start of a equity trader in indian market

since certain queries coming to me.......to suggest basic of trade on 21st century....some hints i put. logicaltrades.com....kevin butler....masterplan...also book is freely available of **********....with www.************.
search with key word trading........password....if any...masterplan
.............................he is pro who knows what is telling[heavily advertised ]..........
1.key concept is u have to build a base
2. price and you .......reading price movement rightly
3.direction of trade
4.a system and how aggressively to trade
5.a trade is based on mistakes of others[ploy in chess terms]
6.bma--broad market analysis
go where the strength is
direction and strength of present market
7.location of obstruction which can affect price
8.when i have an edge and where.....how aggressive i shall put money
9.some high probability pattern
10.effective trade management
11.leverage strategy
12.when not to trade......%age of random trade failure idea
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yes its implementable in indian market

Thanks for the book.I am goona read.

today i am the fool......short nifty 2lot......cover@5080......loss 10000.a good lesson learnt..
dont worry......loss is a friend......i have love hate relationship with it

so i am in learning mode today......what better than compiling insight from traderji!!
..........................................I prefer trading the medium to long term trends although I do sometimes trade short term trends lasting a few days.
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Indicators are a personal choice and most indicators give reliable trading signal. However the trick is to use them often over a long period of time to understand how they behave under different market conditions. Then only will you get the desired results from that indicator
About 30-40% of my trades are not profitable. The Maximum Loss I take on any single trade does not exceed 1% of my trading capital.

It does not take too long to cover up any loss as I trail profitable trades which enables me to capture a good 70-90 % of its trended move.
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Best Wishes!
do not do intra-day trading. I prefer positional trades where the holding period can be anywhere between weeks to months.

My method of selecting stocks to trade in are different. I do not use any technical indicators. I visually scan through the bar charts every day/week for consolidation/congestion patterns and trade breakouts of those patternsOnce in a trade I keep adding more positions (as soon as the current stoploss reaches break even level) in the direction of the profitable trendI primarly use MetaStock

3) I do not use any indicators. You can read the anatomy of my recent trade at http://www.traderji.com/51818-post12.html

4) I primarly trade equities in both cash and futures. I find the equities market more profitable and easier to trade
..................................I prefer the ERS when compared to the RSC. The ERS is superior because it compares a single stock to all the other stocks in the market and ranks that stock from 1 to 99. The RSC drawback is that it only compares a single stock to another single stock or index.

I personally use the Trend Trading Newsletter for the daily ERS reading and trend signals.
If I go long I use the previous 3 bar low as my stoploss.

I personally use chart patterns as mentioned in my earlier post. If you are seriously interested in chart patters I would suggest you get Encyclopedia of Chart Patterns by Thomas N. Bulkowski
__________________I swing trade breakouts of chart patterns like pennants and flags.

For exampe after a stock has made a new three month high on the daily chart (this confirms an uptrend) I wait for a consolidation of at least a week (during which time that chart could form a pennant or flag)

I then go long only on a close above the previous 5 day high and ride the trend with a trailing stop below the previous days low.
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I search for stocks manually. I visually go through about 100-150 charts every day. This gives me a better feel of what patterns could be developing in every stock.
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A new three month high confirms and indicates that the stock has begun an intermediate uptrend.

A three month high is 63 bars on the daily chart and not 90 bars. You can easily scan for stocks making a new 3 month high using the following formula in MetaStock:

c> ref(hhv(c,63),-1)
The other things that I consider apart from price trends is volume ( I prefer to trade large & mid cap high volume stocks) and most important ERS.

I select sectors with the highest ERS and then stocks within that sector with the highest ERS. This helps me select the best performing stocks within the best performing sectors. Most amatuers make the mistake of selecting stocks that have fallen the most and are cheap. However to be successful in trading one should buy into stocks which have the HIGH ERS readings and short sell stocks with LOW ERS readings.

Volatility is important for intra-day traders and not for medium to long term position traders. In fact do you know that stocks in strong trends have low volatility.
______For more details on ERS visit http://www.tradersedgeindia.com/exte...e_strength.htm

ERS is a ranking system of the weighted performance of stocks over a constant time period.

The TradersEdgeIndia.com Trend Trading Picks Newsletter and the Trend Trading Picks Weekly Newsletter provides the external relative strength rankings of most of the stocks listed that are constituents of the NSE Nifty, NSE Nifty Junior and the CNX MidCap 200 Index.____________
Best Wishes!
To go short you need to confirm a downtrend first. For this look for a new 3 month low and not 3 month high. So the formula for the scan would be

c<ref(llv(c,63),-1)
...........Your approach should vary depending on the time frame you would like to trade. If you a day trader you will have a strategy which will be different from a swing trader. A swing trading strategy will be different from a position trading strategy. So first you have to decide on the time frame you would like to trade in and then develop a trading strategy to suit that style.
Short Selling is the selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short. Short sellers make money if the stock goes down in price.

Swing is a term most commonly used when referring to a situation in which the price of an asset experiences a significant change over a short period.

Swing Trading is a short-term trading strategy in which a trader attempts to capture gains by holding a security for only a few days
The 2% stoploss really depends on your trading capital. If you have a very large capital your stoploss could even be as low as 0.25% to 0.50%. If you have a very small trading capital then one has to trade with a larger stoploss of maybe 3-5% of you trading capital. I always keep my stoploss the same while taking positional trades - last 3 days low for long trades and last 3 days high for short trades. If you can use a system tester check out its profitibility.

If I find that the stoploss is to large (during highly volatile times) I normally reduce the position size to fit into my % rule of money management. Keep in mind that one should not change the stoploss to fit into your money management but rather the position size. If you find that the difference between the entry price and stoploss is too large and you cannot take the loss then do not take the trade.

I do not change my trading strategy during the first three days of the month or last three days of the month. The trading strategy remains the same
In highly volatile markets it is always better to swing trade. Your stoploss should be the swing low and if you do your analysis correctly the chance of your stoploss getting hit will be lower.

I use the previous 3 bar low or the swing low whichever is lower.

I would suggest you wait for a pullback and then BUY only after it closes/crosses above its previous bar's high.

If I entered a trade at this level I would use the previous 3 bar low or swing low whichever is lower as my stoploss.

Amaraja was a good swing trade. However it looks ready for a pullback/correction. Iwould suggest you to make a list of 50 stocks which you should visually scan daily for such setups. I am sure you will not be disappointed
trade or trend?This is the dilemma most traders go through. It is generally recommended to use trend following indicators in the daily chart when the weekly ADX is rising and oscillators in the daily chart when the weekly ADX is falling.
__________________You can enter the next day immediately after a breakout out of the pattern. Taking a trade is probably the most common heartache faced by market timers and all market traders, and is only compounded when it turns out that it would have been a profitable trade.

"Uncertainty is a powerful emotion that can weaken the resolve of even the best of market timers." You need to get rid of this.

Mark Douglas, an expert in trading psychology, says this about trading fears in his book "Trading in the Zone."

"Most investors believe they know what is going to happen next. This causes traders to put too much weight on the outcome of the current trade, while not assessing their performance as "a probability game" that they are playing over time. This manifests itself in investors getting too high and too low and causes them to react emotionally, with excessive fear or greed after a series of losses or wins.

As the importance of an individual trade increases in the trader's mind, the fear level tends to increase as well. A trader becomes more hesitant and cautious, seeking to avoid a mistake. The risk of choking under pressure increases as the trader feels the pressure build.

All traders have fear, but winning market timers manage their fear while losing timers (as well as all traders) are controlled by it. When faced with a potentially dangerous situation, the instinctive tendency is to revert to the "fight or flight" response. We can either prepare to do battle against the perceived threat, or we can flee from this danger.

When an investor interprets a state of arousal negatively as fear or stress, performance is likely to be impaired. A trader will tend to "freeze."

There are four major trading fears:

Fear Of Losing

The fear of losing when making a trade often has several consequences. Fear of loss tends to make a timer hesitant to execute his or her timing strategy. This can often lead to an inability to pull the trigger on new entries as well as on new exits.

Fear Of Missing Out

Every trend always has its doubters. As the trend progresses, skeptics will slowly become converts due to the fear of missing out on profits or the pain of losses in betting against that trend.

Fear of Missing Out on Profits

This fear is usually felt during runaway rallies. All your friends are talking about the incredible profits they are making every day. If you really look at this in the right perspective, it is a very dangerous kind of fear. It eventually causes you to buy in, and of course, when you and thousands of others who feel the same way react at the same time, the market is finally at its top.

Fear of Being Wrong

The desire to be "right" is in direct opposition to the ability to be successful.

The desire to be "right" is in direct opposition to the ability to make money.

A market timer's desire to be right, to be able to tell his friends how successful he or she is, can become so powerful, that a he or she winds up second guessing, the "strategy." Taking winners too quickly, or holding onto losers in the hopes that they will come back, or at least break even.
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Best Wishes!

Traderji

market Direction is most important as majority of stocks move in the same direction of the market. One should always trade in the direction of the market.

I do not BUY 100 Days HIGH. Please read the discussion again.

The reachable % profit yearly depends on your trading style and how the market behaves. One cannot exactly pin point this figure.
__________________These are called pivot points. If you do a search around this forum you should find the formula. use the 3 month high to identify stocks that are in an uptrend. Once the stock is in an uptrend I transfer it to a separate folder and then watch it for consolidation patterns. The 3 month high/low can be used to identify stocks for swing or position trading.

When long I keep a stoploss at the previous 3 bar low. When I am short I keep a stoploss at the previous 3 bar high. I keep this stoploss irrespective of how the market or that stock behaves.
Thats probably because most analyst are not professional traders and are unable to decipher the disinformation of the markets.

I could not find disinformation in my dictionary, but it is a term coined in the intelligence community and now in broad use. In intelligence parlance it means false information designed to mislead and confuse the adversary.

I am not suggesting that the markets have any volition or that there is a conspiracy among insiders to fool the rest of us. This is something that just happens because of the nature of markets.

William Eckhardt is one of "wizards" Jack Schwager interviewed for his book, The New Market Wizards. Eckhardt was the partner of mega-millionaire Richard Dennis. It was his bet with Dennis about whether trading skill could be taught that led to the formation of the famous "turtles." Eckhardt put it this way. "The market behaves much like an opponent who is trying to teach you to trade poorly."

A common formulation of this phenomenon is the concept of random reinforcement. Traders are not rewarded with a profitable trade every time they do something right, nor are they penalized with a loss every time they do something wrong.This makes it exceptionally difficult to figure out what is right and what is wrong. Compare this to an electric fence. Every time you walk by and don't touch it, you feel fine. Every time you touch it, you receive a painful shock. It doesn't take a man or animal long to learn how to relate to an electric fence.

Think how much easier learning to trade would be if you automatically took a loss every time you failed to follow correct decision-making procedures. At the same time, what if you were always rewarded with a profit when you traded correctly? You would be able to learn the correct trading rules much more easily.
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The rounding bottom is a long-term reversal pattern that is best suited for weekly charts. It is also referred to as a saucer bottom, and represents a long consolidation period that turns from a bearish bias to a bullish bias.
The metastock formula for crossing the high or low of the previous 3 days is:


Close crossing above previous 3 day high
cross(c,ref(hhv(h,3),-1))

Close crossing below previous 3 day low
cross(c,ref(llv(l,3),-1))

Maybe this will help you understand it better

You need to draw up trend lines joining pivot lows
............generally wait for 30 minutes before entering the trade. I use the 3llv as a stoploss for the trade.and confirmation by price

..............here i repeat insight of traderji for benefit of all traders
with regards to HIM
oilman5

uncertain
........... more like distribution day......pro r slowly selling......we amateur r accumulating with bias of up trend may occur after some day.
basically low volatility on weekly chart......by atr or by comparison of volatility[historical] define it mathematically.
........volatile day......atr value is high......aprox....5stock [10% of nifty.....dance like any way.......intraday......william%r....good....pivot buy of low .....sell @ resistance higher pivot excellently works.....example 1.10.o7......nifty
linda has done pioneer work on it........also volatility based day trader use them

a trader must define what time frame........he shall trade.........a hints given regarding matching though i know my comments r controversial.
1] intraday..........a cool computer man with high speed calculation /software to use in analysis.......and high lebel adaptability......preference to volatile stock with break out
NO TO ALL NORMAL INVESTOR
2]one or two trade a day.......eod scanner biased guide....based on reversal.....with price confirmation.....suitable for experienced parttime trader.......with strict stop.
UNSUITABLE WHO CAN NOT CALCULATE RISK FIRST
3]SHORT TIME TRADER........MOMENTUM BASED BREAKOUT PLAY....HOPING CONTINUITY FOR 1-2 DAY.......APPLICABLE IN CURRENT MARKET[EUPHORIA STATE IN MARKET]
4]swing......buy at bottom swing.......and hold.....saucer pattern in weekly chart
5]intermediate position player........when a stock is ready to move after consolidation
add position when proven winner..........suitable 10 yr experienced trader[saint,traderji]
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the comments r based on my all type of first hand trading with min 6month experiment in each case with a/c size of 1lakh to 5lakh.......
with result based/run away/volatile/ bearish market
......with biasness of last 4yr bullish sentiment IN STOCK MARKET
ALL COMMENTS R WELCOME.........

OILMAN5

so in trading, if for day......premarket analysis is biased to trade........now only if market opens and trade as expected ..........then take position, otherwise no trade.
which software u use , and signal on realtime basis is far superior way, provided u stick to discipline.
a recent analysis by naveen shows excellent way to handle individual ,as per tune of market.
some idea on trade vs trend i clarify in cv thread 'wisdom dump'

Dear Oilman,

Gald to see you're doing well my friend, I would like to make a suggestion, if you trade chart patterns you already know the lesser known the pattern the better your chances of success (unless of course you fade patterns which I don't think you do) in relation to this there is an excellent book called "Trade Chart Patterns Like The Pros" by Suri Dudella. Suri is a professional trader and manages a fund, he hangs around the trading boards and on the elite boards said he uses these techniques to trade, infact although his book discusses 65 chart patterns he exclusively trades only 10 , he has been consistently profitable, his book is not easily avialable and none of his patterns are not among the well known ones.

I thought you may find it useful.

marcus

thanks marcus,
personally i trade what i know.my scan consist of known share [fundamentally i get/interpret info before others].
and 10%money i trade for experiment.
risk management idea i use.
regarding feel of pattern i consider myself lucky .......its complex .
for intraday........i dont see pattern .........only order flow at high price.
biasness of eod chart , for swing trading ........i am good at
.............
i am discreationary ........performance study on return i use .......stock ...gr.A.....i prefer.
omnitrader scanner saves my time
fundamental info ....by equitymaster/capitalmarket i use.
callgiver..........i dont trust
.......................many a mistake i make here & there,but profit booking and encash it i do

RECENTLY I SEE SOME INTEREST AS TA LEARNER.......so i try
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why ta ?to guess future or to go with flow
both r different type of model
next.......can we predict swing low /swing high intermediate term,....or bias to be confirmed by price action.
..........which timeframe shall i trade?
how a higher one and lower one help in decision making?
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next a indepth study.........which indicator suits u
.................
so this 4 basic pt ............must understand and apply in trade.
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so after this 1st level............learn trend or tradezone..........which condition exist in market,......in near future,..........chance of transition.
so detail realisation is must..............for trend.........transition .........zone.
interrelation with news .........and moneyflow...............can u see this on chart?
...............3rd level
can u put this mathematically and program it?
answer........for me i am novice ....so an impossible event.
so i calculate, with if and but..........have no other alternative .......it takes time so i trade on eod,.....and on past occurance of pattern.
then how can i improve.........by using blackbox tool of omnitrader,.....some scanner of metastock..........and putting more money on winner.
yes some knowledge on volatility by unique study i have but still on experimental basis.
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for total novice...........study a tool called aroon......................from metastock and use support/resistance.........for risk/reward...........u shall not search another occupation