⚙️ Trading Setup Rules ⚙️

My personal trading rules for managing risk and maintaining discipline across different timeframes

⚙️ Core Trading Rules ⚙️

📈
RULE #1
Trade With The Trend
All trades must align with the prevailing trend. Uptrend = Long positions only. Downtrend = Short positions only. Never trade against the trend.

How to Identify Trend?

  • Uptrend: Price above EMA 200, EMA 50 above EMA 200
  • Downtrend: Price below EMA 200, EMA 50 below EMA 200
  • Ranging: Flat EMAs, price chopping sideways
  • Check multiple timeframes (Daily, 4H, 1H) for alignment
  • Wait for pullbacks to EMA 50 or EMA 20 for entries

✓ Why This Rule?

  • Trading with trend = highest probability setups
  • Institutional money flows with the trend
  • Better risk-to-reward opportunities
  • Reduces emotional stress and second-guessing

⚠️ Critical Warnings

  • Trading against trend is #1 cause of losses
  • Even perfect entries fail when fighting the trend
  • Don't trade in ranging/choppy markets
  • Wait for clear trend before entering ANY position
🛡️
RULE #2
Day+ Trades: SPOT ONLY
All trades lasting 1 day or longer must be executed using SPOT purchases only. No leverage allowed to protect capital from liquidation risk.

Why This Rule?

  • Eliminates liquidation risk on longer timeframes
  • No funding fees eating into profits over days/weeks
  • Sleep peacefully without worrying about stop-outs
  • Forces proper position sizing and capital allocation
  • Can hold through volatility without forced exits

✓ Benefits

  • Own the asset outright - no counterparty risk
  • Can wait out temporary drawdowns
  • Lower stress, better decision making
  • Captures full trend moves without early exits

⚠️ Discipline Required

  • Must accept smaller position sizes
  • Requires patience for spot markets to move
  • No shortcuts with leverage to "speed up" gains
⚡
RULE #3
Less Than 1 Day: Leverage Allowed
Trades lasting less than 24 hours may use leverage for amplified gains. These are active, monitored positions that I can close quickly if needed.

Requirements for Leveraged Trades

  • Must be actively monitoring the position
  • Clear entry, stop-loss, and take-profit levels
  • Risk per trade capped at 1-2% of capital
  • Maximum leverage depends on volatility (typically 3-10x)
  • Never hold leveraged positions overnight unless exceptional setup

✓ Advantages of Intraday Leverage

  • Capitalize on short-term volatility
  • Smaller capital commitment per trade
  • Multiple opportunities throughout the day
  • Quick profits compound faster

⚠️ Critical Warnings

  • Losses can exceed deposits if not careful
  • Requires constant monitoring and discipline
  • Emotional control is ESSENTIAL
  • One bad trade can wipe out weeks of gains
  • Never add to losing leveraged positions

🎯 Quick Summary

RULE #1: Trade with the trend (check EMAs first)
RULE #2: Long-term (1+ days) = Spot only
RULE #3: Intraday (<24hrs) = Leverage allowed (with strict monitoring)

📊 Trend Identification Guide

EMA 20 (Short-term)

Quick momentum indicator. Use for fine-tuning entries after trend confirmed on higher EMAs.

EMA 50 (Medium-term)

Primary entry signal. Pullbacks to EMA 50 in trends = high-probability setups.

EMA 200 (Long-term)

The trend master. Price above = bullish bias. Price below = bearish bias. Your north star.

💡 Multi-Timeframe Alignment

For higher probability trades:

  • Daily: Overall trend (EMA 200)
  • 4H: Confirm continuation (EMA 50)
  • 1H: Precise entries (EMA 20 pullbacks)
  • Rule: All timeframes align = higher confidence

⚠️ Why This Matters

Trading against the trend = #1 cause of losses.

  • Longing downtrends = catching falling knives
  • Shorting uptrends = fighting institutional buyers
  • Trading ranges = death by a thousand cuts

Wait for clear trend signals before entering ANY position. Patience pays more than action.

⏱️ Timeframe Considerations

Daily/4H (Longer): Trend alignment MANDATORY. Check EMA 200 & 50 every time.

1H/15m (Shorter): Trend still matters but more flexible. Very short timeframes (1m, 5m) = advanced only.

Rule of thumb: Trade duration >1 day = trend alignment NON-NEGOTIABLE.

📋 Spot vs. Leverage: Quick Reference

Factor Spot Trading (1 Day+) Leveraged Trading (<1 Day)
Time Horizon 1 day to weeks/months Minutes to <24 hours
Leverage None (1x only) 3-10x typical
Liquidation Risk Zero - impossible High if mismanaged
Funding Fees None Yes (8 hours)
Position Monitoring Periodic checks OK Constant required
Capital Efficiency Low - full capital needed High - small margin
Emotional Stress Low - can ignore volatility High - every tick matters
Profit Potential Moderate (trend-based) High (if skilled)
Risk Level Lower - limited to capital Higher - can exceed capital
Best For Swing trades, position trading Scalping, day trading

✅ Pre-Trade Verification Checklist

Use EVERY time before entering a trade. No exceptions.

📊 Trend & Analysis

  • ✅ TREND ALIGNED: Price above/below EMA 200 matches trade direction
  • ✅ EMA CONFIRMS: EMA 50 position supports trend
  • ✅ NOT RANGING: Clear directional movement
  • Entry price identified
  • Stop-loss calculated
  • Take-profit defined
  • Risk:Reward min 1:2

🛡️ Risk Control

  • Position size calculated
  • Risk 1-2% max per trade
  • Portfolio exposure checked
  • Leverage matches timeframe
  • Capital/margin available
  • Stop-loss is reasonable

⚡ Execution

  • Correct pair selected
  • Long/Short verified
  • Order type correct
  • Quantity matches plan
  • Stop-loss set FIRST
  • Take-profit set

🧠 Mental Check

  • Not revenge trading
  • Not overconfident
  • Calm and focused
  • Following plan, not impulse
  • Can accept loss
  • No emotional attachment

🚨 PASS OR NO TRADE 🚨

If ANY item is unchecked, DO NOT TRADE. It's better to miss a trade than to lose money on a bad setup.

🚨 NEVER FORGET 🚨

These rules protect me from myself. Break them = Lose money. Follow them = Best chance to succeed.

Spot = Patience. Leverage = Precision. Never confuse the two.

Every trade must pass the checklist. Skip it = Gambling, not trading.