This is for those wishing to day trade the markets. This very efficient model (if followed correctly) ensures every trade idea we generate has a built in 3:1 reward to risk ratio and a high probability of success. Relying mostly on technical indicators, this model is strictly for those wishing to be in and out of trades the same day.
Model criteria
Portfolio initial balance: $10,000
Yearly goal: 20% return or $12,000
Margin requirement for trading unit: $1500
Maximum risk capital: $8,500
Max risk per trading day: $500
Reward to Risk parameters
Maximum risk expected per trade $150
Maximum anticipated reward: $450
Maximum daily loss limit is 3 x -$150 or -$450
Setup
Step 1. Hunting
- 1hr & 4hr agree on market structure
- 15m double bottom/top off fib level in direction of higher time frame structure
Step 2. Stalking
- Initial burst move of between $400 to $750 (based on contract specs)
- draw BoT Setup fibs
- 33% – 66% retracement of initial burst move
- draw BoT Trade fibs (ab=cd levels)
- triple bottom (three stops to run) consolidation below (long) or above (short) 25% entry level
- 15 momentum & volume confirm entry
Step 3. Trade Entry
- Candlestick pattern + MA confirmation on 3m entry
- Order entered AOCO basis, stop 1 tick on other side of point C exit at point D
Step 4. Trade Management
- Move stop to ‘break even’ when 50% of C-D (of entire ab=cd pattern) realized
- Move stop to ‘trailing’ when 66% of C-D (of entire ab=cd pattern) realized
Step 5. Trade resolution
- On fill of either stop or AOCO exit cancel all remaining orders
The Rational Investor 
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