Profit is Buying Below Value and Selling Above Value in either order

Profit is Buying Below Value and Selling Above Value in either order. And then there is trading the change in trend.

This defines the essence of trading.

Lets go back to the basics again. There are two types of trades: Inside out and Outside in. Inside out is trading the trend and Outside in is fading the trend. Both types of trading can be profitable as you have seen in this blog.

To be profitable therefore, first I need to determine two things:

1. what the trend is, and,
2. what value is

Both these metrics are related directly to the periodicity I am trading. The trend and value will not be the same for a 30 minute periodicity and, say, a 9 tick range periodicity.

Once I have determined these two metrics on the periodicity I am trading all I need to do is join the order flow in the direction I want to trade. When choosing that place to enter my trade I try and buy below what I see as value and sell above value. I pick those spots where I either see order flow telling me or where I expect order flow to reverse in favour of my proposed trade. These choices, although discretionary, are rule based.

Here is today's chart trading the ES during RTH  on a basis of 1 contract and adding contracts when the position goes against me. Rule based. Its possible to trade this methodology with $10,000 using low day trade margins. Today's chart made over $600. Average for the week was over $800 trading from 8qm until about 11am. Green every day. The purpose of this post is to provide a m less than etric on what could be a basis of a trading plan. Trading is a business and a trading plan should include a projected cash flow. Again I remind you of a story early in this blog about a T-Bond trader I knew in Malibu in California. He traded to make 8 ticks in the T-Bonds in the opening half hour to make his goal every day and then hopped into his Porsche and went to the beach. That was part of his trading plan.

 The takeaway from this post is that its now fairly easy using today's technology to create a trading plan that allows for a good living to be made trading. The chart above is a scalping type trading style designed for lower capitalized accounts who have learned the required skills for a very high win rate and smaller average trades. The chart above shows that all the trades were either profitable or break even. That is the goal to aspire to. It all starts with the trading plan and the continual SIM trading until CP is achieved. I thought that today would be a good day to trade 1 lot as a demo because it's the day before the 4th July holiday and yesterday was already a smaller daily range.

Happy 4th July to all in America.