two simple questions but no clear answers-post your answer please

#1
hi friends
here are two big trading questions.
post your answer here,but dont imitate or copy others views give your own view as you see it

ASK THIS QUESTION AND ANYBODY WHO CALLS HIMSELF A TRADER WILL RUN AWAY WITHOUT ANSWERING.

Buy low Sell high-
IS WHAT they all say almost always
How low is Low to Buy?
How High is High to Sell?



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Question 2

how much risk is ok and how much is not ok?
for daily chart basEd traders.


COROLLARY
WHAT IF THE STOCK YOU ENTERED ROSE SOMETIME AND THEN STARTED FALLING? WHAT TO DO IN SUCH A CASE?
 

gurmy.

Well-Known Member
#2
hi friends
here are two big trading questions.
post your answer here,but dont imitate or copy others views give your own view as you see it

ASK THIS QUESTION AND ANYBODY WHO CALLS HIMSELF A TRADER WILL RUN AWAY WITHOUT ANSWERING.

Buy low Sell high-
IS WHAT they all say almost always
How low is Low to Buy?
How High is High to Sell?

wrong questions
so dont expect right answers
trading is not science
it is an art
show a picture to 10 people
they will have separate views about it
same with charts
better figure out yourself
still better dont try to fish bottoms and search for tops
go with the flow
u will enjoy it

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Reggie

Well-Known Member
#3
Ford, Just my views :

How low is low? : To an investor, for a junk company, there is no low. So even when the stock goes to a penny, its best an avoid. As against this, for a company with good fundamentals, its is always a buy when the stock is valued basis P/E, sales and profit growth etc.

If the same question is asked of a trader, he will answer after a check of the charts. Low levels are for shorting, retracements are for shorting. Unless the stocks makes a base, it is always a short candidate.

Similarly, charts will answer the question for a good buy. When a stock has consolidated and starts making a upmove it is a buy.

A trader sells low, to buy lower. He buys highs to sell higher. These decisions are made on technical understanding of the charts, (Moving averages, Pivot levels, Support & resistance, Candlestick patterns, indicators and oscillators etc and other patters including Head and Shoulders, Double top, Double bottom, triangles, wedges)

While trading on the basis of daily charts, generally a SL has to be determined as per the traders psychology, risk appetite, market conditions, and system. So there may not be a fixed level of SL. A positional trader may have 2-5-7-10% SL. Another may have a fixed amount of SL say 1-2-4 thousand. Some may have a fixed % of SL, say 1-1.5-2% others will follow trailing SL. All these differ from person to person.

As far as taking profit is concerned, generally a trader will have a feel as to level of profit to take. A spike of say 5-10K while the stock is against the market trend is always good to book. Also, if the stock is priced greatly away from its long term MA, it is good to book profit or trail with a close SL.

Again to answer what a trader should do if a profitable trade is going against him, the question will have many different answers depending upon whom you ask. The conventional wisdom is that it is best to not have a profitable trade turn to a loss. Hence when the profit amount is good, the profit has to be protected with SL or trailing SL. If out of the trade, you have atleast made the money. Also, if the charts suggest, one can go back and re-enter the trade.

All this comes thru experience and individual psychology and system of the trader.

My two bits worth.

hi friends
here are two big trading questions.
post your answer here,but dont imitate or copy others views give your own view as you see it

ASK THIS QUESTION AND ANYBODY WHO CALLS HIMSELF A TRADER WILL RUN AWAY WITHOUT ANSWERING.

Buy low Sell high-
IS WHAT they all say almost always
How low is Low to Buy?
How High is High to Sell?



--------------------------------------------------------------------------
Question 2

how much risk is ok and how much is not ok?
for daily chart basEd traders.


COROLLARY
WHAT IF THE STOCK YOU ENTERED ROSE SOMETIME AND THEN STARTED FALLING? WHAT TO DO IN SUCH A CASE?
 
#4
hi friends

Based on experience and knowledge,traders will share their views. I respect all those.

Anyways,time will tell the real truth.people will find out only if they are really interested.
SEE WHAT TIME HAS REVEALED.

Last year I happened to ask this question to a trader friend and he said -I think these are worthless questions-I have no time for these.Recently I came to know that he lost Rs 10 laks in commodity trading that too in just 2 positional trades and stopped trading altogether.Now looking for more education from good trading trainers.

Reggie
Thank you.your experience speaks with maturity.
your answer has given direction and clarity.

About 42 years ago,William J ONEIL said you must exit if your stock fell 7% below the entry price-(on daily chart basis).
It saved millions of Americans.

What happens if a trader doesnt sell at 7% loss?
chances are over 80% of time,he will be forced to sell at a loss of 50% ,or 60% or 70%. and this is readily accepted at that gloom time.

one my trainer said- you check monthly charts and get an idea from there and then keep checking on your trading timeframe if you have fixed one.
Most of the time camarilla chart gives clarity.
regards and thanks
 
#5
hi friends
here are two big trading questions.
post your answer here,but dont imitate or copy others views give your own view as you see it

ASK THIS QUESTION AND ANYBODY WHO CALLS HIMSELF A TRADER WILL RUN AWAY WITHOUT ANSWERING.

Buy low Sell high-
IS WHAT they all say almost always
How low is Low to Buy?
How High is High to Sell?



--------------------------------------------------------------------------
Question 2

how much risk is ok and how much is not ok?
for daily chart basEd traders.


COROLLARY
WHAT IF THE STOCK YOU ENTERED ROSE SOMETIME AND THEN STARTED FALLING? WHAT TO DO IN SUCH A CASE?
The questions you posed are extremely important for any trader , trading any style, any time frame. So to answer the question " How low is low to buy ?"the answer is ideally the low should be as near as possible to a point which if broken , will change your bullish view of the market to bearish view. But this ideal situation we dont always get in the market so the low should be as near as possible to some important chart point which if broken , you would like to get out and re-assess the situation. And How high is high to sell ( I am not considering short selling here ) is based on any important resistance point which the market found it difficult to overcome. If market takes out that and goes into a new territory, we will enter again and keep a stoploss of some logical chart point to ride the new trend.

The answers to the above questions a trader should think in his mind BEFORE entering into the trade and not AFTER.

How much risk is ok ? This again depends on the trading frequency and timeframe .A day trader takes lots of trades and he is exposed to the risk that many times ( everytime he takes a trade he is at risk) so he may consider 1 % per trade is ok and he will do very well with this percentage. A swwing trader who is taking a trade once in 7-10 days will say 2 to 3 % is fine....as his trading frequency is less and his Reward to Risk ratio is better than daytraders....he is less exposed to market risk. A trader trading on daily charts may say 4-5 % risk is ok for him......but anything above 5 % is a bit risky.

To answer the corollary.......what should be done if the stock we buy goes up for some time and then starts coming back.......if it has gone up a good distance then we exit at a trailing stop and lock some profits, we can always re-enter later if required....if not we have to exit at our entry stop.......but stops are MUST to protect the capital....without stops one is not trading as a business, he is speculating and hoping and he is sure to self destruct, blow up his account, self esteem, family, health and above all happiness in life......

Hope I am able to give some inputs .

Smart_trade
 

Rish

Well-Known Member
#6
How low is Low to Buy?

Any script going into Daily as well as Weekly sell mode, we can enter lower level "BUY" if monthly buy appears - Case Study - BEML / RCOM.


How High is High to Sell?

Any script going into Daily as well as Weekly Sell Mode, we can sell in higher level "Sell" if Monthly Sell appears.

Also, selection of script should be good - Not like Suzlon / JP Associates / GMR Infra............ DLF all we think it is trading in lower level, if may fall below Rs.100/- over the period time. "SELECTION OF SCRIPT IS ALSO IMPORTANT".

I have applied this when Hanung Toys / Bhusan Steel was trading at 42 and 340 respectively (in 2008 crash) and bought with clear s/l based on Monthly Level. Made good profit.

I never gone short based on this method. Always i use to buy.

I may be wrong, this is my view.

Nirahjan
 
#8
Smart_trade
Thank you for the valuable views.

The answers to the above questions a trader should think in his mind BEFORE entering into the trade and not AFTER.
While amateurs go broke by taking large losses,professionals go broke by taking small profits...... William Eckhardt in New Market Wizards
This quote carries a lot of hidden thing. Allow me to think first about it.It hits out at amateurs and pros at one shot with a reality kick
One point i read from your critical reply is-one should be always aware of key support and key resistance levels and play with caution when price reaches these levels.
I still have to figur out what key support-rsistance levels are first. as price reaches these support levels,it may reverse back up or breakdown thru,thereby giving evidence to trader if a low or high is formed or not.
On daily charts,seems as per ONEIL,our grandpa,7% fall or loss is maximum a trader can take -should have some solid background.
If a trade moved up in favour,one should mark breakeven price or entry and exit there if price tries to break down thru that.
so moving initial stop to brakeven stop can make fre trade possible if trader exits at entry itself as price falls.
So far i never saw a tradr saying-i had 10 looser trads,5 winning trades, and 5 breakeven trades.(mostly nobody has breakeven trades).
if a trade moved in favour say past 2 or 3 %,then one should use a stop that operates based on recent high point-like chandelier stop.
then instead of 7% below entry, move stop to higher level, but take 7% below recent highest high price say of 10 or 20 periods.

In general, for daily trades,Jimberg trailing stop is best as per my observation.
REGARDS



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In trading one needs a clear concept in mind.
in trading one should trade what he sees not what he thinks.

If you dont have any guidance rules on Low and High, you end up making mistakes and loosing money faster than you think.

A multiple timeframe approach may help but i dont know. I will check.
Like Nirahjan pointed out,WITH EXAMPLES.
How low is Low to Buy?

Any script going into Daily as well as Weekly sell mode, we can enter lower level "BUY" if monthly buy appears - Case Study - BEML / RCOM.


How High is High to Sell?

Any script going into Daily as well as Weekly Sell Mode, we can sell in higher level "Sell" if Monthly Sell appears.

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Thank you Nirahjan!
 
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onlinegtrash

Well-Known Member
#9
hi friends
here are two big trading questions.
post your answer here,but dont imitate or copy others views give your own view as you see it

ASK THIS QUESTION AND ANYBODY WHO CALLS HIMSELF A TRADER WILL RUN AWAY WITHOUT ANSWERING.

Buy low Sell high-
IS WHAT they all say almost always
How low is Low to Buy?
How High is High to Sell?



--------------------------------------------------------------------------
Question 2

how much risk is ok and how much is not ok?
for daily chart basEd traders.


COROLLARY
WHAT IF THE STOCK YOU ENTERED ROSE SOMETIME AND THEN STARTED FALLING? WHAT TO DO IN SUCH A CASE?
Hey I can answer these easy questions without running away!
But my answer will be in the form of question, just to see, if the questioner is not running away ;)
question 1#:
If anyone (or small group of traders) knows highs/lows and acts on the knowledge, what do you think will happen to the old predicted high/low level? so what happens to your question now!?

question 2#:
What do you think the primary goal(s) of risk management & money management is? if you figure out that first, you only need few more questions to get to the answer to your 2nd question ;)
 
#10
hi onlinegtrash
you said

If anyone (or small group of traders) knows highs/lows and acts on the knowledge, what do you think will happen to the old predicted high/low level?
so what happens to your question now!?

question 2#:
What do you think the primary goal(s) of risk management & money management is?
if you figure out that first, you only need few more questions to get to the answer to your 2nd question
====================================================
what happens to old high or low? is what i asked how high and how low? it means these values are dynamic may keep changing and unless a trader is clear in his mind he cant face the situation. This means in effect you said nothing new except repeat my question.
Second thing- I request you to post few points on primary goals of risk management so that we guys can learn and update ourselves with your guidance.
that will be education for me .accept my thanks in case you post this info.
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I wonder what is there to run away in the first place.
This forum is there to educate traders and provoke thinking in right direction.

The point here of this discussion is-may be you have better answers to this puzzle.It is not to hit at each other with criticism or any such thing.

I appreciate your points.
First thing-only smart operator groups may have info on where they may force the market to reverse only if no counter groups come and sink them.and the scrips which they operate have very low volumes to help them operate easily.I havnt seen this in my experience but heard of it.
with big scrips with higher volumes this kind of manipulation had back fired in past with kp etc.

regarding risk,everybody is aware of stoploss use.
but what are the critical parameters that form the stoploss formula and which is better and what parameter values are best -is the question.
I said key support and key resistance levels-can you say something in clear terms about them?
cheers
 
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