Benzinga - by Johnny Rice, Benzinga Staff Writer.
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Benzinga has teamed up with Apex Trader Funding, one of the leading funding platforms for traders looking to gain a competitive edge in the market, to deliver Trader Bacon, a show dedicated to finding success in day trading. The show brings together experts and enthusiasts from across the day trading space to share their insights and experience.
Trader Bacon is hosted by Gates Adams, a long-time trader with years of hard-won experience. But just who is Mr. Adams? Benzinga recently sat down with the host to find out.
Can you explain your trading strategy and approach?
“I primarily trade NQ (Minis). My primary trade is a scalp with a 9/21 risk-reward ratio. This means break-even would happen at a 70% win rate if there were no commissions. This means I have to be very diligent, and very disciplined with my trading strategy. Focus is very important, so meditation before I trade, is a huge part of my strategy - in fact, I have about a 3-hour routine in the morning before I trade (including my meditation), and one of my rules is if I have not completed my routine, I don’t trade. Period. It can only hurt me to have the distraction of feeling like something is “undone.”
As far as the strategy itself, I am looking for price weakness leading to a reversal. In a trend, I primarily look for steadily diminishing volume, and unfilled orders, at reversal points. I will generally enter once I see this, and it traces back between 5-10 ticks. I will also look for extra confirmation based on areas that have either recently, or historically seen significant levels in price action.
I am working on developing my skills with trailing positions as well, where the R/R is not quite as tight. I’m looking for moves out of consolidation, mostly, but I’m not quite there yet on this one, so it’s probably best not to expound too much on that one.”
How do you manage risk?
“I manage risk in several ways, (especially with my history), which has a few connotations.
One, I won’t trade my funds right now, as I mentioned before. I’m sure I will get back there at some point, but for now, there is no value in doing so when operating as a funded trader is so accessible. Psychologically speaking, I’m not ready to make the transition. Not to sound like I’m rambling, but I will be ready to revisit this when I am “playing with house money,” so to speak. Once I reach a critical level of profits as a funded trader, then I may start transitioning some of those funds into my trading account… slowly, but surely, I imagine!
Two, within the trades, I operate using a pre-determined ATM… if it’s a scalp, it’s pretty simple, an entry triggers a 9-tick target and a 21-tick stop loss. From time to time, this warrants a little bit of management, but for the most part, that’s all I’ll do. If I am trailing (again, I am still coming up to speed here), I will always enter with a stop loss in place, but due to the nature of the trade, I will generally have to scoot it around a little. I have it set to go in automatically just so I never get caught with my pants down. I will generally have a target level, based either on deviation levels, or past areas of “interest,” as I described in regard to the scalps. As the tree moves in my favor, I will typically trail my stop behind other areas of interest that weren’t strong enough to be my target, but there are usually a few along the way.
Three, I have a daily profit target and a daily loss limit. If I reach either, I am done for the day.
Four, I keep my stats - in addition to all my ratios and averages, I keep track of my max drawdown. On any given trade, I keep my risk within 3-4% of my available balance (or drawdown, in the case of a funded account), but I also know if it is statistically likely for me to blow my account based on my max drawdown.
It should be noted that I have, and still sometimes do break my rules. Discipline is a moving target, and there is no final destination. I’m human. I have to operate in the real world, which means frustration, bad energy, bad moods, exhaustion, etc. are all part of my life, and any one of them, and many other emotions can and will take over from time to time. I have gotten pretty good at stopping when I recognize them, but sometimes it just takes over. I have to be aware of that, constantly evaluate myself, and take corrective action when I need it.”
This is the second of a 4 part series, read the last part here.
Watch the show on Benzinga here!
Featured photo by Austin Distel on Unsplash.
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