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MarketLife Ep 21 – Pulling the trigger: where, how, and why?

Podcast-Cover300A look at how to execute trades: where they set up, and how, when, where, and why to pull the trigger–to make the decision to get into or out of a trade. Here are the show notes:

  • Key assumptions:
  • Most of what we see is random.
  • I will be wrong a lot.
    • So I can’t be emotional about being wrong
    • I can be “wrong” can be for many reasons, most of which are beyond my control and knowing.
    • Losing trades are a combination of “real” patterns failing and random garbage
  • Application
    • Wait for a market to make a big move
      • Bands and averages
        • Tendencies around bands and averages
        • How to use
    • Decide mean reversion or momentum?
      • Does it matter?
        • Yes, but you could make a good argument that it doesn’t
        • Can make $$ being long or short at nearly any point (can also lose!)
    • Momentum
      • Sharp move usually leads to at least one more sharp move
      • A trending market is likely to continue
      • Momentum against the trend is a problem
      • Action following the move can help to separate
    • Mean reversion
      • Large moves are reversed
      • Spikes out of non-trending markets tend to fail (meaningless statement? No.)
      • Keep everything “smaller”
  • The actual entry
    • Doesn’t matter as much as context
    • Many books with numbered bars, but is this the best way?
    • Identify context (potential) first.
    • How to get in?
      • Sorta doesn’t matter
      • Breakout of previous bar
      • Lower timeframe
      • Previous close
  • What matters a lot more:
    • Correct risk
    • Getting out
    • Trade management decisions

If you enjoy the podcast, one of the very best things you can do for me is to leave me a review on iTunes here.

Also, if you like the music for this podcast, then be sure to check out Brian Ashley Jones, my friend, and a fantastic singer-songwriter.

Enjoy the show:



Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.
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