When, Where, and How of Equity Trading

#1
I am only 1.5 years old learner and experimenter in this domain. Trading is mainly a practical testing-ground for my theories about cognition.

As I chase this domain, I keep on synthesising from the experience. Below is one such synthesis. It may seem simplistic--but I would like to believe that it is not.

Anyways, please don't accept it uncritically.

The 3-element framework
  1. How (i.e. System + Psychology). System includes set-ups, position sizing, risk:reward, etc. Psychology includes patience, lack of hope (cutting losses), and lack of fear (letting profits run).
  2. When to deploy the How (i.e. when is the mkt. structure aligned with your trading system). For example, a trend follower does not do well when markets are quiet.
  3. Where to deploy the How (i.e. where is the trading action happening that is aligned with your system). For example, these days (Jul 2021) action is mostly in small and mid caps. Large caps are giving fake moves a lot.
How I applied the framework to sense-make my trading performance.
  1. The biggest success factor for me while day trading in Bank Nifty is: When. Why? Because my trading style looks for big moves (200+ points), and BN does not trend all the time.
  2. The biggest success factor for me while day trading in Stocks is: Where. Why? Because there are 170+ F&O stocks. And only 5-6 typically give clear moves in a day. This is also why Stocks-in-play concept is used by so many pros.
  3. The biggest challenge for me while swing trading in F&O stocks is: Psychology (How). Why? Because multi-day patience is needed to let the stock run its full course. Also, opposite-candle days make one nervous. The more time one has to feel, the more one feels :). When and Where is easier for me for Swing trading. Why? Coz lot of time to scan. And lot of reaction time to cut losses if When goes wrong.
My point.
One can use such a framework to diagnose one's own trading performance.

Note: I will keep building up on this initial idea and its applications...
 
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