Friday August 8, 2025

Q: What are the 'Friday Rules' and why are they so important?

The 'Friday Rules' are a set of guidelines designed to protect a trader's profits and mental state as they head into the weekend. They include reducing daily loss limits, limiting trading to one well-executed trade, reducing activity on multiple accounts, and generally adopting a more cautious stance to protect gains, especially when there are no major news drivers.

Q: How does the concept of 'two masters' relate to trading, according to Microtrader.com?

The concept of 'two masters' comes from biblical scripture and is used as a reminder not to let the pursuit of money overshadow ethics, mental well-being, or other important life priorities. It warns that focusing solely on financial gain can lead to poor decisions or a compromised moral compass.

Q: What role do 'news drivers' play in market volatility and trading decisions?

'News drivers' are significant events or announcements that can heavily influence market volatility. For example, the upcoming Consumer Price Index (CPI) release is expected to increase volatility after a quiet period. In contrast, Fridays without news drivers tend to have lower volatility, supporting a cautious trading approach.

Q: What is a 'battle plan' in Microtrader.com's trading strategy?

A 'battle plan' is a pre-defined trading strategy created before the market opens, outlining specific levels and trade setups. It guides disciplined execution and prevents impulsive trading by ensuring traders stick to their mapped-out plan.

Q: How are 'value area,' 'value area high,' 'value area low,' and 'PAC' used in technical analysis?

These are volume profile concepts used to identify key price zones. The Value Area is the range containing most trading volume, VAH and VAL are its upper and lower boundaries, and the PAC is the price level with the most volume traded. Traders use these to find likely support and resistance and to trade at edges rather than in the 'chop zone.'

Q: What does it mean to be an 'edge trader' and why is it preferred?

An edge trader prefers entering trades at the boundaries of price ranges, such as VAH or VAL, rather than inside the range. This approach can offer better risk-reward and more predictable price action compared to trading in the middle of a balanced market.

Q: What is the approach to managing risk and taking profits in a trade?

Risk is managed by taking profits on initial contracts and keeping a smaller 'runner' position for potential extended moves. This ensures gains are locked in while still allowing for additional upside if the market continues in the trade's favor.

In Friday’s AM Briefing, Micros Trader urged market participants to scale back risk and safeguard weekly gains ahead of a low-volatility session. The market remains locked in a narrow range, with attention shifting to next week’s CPI release, expected to reignite trading activity. Traders were advised to rely on pre-defined “battle plan” levels, prioritize trades at range edges, and avoid overexposure. Emphasizing discipline over prediction, the session closed with reminders about balancing financial ambition with personal well-being.

☀️ AM BRIEFING

Opening Remarks

Micros Trader opened the Friday AM Briefing with a focus on adjusting trading behavior for the final day of the week. The primary principle was clear: "Never give your week back on Friday." If the week has been profitable or marginally positive, the goal is to preserve that progress rather than jeopardize it with unnecessary risk-taking.

Friday Trading Rules: Preserving Equity and Mental Well-being

Micros Trader advised reducing daily loss limits. For instance, if a trader’s standard loss limit is $500, Friday might warrant lowering it to $250 or even $200. Another method is to use a percentage of weekly profits—such as being “willing to give back 20%” of gains.

The “one trade and done” approach was highlighted as a means to minimize exposure—executing one quality trade and stepping away. For those trading multiple accounts, focusing on evaluation accounts or a single account rather than “bulk trading all 10 of them” was recommended.

The core theme for Friday was summed up as: dial it down, be cautious, and protect what you have—especially when there are no major news drivers on the calendar.

Market Context and Future Outlook

The market was described as balanced and choppy, “chopping around in the upper distribution of yesterday” and “inside of yesterday’s distribution which is inside of the previous day.” This reflects a large balanced zone without strong momentum.

Micros Trader drew attention to next week’s CPI release, calling it a potential “news driver” that could “knock us off the rocker” and bring back volatility. Until then, market conditions are expected to remain slow—“dead as a doornail.” He suggested that next week could be a “monster week” with major trading opportunities.

Core Strategy: Edge Trading and Risk Management

The advice centered on trading core strategy levels as they develop, following the “battle plan trades” released the night before the market opens. These plans map out trade ideas in advance, reducing the temptation to react impulsively.

Micros Trader emphasized that every trade must be managed properly—take partial profits on initial contracts and keep a runner in case of extended moves. He identified as an “edge trader,” preferring to trade at the boundaries of ranges rather than in the middle.

The Point of Control (PAC) from the weekly profile was likened to “home base”—a safe but unexciting price area that price often returns to. Trading directly around PAC is less appealing for an edge trader.

Key Levels and Market Observations

Important reference levels included the Value Area High, Value Area Low, and PAC, which often form the most likely chop zones. Single prints were identified as potential trade targets in line with battle plan setups.

Micros Trader noted a missed opportunity during the Asia open bounce—skipped due to time-of-day considerations.

Philosophical and Practical Reminders

"You can’t be slaves to both God and money."

A humorous analogy followed: “Gandalf doesn’t know—even the Eye of Sauron can’t see that far ahead,” underscoring market unpredictability and the necessity of focusing on risk management rather than attempting perfect predictions.

❓ FREQUENTLY ASKED QUESTIONS

Friday AM Briefing – FAQ

What is the core philosophy behind Microtrader.com's approach to trading?

Microtrader.com advocates for a disciplined and cautious approach to trading, particularly emphasised on "Friday rules" to preserve capital and psychological well-being. The core philosophy stresses the importance of having a well-defined trade plan ("battle plan"), managing risk diligently, and avoiding impulsive decisions. It encourages traders to "dial it down" on Fridays, potentially reducing daily loss limits or restricting themselves to "one trade and done" to ensure they end the week as a "winner" and protect their "mental and emotional equity." The ultimate goal is to trade better through structured preparation and adherence to pre-set strategies.

What are the "Friday Rules" and why are they so important?

The "Friday Rules" are a set of guidelines designed to protect a trader's profits and mental state as they head into the weekend. They are considered important because giving back weekly gains on a Friday can be emotionally and psychologically detrimental. Key aspects include:

Preserving Mental and Emotional Equity: Avoiding regretful trades that could negatively impact a trader's mindset.
Smaller Daily Loss Limits: Reducing the typical acceptable loss (e.g., from £500 to £250 or £200) or setting it as a percentage of weekly profit.
"One Trade and Done": Limiting trading activity to a single, well-executed trade.
Reduced Activity on Multiple Accounts: For traders with multiple funded accounts, focusing on evaluations or only trading one account instead of all of them.
Caution and Protection: Generally adopting a more cautious stance to protect existing gains, especially on Fridays with no major news drivers.

How does the concept of "two masters" relate to trading, according to Microtrader.com?

The concept of "two masters" directly links to the biblical scripture "no household slave can be the slave of two masters since he either will hate one and love the other or he will be devoted to one and despise the other you can't be slaves to both God and money." In the context of trading, this serves as a reminder to not let the pursuit of money overshadow ethical conduct, mental well-being, or other important life aspects. It implicitly suggests that an obsessive focus solely on financial gain can lead to poor decisions or a compromised moral compass, reinforcing the need for discipline and a balanced perspective in trading.

What role do "news drivers" play in market volatility and trading decisions?

"News drivers" are significant events or announcements that can heavily influence market volatility. The briefing specifically mentions the upcoming Consumer Price Index (CPI) as a major news driver for the following week, indicating that its release is expected to bring increased volatility back to the market after a potentially "dead as a doornail" period. In contrast, Fridays without news drivers are often characterized by lower volatility, reinforcing the "Friday Rules" of caution. Traders are encouraged to moderate their expectations on such days, as significant price movements are less likely without these external catalysts.

What is a "battle plan" in Microtrader.com's trading strategy?

A "battle plan" is a pre-defined strategy outlining the trades a trader is most interested in taking. This plan is typically published before the market opens and includes specific levels and potential trade setups. It serves as a crucial guide for disciplined trading, ensuring that traders execute their mapped-out plan rather than reacting impulsively to market movements. The importance of the "battle plan" is highlighted by the statement, "we mapped out our trades and we trade our mapped out plan that's what you do that's all you can do," emphasising preparation and adherence as key to successful trading.

How are "value area," "value area high," "value area low," and "PAC" used in technical analysis?

These terms relate to volume profile analysis, which helps identify areas of significant trading activity over a specific period:

Value Area: The price range where the majority (typically 70%) of trading volume occurred. It represents where most market participants agreed on value.
Value Area High (VAH): The upper boundary of the value area.
Value Area Low (VAL): The lower boundary of the value area.
Point of Control (PAC or PoC): The price level within the value area where the most volume was traded. It's considered "home base" or a "safe" area where price frequently returns.

Traders use these levels to identify potential support and resistance zones, assess market balance, and identify "edge" trading opportunities (trading at the boundaries of these zones rather than within the "chop zone" of the value area).

What does it mean to be an "edge trader" and why is it preferred?

An "edge trader" is someone who prefers to initiate trades at the boundaries or "edges" of established price zones, rather than within the middle of a range. Micros Trader explicitly states, "I'm an edge trader I prefer to trade on the edge when I don't trade on the edge I don't do as well and I know that." This preference stems from the belief that trading at these edges (e.g., at value area high/low or key resistance/support levels) offers a clearer advantage or "edge" in terms of risk-reward and potential for significant price movement. Trading within a balanced or "chop zone" (like the PAC or middle of the value area) is generally avoided by edge traders due to less predictable price action and potentially lower profitability.

What is the approach to managing risk and taking profits in a trade?

The approach to managing risk and taking profits involves a pragmatic understanding that no one, not even "Gandalf" or the "Eye of Sauron," knows how far price will run. Therefore, the strategy is to:

Manage Risk Properly: This is a fundamental principle for every trade.
Take Profits on Initial Contracts: As a trade moves in a favourable direction, profits should be secured on a portion of the position.
Keep a "Runner": A smaller portion of the trade is kept open ("just in case") to benefit from further, unexpected price movements, without risking all the initial gains.