Hello , I am a day trader for 5 years , and I found people just struggling to make consistent profits in day trading . They always try to find some magical indicators which can make them the best trader giving them profit after profit but the real truth is there is no such thing I even use technical indicators but not like the people who are continuosly loosing as a day trader . You really need to have a edge in the market than what other people are doing . As a matter of fact you really need 3 things to be a better trader is 1. Proper Mindset 2. Strict Money Management and 3. Method which I will dicuss here .
Here I am discussing one of my strategy -
This strategy consist of three Technical Indicators
1. Super Trend Indicator 7,3
2. Stochastic ( You may use RSI , CCI etc does'nt matter and adjust the setting which suits you best )
3. Average True Range 14 period
You will also need atlest 7 days intraday historical data which is now most broker have in their Trading platform .
The reason for using the Super Trend is that it is a trend fllowing indicator and really gives less false signal in sideways market than other trend following Indicators like SMA , EMA crossover etc.
ATR is used in my strategy for determing stop Loss
BUY SETUP
First Super Trend should be in a bullish mode in 30 Min Chart
Entry should be taken on Stochastis crossover in Oversold teritory on a 5 min chart
Stop Loss should be 1.5 times the value of ATR based on 5min chart
Book Profit when price reaches 3 times the stoploss meaning if your stop loss is Rs 2 book profit when price increases Rs 6 from entry price
SELL SETUP
First Super Trend should be in a bearish mode in 30 Min Chart
Entry should be taken on Stochastis crossover in Overbought teritory on a 5 min chart
Stop Loss should be 1.5 times the value of ATR based on 5min chart
Exit strategy should be opposite the buying one above .
Now , the reason for using supertrend on 30 min chart is that it will give you a clear direction of the overall short term trend which is very very important on day trading
If you dont know the overall trend and just blindly taking signals on 5 min chart you will be in real trouble .
Now comes the Money Management without which you will not be able to make money consistently .
Suppose you have 1 Lac in your trading account . You will not risk more than 2 % on a single day which is Rs 2000 . If you are willing to trade 4 trades in a day then divide the risk by 4 wich is Rs 500 which is I am n going to risk on a single trade . So for example if you entering a trade and you determing the Stoploss is Rs 4 , then I will divide the risk per trade amount which is here Rs 500 by the stoploss which is Rs 4 and the result is 125 which is going to be my position size meaning the number of shares i will be buying and same for shorting .
Meaning you are risking Rs 500 for getting a potential profit of Rs 1500 on each trade
So 4 trades in a day ok .
If 2% of you trading capital which is the daily loss limit is hit which I think is the worst case then stop trading immediately , dont overtrade to make that loss up on that day , come back on the market the next day .
And dont always expect your target to hit by 1:3 risk reward ratio if the market is not trending strongly , sometime you have to settle for 1:2 which I think is not bad.
And try to trade on fixed stocks rather than jumping from one stock to another which will decrease your odds. You can have 2 to 7 stocks in your wachlist and try to trade them on a daily base .
Select stock which have daily range of 3% of its price and the price should be between Rs 500 to Rs 1000 and try to select them form nifty 50
Here I am discussing one of my strategy -
This strategy consist of three Technical Indicators
1. Super Trend Indicator 7,3
2. Stochastic ( You may use RSI , CCI etc does'nt matter and adjust the setting which suits you best )
3. Average True Range 14 period
You will also need atlest 7 days intraday historical data which is now most broker have in their Trading platform .
The reason for using the Super Trend is that it is a trend fllowing indicator and really gives less false signal in sideways market than other trend following Indicators like SMA , EMA crossover etc.
ATR is used in my strategy for determing stop Loss
BUY SETUP
First Super Trend should be in a bullish mode in 30 Min Chart
Entry should be taken on Stochastis crossover in Oversold teritory on a 5 min chart
Stop Loss should be 1.5 times the value of ATR based on 5min chart
Book Profit when price reaches 3 times the stoploss meaning if your stop loss is Rs 2 book profit when price increases Rs 6 from entry price
SELL SETUP
First Super Trend should be in a bearish mode in 30 Min Chart
Entry should be taken on Stochastis crossover in Overbought teritory on a 5 min chart
Stop Loss should be 1.5 times the value of ATR based on 5min chart
Exit strategy should be opposite the buying one above .
Now , the reason for using supertrend on 30 min chart is that it will give you a clear direction of the overall short term trend which is very very important on day trading
If you dont know the overall trend and just blindly taking signals on 5 min chart you will be in real trouble .
Now comes the Money Management without which you will not be able to make money consistently .
Suppose you have 1 Lac in your trading account . You will not risk more than 2 % on a single day which is Rs 2000 . If you are willing to trade 4 trades in a day then divide the risk by 4 wich is Rs 500 which is I am n going to risk on a single trade . So for example if you entering a trade and you determing the Stoploss is Rs 4 , then I will divide the risk per trade amount which is here Rs 500 by the stoploss which is Rs 4 and the result is 125 which is going to be my position size meaning the number of shares i will be buying and same for shorting .
Meaning you are risking Rs 500 for getting a potential profit of Rs 1500 on each trade
So 4 trades in a day ok .
If 2% of you trading capital which is the daily loss limit is hit which I think is the worst case then stop trading immediately , dont overtrade to make that loss up on that day , come back on the market the next day .
And dont always expect your target to hit by 1:3 risk reward ratio if the market is not trending strongly , sometime you have to settle for 1:2 which I think is not bad.
And try to trade on fixed stocks rather than jumping from one stock to another which will decrease your odds. You can have 2 to 7 stocks in your wachlist and try to trade them on a daily base .
Select stock which have daily range of 3% of its price and the price should be between Rs 500 to Rs 1000 and try to select them form nifty 50