on how the signals portray the past, current,
& future actions of a security

The ultimate market reality for me is the price action. I never consider
the market wrong, only I can be wrong. The market works in probabilities.
There is no 100% certainty in the market’s action. Losses are unavoidable
and an inherent part of trading.

Some losses are just a natural & acceptable part of market uncertainty.
Others provide a lesson that needs to be learned. It is important to distinguish
one from another and learn your lesson after being taught.

Risk is a necessary part of trading for there would be no reward if there
were no risk. I embrace risk and appreciate the fact that it provides me
with opportunity.

Risk control is turning trading into a planned activity. When a reason for
a trade is not there anymore, a trade must be cancelled entirely.

In my approach, a reason for taking a trade depends on what kind of market
environment we are in:

• Trading Range:

• Normal: Scalp plays at the edge of the range back toward middle as momentum
  slows
• Aggressive: Occasional fade play at the edge with expectation of price
  moving to middle

• Following:

• Conservative: If I can catch the first pullback I will do so with
  expectation of a rise
• Normal: Else I will scalp with the trend as long as it continues

• Normal: Only in case of ever-steeping slope will I go for a CT Scalp
• Conservative: Else I will look for confirmation via volume analysis,
  Market Delta, & Trendline breaks on the higher timeframes (610-tick
  & 5-minute+) before entering in the direction of the anticipated
  new trend.

Signs of my reasons for entry no longer being there are:

• Trading Range: A close outside of the range & that closing
  bars high being violated
• Trend

• Following:

• If price fails reverses after the first pullback and closes below
  the reversal candle
• If the consolidation breakout I was playing fails to hold and price
  falls below it.

• If prices consolidate sideways for 4+ bars after breaking TL w/out
  falling
• If prices go on to make new lows then a reversal has in fact not occurred

My Trading Psychology:

The market is my guide. I am not going to impose my opinions on it. I am
going to listen to it and obey it.

Self-control is my major weapon in trading. The market provides the guidance:
I control myself to follow it.

I am comfortable with taking responsibility for my actions. This is what
gives me strength and makes me self-reliant

I take losses with no hesitation and no hard feelings. They become a lesson
to learn for me.

I do not feel obliged to trade all of the time.

I am comfortable with the market’s uncertainty. I act on IF-Then scenarios,
not expecting to know the outcome in advance.

I am uncomfortable with a losing position and cut my losses with no hesitation
when my stop is hit. I am comfortable with a winning position and ride it
without anxiety until my profit-taking signal is generated.

My correct mindset is:

• Emotionally detached

• Focused on market action and not money
• Concentration brought on through bodily relaxation
• Alert, and totally present

My method to achieve the correct mindset is:

• To start each morning off with meditation
• To ensure proper breathing throughout the entire trading process
• To envision that I already am all that I wish to become

When I am looking for a trade, I:

• Will not succumb to the desire to over-trade
• Understand that cash and sitting on my hands is a position
• Only take trades that align with my current setups

When my entry signal is generated, I:

• Trust the setup and take it without hesitation
• Remember to breathe to ensure proper oxygen gets to my brain

When I am in a trade, I:

• Will focus on higher timeframe charts when in a Trend play
• Will manage it closely and cut losses soon if the situation changes

When I am in a trade that moves against me, I:

• Will re-evaluate whether or not the original reasons for entry are still
  valid:

• If yes: then I will leave it alone
• If no: then I will close it out immediately

When I am in a trade that moves in my favor, I:

• Will control my impulse to take profits off the table immediately unless
  that was the plan originally.
• Instead, I will give the trade the proper room it needs to produce even
  higher returns until such a time when the reasons for entry become no longer
  valid.

I am going to use my emotional detachment in order to let my intuition work.
I am going to use my understanding of the emotional side of trading to read
the action of the players and define my action.

My Trading System:

I am a MBTI: ENTP. I score very low on both Neuroticism & Conscientiousness
and high on Openness & Extrovertism.

The latter means that I will tend to be itchy to be in the market and constantly
looking for the “next” move. This in conjunction with my low negative emotionality
scores, quick thinking and highly intuitive mind mean that psychologically
speaking, I am better suited for short-term, intra-day trading and scalping.
This is something I embrace and will build upon, not fight.

My low conscientiousness score simply means that I must be more vigilant
in my planning to remain organized and act deliberately instead of falling
into a pattern of shooting from the hip.

My planned timeframe is Intra-day & Scalping.

I limit my losses to 1.50% of my trading capital.

I control my risk by limiting my position size so that with m planned stop
size, my loss would not exceed $200.

At any given time I am trading no more than 2 positions.

When scalping I can allocate up to %200 of my capital on any given trade
so long as

• The $ at risk does not exceed 1.50%
• It is indeed a position that will not be open for very long
• There is virtually no risk of trading on the security being halted (ie: index futures)

My daily, weekly, & monthly loss is limited to: 2.66%, 6.66%, &
10.00% (Currently:$400, $1000, & $1500)

In relation to margin I use it liberally when scalping & day trading,
but very cautiously when swing trading.

I apply Tape Reading & Technical Analysis to read the market

I will not take a scalp if potential slippage is more than 2 ticks.

I apply the following set of chart patterns, formations, technical studies
and indicators:

• Price & Volume: Particularly look for H&S, & 2T/2B setups;
  Use volume to confirm
• Market Delta Information: To watch for & monitor transitional structure
  development
• $NYSE-TICK, TRIN, & Put-Call Ratio: Market internals I follow to gauge
  market pulse intra-day
• % TICK Indicator: Use validate
• TRIX: Use as momentum oscillator for catching divergences & for confirmation
• Trend Indicator: Use to keep me in or out of the market
• Support, Resistance, & Trendlines
• Flash Formation Fractals (FFFs)
• Sector Trends: Use to monitor the % Change within the market as a whole
  to gauge direction

**System Outlines Removed**

3+ Convergence Play:

10-22-06

• Based on this, it is evident that the quality of any single factor is
  none to important. Instead, I must focus on:

• NEVER TAKING PLAYS WITH ONLY 1 FACTOR and
• STRETCHING THE PROFITABILITY OF PLAYS WITH 3+ FACTORS

My Trading Tools:

For my charting needs I use TradeStation

For trading I use Interactive Brokers mainly with TradeStation as a backup.
I will also make sure to place 10 round trip trades on TradeStation per month
so as not to incur the $160 platform fee.

I will use NinjaTrader as my front-end order-entry
API to use in conjunction with Interactive Brokers

For scanning I will use a TradeStation’s radar
screen & top-down analysis for now. But eventually will upgrade to something
along the lines of Trade-Ideas if & when I ever get more involved on the
equity side again.

Practical Trading:

I am going to start with paper trading. At this stage, I am testing and
fine-tuning my system. I am learning my trading tools. I am going to stay
with paper trading until one of the following conditions is met:

1. I hit my Net Daily Goal of $160 for 10 consecutive days
2. I hit my Net Daily Goal for 16 out of 20 days.

At this stage I will move up to trading live money, again with a Net Daily
Goal of $160. If the either of the #1 or #2 criteria are met,
I will then increase my Net Daily Goal in increments of $40 for 2 more levels
until my NDG = $240. Up until this time, the maximum # of ER2 contracts I
will ever take a position in will be 2. At this however, this limitation
will be re-evaluated.

I keep my trading journal which I use to track and monitor all of my simulated
and live-account trades. I fill it out at the end of each trading day and
evaluate market conditions and my own state of mind using this journal.

If I experience 3 losing days in a row, I will only paper-trade for at least
the next 2, as I try to evaluate what, if anything, is going on.

If I see myself as the culprit, I will revert to paper trading until such
a time when the problem is eradicated. When I do start to trade with live
money again, I will do so at the next lower price/NDG level.

Words of Wisdom

• 2 Biggest Errors Novices Make

• They buy after price has already made a significant advance
• They buy at areas of supply where we objectively know more sellers are
  present than buyers

• You don’t have to be involved in this move, especially if it isn’t completely
  clear-cut
• Opportunities abound, all it takes is time and dedication to find them
• You will never go broke being patient

• Which means that either the Reward/Risk ratio is too low
• Or that you are risking more capital than you are comfortable loosing
• Take this as an immediate warning sign not to proceed with the trade
  and take the time to meditate, relax, and correct whatever the problem
  may be for trading in this state is very hazardous to your capital