Hi...!
I think the most important part of trading nifty is to have a clear picture of whats happening in the market. Having a good afl helps in making a good entry but its the exit that dictates the profit. We either exit too early or dont exit at all and wait and hope for a turn around and book big losses.
Problem is we all want perfect entry and perfect exits. I started trading just 1 year back and by the time I realized how to trade the market half my capital is gone. Thats when I decided take a break and find out what makes a day trader tick. If only 1 in 10 day traders make money at the end of the week, then that 1 guy must be doing something right.
This is no coincidence. A good mechanical trading system automates the entire process of trading. The system provides answers for each of the decisions a trader must make while trading. The system makes it easier for a trader to trade consistently because there are a set of rules which specifically define what should be done. The mechanics of trading is not left up to the judgment of the trader. If you know that your system makes money over the long run it is easier to take the signals and trade according to the system during periods of losses.
If you are relying on your own judgment during trading you may find that you are fearful just when you should be bold and courageous when you should be cautious. If you have a mechanical trading system that works, and you follow it rigorously your trading will be consistent despite the inner emotional struggles that might come from a long series of losses, or a large profit.
The confidence, consistency, and discipline that a thoroughly tested mechanical system affords is the key to many of the most profitable traders success.
My strategy for day-trading is to follow these rules and stick to it. I maintain a journal of all the trade I do everyday and congratulate myself if I didnt break any rules, even if I end the day with a loss. I treat myself by ordering pizza or ice-cream simply bcos I didnt break any rules. And conversely, even if I make a good profit and I broke a few rules, then I reprimand myself. Its my way of de-emotionalizing myself.
Genaral rules
1 Trade in the direction of the 50 EMA. 30 and 50 ema cross is a signal of a trend change.
Reverse the position at the cross of 10 ema & 30 ema if and only if 50 ema's rate of fall / rise decreases and ADX suggests a strength in the reverse direction.
2 dont be in a hurry to get in. and once in get out as soon as the reason u got in is nullified
3 when in doubtget out
4 Markets decides the amount profit I will make I can't control profit. I can only decide the amount of loss I make.
5 I can never know if the market will bounce from being oversold / over bought. It doesnt matter.
6 learn to get out with small losses.
7 if I miss the busdont chase it. there will be another chance to get in.
8 Dont panic. I will regret your every action taken in panic.
Target
The target is to get the big moves not the smaller ones.
The longer I stay in trade. That too in the direction of trend the more profit I will make.
Entry
for getting inuse the 5 min chart. Then go to the 1 min chart for a better perspective.the same for exit
Wait for a dip before u take your position.
Gap up/down : Wait for a confirmation of momentum (Trix, MACD & ADX) in the direction of 50 EMA
Exit
Always place a stop loss wide SL is betterwill keep u in the trade longer.
the SL should be above the 50 ema on a 5 min chart as thats where the support / resistance is.
The moment the RSI and stochastic indicates extremesget rid of 1 lot
trail the SL of the other lot at a point well above the 50 EMA in the 5 min chart
position sizing
Play with the first lot
If u are into profit add another lot
If u are at a loss. Dont average ur losses. Get out.
Note : I am still in the process of developing and refining my strategy. So I am expecting a lot of help from the members on this forum on ways to trade better and optimising my entry and exit. I am enclosing my afl which I wrote based on the above guidelines.
I think the most important part of trading nifty is to have a clear picture of whats happening in the market. Having a good afl helps in making a good entry but its the exit that dictates the profit. We either exit too early or dont exit at all and wait and hope for a turn around and book big losses.
Problem is we all want perfect entry and perfect exits. I started trading just 1 year back and by the time I realized how to trade the market half my capital is gone. Thats when I decided take a break and find out what makes a day trader tick. If only 1 in 10 day traders make money at the end of the week, then that 1 guy must be doing something right.
This is no coincidence. A good mechanical trading system automates the entire process of trading. The system provides answers for each of the decisions a trader must make while trading. The system makes it easier for a trader to trade consistently because there are a set of rules which specifically define what should be done. The mechanics of trading is not left up to the judgment of the trader. If you know that your system makes money over the long run it is easier to take the signals and trade according to the system during periods of losses.
If you are relying on your own judgment during trading you may find that you are fearful just when you should be bold and courageous when you should be cautious. If you have a mechanical trading system that works, and you follow it rigorously your trading will be consistent despite the inner emotional struggles that might come from a long series of losses, or a large profit.
The confidence, consistency, and discipline that a thoroughly tested mechanical system affords is the key to many of the most profitable traders success.
My strategy for day-trading is to follow these rules and stick to it. I maintain a journal of all the trade I do everyday and congratulate myself if I didnt break any rules, even if I end the day with a loss. I treat myself by ordering pizza or ice-cream simply bcos I didnt break any rules. And conversely, even if I make a good profit and I broke a few rules, then I reprimand myself. Its my way of de-emotionalizing myself.
Genaral rules
1 Trade in the direction of the 50 EMA. 30 and 50 ema cross is a signal of a trend change.
Reverse the position at the cross of 10 ema & 30 ema if and only if 50 ema's rate of fall / rise decreases and ADX suggests a strength in the reverse direction.
2 dont be in a hurry to get in. and once in get out as soon as the reason u got in is nullified
3 when in doubtget out
4 Markets decides the amount profit I will make I can't control profit. I can only decide the amount of loss I make.
5 I can never know if the market will bounce from being oversold / over bought. It doesnt matter.
6 learn to get out with small losses.
7 if I miss the busdont chase it. there will be another chance to get in.
8 Dont panic. I will regret your every action taken in panic.
Target
The target is to get the big moves not the smaller ones.
The longer I stay in trade. That too in the direction of trend the more profit I will make.
Entry
for getting inuse the 5 min chart. Then go to the 1 min chart for a better perspective.the same for exit
Wait for a dip before u take your position.
Gap up/down : Wait for a confirmation of momentum (Trix, MACD & ADX) in the direction of 50 EMA
Exit
Always place a stop loss wide SL is betterwill keep u in the trade longer.
the SL should be above the 50 ema on a 5 min chart as thats where the support / resistance is.
The moment the RSI and stochastic indicates extremesget rid of 1 lot
trail the SL of the other lot at a point well above the 50 EMA in the 5 min chart
position sizing
Play with the first lot
If u are into profit add another lot
If u are at a loss. Dont average ur losses. Get out.
Note : I am still in the process of developing and refining my strategy. So I am expecting a lot of help from the members on this forum on ways to trade better and optimising my entry and exit. I am enclosing my afl which I wrote based on the above guidelines.
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