📖 The Traders' Bible: Your Complete Systematic Trading Framework (+ Free Interactive App)

What's good, systematic traders! 🎯

I just launched The Traders' Bible — a complete reference guide for pyramiding, trailing stops, position sizing, and professional trade management. And it comes with a FREE interactive web app with 8 different calculators so you can actually BUILD these systems yourself.

Open the app here: https://traders-bible.web.app

This isn't just another trading guide. This is a SYSTEM—a complete framework synthesizing techniques from Jesse Livermore, the Turtle Traders, Nicolas Darvas, Chuck LeBeau, and Rob Carver into actionable, calculable strategies.

Let me walk you through what's inside. 👇

🎯 What Is The Traders' Bible?

It's your complete toolkit for systematic position management. Every concept has a matching interactive calculator in the web app.

The Flow:

Read the concept (in this post or in the app)

Open the calculator (keyboard shortcut F1-F8)

Input your trade parameters

Get exact numbers, charts, and guidance

Execute with ZERO discretion

Navigate the app with keyboard shortcuts:

F1 — DASH (Dashboard & data management)

F2 — PYMD (Pyramid Planner)

F3 — STOP (Trailing Stop Calculator)

F4 — TRCK (Position Tracker)

F5 — FREE (Free Roll Calculator)

F6 — SURV (Survivability Analyzer)

F7 — RISK (Expectancy Calculator)

F8 — EDUC (Education Hub)

Or use the sidebar codes if you prefer clicking. Let's break down each module! 🚀

🔺 Module 1: Pyramiding — Adding to Winners (F2 PYMD)

We covered this in the previous post, but here's the quick recap with the app integration:

The Three Scaling Methods

Equal Unit Scaling (Turtle Method):

Add the same size at each level (100-100-100-100)

Simple and aggressive

Raises your AEP fast

Used by Turtle Traders at 0.5N intervals (up to 4 units max)

Tapered Scaling (50%):

Each add is half the previous (100-50-25-12.5)

Keeps your center of gravity LOW

Way more resilient to corrections

The preferred method for most traders

Fibonacci Scaling (61.8%):

Each add is 61.8% of previous (100-61.8-38.2-23.6)

Middle ground between equal and tapered

Slightly more aggressive than 50% taper

The Critical AEP Formula

Every time you add, your blended entry price changes:

AEP = Σ(Price_i × Volume_i) / Σ(Volume_i)

This number determines:

✅ Your free roll level

✅ Your survivability threshold

✅ Your TRUE risk

Track it obsessively.

When to Add (Three Systematic Triggers)

Breakouts: Add when price clears resistance

Lower win rate (30-40%)

Never miss a trend

Use for initial entries

Pullbacks: Add when price retests support/MA

Higher win rate (50%+)

Better R:R

Use for pyramid adds

ATR Intervals: Add at fixed distances (Entry + 0.5N, +1.0N, +1.5N)

Completely systematic

Removes ALL discretion

The Turtle method

🔧 Try the Calculator: F2 PYMD

What you input:

Entry price

ATR

Account size

Risk percentage

Scaling method (Equal/Tapered/Fibonacci)

What you get:

Complete table of every pyramid level

Entry price for each add

Unit size at each level

Cumulative position size

Running AEP

Stop level

Risk in dollars AND R-multiples

Visual chart showing entries vs AEP vs stop

Example output:

You're trading AAPL at $150 with ATR of $3. Account size $100k, risking 1%.

The calculator shows:

Entry 1: 222 shares @ $150 (stop @ $144)

Entry 2: 111 shares @ $151.50 (AEP now $150.50, stop @ $147)

Entry 3: 55 shares @ $153 (AEP now $151, stop @ $148.50)

Entry 4: 28 shares @ $154.50 (AEP now $151.36, stop @ $149.86)

Total position: 416 shares, but risk still only $1,000. 📊

🛑 Module 2: Trailing Stops — Protecting Profits (F3 STOP)

The Breakeven Fallacy (READ THIS CAREFULLY)

Moving your stop to breakeven at +1R feels safe but is mathematically destructive.

Why?

It truncates the right tail—the 5% of trades that generate 80% of profits. Simulations show breakeven stops at 10% of target:

✅ Increase hit rate 4x

❌ Reduce total expected value

The market doesn't care about your entry price.

Rule: Never move to breakeven before +2N.

The Three Main Trailing Methods

Chandelier Exit (The Gold Standard) 🕯️

Named by Chuck LeBeau. Hangs from the highest high:

Stop = Highest_High - (k × ATR)

The Dynamic Tightening Schedule:

Initial Phase (k = 3.0): Let the trade breathe, wide buffer

Mature Phase (k = 2.5): Trend confirmed, begin tightening

Parabolic Phase (k = 2.0): Protect profits, watch for exhaustion

Exit Phase (k = 1.5): Aggressive lock, expect reversal

ATR-Based Stops (Simpler Variant) 📏

Hangs from current price instead of highest high:

Stop = Current_Price - (k × ATR)

Auto-adapts to volatility:

High ATR (choppy market) = wider stop

Low ATR (calm market) = tighter stop

Use k = 2.5-3.0 for trend trades, 1.5-2.0 for mean reversion.

SuperTrend (Fast & Reactive) ⚡

Uses median price instead of high:

Stop = (High + Low)/2 - (k × ATR)

More reactive than Chandelier. Better for faster timeframes, worse for catching long trends.

Market Structure Stops (Discretionary) 🏔️

Place stops below swing lows (Dow Theory). The stop is where your trend thesis is INVALIDATED—not at some arbitrary math level.

Best combined with ATR as a minimum distance floor.

🔧 Try the Calculator: F3 STOP

What you input:

Current price

Highest high

ATR

Method (Chandelier/ATR-based/SuperTrend)

What you get:

Exact stop price

Distance in dollars and percent

Risk at the stop (dollar amount)

Full dynamic tightening schedule (all four phases)

Recommendations for when to tighten

Example:

Stock at $130, highest high $135, ATR $4.

Chandelier (k=3.0): Stop @ $123 (distance: $7, risk: 5.4%)

Tightening schedule:

Phase 2 (k=2.5): Move to $125

Phase 3 (k=2.0): Move to $127

Phase 4 (k=1.5): Move to $129

Visual guidance on when to shift between phases. 📈

📊 Module 3: Position Tracker — Live Trade Management (F4 TRCK)

This is where theory becomes reality. Real-time position tracking with automatic phase identification.

The Three Trade Phases

Phase 1: PROTECTION (Entry to 1R) 🛡️

The trade is UNPROVEN.

Rules:

❌ Do NOT move your stop

❌ Do NOT add

✅ Let the trade work or hit your stop

Moving to breakeven here is the #1 edge destroyer.

Phase 2: GROWTH (1R to 3R) 📈

The trade is WORKING.

Rules:

✅ Trail stop to higher lows

✅ Check pyramiding signals

✅ Use 1R Rule (total open risk ≤ initial risk)

Phase 3: MAXIMIZATION (3R+) 🚀

You have a RUNNER.

Rules:

✅ Tighten stops progressively (3.0 → 2.0 ATR)

✅ Watch for parabolic exhaustion

✅ Monitor volume divergence

✅ Look for reversal candles

This is where most of your money is made.

Three Strategic Models

Model A (Conservative):

Breakeven at 1R

Tight trailing (2 ATR)

No scaling

Partial exits at targets

For capital preservation

Model B (Aggressive):

Wide stops (3-4 ATR)

Aggressive pyramiding

Exit ONLY on trend reversal

For trend capture

Model C (Mathematical - The Balanced Approach):

Breakeven at 2R

Structural trailing

Risk-free scaling

Partial profit at 3R

Trail, Don't Target ⚠️

Profit targets CAP your winners. In trend following, the biggest winners are outliers that far exceed any reasonable target.

The Turtle Traders had NO profit targets.

They exited only when the trailing stop was hit.

The Scaling Out Paradox

Rob Carver documented this: dynamic sizing (scaling out) improves your Sharpe ratio but REDUCES your CAGR.

Why?

Upside volatility is RETURN, not risk. Don't penalize it.

Rule: Scale out ONLY when:

Trend structure is invalidated, OR

Position exceeds 20% of equity

🔧 Try the Calculator: F4 TRCK

What you input:

Trade entries (price, size, stop, ATR for each)

Current mark price (update as market moves)

What you get:

Real-time P&L (dollar and percent)

Weighted Average Entry Price (WAEP)

R-multiple (how many R you're up/down)

Automatic phase identification (PROTECTION/GROWTH/MAXIMIZATION)

Color-coded guidance for current phase

Stop levels for all positions

Total exposure and risk

Example:

You have 3 entries in NVDA:

Entry 1: 100 shares @ $800

Entry 2: 50 shares @ $820

Entry 3: 25 shares @ $840

Current price: $875

Tracker shows:

WAEP: $813.33

P&L: +$10,791

R-multiple: +5.4R

Phase: MAXIMIZATION (color: green)

Guidance: "Tighten stops to 2.0 ATR. Watch for exhaustion."

Live updating as price moves. 🎯

🆓 Module 4: Free Roll — Risk-Free Positions (F5 FREE)

A position reaches "free roll" when your stop is at or above your Average Entry Price. At that point, the WORST outcome is breakeven—the market is paying for your entire position.

The Formula (It's Just AEP!)

Free Roll Price = (E1×V1 + E2×V2) / (V1+V2) = AEP

If your stop is at or above this price, aggregate P&L at the stop is zero or positive. Principal risk is eliminated.

House Money Financing

How much can you add from unrealized profit?

V_add × R_unit ≤ alpha × OTE

Where:

OTE = Open Trade Equity (unrealized profit)

alpha = Financing coefficient

Conservative: alpha = 0.2-0.3 (use 20-30% of profit)

Moderate: alpha = 0.5 (use 50% of profit)

Aggressive: alpha = 0.7 (use 70% of profit)

Never go above 0.7—you need cushion for corrections.

The Free Roll Mindset 🧠

Once you reach free roll, anxiety DROPS.

You can hold through volatile corrections because you know the MARKET—not your capital—is at risk.

The goal of every pyramid: Reach free roll as quickly as possible.

Note: Free roll doesn't mean risk-free. Gap risk and slippage still exist. But your principal is protected.

🔧 Try the Calculator: F5 FREE

What you input:

All your entries (price and size for each)

Proposed stop level

What you get:

Free roll status (YES/NO with color coding)

Exact free roll price

Locked profit (if at free roll) OR remaining risk (if not)

House Money calculation: How many additional units your open profit can finance

Recommendations for safe scaling

Example:

Position in BTC:

Entry 1: 1.0 BTC @ $60,000

Entry 2: 0.5 BTC @ $65,000

Current price: $70,000

Calculator shows:

Free roll price: $61,666

Current stop: $63,000

Status: FREE ROLL ✅

Locked profit: $2,000

Available to finance: Can add 0.3 BTC using house money

Now you're playing with house money. 💰

🏋️ Module 5: Survivability — How Deep Can You Survive? (F6 SURV)

The survivability threshold is the number of ATR-multiples of correction your pyramided position can absorb before turning to a loss.

The Formula

ST = (Peak_Price - WAEP) / ATR

Higher ST = more resilience. This is the single most important metric for evaluating pyramid risk.

Equal Units vs Tapered: The Brutal Numbers

Equal Unit Scaling:

Survivability Threshold: ~5.0N

Verdict: FRAGILE

A 5.1N correction wipes you out

Tapered (50%):

Survivability Threshold: ~7.0N

Verdict: ROBUST

Survives corrections 40% deeper

Fibonacci (61.8%):

Survivability Threshold: ~6.5N

Verdict: Middle ground

The 10N Simulation (This Will Blow Your Mind)

An asset rises 10N, then corrects 3N.

Results:

Both EUS and Tapered net $4,400 profit (SAME profit).

BUT:

Equal Units:

Required margin: $121,000

Peak-to-trough drawdown: 60%

Tapered:

Required margin: $58,000 (HALF!)

Peak-to-trough drawdown: 43%

Same profit. Half the risk. This is why you taper. 📉

Optimal Taper Ratio

r_opt ≈ 1 - (1 / ST)

This geometric decay maintains constant survivability as you add levels.

Top-Heavy Vulnerability

Equal units at higher prices raise the center of gravity dangerously close to current price.

EUS: Drifts center of gravity by ~50% of trend magnitude

Tapered: Drifts only ~30%

The bigger the position at the top, the faster it unwinds. 📊

🔧 Try the Calculator: F6 SURV

What you input:

Peak price

ATR

Entry price

Number of adds

Interval between adds

What you get:

Side-by-side comparison: Equal Units vs Tapered vs Fibonacci

Total size for each method

WAEP for each method

Survivability threshold for each method

Optimal taper ratio

Wipeout price (where each method turns to loss)

Correction scenario table: P&L at every depth from 1N to 10N

Comparison chart: All three methods plotted

Example:

Stock at $150, ATR $3, 4 adds at 0.5N intervals.

Results:

Equal Units: 400 shares, WAEP $151.50, ST = 5.1N, wipeout @ $135.70

Tapered: 187 shares, WAEP $147.27, ST = 7.3N, wipeout @ $125.81

Fibonacci: 262 shares, WAEP $149.10, ST = 6.4N, wipeout @ $129.90

Visual proof of why tapered sizing is superior. 🎯

🎲 Module 6: Risk & Expectancy — Know Your Edge (F7 RISK)

Every formula is useless if your edge is negative. This module quantifies your statistical advantage.

Trading Expectancy

The average amount you expect to make per trade:

E = (Win_Rate × Avg_Win) - (Loss_Rate × Avg_Loss)

Example:

Win rate: 35%

Avg win: $1,500

Avg loss: $500

E = (0.35 × $1,500) - (0.65 × $500)

E = $525 - $325 = $200 per trade

Even a 35% win rate is HIGHLY profitable with proper R:R.

Kelly Criterion (Optimal Position Size)

f* = (p × b - q) / b

Where:

p = win rate

q = 1 - p (loss rate)

b = avg_win / avg_loss

Full Kelly is too volatile for trading. Use 25-50% of Kelly (half-Kelly) in practice.

Variance Drag (The Leverage Killer)

Leverage amplifies volatility, and volatility reduces geometric growth:

G ≈ μ - (σ² / 2)

This is why 3x leveraged ETFs underperform 3x the index over time.

The higher your leverage, the more variance eats your compounding.

Risk of Ruin

Probability of blowing up your account:

RoR ≈ ((1 - edge) / (1 + edge)) ^ (account / risk_per_trade)

Target: RoR below 1%

This usually means: Risking 1-2% per trade with positive expectancy.

The 1R Rule

R = the fixed dollar amount you risk per trade (typically 0.5-1.0% of equity).

Total open risk across ALL positions should never exceed 1R.

When pyramiding, new units are financed by open profit, keeping total risk at 1R.

The Ant Moving Protocol (Crypto Perps Scaling)

A complete systematic scaling system:

Scout (1%): Test position, stop at -0.8%

Mantis (2%): Add when floating profit hits 50%, stop to breakeven

Breakout (3%): Add on price breakout, trail to previous low

Max (26% total): Only with on-chain confirmation + funding rate reversal

The Thunderstorm Filter: Only scale aggressively when 4H ATR is at least 2x the 60-day high. No volatility, no scaling. ⚡

🔧 Try the Calculator: F7 RISK

What you input:

Option A (Manual):

Win rate

Average win

Average loss

Account size

Risk per trade

Option B (From History):

Add individual trade P&L values

Tool computes everything

What you get:

Expectancy per trade

Expectancy per dollar risked

Profit factor

Kelly fraction (optimal position size)

Risk of ruin (blow-up probability)

Variance drag (compounding penalty)

Simulated equity curve (5 random paths showing outcomes)

Example:

Win rate: 40%

Avg win: $2,000

Avg loss: $700

Account: $50,000

Risk per trade: $500

Results:

Expectancy: $380 per trade

Expectancy per $1 risked: $0.76

Profit factor: 2.29

Kelly: 21.4% (use 10.7% half-Kelly = $5,350 per trade)

Risk of ruin: 0.3%

Variance drag: -2.1% annually

Monte Carlo simulation shows 5 potential equity curves. 📊

🧠 Module 7: Behavioral & Psychological (Built into F8 EDUC)

Every formula is useless if you can't execute. These are the biases that destroy traders who know the math but can't follow the rules.

Breakeven Bias 🚨

The irresistible urge to move your stop to entry the moment profit appears.

Feels like: "Locking in" a risk-free trade

Reality: Filtering out retests that would become your biggest winners

Cure: Predefine stop rules BEFORE entering. Follow mechanically.

Disposition Effect

Selling winners too early. Holding losers too long. Directly opposes Anti-Martingale.

Pyramiding is the systematic antidote—it FORCES you to add to winners instead of cutting them.

Whipsaw Penalty

Tight stops in choppy markets = death by a thousand cuts.

Each small loss drains the account through cumulative losses.

Solution: Use wider stops (3.0 ATR) and accept fewer, larger drawdowns. The cost of being stopped out repeatedly far exceeds one well-managed larger loss.

The Livermore Rule

"I never buy on reactions. I buy on breakouts."

Your initial position is a TEST, not a commitment.

Jesse Livermore went bankrupt FOUR TIMES because he violated his own rules. Follow the system.

Process Over Outcome ⚖️

Judge each trade by whether you followed the system, not by P&L.

✅ Losing trade + perfect execution = GOOD trade

❌ Winning trade + broken rules = DANGEROUS (reinforces bad habits)

Track your Rule Adherence Rate alongside win rate and expectancy.

📚 Module 8: Education Hub (F8 EDUC)

Your in-app reference library with six topic tabs:

Pyramiding — All scaling methods, AEP formulas, historical context

Stops — Chandelier, ATR, SuperTrend, breakeven fallacy

Exits — Trail vs target, scaling out paradox, phase management

Sizing — Equal units vs tapered, survivability, optimal ratios

Risk — Expectancy, Kelly, variance drag, risk of ruin

Behavioral — All cognitive biases and their systematic antidotes

Use it as your quick reference whenever you need to refresh on any concept.

Every formula, every historical case study, every principle from the source material. 📖

🎯 Quick Reference — All Tools at a Glance

F1 — DASH (Dashboard):

System overview, data export/import, settings

F2 — PYMD (Pyramid Planner):

Plan scaling entries with Equal/Tapered/Fibonacci methods

F3 — STOP (Trailing Stops):

Chandelier, ATR, SuperTrend calculations + dynamic tightening

F4 — TRCK (Position Tracker):

Live P&L, WAEP, R-multiples, automatic phase identification

F5 — FREE (Free Roll):

Risk-free position analysis + House Money financing

F6 — SURV (Survivability):

EUS vs Tapered comparison, correction depth analysis

F7 — RISK (Expectancy):

Edge analysis, Kelly criterion, risk of ruin, Monte Carlo

F8 — EDUC (Education):

All concepts, formulas, case studies, historical references

🚀 How to Use This System

Step 1: Learn the Concepts

Read through this post and the Education Hub (F8) to understand the WHY behind each technique.

Step 2: Plan Your Trade

Use F2 (Pyramid Planner) to map out your entries before you enter. Know exactly when and how much you'll add.

Step 3: Set Your Stops

Use F3 (Trailing Stop) to calculate your initial stop and dynamic tightening schedule.

Step 4: Track Live

Use F4 (Position Tracker) as you manage the trade. It tells you what phase you're in and what to do.

Step 5: Analyze Your Edge

Use F7 (Risk & Expectancy) to track your performance over time. Know your edge, risk of ruin, and optimal sizing.

Step 6: Learn from History

Review your trades, calculate survivability (F6), check if you reached free roll (F5), and adjust.

💡 Why This Matters

Most traders fail because they:

❌ Trade on emotion instead of rules

❌ Don't know their statistical edge

❌ Cut winners early and hold losers long

❌ Use position sizing that's too aggressive OR too conservative

❌ Don't have a systematic framework

The Traders' Bible gives you:

✅ Rules-based framework (zero discretion)

✅ Quantified edge (expectancy calculator)

✅ Anti-Martingale enforcement (pyramid only winners)

✅ Optimal sizing (Kelly criterion + survivability)

✅ Complete systematic approach (plan → execute → analyze)

This is how professionals trade. They don't "feel it out." They calculate, execute, and adjust based on data.

🎓 Historical Foundations

This framework synthesizes techniques from:

Jesse Livermore — The Probe system, buying on breakouts

Nicolas Darvas — Box Theory, structural trailing stops

Richard Dennis & Bill Eckhardt — The Turtle Traders, ATR normalization

Chuck LeBeau — Chandelier Exits, systematic stop placement

Rob Carver — Scaling paradox, variance drag, systematic trading

Standing on the shoulders of giants. 📚

🔗 Get Started Now

Open the app: https://traders-bible.web.app

It's completely free. No signup, no paywall, no BS. Just systematic trading tools.

Bookmark it. Use it before every trade. Make it part of your process.

🗣️ Discussion Questions

For the systematic traders in the community:

Which module do you think will be most valuable for your trading?

Are you currently using any of these techniques (pyramiding, Chandelier exits, etc.)?

What's your biggest challenge in following systematic rules?

Would you add any features to the app?

What's your win rate and R:R ratio? (Check with F7 RISK)

Share your experiences with systematic trading below! Let's learn from each other. 👇

Not financial advice. Past performance doesn't guarantee future results. Trading involves risk. These tools help you be systematic, but they don't guarantee profits. Use proper position sizing. Risk only what you can afford to lose. Test everything in simulation first. 🙏

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