~5 minute read
Today James over at Take Profit Trader sent out an email that stuck with me. He made a simple observation: most traders have a do-trade strategy, but what they really need is a do-not-trade strategy. It’s one of those ideas that sounds obvious the moment you hear it, but most of us have never actually sat down and built one.
That idea is the inspiration for this post. My spin on it gets a little more specific, because in our world, the filters aren’t just emotional. They’re also mechanical and structural. But the core question James raised is the right one, so credit where it’s due.
Building Your Do-Not-Trade Strategy
When you’re newer to trading, or working to learn a strategy for the first time, it’s natural to become very focused on the rules. The entry criteria. The checklist. Getting every condition exactly right before you pull the trigger.
At TDG, we deliberately shift that framing. Instead of rules, we talk about filters, frameworks, and considerations. Rules are rigid. Filters are intelligent. Rules tell you what to do. Filters help you understand why you should or shouldn’t be doing something in the first place.
And that distinction matters a lot, because the most important filter most traders never build is the one that tells them when to stay out entirely.
Your do-not-trade strategy is probably worth more to your account than your do-trade strategy ever will be.
Let that sink in for a second.
The Filter Model Nobody Talks About
Think about it this way. If you could eliminate just your worst 20% of trades (the ones taken without the proper criteria, or worse, out of boredom, bad timing, or poor market conditions), what would happen to your P&L?
For most traders, the answer is dramatic improvement. Not because they found better trades, but because they stopped taking the bad ones.
That’s the filter model. The concept is straightforward: before you can trade well, you need to know when not to trade at all. And that means getting specific, not just about what conditions you need to see to take a trade, but about what conditions should keep you out entirely.
At TDG, we break those conditions into three categories: filters based on market dynamics, filters based on price relative to range and volume, and filters based on your own state as a trader. Each one is worth building. The rest of this post walks through all three.
Market-Based Filters: Let the Range Tell You When to Sit
Not every filter is about your emotional state. Some are purely mechanical, and just as important.
Here’s one example from how we trade: I’m (usually) not interested in trading the “stay in the lane” strategy (trading VWAP bands) until the market has put in at least 50% of its 7-day true range for that session.
What does that look like practically? If the MES has traded in a 100-point range over the last 5 trading sessions, I want to see at least 50 points of range built into the current session before I’m looking at VWAP band setups.
Why? Because until enough volatility has come into the market, the VWAP bands haven’t had time to expand and adjust. You’re essentially trading a setup that isn’t fully cooked yet. The filter says: wait. The conditions aren’t right, so you sit on your hands.
This isn’t about being timid. It’s about being selective. A surgeon doesn’t operate in poor lighting just because the patient is on the table. (Claude wrote that last sentence, not me, but I like it, so it stays.)
Structural Filters: Read What the Market Is Already Telling Us
Some filters come from the price structure itself, not indicators, and definitely not our emotional state.
One clear example: on an outside day up, I’m generally not looking to short. Full stop. You may have also heard us refer to this as a snow day in the PTR and elsewhere.
When price is trading above the prior session’s high, the market has already told us something about its character for that day. Fighting that message by hunting shorts puts us in a low-probability trade from the start. The filter is simple: if we’re trading above yesterday’s high, shorts are off the menu for the session.
You don’t need to understand every reason why. Just respect the guideline. The market gave us information so we use it.
Emotional Filters: Worth Acknowledging, Not Obsessing Over
You’ll hear a lot in trading content about emotions being the enemy. And yes, they’re worth putting on your do-not-trade list. Trading tired, trading angry after a loss, trading bored on a slow afternoon. These are real conditions that can lead to poor decisions, and it’s fair to account for them.
But you probably know my take by now: emotions are largely a symptom, not the root cause. Trading is a skill-based business. When you genuinely have the skills, when you understand what you’re looking at and why you’re in a trade, most of the emotional noise quiets down on its own. The fight-or-flight feeling that shows up after a loss, or the overconfidence after a win, those reactions are often just your nervous system telling you that you’re operating outside your level of competence.
So yes, you can include emotional state in your filters, just as I’m reluctantly including it in this post. A rough morning or jumping in too soon after a big winner, that’s worth noting. But don’t let the emotional conversation become a substitute for doing the deeper work of actually building your skills. The best version of your do-not-trade list will be heavy on market conditions and light on “I was feeling off today.”
Build Your Own Do-Not-Trade List
Here’s what I want you to do after reading this.
Grab a piece of paper (or open a notes app) and ask yourself three things:
- What market conditions tend to show up right before my bad trades?
- What structural signals tell me a setup isn’t ready yet?
- What emotional states have I been in when I’ve made my worst decisions?
Build your list. Write it out. Put it somewhere you’ll see it before you sit down to trade each morning.
Your do-not-trade strategy won’t be the cornerstone of your edge. You learn by trading, and there’s no substitute for that screen time and experience. But a good filter system quietly does something important in the background: it keeps you out of the conditions where bad habits form and confidence erodes. Build one, follow it, and over time it becomes one of the more underrated contributors to your growth as a trader.
Want to go deeper on trading filters, VWAP strategies, and how to structure your trading day? That’s exactly what we work on together.
Come check out what we do.[Join the Discord Community →]
Commodity Futures Trading Commission. Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
