In High Probability Trading Strategies, I stress how important it is to have a written trading plan and describe the elements that should be included in any trading plan. A trading plan may include objective “rules” and/or guidelines that must be met before a trade is considered. My suggestion is the first filter to consider a market for a trade should be completely objective.
In HPTS I teach how we use multiple time frame momentum conditions to filter a market for trade direction and trade execution setup. It is a 100% objective trade filter and ups the odds tremendously for a trade with a high probability positive outcome and, at the same time, only identifies trades with completely objective capital exposure.
Regardless of whether or not you use all of the trade strategies taught in HPTS, you should have some completely objective approach to identify whether a market is in a good position for a trade or not. Whether you use a momentum indicator, trend or volatility position or any other technical condition as the filter, it should be objective so you will only consider a trade when the technical position puts the odds on your side.
The technical condition is the first filter to identify if a trade should even be considered. It is not itself a trade execution strategy. The trade filter is only one part of a trade plan that includes other technical factors (price, time and pattern position), objective trade execution strategies and trade management strategies.
One of the primary reasons traders do not succeed or reach their full potential is they do not have a logical and practical trade plan. The unsuccessful trader is usually flying by the seat of their pants with no consistent approach that makes sense. Develop a trade plan with an objective initial filter to identify potential trades and you results should improve tremendously.
Oh yeah. If your trade plan is not written down, it doesn’t exist and you will eventually get your clock cleaned. So remember, trading is like any other business. Plan, review and execute. Then, plan review and execute again. As the old saying goes, “If you fail to plan, you can plan to fail.”
GREAT WORK BY MR MINER ON THE NEW BOOK AND THE BEST SOFTWARE I HAVE EVER USED IN MY TRADING CAREER
THANKS
SACHIN
Robert Miner presents in this material a refreshing and holistic approach to High Probability Trading techniques devoid of the usual mathematical errors and often massaged returns that comprise the content of many trading courses and books.
Throughout my learning curve I have attended many courses and purchased scores of books the majority of which present ‘incomplete’ systems or methodologies that simply don’t work in the real world. I’ve spent many thousands of pounds on study material only to find it littered with errors in everything from coding to performance statistics. Where is the attention to detail and if an author can make so many errors after reviewing his material pre-publishing what is the value of the material it presents?
Just a little disinformation can take you a long way off target and it took me many years and many dead ends to arrive at the door of Robert Miner and ‘friends’.
My introduction to the Dynamic Traders software began four or more years ago when I visited the United States for mentoring. I cannot tell you how pleased I am today that this was the software of choice as it exposed me to Robert Miners work and a whole new adventure. I see the same setups presented in the book occurring every time I sit at my monitors. I’ve always believed in the saying “those that can do and those that can’t teach.” There are clearly some however that can do both and after working with Robert in his Dallas seminar in 2007 he threw down the gauntlet to those present and said “okay (he say’s okay a lot) we’re gonna have bit of fun, a Beat the Guru competition”. Ouch I thought I’m going to be monitored. There you have it in one. Every trade and setup was posted for the month following the seminar and even using a conservative approach Roberts’s end of month returns were exceptional.
The good news however is you’ve found this website. Use the information it provides, apply it and stop looking in the field next door. This is greenest out there; trust me I’ve been in many fields!
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Hi Bob,
I purchased your book and I am reading it right now. It is excellent work and it gave me some new ideas and I feel more confident in my study how to trade successfully. I have a small account ($5,900 only) and I do not want to use more before I learn not to lose more than I already did (60% is gone). So about a year ago I started studying – money management, technical analysis how to select stocks etc and now I am training and slowly returning back to the market. Well when I read your book how to calculate capital exposure, you say do not expose more than 6% of the entire portfolio and if I have a trade exposure set at 3% per trade does it mean I can only open two positions? I.E I am looking at buying Visa (V) at current price $66.41 and a stop loss at $59.99 a risk per share will be 9.67% (66.41-59.99)/66.41. If I set up 3% per trade a portfolio my exposure will be $178.27 per trade (5,900*3%) which allows me to buy 27 shares. If this is correct I do not see how that 6% is accounted into equation except the case when I buy Visa with 3% exposure I can buy only one more stock with another 3% exposure not to risk more than 6%. Or what am I missing? Can you help me to clarify it? Or where on your web I can download the spreadsheet to see how you are calculating this (as mentioned in your book)? Thanks
Martin
Martin:
You are not missing anything. If you have two open trades that total capital exposure of 6% of account, that is the maximum exposure you should accept at any time. No more new trades until one of the existing trades is closed out.
Be ruthless about not over trading or over exposing. Two trade are plenty to manage at any one time.
I’m sure your winning percentage and account balance are going to grow if you use the logical trade strategies and trade management taught in the book.
Welcome back to the business of trading.
Robert
Bob, thanks for the clarification. I agree with your statement that two trades might be enough to manage. In this I am a bit impatient and when I see a trade going my way, I want more than just watching it and I usually search for more stocks to trade.
Well this business is really tough. This last week I was back-testing my strategy and I am loaded with skepticism right now. I am still doing something wrong. Most likely I end up with chasing a stock movement or bad recognition of a pattern, which makes me scared that when I start trading real money I will be losing again.
BTW I found you are from Steamboat. I am from Vail, so greetings to Steamboat…
Dear Mr. Miner,
I finished your book and am starting to apply your methods. I would like to buy the Dynamic Trader software, but can’t afford it right now. I’ll get it as soon as I can.
My question: What momentum indicators do you look at, the current, which are varying as prices fluctuate during the day, or the trailing period. For example, in a weekly-daily analysis, lets say the weekly momentum oscilator is bullish, not OB. And lets suppose, pattern, price and time are right for a long trade. Do you wait for the intra-day daily momentum bullish reversal to go long (which by the end of the day might not be a reversal if price decreases) or do you check if the previous day was a bullish reversal, or do you wait until late in the day when you confirm that the bullish reversal is imminent, or do you wait until the day is over and the reversal is confirmed?
Thank you for your help, I like your book and methods a lot,
Federico Castro
El Salvador
Federico:
Save those pesos. We like to sell software!
Always wait for the bar to be complete before it is considered a momentum reversal. Then use one of the entry strategies taught in the book such as the trailing one bar high/low. If using weekly/daily data, the daily bar much be complete before the momentum bullish reversal is valid.
Robert
for beginner like me, easiest strategy is dual time frame, pattern recognetion is hardest.
I think the best filter for any trading system is to check the news on the stock your trading, the best trading signals occur on price action with no news related to it, so upgrades/downgrades, earnings, guidance, analyst opinions, etc….are all things to avoid trading around in my opinion.