All Trading Plans Are Frankenstein

“Frankensteining” your systems is usually seen as a bad thing - but all creative and/or complex thinking is really just a combination of things you’re piecing together from experience and education.

Over the years, I slowly migrated away from truly structured trading (I know, right?!), and increasingly started trading….fast.

The more of a scalper I became, the more trades I took.

The more trades I took, the more difficult it became to journal.

….and my performance stalled in a big way.

At the same time, I pulled back from trading as my main focus and poured everything into my “other” career.

Now, I’m making a focused return and I’ve quickly realized I’ve developed a few bad habits:

#1) Trading on “gut feel” instead of a formal plan. This is tricky because we can play the game on instinct and win - at least for a while. I imagine this is what gamblers feel like. I never had to deal with this before, but the feeling has deffo crept in.

#2) Overtrading. Honestly, this is the big domino. This is the cause behind everything from revenge trading to greed to all the other negative emotions that trigger bad decisions.

#3) Breaking DLL (and other rules). Again, I used to be SO disciplined - but my rule-following has eroded. Overtrading and “gut feel” has led me to bump up against my rules so many times that, at some point, I stopped respecting them.

So, on the surface, that’s not great.

But, as with all things trading - everything’s a double-edged sword.

If the above are my negatives, they’ve also come with a few positives. I’m quick to build a bias and take action.

So, this week, my homework is to finalize my formal trading plan!

If you’d like a copy, just follow along and keep an eye out - I’ll share it here.

(but, believe me, you need to create your own version)

But, I digress.

Back to Frankesteining a trading plan.

I’m mostly grabbing a system I learned in the old James16 group, 15ish years ago - “The Knife”.

It’s a simple MA crossover system, so you can use it as a reversal and/or pullback system.

I use the 9/14/21 EMAs for no good reason other than I like them.

Here’s a reversal confirmation entry (actually, 2 possible entries, depending on how aggressive you want to be). There’s a clear up trend, following by the EMAs crossing over and the price coming back to test and fail:

This one’s a breakout pullback on the 1m. 1m OR levels on the NQ are super important, so it’s nice to see some confluence happen here:

That’s the basic structure I’m looking for. Exits trigger when price starts to close on the wrong side of the EMAs.