My Journey In Technical Analysis

[XRAY27]

Trading system strike rate:

Trading system which huge strike rates of 70 are very rare in intraday,but positional side it is possible.why because of the time factor

Question is can we find this 90 % strike rate in intraday.. it is snake oil :lol: ,as trading days of trending is 20 % and if we can catch that at max 70 to 80 % of the trend then..u la la..but what you will do on remaining 80 % of the time ??? lose what we got in those 20 % trending

D and S protected me up to 60 % of the drain,but after putting MP protection level reached 80 %.

50 % strike system gives number of trades,40 to 30 % strike rate you will be in 20 20 match

.90 % strike rate trades are very very rare, this rarest occurrence waiting time for this causes trading fatigue

A 50% strike rate for example is liable to suffer consecutive losing runs of 6-7, a 40 to 30 % strike rate liable to experience losing runs of 11+ at some point.

A 90% strike rate is liable to experience a consecutive losing run of max 2, more commonly 1, when it occurs .

I got that setup in positional side with VPOC and VOL.Divergence ,but very rare setups which offers 90 % stike rate…in last one year it come just one time ..in that case I take maximum relaxation in MM to capture this.

Psychological issue in trading lower strike system

In trading a lower strike rate system/methodology there are naturally more losing trades and crucially more consecutive losing trades. Our brains remember past losses and irrationally place more emphasis on them than the winners, resulting in it fearing more losses to come.

Further to this, such a consecutive run of losing trades can also interfere with the ability to actually place the next trade when the trading edge presents itself, fearful of further losses, thus interfering with the natural flow of probability upon which all trading edges rely.

Physical discomfort and Fear are powerful debilitating factors on the ability to profit from a trading edge.

Confidence in a trading edge can be shaken because it's user does not understand it's potential for delivering a consecutive losing run over any given sample and how long that consecutive losing run can be. This in turn can lead to the mis-management

Solution

The only effective solution in helping to overcome these potential physiological barriers, available to trader is to seek a trading edge that has a high strike rate over any sample of set-ups or to get protection from drain of losses,by avoiding tight range days and sharp edge days ,I took the second option with MP as i'm a trend trader

 

[XRAY27]

Finally words of Michael Marcus are most important..

 

[XRAY27]

Failure in trading !!!

1. The vast majority of new traders fail simply because they did not do their homework before they started trading.

2. A trader has to build a trading system that matches their own personality and risk tolerance levels.

3. A trader that chooses to be master a specific type of trading method or trading vehicles has a much better chance of success than the traders that just dabble in many different things and never make much progress.

4.Pro traders also fail when arrogance is reached in there mind,which make him believe he him self is the market

5.Another reason for Pro failure is to move is swift phase to lower risk setups without distinguishing between low risk setup and lowering of risk in trading
first is a trade setup and second is MM segment

 

[XRAY27]

Any method intra/swing/positional is not a cup of tea !!! it is the trader who has to make it cup of tea !! if a person fails whether he is coder or doctor or engineer it is problem of his own...trading success and qualification has no correlation !!!

 

[XRAY27]

Focus and Practice

 

[XRAY27]

Fat finger error akka self goals

A fat-finger error is a keyboard input error in the financial markets such as the stock market or foreign exchange market whereby an order to buy or sell is placed of far greater size than intended, for the wrong stock or contract, at the wrong price, or with any number of other input errors

This is problem with me ,which i put 1 or 2 trades in every quarter which gives a current shock to trading account

Notes to self to avoid this error:

1.Repetitive data entry can lead to fatigue and what is known as familiarity blindness. If your hands get used to typing in the same number over and over, muscle memory might ensure they continue to do so, regardless of what you meant to type.

2.Remind yourself you’re never an expert, because with greater skill comes greater unconscious automation of your actions, which means paying less attention to the display.

3.Pay attention to the units.

4. Trade only on days of trend (Va'gaps,PDH,PDL blow out) and avoid other days,quality of trades are more important then number of trades

 

[XRAY27]

Who is trader is he can be called as “Professional Uncertainty Manager.”

Trading is a business of possibilities, not certainties. Despite our best efforts to predict financial markets, we’ll inevitably be wrong time and time again. Many of our bets will lose purely due to bad luck or unforeseen

It doesn’t matter if they were objectively good bets.

We want to risk capital when the odds are in our favor. The goal is to continuously place positive expected value (EV) bets. If a bet has positive expected value, it means that over time placing it again and again will result in net positive profits. The outcome of any single bet may be negative, but that doesn’t matter.

The net profits at the end are the focus

Calculating EV before placing a trade is crucial. But it’s important to remember that markets are a continuous event, not a discrete one

This means that expected probabilities and payoffs change as time passes.

Bayesian analysis, it is a statistical program that answers unknown it is based on observed distribution ,rather prior distribution ,which means we update probabilities and payoffs as new information becomes available.

Say we are short and RBI meet interest rate is reduced, This new information and subsequent price action would force us to re-evaluate the expected value of our short bet, possibly causing us to exit the trade altogether.

Best way to trade event risks like RBI,FOMC ,Budget days with separate pattern which based on Bayesian analysis named as “Event Pattern”

 

[XRAY27]

Psychology (quick points for self)

1. Trading affects psychology as much as psychology affects trading.

2. Emotional disruption is present even among the most successful traders.

3. Winning disrupts the trader’s emotions as much as losing.

4. Successful traders possess rich mental maps

 

[XRAY27]

An effective market selection is important and you should only look for markets that offer clear price action and stay away from markets that are too erratic and noisy.

In my case of two index trading effective market can be spotted with first 15 mins and if that is not trading then i should stop trading in intra..as trend moves are just 5 to 10 % these days

There is no issue in swing/positional !!!!

Revamp plan is placed for intra and now scaling is possible in meaningful way..is my quest for intra finished !!!!

 

[XRAY27]

Simplicity in trading and optimization: (notes to self)

Traders often think that price action is superior and very good arsenal for getting big but fact of the matter is a confused form of simplicity leads to greater pit falls in trading, in simple words after a series of losses ,traders remove all indicators and if he names it as simple approach and once again he focuses on entries ,but finds himself in mess with regard to Profit booking (PB) then it will lead him into greater problems

Trader should know that simple does n’t mean easy,he should know his system as a whole or else he will find hole in the ledger :lol:

Similarly traders often add points as observations,but they don’t check on larger sample size before addition ,

Secondly each point added becomes a trade setup and he has to frame the MM rules for this but he grossly ignores this point and this is another factor for blowing the accounts

Bottom line: Simplicity means certainty and clarity not ifs and buts akka guesswork and confusion