Cutting The Day Trading Mustard

There are some distinct differences between the SST and the SST Simple. One of the obvious and immediate differences is the way the initial stop is determined and placed. As you may or may not know, the SST begins each trade giving the setup a lenient amount of space to develop. As the trade progresses, it seeks to cut risk and ultimately put us into a risk free position. Part of its overall effectiveness is the dynamic method it uses to place the stop far enough away from the setup bar to avoid initial chop and churn. We don’t want to get stopped out due to short-term market noise, only to then watch our initial trade theory turn out to be correct, but with us already stopped out and on the sidelines.

The SST Simple is a lot different. It wants to put its stop just on the opposite side of the setup bar. This results in a much tighter stop, which a lot of traders prefer. To compensate, we have slowed down the trigger line, amongst other things. And while it has been an excellent performer on many markets and timeframes, sometimes it is prone to get caught up in the chop and churn that could occur when price range contracts.

What if you could apply a filter that would help you determine whether or not your SSTS trade ‘cuts the mustard,’ or not? This handy little technique comes to us from one of our members, Mr. Everett Kelly. Everett hit the jackpot several months ago when he won a free version of the SST during one of our promotions. We’re very impressed with him, not only because of his unusual good luck, but also because he was astute enough to not squander the SST or devalue it, just because he won it at no charge.

Quite the contrary, in fact, Everett actually took the time to fully learn the SST, following the training and ultimately taking full ownership and making the SST (and SSTS) his own. He was gracious enough to share his experience with our membership during an interview, which you can easily check out for yourself at: http://www.netpicks.com/trading-tips/secrets-from-successful-traders-everett-kelley/

One of the things he discovered, (and as soon as he shared it with me I knew that it was going to be a great idea since we had used a similar technique with excellent success on a prior trade strategy) was the use of a simple filter to help mitigate some positions that might not have as good of odds as other setups. Everett suggested putting a 50 exponential moving average (ema) on the chart, giving it a mustard color and then using it to help filter out some bad setups. He called it, the ‘mustard line.’

His idea being that many traders use the 50 ema and that it would identify short-term support and resistance. If the 50 ema came between the entry and the target, it would create an additional hurdle to have to ‘fight’ through and thus, logically would imply some additional risk on the trade. In other words, the odds might not be quite as much in our favor. When this happens, we can easily stand down and pass on the trade. The trade didn’t cut the mustard so, let’s take a pass.

Sure we’ll miss some winning trades. Nothing is perfect and one has to be very careful that along the quest to try to improve something, you don’t wind up making it worse. But if you had to miss out on a winning trade but also could avoid 2 losing trades, for example, that would be worth it, right? This works well on some markets abut perhaps not as well on others. Before using this idea with real money you should definitely test it out for yourself. Do a quick count of wins and losses over a few months and see what you find.

We were talking about it today (Oct 17th) and a member in the traderoom mentioned that he too, was thrilled with the Cutting the Mustard idea. He’s been using it on the European Session Crude Oil Tradeplan. Today he was excited to share with us that over the last 100 trades or so, he’s been enjoying an 88% win rate and by avoiding the trades that ‘didn’t cut the mustard,’ he has helped his cause in being able to achieve such an amazing result. Congrats on his excellent trading! AND, a big congrats and thanks to Everett Kelley for such a great idea that could have only come about by somebody who rolled up their sleeves and did the necessary foundational work to actually take full ‘ownership’ and make the SST their own.