One our new traders sent me this outline over weekend for his trading. Excellent work by him working on his game over the weekend (even if he is a Heat fan). Below are my comments to his adjustments. One of his suggestions is so cutting edge this is worth your review.

Adjustment Plan for current environment

Volume

• Decrease average trading volume by 35%
• Increase volume on the immediate open (Bella note: I prefer the idea of working on your PlayBook on the Open. If there are plays that make sense to you then trade more of them. Making more money on the open is about mastering these set ups for you. Then trading them more often and with more size. I’m not a fan of just saying I want to trade more on the Open. That is not specific enough. I want to trade more plays that make sense to me, where my trading stats are superior, with more size on the Open.)
• Absolutely zero trading from 12pm to 2:30pm (Bella note: Yeah (think Bill Lumbergh’s intonation here) I am not a fan of statements like this. You might want to trade less. You might want to be super careful as the trading volume decreases and trading is more difficult. But there aren’t any trades you would ever make during the midday? I would be slow to make such pronouncements.)
• Lighten up into close, use three lots max

Execution

• Bottom heavy in all positions
• Initial entry and areas to get bigger all via bidding and offering (Bella note: Learning to buy on the bid and sell on the offer is a skills so few learn and is so costly never to master. I like you working to get better at this.)
• Increase average added liquidity by 50%

Risk

• Limit risk to 20% of daily stop on assumed maximum number of attempts to enter position (Bella note and cutting edge idea: I didn’t understand what this meant so called said trader over to my desk to explain.  This is such a cutting edge idea. I have never thought of this. And I should have. The idea is to understand that with certain set ups it will take you more than one trade to get on the right side. So for example in HAL today it took the trader three tries to get on the right side. For each trade only allot seven percent of your daily stop out loss. Do not allot 20 percent and then 20 percent and then 20 percent on three separate trades. This is making this one trade way too important to your trading day. We made this mistake in SCCO today at 31.50. Too many trades trying to catch SCCO around the 31.50 level. Better to give each small trade less risk if it may take a few times to get on the right side. We will write more about this idea going forward. This is one of the best ideas to improve your trading I have heard in years. This idea is just a “wow” as my mom would say. )
• Only take trades where assumed reward is at least 50c

Psychological

• Constantly remind self what trade you are in/getting in and stick to the plan (Bella note: I like the idea of telling myself to do the right thing. If I am two points in the money and the right thing to do is buy more then I must buy more. This works for me. )

Why

Currently the market patterns have changed. This market is very tradable if patient and working hard looking for opportunity. However, adjustment is needed. The Market is no longer giving second chances and rewarding mediocre trading. Meaning a lot of moves are not having follow through, so if they weren’t executed properly the first time, the rest of the day will be frustrating and costly trying to force the second move. Adjustments will help here as it will curb the paying of new high/strength, and rather rely on finding patterns and getting the best possible price. This will also have me more focused on trading the open keenly, as this is where most of the days profit opportunity has been coming from. I’ve noticed that I’ve been sloppy (but profitable) and light on the open. These  adjustments will fix this.