Pivot Trading- a new way of Trading

[sangram1705]

Tell me guys which script you want to learn, with some modification

To start with 5-min NF

 

[wisp]

Originally Posted by Smart_trade View Post
The entire trading is based on two very important concepts.....1) Reward/Risk ratio or R/R and 2) Money Management ( MM )or Position sizing. Both these concepts are more important than which of our trade is successful and which is not.

I read a book called " Mathematics of Money Management " by Ralph Vince. This is one of the three finest books on MM by the author and some of the concepts in that book opened my eyes to what trading really is... I am giving below a small excercise from this book to stress a point that in final results, which of your trade made money and which lost money makes NO difference at all.....

THE POSITION SIZING AND MM GAME

Make 40 small pieces of paper,on 20 write SUCCESS and on 20 write "FAIL" and fold them and put them in a glass bowl. Then ask a small child in the family to pick up each slip from the bowl and you read whether success or fail.

The sttarting capital is Rs 1,00,000/- and At each trade you will risk 25 % of the capital. If the trade is success,you make double the amount of money risked on a trade and if it is failure,you loose the amount risked on that trade. So for first trade your cum equity balance is Rs 1,00,000/- and the amount risked is 25000/- so if the slip says success,you make 25000*2 =50,000/- and your cum equity is 1,50,000/- now and on next trade you bet 25 % of 1,50,000/-. so go on like this till 40 trades are over.

The final amount you will have is not dependent on the sequence of your winning/loosing trades,consecutuve looses,wins etc and final amount is over Rs 10,50,000/- Dont believe me ? Try it out. I have spent 3 hrs on this game early in my career and tried coin toss,various sequence of alternate win/loss,10 losses and 10 wins in sequence etc…But the final wealth is same not even a rupee more or rupee less.

What does this prove ? Have a competent system,backtest,have a good mm and trade with confidence. Your sequence of losses and gains make no difference in ultimate results of building your wealth as long as your method has a positive expectancy and edge. Hope you enjoyed the game and learnt something from it…..About expectancy, we will discuss later...

I am no way advocating risking 25% on every trade. This is just illustration because optimal f for this system is 25 %. But 25 % is way tooo high. Start with 1-2 % and put your profits to work for you….


Smart_trade

I dont mean to disagree with ST Da, but the permutations and combinations in trading are a bit different. In this game, the child is repeating the same action the same way, i.e. pick a piece of paper from a bowl and you read. In trading however, we take a trade time after time, but there are different types of entries at different places and times, in addition the market has a mind of its own and it behaves differently at different times for the same entry, add to this the psychology of the trader and the soup gets thicker and thicker :lol: So I think these are apples and oranges and therefore cannot be compared IMHO.

 

[sangram1705]

We have discussed Rally Decline, minor pivots, Visual pivot, ERL and trend too some extent.

Now all have to identify different trend in different Time frame.

Given you all the materials for those I have told above.
Now all have to practice.

Dada,
pl check the attached attached image.
in between the Visual pivots all pivots seem to be minor pivots. I have not marked the minor pivots

 

[eku]

Tell me guys which script you want to learn, with some modification

Relinfra Please..

 

[sangram1705]

 

[amandeep86]

Subhadip Sir,

We buy once we see Higher VPL and Higher VPH and Viceversa for sell ,This means we need to enter on second Higher VPL formation (In case of UPtrend) ,As first Higher VPL would be used for confirmation.

This means we need to skip first Minor Trend for entry(Since that was used for confirmation),Please correct me for my misunderstanding.

Attached is todays Nifty Chart :-

 

[Subhadip]

Subhadip Sir,

We buy once we see Higher VPL and Higher VPH and Viceversa for sell ,This means we need to enter on second Higher VPL formation (In case of UPtrend) ,As first Higher VPL would be used for confirmation.

This means we need to skip first Minor Trend for entry(Since that was used for confirmation),Please correct me for my misunderstanding.

Attached is todays Nifty Chart :-

I will post the detailed thinking of this chart tomorrow

 

[Subhadip]

Too many lines. But good attempt.

 

[Subhadip]

I dont mean to disagree with ST Da, but the permutations and combinations in trading are a bit different. In this game, the child is repeating the same action the same way, i.e. pick a piece of paper from a bowl and you read. In trading however, we take a trade time after time, but there are different types of entries at different places and times, in addition the market has a mind of its own and it behaves differently at different times for the same entry, add to this the psychology of the trader and the soup gets thicker and thicker :lol: So I think these are apples and oranges and therefore cannot be compared IMHO.

Read again when in good mood please.

 

[Dax Devil]

I dont mean to disagree with ST Da, but the permutations and combinations in trading are a bit different. In this game, the child is repeating the same action the same way, i.e. pick a piece of paper from a bowl and you read. In trading however, we take a trade time after time, but there are different types of entries at different places and times, in addition the market has a mind of its own and it behaves differently at different times for the same entry, add to this the psychology of the trader and the soup gets thicker and thicker :lol: So I think these are apples and oranges and therefore cannot be compared IMHO.

You have made a valid point, wisp. Actually it was not Ralph Vince's original idea. It was built on a mathematical research paper published in 1950s ( I have the whole story along with equations somewhere on my backup disks).

Upshot is, Vince equation is not suitable for short term trading in the long run - and certainly not for day trading high vix scrips where time constraint is obvious. And on top, it doesn't allow to mess up with 25% in arbitrary fashion. It is almost a constant. That means, in order to derive full benefit of it one has to be trading on TF which would be ridiculously long for ordinary traders. The only way to compensate TF problem is to have postion sizing so big that would bring heart attack to many small/medium traders if the trade failed even a couple of times in a row. Not practical for puny mortals like you and I.