Q & A with Traderji

[Traderji]

Dearest Traderji,
A really fasciating Qs.ad Ans. Session ----in the most simpliest way---
My Qs. are :
1)While trading Nifty Futures---in this highly volatile month of July---what was ur strategy or with what strategy could one sussessfully carry on a trade with trailing stop loss even for 3--4 days --without the Stop loss getting hit as per the 2% rule of money management?
2) What strategy do u follow in trading Nifty in the 1st three days and the last three days of the near mth cycle?
As usual---Thanks once again,for ur efforts in keeping simple things simple--
Regards,
joy_mitali

The 2% stoploss really depends on your trading capital. If you have a very large capital your stoploss could even be as low as 0.25% to 0.50%. If you have a very small trading capital then one has to trade with a larger stoploss of maybe 3-5% of you trading capital. I always keep my stoploss the same while taking positional trades - last 3 days low for long trades and last 3 days high for short trades. If you can use a system tester check out its profitibility.

If I find that the stoploss is to large (during highly volatile times) I normally reduce the position size to fit into my % rule of money management. Keep in mind that one should not change the stoploss to fit into your money management but rather the position size. If you find that the difference between the entry price and stoploss is too large and you cannot take the loss then do not take the trade.

I do not change my trading strategy during the first three days of the month or last three days of the month. The trading strategy remains the same.

 

[rahulg77]

Dear Traderji,

I have a few queries

- Can one do position trade in highly volatile markets like the sensex is these days. or is it better to swing trade in volatile markets. Doesnt the stop loss get hit more often as the market is facing lot of swings and takes many stocks with it.

- When u trade a break out do you place the stop at the point of break out (i.e the place where the price breaks the trend line) or there also u use previous 3 days high or low depending upon your time frame of investment.

- I found a breakout trade but have missed out on the move (Amara Raja Batteries). How would you suggest to enter this trade. Would you suggest to stay out at this price level since it has moved up a little from the point of breakout and wait for retracement?

-If we can enter this trade at this level where u would place your stop and why. Also if you would have entered it just when it had a break out from the pattern then where would your stop have been. your explanation would help me see how you would have trade this script at the point of breakout and at present levels. This query is more for education purpose rather than to trade this script.

-How will you decide if you would enter this script for long term or short term?

Kind regards

Rahul

P.S I have attached the file and drawn the pattern as my eyes could make of it.

 

[Traderji]

Dear Traderji,

I have a few queries

- Can one do position trade in highly volatile markets like the sensex is these days. or is it better to swing trade in volatile markets. Doesnt the stop loss get hit more often as the market is facing lot of swings and takes many stocks with it.

- When u trade a break out do you place the stop at the point of break out (i.e the place where the price breaks the trend line) or there also u use previous 3 days high or low depending upon your time frame of investment.

- I found a breakout trade but have missed out on the move (Amara Raja Batteries). How would you suggest to enter this trade. Would you suggest to stay out at this price level since it has moved up a little from the point of breakout and wait for retracement?

-If we can enter this trade at this level where u would place your stop and why. Also if you would have entered it just when it had a break out from the pattern then where would your stop have been. your explanation would help me see how you would have trade this script at the point of breakout and at present levels. This query is more for education purpose rather than to trade this script.

-How will you decide if you would enter this script for long term or short term?

Kind regards

Rahul

P.S I have attached the file and drawn the pattern as my eyes could make of it.

In highly volatile markets it is always better to swing trade. Your stoploss should be the swing low and if you do your analysis correctly the chance of your stoploss getting hit will be lower.

I use the previous 3 bar low or the swing low whichever is lower.

I would suggest you wait for a pullback and then BUY only after it closes/crosses above its previous bar's high.

If I entered a trade at this level I would use the previous 3 bar low or swing low whichever is lower as my stoploss.

Amaraja was a good swing trade. However it looks ready for a pullback/correction. Iwould suggest you to make a list of 50 stocks which you should visually scan daily for such setups. I am sure you will not be disappointed.

 

[rahulg77]

In highly volatile markets it is always better to swing trade. Your stoploss should be the swing low and if you do your analysis correctly the chance of your stoploss getting hit will be lower.

I use the previous 3 bar low or the swing low whichever is lower.

I would suggest you wait for a pullback and then BUY only after it closes/crosses above its previous bar's high.

If I entered a trade at this level I would use the previous 3 bar low or swing low whichever is lower as my stoploss.

Amaraja was a good swing trade. However it looks ready for a pullback/correction. Iwould suggest you to make a list of 50 stocks which you should visually scan daily for such setups. I am sure you will not be disappointed.

Thank you traderji for taking time to answer our queries. By the way this amara came up when i used your filtering method for 3 months high

Regards

Rahul

 

[Traderji]

Thank you traderji for taking time to answer our queries. By the way this amara came up when i used your filtering method for 3 months high

Regards

Rahul

You are always welcome. If you can successfully identify stocks like Amaraja then you are on way to success.

 

[mfire]

Respected Traderji
I appreciate your thread of questions & answers.
I am new to technical analysis.
I work in NIFTY options only. I want to know which charts, NIFTY index or options price charts I should use to decide entry, stop loss and exit positions. I presently use only NIFTY index charts for this. Where can I get NIFTY option price charts?
Thanking you
Mohan Agnihotri.

 

[kuldeep49]

Traderji,

The last six months have been a learning experience in TA. It is a bit like golf; whenever you feel you have mastered the game ... there is something new to learn. My question is:

Under what circumstances does one use different indicators to formulate their trading entry & exit startegy? When to use moving averages, when is it better to rely on RSI, and does ADX give better signals in a trending market etc.?

Regards
Kuldeep

 

[Traderji]

Respected Traderji
I appreciate your thread of questions & answers.
I am new to technical analysis.
I work in NIFTY options only. I want to know which charts, NIFTY index or options price charts I should use to decide entry, stop loss and exit positions. I presently use only NIFTY index charts for this. Where can I get NIFTY option price charts?
Thanking you
Mohan Agnihotri.

You do not need option price charts to trade options. You can stick to using the Nifty Index charts.

 

[Traderji]

Traderji,

The last six months have been a learning experience in TA. It is a bit like golf; whenever you feel you have mastered the game ... there is something new to learn. My question is:

Under what circumstances does one use different indicators to formulate their trading entry & exit startegy? When to use moving averages, when is it better to rely on RSI, and does ADX give better signals in a trending market etc.?

Regards
Kuldeep

This is the dilemma most traders go through. It is generally recommended to use trend following indicators in the daily chart when the weekly ADX is rising and oscillators in the daily chart when the weekly ADX is falling.

 

[Spiderman]

Traderji,
How do you rate Macd and ADX on comparative basis? In my own
view Macd is far better than ADX.

Spiderman