Thoughts on Day/Swing Trading Part 2

[gofindrahulsingh]

AAj kya lag raha hai nifty mein? High thodega kya? mushkil lag raha hai

 

[Smart_trade]

Problem of Systems Hopping

Following is the pm describing a major problem all traders face when they are starting out in trading. I thought of replying to that pm ( with the sender's name removed for privacy and with his permission) so that many facing this problem may get some clues to work on. Here it goes :

Hello ST Sir,

Need your advice on a very serious issue which i m facing and it seems to be a biggest hurdle in my trading success.

Background :-

I have traded full time intraday during 2009/10 and left trading for two years after i joined my job in 2010,lost about Rs. 2 lacs.

From period of 2010 to Jan 2014 i read lot about trading methods ,MM and Risk management and paper traded few systems which seemed to be working well.

In March 2014 ,i left my job to trade full time with a capital of about 2 lacs,I take minimal possible risk as per money mangement principles with risk ranging from 0.5 to 1% on my capital and traded about 10 -15 methods in Cash scripts, NF Options and NF.

Problem :-

During the period of 8 months in 2014 after i started as full time ,i came across various systems via trading Forums ,Friends ,i use few of them trade with them but negate them soon once i hit 2-3 losses..This may be due to fact of not following system properly or system losses.

Finally leave that system and again find a new system and start trading it,I think my system hardly last for 20 days.

This has lead to a drawdown in my capital of about 15%.And equity curve is continuously falling ,leading to frustration and fear.

I use to work in 5 mins charts which does'nt seem to work well for me,Presently trying to build my system in 60 mins

Kindly advice me on :-

How to stick to a method and stop looking for new methods ,Shall i stop reading forums ,discussing with other trader friends ????

Totally confused which trading system will suit me ,Which TF is best for me ,Which instrument is best for me Cash ,options or NF??

Haw to develop a full confidence on my system in order to follow it blindly???

Advice me on exits ,I exit early leading to poor RR ratio?

Build a strong trading psychology to trade and expertise a method and kind of instrument i should stick ?

Thanks in Advance .

learnt a lot from your posts

This is a very common problem with all beginner traders. My views are as under :

1) Each successful trader has atleast 3-4 systems which are his best. They are best suited to his mindset. He can trade any of these systems and make money.They are also pretty good in different timeframes....they can trade 5 min bars and also trade 60 min swing trade positions simultanously.

2) We have to understand and accept that all systems will go through drawdowns and rough patches...but after the drawdowns comes a bright winning period. So if the system is a competent system with positive ecpectancy, the system will come out as a winner.

3) I always feel that jumping the systems is not a good sign. But that means that one must have a core system and he can always add few parameters based on what he learns further or what the changed market condition warrants.

4) Which method suits a trader is known by a simple test. You ask your mind which method you like the most. The chances are that you like it because that method suits your mindset. Each trader is different so a system which I like , the other trader may be miserable trading on it and vice versa.

5) You have to have full confidence on your system. It comes by backtesting and then trading it in real time. But remember that trading is performing art...no amount of studies of will make a classical dancer like Sanyukta Panigrahi or Sarod player like Ustad Amjad Ali khan to mesmerise a live show or a concert....it comes by hard work and years of Riyaaz or practice.Though basics of Sur,Taal is absolute must but all guys learning Sur and Taal dont mesmerise the concerts...Same goes with trading....I have seen many who spent months on backtesting a system and then abondons it and goes to another system and the process continues.So instead of professional traders, they become professional backtesters , system hoppers and systems collectors. The system need not be complicated stuff...simple support and resistances will make a great system .

6) Exits and the trade management is the most difficult ( and also vital ) part of any trade....I have posted few posts on exits in this thread...you may find them useful.

Hope you find the above useful...keep learning...adding new things to your trading but keep your core method same for a few years..

Smart_trade

 

[Shantala]

:lol:

All guns are made to kill. If you are not hitting Bull's eye, it's not problem of gun.

Learn to aim properly (All guns have same principle of aiming).

Choose a comfortable gun (Is it too heavy to handle, even lifting it you lose balance?).

Adopt (eg Are you shortsighted, use lens)

:lol:

 

[Smart_trade]

Posting the current downmove in Nifty Futures marked on the chart. Swings are marked with red zigzags, TDST are horizontal red/blue lines. The downtrend started fron the level shown by purple horrizontal line.

Smart_trade

 

[athma_shakti]

Excellent Chart Smart_Trade
is that EMA ribbon formation you have on top of the chart?

 

[XRAY27]

Excellent Chart Smart_Trade
is that EMA ribbon formation you have on top of the chart?

Please go to below thread for this trading system..

http://www.traderji.com/advanced-trading-strategies/89870-combining-trend-vwap-ranges.html

 

[amitrandive]

Posting the current downmove in Nifty Futures marked on the chart. Swings are marked with red zigzags, TDST are horizontal red/blue lines. The downtrend started fron the level shown by purple horrizontal line.

Smart_trade

ST Sir

Can you please share the AFL of the lower image , looks like a TD sequential?

 

[manishchan]

ST Sir

Can you please share the AFL of the lower image , looks like a TD sequential?

Amit bhai.. I guess ST Da has shared it multiple times in TJ..

Here is one of the posts I found http://www.traderji.com/futures/91950-day-trading-futures-164.html#post936032

 

[Smart_trade]

TO ADD or NOT TO ADD

One of the questions which bother traders whether day traders or swing traders is whether they should add to the winning positions or not.The answer is not simple because adding the positions when the market is going in our favour it a good trading practice but it has its own trade-offs. Let us see what are the advantages and disadvantages :

1) Advantages : 1) The main advantage is when we get a strong trend, and we add to our positions, the positions become large without any increase in risk as we add in such a way that the total position after adds are not jeopardised.So in a strong trend the adds can give profits of 5-10 R from 3-4 R price move.

2) Another advantage is as we are adding in the profitable position along with the trend, there is less tendency/temptations of booking profits and taking positions against the ongoing trend.

2) Disadvantages : The main disadvantage is the trader looses small profits.Most of the times markets are sideways and choppy and small profits which has accumalated will vanish if we take adds.

So how does a trader resolve the above dilema ? This issue is more bothersome for daytraders. Swing traders generally get good directional trend moves but daytraders will always feel bad if the small profit accumalated goes away due to add and the trade becomes a breakeven or small profit trade. The solution lies in achieving a balance . I have found that daytraders can take atleast 1 add in sideways/weak trending markets but the moment they sense that the day could be a strong trend day, they must add aggressively and hold till the end as the statistics indicates that the strong trend days close at /near the bottom/top of the day. On strong trend days holding till the end is much profitable than buy/sell during the day In grinding up/down and choppy markets one should avoid adds.

But for taking adds, one should be prepared to fergo some small profits. Adds in swing trading are very profitable when we get a large trend and we have initial position plus 3-4 adds. Adds could be in 1:1:0.5:0.25:0.25 position so that the add quantity is reduced as we go further in the trend.

Traders can practice by starting with one add on a trend day and holding till the end, then increase add positions to 2 and so on...even one add straight-a-way doubles the profits.

Smart_trade

 

[Subhadip]

TO ADD or NOT TO ADD

One of the questions which bother traders whether day traders or swing traders is whether they should add to the winning positions or not.The answer is not simple because adding the positions when the market is going in our favour it a good trading practice but it has its own trade-offs. Let us see what are the advantages and disadvantages :

1) Advantages : 1) The main advantage is when we get a strong trend, and we add to our positions, the positions become large without any increase in risk as we add in such a way that the total position after adds are not jeopardised.So in a strong trend the adds can give profits of 5-10 R from 3-4 R price move.

2) Another advantage is as we are adding in the profitable position along with the trend, there is less tendency/temptations of booking profits and taking positions against the ongoing trend.

2) Disadvantages : The main disadvantage is the trader looses small profits.Most of the times markets are sideways and choppy and small profits which has accumalated will vanish if we take adds.

So how does a trader resolve the above dilema ? This issue is more bothersome for daytraders. Swing traders generally get good directional trend moves but daytraders will always feel bad if the small profit accumalated goes away due to add and the trade becomes a breakeven or small profit trade. The solution lies in achieving a balance . I have found that daytraders can take atleast 1 add in sideways/weak trending markets but the moment they sense that the day could be a strong trend day, they must add aggressively and hold till the end as the statistics indicates that the strong trend days close at /near the bottom/top of the day. On strong trend days holding till the end is much profitable than buy/sell during the day In grinding up/down and choppy markets one should avoid adds.

But for taking adds, one should be prepared to fergo some small profits. Adds in swing trading are very profitable when we get a large trend and we have initial position plus 3-4 adds. Adds could be in 1:1:0.5:0.25:0.25 position so that the add quantity is reduced as we go further in the trend.

Traders can practice by starting with one add on a trend day and holding till the end, then increase add positions to 2 and so on...even one add straight-a-way doubles the profits.

Smart_trade

Thanks Da....