Learning through blunders


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I had been trading small quantities of Silvermic with some success.

Suryameet's banknifty optionstrategy was very attractive and I tried it. http://www.traderji.com/options/104017-banknifty-sureshot-intraday-strategy-without-any-analysis.html. Sure enough it was good. However the second day in the excitement I got confused between weekly and monthly options. That did me in. If Day gave a profit of 1.5k Day 2 put me back by 15k.
Mthly options do not move at all in a day.
Because margin was low and because the
banknifty future was looking bearish decided to short it.
I missed the long downward move by bad luck. When I entered there was no real opportunity. Also I had ignored the 2% var rule.Loss again.

So as per the 2% VAR rule, I can only short SBIN. etc.

Futures are volatile, options are even more so. Thousands are gained and lost in seconds. The 1st day was sitting on a gain of 4700. In a few mins it slipped to 1500.
If you do not put in in-depth study and practice before venturing you'll just lose your shirt.

When profits and position size suddenly increase, we can lose our equanimity.
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I backtested on excel strategies of Supertrend and RSI. These are the results:

SUPER TREND indicator is more suitable for intraday trading.
RSI seems to be more suitable for daily time frame trading.

If anybody wants I can upload the excel sheet for backtesting any strategy. You have to enter the strategy. It will add up the returns.


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Order of learning trading as suggested by Manesh Patel:
  1. Learn to trade on Daily TF.
  2. Then start on smaller time frames.(4 hr, 1 hr, 15 min, 5 min)
In view of this, learning trading on equities would be expensive unless you use CNC orders with a discount broker like Zerodha.
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Never buy in overbought conditions. (Stochastics>80)
Never sell in oversold conditions. (Stochastics<20)

The exceptions are when the market is trending on heavy volume (>5x previousbar).


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Skipping a trade has been quite difficult. I've suffered huge losses and given back profits through overtrading. Perhaps you can protect your capital better through limiting your trades.


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A trick to avoid over trading:
You can use this in commodity/currency markets where margin is low. When the market is not giving clear indications but you are impatient to trade, place opposite orders in different months' contracts. And then wait,....

When it breaks out of the range on heavy volume and closes outside the range, and you're fully convinced (wait a few bars), exit the other trade and let this run. Now place a stop loss.

One hour chart or higher may be ideal for beginners.


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Taking trades personally
Do you find yourself being hard on yourself when you lose a trade? I do. Still it's nothing personal. Just like any other work. It's absurd to take it personally.
Conversely, for success also.


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More than half of the losses in trading are not because of the market not matching our expectation; it's because of our own drawbacks:
  • Indiscipline
  • Sloppiness- not doing homework, study, logging, not using stops, MM etc.
  • Greed
  • Fear
  • Pride
  • Unrealistic thinking

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