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Senior scalpers and day traders , plz comment on my money&risk management system .

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  #1  
Old 20th January 2015, 06:55 PM
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Default Senior scalpers and day traders , plz comment on my money&risk management system .

Hello All,

I'm finally in the last leg of defining my rules for trading . I have done ,swing , scalping , long term investing and have been successful with all of them . But i am picking scalping cause there are many opportunities available in the day .

K so , I have developed a money management system can seniors plz tweak and comment so I can get my money management rules done with :
My capital is going to be 50k
1. For every 30k in the account = 500 shares .
As 1 lot in futures generally costs around 19k-25k . giving me a 5k cushion.
2. My stop loss will be at 0.35% of the price (i.e 400rs share , SL will be 1.4 rupee lesser than entry)
3. My target will be 0.5% of the price (400rs share , SL will be 2 rupees more than the entry)
4. If target is not achieved then , 0.3% from the current high will be my exit
(so , 401.5 is the highest it goes , then my exit will be 400.29) , hence giving me a very very small profit but making sure the trade doesnt turn into a loss making one
5. No over night holding . As my account balance is too low for that . Will not be able to hedge and earn effectively .

Bottom line :
*target Risk/Reward ratio of : 0.35/0.5 = 0.7.
* position sizing is as follows :
for every 30k i will be adding 500 shares for each position :
so 30k = 500 shares lot size (thanks to nse to break a couple of my stocks down to 500/lot) .
so assuming a 400 rupee share possible drawdown (if i stick to my rules) :
is 650rupees .
and possible profit on a trade : 1000 rupees .
(brokerage , Is extremely low , so not even taking into consideration)



As of now , I have been able to come up with these rules . I will start paper trading from FEB1st , after my backtesting phase which starts from 25 to 30th of jan .

Would be awesome , if experts and seniors can comment below .
(I know its hard to follow rules and blah blah blah ... I am expecting these kind of comments , so wanted to clear things up . I believe in statistics . As long as my method gives me a 50% success rate or above I am fine .)



Awaiting guidance ,

HedgeFudge


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  #2  
Old 20th January 2015, 07:12 PM
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Thumbs up Re: Senior scalpers and day traders , plz comment on my money&risk management system

Hi
Your money management rules are good. If you don't mind can I know How you choose the stocks ? as well as you defined the exit levels can I know when you enter into trade?
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  #3  
Old 20th January 2015, 07:32 PM
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Default Re: Senior scalpers and day traders , plz comment on my money&risk management system

Quote:
Originally Posted by hedgefudge13 View Post
Hello All,

I'm finally in the last leg of defining my rules for trading . I have done ,swing , scalping , long term investing and have been successful with all of them . But i am picking scalping cause there are many opportunities available in the day .

K so , I have developed a money management system can seniors plz tweak and comment so I can get my money management rules done with :
My capital is going to be 50k
1. For every 30k in the account = 500 shares .
As 1 lot in futures generally costs around 19k-25k . giving me a 5k cushion.
2. My stop loss will be at 0.35% of the price (i.e 400rs share , SL will be 1.4 rupee lesser than entry)
3. My target will be 0.5% of the price (400rs share , SL will be 2 rupees more than the entry)
4. If target is not achieved then , 0.3% from the current high will be my exit
(so , 401.5 is the highest it goes , then my exit will be 400.29) , hence giving me a very very small profit but making sure the trade doesnt turn into a loss making one
5. No over night holding . As my account balance is too low for that . Will not be able to hedge and earn effectively .

Bottom line :
*target Risk/Reward ratio of : 0.35/0.5 = 0.7.
* position sizing is as follows :
for every 30k i will be adding 500 shares for each position :
so 30k = 500 shares lot size (thanks to nse to break a couple of my stocks down to 500/lot) .
so assuming a 400 rupee share possible drawdown (if i stick to my rules) :
is 650rupees .
and possible profit on a trade : 1000 rupees .
(brokerage , Is extremely low , so not even taking into consideration)



As of now , I have been able to come up with these rules . I will start paper trading from FEB1st , after my backtesting phase which starts from 25 to 30th of jan .

Would be awesome , if experts and seniors can comment below .
(I know its hard to follow rules and blah blah blah ... I am expecting these kind of comments , so wanted to clear things up . I believe in statistics . As long as my method gives me a 50% success rate or above I am fine .)



Awaiting guidance ,

HedgeFudge



hi

not taking brokerage consideration, Imho, is a mistake.. brokerage is not just brokerage... it is brokerage+stt+transaction charges+various service taxes.
and then there is the problem of execution... slippage to account for.. a liquid stock like Rcft wd eat up .3-.4 paise slippage in ordinary times.. in a fast moving mkt, it can be anything.. I hope you have taken these into account since you are trading on a very tight leash.

regards
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  #4  
Old 20th January 2015, 07:43 PM
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Default Re: Senior scalpers and day traders , plz comment on my money&risk management system

Quote:
Originally Posted by anuragmunjal View Post




hi

not taking brokerage consideration, Imho, is a mistake.. brokerage is not just brokerage... it is brokerage+stt+transaction charges+various service taxes.
and then there is the problem of execution... slippage to account for.. a liquid stock like Rcft wd eat up .3-.4 paise slippage in ordinary times.. in a fast moving mkt, it can be anything.. I hope you have taken these into account since you are trading on a very tight leash.

regards

Ah , excellent point Mr.Anurag . I hadnt considered the other taxes .
And slippage too could be a problem of few paisa .
Hmm... how would you tackle these problems ?
and well , My positions last for max 3mins or so , so yea , i guess It is a bit tight .



Awaiting reply ,

Hedge
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  #5  
Old 20th January 2015, 07:45 PM
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Default Re: Senior scalpers and day traders , plz comment on my money&risk management system

Quote:
Originally Posted by eagal View Post
Hi
Your money management rules are good. If you don't mind can I know How you choose the stocks ? as well as you defined the exit levels can I know when you enter into trade?
I use price action and my feel of the market . I donot select any particular stock before the market . I look for the most liquid futures for the day and open all their charts and look for opportunities .
Even i am trying to narrow down the process of which stocks to trade , but unable to find any guidance regarding it .

Regards,

Hedge
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  #6  
Old 20th January 2015, 07:51 PM
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Default Re: Senior scalpers and day traders , plz comment on my money&risk management system

Quote:
Originally Posted by hedgefudge13 View Post
Ah , excellent point Mr.Anurag . I hadnt considered the other taxes .
And slippage too could be a problem of few paisa .
Hmm... how would you tackle these problems ?
and well , My positions last for max 3mins or so , so yea , i guess It is a bit tight .



Awaiting reply ,

Hedge


not possible to tackle these problems with the kind of trades you are taking. either move up a tf.. make a system which has fewer trades and you get more meat in your winning trades. or else if you are very confident of your system, get it automated, backtest it on stimulated real mkt condition which takes into account slippage.

regards

ps.. after seeing your next post, I believe you will not be able to get it automated.
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  #7  
Old 20th January 2015, 08:21 PM
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Default Re: Senior scalpers and day traders , plz comment on my money&risk management system

Quote:
Originally Posted by hedgefudge13 View Post
Ah , excellent point Mr.Anurag . I hadnt considered the other taxes .
And slippage too could be a problem of few paisa .
Hmm... how would you tackle these problems ?
and well , My positions last for max 3mins or so , so yea , i guess It is a bit tight .



Awaiting reply ,

Hedge
Quote:
Originally Posted by anuragmunjal View Post

not possible to tackle these problems with the kind of trades you are taking. either move up a tf.. make a system which has fewer trades and you get more meat in your winning trades. or else if you are very confident of your system, get it automated, backtest it on stimulated real mkt condition which takes into account slippage.

regards

ps.. after seeing your next post, I believe you will not be able to get it automated.
I too have the same view as that of Anurag. You wont get a better person than Anurag in this forum who has huge experience in scalping with really large volumes.

Your stops and profit taking ,try them in actual trades. I feel they are difficult to achieve...but if you can achieve it, then it is great.

Best wishes for your real trades trading/scalping.

Smart_trade
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  #8  
Old 20th January 2015, 10:49 PM
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Default Re: Senior scalpers and day traders , plz comment on my money&risk management system

MR.Anurag and MR.SmartTrade , Thank you for guiding me and sharing your views . Good to know I can fall back on this forum for guidance even though I lack a mentor .
Thank you

I thought of sharing what my todays trade would've been if I would have Traded . one of my fav.stock BHEL . (BHEL gives some major jackpot days every 3weeks or so).

Below is a chart which I have attached , with my entry and exits . would be amazing if both of you can analyze and comment on my trades and help me tweak with my money management system .


Awaiting for reply ,

HedgeFudge

P.S: Blue dot = buy and Purple dot= sell

As you guys can see , I would have had 6 trades out of which 1 would have been a loss .
I had profited nearly 9% in a day cause of BHEL when i was trying out various types of trading

It would be amazing if you guys could evaluate .
Attached Images
File Type: png Bhel supposed trades.png (41.0 KB, 346 views)

Last edited by hedgefudge13; 20th January 2015 at 10:54 PM. Reason: forgot to attach chart.
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  #9  
Old 21st January 2015, 10:36 AM
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Default Re: Senior scalpers and day traders , plz comment on my money&risk management system

Quote:
Originally Posted by hedgefudge13 View Post
MR.Anurag and MR.SmartTrade , Thank you for guiding me and sharing your views . Good to know I can fall back on this forum for guidance even though I lack a mentor .
Thank you

I thought of sharing what my todays trade would've been if I would have Traded . one of my fav.stock BHEL . (BHEL gives some major jackpot days every 3weeks or so).

Below is a chart which I have attached , with my entry and exits . would be amazing if both of you can analyze and comment on my trades and help me tweak with my money management system .


Awaiting for reply ,

HedgeFudge

P.S: Blue dot = buy and Purple dot= sell

As you guys can see , I would have had 6 trades out of which 1 would have been a loss .
I had profited nearly 9% in a day cause of BHEL when i was trying out various types of trading

It would be amazing if you guys could evaluate .



dear friend,

when I used to scalp, I did it without the use of charts, hence would not be able to comment there. you are the best judge here as you know when you get your signals and how far you are able to execute them. the problem I see at times with chart based scalping is that when you would analyze 20 diff charts EOD, there will definitely be a few which worked very well by any good system, but if one is tracking 10-20 scrips, what are the chances that
a) one would be trading that particular script on that day.
b) one wd trade all signals that day.
nevertheless, you have had good returns by your system. you must give it a try. I wd suggest trade one single script for 15-30 days.. if you get good results by the end of it.. you definitely have something up your sleeve.
but if you find you get a few good days, few bad and a few ordinary days, then it would be very difficult to make any money after factoring in the various costs and slippage.

regards
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  #10  
Old 21st January 2015, 12:22 PM
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Default Re: Senior scalpers and day traders , plz comment on my money&risk management system

Quote:
Originally Posted by anuragmunjal View Post


dear friend,

when I used to scalp, I did it without the use of charts, hence would not be able to comment there. you are the best judge here as you know when you get your signals and how far you are able to execute them. the problem I see at times with chart based scalping is that when you would analyze 20 diff charts EOD, there will definitely be a few which worked very well by any good system, but if one is tracking 10-20 scrips, what are the chances that
a) one would be trading that particular script on that day.
b) one wd trade all signals that day.
nevertheless, you have had good returns by your system. you must give it a try. I wd suggest trade one single script for 15-30 days.. if you get good results by the end of it.. you definitely have something up your sleeve.
but if you find you get a few good days, few bad and a few ordinary days, then it would be very difficult to make any money after factoring in the various costs and slippage.
regards



Dear anurag sir,

then what is the solution and how we can make regular and consistent money in the scalping. please guide and give your invaluable thoughts for successful scalping or scalp trading.

Regards
pav

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