What really works in professional commodity trading? My Trading Strategies

[deba72]

I don't understand your style at all. In the first post, you said your main focus is on money management and then you are arguing in favour of averaging a losing trade which in effect is throwing good money to a trade which has already gone bad. How do you integrate these two contradictory statements ?

Traders use SL not because they are afraid but because it's a very important part of risk and money management. How do you do risk management when you don't use SL ..kindly explain...

 

[Rish]

Priority No. 1 - Money

We all know well that there are somany tools for the trading. But which one is the first priority for me?

1. Fundamental Analysis - No
2. Technical Analysis - No
3. Watching Foregin Market - No
4. Price Action Trading - No
5. Amibroker, Meta Trader, Automated Trading Etc - No

The above list goes without any limit..............

Professional Traders go to market for earning money. But Scalpers, Intraday Traders and others are gambling the market by the above tools. Some tools work for sometime but not always...

So, I am very cautious about money. My first priority is Money management. But you may ask, Is merely money management enough? I am not saying like that.


Money should be given the first priority. I have more valid reasons how professional traders are safe in all types of market by their money management plan.

Here, i will explain the money management plan for 1 Lakh rupees. Let me write my long experiences one by one.

With the averaging concept....how you would have managed Crude Oil with this 1 lakh Rupees account ...say started bought from 90 dollar to till 27 dollar...

Just I wants to understand the Rs.1 lakh money management..please...

 

[monkeybusiness]

With the averaging concept....how you would have managed Crude Oil with this 1 lakh Rupees account ...say started bought from 90 dollar to till 27 dollar...

Just I wants to understand the Rs.1 lakh money management..please...

Me too.....

 

[boarders]

i think he is explaining his strategy using a example figure of 1 lakh and may not be his real capital.

another thing is he may be trading in only non perishable goods.

I know some guys in commodity trading who does averaging, but then only upto a given limit after which they book loss if the trade doesnt work out and not go all the way from 150 $ to 25 $ linke in the case of crude oil.

the above doesnt mean I agree or vouch for kabali's methods. I myself am purely a technical trader and cant imagine to trade without stop loss that too I use tighyt stops.

 

[DSM]

1. Trader With Stop Loss ( I never put stop loss) - Can you believe it?

Possible - to not put a Stop Loss (in the system) to avoid 'Stop Loss Runs...'

2. Dont average the losing position - But i average it. Can you believe it?

Again, Possible as long as one is adding to the position within the trend or at acceptable levels of retracement. '

3. Trade with trend ... But I dont see the trend - Can you believe it?

Sure... You have your own system which works, or has worked for you till now... It will not help me to prejudge you till I have read all you have to say....

Then, what is working in market? How to make the profit? Ya, I got the solution first. Later, I planned my trading.

Interesting... Looking forward to know.

In offline physical trading, If you bought the product for 100, Will you sell it for 95? will you sell in Loss?

Yes, depending on the way I see the trend....

The basic reason is money. Somone starts with 10000, 50000, 75000, 1 Lakh. One time investment only. Most of the indian traders are not able to invest money continously. So they trade with stop loss and fear. I say, It does not matter. You choose the product depending on the money in your account.

As a common example for commodity traders, Crude cracked from US$120 to about US$27 odd.... How would you manage this position?


Simply said, I am maintaining Professionalism in Trading by comparing every trade like physical commodity business. That is why i am able to exist in this market for the long periods.

Not taking a loss is being stubborn, not being professional... But do explain your view point for understanding....

Somebody may not agree with above points, Everyone has different trading plan. But, I share here what works in this market for me.

Yep, the point of not taking a loss is unheard of among future traders... But do share your story - seems different and interesting.

 

[Kabali]

First of all, My sincere thanks to all.

All the questions asked by you are reasonable. I have the duty to answer to all. But I have very less time only. Sorry for the inconvenience.

Way to go more in this thread.

Most of the traders dont prefer hedging concept. Because they will confuse theirselves when to remove the hedging and which is the correct time to come out of hedging. Let me share about hedging in details later. Averaging the losing position differs from averaging the hedging. I will tell you how your account will go up and down at the time of averaging the losing position and averaging the hedging position.

Someone asked crude oil money management for 1 Lakh. Sorry, 1 Lakh not enough for crude oil. Crude oil mini is only preferable for them.

Averaging the losing position and trying to catch the lowest price is like catching the falling knife. I also know well. I will explain about "% Analysis of price rise and price fall" in details later about when to average.

Dear traders, You are reading this thread by using your time. Thanks a lot for spending your time here.

My main focus on every trade is exit strategy if profit comes, and entry strategy if loss comes. it will be planned before entering every trade. Everything is to plan with money, Price and position (long or short).

I never said that i always take long position only like physical market. I apply the concept of physical market at the time of buying and averaging. I apply my hedging concepts with % analysis (I give my own name here) at the time of averaging the losing position.

Will catch you soon with my next post "Priority No. 3 "Effective Hedging and Its Possibility to come out of trade with profits":thumb::thumb::thumb:

 

[anal_]

Things are getting confused between averaging loss and scaling in. If the price moves in the opposite direction post entry, and you decide to add to your position since the initial bias still holds, then that's scaling in. Professional trading is done that way, coz there is no 1 price level to enter and exit. You gotta dance with the markets.

If your bias is reverted but you still married to your position and keep adding, that's called averaging loss. This is how most retail participants trade.

Now the stop loss. If you're scaling in, you can't keep fixed stops near your entry. There are 2 risks you deal while trading, chronic and acute (just like the medical ones). Chronic is the risk of losing to make profit in the trade (opportunity cost), acute is the risk of losing capital for next trades. Chronic risk is taken care of while you scale up and down while riding on the initial bias. Since you trade on likelihood, scaling up should happen as the probability rises and vice versa when the probability goes down. For acute risk, that can cause a wipe out, what we call black swan, there should be a large stop that won't be taken by price action swings.

 

[DSM]

Thanks Kabali/Anal for your post and comments....

To all those following the thread, there are important points made on both sides of the arguments. May I request, that while discussing ideas or opposing points of view, we avoid being personal and instead be objective with our comments? This will help us to get some insights to different ideas, and even be respectful in our communications though we may have differences of opinions....

Thanks all....

 

[deba72]

First of all, My sincere thanks to all.



Someone asked crude oil money management for 1 Lakh. Sorry, 1 Lakh not enough for crude oil. Crude oil mini is only preferable for them.

Please throw some more light on the above remarks made by you. Currently one lot crude margin is around 27k. Do you mean to say 100k is not sufficient to trade an instrument whose margin is 27k ? If I understood correctly , you are looking to allow a MTM of 73k on an initial position of 27k and still keep on averaging a position which has moved 730 points against you. What sort of trading plan is this ? Please clarify my doubts.

 

[vijayanscbe]

Generally, There are some technical rumours around the market friends.

The rumours are :

1. Trader With Stop Loss ( I never put stop loss) - Can you believe it?
2. Dont average the losing position - But i average it. Can you believe it?
3. Trade with trend ... But I dont see the trend - Can you believe it?

They are not rumors, they are really followed by many traders.

Generally, There are some technical rumours around the market friends.

The rumours are :

1. Trader With Stop Loss ( I never put stop loss) - Can you believe it?
2. Dont average the losing position - But i average it. Can you believe it?
3. Trade with trend ... But I don't see the trend -Can you believe it?

I believe you. I have done these things.
I suspect the 100%, but definitely 99.9999.....% traders do these things initially, up-to blowing few accounts.