⚙️ Trading Setup Rules ⚙️

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

🛡️
RULE #1
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 #2
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
🔍
RULE #3
Double-Check Everything
Before executing ANY trade, I will verify the setup is correct and the position is properly maintained throughout its lifecycle.

Pre-Trade Verification Checklist

  • Confirm trade direction (long/short) matches analysis
  • Verify position size matches risk tolerance
  • Check stop-loss is set at correct price level
  • Confirm take-profit targets are realistic
  • Review overall portfolio exposure
  • Ensure sufficient margin/capital available

During-Trade Monitoring

  • Check positions at regular intervals
  • Adjust stops to protect profits when appropriate
  • Watch for changing market conditions
  • Never ignore warning signs of invalidation
  • Keep emotions in check - follow the plan

⚠️ Common Mistakes to Avoid

  • Rushing into trades without full verification
  • Setting wrong position size (too big or too small)
  • Forgetting to set stop-loss orders
  • Ignoring portfolio-level risk exposure
  • Letting winning trades turn into losers

📋 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 Setup Verification Checklist

Use this checklist EVERY time before entering a trade. No exceptions.

📊 Analysis & Setup

  • Trade idea based on solid analysis, not emotion
  • Clear entry price identified
  • Stop-loss level calculated and reasonable
  • Take-profit target(s) defined
  • Risk-to-reward ratio is favorable (min 1:2)
  • Timeframe matches my trading rules

🛡️ Risk Management

  • Position size calculated per risk rules
  • Risk per trade is 1-2% of capital max
  • Total portfolio exposure checked
  • Leverage appropriate for timeframe
  • Stop-loss won't cause excessive loss
  • Margin/capital available for trade

⚡ Execution

  • Correct trading pair selected
  • Buy/Sell direction double-checked
  • Order type correct (market/limit/stop)
  • Quantity matches calculated position size
  • Stop-loss order placed immediately
  • Take-profit order set (optional but recommended)

🧠 Mental State

  • Not revenge trading after a loss
  • Not over-confident after winning streak
  • Calm and focused, not emotional
  • Following my plan, not impulse
  • Prepared to accept outcome (win or loss)
  • Can afford the potential loss financially & emotionally

🚨 CRITICAL REMINDERS 🚨

These rules exist to protect me from myself. When I break them, I lose money. When I follow them, I give myself the best chance to succeed.

Spot for patience. Leverage for precision. Never confuse the two.

Every trade must pass the verification checklist. If I skip it, I'm gambling, not trading.