Day Trading Stocks & Futures

Market has uncanny ability to teach and reinforce wrong things on our minds. The market goes against us, we dont cut our losses and then market reverses giving us chance to profit from a loosing trade. So market imbibes on our inner mind that "look if you had cut the loss, you would have unnecessarily lost money....now you saved that loss" and our mind accepts and thinks that not cutting loss is a right thing to do and cutting loss is a waste of money. Same is with booking profits early..many times we book profits early for no reason and then market comes back evaporating our profits...the market tells our mind that "look it was good that you took profits...else now it is gone....." so slowly mind gets conditioned with wrong practices and then market throws a real big loser at us which cripples us, then we take oath that we will follow good trading principles ...and the cycle continues till we get a next crippling loss which takes away all our capital. I always think that all the traders have at some point or the other suffered a crippling loss...we have made small money here and there before it but this large crippling loss has wiped out all the gains and all of our capital...this happens with every trader. Now just think that you acted as if you are on the other side of your trade meaning you have many small losses. small profits but instead of large crippling loss, you have a blockbuster trade which gave you career best profits and now think how lucky you would feel yourself to be....instead of crippling loss, you now have a huge profit in your ledger and small profits and small losses...but never a large loss...good trading practices help you achieve exactly that.
While testing and developing your trading method, you have to consider that the method should be profitable considering all losses and costs....then only it is a real trading method. Stoploss is to prevent those large losses which will take away all your profits and your capital.

Smart_trade

Psychology

We have been nurtured and brought up to do right things. As such, we do right things. In a sense, we cannot be wrong whatever we do. The trading proves us to be wrong about 50% of the time. But our psychology wont allow us to be wrong in our deeds. Hence we try to force on our trades to be right even though they are wrong. This is the most important aspect we need to tackle before embarking on trading.

We should train ourselves to be looser on 50% of the decisions we make in our trading. Loosing trades are to be closely guarded consciously by taking small losses. This takes much time to sink into our subscious mind which is responsible for most of decisions.

You will be wrong in the trade. What is the cost of being wrong? Every trade should be consciously approached as it is going to be a looser.

Trading is a beast which tricks you to do nasty things. For example, we average a loosing trade instead of killing it when it hits Stop Loss. And this proves to be a winning trade. It makes you to do average a loosing trade. As it goes, your 10 trades will turn into profits. One day, you will get struck in a wrong direction, you will keep averaging the trade, and it will never turn up...and you will loose heavily more than what you made on 10 trades and somemore.

First thing to master in trading is to manage loosers effectively. No matter what market does, you need to exit on SL hit. The market may move in your direction after SL hit, but that is the trick which succumbs you into large and big looser. This should be guarded effectively.

A thing I have observed about placing targets at S&R, that mostly achieve targets is :
Instead of placing target at exact swing low/high, better place it at the closing price (of the reference swing candle), i.e. you discount the wick.
Its simple and easy to execute every time.

Vivek

Price action divergence or implicit divergence

Implicit Divergence