Technical Analysis - Graduation Day :)

[AW10]

Jagan, IMO, a true professional is the one who is always on the top his/her field, keeping him/herself up-to-date with latest happenings in the field, keeps sharpening the skills and has never ending drive to excel in the domain.. More they know of the subject, more they realise that how little they know of it..

But their purpose of reading changes with time..at the initial stage as a trader when we are focusing on getting the basics right, finding rules and strategy that suits us a trader are more important..., at later stage we are focusing on keeping ourselves up-to-date with current market conditions, techncial analysis, new ideas to make money and develop new systems to meet different goals.. In real sense, once u have found a system the suits you and you are able to execute it perfectly, than trading becomes boring. If one stops there, than as a true professional the trader is not developing anymore.. He has limited himself (there is nothing wrong in it if that is what trader wants). But if one has strong urge to improve oneself, than it is not just trading, but that person will never give up on reading in any other profession as well.

I have read lot more about trading and investing than what I read about my PG subject.. but still I pick up new books when time permits and try to find something new. Lot of my reading is gradually transferring to other domains like psychologoy/ brain tuning/ economics/ macro economics/ inter-market relationship / searching for new investment ideas and then collecting data so that I can develop system/set rules to exploit the opportunity. As you mature in the subject, I must accept the fact, it becomes difficult to gain and new input. When reading a 200 page book, at the start of trading career,100% of this was new, but if today a book can give me anything more than 15to20% new stuff, it is worth investing my time in that. Ofcourse, due to improved maturity in subject, news books will not need so much time to read and hence one can skip and focus on required chapters.

That is my view on any Professional Person irrespective of their field. Otherwise, to make living thru trading, one profitable system and ability/mindset to perfectly execute that is more than enough.

Hope this helps.

Happy Trading

 

[4xpipcounter]

My thought has always been there are no degrees in trading, because we are always learning. I've been trading for almost 7 years. I don't ever know of a time where there is not something new I could learn. This is why I join a forum like this one. The idea is just to enunciate what I already know,and hanging out with other traders and learning something new.

I like to follow other successful traders, because I like to know how they arrive at their conclusions. They might view price action a little different than me, or they might derive an S&R different than I do, so I like to know what they are looking at or how they are thinking, because it could trigger something in me.

I have, IMO, the perfect methodology (Don't cut me off. I'll explain later.). One thing is for sure, and that is no major overhaul is needed for it, but it could always use some fine tuning. It was just in Dec of last year that I learned the art of using a TL. I added it to my trading arsenal.

My methodology is perfect, as in being perfect for me. It is designed exactly the way I like it. I use the ichimoku, stochastics, TL's, and my proprietary set of S&R's. The way I use them and trade with them is perfect for me. I only have 85% winning trades, so it does have a failure rate of 15%. In essence my methodology is perfect for me, but not perfect in the thought it will never yield a losing trade. After 7 years, you'd think I could avoid the 15%, but that shows I still have a bit of the learning curve to climb.

I agree wholeheartedly with Smartrade when he said that what might be good for Trader A may not be good Trader B. Trading is highly personal. Some traders even hold a disdain for indicators, and others can't trade without them (like me). The way I trade is right for me, and the way Trader A and Trader B trades is right for them, as long as their trades are yielding them a net gain over the long haul.

I spend very little screen time looking for a trade, or doing the process of entering and exiting. I would say that part takes 2 hours per week of my time. Part of that is due to the fact I do my Weekly Forecasts (which takes about 3 hours per week), and use only them to trade by. The rest of my time is given to studying the markets, indicators, etc.

Let me make one suggestion. Having solid rules in place is the one thing all traders need (Partly reflecting off of what Jagankris posted.). The one thing traders never need and never will get is something that is 100% foolproof. I hate sounding like I'm blowing my own horn, but the reason I'm successful as a forecaster and a trader is not because I found something that is 100% foolproof, but that I simply found something that wins more than it loses. You don't need 100%. You don't even need 85%.

Here's another very simple thought I live by. The market can only go UP or DOWN. It's that simple. You can toss a coin and be right 50% of the time. As traders, we have an unfair advantage. We have a methodology that allows us to see in advance which way the markets are going to go. The markets are trapped in a predictable ebb and flow. They can't go anywhere because of the cyclical constraints it has. A good methodology is able to discern those cycle patterns.

 

[Agardas]

There is nothing wrong in learning new techniques,methods and pick up trading ideas and incorporate those useful ideas in the methods you currently trade....this is different from methods hopping where one is not happy with the current system he trades and goes on changing methods in search of "holy grail" like a child plays with a toy for sometime and then discards it and goes for another new toy.

To answer your questions :

1) Every trader selects a method with which he is comfortable by process of elimination. If you like the method and most importantly enjoy trading that method then the chances are that the method suits your mindset and beliefs....if there is tension, unhappiness, anxiety,anger in trading.....these are the signs that the method and your mind are not compatible....Good trading as always effortless and enjoyable....if there is strain,efforts then be sure that something is missing....

2) Once you identify a method which suits you and makes money, then method hopping stops....the search for knowledge ,new things continues. This is a continuous process and the best traders also are always looking out /trying/backtesting new trading ideas ( it could be new MM plan or new market ) which they can incorporate in their method. Markets continuously change and some minor adjustment is necessary to address the change in market structure. This activity is continuous and never stops and in fact consumes major time which a trader spends apart from his trading time......
All successful traders have a bunch of few methods and they can trade any of the methods and be successful. They have their favourite methods too.....

Smart_trade

Hi Smart_trade

In trading , I believe that very simple strategy or system makes money for traders, but that also comes with practice and lot of screentime experience.

If the system understanding and implementing has been done with only 1-2 yrs. of experience, then can a person give up his/her daily job and surrender himself to fulltime trading?

will the methods of trading and signals we get in daily intraday market will remain same which keep coming from years or will it keep changing
will it like signals work for some time period and after that everything changes
(i'm talking abt simple methods/signals of price movement on chart which are very general in day to day trading)

And if this things keep changing then how a trader can spend his/her whole life with trading based on 1-2 yrs. of system understanding.

It is considered that pro trader must keep learning and improving but the methods that gives him daily bread-butter , if that goes and something new happening in the market then how will he survive.

I'm asking this doubts bcoz i want to plunge into fulltime trading based on 1-2 yrs of method understanding.


thanks..
Agardas

 

[Smart_trade]

Hi Smart_trade

In trading , I believe that very simple strategy or system makes money for traders, but that also comes with practice and lot of screentime experience.

If the system understanding and implementing has been done with only 1-2 yrs. of experience, then can a person give up his/her daily job and surrender himself to fulltime trading?

will the methods of trading and signals we get in daily intraday market will remain same which keep coming from years or will it keep changing
will it like signals work for some time period and after that everything changes
(i'm talking abt simple methods/signals of price movement on chart which are very general in day to day trading)

And if this things keep changing then how a trader can spend his/her whole life with trading based on 1-2 yrs. of system understanding.

It is considered that pro trader must keep learning and improving but the methods that gives him daily bread-butter , if that goes and something new happening in the market then how will he survive.

I'm asking this doubts bcoz i want to plunge into fulltime trading based on 1-2 yrs of method understanding.


thanks..
Agardas

Agardas,

Market is a dynamic entity and it always keeps changing , it is never constant. So no system is going to work all throughout the trading career of the professional trader. But a professional trader also enhances his knowledge about market structure,trends so that he is in a position to adapt his methods, incorporate necessary modifications to make it suitable to the changed conditions.

Any professional trader who trades for living has atleast 4-6 different methods which with little bit of modifications he can start trading in real market. So once a trader has evolved /matured over a period of time he need not fear that changed conditions will drive him out of the market. To give you an example, not many years ago, we had open outcry system of trading, system of jobbers,trading rings.....all that changed ...now we have screen based systems, technical analysis ,TA software...and professional traders could adapt to the new environment and they are making money.

The traders progress in market/methods knowledge is continuous and does not stop till he is actively trading......

I always tell the new entrants in the world of full time trading that address all your financial worries before you come to trading.....have sufficient trading capital ( meaning upwards of Rs 4.00-5.00 Lacs.....guys trading on 25K capital and trying to be full time traders are playing with heavy odds against them ), have atleast 1 years home expences kept aside otherwise these will create friction and tensions in initial periods when earnings understandably will not be high/regular. Before getting in by leaving their jobs and putting their family's financial future at stake, a aspiring trader must ensure that he/she earns atleast 1.5 times in trading what he earns in a steady job. The time period to start good earning is very varied. I have seen traders making good money in 2 years time but that does not mean all traders will be successful in 2 years. I have also seen many bright guys unable to make living even after 5 years of trading experience....the reasons are manyfold.....

Don't want to discourage any new trader I look forward to many young and bright to join trading .....trading is without doubt one of the best professions to be in....but just thought of giving realistic assessment of what one should consider before getting into full time trading to avoid unpleasant experiences at a later stage.....

Hope the above helps some aspiring trader.....

Smart_trade

 

[jagankris]

Agardas,

Any professional trader who trades for living has atleast 4-6 different methods which with little bit of modifications he can start trading in real market.

I always tell the new entrants in the world of full time trading that address all your financial worries before you come to trading.....have sufficient trading capital ( meaning upwards of Rs 4.00-5.00 Lacs.....guys trading on 25K capital and trying to be full time traders are playing with heavy odds against them ),
Smart_trade

Dear Smart Trade ji,

Thanks a lot.Very valid points.

1.4-6 Different methods - Few examples for our better understanding.
Why a trader needs 4-6 methods ?

2.Assuming capital is a constraint - If a trader is able to manage only 50K to 1 Lakh.

1.Capital constraint traders tend to look out for leverage trading.
2.Options trading.

and loose the seed capital also.

Request to suggest strategy and approach considering the above case for their benefits.
There are lot of traders who falls under this category.

TIA.

 

[Shivanand Biradar]

The purpose of learning, should make life simpler and not complex.

TA is difficult for me because i am not able find a free technical analysis software. If I find one, I will be very happy.

I think all that we should try to do is, find the direction of a specific stock for a limited period of day, I do it for intraday. If my direction is right, I make little money, and If my direction is wrong, I invest lot of money and still make little money or little loss.

My style might be still very native, but I have been able to avoid big losses for quite sometime now.

 

[4xpipcounter]

Jagankris, I was going to respond to Smart Trade because of your point # 1. His whole post, as always, he nailed. Very practical points were made.

I have one methodology to trade by, but I use various approaches to ascertain market movement. Nothing is cut-n-dry. Most everyone on this site know I am infatuated by the ichimoku. As an example, a general rule is when the candle enters in one end of the cloud it will hit the other, and meet with S/R. That does not always happen, and the nature of the move could be interpreted as a headfake, so I move to my S&R's or the stochs to determine what might or should happen next. An alarm could go off if there is a TL in the way. All these points make up the total view of the next moves concerning price action. Also what the different TF's say have a lot to do with it.
After having said all that. I also like to look to my sigma bands, LT,MT,ST, decomposition charts, and the curvilinear envelopes as additional confirmation.
Here's an example as a small snapshot. At "Nifty Intraday Pivot Points", I had been saying since the dip that a recovery would ensue to 5687. That was hit exactly on Friday. During the process of the day I had to consider my MR1 at 5667. I mile spike would be necessary through it to hit the 5687 target. If Monday was needed to hit 5687, then there was going to be a lot of zz'ing in order for the proper correction to ensue. Instead, there was a mild spike through the MR1, and so the correction is going to be pretty much straightforward.

Dear Smart Trade ji,

Thanks a lot.Very valid points.

1.4-6 Different methods - Few examples for our better understanding.
Why a trader needs 4-6 methods ?

2.Assuming capital is a constraint - If a trader is able to manage only 50K to 1 Lakh.

1.Capital constraint traders tend to look out for leverage trading.
2.Options trading.

and loose the seed capital also.

Request to suggest strategy and approach considering the above case for their benefits.
There are lot of traders who falls under this category.

TIA.

 

[ashwani chadha]

The purpose of learning, should make life simpler and not complex.

TA is difficult for me because i am not able find a free technical analysis software. If I find one, I will be very happy.

I think all that we should try to do is, find the direction of a specific stock for a limited period of day, I do it for intraday. If my direction is right, I make little money, and If my direction is wrong, I invest lot of money and still make little money or little loss.

My style might be still very native, but I have been able to avoid big losses for quite sometime now.

to average your position is never a good policy

 

[Agardas]

Agardas,

Market is a dynamic entity and it always keeps changing , it is never constant. So no system is going to work all throughout the trading career of the professional trader. But a professional trader also enhances his knowledge about market structure,trends so that he is in a position to adapt his methods, incorporate necessary modifications to make it suitable to the changed conditions.

Any professional trader who trades for living has atleast 4-6 different methods which with little bit of modifications he can start trading in real market. So once a trader has evolved /matured over a period of time he need not fear that changed conditions will drive him out of the market. To give you an example, not many years ago, we had open outcry system of trading, system of jobbers,trading rings.....all that changed ...now we have screen based systems, technical analysis ,TA software...and professional traders could adapt to the new environment and they are making money.

The traders progress in market/methods knowledge is continuous and does not stop till he is actively trading......

I always tell the new entrants in the world of full time trading that address all your financial worries before you come to trading.....have sufficient trading capital ( meaning upwards of Rs 4.00-5.00 Lacs.....guys trading on 25K capital and trying to be full time traders are playing with heavy odds against them ), have atleast 1 years home expences kept aside otherwise these will create friction and tensions in initial periods when earnings understandably will not be high/regular. Before getting in by leaving their jobs and putting their family's financial future at stake, a aspiring trader must ensure that he/she earns atleast 1.5 times in trading what he earns in a steady job. The time period to start good earning is very varied. I have seen traders making good money in 2 years time but that does not mean all traders will be successful in 2 years. I have also seen many bright guys unable to make living even after 5 years of trading experience....the reasons are manyfold.....

Don't want to discourage any new trader I look forward to many young and bright to join trading .....trading is without doubt one of the best professions to be in....but just thought of giving realistic assessment of what one should consider before getting into full time trading to avoid unpleasant experiences at a later stage.....

Hope the above helps some aspiring trader.....

Smart_trade

Dear Smart_trade,

"Market is Dynamic", oh i love that word..by this nature it provides
so many opportunities to trade the market.
Market can go only in two directions , up or down, and if trader dont predict and can trade whatever opp. it provides then no need to worry.

I have been following Intraday market and all kind of trends are visible there,
and it is literally everyday i get the signals to make money.

From many years theory of how market comes down and goes up and behind that which powerfull signals are responsible..how can they change..that was my only question.
Theory of Breakout/Breakdown and Failures..Uptrend then tiredness reflects into Consolidation then again resume the main trend. same with Downtrend
Sideways market also provides enough opportunities.
How Should I make one belive that How much I Love this market.
Now I feel that i should not ask anybody and take the jump by taking into
consideration all the points explained by Mr.Smart trade.

 

[anuragmunjal]

give you an example, not many years ago, we had open outcry system of trading, system of jobbers,trading rings.....all that changed ...now we have screen based systems, technical analysis ,TA software...and professional traders could adapt to the new environment and they are making money.

hi ST

this reminds me of the time I spent trading in the ring.. life was much simpler then..lots of arbitrage oppertunities..u could always see what the big guys were doing...accumulation in stocks had a pattern... interest rate of 3-4% a month...was too young and naive to make optimum use of the oppertunity then...
but then that is life..

regards