Trading Predicament

Dear All,

I am facing perhaps the paradox of my life. It goes like this:

I want to push myself away from the trading screen as much as possible, i.e I want to work on a higher time frame rather than a lower time frame. The primary reason being, my decision making skill is a glorious mess. And hence trading with a faster data will only make me lose my money faster. Hence for a guy like me, intra is a strict no-no.

Yet the problem is to trade and catch swings on even a daily or weekly basis, I dont have sufficent money to risk.

Lets assume, I short NIFTY on 12th September, wow!it looks like a fantastic ride could have been mine.That day it closed below EMA[11] and EMA[11] crossed EMA[22].
So if I would have shorted NFTY at 4228 levels and set EMA[11] on 12th September as my SL, which is approx 4372,my heat of the portfolio on that day would have been 21%. [Of course now it will be around 17%, so do the math]

But inherently my point is, my rules doesnt allow me to take this much of risk, and knowledge of my own abilities doesnt allow me to go to a smaller time frame with lesser risk and faster data.


Seniors, you remember how frustrating it was, in your olden days, when you just wished if somebody was there to guide you. Remember the gratitude you felt when somebody helped you improve your skills on which you were struggling so much?
I am in that position, and I am looking up to you, to guide me.

As the Jewish proverb goes
Save one man, and you save the entire world over

You have clearly defined your problems (Highlighted in your post) and (i) should save enough to risk and (ii) define very clearly your objectives, your risk level, and gain as much knowledge as you can so as to achieve your objectives. do not trade untill then , pls do not trade. you will only be feeding your ego and hurting your bank balance.

However you have cleared stage 1 of trading, identifying your problems, now comes the strategy development and then you come back again to a new set of problems.. till then all the best.

Buddy, nothing works except ur own consious.....

Did u ever think of trading with small qty & small risk.....?

System does not comes in days or months.....it require years....& pecence of testing & improving self made rules......infact trading need self control with proper knowledge.

just try with small qty & suitable time fram that suits u.....for one-two months & check urself......

or post ur trading plan here & let member's comeup with their suggestions....hopefully u will get a proper solution.

Blitz, be my mentor,

Help me to ask the right questions, and guide me to the right answers... both related to trading strategy and psychology


AceX

Cactus thanks, I will tell you, is it possible to go below MINIFTY? I am trading with MINIFTY and when things go a bit my way, shift to NIFTY. Great and fine, but my problem is at a much deeper level. When the decision making skill at the edge of the market is questionable, then nothing works. With smaller risk you say, god knows, how many times I have been stopped out.I have been stopped out so many times, that I guess special warning bells go around in trading pit whenever I enter a trade [Sorry for being self-deprecating, somebody said, in times of crisis, humor is your best resort, and again whats better than self -depreciation.]

Well, I know, but got to start from somewhere isnt it? Got to train my psychology from somewhere isnt it.

Nifty rani........
lage sabko suhani.........
par pilati hai paani.


http://tudaaldalmainpaatpat.blogspot...k-trading.html


1/10 th of lot in cash.......of heveyweights..........


What more.......

AceX. I am impressed by your sense of humour and great writing skills. And of course by trading analysis skills as well. Not many traders analyse their performance and try to find the problem areas. Once u know the problem, finding solution is easy.. Just matter of time.
And you are not alone; most of the traders do face this dilemma of timeframe, stop loss, strategy selection at earlier stage of trading career.
But, market has place for all type of personality and there are umpteen numbers of strategies possible. Crux of the matter is to find the one that suits you... And it does require back testing and adjusting the parameters so that it fits you. And if not then reject the strategy and find another one.

I don't know your strategy, but if I were you, I will address following points
1) What is my risk limit per trade (in Rs.)? What timeframe I can trade.
2) Define setup rules of strategy (conditions that should be in place before I consider entry).
3) Entry rules - at what price will I enter, do I have to wait for something else to occur before pulling the trigger
4) Exit rule - to know where is my stop and where are my targets (expecting homerun in all trades is most common mistakes system developers make)..

Backtest it, backtest it, backtest it.
Once I have some results in front of me. Following adjustments that I will try
1) what if I improve my setup requirement (prerequisites) so that I can avoid some poor trades (say it has to be a green day, of 50 EMAs position, mkt up for last 2 days, or mkt down for last 3 days so higher change of getting a bounce now).
2) See if instead of taking all trades, what if I take the trades after system has given 2 failed trades. So your chances of getting positive trade is high (i.e. two loosing trades were in congestion area, hence chances are high that 3rd signal will be start of new trend)
3) Use ATR (Average true range) of my timeframe to assess my risk per trade limit
4) Develop a system based on 1 bar pattern (like Hammer/Hanging man) etc to trigger a trade.
5) Find an instrument, where number of shares can be adjusted to meet my risk limit
e.g. - if risk limit is 1000 rs then Nifty daily atr is 120 points (which is equal to 120*50=6000 pts).. so the acct can't afford daily trading on NIFTY contract. But if u trade stocks of reliance then u can buy less number of stocks and still keep risk limit to 1000 rs. That’s limitation of trading futures where we are tied to the contracts size.
If you still want leveraged trading then look at options world.


Hope that has given you few pointers to find the solution of your problem.

Happy Trading

Ohh man! AW10, you have been a godsend. Thanks, for such a detailed pointer.

I am having a fixed amount of risk per trade, either it is that I am having too low a risk appetite or it is this that volatility has shot through the roof in the past three four days.
I dont know about the first but surely, I can trust the second to be true.

Once again, Aw thanks for such a brilliant post.

What is it that you think that you have which will make you a successful trader ?
Trading is a zero sum game. Always two there are, no more, no less - the winners and the losers.
So, within you, lies the answer, my friend.

A trader should trade like a general fights a war. As the great Sun Tzu (400 B.C) wrote in Art of War about war, it applies to trading as well :

All warfare is based on deception.

The art of war teaches us to rely not on the likelihood of the enemy's not coming, but on our own readiness to receive him; not on the chance of his not attacking, but rather on the fact that we have made our position unassailable.

It is only one who is thoroughly acquainted with the evils of war that can thoroughly understand the profitable way of carrying it on.

He who knows when he can fight and when he cannot, will be victorious.

If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.

Invincibility lies in the deference; the possibility of victory in the attack.

Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.

The good fighters of old first put themselves beyond the possibility of defeat, and then waited for an opportunity of defeating the enemy. To secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself. Thus the good fighter is able to secure himself against defeat, but cannot make certain of defeating the enemy.

Thus it is that in war the victorious strategist only seeks battle after the victory has been won, whereas he who is destined to defeat first fights and afterwards looks for victory.

Whoever is first in the field and awaits the coming of the enemy, will be fresh for the fight; whoever is second in the field and has to hasten to battle will arrive exhausted.

The clever combatant imposes his will on the enemy, but does not allow the enemy's will to be imposed on him.

Military tactics are like unto water; for water in its natural course runs away from high places and hastens downwards... Water shapes its course according to the nature of the ground over which it flows; the soldier works out his victory in relation to the foe whom he is facing. Therefore, just as water retains no constant shape, so in warfare there are no constant conditions. He who can modify his tactics in relation to his opponent and thereby succeed in winning, may be called a heaven-born commander.

No leader should put troops into the field merely to gratify his own spleen; no leader should fight a battle simply out of pique. But a kingdom that has once been destroyed can never come again into being; nor can the dead ever be brought back to life. Hence the enlightened leader is heedful, and the good leader full of caution.


Good luck !!

AceX,

This post is not to redicule you, but to help you. Take it in right perspective.
I have copy pasted a portion of the article, which I think will help you. Read the copy pasted portion carefully.

There are different types of novice traders. One type among them are
--------------------------------------------------------------------------
THE ACTIVE NOVICE TRADER
Novices who have been actively trading are of a different mould, because they realise that the only way to make money and design their own life is to stop being someone else's employee, and start working for themselves. And they get on with it. However, without the right method, mindset and emotional make up, they find themselves frustrated by a mixture of some success and some failure which nets out to an overall loss or a "going nowhere" scenario ("break even traders"). They become too close to the problem and too remote from the solution.
Struggling to understand why they are not succeeding, they reach a point of self torment from which only mentoring can help them escape the fog, emerge to view clear blue sky, and avoid "washout". Washout is where they themselves end up feeling physically, emotionally and mentally washed out and, finally, financially washed out, without a second chance available.

Note: Underlining is by me.
-------------------------------------------------------------------------

I sincerely hope this helps