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SAM's
rules of engagement are designed with the
principle of KISS (keep it simple, stupid) in mind. They and
their updates are all pre-determined and announced to
viewers ahead of time. Once they are finalized, they are
to be carried out in one two of the three steps below:
Entry, Profit-taking, or Cut-loss.
Other details leading up to the three steps are as the
following:
1) RRR rules are typically -50/+100pts during
non-trending markets.
2) RRR rules are typically -150/+300pts during trending
markets.
3) RRR rules can include secondary or more entries at
100pt
increment in addition to the primary entry. This is
mostly done
during the time of trend reversal or for the purpose of
catching a
major trend or counter-trend move.
4) Profits of minimum 20pts are always taken at the
closing price
(3:00pm EST or 12:00 noon PCT).
5) Profits targets are usually narrowed down to +50pts
for the next
session, if an entry or position has to be left in the
marketplace
overnight.
6) Easing and tightening RRR rules are periodically done
with
calculated acceptance of risk to necessarily adjust to changing
market. Changes are always announced today for tomorrow, or one
session
ahead of time.
What does RRR stand for?
RRR is short-termed for "risk reward ratio," a money
management policy whose absence in trade planning and
trade executions virtually guarantees the demise of all market
losers. RRR-/+100pts means that we are willing to take a
potential risk of losing 100pts for a potential reward
of winning 100pts for a particular trade. If we enter a
buy position at EUR 1.0000, at RRR-/+100pts, then this
trade will be taken out either with -100pts loss if EUR
sinks to 1.0900 or with +100pts profit when EUR rises to
1.0100.
What do you mean by "settle profit by close"?
If a trade entered during the day does not reach the
profit target but nonetheless makes money (at least
20pts) by the last quote of the day at 3:00pm EST
(Eastern Standard Time, US) or 12:00noon PCT (Pacific
Coast Time, US), then take the profit anyway to settle
the trade. The answer to the question "Why?" lies in the
virtue of another question "Why not?" There is no right
or wrong answer to it, as it boils down to personal
preference. For us, leaving an open position overnight
in the marketplace feels like a GI sleeping in an Arden
foxhole on the eve of Battle of Bulge. Too quiet for
comfort.
What is a trading session?
A trading day (or session) mentioned in our web site
starts at the open of Hong Kong market (HKG) at 4:00pm
PCT (Pacific Coast Time) in US, and ends at the close of
New York market at 3:00pm EST (East Standard Time) the
following day. It covers Forex markets in Asia, Europe,
America, and all regions in the order of time zones. For
a Greenwich time converter to calculate the closing time
for your time zone, please visit
http://greenwichmeantime.com.
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