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Finding Your Sweetspot

Finding Your Sweetspot. Self. Market. System. Self. Market. Stay aligned. System. Get aligned. Market condition. Volatile. Normal. Quiet. Bull. Sideways. Bear. Top down or Bottoms up?. Top down. Bottoms-up. Inductive approach Evidence-based rulemaking

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Finding Your Sweetspot

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  1. Finding Your Sweetspot Self Market System Self Market Stay aligned System Get aligned

  2. Market condition Volatile Normal Quiet Bull Sideways Bear

  3. Top down or Bottoms up? Top down Bottoms-up Inductive approach Evidence-based rulemaking Price behavior “demands” an explanation; people seek patterns to make sense of the world Momentum in one time frame is a signal in other time frames Reinforcing feedback loops can generate more stories/narratives This looks like it could be a …, in which case The intraday trade grows into a swing trade a day at a time Skill: trade framing, reward:risk management Question: does it HAVE to make sense to you in the moment, or is price action sufficient? • Deductive approach… • If….Then Hypothesis: • Swing trade patterns alert you to short term favorable conditions • Higher probability of a directional move? • Higher probability of an outsized move compared to normal? • Both? • When the move begins to happen as templated intraday… • When the price triggers the entry as the “official” mechanical entry • When price is moving towards the trigger and all other signs point to “Yes”…

  4. Top-down trade framing stalking Reasonable price target if the hypothesis of the swing-trade turns out to be “true” Criteria are met on the set-up day Swing systems The system’s edge Perfectly efficient line if we get the hypothetical return over the average number of days in the trade If the trade outperforms and we get our gains faster than average Good enough to stay in Long term average return of buy and hold entry Initial stop (iStop) Is there some time by which the trade “should” start working if it’s going to work? Day 1 Day 2 Day 3 Day 4 Day 5

  5. Remember the market… The market, in all its complexity, which influences our swing trades, and which can change faster than, and independent of the forces moving our swing-trade… Stalking… Stalking… What’s the relationship between your trade and the market condition?

  6. Bottoms-up trade framing Frog opportunities RLCO opportunities Independent, intraday trades, no continuations … Patterns beginning to emerge that carry over the next day? An active swing trade (swing trade exit signal hasn’t fired yet)… Core position - + + Intraday “Turbo” position, based on intraday trade logic Intraday “Turbo” position, based on intraday trade logic Intraday “Turbo” position, based on intraday trade logic

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