Table of Contents
Tim Racette sits down to unpack how he became a full-time trader—shaped by early exposure to Chicago’s trading culture, a shift from pit lessons to screens, and a career built around stocks and futures. He talks straight about starting from risk first, keeping tools simple, and letting patience—not hype—drive entries. You’ll also hear why embracing your “unfair advantage” and staying relentlessly process-driven beats chasing headlines every time.
In this piece, you’ll learn Tim’s practical approach to swing-trading strong stocks on pullbacks, day-trading futures in focused morning windows, and building capital the smart way—without blowing up when emotions spike. We’ll cover his risk-first playbook, forward-testing mindset, and the routines that keep him sharp so you can adapt the same structure to your own strategy and avoid the traps that snag most new traders.
Tim Racette Playbook & Strategy: How He Actually Trades
What he trades and when he trades it
Tim focuses on vehicles that move cleanly and let him size risk with clarity. He keeps a tight window for execution to avoid overtrading and decision fatigue. Expect a bias toward liquid futures and strong stocks that are trending, with most activity in the morning session.
- Trade a primary futures contract (e.g., S&P or Nasdaq) during the first 2–3 hours after the open; step aside by late morning.
- Maintain a secondary swing list of high-relative-strength stocks; review weekly and prune ruthlessly.
- Skip low-volume names and choppy products; if the spread or slippage looks ugly, it’s a hard pass.
- If market internals diverge or news volatility is extreme, cut size in half or stand down entirely.
The daily prep that makes entries obvious
The goal is to show up with a plan so the market only has to answer yes/no. Tim builds a simple pre-market map—levels, bias, and conditions that would invalidate that bias—to keep his execution fast and consistent.
- Before the open, mark the prior day’s high/low, overnight high/low, opening range, and yesterday’s value area/VWAP zones.
- Define the day’s directional bias in one sentence; write the “I’m wrong if…” line next to it.
- Pre-write two A+ setups you’ll take and two conditions that mean no trade; keep this visible on your screen.
- Set a maximum of three trade ideas for the session; if none trigger cleanly, you’re done.
A+ setup criteria
He hunts for the same high-probability patterns repeatedly—trend, pullback, continuation. Clear structure means less hesitation and easier stop placement.
- Only trade in the direction of the session trend or the higher-timeframe trend (pick one and stick with it).
- Wait for a pullback to a well-tested area (prior level, VWAP band, or rising/falling short-term MA) plus a momentum pause.
- Require confluence: level + structure + confirmation (e.g., rejection wick or failure to push beyond the pullback low/high).
- No signal within the first 1–2 minutes of the cash open; let the opening volatility shake out.
Entry rules you can execute in seconds
Entries are binary: either the pattern is complete or it isn’t. Tim avoids “anticipation fills” and uses stop orders to get pulled into strength.
- Use a stop-entry 1–2 ticks above a bull trigger bar (long) or below a bear trigger bar (short).
- If a valid setup fails to trigger within two bars, cancel the order and wait for the next one.
- Never add to a losing position; scaling is allowed only into strength with pre-defined risk.
- If price tags your level and rips away without a trigger, let it go—next bus is coming.
Stop placement and initial risk.
Stops live where the idea is invalid, not where P&L feels comfortable. The goal is small, consistent R at stake on every trade.
- Hard stop goes beyond the swing point that defined the setup (or beyond the VWAP band used for confluence).
- Risk a fixed fraction per trade (e.g., 0.25%–0.5% of account); size by distance from entry to invalidation.
- If stop distance expands beyond your max per-trade risk, skip the trade—no exceptions.
- Move stop to breakeven only after the first scale-out or after a clear structure break in your favor.
Profit targets and scaling
He realizes gains in stages to reduce decision load while letting the trend work. Targets are mapped from structure, not hope.
- First target at 1R or at the opposing side of the opening range; take partials (25%–50%).
- Second target at the next objective level (prior day high/low, measured move, VWAP/IB extension).
- Trail the remainder behind higher lows/lower highs or a short-term MA; exit on structure break, not emotion.
- If price spikes to 2R+ immediately, take something off; “pay yourself” and let the runner ride.
Session guardrails that prevent blowups
Edge dies when you let the day spiral. Tim uses strict stop-trading rules so one session can’t damage the week.
- Max three trades per session or two consecutive losers—whichever comes first, stop trading.
- Daily loss cap at 1–1.5R; hit it and you’re flat until tomorrow.
- If the first trade is a full loss and the second is break-even or scratchy, reduce the size by 50% for the next attempt.
- After a large outside news move, one clean pullback cycle before taking a fresh trade.
Swing playbook for strong stocks
For swings, he wants power behind the move and a clean spot to hide a stop. The watchlist is built from relative strength and catalysts, then timed on pullbacks.
- Build the list from names above their 50- and 200-day MAs with rising average volume and leadership in their group.
- Enter on a pullback to a prior breakout level or rising 20-/21-day MA with a tight invalidation under that area.
- Risk ≤0.5R overnight into events; avoid holding through binary catalysts unless the position is trimmed to “probe size.”
- Stagger targets: partial at recent high, partial at measured move (range projection), trail remainder with a weekly swing stop.
Journaling that actually improves P&L
He keeps the journal lightweight but relentless: fewer fields, filled every day. The aim is to catch patterns in behavior, not write novels.
- Record only five items per trade: setup tag, R risked, R taken, rule adherence (Y/N), screenshot.
- End of day: note the one mistake and one strength; set a single improvement task for tomorrow.
- End of week: export stats by setup; cut or shelve any setup with a win rate or expectancy below your threshold.
- Maintain a “playbook” folder of best examples with annotated charts; review before the open.
Environment, screens, and routines
Clutter breeds hesitation; routine breeds edge. Tim keeps the desk minimal, charts clean, and breaks scripted.
- Use one execution ladder and 2–3 timeframes (e.g., 1–5 minutes for entries, 15–60 minutes for context).
- Remove indicators that duplicate information; keep only what directly informs entries, stops, or targets.
- Timer for 90-minute deep focus after the open; step away for 10 minutes at the first lull.
- Pre-session checklist (platform, orders, news scan) and post-session shutdown (P&L hidden, journal done, platform closed).
Mindset rules when volatility messes with you.
The market will tempt you to speed up when you should slow down. These rules keep your best self behind the keyboard.
- If you feel urgency, reduce the size by half or skip the next signal—impulse is a risk signal.
- Talk in rules: “If X happens, I do Y,” not “I think.” Thinking is for prep; sessions are for execution.
- After any tilt moment (revenge click, anchor to P&L), go flat and walk for five minutes.
- Grade the day on rule-follow, not dollars; compounding good process is the real strategy.
Risk framework for account growth
He scales exposure only when stats prove his edge is stable. Drawdown controls protect the mental capital needed to keep going.
- Increase size only after 20 consecutive trades with positive expectancy and no rule-breaks.
- Cap peak-to-trough drawdown at a hard percentage; at that level, drop size to “training mode” until recovered.
- Keep a small “sandbox” allocation for testing tweaks; never contaminate core rules with experiments.
- Withdraw a portion of new equity at pre-set milestones to de-risk psychologically and celebrate progress.
Playbook maintenance and continuous improvement
A playbook isn’t a PDF—it’s a living thing. He audits it regularly, so the rules evolve with market regimes without losing their spine.
- Quarterly: re-tag trades by regime (trending, range, high-vol) and validate which setups still carry.
- Retire any rule that adds complexity without improving expectancy; simplicity scales, clutter doesn’t.
- Back-review your worst week each quarter and write the “anti-checklist” to prevent repeats.
- Keep a one-page “mission orders” sheet: market focus, session window, A+ setups, risk per trade, stop-trading rules.
Risk First: Define Invalidations, Size Positions, Protect Downside Every Session
Tim Racette builds every trade from the stop outward, not the entry inward. Before he even thinks about profit, he marks the price that proves the idea wrong. That invalidation level anchors position size, so risk stays constant even when volatility shifts. If the distance to invalidation is too wide for his max-per-trade risk, he simply skips the setup. It’s a binary rule that kills FOMO and keeps him in the game when markets get loud.
Tim also ties risk to session structure, capping losses by R and by time on keyboard. He enters with stop orders, avoids averaging down, and moves to breakeven only after the first objective pays. Scaling happens into strength, never to rescue a bad idea, because process—not prediction—guards his equity curve. By defining the “I’m wrong if…” line and sizing off it, Tim Racette turns risk from a fear into a framework he can execute every single day.
Trade the Morning Edge: Focused Windows, Fewer Decisions, Cleaner Trends
Tim Racette limits his active trading to the first two to three hours, when participation and direction are clearest. He pre-marks levels before the bell, then waits for one clean pullback or breakout through those areas rather than chasing noise. By compressing his window, Tim preserves mental capital, avoids the chop that follows lunch hours, and grades success rule-following, not time spent at the screen.
When conditions are messy, Tim Racette cuts size or stands down entirely instead of forcing action. He uses stop entries to get pulled into strength, cancels untriggered orders quickly, and shuts the platform once his plan’s opportunities are gone. This narrow, high-quality window keeps decisions simple, protects discipline, and lets the rest of the day go to prep, review, and life outside the charts.
Enter on Pullbacks with Confluence: Level, Structure, Momentum Confirmation Only
Tim Racette waits for the price to come back to him, not the other way around. He looks for a pullback into a known level—prior day high/low, VWAP band, or a clean swing area—then checks that the structure is intact with higher lows in an uptrend or lower highs in a downtrend. Only after a small momentum pause or rejection wick confirms that sellers are spent (or buyers are exhausted), does he consider pressing the button. No confluence, no trade—he’d rather miss than guess.
Execution is mechanical once the puzzle fits. He uses a stop entry just beyond the trigger bar, puts the stop past the structure that defines the idea, and cancels the order if it doesn’t trigger within a couple of bars. If the pullback slices through the level or momentum fails to confirm, Tim Racette stands down and waits for the next cycle. The goal is simple: let the market prove continuation first, then ride the move with defined risk.
Scale Out Intelligently: Pay Yourself at 1R, Trail Remainder by Structure.e
Tim Racette treats the first target as a paycheck, not a maybe. Once price hits 1R or the opposing side of the opening range, he takes a partial to lock progress and reduce decision pressure. That early pay shifts psychology from fear of loss to management of gains, making the next choices cleaner instead of reactive. If momentum is sharp out of the gate, Tim still pays himself—he lets the market prove it can keep going before he gives it more rope.
For the rest of the position, Tim Racette trails behind structure, not feelings. He nudges the stop under higher lows (or above lower highs), or uses a short-term moving average/VWAP band as a dynamic guide. If price sprints to 2R+ quickly, he skims another partial and tightens the leash to avoid round-trips. Break the structure decisively, and he’s out—no “hope holds”; keep making higher lows, and he rides the trend until the market says otherwise.
Process Discipline Beats Prediction: Pre-Plan Setups, Limit Trades, Journal Relentlessly
Tim Racette treats the market like a checklist, not a crystal ball. He walks in with two or three pre-approved setups, the invalidation for each, and a hard cap on trades. That plan turns the session into a sequence of yes/no decisions instead of forecasts and feelings. If the plan doesn’t trigger, Tim counts that as a win for discipline and keeps his powder dry.
After the close, Tim Racette journals with ruthless simplicity: setup tag, risk taken, result in R, and whether he followed rules. Screenshots go into a playbook so patterns stay fresh, and any rule he broke becomes tomorrow’s focus. Size only scales when stats confirm edge, not because he “feels hot.” In Tim’s world, prediction is optional—but process is mandatory.
Tim Racette’s big lesson is that edge starts with realism and restraint. He built his career by identifying an “unfair advantage”—simple repeatable setups in liquid markets during focused morning windows—and sizing every decision from the stop outward. That risk-first framing ties directly to account realities: you work backward from income goals, accept what your capital can safely produce, and skip anything that demands oversized risk to “make it work.” Tim’s playbook keeps tools minimal, entries mechanical, and structure king: trend, pullback, confirmation, then execute with a stop where the idea is objectively wrong. Miss it? Let it go. Pay yourself at 1R, trail by structure, and let the next bus come.
Just as important, Tim Racette treats trading as a craft honed through tiny tweaks and ruthless routine. He preplans levels, caps the number of trades, journals results in plain R-language, and shelves any setup that can’t prove expectancy. When volatility or emotions spike, he slows down, cuts size, or stands aside to protect mental capital—because momentum in mindset is real, and spirals (good or bad) compound quickly. The throughline from pits to screens to today is adaptability: keep the process simple enough to execute flawlessly, upgrade it through small, testable improvements, and guard discipline like capital. Follow that, and you’ll have a strategy that survives regime shifts and a mindset that sustains the grind.
