Learn How To Fish
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This post not relevent to our method.....But its help swing traders....
Post by positivetrader.....
Following certain guidelines may be of some help both for intraday as well as positional traders.
These are already known to many if not to all of us.
Still, violation of accepted general guidelines causes not only losses but also psychological depression to traders.
* Select trade set ups which are in line with the major trend.
Try to stick with a simple rule.
Go long only in those stocks which are above MA200.
Go Short only in those stocks which are below MA200.
For this one may have to wait for the right opportunity.
And a trader is supposed to possess that quality.
* Avoid trades in ambiguous conditions.
Suppose a stock is whipsawing or likely to whipsaw around MA200, better to avoid trading them.
Market is offering so much opportunities, why to select a stock with unclear trade set up ?
Selecting the right trade set up is the basic need to be fulfilled by any trader.
* Understand market is supreme.
No revenge trading, please.
No efforts to cover the loss and trade with leverage. That may lead to more losses.
No trades to prove anything against the market.
Because, market is indeed Supreme !
What the market do is beyond our control. But what as a trader we do is within our control.
* Be mindful of possible outcomes of a trade.
Any trade may cause any one of the following only.
1. Big Profit
2. Small Profit
3. Small Loss and
4. Big Loss.
Always a trader should prefer the outcome in the same order (given above) anything from 1 to 3.
Avoiding big loss will offer time for the trader to come out ultimately successful.
* Hedging the trades.
While hedging the intraday trades may be more costly and may not be fruitful, positional trades has to be hedged appropriately.
While many traders may use different ways to hedge, generally I follow a simple way.
Suppose I am long in Future.
Generally one of the most painful possibility is a huge gap down on the next day.
I avoid carrying longs overnight.
Before EoD, will buy a Call and cover the Future even if it is at a small loss.
At least my loss is limited and known to me.
There will be no call from my broker for additional margin.
I will still get a chance to come out with a small loss, if not with a profit (small or large).
Yes, if the Future move in our direction the profit would have been much higher. But when I want a good sleep at night/ week ends, I have to pay something or forego some of my possible profit. This is the reality.
One un-hedged trade (kept overnight) going the wrong way (due to gap) may depress the trader so hard, it will take huge efforts, time, courage and good amount to come out of it.
Similarly, Short Future may be replaced by Long Puts to avoid problems due to gap up openings.
* Believe your intuition.
Some times your intuition says something and the eyes are refusing to believe it from charts..what to do.
It is the trader's testing time on his belief / faith in something.
I personally vouch : Intuition is better than what the chart says.
But there should be no biased mind set and mistaking our view with ego for intuition may cause more damage.
Developing the faculty of intuition is an art. Long time efforts with consistent practice with patience and determination only can help one in improving the intuition.
In fact, a Call Spread (replacing a Long Future) or a Put Spread (replacing a Short Future) will be more ideal to avoid the risks in holding overnight Long or Short positions.
In both the cases, the risk is limited and the reward is also limited. Agreed. But definitely big losses are avoided.
Imagine what may happen if our long is in a stock like Satyam or DHFL or Yesbank ?
We dont have the power to dictate the stock movement in the market. But we have the opportunity to limit our risk and reward thereby avoiding extreme panic conditions.
Post by positivetrader.....
Following certain guidelines may be of some help both for intraday as well as positional traders.
These are already known to many if not to all of us.
Still, violation of accepted general guidelines causes not only losses but also psychological depression to traders.
* Select trade set ups which are in line with the major trend.
Try to stick with a simple rule.
Go long only in those stocks which are above MA200.
Go Short only in those stocks which are below MA200.
For this one may have to wait for the right opportunity.
And a trader is supposed to possess that quality.
* Avoid trades in ambiguous conditions.
Suppose a stock is whipsawing or likely to whipsaw around MA200, better to avoid trading them.
Market is offering so much opportunities, why to select a stock with unclear trade set up ?
Selecting the right trade set up is the basic need to be fulfilled by any trader.
* Understand market is supreme.
No revenge trading, please.
No efforts to cover the loss and trade with leverage. That may lead to more losses.
No trades to prove anything against the market.
Because, market is indeed Supreme !
What the market do is beyond our control. But what as a trader we do is within our control.
* Be mindful of possible outcomes of a trade.
Any trade may cause any one of the following only.
1. Big Profit
2. Small Profit
3. Small Loss and
4. Big Loss.
Always a trader should prefer the outcome in the same order (given above) anything from 1 to 3.
Avoiding big loss will offer time for the trader to come out ultimately successful.
* Hedging the trades.
While hedging the intraday trades may be more costly and may not be fruitful, positional trades has to be hedged appropriately.
While many traders may use different ways to hedge, generally I follow a simple way.
Suppose I am long in Future.
Generally one of the most painful possibility is a huge gap down on the next day.
I avoid carrying longs overnight.
Before EoD, will buy a Call and cover the Future even if it is at a small loss.
At least my loss is limited and known to me.
There will be no call from my broker for additional margin.
I will still get a chance to come out with a small loss, if not with a profit (small or large).
Yes, if the Future move in our direction the profit would have been much higher. But when I want a good sleep at night/ week ends, I have to pay something or forego some of my possible profit. This is the reality.
One un-hedged trade (kept overnight) going the wrong way (due to gap) may depress the trader so hard, it will take huge efforts, time, courage and good amount to come out of it.
Similarly, Short Future may be replaced by Long Puts to avoid problems due to gap up openings.
* Believe your intuition.
Some times your intuition says something and the eyes are refusing to believe it from charts..what to do.
It is the trader's testing time on his belief / faith in something.
I personally vouch : Intuition is better than what the chart says.
But there should be no biased mind set and mistaking our view with ego for intuition may cause more damage.
Developing the faculty of intuition is an art. Long time efforts with consistent practice with patience and determination only can help one in improving the intuition.
In fact, a Call Spread (replacing a Long Future) or a Put Spread (replacing a Short Future) will be more ideal to avoid the risks in holding overnight Long or Short positions.
In both the cases, the risk is limited and the reward is also limited. Agreed. But definitely big losses are avoided.
Imagine what may happen if our long is in a stock like Satyam or DHFL or Yesbank ?
We dont have the power to dictate the stock movement in the market. But we have the opportunity to limit our risk and reward thereby avoiding extreme panic conditions.
Hi Everyone,
Below is the trade from yesterday. I am seeing noone took this trade yesterday. Is the below marked trade is correct as per rules.?
Because previous on formation inside vps we went sideways. and then next we got lowest mpl below vpl but since we got one more higher mpl .Does not this latest mpl below vpl get preference for trade?
Unless we don't break mpl 1 still in sideways. or on break of mpl 2 we can give prefernce to it and start DT?
Below is the trade from yesterday. I am seeing noone took this trade yesterday. Is the below marked trade is correct as per rules.?
Because previous on formation inside vps we went sideways. and then next we got lowest mpl below vpl but since we got one more higher mpl .Does not this latest mpl below vpl get preference for trade?
Unless we don't break mpl 1 still in sideways. or on break of mpl 2 we can give prefernce to it and start DT?
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