Rules for profitable day/swing trading

[manu_nbd]

Hi there, I'd agree with most of the things said here, I too had a lot of losses initially then started recovering slowly. Still make mistakes and regret later but they are not blunders or suicidal any more as they used to be. I have so many times doubled money in a month only to lose it later because of some silly mistake. To add my two cents I'd say to be successful in trading what one needs is (some things have already been told by Reggie in his very useful post) -

1. An average/simple trading system

2. very good Money Management (its as important as or even more than having a good trading system)

3. If you are a day trader - good trade execution (its not generally emphasized upon but I think in day trading its very important)

4. NO Ego at all, ( because I allowed so many huge wins turn into losses only trying to outperform myself every other day so that I can boast about my great performance.)

5. Always keep rational and acheivable goals so later when you get more than what you aimed for, it will increase your confidance and your faith in your system and inspire you to continue following it successfully.

6. If day trading, do it with great concentration and in an undisturbed place

7. All of this is useless and totally wasted effort if you dont have following three things -
DISCIPLINE, DISCIPLINE, DISCIPLINE.

FOLLOW THE RULES RELIGIOUSLY

warm regards

 

[raju_600005]

Hi Reggie
Can you give some more examples how to use 20 MA in 1.Swing trading and 2.Daytrading. 20 day MA means 20day ema or sma?

 

[Reggie]

Hi Raju,

I use 20 period EMA (EMA) as more weightage is given to recent price points.

Suggest you look at charts with only price and EMA and look at for any slope in the EMA and the price behaviour to gain understanding of long and short trade opportunities.

When the EMA is generally seen as a straight line, one can buy when the price is below the EMA with 1 bar SL. The target is for price to move above the EMA. Trail SL as per comfort level. (you can make decent money on this trade) The reverse in this case would be to go short when price is above the straight line EMA.

You will need to look at different charts with EMA plotted to get a full understanding of trade setups.

Due to upload constraints (I have already reached the posting limit) I cannot upload more charts. Do look at ChartNexus (its free) for any chart that you want to see.

Good luck and happy trading.

Hi Reggie
Can you give some more examples how to use 20 MA in 1.Swing trading and 2.Daytrading. 20 day MA means 20day ema or sma?

 

[Reggie]

Thanks Rajiv. Noted. Will post some external links.

Reggie Bro,

I think you need not attach each and every image. You can upload it at any external image hosting sites and post the link here. Please see TimePass' notes below his signature for details.

Regards
Rajiv:thumb:

 

[hsonkeshri]

Reggie Boss,

In my view the trading is nothing but a way of life.
and u have clearly put the guidelines for happy life.

HS

 

[Reggie]

Have not posted chart images of different time frames.

http://imgur.com/R7wbe
http://imgur.com/0O1VU
http://imgur.com/fJw48
http://imgur.com/wKEVU
http://imgur.com/S5Uij
http://imgur.com/gwLtz
http://imgur.com/bzpeL
http://imgur.com/LRACQ
http://imgur.com/ipLUU
http://imgur.com/WztFO
http://imgur.com/TA7Uc
http://imgur.com/aQkwD
http://imgur.com/yVDIZ
http://imgur.com/DaW8D
http://imgur.com/ECPXL

 

[Reggie]

The charts that I have posted (some of them are repeats) show the basic principal of using 20 period EMA. The idea is to go long at or near the 20 EMA when the EMA is rising and short at or near 20 EMA when the EMA is falling. The system works on any timeframe intraday or on daily charts. I prefer to watch the 15 day 15 minute chart, though I do check higher and lower timeframe before entry.

In my view, to trade successfully, one MUST take a long or short position in the direction of the trend (with a few exceptions). If a trade is taken in the direction of the trend, I believe 70-80% of a traders the losses can be eliminated.

The most important question is how to determine the trend? There are a variety of tools available on the charting platform, and most traders make the mistake of making trading complex and confusing by using a multitude of indicators. I too have used many indicators for trading decision, but it hardly helped me to make profit consistently.

The great Winston Churchill said Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing ever happened.

So my suggestion is to take some time with this clear, simple and practical system and check it out for a period of a week or two. Go thru end of day and intraday charts on different timeframe. Just think, if you trade with the trend, how can you not be right? (atleast majority of the time???)

Being a trader for over 4 years, and having spent a great deal of time and money on trading systems and books I have realized there is no holy grail but a practical, disciplined and a systematic approach helps to trade successfully.

In Trade Tiger platform which I use, the colour of EMA changes to green or red as per the trend. Besides this visual sighting, I prefer to trade when the rising or falling slope of the EMA is a bit more pronounced.

The exception that I make to this is if a stock has moved continuously for 4-7days in one direction, a whiplash can be expected if one is taking an overnight position and a conviction position against the trend is very much possible if the price is far, far too away from the EMA.

Happy trading.

If you can provide some comments on how to interpret these charts for trading it will be very useful.:thumb:

Thanks:clap:

 

[prabhsingh]

Hi Reggie,

Kindly can you elaborate what do you actually mean when you say "I prefer to watch the 15 day 15 minute chart".

 

[Reggie]

Hi Prabh,

The principal works in any timeframe, though my preference is for 15 Day 15 minute chart. As I understand your query is why 15 day chart?

For 20 EMA line to form on 15 minutes chart, 5 trading hours have to elapse since the opening and hence previous days data is required. 5 day data is fine for trading purpose.

I use 15 days data to scan so as to get at a glance idea as to where the trend is relative to previous two weeks. i.e if it is peaking (and final push) or in the middle or just in infancy.

As I mentioned I do look at the daily chart as well before entry, but looking at the relatively longer timeframe helps me while scanning for the entries.

Hi Reggie,

Kindly can you elaborate what do you actually mean when you say "I prefer to watch the 15 day 15 minute chart".

 

[Somatung]

Some good information in this thread. :thumb: Any continuation of it as I guess some would appreciate it?