To Read & Re-Read !!!

[TraderRavi]

Some important posts by TJ members or from net to improve trading psychology.

 

[TraderRavi]

Some trading system related posts :

XRay demand and supply notes
http://www.traderji.com/members-discussion-forums/95624-my-trading-system-2.html

 

[TraderRavi]

The outcome of a trade has no correlation with the previous one and has no bearing on the next one.
Psychology lessons (Emotion control) will help ppl there

This is very important

 

[TraderRavi]

Bade losses se bacho.....Chhote losses recover ho sakte hain, bade losses cripple our accounts and our minds.

ST

 

[TraderRavi]

BASIC TYPE OF STOP-LOSS EXITS

1. Initial stop.
First stop set at the beginning of your trade.
This stop is identified before you enter the market.
The initial stop is also used to calculate your position size.
It is the largest loss you will take in the current trade

2. Trailing stop.
Develops as the market develops. This stop enables you to lock in profit as the market moves in your favor.
We exit the market when the market goes against us and our stop is hit.

3. Trend line stop.
Use a trend line placed under the lows in an uptrend or on top of the highs in a downtrend. You want to get out when prices close on the opposite side of the trend line

MOVING STOPS
Never move your stop for emotional reasons, especially when it is your initial stop .
As new trailing stops are determined, you can move your stops to lock in profit.
If you add on to your winning trade (increase your trade size), your stop must be adjusted to keep your risk in relation to your new trade size.

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[TraderRavi]

Ali, focus of money mgmt is - SURVIVAL. As a trader, we can survive to fight the battle on next day, only when we control the amount that we are going to loose.
We got to set the rules and follow.. (if we don't have the rules, then there is no question of following them). It is not just matter of knowing this number in our head.. but I prefer to keep it in writing so where and also refer to them regularly and monitor them during the market hours.

In my trading, I have various loss limits as % of my trading account size.. i.e.

- Risk per trade 1%,
- Risk per day - 4%,
- Risk per Week - 8%,
- Risk per month - 10%.

At the start of month I calculate these number and then they are reset only on next month begining.

You can have different % here. But higher the number, difficult it gets to recover the loss. In my approach even if I am down 10% in a month, I can easily recover in next month.. but if I am down 30% in a month (i.e from 100, i have come down to 70), then I will need a RoR of 45 to 50% to recover.. which is not practical in a month. So, I keep fighting for 2/3 months just to get back my loss.. Not a good trading loop where I want to be in.

The Must rule for me is to stop trading for as soon as any of the loss limit is hit.
If I have 4 loosing trades in a day, my trading day is over. If I have 1 4% lossing day, and next day again I loose 4 trades, I am on holiday for a week. No more trading, no fighting with mkt to recover my loss.. Psychological impact of losses on our decision making is very different topic.

Plz read something more on this topic and feel free to raise your doubt/query.

Hope this helps.
Happy Trading

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[TraderRavi]

Hello Ali,

Sorry to hear that you are going through a loosing streak at present but every trader goes through it periodically....so no need to feel bad....winning and loosing is a part of a game called trading....as long as you keep your winnings large and loosings small you are going to be a winner. And this is where MM comes into play..to restrict your losses when trade goes against you.

I follow following MM rules in my trading :

1) The initial risk in any trade should not exceed 1% of the trading capital...with adds it should not exceed 1.5 %

2) Max risk at any point on all open daytrading positions should not exceed 3%

I will also suggest the following to follow in the loosing streak :

1) Trade small till you get on the winning streak and get back your confidence because loosing streak not only dents your trading account but it dents your confidence,clarity of thoughts,judgement etc

2) You must learn to hold on to your positions when they are going in your favour...also add to your profitable positions...this is the key to trading profits....no amount of brilliant thinking will do that for you ....it is your adding and sitting with profitable positions which will make enough money in your succesful trades much more than your losses in loosing trades....and this applies to daytrading as well you can have 2-3 profitable adds during the day.

3) Wait for proper set ups to develop before you take a trade...this is particularly necessary in loosing streaks..

I am sure you will get out of this loosing streak and get on to rocking streak soon. Look at it from positive perspective that after this loosing streak,the winning period is round the corner....so cheer up and go for it...

Best wishes,

Smart_trade

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[TraderRavi]

Trading Psy Ops # The Defence is more important than Offence​

In a game of chess or football or even in a war between 2 nations, offence hogs the limelight. When we watch a match of cricket, we are more focused on watching the player hitting a 6 or 4 / or our bowlers taking wickets. But do we really cherish when a Batsman blocks a Yorker or leaves a good off-swinger. I guess the answer is no.

Because we are result driven and want winning events more than the one which let us stay alive. This is one of the AAM AADMI (apolitical) habits which has been the target of the market maker. So we need to focus on the defence area of trading. One is very simple and well known – STOP Loss or TSLs, this I will skip and focus on other aspects, except few touch points on SLs.

Decide when not to trade:

•To make a decision on a journey (to Profit), you should know till what point you need to go per month (I found a monthly target is better than a daily or weekly) – The Z factor, without this no planning can be done

•How much you scored till a weekly basis compared to your monthly milestone, to decide whether you need an aggressive or defensive entry strategy next week – essentially meaning taking high-quality trade signal (defensive) or High-Risk trade signal (Offensive)

•Market opens everyday (working days), but that does not necessarily mean that you need to take fresh entry everyday


Identifying failure points

•When you enter a trade, don’t decide fixed pip SL - that you will keep your SL at 50 pips or 30 pips below entry. Unless you are scalping, fixed pips SL is not required. Most of the times you can find a point where a trade will fail, with a nominal cost, than a traditional SL. That is the failure point, ensure you stick to that.

•MAE (Maximum Adverse Excursion) is beautiful concept of optimising SL by data-mining on a historical win-fail data if you maintain a journal properly

•Avoid a failure point on a chart as your SL area which looks very obvious – like a long wick of rejection before the new uptrend. Most of the SLs of retailers are there – it is nothing but a liquidity pool for the big sharks lurking in the deep sea


Do anything which stops you from going Emotional Overboard

•Killing a trader by overpowering / overshooting his emotional threshold – is the primary weapon of market maker, don’t be a victim of this. Do whatever it takes to get away from its line of sight:

oRight position size, which you can hold on to

oNever try to make up from a sequential loss (say 3 in a row), with X size, by taking the fourth trade with 3X or 6X size – that is suicide. The right way is , win with same size, more frequently with better RR

oDon’t listen to News channels or Twitter feeds when you are having open position – keep faith on yourself. Even if you lose in that process, it is fine. Don’t let other tell you that you are going wrong

oBe a good loser - Allowing a losing day to end peacefully, don’t fight the market. Keep your focus glued to the monthly goal, not on daily. Losing a day or 2 is fine


Don’t be a Victim of Mental Inertia

We all know what the inertia is – a moving body prefers to maintain the same speed and line till disturbed by an external force, and vis-à-vis for a static body.
When you cycle (at some-point we all did), you don’t keep on paddling as long as momentum persist, you simply steer and apply break if requires.

Our brain also works like this for the decision making - example (you enter a password for your mail a/c, it fails. You will try 2 more times with same password failure (metal inertia), then when the threshold of your Psy system is crossed, you check what's going wrong and may find caps lock is on).

which is a big fallacy for trading.

This is the secondary weapon of the market marker.
Some example:
•Market was negative and reversing for good, signals also showing sign of it. How retail fishes behave

oOh its up sell – SL Hit
oOk one more time – blown once more , 2 days silence
oMarket entered uptrend and does a little pullback – yeah baby, this is it – short once more – blown to bits

Don’t feel victimised. Our trading habits cannot be totally insulated from our hard-mentality, regardless how much ever we may read about this. So learn to live with it.

This is not a mistake in being wrong (taking a bad entry) – but it is definitely a blunder in staying wrong (retaining this loss making position).

Mental inertia is not good for your defence in trade

It does not matter if you have hit a 100 Pip(er) or 1000 Pip(er). That was your offence. What you did for the rest of the trades on that month will decide - your money grew at the month-end or not - end of story !!

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[TraderRavi]

A TA follower duty is to

-Find the right direction

-Staying in the trend

-Spotting great pullback opportunities to get back in with trend

-Knowing when the market will continue and when the market is likely to reverse

-How to find some of the more profitable moves in the market (impulsive)

-Knowing who is in control of the market


post by XRay

http://www.traderji.com/members-dis...journey-technical-analysis-3.html#post1209618
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[TraderRavi]

Trading discipline :

Discipline is the ability to construct a set of trading rules and to stick to those rules as unemotionally as possible .

An excellent trader should have the ability to trade the markets with a detached mindset, respecting the market as a wild beast that cannot be tamed, but one that can be beaten over the long term but setting rules and abiding by them with steadfast strength and discipline, knowing that those rules will give him an edge over the market forces.

Pulling the trigger

The ability to pull the trigger is another key discipline that must be respected. This comes down to self-confidence in the traders rules.

Methodology

A solid trading methodology is of course very important to a trader success. Work out what works for you. Every trader will have different objectives, timeframes, risk tolerances and trading setups that appeal.

post by XRay
http://www.traderji.com/members-dis...journey-technical-analysis-3.html#post1210438