Beginning of a new journey

#1
I was interested in making money through the markets and bought some book recommended in the forums a year ago.I red them, did not understand them and dumped them.

My interest was spurred again recently and I started trading on my brokers advice. I started trading in options and basically ignored all good advice, against my better judgement ( like starting with one lot, not trading on others advice, stop losses etc.). This lead to substantial losses. Fortunately I only traded what I could loose, therefore I am starting my trading diary 44k in the red and 10k cash.

I am going to document my trades here and maintain my trading diary, to record my journey and evolution. Please feel free to comment if you so wish.

I use a trend following system with stop losses. I am starting with the trades that I made using my own analysis.
 

murthyavr

Well-Known Member
#2
Re: Beggining of a new journey

I was interested in making money through the markets and bought some book recommended in the forums a year ago.I red them, did not understand them and dumped them.

My interest was spurred again recently and I started trading on my brokers advice. I started trading in options and basically ignored all good advice, against my better judgement ( like starting with one lot, not trading on others advice, stop losses etc.). This lead to substantial losses. Fortunately I only traded what I could loose, therefore I am starting my trading diary 44k in the red and 10k cash.

I am going to document my trades here and maintain my trading diary, to record my journey and evolution. Please feel free to comment if you so wish.

I use a trend following system with stop losses. I am starting with the trades that I made using my own analysis.
It's good to hear that you have formulated your own strategy in the end. Every wise person on this forum advised exactly the same.

However, please put all your strategies to mock test for a few days and then jump into actual trading. I am no expert in these things, but after reading several posts where people have burnt their fingers, I feel that it is necessary to do it, that way only.
 
#3
Re: Beggining of a new journey

So initially account is in the red by 44k.

Cash available is approx 10 K. The trend according to me is UP

I am assuming a flat brokerage of approx 115 per buy and sell transaction

1)
NIFTY10SEP5900CE Buy 50 50 16/Sep/2010
NIFTY10SEP5900CE Sell 50 113.85 21/Sep/2010 ( hit stop loss and got sold at market, otherwise better returns could have been had. But I am happy I had a stop loss and I stuck to it, not succumbing to greed)

2)
NIFTY10SEP6000CE Buy 50 30 20/Sep/2010


3) This was a emotional trade, not according to my system. I was quick to realize that and squared off immediately
NIFTY10SEP5900PE Buy 50 33 21/Sep/2010
NIFTY10SEP5900PE Sell 50 38 21/Sep/2010

4)
NIFTY10SEP6100CE Buy 50 32 21/Sep/2010

5) Again this trade is against the trend, but I felt that I market may go down, and I need to protect. Trading what you feel is bad, or so I have heard, what do you guys think about this trade?
NIFTY10SEP5900PE Buy 50 30.2 21/Sep/2010

EDIT: 50 is the lot size, followed by the price. Current return calculated in option oracle is 4507(i.e. positive return) on an investment of 9550. max loss potential is -2315.
 
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#4
Re: Beggining of a new journey

It's good to hear that you have formulated your own strategy in the end. Every wise person on this forum advised exactly the same.

However, please put all your strategies to mock test for a few days and then jump into actual trading. I am no expert in these things, but after reading several posts where people have burnt their fingers, I feel that it is necessary to do it, that way only.
Thanks, I have back tested my strategy, it seems to provide positive returns in paper trades. I haven't used any software for this, just manual testing, using EoD index data. I plan to trade over a period of days( i think its called swing trading ). Also, I am limiting my exposure by trading in few lots initially ( 1 min to 4 max, usually on the lower side). I have added my trades for the past few days.
 
G

gangadharan

Guest
#5
Re: Beggining of a new journey

I think you may get chance to earn on both the put and call before this expiry

thanks and best of luck
 
#6
Re: Beggining of a new journey

So here is my update for the day. I am changing my posting style, will update my previous post later. The trend according to me is UP still, though 6000 seems to be unbreakable resistance.

Trading according to my strategy, stop loss got triggered so first trade of the day
Contract Buy / Sell Trade Price Traded Qty
1)
OOPTIDX-NIFTY-30SEP2010-6000-CE Sell 60.65

2) I had taken on this position because i was fearful of a fall, squared it off because it was against my strategy
OPTIDX-NIFTY-30SEP2010-5900-PE Sell 29.2 50

3) I decide to square this postion and pick up a ATM call so sell 6100 call and pick up 5900 call. I think I may have bitten off more than what I can chew here. The risk is greater than my appetite, and I am fearful of a downfall.
OPTIDX-NIFTY-30SEP2010-6100-CE Sell 25
OPTIDX-NIFTY-30SEP2010-5900-CE Buy 120.8


Overall,I have stuck to my system but taken on graeater risk with the 5900 call. Should have gone for 6000 call. I was not sure of my feelings today. Maybe I should have sat on the sidelines as I was not sure of the market, 6000 being a major resistance. Lets see if tomorrow brings in trend continuation/reversal.

Question: What do you think is better, trading with the trend or sitting on the sidelines when not sure. Tomorrow will be a new lesson.
 
#7
Re: Beggining of a new journey

Not sure of the direction market is going to take, unlikely to trade in this month. Last trade and profit is as follows:

OPTIDX-NIFTY-30SEP2010-5900-CE Sell 96.95 50

Edit: forgot profit 1911. Trend according to my system is DOWN. However, I learnt to follow my instincts instead of pure mechanical (might have to unlearn it :) ), so not taking any new position now
 
#8
Re: Beggining of a new journey

Hi,

If anyone was wondering, i hadnt chickened out of the market. Since i am a newbie, I was trying to make sense of the market. I am constantly reading, learning, analyzing. The books I have got from this forum are awesome and hard as well. It takes time to understand them but its well worth the effort. As they say, slow and steady wins the race.

I try and refine my strategy everyday, as there are so many things that I learn everyday. The best part I fell is seeing myself go through the emotions of fear , greed etc. After reading and understanding so much, I thought I would be immune to them but putting your on money at risk makes one vulnerable. At least I can recognize the sign of emotional trading and stop myself before I take any hasty decision.

So last month, I bought a Put at 14 rs, expecting the market to go down ( trading what you feel). Lost the entire thing, so net profit at the nd of the month was approx 1250. Great I say, lets hope I stay in the green.

So spending some(great) time on analysis, I refined my profit taking strategy a little. I wish I could move my stops a bit further ( one of the things I saw could better my profit) but I don't have that capital to loose. So stops stay close.

OPTIDX-NIFTY-28OCT2010-6200-CE Buy 112.00
 
#10
Sorry for the long post, have a few questions that I hope I can find answers to:

OPTIDX-NIFTY-28OCT2010-6100-PE Buy 30.20 500
OPTIDX-NIFTY-28OCT2010-6100-PE Sell 46.23 500

OPTIDX-NIFTY-28OCT2010-6200-CE Buy 80.00 100

They say hindsight is 20:20. Now anyone can see that the major trend is UP. Since the past few days, I have been predicting the market according to my system but not trading, because I am scared to loose. As the saying goes 'Scared money never wins', I wasnt making any money, but also I wasnt loosing any either :). I have read that one must wait for the best opportunities, so its a question finding a balance between the two setiments. I feel that may only come from experience.

The purpose behind this long rant being that today I had a feeling (after correctly predicting, but not acting on yesterdays gain) that correction was in store . I thought that I had seen the same setup before. This feeling was not in accordance with my system. But after the same input from my broker, I decided to buy 500 puts. I had a mental stop loss, but I dot think i was ready for the quantum of loss if it was realized.

So I made 2 mistakes, in my opinion:
1) Trading against my system
2) Trading a bigger position than my MM would allow

In the end, I ended up taking a neat profit. I will still like to have the views from the experts if I took the right decision. The reasons i went ahead with the trade was:

1) Strong feeling that I had seen the same setup before
2) There was only Time Value in the option. Given the number of days till expiry the time value would not have decreased rapidly ( barring a sharp up-move). Even then a 20 point loss could be absorbed. ( It would still hurt bad though)
3) Given the volatility, there was a good chance that a down-move would be encountered in the near future. Again, yesterdays sharp rise was looking ripe for a correction

So can anyone weigh the mistakes against the positives and give their opinion. It would be appreciated.

P.S: I closed the day with a position in accordance with my trend following approach and MM strategy. I have amended my strategy a little so that I book profit on part of the trade early (satiates greed). This means I must trade at least two lots
 
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