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OneSymbol - Trading System

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Disclaimer: The sole purpose of this document is to introduce you to a sample trading rules and money management system. The rules defined here are not a trading advice. Consider this as a sample system for learning purposes. After reviewing, feel free to create your own system based on your risk tolerance, trading style and capital available. We do not guarantee any success by following this system as success depends on a lot of other factors as well. Money Management is only one aspect of trading.

Set up an excel sheet or log your trades in to manage this system. Practice not to place any trades without reviewing your logs. It is all about cultivating a good mind set. Feel free to modify this system to suit your personality, trading style and initial capital available. Use this as a template. But once you finalize a system that you are going to follow, follow that strictly. Do not change the system as soon as you are hit with a losing or winning streak. Try the system all the way through regardless of winning or losing streak. You can initially try the system using fake money ( paper trades) and see how it works out. Paper trading will also help you tweak the system by reviewing the logs.

This trading and money management strategy is based on focusing on just one symbol.

Create a journal "One Symbol Focused" and Setup two accounts. "Capital Account" and "'Profit_Account'". Initially when you start, all your money will be in "Capital Account" and "'Profit_Account'" will have a balance of $0. We have different set of rules for these accounts as the purpose of capital account is to preserve capital and be conservative and the purpose of the profit account is to grow the account.

Rules for Capital Account

Rule #1. Focus on only one symbol for this strategy. You will trade based on the Setups posted. If you missed to react to the alert on time, do not chase, wait for the next Setup to be posted.

Rule #2. Do not invest more than 6% of the capital account balance in a single trade.

Rule #3. At any given point of time, you will have only 1 active open position.

Rule #4. Do not buy options that expire within 5 days. If the stock goes in opposite direction, time decay will wipe out your investment.

Rule #5 (Optional). Exit Half your position at 50% gain. Exit Strategy is something you can tweek based on your trading experience.

Rule #6. When you make a profit and if the capital account balance is more than your "initial investment level", withdraw 20% of the profit as your reward for hard work. Retain 40% in the capital account, and move 40% to "'Profit_Account'". Consider the updated balance in your capital account as the new dollar amount used as "Initial investment level".

Rule #7. Repeat the same steps again for capital account until the account is doubled. Once your account doubles in value, you can add one more symbol to your focus list. However, you need to dedicate some amount of each symbol and still follow the same rules for each symbol.

Rules for 'Profit_Account'

Rule #1. If you have funds available in the 'Profit_Account', and if your capital account balance is fell below the "initial investment level", move the required funds required to bring the capital account balance to the "Investment Level" from the 'Profit_Account'.

Rule #2. Do not place any trades in 'Profit_Account' until the balance in the 'Profit_Account' reaches 10% of your balance in the capital account.

Rule #3. Do not invest in options that expire within 5 days

Rule #4. You may want to enter your trades in 2 lots as we did for our capital account. But this rule is not mandatory for trades made from 'Profit_Account'.

Rule #5. Only 1 active open position at given point of time in profit account.

Rule #6. After closing the 1st trade, regard less of what the balance is, you will move 20% of the balance to the capital account and invest the 80% in the 2nd trade.

Rule #7. After 2 trades, regard less of the overall balance is, you will move the entire balance in the 'Profit_Account' to capital account.

Rule #8. Focus only on one symbol for all your trades from profit account.

Rule #9. Repeat the steps, all over again. '

I am ready to try this out.   

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