Hello friends,
I am a about 3 week old day trader and I will share important points I have learned till now & from hereon right here... i am doing this so to help my colleagues who are also trying to walk first steps... If Any of my experience be of any help to anybody in any way my work will be worthy ... So if i am mistaking anywhere or every where please do correct me ... I am always open to receive...
1. First Signals : - Price, Time and Volume are the only first and most fresh things you get from exchange ... So if you can become a master of reading these things and what they "mean", then there seems to be no need to learn all the technical stuff ... So always be careful not to get lost in technical jargon ... Do travel it ... but never get lost ... i was about to get lost and fortunately RSI has pulled me on right track ...
2. Live charts on websites: - till now I have made a loss of 5 to 6000 Rs. just because of one stupid blunder. I referred price charts which are broadcasted "live" on in.quote dot com ... and based on that I have took my decisions ...and 90% of them were wrong...So past 3 weeks with fantastic consistency like a pro day trader I was i was day-trading but only difference was I was making loss and loss and loss...the day decided to stop I day trading , suddenly I found that those broadcast were delayed 15 minutes .... So please don't make mistake like me ....
"No website legally gives us Live broadcast of stock prices for free"
... I won't forget this in my whole life you also don't make this BIG mistake ...
3. the Science of probability: -
The very basic science I have realized behind all is Probability Theory.
Very Basic question is that if you take some "set of actions/decisions", what is probability of you survive long and strong in the game?
So as a quest for the right answer to this question concept of stop loss has arrived.
While taking any action in the market do ask yourself some basic questions ...Don't/Never enter blindly...
a. What loss is acceptable for me in this/any trade. what % of total capital I am ready to lose in a given trade.
b. What benefit i expect from this trade ... What benefit I am looking up to? ... Or Do I want to keep this option open? ...
So first decide on this, stick to it,do the trade, ... if things go right learn from it ... if things go wrong learn from it and find some improvement... change the plan...this way only I/we will find better and better ways to trade...
Probability Statement 1: - the probability theory says "the less you lose in any single trade and the "more" the number of trades you make in the trend, the more are the chances you will survive long and strong and you will grow up" ...
Probability Statement 2: - So taking above statement to be true, I put very very tight stop loss then another probability comes into the picture...which says if I put stop loss in the range of price fluctuations then it is more probable that I will hit it and although i am losing very less I am winning also very less ... So this way second probability will counter the first first probability ... and we won't grow ...if we increase the stoploss too much then first statement will shout at us ... "well dear trader, you are violating me, so be ready for packup"
So we need to learn to put "Right and Tight" stop loss to every trade. this way we will satisfy both of the above probabilities...and be a most "probable" winner...
Probability doesn't believe in "hoping" things to turn around ... So if stoploss price is hit just stick to your commitment ... get out of the trade and learn...Probability likes play safe ... play in more numbers ... and she will be happy if you use your common sense in addition
4. Actual Loss is more than double of itself : -
I get 6 times exposure of the total amount I deposit in my Demat account. I was having 10,000 Rs. in my account and On one fine day I made a fantastic Rs. 2000/- loss in one day!!! ...The next day I discovered this very very important thing ... When I saw my exposure decreased by 12000/-Rs.... And I realized that ...
a. I have already lost 2000/- this is the basic lost
b. To get to the ground level where I was a day before ( i.e. Rs. 10,000. account balance)
I have to earn profit of Rs. 2000/-
c. Earning 2000/-in one day is not a joke
d. I am not equally "Powerful" as the day before, since because of loss i have have lost
Rs. 12000 margin ... So I "have to" earn 2000/- with lesser amount than the day before...
d. Anyway with all my vigor if I became successful to earn Rs.2000/- in a day, all that good
is i have reached where I was initially ... so actually i have lost my Rs 2000/- profit too
reaching to the same place ...
e. I have lost at least two valuable days not reaching an inch ahead ..
So this way loss is always double than itself! ,...
I have found it and sharing with you ... So please take this seriously and don't reinvent the wheel ... better reinvent something like bullock cart with that wheel
.... So if you like my understandings please do reply ... Do correct me if anywhere /everywhere i am wrong!
Thanks n regards,
priyanvada
I am a about 3 week old day trader and I will share important points I have learned till now & from hereon right here... i am doing this so to help my colleagues who are also trying to walk first steps... If Any of my experience be of any help to anybody in any way my work will be worthy ... So if i am mistaking anywhere or every where please do correct me ... I am always open to receive...
1. First Signals : - Price, Time and Volume are the only first and most fresh things you get from exchange ... So if you can become a master of reading these things and what they "mean", then there seems to be no need to learn all the technical stuff ... So always be careful not to get lost in technical jargon ... Do travel it ... but never get lost ... i was about to get lost and fortunately RSI has pulled me on right track ...
2. Live charts on websites: - till now I have made a loss of 5 to 6000 Rs. just because of one stupid blunder. I referred price charts which are broadcasted "live" on in.quote dot com ... and based on that I have took my decisions ...and 90% of them were wrong...So past 3 weeks with fantastic consistency like a pro day trader I was i was day-trading but only difference was I was making loss and loss and loss...the day decided to stop I day trading , suddenly I found that those broadcast were delayed 15 minutes .... So please don't make mistake like me ....
"No website legally gives us Live broadcast of stock prices for free"
... I won't forget this in my whole life you also don't make this BIG mistake ...
3. the Science of probability: -
The very basic science I have realized behind all is Probability Theory.
Very Basic question is that if you take some "set of actions/decisions", what is probability of you survive long and strong in the game?
So as a quest for the right answer to this question concept of stop loss has arrived.
While taking any action in the market do ask yourself some basic questions ...Don't/Never enter blindly...
a. What loss is acceptable for me in this/any trade. what % of total capital I am ready to lose in a given trade.
b. What benefit i expect from this trade ... What benefit I am looking up to? ... Or Do I want to keep this option open? ...
So first decide on this, stick to it,do the trade, ... if things go right learn from it ... if things go wrong learn from it and find some improvement... change the plan...this way only I/we will find better and better ways to trade...
Probability Statement 1: - the probability theory says "the less you lose in any single trade and the "more" the number of trades you make in the trend, the more are the chances you will survive long and strong and you will grow up" ...
Probability Statement 2: - So taking above statement to be true, I put very very tight stop loss then another probability comes into the picture...which says if I put stop loss in the range of price fluctuations then it is more probable that I will hit it and although i am losing very less I am winning also very less ... So this way second probability will counter the first first probability ... and we won't grow ...if we increase the stoploss too much then first statement will shout at us ... "well dear trader, you are violating me, so be ready for packup"
So we need to learn to put "Right and Tight" stop loss to every trade. this way we will satisfy both of the above probabilities...and be a most "probable" winner...
Probability doesn't believe in "hoping" things to turn around ... So if stoploss price is hit just stick to your commitment ... get out of the trade and learn...Probability likes play safe ... play in more numbers ... and she will be happy if you use your common sense in addition
4. Actual Loss is more than double of itself : -
I get 6 times exposure of the total amount I deposit in my Demat account. I was having 10,000 Rs. in my account and On one fine day I made a fantastic Rs. 2000/- loss in one day!!! ...The next day I discovered this very very important thing ... When I saw my exposure decreased by 12000/-Rs.... And I realized that ...
a. I have already lost 2000/- this is the basic lost
b. To get to the ground level where I was a day before ( i.e. Rs. 10,000. account balance)
I have to earn profit of Rs. 2000/-
c. Earning 2000/-in one day is not a joke
d. I am not equally "Powerful" as the day before, since because of loss i have have lost
Rs. 12000 margin ... So I "have to" earn 2000/- with lesser amount than the day before...
d. Anyway with all my vigor if I became successful to earn Rs.2000/- in a day, all that good
is i have reached where I was initially ... so actually i have lost my Rs 2000/- profit too
reaching to the same place ...
e. I have lost at least two valuable days not reaching an inch ahead ..
So this way loss is always double than itself! ,...
I have found it and sharing with you ... So please take this seriously and don't reinvent the wheel ... better reinvent something like bullock cart with that wheel
.... So if you like my understandings please do reply ... Do correct me if anywhere /everywhere i am wrong!
Thanks n regards,
priyanvada