Informed traders : how they make their Judgment ?
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Buy when the market bounces off/ breaks out of support and sell when market breaks down from support (which becomes resistance after breakdown) or hits resistance and slides down. It is often said that you can catch tops or bottoms but you try this and you'll be surprised... at least I was.
As for news flows I totally agree with AW10, when the stock is languishing just below a resistance good news can help it give that extra boost but once it is over that zone the stock moves on its real path. If the stock wasn't supposed to go through then it will eventually fall through the support. On the otherhand if the stock is strong enough it will form something like an ascending triangle and eventually break through.
As for news flows I totally agree with AW10, when the stock is languishing just below a resistance good news can help it give that extra boost but once it is over that zone the stock moves on its real path. If the stock wasn't supposed to go through then it will eventually fall through the support. On the otherhand if the stock is strong enough it will form something like an ascending triangle and eventually break through.
I want to touch up on another topic. The confidence factor.
Initially, People invest blindly, that too huge sum of money without thinking twice. But slowly, when the capital starts taking a hit, people learn some more and gradually, as the knowledge level increases, the risk taking ability decreases. I know a few who stopped playing intraday because of the high risk. I myself play with 1 lot of mini-nifty during intaday just to fine tune my chart reading ability. My main income source remains a hedged positional nifty trade.
During the phase, where we undergo the developing and testing of a reliable trading system, confidence takes a huge beating. We keep slapping indicators left right and centre and by the time we discover a working system, our capital has taken so much beating that taking a sizable position based on any system becomes very difficult.
Often, capital and knowledge becomes inversely proportional. In the process, confidence goes or a toss. I myself can guide a person through a nifty trade very well, but when i put my money in the same trade, i lose confidence. I exit too early, petrified by the market.
The one thing i love about TJ is that i get to meet so many persons who have overcome fears , emotions and drawbacks that i currently feel. Every body has gone though the same emotional roller coaster ride and some have survived it.
How did you build your confidence levels after the thrashing ? How do you overcome fear...?
Initially, People invest blindly, that too huge sum of money without thinking twice. But slowly, when the capital starts taking a hit, people learn some more and gradually, as the knowledge level increases, the risk taking ability decreases. I know a few who stopped playing intraday because of the high risk. I myself play with 1 lot of mini-nifty during intaday just to fine tune my chart reading ability. My main income source remains a hedged positional nifty trade.
During the phase, where we undergo the developing and testing of a reliable trading system, confidence takes a huge beating. We keep slapping indicators left right and centre and by the time we discover a working system, our capital has taken so much beating that taking a sizable position based on any system becomes very difficult.
Often, capital and knowledge becomes inversely proportional. In the process, confidence goes or a toss. I myself can guide a person through a nifty trade very well, but when i put my money in the same trade, i lose confidence. I exit too early, petrified by the market.
The one thing i love about TJ is that i get to meet so many persons who have overcome fears , emotions and drawbacks that i currently feel. Every body has gone though the same emotional roller coaster ride and some have survived it.
How did you build your confidence levels after the thrashing ? How do you overcome fear...?
After losing a sizeable chunk of my capital, I was devastated!
I learnt from another trader in NY that the best way to get back was to psych oneself that I have already lost $1000.00" before taking a trade. I used this method to get back to the markets.
Sometimes I still use this method when I am feeling down and am in a losing streak.
I learnt from another trader in NY that the best way to get back was to psych oneself that I have already lost $1000.00" before taking a trade. I used this method to get back to the markets.
Sometimes I still use this method when I am feeling down and am in a losing streak.
Confidence, in my opinion, is most important. All the other numbers fall far behind.
The million dollar question one can ask himself is, what can I do to maintain a healthy level of confidence in my trading, as it is my business?
People do all sorts of things:
1) They come to office early and do their diva-batti. It adds to ones confidence to know that the God is on his side since he is a good and a god-fearing man.
2) They read-up crucial chart levels, study the strength etc..
3) Yoga or pranayama in the morning to keep their minds well oxigenated and clear
4) They help out the needy to attract good karma and good luck, which some think as a crucial element in trading.
..and myriad of other activities. People are pretty creative in that way.
All these activities are positive, but the real question is:
"Does it largely contribute towards our lasting level of confidence, which is directly propotional to our success?"
Or like Mr.Mark.Douglas often asks the readers whether they are thinking in line with the market reality?
To be successful as traders this is a question we all must find an answer to. Until then, be sure to have another source of income by the side.
Amit.
The million dollar question one can ask himself is, what can I do to maintain a healthy level of confidence in my trading, as it is my business?
People do all sorts of things:
1) They come to office early and do their diva-batti. It adds to ones confidence to know that the God is on his side since he is a good and a god-fearing man.
2) They read-up crucial chart levels, study the strength etc..
3) Yoga or pranayama in the morning to keep their minds well oxigenated and clear
4) They help out the needy to attract good karma and good luck, which some think as a crucial element in trading.
..and myriad of other activities. People are pretty creative in that way.
All these activities are positive, but the real question is:
"Does it largely contribute towards our lasting level of confidence, which is directly propotional to our success?"
Or like Mr.Mark.Douglas often asks the readers whether they are thinking in line with the market reality?
To be successful as traders this is a question we all must find an answer to. Until then, be sure to have another source of income by the side.
Amit.
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IMO, fear or anticipation while having a position is obvious in early stages. If we feel fear, then it is that our mind works.
Confidence building is based on some realistic measures.
1. A system that gives consistent result
2. A state of mind where you need not be right always
3. Calculating risk/reward before entering a trade and feeling comfortable with taken risk
4. Not thinking of money and aim to execute good trades.
Experience suppose to bring all these qualities. I remember the days when I was with a running heart, paralyzed, indecisive, averaging a losing trade which was against the trend or due to mere noise that I could not differentiate.
Confidence building is based on some realistic measures.
1. A system that gives consistent result
2. A state of mind where you need not be right always
3. Calculating risk/reward before entering a trade and feeling comfortable with taken risk
4. Not thinking of money and aim to execute good trades.
Experience suppose to bring all these qualities. I remember the days when I was with a running heart, paralyzed, indecisive, averaging a losing trade which was against the trend or due to mere noise that I could not differentiate.
Awesome posts guys. It was great reading them!
I took a huge hit on the day Satyam took the markets down. I always though that the Indian markets were no place for bears anymore and lost bigtime that day. Devastated was not the word. I lost 40% of my ledger balance (capital + profits) in that week. Although I had only lost a small part of my capital the total outflow as enormous. I just couldn't accept the loss and refused to square off hoping and praying that that the markets would bounce back.
Now I remain in cash all the time other than my equities, don't carry over positions and only trade when I am sure of the direction. I tried talking sense to myself and going over all the stats and risk management techniques but I can't push the confirm button on the order execution. Till that fatefull day I made good profits (with calls from my broker).
I was everything a trader shouldn't be. Now I have newfound respect for the markets, technicals and risk management. And a load of cash ready to rumble
Now what I have done is I think this way - I am not trying to figure out how much profit I am going to make but try to get my entry and exit right, not take exessive risk and with sensible SL's try to get most of my calls right. I feel it is important that you trade a system where you can have a high win ratio than a more profitable system "initially" till you can build up confidence.
I took a huge hit on the day Satyam took the markets down. I always though that the Indian markets were no place for bears anymore and lost bigtime that day. Devastated was not the word. I lost 40% of my ledger balance (capital + profits) in that week. Although I had only lost a small part of my capital the total outflow as enormous. I just couldn't accept the loss and refused to square off hoping and praying that that the markets would bounce back.
Now I remain in cash all the time other than my equities, don't carry over positions and only trade when I am sure of the direction. I tried talking sense to myself and going over all the stats and risk management techniques but I can't push the confirm button on the order execution. Till that fatefull day I made good profits (with calls from my broker).
I was everything a trader shouldn't be. Now I have newfound respect for the markets, technicals and risk management. And a load of cash ready to rumble
Now what I have done is I think this way - I am not trying to figure out how much profit I am going to make but try to get my entry and exit right, not take exessive risk and with sensible SL's try to get most of my calls right. I feel it is important that you trade a system where you can have a high win ratio than a more profitable system "initially" till you can build up confidence.
Lets look at each aspect of confidence building. Losses makes us good learners in this market.
I think the best way to rebuild my own confidence is to better myself everyday. The market is not my enemy. Nor are the other traders or operators who play in this market. my competition is with myself.
About 3 months back, a trader, who trades for a living, told me that the only path to improvement is to jot down every thought that comes to mind. how i trade determines the confidence. A trading log of why i took a trade, where i exited and why, where i entered and why, what are the cues i looked for before i trade, profit expectations, pat my own back if i stuck to my own trading rules and ended with a loss, acknowledge when I made profits by luck or by breaking a few rules.
I realize that discipline gets rewarded in this market and instilling that discipline requires a strong system, a strong set of rules for entry, exit and all possible what-if scenarios, a strong belief in the rules of the system , ability to acknowledge mistakes and take corrective actions.
But sticking to the rules becomes so difficult sometimes. Thats why you need friends who too believe in the same system. have the same style of trading. That way when i trade, i let them know the trade and they can sit in judgment. When i let a bad trade go worse, they YM me and remind me of my own rule. I return the favour when i feel a trade they took might go bad. Hunting in packs always helps. Since we all follow the same system, it becomes easier to cut / raise the profit expectations.
I like to ask everyone, How do you instill discipline into yourself ? Prevent yourself from making the same mistake again and again...?
I think the best way to rebuild my own confidence is to better myself everyday. The market is not my enemy. Nor are the other traders or operators who play in this market. my competition is with myself.
About 3 months back, a trader, who trades for a living, told me that the only path to improvement is to jot down every thought that comes to mind. how i trade determines the confidence. A trading log of why i took a trade, where i exited and why, where i entered and why, what are the cues i looked for before i trade, profit expectations, pat my own back if i stuck to my own trading rules and ended with a loss, acknowledge when I made profits by luck or by breaking a few rules.
I realize that discipline gets rewarded in this market and instilling that discipline requires a strong system, a strong set of rules for entry, exit and all possible what-if scenarios, a strong belief in the rules of the system , ability to acknowledge mistakes and take corrective actions.
But sticking to the rules becomes so difficult sometimes. Thats why you need friends who too believe in the same system. have the same style of trading. That way when i trade, i let them know the trade and they can sit in judgment. When i let a bad trade go worse, they YM me and remind me of my own rule. I return the favour when i feel a trade they took might go bad. Hunting in packs always helps. Since we all follow the same system, it becomes easier to cut / raise the profit expectations.
I like to ask everyone, How do you instill discipline into yourself ? Prevent yourself from making the same mistake again and again...?
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