Table of Contents

Technology

1. Trading Tools
2. Hotkeys/Buttons
3. Journal Selection
4. Journal Criteria for BHOD Strategy

Strategy

1. Trading Tenets
2. Trading Rules
3. Trading Framework
4. Trading Plan BHOD Strategy
a. Money & Risk Management for BHOD Strategy
b. Trade Management for BHOD Strategy
c. Best Trade
d. Worst Trade

Psychology

1. Trader Personality Assessment

2. Performance Profile
3. Goals

TradeBook Edge

1. Edge Definition
Technology
Trading Tools

Trading Platform: DAS Trader pro. DAS has three key advantages: Simplicity, Customization, and Low-Latency. Have used
multiple trading platforms and DAS is by far the most simple. It has all of the most popular features required by serious
day traders, without any unnecessary functionality. It is also extremely customizable and literally allows you size and
position every window in any monitor location. But most importantly DAS offers extremely low-latency quotes and
orders due to their direct market access.

Trading Scanners: DAS Alerts. Very simple strategy on the surface, so it only requires a very basic “scanner”. DAS’s Last
Price alert provides notification that a price is nearing the High-of-Day (HOD). It is merely an indication of this. It is not
confirmation that the set-up is in any other way valid.

Broker: Interactive Brokers. Works well with DAS and provides reasonable commission rates.

Trading Desk:
Orbital Computer Trader X1000

● Case: Corsair 100R Mid-Tower - With Window

● CPU: Intel Core i7 8700 - 6 Cores, 12 Threads - 4.60 GHz - 12MB Cache - 14nm Coffee Lake
● Motherboard: Gigabyte Ultra-Durable Motherboard - USB 3.1, USB 3.0, NVMe - B360 Chipset - 64GB RAM
Supported
● CPU Cooler: Intel CPU cooler
● RAM: 16GB DDR4 RAM - 2666 MHz - Lifetime Warranty - Aluminum Heat-Spreader Included - (2x8GB DIMM)
● Power Supply: EVGA 500W 80 Plus Certified Power Supply - Non Modular - 3 Year Warranty
● Sound Card: Onboard HD Audio included
● Video Card: Intel HD Graphics (3 Monitor Support)

Peripherals

● ApexDesk ET60-OAK Elite Series 60" W Electric Height Adjustable Standing Desk
● 3 x Acer KN242HYL UM.QX2AA.001; KN242HYL 23.8" Screen LED-Lit Monitor
● Vivo triple LCD Monitor Desk Stand Mount Free-Standing
● 54Y9400 Lenovo IBM Preferred Pro USB Wired Black Computer Work Home Office Keyboard
● HP x500 Optical Wired USB Mouse
● Audio-Technica ATH-M20X Professional Studio Monitor Headphones

Trading Community:

Hotkey/Buttons

● Entry (Hot Buttons because they require slightly more mental commitment and confirmation)

o Market Buy: ROUTE=SMRTM;Price=Ask ;Share=100;TIF=DAY;BUY=Send

● Partial or Full Exit: (Hot keys to get as close to desired BID price as possible)

o Partial (Marketable Limit Order): ROUTE=SMRTL;Share=Pos*0.5;Price=Bid-.10;TIF=DAY+;SELL=Send

o Full Exit (Marketable Limit Order): ROUTE=SMRTL;Share=Pos;Price=Bid-.10;TIF=DAY+;SELL=Send

● Move Stop to Breakeven: CXL

ALLSYMB;Route=Stop;Price=AvgCost;StopType=MARKET;STOPPRICE=AvgCost;StopPrice=Round2;Share=Pos;TIF=
DAY;Send=Reverse

● Set Alert:
AlertName=BHOD;AlertType=LastPrice;AlertOperator=>=;Speak=Yes;PlaySound=Yes;Beep=No;Loop=No;AutoDel
ete=Yes;AddAlert

Journal Tools

Microsoft products: Utilize Google Sheets and Google Slides. Google sheets is used to collect measurable data about the
trades and is used for long term performance analysis and strategy refinement (see below). I prefer to enter data
manually because I can better capture metrics directly relevant to my strategy. It also acts as a punishment for
overtrading. Google Slides is used to visually capture the best and worst trade for each day (see Best and Worst Trade in
this document)
TraderVue/Chartlog: Not utilized.

Trade Analysis

● I use the “Best and Worst Trade” methodology for everyday analysis of trades. While this does not analyze every
trade, it does focus on what I did quite well for the day and what I did very wrong. It is analysis at the extremes
and helps me psychologically focus on my best and worst mental actions for the day. I also share these trades on
twitter and youTube as a sort of confession of my behavior. For examples, see Best and Worst Trade in this
document.
Strategy
Trading Tenets

● Trading should be enjoyable. I choose this path in life because it was my joy. If that ever ends, it is time to do
something else.

● I do not let my trading affect my family life. Trading can be emotional and stressful. This is my burden, not theirs.

● I am happy and grateful to learn from others, but ultimately I choose my own path. I create my own strategy,
enter my own trades, and refine my own edge. Outright copying never works in trading. There is too much
psychological baggage for that to be possible.
Trading Rules

Rule 1: Mostly ignore the chat room for trade suggestions. There are a select few Bear Bull Traders members who know
what kind of trades I am looking for because they trade a similar strategy. I listen to them, but the rest of the suggestions
are noise to me. This is not to say they are not good suggestions for someone else, but I must follow my edge.

Rule 2: Patience, Patience, Patience. My data shows that there is no profitable advantage for me taking trades in the first
5 minutes. And trades from minute 5-10 must be a very obvious set-up, usually on a more catalytic stock. But waiting 10
minutes is usually the best move. My best trades generally come later.

Rule 3: Follow volume. HOD breaks are successful because of enthusiasm and optimism. There must be lots of buyers
willing to buy at higher and higher prices. 10 people demanding tacos at a taco stand cannot drive up the price of a taco.
But 1,000 people can.

Rule 5: The trade must work “fast” or I am out. “Fast” varies by time of time and the volatility of the stock. But I know
when it feels like a “long” time and when I pass that point I can intuitively feel the risk growing. Time to get out.

Rule 6: In most cases, trade with the market. There are exceptions, but because I mostly trade the same list of stocks
everyday (i.e not particularly catalytic), it almost always is a good idea to trade with an uptrending or at least neutral
market. Fighting a downtrend is a bad idea.
Trading Framework

Daily Stock Selection Criteria:

● I Rarely trade what other BBT mods are watchingI prefer to trade expensive stocks, generally above $100 in price.
The reason for this is simply that I find the Level 2 for these stocks to be easier to interpret. Expensive stocks
tend to have larger asks on the Level 2 mostly at half-dollar levels and especially dollar levels. And these large
asks often provide areas of resistance and are good places to incrementally sell off (partial) the position. Less
expensive stocks tend to have large asks all over the price range and it requires a lot more concentration to
determine how far the price can run. I maintain a primary list which resides on one monitor and a secondary list
which can be viewed on my main monitor by selection from the watchlist.

Charts Used For Stock Watching: I change time frames because candles on the left monitor become unreadable. But it’s
also easier to read the strength of trends (in my opinion) with larger time frames later in the day.
Daily Max Loss: -3R

Daily Profit Goal: 2R (less than daily max loss because I achieve substantially more green days and rarely hit max loss on
a red day)

Max 30 Day Loss: Not utilized

Exchanges: NASDAQ, NYSE

Trading Plan (BHOD with Scanner)
Description: Exactly as it sounds, the HOD Break strategy seeks to take advantage of volume driven price movement into
a price range above the intra-day high (high set since the start of regular trading hours, 9:30 AM ET). The HOD for a stock
is a contentious level which is closely monitored by many traders. Therefore price action at the HOD is often volatile and
can be both an area of rapid continuation or reversal. However, with proper trade execution and risk management it can
yield reliably positive results. This strategy should not be used in the first 10 minutes of the trading day, but it is valid for
the rest of the day.

Time: Only trade after 9:35 AM ET (hard rule). Prefer to wait until 9:40 AM ET to trade.

DAS Price Alerts: These are set below the HOD so I know when a stock is approaching that level. Crucial to meeting daily
goal. I am willing to trade all day and I never know when that great trade is coming. Alerts are like hooks in the water,
waiting for a fish to tug a line. Allows me to work on other things and not have to constantly watch stocks. Where I set
them depends on the price of a stock and the behavior I know it usually exhibits. $0.40 below HOD for many stocks like
$AAPL, $MSFT, $FB, etc. Could be $2 below for $TSLA, maybe more. Need to allow more room in the early morning. Alert
goes off and I check for the “punch” pattern (see below).

Indicators:
● “Ideal” HOD: Not required, but this is when the HOD is shared with either the pre-market high or the HOD. Price
should be within about $0.10 of these levels.
● Pullback: Sufficient pullback varies by stock price, time of day, and volatility. Generally at least $1 for any stock I
trade. Needs to be much more for stocks like $TSLA
● “Punch” Pattern: In perfect form it is a series of candles forming an exponential shaped move to the HOD. Not
necessarily exponentially shaped from pullback to HOD, could be last dollar move only. Can also see it form in
the 5 min and 15 min later in the day, but final punch should be observed on the 1 min.
 ● Level2: Great to see a big ASK at the HOD or more likely the $-Level. When that big ask breaks, it can create the
pop and run. Also nice to see big ASKs above HOD at $-Levels or ½ $-Levels (stacked L2). See the example below
where $BA has a HOD at $210.

Confirmations:
● UpTrending $SPY: The $SPY is used as a proxy for market direction and in almost all cases I want the market to
show some kind of uptrend (even if small) when I enter a HOD break trade. This follows the famous trading tenet
that “The Trend Is Your Friend”. The rare exception is when I am trading a stock with a strong, obvious catalyst.
This I trade the same list of stocks everyday, this is usually not the case. with a non-catalyst stock it is possible to
enter on a flat (or consolidating) $SPY, but one should not enter on an obvious $SPY downtrend.
● Rising 1 Minute Volume: As the price approached the HOD i want to also see a rising 1 minute volume. The
volume bars will ideally look like a set of stairs (at least 3, 4 or more is better). The image below shows various 1
minute volume setups and their respective quality on a scale of 1-10. The bar on the right is associated with the
entry candle:
 ● Time & Sales: Ideally you want to see the majority of the big ASK (mentioned in Confirmations) actually get
purchased. Helps to have a second Time & Sales window filtered for big orders

Entry Management: The entry methodology for this strategy has three options and all of them are valid under the
appropriate conditions: Enter below HOD, Enter at HOD, Enter above HOD. Entering below the HOD is appropriate early
in the morning (i.e. 10-15 minutes after the open or when surging volume and a strong upward price movement is
occurring. But even with surging volume it is best to enter no further than $0.10 below the HOD. Entering at the HOD is
reserved for a special condition. That is when the HOD is at an exact dollar level (e.g. $220.00). In this case, there is often
a large ask at the dollar level. The goal is to get an entry as part of that ASK as it begins to get “bought up”. Confirmation
of buying can be observed on the Level 2. In most other cases it is wise to take an entry just above the HOD. A good
method is to let the bid break the HOD and then take an entry. This shows that there is a buyer willing to pay more than
anyone else has paid all day. Below is a table that suggests when to enter below, at, or above the HOD. All three are
viable options:

Target: Anywhere between 1 and 2R is a good HOD break trade. Above 2R is a great BHOD trade and actually quite rare.
Therefore, if a 2R trade falls in your lap, just scalp the whole thing. Statistically this is the more profitable option in the
long run.
Money & Risk Management for BHOD Strategy

Risk Management Principle: I use the “R” method for risk management wherein I risk the same amount of money on
every single trade. So a trade that stops out completely results in the loss of that same amount of money, or, 1R. And a
trade that makes twice the amount of money risked is known as a 2R trade. However, my risk management strategy is a
bit unique in that I do not stay in a trade strictly for either some predetermined R profit or a 1R loss.

Stop Loss: The HOD Break strategy relies on volume and momentum and if it works, it should work quickly. So when it
does not work quickly, I am often exiting the trade with a small loss (e.g. 0.2R) or perhaps even a small gain. The 1R
losses result when the trade violently rejects the HOD and I am stopped out in three 1 minute candles or less. This
happens in about 10% of the HOD break trades. I call my 1R stop the “failsafe stop”. 1R stop losses are set depending on
share size. $1 (100 shares), $2 (50 shares), or $4 (25 shares) below entry.

Risk Per Trade: $100

Profit Target Per Trade: $100-$200

Max Loss Per Trade: -$100

Trade Limits: Do not have a hard limit on number of trades, but 10 or more is usually indicative of overtrading. Exception
is an extreme running market where good HOD breaks happen all day.

Time Constraints: Only trade after 9:35 AM ET (hard rule). Prefer to wait until 9:40 AM ET to trade.

Stop Loss Mechanism: Manual (not recommended for beginner traders)

Long-Term Average R per trade: ~0.25R - 0.30R

Scaling up Criteria: Scale up based on account size.

Trade Management for BHOD Strategy

General Management: As mentioned above, this strategy should work quickly and one should be willing to exit trades at
or near breakeven. “Quickly” is time-of-day dependent. Generally speaking, a HOD break trade that is not working out
10-15 minutes after the open should be exited within 1 minute. In the afternoon it is possible to wait as long as 5
minutes. Longer than that 5 minutes is not recommended. Beware “The Dying 1 Minute Chart”: 3 red candles with
lower lows and lower highs after entry is a great sign to get out.

Removing Size from the Position Plan: I use an aggressive 50% partialing methodology because so many HOD break
trades pop and then come back to breakeven. With these expensive stocks my first 50% partial is near 1R, or a near $1
move in price. And then 50% off at each additional near $1 move. However, more volatile stocks can be held for $2
moves or more between partials. It takes time and observation to know which stocks can run for larger partials. Rarely I
will take partials one each $0.50 level. See the table below:

Adding to the Position Plan: Not utilized.

Stop Loss Moving Plan: Stop is always moved to break even at 0.5R in unrealized gains are whenever the first partial has
been taken.
Best Trades
Worst Trades
Psychology
My Self-Recognized Psychological Strength
The biggest psychological advantage I have is strategy focus. 95% of my trades are HOD breaks. One of the benefits of trading almost entirely one strategy is
forced patience. A common problem among new traders is over-trading. The market is constantly moving, appearing to offer opportunity, and inexperienced
traders are often drawn into trades that have no probabilistic advantage. Rigorous strategy focus (whatever the strategy) mitigates this danger. Focus on what you
do best and patiently wait for the very best opportunities.

Trader Personality Profile

Performance Profile
To be completed
Goals
To be completed

GOALS (Specific, Measurable, Attainable, Relevant, Time-Based)

Goal 1: SMART Goals

S: Specific
M: Measurable
A: Achievable
R: Realistic
T: Timed

Quarterly Monthly Daily

Outcome ● These goals are targets that can be ● 20R ● 2R
Goals influenced by factors outside of your
control
Performance • These goals are used to help you ● ●
Goals improve your own performance in
specific areas
Process • These goals focus on strategy, ● •
Goals emotional regulation, daily habits and
any other processes you must go
through to trade successfully or to
meet your performance and outcome
goals.
TradeBook Edge
Edge Defined
TradeBook Edge: For me, a trading edge should sound like an elevator speech. My edge is:

And…