Bakwaas Trading

augubhai

Well-Known Member
Copying....

Jesse Livermore views regarding excessive trading....


1. “Money is made by sitting, not trading.”
2. “It takes time to make money.”
3. “It was never my thinking that made the big money for me, it always was sitting.”
4. “Nobody can catch all the fluctuations.”
5. “The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.”
6. “Buy right, sit tight.”
7. “Men who can both be right and sit tight are uncommon.”
8. “Don’t give me timing, give me time.”
and finally, the most important thing:
9. ”There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. Not many can always have adequate reasons for buying and selling stocks daily – or sufficient knowledge to make his play an intelligent play.”
Jesse was a trader but he knew the value of staying with positions and sometimes not trading at all. Once he began to follow tips from others or trade when he should have abstained, all of his progress had come undone, and with it, his sanity.
We are fortunate to be able to learn from his mistakes and to sidestep the errors that eventually cost him everything.
 

augubhai

Well-Known Member
The Power of Compounding

NF is at 7700. If you are able to net 10 points per day, then you are earning 3.24% on margin on MIS basis, and 1.62% on NRML basis.

If you have a high win %, and low risk per trade, and deploy full capital on each trade, then with NRML your capital would have multiplied 24 time in an year. With MIS, then your capital would have multiplied 588 times.

I am assuming that you are able to trade 200 days in a year.

If you earn 0.1% of capital everyday, compounding your capital will make it 1.22 times after 1 year.
If 0.2%, 1.49 times.
If 0.3%, 1.82 times.
If 0.5%, 2.71 times.
If 1%, 7.32 times.
If 2%, 52 times.
If 3%, 369 times.
If 4%, 2550 times.
If 5%, 17292 times.
If 6%, 115125 times.
If 7%, 752931 times.
If 8%, 4838949 times.
If 9%, 30570292 times.
If 10%, 189905276 times.

Get the drift? Now don't find excuses. Just do it :)
 

onlinegtrash

Well-Known Member
The Power of Compounding

NF is at 7700. If you are able to net 10 points per day, then you are earning 3.24% on margin on MIS basis, and 1.62% on NRML basis.

If you have a high win %, and low risk per trade, and deploy full capital on each trade, then with NRML your capital would have multiplied 24 time in an year. With MIS, then your capital would have multiplied 588 times.

I am assuming that you are able to trade 200 days in a year.

If you earn 0.1% of capital everyday, compounding your capital will make it 1.22 times after 1 year.
If 0.2%, 1.49 times.
If 0.3%, 1.82 times.
If 0.5%, 2.71 times.
If 1%, 7.32 times.
If 2%, 52 times.
If 3%, 369 times.
If 4%, 2550 times.
If 5%, 17292 times.
If 6%, 115125 times.
If 7%, 752931 times.
If 8%, 4838949 times.
If 9%, 30570292 times.
If 10%, 189905276 times.

Get the drift? Now don't find excuses. Just do it :)
Augubhai,

does this calculation include brokerages + slippages?
If you don't mind can you help me to understand a practical example with 50k, 2 lots and 10 trades per day (i.e 5 buys, 5 sells).

I have a feeling lower the time frame lower the edge (after deducting brokerages, slippages, turnover charges, random SL hits due to noise etc).
 

augubhai

Well-Known Member
First time I have seen it stated like this...

Psychologically we as human beings are habituated to expect mercy and leniency right from our childhood. If we dont do our homework, teacher will punish us but not injure us....if we dont get good grades in school/college our parents will give punishment but will fergive us soon...in a job if we do mistakes, our boss does not kill us. All these things have mercies because we are dealing with living beings on the other side.

Market is a non living thing. It has no idea of your position, your loss, your hardships. So it has no mercy...it can ruin the life,families. Not respecting risk is like jumping in front of a running train and expecting the train to be lenient and not harm you much....

Smart_trade
 

augubhai

Well-Known Member
Time to review....

Went through this entire thread in the night.... interesting...

Almost 2 years since I started this thread. And what have I learnt in the 2 years? All stuff that is already on this thread, stress on MM, win-loss ratio, importance of backtest, compounding, etc. But what have I really learnt, in a way that I have incorporated into my trading. Zilch, nothing, nada, koLi Motte (other than the 1000 ways to lose, that is)

From February, I started posting live trades... http://www.traderji.com/members-discussion-forums/97492-live-notes.html and http://www.traderji.com/trading-diary/90116-dasara-system-78.html#post1048827... flipped back and forth between Mechanical and Discretionary trading. Nothing worked for me.

What did I learn (in a way that I will incorporate into my trading)? This is what I have incorporated into my trading in May.
1. Mechanical trading - if I am not doing better in discretionary, then why expend the mental effort? To be fair, I think I could have done better in discretionary, when I look at the chart at the EOD :D. Maybe, my mental makeup is not right for discretionary trading... yet. (Or is it that my mental makeup is not right for any kind of trading?)
2. Keeping losses small - That way I get to survive longer if the system is a sinking one. (Error in my ways... I have still not backtested the system I am trading). Since I have not backtested, I do not have the faintest idea of the probable win-loss ratio, so small losses is my straw for the moment.
3. Slow trailing - It's only the initial SL that is small. Trailing to lock profits happens very slowly, to reduce premature exits from big moves.
4. Targets - Have not really tried target based exits during all these years of trading... current targets at 7x to 15x the SL, and are usually not achieved.
5. Fewer trades - Trading 0-5 trades per day. Usually, 1 or 2. If I miss a good move, so be it. If I get into a good move, ride it.
6. Compounding - Getting in with the biggest position that I can afford... tight SL's make that possible.

And so, the usual words to end such a post... "Let's see how it works out"
 

VJAY

Well-Known Member
Dear augubhai,
IMO you must stick with 1 method.try to 1 week of holiday for trading :) ..back test your system with clear cut rules ...you can test it with 2 rules for profit booking...so you have idea about profit booking vs trail stops...backtest @least 3 years data....
 

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