Informed traders : how they make their Judgment ?

linkon7

Well-Known Member
#1
Most day traders or positional traders, who consistently make profit at the end of the week, have one thing in common. They all are well informed about the market dynamics. Its what dictates the direction they take.

I know a someone who trades for a living (and does a fine job at that...!) who doesn't believe in technicals. He spells technical as "TECH-NIKAAL" and analyst as "ANAL-ist" . His view is that if you are rely on the JUDGMENT given by the technical analyst on TV during trading you may find that you are fearful just when you should be bold and courageous when you should be cautious.

I believe in technicals and rely on that for my entry point, exit, target and SL. But the JUDGMENT on the direction is where I falter sometimes. Even if I a good buy signal, I dont take it simply because I FEEL the market is overbought and regret later for not taking it. (In a trending market where the market has gapped up and is already up by 100 points, I start looking for shorting opportunities and jump at the first sell signal. I have learnt by experience to put tight stop loss under such circumstances, but the point here is I made a bad JUDGMENT. Technically, I should be trading in the direction of the trend and should be looking for buy signals in my setup.)

Then there are a few long term positional traders who play the big trend. I know a guy who is still holding his shorts in axis bank at 800 levels. Thats 4 or 5 months back and rolls over his position every month. He is deeply into profit. He has made more profit in one counter than I have in my whole trading cycle. Again a question of JUDGMENT.

Making a good fundamental JUDGMENT is far more reliable and profitable in the long run than a short term technical JUDGMENT. I was advised by one trader to plot the net buy figure of FII, DII etc everyday with the total volume traded that day. I found that to be very reliable indicator. Another advise I liked was to look for supply zone instead of a resistance on a chart. Now I co-relate the net buy figure and the volume traded on that given day and have a rough idea where the next supply zone will be.

I sure many track Nifty futures discount, PCR, NF OI, Implied volatility, VIX etc. Some even track US markets and Asian markets.

I am hoping to get the views of all members on this forum on how they make their JUDGMENT. That will help me and many like me, to refine the way we trade the market.

Happy trading
Linkon7
 

praveen taneja

Well-Known Member
#2
Dont Know about others brother but I trade totally on News:)
Buy on rumour sell on news:clap:
No fundamental NO TA just less trade max profit:thumb:
 

linkon7

Well-Known Member
#3
Dont Know about others brother but I trade totally on News:)
Buy on rumour sell on news:clap:
No fundamental NO TA just less trade max profit:thumb:
kindly elaborate with an recent example. do you wait for the price movement on rumours to initiate the buy ? i am curious.
 

praveen taneja

Well-Known Member
#4
kindly elaborate with an recent example. do you wait for the price movement on rumours to initiate the buy ? i am curious.
See from the last 15 days it was in the mkt that RIL is about to start supplying gas:)
It ran from 1280 to 1680:clap:
 
#6
I believe in technicals and rely on that for my entry point, exit, target and SL. But the JUDGMENT on the direction is where I falter sometimes. Even if I a good buy signal, I dont take it simply because I FEEL the market is overbought and regret later for not taking it. (In a trending market where the market has gapped up and is already up by 100 points, I start looking for shorting opportunities and jump at the first sell signal. I have learnt by experience to put tight stop loss under such circumstances, but the point here is I made a bad JUDGMENT. Technically, I should be trading in the direction of the trend and should be looking for buy signals in my setup.)


Happy trading
Linkon7
To me, it looks like exactly as if I myself have written it. I'm also doing it exactly the same way again & again. As soon as market is barely up, I start looking for selling opportunities and jump in for shorting at the first opportunity available. Dont understand why I'm always looking for getting opportunity against the trend instead of going with the trend which already is in progress.

Reason might be that I want to catch the trend from the start. have been slapped by market quite a few times because of this. But somehow, doing it again & again instead of going with the safer option of flowing with the trend. Probably, its my psychology (I believe everyone has different psychology) which always think that I've missed out most part of trend and instead try to find out exact top/bottom to enter the market.
 

linkon7

Well-Known Member
#7
To me, it looks like exactly as if I myself have written it. I'm also doing it exactly the same way again & again. As soon as market is barely up, I start looking for selling opportunities and jump in for shorting at the first opportunity available. Dont understand why I'm always looking for getting opportunity against the trend instead of going with the trend which already is in progress.

Reason might be that I want to catch the trend from the start. have been slapped by market quite a few times because of this. But somehow, doing it again & again instead of going with the safer option of flowing with the trend. Probably, its my psychology (I believe everyone has different psychology) which always think that I've missed out most part of trend and instead try to find out exact top/bottom to enter the market.
A friend explained this behavior as greed. we want to ride the down trend from the start. we want to be the ones to make the down side candlestick. and feel good about it when it clicks. as if we timed the market very well and papa is going to pat the back.

another guy calls it the unbeaten hero syndrome. teenagers rebel without a cause. just to do something different. i guess, thats part of our learning process.

we make mistakes and keep making them until we learn.

:)
linkon7
 

linkon7

Well-Known Member
#8
I wonder why FA is so ignored. everyone wants to learn TA and become rich overnight. Very few people believe in the company they are investing. Its like price dictates the buy. I hear questions like "I want buy 500 shares with Rs. 10,000 as investment, what can i buy ?"

TA is after all the study of history of price movement with the an assumption that history repeats itself. With so many traders into TA, big sharks know exactly how to play them to hit their SL. Its no longer a question of supply and demand. its more like resistance and support.

FA traders on the other hand need to have patience and somehow they are the ones to consistently reap good profit. How do they assimilate their info ?
 
#9
I wonder why FA is so ignored. everyone wants to learn TA and become rich overnight. Very few people believe in the company they are investing. Its like price dictates the buy. I hear questions like "I want buy 500 shares with Rs. 10,000 as investment, what can i buy ?"

TA is after all the study of history of price movement with the an assumption that history repeats itself. With so many traders into TA, big sharks know exactly how to play them to hit their SL. Its no longer a question of supply and demand. its more like resistance and support.

FA traders on the other hand need to have patience and somehow they are the ones to consistently reap good profit. How do they assimilate their info ?
Every body likes TA because TA runs 4 or 5 months in advace to FA.Traders dont care about FA.Investors can invest on companies with good Fundamentals.In simple words FA tells what to buy and sell.TA tells when to buy and sell.
 

linkon7

Well-Known Member
#10
Every body likes TA because TA runs 4 or 5 months in advace to FA.Traders dont care about FA.Investors can invest on companies with good Fundamentals.In simple words FA tells what to buy and sell.TA tells when to buy and sell.

I think you are confusing the fact that stock-markets discounts economic news 3 to 6 months before an event happens. Traders who follow FA are the one who discounts this. FA traders are very big players, like LIC HNI etc. they support the market when its falling. At the very bottom, its the FA traders who are buying and the TA traders who are selling. Same is true at the peak.

I think FA traders make advanced decisions simply because their perspective is 1 to 5 years and only when the event happens and the same is reflected on the charts, TA traders jumps in for the kill. but its the FA traders who make the big money. its like you take something too close to your eyes and the picture becomes myopic. any decision taken based on that will give a good short term profit.

I accept that TA gives you good entry points and exit points. no doubting that. but when it comes to bigger picture and the bigger profits... its FA all the way...

A good trader will have a mix of both though.
 

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