ThreeMax - Trading System

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Disclaimer: The sole purpose of this document is to introduce you to a sample trading system that uses both 'Position Size' and 'Money' for Risk Management. The rules defined here are not a trading advice. Consider this as a sample trading system for learning purposes. After reviewing, feel free to create your own system based on your risk tolerance, trading style and capital available. Merely following a trading system does not guarantee any success as success depends on a lot of other factors. However following a trading system may help you with risk management and discpline required for options trading.

You can either set up an excel sheet or log your paper/real trades in sleekoptions.com by creating your journals in order to manage, monitor and measure the peformance of your trading system. Feel free to modify this system to suit your personality, trading style and initial capital available.

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This trading system adopts the original 'ProfitCycle' System for money management with some minor changes.



Minimum Account Balance:
15K or more is ideal for this trading system.
Style:
Aggressive.
Focus Symbols:
Pick 3 Focus Symbols. Dont change your focus symbols for 6 Months. Trade only from your focus symbols.
MultiLots Method:
Yes. This trading system will use three lots. A 'MultiLots' method is where you will be investing incrementally once the trade is identified. For example: Let us say you planned on investing $500 in a particular trade. Instead of investing all of $500 in one go, you will first invest a portion of it, say $150 in starter lot. And then in a couple of hours or days you will add to this position by investing another $150. Please note depending on the trading system you choose, the rules to add second lot may vary.
Starter Lot:
Starter Lot trades will be taken from Primary setups triggered for any of your Focus Symbols. Primary Setups are the setups triggered by the sleekoptions.com core algo.
Second Lot:
Second Lot trades will be taken from any Medium or Low risk Dip-A and Dip-B Setups for the Same symbol. Dip-A, Dip-B Setups.

Second lot trade will be added only to adjust a starter lot trade that did not go your way. Dip setups are not completely algo driven. Check the FAQ to see how the Dip Setups are triggered.
Third Lot:
Third Lot trades will be taken from any Dip-C. Dip-C Setups.

Third lot trade will be added only to adjust a second lot trade that did not go your way.
Protection Lot:
In this trading system you will add 1 Protection Lot trade in the opposite direction of Primary Lot when the second lot trade is placed.
Maximum Investment Per Trade.
No more than $500 or 5% of your capital account balance in a trade. Whichever is higher. For example: Assuming your account balance is 15k. Maximum Investment per trade ( all lots combined) should not exceed $500. If Your account balance is 7k. Maximum Investment per trade ( all lots combined) should not exceed $350. (5% of 7000).
Maximum Market Exposure.
Only 1 Active Position (multiple lots) at any given point in time. You ignore all other alerts until this one trade is fully closed ( All Lots are closed).
What type of Option Contracts can we trade for this Trading System?.
You can trade both CALLS and PUTS for this trading system. As a variation, you may want to trade either only CALL alerts or only PUT alerts to further narrow your focus.
Logical Accounts:
One Account. Capital Account
Lot Ratio:
Lot Ratio for trades placed from capital account will be 1:1:1:2 in terms of dollar value. ( First Lot : Second Lot : Protection Lot : Third Lot).
Profit Transfer Formula:
For every profitable trade from capital account, withdraw 50% of the profit from your trading account.
Exit Strategy for Capital Account Trades when trade is in Profit
Exit all the trades when all the lots combined are in a profit of around 40%. As a variation, you may want to hold until the current term trend is broken.
Exit Strategy for Capital Account Trades when trade is in a Loss
1. Since we use position size as a risk management strategy, you may want to hold until expiry. A conservative approach would be to exit all the postions when the combined loss is above 50% after staying in the trade ( all lots) for at least 2 days.
When do I add Second Lot?
1. If your first lot is profitable you will not add 2nd lot in this trading system.
2. If your first lot trade is in a loss, wait until 2nd lot setups are triggered for the same symbol and in the same direction as starter lot. Strike and Expiry can be different.
When do I add Protection Lot?
1. Add protection lot trade the same time when 2nd lot trade is added.
2. Protection lot trade is in the same symbol as 2nd lot and in the opposite direction. Strike and Expiry can be different.
When do I add Third Lot?
1. If your second lot is profitable you will not add third lot in this trading system.
2. If your second lot trade is in a loss, wait until 3rd lot setups are triggered for the same symbol and in the same direction as starter lot. Strike and Expiry can be different.
When to EXIT 2nd lot Trade?
In this trading system, you will exit all the lots in one go when the combined trade is in profit. Alternatively if your protection lot is in profit you may want to just exit the protection lot trade and retain the rest for a reversal play. Consider time left and how far away is the strike to make a decision.
Multiple alerts are posted in the same direction. What should I do?
Just take one alert and skip the rest until this position is closed.
Multiple alerts are posted in different direction. What should I do?
Take only the starter lot in the opposite direction.
An alert is 2 days old but has not moved much and has not expired yet, can I trade that alert?
No. Wait for a fresh alert.
Any other trading systems that are similar to this?
Check out the below

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