Revised and updated from a plan maintained over the past 35 years.
This document defines my mechanical rules and logic for the 2026 trading cycle. It is designed for discipline, capital preservation, and lifestyle maintenance.
I. 🎯 Vision & Purpose
- Status: Retired (2022). This document represents the 2026 evolution of a personal trading plan developed and refined over three and a half decades of active market engagement.
- Objective: Maintain cognitive acuity and fund a simple lifestyle.
- Core Philosophy: Capital Preservation over Profit. Having concluded my career in public service, I now apply that same sense of duty and discipline to the stewardship of my own capital. I trade to maintain independence, not for ego.
- Methodology: Multi-strategy approach. Option selling (income), swing trading (growth), and scalping (momentum).
II. 💰 Financial Parameters
| Category | Value / Protocol |
|---|---|
| Capital Base | $XXX,000 (2026 valuation) |
| Daily Target | Minimum $200/day ($50k/year) |
| Monthly Draw | $1,000 – $2,000 (Discretionary) |
| Cash Bucket | 3-month draw reserve in liquid Money Market |
- Yield Structure: The baseline yield is provided by the government bond collateral. Active trading bridges the gap to the $200 daily target.
- Draw & Reinvestment Logic: * Only draw from the Cash Bucket if needed for lifestyle expenses.
- Reinvestment Rule: If the draw is not required, the cash in the Money Market is reinvested back into the Bond Collateral base to maximize yield and compound the account.
📈 Post-Draw Allocation (The 50/25/25 Split)
- 50% Reinvestment: Compound the base to outpace inflation.
- 25% Tax Reserve: Fund capital gains liabilities.
- 25% Overflow Growth: Cushion for the account or major purchases like vehicles and trips.
III. 🧠 Market Logic
- The Edge: Collect extrinsic value. Think like the casino owner, not the gambler.
- Mean Reversion: Prices overextend. I trade the inevitable return to the mean.
- Sovereignty: Ignore media noise. Trust only multi-timeframe Technical Analysis (D/W/M).
- Probability: Every trade is a 50/50 event. My edge is Management, not prediction.
IV. 🛡️ Risk Management
| Metric | Level / Threshold |
|---|---|
| Collateral Buffer | Majority of capital held in liquid govt bond ETF (SGOV) |
| Total Account Equity | ~$xxx,000 |
| Broker-Granted Buying Power | ~$xxx,000 (Options BP) |
| Utilization Cap | 15% of total equity (~$xx,000 target deployment) |
| Current BP Usage | ~$xxx,000 (~28% of equity) |
| Max Trade Risk | 1–2% of total equity per trade |
| Account-Level Halt | 10% total portfolio drawdown |
- Black Swan Protocol: If volatility spikes, defend the bond base first. Reduce delta exposure immediately.
- Circuit Breaker: If a strategy realizes a drawdown of 25% of its allocated BPI, that strategy is paused.
- Regime Shift Definition: Triggered by:
- Sustained break of the 200-day Moving Average (S&P 500).
- 20% spike in 10-year Treasury yield within 30 days.
- VIX > 30 for 3 consecutive sessions.
- Succession: Heirs have instructions to liquidate active positions and revert to a bond-only base if I am incapacitated.
V. 🎣 Profit Preservation & Runners
⚙️ The Tiered Ratchet (Swing Trades)
| Trigger | Action |
|---|---|
| 25% of Target Hit | Reduce initial risk by 50% |
| 50% of Target Hit | Move stop-loss to Break-Even |
| 75% of Target Hit | Lock in 25% of total projected profit |
- The Runner Protocol: Once final target is hit, close 50%. Manage the remaining “runner” with a trailing stop (e.g., 21-day EMA).
- Covered Call Overlay: For equity runners, sell OTM calls to generate additional premium income while the stock trends higher.
VI. ⚡ Execution Rules
- Volatility Adaptation (VIX Overlay):
- VIX < 20 (Low IV): Normal operations. Focus on theta decay, credit spreads, and aggressive scalping.
- VIX 20-30 (Elevated IV): * Action: Reduce total BPI utilization by 25%.
- Strategy Shift: Pivot to selling further Out-of-the-Money (OTM). Use the increased premium to buy “safety distance” rather than seeking higher absolute returns.
- VIX > 30 (High IV/Panic): * Action: Reduce new entry sizes by 50%.
- Strategy Shift: Primarily utilize Defined-Risk Spreads to hedge against broker margin expansion. Focus on “Mean Reversion” scalps as the rubber band is likely stretched too far.
- Technical Redundancy: Secondary device and mobile hotspot mandatory when traveling.
- Journaling & Transparency: Primary data via broker logs. Weekly “dump” of closed trades to personal website. Audit stats monthly.
VII. 🖖 Psychological Standards (The Spock Method)
- Neutrality: Execute mechanically. Eliminate emotional variables.
- Zero Hopium: Hope is not a strategy. If the stop-loss is hit, the trade is dead.
- Cognitive Bias Mitigation:
- Recency/Endowment/Sunk Cost: Actively monitor for these daily.
- Confirmation Bias: Search for the “bear case” when bullish. Stay mechanical until data proves a strategy no longer works.
- Strategy Evolution: If conditions change, acknowledge the regime shift, reassess, and pivot to new backtested strategies or revisit historical ones that have rotated back into favor.
VIII. 🛠️ Technical Refinements
- Operational Limits: Never exceed 10 active positions at once.
- New Strategy Integration: Any new strategy must be back tested and paper-traded or traded at 1/10th normal size for 30 sessions before full integration.
IX. 🔐 Privacy & Accountability
- Privacy: Total net worth and performance data are personal business.
- Accountability: I share my logic and plan because it forces me to remain disciplined. I am at the age I really don’t give a crap about what other people trade and I only do what works for me. Not grumpiness but self aware.