How Much we need to earn in Intraday Trading

Xaero

Active Member
#21
Although you have understood the post well I'm not sure thats what he wanted to understand from his post :rofl:
 

ash.paul

Active Member
#22
i think the point here is even if u maintain a risk reward ratio of just 1:1, if your success rate is higher than 50% then u end the week with a profit. A higher risk reward ratio will give you net profit even if the success rate is below 50%....
With 50% winning rate this rule will fail, most people dont understand that if the outcome of the system is 50% then that doesnot means in 10 trades 5 will be a winner and 5 will be a losser, same like tossing a coin has 50% probability of heads and tails, doesnot means if u flip a coin 10 times in row you will get the result, the results may vary but in a long run means flipping it more than 100+ or over times may get you a clear outcome. Else u are lucky or unlucky.
In trading it is even worse because if you get 10-20 loosing trades in row because you are left with less money because of the serious drawdown
and therefore the margin amount also decreases accordingly. Trading is not a zero sum game because broker always has the edge in his winning.
In Ashes example even with a 60% probablity and 1:-1 risk:reward ratio the system will fail in a long run( assuming we take 40 trades and we loose 16 times in a row and 24 wins later on)

1st 16 trades will give us a drawdown of Rs 8800 {16*550}
We are left with 25,000-8800= Rs16200
[Ideally after 10 loosing trades the margin amount will go down as in his example we have 5times leverage but we are taking only Rs100000(4times exposure) instead of Rs125000(5times). To maintain a position of Rs 100000 we need atleast Rs20,000 in margin so after 10 trades we will loose 10*550= Rs5500/-so lets just ignore these for argument sake]

With Rs16200 we can only take maximum of Rs64,800 position (4times as before)
Divided by 2= 32,400 positions each
1%= Rs 324, For every winning trade we generate Rs324-50= Rs 274
So, if we get a 24 winning trades then Rs274*24=RS 6576
We are in a loss of Rs 2224/-
PS: The purpose of above example was to illustrate that its not the winning probability that wins in a long run but the risk reward ratio plays more dynamic role in moneymanagement. Dont know if people will agree with me but always remember if you want an edge then why not which survives every disaster, thats what Risk/moneymanagement is all about.
 
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Xaero

Active Member
#23
Assuming you are trading a profitable system, the thing with probability is that with each losing trade the chances of winning start increasing!

Not to say that you can't end up with 20 straight SLs but the chance of that happening are so low that you can never really end up going bankrupt with a proper trading strategy.

Another point I would like to add is that when you trade risk only 1% of your capital. So as your capital goes down the risk amount should also decrease. Which again increases the chance of SL being triggered.
 

Laksh

Active Member
#24
Most of the posts in this thread are very critical of the r:r ratio suggested by ashes in the first post. But we are missing one impotant aspect of his suggestion i.e Always enter if u are 90 % or more % sure of trend. If you are reasonably confident of the trend then the r:r ratio automatically come in your favour. There is a much lower probability of hitting the stop-loss.

Laksh
 

ash.paul

Active Member
#25
Assuming you are trading a profitable system, the thing with probability is that with each losing trade the chances of winning start increasing!

Not to say that you can't end up with 20 straight SLs but the chance of that happening are so low that you can never really end up going bankrupt with a proper trading strategy.

Another point I would like to add is that when you trade risk only 1% of your capital. So as your capital goes down the risk amount should also decrease. Which again increases the chance of SL being triggered.
How many of us can even trade a profitable system profitably, there are plenty of other risk apart from the systems own measured drawdown. Common Human Psycological errors, Stoploss not being getting hit because of dry liquidity, Techological failures say your PC dies/ power failure/ brokers platform not working or anything you cant imagine.
 
#26
Although you have understood the post well I'm not sure thats what he wanted to understand from his post :rofl:

HI Xareo , no concept can be understand without practical example , so trying to post practical example by giving some buy levels

I have given 6 stocks with buy levels , target and stoploss , as usual target and stoploss are 1 % away from buy levels.

Expecting market in positive bias on Monday, if situation changes till Monday morning then can change some of them and will include shorting calls.

Please note these stocks are only for paper trading do not buy / sell with real money , this exercise is just for understanding concept better only .

Our buy will trigger only when price touches respected buy levels and stoploss will come into existence only after buy triggers. before that it can even open below stoploss levels that won't change result of call






GmrInfra : Buy @ 115.5 Target 116.65 , stoploss 114.35

ADLABS : Buy @ 228.10 Target 230.40, Stoploss 225.80

ZEEL : Buy @ 116.8 Target 118 Stoploss 115.60

HCLTECH : Buy @ 131.8 Target 133.15 Stoploss 130.45

Maruti : Buy @ 825.50 Target 833.75 Stoploss 816.85

NALCO : Buy @ 217.10 Target 219.30 Stoploss 214.95


Not all 6 stocks will trigger , expecting buy to trigger at least in 4 stocks .

For paper trading 20,000 is capital with 5 times intra-day limit , we will trade only 2 scrips at any point of time , it means intraday limit is divided into 2 equal part and every trade will be done of RS. 50,000

For example :

Number of Maruti shares = 50,000 / 825.5 = 60

Number of Gmrinfra shares = 50,000 / 115.5 = 432

and so on .........


Let check whether 60 % accuracy is achieved or not :thumb:
 

Xaero

Active Member
#27
I don't know why we are debating the same thing over and over. everyone who has posted here seems to know what we need to know. If anything we have all added enough info to any newbie to know about trading intraday.

That aside lets add something constructive like what you have done.

Also the reply you have quoted was for linkon7 on jerrys post. I hope you have not misunderstood me.
 

ash.paul

Active Member
#29
I don't know why we are debating the same thing over and over.everyone who has posted here seems to know what we need to know. If anything we have all added enough info to any newbie to know about trading intraday.

That aside lets add something constructive like what you have done.
.
1.What you wanted to know and what have you known so far?
2.What was constructive about ashes post?

Pls dont take it otherwise I am not trying to be a prick, just wanted to know what was ur intention.
 

linkon7

Well-Known Member
#30
Ashes, I think a further clarification is required on what basis have u decided the buy levels. and the stock selection procedure. that way we can scan other stocks that fulfill the same criteria and enter them for the next day. This process can be repeated everyday and at the end of the month, we have a report on a trading system.