Prop Training Section 3 - Items to Check

Checks

Determine whether to buy a stock based upon how many indicators are in your favor. We call them checks. Checks that are in your favor. For example, if the corresponding futures are in your favor then √. If the corresponding futures are in your favor and a held bid then √√. There are also indicators that may be against me. For example, I may find √√ but the Inside Market/Box may not be in my favor. So in my head I eliminate a √. It is like if you are dating. You ask are they attractive √, are they nice √, do they like Dave Matthews √√√. If they have a lot of checks then you keep dating them. If you have a lot of checks in your favor with your position, then you stay long.

Let's go over the list of indicators that provide a √ for us.

1) Corresponding Futures
2) Inside Market/Box
3) Held Bid
4) Unusual Hold on the Bid
5) Prints
6) Pattern of the stock
7) Catalyst
8) Trading bias
9) Intraday level
10) Big Buyer
11) You trade the stock well
12) Specialist treats our orders fairly
13) Risk versus reward is favorable
14) Stock has potential to explode
15) Can’t get hit on the bid
16) Stocks in sector are strong
17) Breaking News

We will discuss each of the above in our lecture.

But if the Prints are in my favor, the stock is above an important intraday resistance level, a bid has just held, you trade the stock well, the Inside Market/Box looks strong, and the corresponding futures are in my favor and I am long, then my position is √√√√√√. If I see the pattern of the stock and the Inside Market/Box is in my favor and I get long, then my position is √√. We want multiple checks in our favor. The more checks the better the position.

Also, one indicator may earn multiple checks. For example, ES#F changes from 0 to 10, that is worth √√. Or if you spot a Held Bid, then that may be worth √√. If you spot and Unusual Hold on the Bid then that is √√√. If a stock has just cleared a crucial intraday resistance level, then that may offer √√√. If you notice a huge seller lift, then that may offer √√√.

While trading you should quickly compile a list kept in your head of how many indicators are in your favor and how many indicators are against you. The more checks in your favor the better your position. Not all positions are equal.

You may start a position with √√√√√√ and during the position have only √√√ left. What are you going to do now? Before you opened your position you should consider what you will do if some of your checks disappear during your trade. You must develop a detailed and executable plan before every trade.

Finally, you may lighten up with a big position if some of your checks disappear. You may start with √√√ and then the position may become √√√√√√ so you add a lot to you position. But then the position may be √√√ again and you may lighten up. Good traders constantly evaluate their positions.

Summary

1. How many Checks in my favor?
2. I am searching for multiple checks
3. I am constantly reevaluating my positions based upon how many checks I have in my favor
4. I may lighten up or sell if I don’t have the same amount of checks
5. Good traders constantly evaluate their positions