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2010issue C0692-93

A trading-plan that sets entry, stop, trail, and pause together

The archive presents a trading-plan whose trading-rules must be met before any market action. Entry and exit are prepared in advance with time, price, and pattern. A stop-loss is placed at once and then advanced as a trailing-stop. New trades follow the main-trend. Three consecutive losses pause trading for review.

  • Trading-rules are conditions that must be met whenever any market action is taken.
  • A stop-loss is placed immediately after entry and then advanced as a trailing-stop when the market moves in the position's favor.
  • New trades are allowed only in the main-trend or a major correction of that trend, and only when the trading-rules indicate that action is allowed.
  • Three consecutive losses trigger a three-loss-pause so the trading-plan and trading-rules can be reviewed before any rule is changed.
Entries in this reading3 entries
Current trackTrend following168 readingsPre-trade checklist245 readingsStop-loss order297 readings

Trading-rules as conditions for every action

The described trading-plan treats trading-rules as conditions that must be met whenever any market action is taken. In this usage a trading-plan is a written procedure that states when to enter, stand aside, hold, or exit, and trading-rules are the conditions that must be satisfied before any of those actions.

Chosen trading-rules are treated as provisional until the trader has tested them. After that test, the plan requires those rules to be followed consistently.

What must be true before a new trade

The pre-trade-checklist is a joint test of trend alignment, rule confirmation, and time-price-pattern coincidence used before placing a trade. Advance preparation of entry and exit, using time, price, and pattern together, is presented as the way to meet a trend change with limited exposure.

New trades are restricted to the main-trend or a major correction of that trend, and only when the trading-rules indicate that action is allowed. The main-trend is the prevailing directional swing the plan requires a new trade to follow, including a major correction of that swing.

Exposure, the first stop, and the trail

Acceptable exposure on a trade is described as a function of available capital and the success probability implied by the trading-rules.

The risk procedure requires a stop-loss to be placed immediately after entry and then advanced as the market moves in the position's favor. A stop-loss is an order placed immediately after entry to bound the loss if the trade fails. That advanced order is a trailing-stop: a stop moved as the market moves in the position's favor so accumulated gains stay protected.

A position is to be exited by a trailing-stop unless intermediate- or long-term time-price-pattern analysis indicates a major reversal. Time-price-pattern is a combined reading of timing, price structure, and chart form used to judge reversal, continuation, or a major change. If the market does not move after entry, the plan calls for exiting and waiting until a definite trend appears.

A three-loss-pause before any rule change

Three consecutive losses are specified as the cue to pause trading, review the trading-plan and trading-rules, and change rules only after that review trigger. The three-loss-pause suspends trading after three consecutive losses so the plan and rules can be rechecked.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
24 of 38 in the Trend following track
201032-37 pp.Next on Trend followingMulti-horizon cycle signals, trend filters, and stopsA stock-and-futures procedure binds a price, range, and volume composite to cyclical structure and applies the same indicator at three or more cycle lengths so signals can be generated mechanically.
All readings on this track · 38 readings
  1. 1986A Marshall Wave book is assembled one confirmed stance at a time
  2. 1987Operator gut check when two systems conflict
  3. 1988Visual trend rules need one testable procedure
  4. 1988Audit trend and breakout rules sold without tests
  5. 1992Weekly 4 percent close reversal case study
  6. 1992Write down the plan, then wait for the cross
  7. 1994Constructing a three-rule moving-average system
  8. 1995Weekly long-only trend rules with a gated retracement exit
  9. 1997Constructing rainbow charts with repeated smoothing
  10. 1997Three-line break as a one-parameter mechanical filter
  11. 2000Nested horizon trend alignment with a momentum stack
  12. 2001When certainty turns off the stop
  13. 2001Price must confirm every setup
  14. 2001Constructing a color stack from every lookback
  15. 2002Evaluating mechanical trend signals from ten-session average excursions
  16. 2004Trend pullbacks with a fifty-day average and relative strength index
  17. 2005Stochastic overbought as a trend-regime state
  18. 2005Trend-following as one testable signal procedure
  19. 2007One checklist for entry, exit and abstention after a market switch
  20. 2008Parallel listings and divergent trend behavior
  21. 2008Recovery headlines versus trend-regime rules
  22. 2008Constructing an intraday trend procedure with confirming close, retest, and planned exits
  23. 2010Mechanical trend-following system design, stops, and validation
  24. 2010A trading-plan that sets entry, stop, trail, and pause together
  25. 2010Multi-horizon cycle signals, trend filters, and stops
  26. 2012Weekly bear-market and shock signals as a mechanical procedure
  27. 2013A 2013 rates week as a structure-first exit drill
  28. 2013Trend following as one testable procedure
  29. 2013A forex veto checklist: trend, pair economy, and crowd bias
  30. 2015Relative-strength-index rules under a 20-percent trend filter
  31. 2015Trend-gated oscillator entry and exit rules
  32. 2016Trend process versus end-goal trading
  33. 2017Gold as a classroom for one midterm-trend procedure
  34. 2017Falling-knife FX longs wait for a four-hour trend turn
  35. 2018A closed procedure for quarterly sector rank slots
  36. 2018A recursive median as shared state for trend rules
  37. 2020Moving-average construction as an objective trend filter
  38. 2020Constructing first and second cross trend entries
By fieldDecision process416 readingsBy year2010169 readings
All 168 readings tagged Trend following
Also on Trend following5 readings
1992Write down the plan, then wait for the cross2001Price must confirm every setup2006Relocating trading certainty to the decision process2007One checklist for entry, exit and abstention after a market switch2010Four-gate veto before trend entries