What rules does Brett Steenbarger derive from a trade?

Trade with intraday sentiment, set targets first, enter on a pullback in sentiment, put the stop outside the noise, size small, require at least 1:1 to the first target, scale out, and review after the close.

Brett Steenbarger

Psychologist and active trader; writes the TraderFeed blog

AA — the trader’s own published text (rule document, own site) was read.

Intraday index trading with sentiment, pivots and a rule-based review. In a 2009 post he turns one recent trade into a list of eight rules (entry, targets, stop, size, reward-to-risk, management, discipline). It shows how a trader extracts rules from his own trades.

A published rule is a hypothesis, not evidence of profit. We do not know how often these rules won, and traders who publish their methods are the ones who survived.

Sources

Uncovering Your Trading Rules (TraderFeed), August 2009 — own site, 2009

Rules

Filter

FilterTrade with intraday sentiment, measured by the NYSE TICK and Market Delta.
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Entry

EntryEnter on a pullback in sentiment, not at the extremes: do not chase price highs or lows. Wait for a higher low in an uptrend, a lower high in a downtrend, or a hold of support or resistance in a range.“Don’t chase price highs or lows.”
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Stop

StopPut the stop far enough away that random noise does not trigger it, so that being stopped out clearly means the trade is wrong.
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Exit

ExitSet profit targets first, from range extremes, pivot prices and the R1–R3 / S1–S3 levels, and decide where the market is likely to move before entering.
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ExitSize so that you can take partial profits at the first target and still hold a piece for further movement; add if the trade proves strong; take quick profits if conditions look shaky at the first target.
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Size and risk

Size and riskKeep size small enough to absorb a stop-out without strain.
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Size and riskRequire at least 1:1 reward-to-risk to the first target and meaningfully more for later targets.
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Discipline

DisciplineDo not second-guess trades during the session; review them after the close.
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Not confirmed

Often attributed to this trader, but not found in the sources above. Not listed as his or her rules.

Exact position size, risk per trade and the TICK/Market Delta thresholds are not given; the rules are drawn from a single example trade.

Limits of these rules

These are rules for index futures in 2009 with specific order-flow tools; they are guidance, not a tested system. His value for this site is the method of turning trades into written rules and reviewing them.

Other traders

Rules are our paraphrase of the sources; only short quotes are verbatim. This is information, not advice or a promise of profit.