In the initial 2.5-3 years I was a struggling and loosing trader. I had left my job and had a saving of Rs 4 Lacs which was considered good that time. But continuous losses in daytrading, swing trading it was like going 2 steps forward and coming 3 steps back... I was making some money but my losses used to be large. I used to cut losses when it used to be large and unbearable. I finally came to complete blowout of the trading money. There I decided that this loosing has to stop and sold some shareholding which I had invested in and got Rs 55,000 and started all over again.
Key to success is dont take large bets, get out of loosing positions fast, let your profits be atleast 1.5 times more than your losses in daytrades and 2-2.5 times in swing trades. Try to make Rs 500 or Rs 1000 consistantly every day.
The method is important. It should be a competent method with positive expectation. Choose a method which you like and are comfortable with. Then one can make money in the long run. Watch your trading capital like a hawk. I always tell that in daytrading if the market is against you for more than 5 min, get out of that position, it is not working out.
Every trade will not be a large profit trade...most trades will be small profit/small looses trades with profits more than losses. Few trades will be large homerun trades . They provide the real meat .
All the above rules are known to everyone. I have not discovered anything new. My success probably was because for me the failure was not an option as I like trading very much. But it was tough, many times I came to make or break point. I could have failed as well....but I strongly believed that there has to be a way of succeeding here and I must find that out. Ability to adapt to market conditions is the biggest quality a trader must have.
If everyone follow the above, there is no guarantee that all will succeed but few will definately make it. It is a tough walk but worth the trouble at the end of the road.
Posting a sample trading plan.
Which I found in my system.Not sure where and when I downloaded after modifying.
Change according to your beliefs,system and style.May be Dan,Anurag ji and other friends will help us to improve this.
My object is to become one of the best professional day trader and make a living from trading.
I believe in classical TA.
I believe that discretionary trading is better than system trading.
All the trading decision is taken by the set of rules which are discretionary and hence has some human emotion element in trading. Sometimes I exit discretionarily which needs improvement.
Intention is to have intraday system, where I square off the trades at the target.
I prefer to wait for the trades than aggressively chasing the markets.
System Display for Easy decision making:
I intend to use Amibroker for this.
The system should be helpful to make decision making with out much noise.
I prefer to use fixed Volume based bars to eliminate the candle stick price noise.
System should display only the trade in progress, long or short., entry price, stoploss, Quantity that is traded.No scaling in the initial periods till I achieve my first milestone.
Support Resistances,Trade location, price bar on which trade occurred target(s), stoploss need to be plotted.
Structure provides us the support and resistance (or turning point) of nifty.
Trading time frame provides us direction of trade.
Timing time frame provides us the entry / exit signal.
Trading time frame : 10 minute
Timing time frame : 2 minute
Stop loss is a fixed percentage or trading time frame pivot + filter.
No mental stop loss.
Place the Stop loss immediately after placing the order.
Structure time frame:60 minutes
Pivots on 60 min time frame gives us a good Entry/exit location.
I define the trend by MA's.
Candle stick analysis is a good health indicator of the trade in progress.
Trading time frame : 10 min
Trend is defined on this time frame.
A series of higher visual pivot indicates Up Trend.
A series of Lower visual pivot indicates Down Trend.
Rules for trading Choppy Days
Rules for trading Gap Days
Rules for trading Trending Days
Rules of the trade when momentum/volatility is very high
Rules for the trade on a news day
Rules for the trade on Expiry
Rules for Re entry of trade if stop is hit
My system has a historical statistical RR ratio of 1:3 and win rate of 65 %.
And hence I am able to trade with confidence and without Fear.
• I will never risk more than 1% of my capital in any trade.
• I will never risk more than 5% of my trading capital in a week.
• I will never risk more than 10% of my trading capital in a month.
To follow and execute my system flawlessly till I get full faith confidence and belief in my trading system.First 100 days of training.
On successful achievement of milestone 1.
Add Scaling in and out rules for my system
Add instruments to trading as per the system for first 2 milestones are achieved.
I will read my trading plan daily.
Check for important news events.
Check the Asian Markets opening daily.
I definitely knew this would come.But I was waiting for Taiki to come out with his thoughts.
I second Raj's advice on over trading.
But not in fixing a % goal like 7 or 10 %.
Raj's intention is control the euphoria of winning - over confidence etc.
Taiki Markets doesn't always give big opportunities.
If you are having a fixed goal say 10% - if you are in a loosing streak it will press you to over trade and commit more mistakes.
Say if you have reached 10% goal and if markets move in a big way you would have missed an excellent opportunity.
Have a system/setup/strategy what ever you call it.
Let the markets/system decides the no of trades you take and profit and loss.
Never have money oriented goals have performance based goals.
Money oriented goals always creates stress and psychological frustrations.
Check if your thoughts and System are in sync ???
And if you are obeying your system even if it contradicts your thoughts.
Say for example - today I never couldn't or digest market moving in the positive direction.I was expecting markets going down.I was expecting markets close at 5600 or near the low.I was expecting to gap down but to my shock gap up.Now only 1 short trade as per my system.Rest 3 longs.
A psychological war was happening in my mind.Even now as i write it is happening.
If you are placing you stops immediately after your trades.
If you are sticking to stops.
If you are trailing your stops as per your system.
Patiently giving more room for the price to move in your favour etc.
If you are ruthlessly cutting loosing positions.
If you re entering properly after markets hitting your stop.
Next regarding stop trading expiry week - I would prefer to trade expiry weeks because options will be very cheap with less premium.Why should one miss that opportunity ?
One catch - definitely there will be sideways - so be prepared to face that if you are trading options there.
News days - Probably I would prefer to sit out because I don't have an edge over that.If you have a Reuter's or Bloomberg Terminal then trade news days also .
Analysing Chart..a few words from me..its not a idea to go long or short, but a a steps to look at chart on a broad basis...enjoy..and comment of you dislike it...rightful criticism always serve for better improvement...The idea is i have read somewhere on some site stored following points to ponder upon, while looking at charts..just a weekend study...
What stage is this stock in?
●Stock formed double bottom and bounced on long term support line, so as per chart a consolidation is going on between 13-23 range, and this range already witnessed a accumulation-run up-fall-accumulation-run up-fall
Is this stock in and uptrend or a downtrend?
stock is progressing from lower left corner of screen to upper right so its a uptrend on daily charts
Is the stock at the beginning, middle, or end of the trend?
As per weekly chart it seems downtrend in control, and stock is ready to surge up,after making double bottom on mid may, stock got a rally and a pullback now going on, and it seems it will correct whole rise from 12.5 to 23.5 level
How strong is the trend?
As compared to earlier rise from dec 2011 the current run is a less steeper and in orderly manner, so trend is going well,traders who knows ADX, may see the recent rise got ADX well above 45 mark, a indication of strong recent rise
Where are the trend lines?
The recent rise from mid may got restricted at long term upper trendline(see weekly chart) at 23.5 levels,so weekly still facing some price ressitance, but on daily a good basing pattern and a broken down from falling wedge(before mid may) give a good uptrend in progression
What wave is this stock in?
I am no elliott wave expert but, if you look from bottom of mid may, recent rise looks a 5 wave advance, and a recent pullback going on, so atleat one more advance left even if its in a correction What do the moving averages tell me?
On daily chart a golden crossover of 50-200 already done and stock getting pullback towards,200 dma..so this is the action zone right now to lok for a trade setup
Was there a breakout recently?
No , so a retest of breakout ruled out Is the chart "smooth" or "sloppy"?
chart is smooth with absence of choppy trends, so a good stock to trade in
Are there any chart patterns?
No after a recent rise from mid may where it break falling wedge right now no pattern, only pattern now going on is a pullback where, a triangle consolidation going on, also ADX falling(not shown here)
Are there wide range candles in the direction of the trend?
Yes, recent rise witnessed a wide range candle formations, where the rise from mid may, if you see carefully, rises are of wide range candles and falls are small consolidation candles or pin bar formation where the rise again took place or starts
Are there any gaps in the direction of the trend?
yes, in the recent rise a gap occured on 25th june, so the rise is a strong one...if one witneseed more gaps, probably it should be third wave, as the rise there is a strong one, and give fewer chances to initiate positions,leaving majority on off table
Are professionals selling strength or buying weakness?
Best way to judge this is look for engulfing patterns with volume and pin bar patterns with volume, both indicate a strong hands interference
Where are the support and resistance areas?
Resistance at 24.5 and support at 12.5 and a gap support at 15
Is this stock at a Fibonacci level?
yes, a recent rise from mid may, got correcting to near to 50% done, so a trade look out on opuurtunities here
What does volume tell me?
Rise witnesses good volume and fall is not getting huge volumes, so unwindings of longs not there, its a good sign for uptrend..low volume pullbacks are always favourable...if a stock is coming on low volume, it means stock lost traders interest and it is right time for institutions to garner chunk slowly
This is all...a preliminary analysis can be done without any indicator role..after this you can have your levels to initiate your position and also can look at your favourite indicators if it requires at all...
sorry, if someone dont find it useful, but thanks for your valuable time...
It is very simple in Amibroker. Just use the Relative Performance AFL in "Basic Charts" category. Type in the symbols for indices, stocks you wish to compare in the Parameters field separated with a comma.