Table of Contents
In this interview, Rolf Schlotmann—co-founder of Edgewonk and a veteran FX and equities trader—breaks down how he navigates shifting volatility, why he dialed back risk on JPY pairs, and how a disciplined journaling process turns “follow your rules” from a platitude into a measurable edge. He’s back in Germany, trading across timeframes, and using hard data to refine execution—exactly the kind of practical mindset retail traders can borrow today.
You’ll learn how Rolf defines and tracks execution “efficiency,” the specific metrics that reveal where profits leak (like R-multiple and potential performance), and the simple weekly habit that tightens your process without overhauling your strategy. Expect clear takeaways on journaling, sample-size thinking, risk adjustments during uncertain regimes, and a realistic standard for rule compliance that still compounds results.
Rolf Schlotmann Playbook & Strategy: How He Actually Trades
Core Trading Framework
Rolf Schlotmann builds his edge around clear rules, small risk, and continuous measurement. He defines setups precisely, sizes positions by volatility, and reviews results weekly, so the process compounds even when markets are messy.
- Define 2–3 primary setups you can describe in one sentence each (e.g., “pullback to 20EMA with prior trend and fresh momentum signal”).
- Risk a fixed fraction per trade (0.25R–1R; pick one and stick to it for 50+ trades before changing).
- Track every trade with tags for setup, market regime, mistakes, and outcome; optimize tags, not hunches.
Trade Selection & Setups
Keep your playbook small and highly repeatable. Rolf favors unambiguous conditions over clever predictions, so a setup either exists or it doesn’t—no debating it mid-candle.
- For each setup, write objective qualifiers: trend state, structure (HH/HL or LL/LH), location (S/R, VWAP, prior day high/low), and a timing trigger.
- Require at least two pieces of confluence (e.g., higher-timeframe trend + intraday trigger).
- Pre-mark invalidation (where the idea is wrong) before entry; no entry if invalidation is ambiguous.
Risk & Position Sizing
Survival comes from sizing, not forecasting. Rolf standardizes risk per trade and lets the market decide trade frequency—risk stays constant even when the setup “looks amazing.”
- Choose a fixed R (e.g., 0.5% of equity per trade) and never exceed it.
- Size position by volatility: position_size = (risk_per_trade) / (stop_distance). Use ATR or recent swing distance for stop_distance.
- Cap total correlated exposure (e.g., all JPY or all tech) to 1.5R simultaneously.
Entry Triggers & Stop Placement
Entries are mechanical and tied to structure, so exits are equally clear. Rolf avoids arbitrary stops; they sit where the setup is proven wrong.
- Use one of three triggers only: break-and-close beyond level, retest + rejection, or momentum cross on your execution timeframe.
- Place initial stop beyond the last structural pivot or 1.0–1.5× ATR(14) from entry—whichever is farther.
- If slippage widens your actual risk > 1.2R of the plan, skip the trade; the idea already moved.
Trade Management & Exits
Management is preplanned, so you don’t improvise under stress. Rolf prefers partials at logical levels and trailing behind new structure rather than hoping for “home runs.”
- Scale out 50% at +1R or first major level; move stop to breakeven only after that scale.
- Trail the remainder behind a new swing structure or a higher-timeframe moving average; never widen a stop.
- If structure flips against you (e.g., HH/HL turns LL/LH), exit on the next valid candle close—no exceptions.
Journaling & Metrics (Execution Over Outcome)
What gets measured gets improved. Rolf uses data to separate luck from skill, focusing on execution quality as much as P&L.
- Log planned R vs. realized R, entry timing error (seconds/bars late), and any rule violation (Y/N with a short reason).
- Calculate expectancy per setup monthly:
Expectancy = WinRate × AvgWinR – (1 – WinRate) × AvgLossR. - Track “Potential vs. Captured R” to expose management leaks; aim to capture ≥ 60% of the setup’s median potential.
Weekly Review & Optimization
The edge grows in review, not in the next trade. Rolf runs short, consistent reviews that tweak one variable at a time.
- Every week, filter trades by tags to identify the top/bottom setup; pause the bottom one for two weeks while you refine it.
- Pick one fix for the coming week (e.g., later entry confirmation on news days), and write it as a rule.
- Build a “Do More / Do Less” list from the data; keep it visible on your platform.
Psychology & Process Discipline
Consistency beats intensity. Rolf treats discipline as a system—with checklists, timeouts, and predefined “if-then” rules—not as willpower.
- Pre-trade checklist (10–20 seconds): market regime identified, setup present, risk set, invalidation marked, news checked.
- If you break a rule, stop trading for 20 minutes and journal the trigger; two violations end the session.
- Limit daily damage: hard stop at −2R; only continue after +1R recovery if you’ve already hit −1.5R intraday.
Adapting to Market Regimes
Rolf adjusts frequency and targets with volatility, not his conviction. The playbook stays the same; only thresholds move.
- In high volatility, widen stops by 1.25× and reduce position size to keep risk at 1R; prefer partials sooner.
- In low volatility, require tighter structure confirmation and accept fewer trades; avoid forcing entries to meet quotas.
- Use a simple daily regime tag (TREND / RANGE / EVENT) to filter setups that historically underperform in that regime.
Intraday Routine (Example Clockface)
A light structure keeps you fresh and objective. Rolf plans the day so that decision quality stays high even when markets run.
- Pre-market (15–20 min): mark levels, note scheduled events, pick A-setups for watchlist.
- Session blocks (60–90 min): trade only during your defined windows; outside them, alerts only—no chart staring.
- Post-market (10–15 min): journal, tag mistakes, screenshot best and worst trade, write tomorrow’s one-rule focus.
Clean Charts, Fewer Indicators
Less clutter = faster, better decisions. Rolf prefers structure and price behavior first, indicators second.
- Keep at most two indicators for timing (e.g., a moving average and RSI or MACD) and one for volatility (ATR).
- Remove anything you don’t actively use in your rules for entries or exits.
- Rehearse setups bar-by-bar on replay weekly; if you can’t call the trigger in real time, the rule isn’t clear enough.
Risk Controls for News & Correlation
Event risk and hidden correlation can sink good setups. Rolf contains both simple, hard rules.
- Flat at least five minutes before high-impact events affecting your instrument; re-assess only after the first post-news candle closes.
- Never stack more than 1R across instruments that move on the same driver (e.g., multiple USD pairs or semis stocks).
- If VIX/vol jumps above your threshold (define it), cut planned R by half for the rest of the day.
Playbook Upgrade Loop (Monthly)
Edges erode unless you iterate. Rolf schedules a short monthly refactor to keep the playbook current.
- Archive the lowest-expectancy setup for 30 days; re-introduce only with a clarified trigger and tight rules.
- Promote one “runner-friendly” management rule for trending months and one “mean-revert” rule for ranges; toggle by regime tag.
- Refresh screenshots in your playbook with only the past 90 days so examples reflect current conditions.
Guardrails for Consistency
Simple guardrails stop small leaks from becoming big ones. Rolf keeps these non-negotiable.
- Max two active positions unless both are already at ≥ +1R with stops at breakeven or better.
- No adding to losers, ever; only add to winners on a fresh signal with the same invalidation logic.
- End green days at a predefined daily goal (e.g., +2R to +3R) to avoid giving back profits through fatigue.
Size Every Trade by Volatility, Not Conviction or Chart Beauty
Rolf Schlotmann sizes positions with math, not mood. He fixes risk per trade in R terms, then lets volatility determine how big the position can be without breaking that cap. The simple idea: position size equals planned risk divided by the distance to a logical, structure-based stop—often approximated with ATR or the last swing. When volatility expands, the stop widens and the position automatically shrinks; when volatility contracts, size increases—but risk in R never changes.
This keeps Rolf honest when a setup “looks amazing,” but the tape is wild. He also limits total correlated exposure so a single volatility shock can’t hit multiple positions at once. If slippage pushes real risk beyond the plan, he passes rather than forcing size to fit a narrative. Over a large sample of trades, this volatility-based sizing keeps drawdowns tolerable, makes expectancy more stable, and frees him to focus on clean execution instead of convincing himself which chart is prettiest.
Define Setup Rules Precisely; Execute Mechanically, Review Outcomes Weekly
Rolf Schlotmann treats setups like checklists, not vibes. Each entry requires a clear trend condition, a location cue, and a timing trigger that can be verified on the chart without debate. If any item is missing or fuzzy, the trade is skipped before emotions get a vote. He keeps execution mechanical by reading the checklist out loud and logging “yes/no” to each criterion so there’s a visible audit trail.
Once the week closes, Rolf reviews outcomes by setup tag rather than by instrument or headline. He compares planned R to realized R, flags any rule violations, and writes one small improvement to test next week. The goal isn’t to predict more—it’s to reduce ambiguity so the next 50 trades look the same. This rhythm of precise rules, robotic execution, and weekly iteration keeps his edge stable even when market conditions change.
Diversify by Underlying, Strategy, and Holding Duration to Smooth Equity
Rolf Schlotmann spreads risk across instruments, playbook types, and time horizons so no single market mood controls his month. He mixes uncorrelated underlyings and avoids stacking exposure that moves on the same driver, which keeps a bad theme from wrecking the curve. By pairing a trend-following entry with a mean-reversion setup, he makes sure wins can come from different behaviors instead of one style dominating.
He also diversifies by holding duration—some trades are intraday “get paid quickly,” others are swing holds that ride structure for days. This time, diversification reduces timing luck and smooths the equity line when one tempo goes cold. Rolf keeps guardrails by capping total correlated risk and adjusting targets to the regime, letting each bucket contribute without competing for the same P&L window.
Use Hard Invalidation and Preplanned Exits; Never Widen Stops
Rolf Schlotmann starts every trade by marking the price that proves the idea wrong—his hard invalidation. The initial stop sits beyond that level or a volatility buffer, not where the P&L “feels better.” If the price tags the invalidation, he’s out immediately; there’s no negotiation, no “give it a little room,” no moving the line because the candle looks dramatic.
Before entry, Rolf also scripts exits on the winning side, so management is just execution. He scales partials at objective levels, then trails the remainder behind evolving structure, never expanding risk mid-trade. If structure flips—higher highs become lower highs—he closes on the next valid candle and logs it. This approach converts exits from emotional decisions into rules that protect expectancy and keep one bad trade from turning into a bad day.
Limit Correlated Exposure; Cap Daily Drawdown With Non-Negotiable Guardrails
Rolf Schlotmann keeps clusters from sinking the boat by limiting correlated exposure across instruments driven by the same theme. If two trades ride the same macro driver, he treats them as one idea and caps combined risk accordingly. He also uses a hard daily loss limit, so a cold session can’t escalate into tilt or revenge trading.
When the loss cap is hit, Rolf stops trading for the day—no exceptions, no “one more.” He pairs that with a maximum number of concurrent positions unless both are already at breakeven or better. These guardrails let Rolf show up the next day with a clear head and intact capital, which is the only way a rule-based strategy can keep compounding.
Rolf Schlotmann’s core message is refreshingly realistic: aim to respect your rules most of the time, not all of the time, and design a process that survives the inevitable slip-ups. He adapts exposure to volatility instead of opinion, rotates between timeframes when momentum dries up, and cuts risk on fragile themes like JPY when policy uncertainty and surprise interventions loom. The result is a playbook that privileges durability—smaller, steadier R over hero trades—while he broadens his universe into equities and keeps his home base in Germany.
The engine behind that durability is journaling with specific metrics. Rolf shows that traders without a journal are essentially guessing, while data reveals the uncomfortable truth: many have an edge but donate it back on rule breaks and mismanagement. He tracks reward-to-risk and R-multiple to catch early exits, uses “potential performance” to quantify how much is left on the table when we meddle, and scores “efficiency” to measure plan adherence. Each week, he picks one fix—starting with the biggest leak—and tests only that, letting behavior change follow the data. This is execution over ego, iteration over prediction, and it’s how his strategy keeps compounding through changing regimes.
