Hi, I liked your first few posts where you told your story. Looks like half of it was my story ... 3 years down the line ... If I survive trading so long. Keep it up.
I am in the early days of moving to a pure technical trading model and struggling with how to size the stop losses and so on. I am also a positional trader and like to decide things before market opens. This is easier said than done because once you see the market changing trend in front of your eyes, all the theories ... at least for newbies ... go out the window. I did turn off CNBC a few weeks back and am even thinking of turning off TJ and another mailing list ... But the challenge is that if you switch these off, a lot of knowledge also goes. I wonder if you would like to share your thoughts on any or all of these topics.
Hi. I am glad you could relate to my experience. It is tough starting off for sure but its all a necessary part of the learning process. You will be thankful for this experience tomorrow.
You are absolutely right when you say that theories go out the window when you see the market moving against your trade real time. In fact, I traded intraday quite a bit for a couple of months (a few years back when I had the time) just to understand price action better. My experience was similar to what you have mentioned. The reason this happens imo is that watching the markets real time you feel compelled to act one way or the other. A chart is a chart & even an intraday chart will make you want to take a position - either long or short. But we have to remember all this is "market noise".
I firmly believe that intraday trading is not only the most risky but also the most difficult type of trading to master. The longer the time frame the easier it is to trade for the average individual (with a full time occupation). The associated stress of intraday trading is another big dampener
So how do we become good positional traders without letting live markets influence us? Simple. Do not watch the markets intraday. Place your orders before market hours. Its a very difficult thing to do but trust me, once you get used to this you wouldnt ever want to go back to checking the markets live again. Once or twice to "check the score" can be forgiven
The same goes for watching CNBC etc. I used to devour CNBC during my early days thinking I could learn something which I could use in next day's trading. I cant recall a single instance where I made money from anything that was said on any of the business channels. It just clouds your thinking. They all sound knowledgable but I really doubt how many trade their own advice diligently. I recall that sometime last year when KS Oils was Rs. 20 odd, Nomura came out with a "Buy" report on it. My system told me to short it around that level & it fell to 10 bucks in a matter of weeks. The point is not to say that the system was brilliant but that even the big guys can & do get things wrong & we should make our own decisions after studying the available information & price patterns. Never catch a falling knife.
Of course, you need to have confidence in whatever trading method you are following......the confidence that even if a few SL's are hit, at the end of the year you will make money. So I would recommend you find a method that is suited to your temperament & just trade the method like a robot. Its surely difficult to keep emotions out of trading but thats what we all should aim for
I'll tackle the last point you made about losing knowledge if you were to switch off the various info media. Remember, what you are switching off is predominantly fundamental news & a few technical opinions. Now where is this already built in? The price action or the charts!!!!! The technical chart of any stock or index should ideally be more than sufficient to make any trading decision - entry, SL or exit. If 10 analysts scream "Buy" & the stock keeps falling, would you go long or short?
I am trading Sharon Bio currently but I have no idea what the company does & frankly I dont really care. I am not trading fundamentals. I am trading technicals i.e. the chart. The name of the chart could be anything to be honest
I remember the time before 2008 when almost the whole world was bullish on RCOM. Look where the stock is today. Or when people used to say "for the index to move, Reliance HAS TO move". Try telling that to the market. What has RIL done in the last 1-2 years? So focus on the charts. They literally talk to you. Listen carefully & you will do well.
Hope this was helpful. Cheers