Constitution of Dust
Article I: General Trading Guideline
Section I: To be able to Trade for a Living
- Item I: I am the type of person that would be happiest if I never had to leave my house except to visit or to shop. Trading will allow me to reach my goal of never having to leave my house to make a living.
Section II: To be able to Trade Multiple Time Frames with Multiple Pairs
- Item 1: I know that if I am not in the market, I will not make any money. Because of this I am propelled to always want to have a trade open. The fact that if I am not in the market, I will no lose money seems not to concern me very much. Successfully trading Multiple Time Frames using Multiple Pairs will allow me the best oppurtunity to always have an open trade.
Section III: To Successfully Enter and Exit Trades as per my Trading Laws
- Item I: It is important that I always follow the rules I have set for myself for entering or exiting a trade. If I do not I will be lost within that trade and will not know how to proceed.
- Item II: If I do accidentally enter a trade as a result of straying from my entry strategies, I should close that trade immediately whether in profit or not to avoid any unneccesary damage to my account balance.
Section IV: To Never Chase Trades
- Item 1: If I come to the party late and miss the exact trading point where I should enter the market, I will sit on the sidelines and wait for a new signal. By trading many pairs on many time frames, a new signal is sure to happen in a short period of time.
- Item II: Having missed the exact entry it is also very risky to set a limit order where I would have liked to be in the market. I am advising myself to avoid using this option to still enter the market where I originally missed my entry price. Price may already be reversing to a new direction at the time my limit order would be triggered.
Section V: To Exit with a Profit and not get Greedy
- Item I: It is important I avoid thinking that I should hold onto an open trade just a little bit longer to increase my profit for that trade. Many times the trade will then turn against me while I am waiting for more pips. Now my tendency will be to stay in the trade even longer as I hope price will get back to the point where I should have origninally exited. This could result in my ending up with no profit or worse yet, taking a loss. With that said, sometimes it can be adventagous to hold onto that trade, but I have accurately read the signs as to how much more profit I really need for this trade.
Section VI: Visually, the Aspects of my Chart must Mean Something to me.
- Item I: It is very important that when I setup my charts, that everything visual has meaniing to me. This way when I go look at a specific aspect of my, important facts regarding current price action will be reveled to me. To have an idicator or an M.A. on my chart that has no meaning or refernce to me will confuse me in my trading and put me in a situation where I could be entering a trade where I shouldn't.
- Item II: It is equally important that I remain comfortable with my charts and how I have them set up and what I am using for visual ques. For this reason, I should not make drastic changes to my charts without very good reason. A lot of research has gone into setting them up like I have, and it should take a lot of research to make a significant change to them.
Section VII: Staying Focused when I am Evaluating my Charts
- Item I: It is important when I open up my charts that I look for specific things which I have defined as my trading startegies. It does me no good just to keep fliping back and forth between charts and timeframes without taking the necessary time to evaluate them based on my trading by-laws. So, when I open up my charts, I should have answered all the question I need to have answered on whether a trading opportunity exits or not. Only then I should move on to the next chart and repeat.
- Item II: If I have determined that one of my trading rules have been met, then I should deal with that particular trade right then and there before moving on to another chart. This way I will not have to remember to come back later.
- Item III: Once I have entered a market or a pending trade I should write down in my journal the pair I am trading, the time frame in which the trade was on, and the stratedgy I used for determining that I should enter a trade. This will help me to not get confused when it comes to possibly enterin a trade on another time frame or exiting that particular trade.
SectionVII: Stay with my Strategies
- Item I: It is important that I stay with my strategies. I have spent many hours deciding on effective ways to enter a trade. As such I have identifiec 3 or 4 ways in which I feel comfortable entering the market. I think it is important not to mix parts of one with parts of another, but follow them to a "T". If I do not do this I will find that I will have a market position open, but that I will be lost as to what to expect or how to manage it.
Secion VIII: Stick to my Money Management By-Laws
- Item I: It is important that I stick to the by-laws I have set up for not getting away from my means and putting too much money at risk. Since my income is limited to start with no means at the moment to replace what I loose. I need to make sure that I follow what I will call "sound money" practices.
Section IX: Limit the time I Spend Trading on a Daily Basis
- Item I: It is important that trading doesn't run my life. That I control my trading. Not that my trading controls me. Spending too much time trading I believe will lead to bad decisions, as well as syphoning all the fun my life would be by my ability to earn a living from home.
Section X: Not to Trade Short Term on Holidays
- Item I: It is important that I remember how holidays can affect and change the dynamics of short term trading. For this reason it is in my best interest to be aware as to which days are holidays, and take some time to stop short term trading on the holiday itself, but possible a day or two before and after the holiday as well. It will remain important to monitor any long term trades during these "days off"
- Item II: It is also advisable to evaluate any open trades thoroughly if I am planing on going on vacation or won't be around my computer for period of time. If I plan on leaving them open, than stops should be in place to shield myself and my balance from any market disasters.
Article II: My Chart Setup
Section I: My Template
- Item I:
Section II: My Indicators
- Item I: The first indicator I would like to mention is actually a combination of 3 EMA's. These 3 EMA's combined help me determine for each specific time frame if price is trending up, trending down or range bound. They are colored Dark Orange on my chart and are as follows:
- 34 EMA High
- 34 EMA Low
- 34 EMA Close
- Item II: Next is another indictor made up of a series of 3 EMA'S. However, rather than help me determine if price is trending up, trending down or range bound on the time frame I have open. It helps me determine these attributes on the next time from above the one I have open. For example, if I have the hourly chart open, it helps me determine where I am in conjunction with the 4-hour chart by plotting the 34 EMA high, low and close of the 4-hour chart on the hourly chart. If I have the 15 minute chart open, it helps me determine what is happening on the hourly chart by plotting the 34 EMA high, low, and close on the 15 minute chart. And so on. The nice thing is that I do not need to switch charts to make this determination. They are colored Indian Red on my charts.
- 15 Minute Chart
- 165 EMA High
- 130 EMA Close
- 110 EMA Low
- 1 Hour Chart
- 165 EMA High
- 130 EMA Close
- 110 EMA Low
- 4 Hour Chart
- 225 EMA High
- 180 EMA Close
- 115 EMA Low
- Daily Chart
- 260 EMA High
- 205 EMA Close
- 165 EMA Low
- 15 Minute Chart
- Item III: Next on my chart is an indicator which I purchased from MBFX Trading which I really enjoy having on my chart. Using it makes it easier to put into perspective the other lower indicators that I use. This indicator consists of the 7 background lines that are visible on my chart. The concept of this indicator is to look to sell when price reaches the upper red lines, and to look to buy when price reaches the lower green lines.
- Item IV: Next is a CCI indicator which I found here on FF which I have done some modifications to and I am expecting to do more such as alerts to my cell phone, etc. I use this indicator in multiple different ways to enter the market.
- Item V: Lastly is a second indicator from MBFX Trading that is used in correlation with the MBFX indicator on my chart. I also use this indicator in multiple ways to enter the market.
- Item VI: I will also use trendlines on my chart. Usually no more than one or two at a time. I will use these in multiple ways to help me enter into a trade.
- Item VII: Oracle Momentum Indicator
- This indicator consists of the Blue and Red Slope Lines on my chart. The concept is that when the blue slope line is below the red slope line, momentum is down. When the blue slope line is above the red slope line, momentum is up.
Article III: Currency Pairs to Trade and Time Frames in which to Trade them
Section I: Which Time Frames and Which Pairs
- Item I: After much deliberation regarding time having to spend at my computer, total risk, and having a life, I think it is best that I focus my attention to limiting both end of day and intra day trading.
- Intraday Trading
- 1 Hour Charts: I will trade the following pairs during the New York session-ish.
- eurusd
- gbpusd
- usdcad
- usdchf
- eurjpy
- 4 Hour Charts: I will trade the following pairs anytime. However, my end of day trading on the daily charts will take precidence.
- All pairs excluding the 5 above.
- 1 Hour Charts: I will trade the following pairs during the New York session-ish.
- End of Day Trading
- Daily Charts: I will trade the following pairs anytime.
- All pairs excluding the 5 above.
- Daily Charts: I will trade the following pairs anytime.
- Intraday Trading
Article IV: Trading Strategies and Using my Visual Chart Aids
Section I: Trendlines
Section II: CCI Divergence
Section III: MBFX Reversal
Section IV: Oracle Momentum
Article V: What Strategies for Which Time Frame
Section I: 1-Hour Time Frame
- Item I: CCI Divergence
- Item II: MBFX Reversal
- Item III: Oracle Momentum
Section II: 4-Hour Time Frame
- Item I: MBFX Reversal
- Item II: Oracle Momentum
- Item III: Trendlines
Section III: Daily Time Frame
- Item I: CCI Divergence
- Item II: MBFX Reversal
- Item III: Oracle Momentum
- Item IV: Trendlines
Article VI: Staying Focused so I Don't Miss that Very Important Entry
Section I: Order in which to Determine if a Trading Opportunity Exists
- Item I: Open up a chart to full screen mode.
- Item II: Verify that all trendlines on that chart are current.
- If they are not current, update the chart with current trendlines before moving on.
- Item III: Determine whether the criteria have been met to place a LIMIT order based on any valid trendline breaks.
- If so, place any LIMIT orders before moving on.
- Item IV: Determine whether we have any divergence forming on the CCI indicator
- If so, make a note of which pair so you can check back later.
- Item V: If we have divergence on the CCI indicator, make sure that the second criteria is met of a level crossing.
- If so, place any STOP entries before moving on.
- Item VI: Determine if price has touched either of the upper green lines or the lower red lines of the MBFX System indicator.
- If so, make a note of this in my notebook before moving on for easy reference.
- Item VII: Check the MBFX Timing indicator and compare it with any notes on the MBFX System indicator to determine if a STOP trade should be placed.
- If so, place any STOP entries before moving on.
- Item VII: Once again, check the MBFX Timing indicator and determine if there are any signals for a continuation trade.
- If so, place any STOP orders before moving on.
Article VII: Entering and Exiting a Trade
Section I: Entrance Details
- Item I: 1-Hour Time Frame
- 6 Pip Buffer
- Figure in spread when entering a buy stop or a buy limit order
- Item II: 4-Hour Time Frame
- 12 Pip Biffer
- Figure in spread when entering a buy stop or a buy limit order
- Item III: Daily Time Frame
- 18 Pip Buffer
- Figure in spread when entering a buy stop or a buy limit order
Article VIII: Trading End of Day Stocks
Section I: Choice of Stock
- SLV - This is a Silver ETF fund that follows closely with the price of silver
Section II: Trading Hours
- I am only going to trade stocks using the daily candlestick charts
- I will evaluate my charts stating at 3:00 p.m. CST. This will give me a chance to contact my broker and place any orders with my before the end of the trading day.
Article IX: Day Trading Holidays
Section I: January
Section II: February
Section III: March
Section IV: April
Section V: May
- Memorial Day Holiday
- I will take a trading holiday the Thursday and Friday prior to Memorial Day, as well as Memorial Day itself.
- I will take a trading holiday the Thursday and Friday prior to Memorial Day, as well as Memorial Day itself.
Section VI: June
- No Mandatory Days Off
Section VII: July
- 4th of July Holiday
- If the holiday falls on a week day, I will take a trading holiday the day before and the day of 4th of July.
- If the holiday falls on a weekded I will take a trading holiday the Friday before and the Monday after.
Section VIII: August
Section IX: September
Section X: October
Section XI: November
Section XII: December
Dust