A Bird's eye view to a Bull's eye
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[QUOTE=dhanya_alapatt;527578]tnsn 2345..
im a month old to trading n i hv already lost 30% of wat i invested...i still hope of doin better..i did day trading...initially i gained nearly 5000rs in couple of day but then i started lossing heavy...plzzzz help me with some tips...
regards,[/QUOTE]
Dear friend
most of us have been thru this phase of 'losses'... if u are keen enough to observe, this thread and a few others have plenty of 'tips'..
regards
im a month old to trading n i hv already lost 30% of wat i invested...i still hope of doin better..i did day trading...initially i gained nearly 5000rs in couple of day but then i started lossing heavy...plzzzz help me with some tips...
regards,[/QUOTE]
Dear friend
most of us have been thru this phase of 'losses'... if u are keen enough to observe, this thread and a few others have plenty of 'tips'..
regards
...adding more to this topic of Risk per trade...(and I have mentioned also earlier, some to the highly speculative opportunities are the '2 mins trade' (I call it 'Maggi Trades', 
), enter at 3:29 pm previous day EOD and exit at 9:16 am next day BOD. Such setups basically a subset of well know 'Jackpot Options' trades are focusing primarily only on gap up or gap down opening on the next day.
Here the opporunitiy is it to double or triple or multiply with any higher number (depending on the UL and how deep OTM Options you buy) and how much is the gap up / down in your favour. But at the same time there is very very high risk of the UL not gap opening (so even flat opening will make your position down by 5% to 10% instantly (again depending on the deepness of OTMs). And if the gap opening is 'opposite' to your judgement than you are instantly down anywhere between 25 - 30 - 40 - 50%....
So in such 'Maggi Trades' the risk per trade will be extra ordinarily high. I have two options here, one, not take such trades (and let go an opportunity, even though I am 'almost certain' that gap opening will happen) or two, risk only smaller amount of shorter TF trading portfolio. So, if I have 2L as my shorter TF allocation, I may only put 50k for such 'Maggi Trades'. The risk per trade would be 50% (ie a loss of 25k) so the over all short TF portfoilo it would be 25k / 2 L i.e. 12.5%, which I may be ok with.
Regards,
), enter at 3:29 pm previous day EOD and exit at 9:16 am next day BOD. Such setups basically a subset of well know 'Jackpot Options' trades are focusing primarily only on gap up or gap down opening on the next day.Here the opporunitiy is it to double or triple or multiply with any higher number (depending on the UL and how deep OTM Options you buy) and how much is the gap up / down in your favour. But at the same time there is very very high risk of the UL not gap opening (so even flat opening will make your position down by 5% to 10% instantly (again depending on the deepness of OTMs). And if the gap opening is 'opposite' to your judgement than you are instantly down anywhere between 25 - 30 - 40 - 50%....
So in such 'Maggi Trades' the risk per trade will be extra ordinarily high. I have two options here, one, not take such trades (and let go an opportunity, even though I am 'almost certain' that gap opening will happen) or two, risk only smaller amount of shorter TF trading portfolio. So, if I have 2L as my shorter TF allocation, I may only put 50k for such 'Maggi Trades'. The risk per trade would be 50% (ie a loss of 25k) so the over all short TF portfoilo it would be 25k / 2 L i.e. 12.5%, which I may be ok with.
Regards,
...skills of a trader..contd...
IMO, after the first skill of basic math, good ability to read and interpret the numbers, the second skill is of Problem Identification.
Pls do not raise eyebrows, I am not going to write on the discipline, risk management etc, what all trading books have. I had mentioned that the things mentioned on this thread may not be written in most of the trading books, since they are the outcome of personal experience.
Why is Problem Identification necessary....
There is no activity in the world do in past, present and would be done in future which will be done right the first time. If you look around everywhere, and when you see successful people, brands, companies, relations, products, cultures or anything, they have constantly refined to this level. No one start it right, though the intentions may always be right. For us to be right, depends on, Internal - our ability to define rightness, capability to stick what we think it right and External - environments willingness to support that it is right.
Ok...cutting this short...
Without the ability (and willingness) to Identify the problem, there is all the likelihood that for a trader, even if he has a good strike rate and a good trading system, he may at best be running on tread mill - running on the same place, thinking that he is going distances. If the problems are not identified, then it is difficult to find a remedy or solutions to address them. I may not write more here, but what I can suggest is instead of reading books on trading it would be worthwhile reading some books on basic engineering / manufacturing books on problem idenfication. No need to buy such books but glancing a few chapters or the foreword would kick start thinking activity in you mind. So visit Crossword and pick up any book relating to this subject and refer it for free.
Willingness to identify problem, is the first step. I can only but assure you that you may not really need any external help (if have just a basic IQ and reasonable intelligence) that you 'YOURSELF' will be able come out with solutions to your problems, once you identify them.
In the intial post of this thread in the 'Topic list' I had mentioned a top called, 'Show me the data', this plainy refers that YOUR histroric data of the trades taken will show what it the problem (also it will show the strengths...we will talk about it later).
Your own data (which is your history) is the most important source of information, it is your DNA. Starting from this point can help change the DNA for betterment in future. If someone asked me how can I help him trade better. I will first look at his data, his histroy. The doctors, lawyers, ask about past information before giving their opinion. The consultants, corporates hire, spend most of their time in data collection.
...I would have loved showing, problem identification and data collection techniques so you all could relate to it much better. I will see how I can do it here on this faceless forum, with my limited ability on tech skills, with variety of trader readers. ...The next step logical step post this is 'data analysing', well Excel, pivot and other functions can do it for, but you need to be handons on these, certanily not possible for me to demostrate those things here...
...contd...
Regards,
p.s. : I have been getting PMs from many of you (surprisingly from lesser/unknown ids i.e. from people not participating on this thread or unheard of), and lot of these are relating to general issues (also a fallout of the discussion on this thread). Since these queries on these PMs are general, I would request the readers to post it on the thread as answering such queries can help others to view my replies and also other experienced traders can comment on those. I would request that PMs be sent only for any specific, personalised query / issue which may not have impact on masses but is relating to that individual and would help him it is address. Just a small request from myside.
IMO, after the first skill of basic math, good ability to read and interpret the numbers, the second skill is of Problem Identification.
Pls do not raise eyebrows, I am not going to write on the discipline, risk management etc, what all trading books have. I had mentioned that the things mentioned on this thread may not be written in most of the trading books, since they are the outcome of personal experience.
Why is Problem Identification necessary....
There is no activity in the world do in past, present and would be done in future which will be done right the first time. If you look around everywhere, and when you see successful people, brands, companies, relations, products, cultures or anything, they have constantly refined to this level. No one start it right, though the intentions may always be right. For us to be right, depends on, Internal - our ability to define rightness, capability to stick what we think it right and External - environments willingness to support that it is right.
Ok...cutting this short...
Without the ability (and willingness) to Identify the problem, there is all the likelihood that for a trader, even if he has a good strike rate and a good trading system, he may at best be running on tread mill - running on the same place, thinking that he is going distances. If the problems are not identified, then it is difficult to find a remedy or solutions to address them. I may not write more here, but what I can suggest is instead of reading books on trading it would be worthwhile reading some books on basic engineering / manufacturing books on problem idenfication. No need to buy such books but glancing a few chapters or the foreword would kick start thinking activity in you mind. So visit Crossword and pick up any book relating to this subject and refer it for free
.Willingness to identify problem, is the first step. I can only but assure you that you may not really need any external help (if have just a basic IQ and reasonable intelligence) that you 'YOURSELF' will be able come out with solutions to your problems, once you identify them.
In the intial post of this thread in the 'Topic list' I had mentioned a top called, 'Show me the data', this plainy refers that YOUR histroric data of the trades taken will show what it the problem (also it will show the strengths...we will talk about it later).
Your own data (which is your history) is the most important source of information, it is your DNA. Starting from this point can help change the DNA for betterment in future. If someone asked me how can I help him trade better. I will first look at his data, his histroy. The doctors, lawyers, ask about past information before giving their opinion. The consultants, corporates hire, spend most of their time in data collection.
...I would have loved showing, problem identification and data collection techniques so you all could relate to it much better. I will see how I can do it here on this faceless forum, with my limited ability on tech skills, with variety of trader readers. ...The next step logical step post this is 'data analysing', well Excel, pivot and other functions can do it for, but you need to be handons on these, certanily not possible for me to demostrate those things here...
...contd...
Regards,
p.s. : I have been getting PMs from many of you (surprisingly from lesser/unknown ids i.e. from people not participating on this thread or unheard of), and lot of these are relating to general issues (also a fallout of the discussion on this thread). Since these queries on these PMs are general, I would request the readers to post it on the thread as answering such queries can help others to view my replies and also other experienced traders can comment on those. I would request that PMs be sent only for any specific, personalised query / issue which may not have impact on masses but is relating to that individual and would help him it is address. Just a small request from myside.
Last edited:
...skills of traders....
IMO there are three types of traders:
1) Unprofessional traders - Traders who are always in the market, sun or rain they are always there. Have random TP, MM, RM plans. They hop skip and jump from one instrument to other, one TF to other. Mostly such traders are part time traders and their salary or earnings else where gives them the fodder every month to stay in the market and not their earning from the market. Very rarely such unprofessional trader consistenly profit from the market. They unknowingly focus on their 'CORE INCOMPETENCY' and keep sharpning it.
2) Professional traders - Traders, who have derived some techniques, methods have a TP, MM, RM plans. They mostly stick to the set rules, but since they are 'Professional traders', they again have to be in the market most of the times. Hence for different types of market conditions they will have different trading methods, instruments, which they will keep on changing or altering to be in sync with the market dynamics. They primarily focus on their 'CORE COMPETENCY' and occasionally try out different TP depending on the market conditions. They are mostly full time traders. And for such full time traders, since it is their livelihood, they cut down on volumes during downturns (may also lose opprotunities then) and increase the volume during a good performence (may also take higher risk and trade where there actually may not have been good opportunity)
3) Profitable traders - They are not in the market most of the times. They mostly sit out. They laze around like a crocodile sunbathing on the banks, oblivious of any activity happening around them. They wait for things to come to them and pounce upon them and they are out again. They can endlessly wait for a desired opportunity. They will not go deep water or into the sea to catch fish, but wait patiently by hanging a fishing line from the banks for the entire day and wait for fish to come and get hooked. They neither are careful of their core incompetencies or use their core competencies. They thrive on 'CHOR COMPETENCY'. Just like a 'Chor' (thief) they do not go every night to steal, but are constantly tracking and noticing the movement of their 'target' make up the entire plan, Plan A (pros)and Plan B (cons) and wait for the right time to strike.
It is not that who is right among the above, or who is the best, but the skills of an individual trader can be eithir of the above three competencies or blend of those. It is necessary to define what we are focusing.
Do you know you can get profitable trades even if you trade on your 'core incompetency'?
...
IMO there are three types of traders:
1) Unprofessional traders - Traders who are always in the market, sun or rain they are always there. Have random TP, MM, RM plans. They hop skip and jump from one instrument to other, one TF to other. Mostly such traders are part time traders and their salary or earnings else where gives them the fodder every month to stay in the market and not their earning from the market. Very rarely such unprofessional trader consistenly profit from the market. They unknowingly focus on their 'CORE INCOMPETENCY' and keep sharpning it.
2) Professional traders - Traders, who have derived some techniques, methods have a TP, MM, RM plans. They mostly stick to the set rules, but since they are 'Professional traders', they again have to be in the market most of the times. Hence for different types of market conditions they will have different trading methods, instruments, which they will keep on changing or altering to be in sync with the market dynamics. They primarily focus on their 'CORE COMPETENCY' and occasionally try out different TP depending on the market conditions. They are mostly full time traders. And for such full time traders, since it is their livelihood, they cut down on volumes during downturns (may also lose opprotunities then) and increase the volume during a good performence (may also take higher risk and trade where there actually may not have been good opportunity)
3) Profitable traders - They are not in the market most of the times. They mostly sit out. They laze around like a crocodile sunbathing on the banks, oblivious of any activity happening around them. They wait for things to come to them and pounce upon them and they are out again. They can endlessly wait for a desired opportunity. They will not go deep water or into the sea to catch fish, but wait patiently by hanging a fishing line from the banks for the entire day and wait for fish to come and get hooked. They neither are careful of their core incompetencies or use their core competencies. They thrive on 'CHOR COMPETENCY'. Just like a 'Chor' (thief) they do not go every night to steal, but are constantly tracking and noticing the movement of their 'target' make up the entire plan, Plan A (pros)and Plan B (cons) and wait for the right time to strike.
It is not that who is right among the above, or who is the best, but the skills of an individual trader can be eithir of the above three competencies or blend of those. It is necessary to define what we are focusing.
Do you know you can get profitable trades even if you trade on your 'core incompetency'?
...
p.s. : "I have been getting PMs from many of you (surprisingly from lesser/unknown ids i.e. from people not participating on this thread or unheard of), and lot of these are relating to general issues (also a fallout of the discussion on this thread). Since these queries on these PMs are general, I would request the readers to post it on the thread as answering such queries can help others to view my replies and also other experienced traders can comment on those. I would request that PMs be sent only for any specific, personalised query / issue which may not have impact on masses but is relating to that individual and would help him it is address. Just a small request from myside"....tnsn2345
..........................
question:your psychological clarity is admirable.
IN stock , i want to know how u create .....a low risk plan implementable
.....................................................
Reply :I have a system developed by me which gives me a list of stock (scans the entire market - top 100 /200 / 300 stocks), I run this system every fortnight / month and get the list of stock to trade. This is a propritory system hence cannot divulge much details. But it is purely a mathematical model, not TA or FA.
Once this list of stock is drawn, I check which stock I should invest on the basis of basic TA, like candlestick charts. I do not use any indicator but I look for certain patterns which is on the basis of my experience. And nothing more.
The most important thing is how much to invest, this is very important, which I monitor through excel. All my allocations (in different instruments, stocks, F&O are dynamically managed through a simple excel file. Nothing complicated at all.
To protect my long stock positions I have to hedge it with Options, so many times, stock and Options are traded for same setup
.............................
First things first...
As the age rises, the more difficult it is to change, hard fact of life it is sometimes not possible to change as we have spent most of our life living the way what we have been. So keep this fact always in your mind. And this is the truth.
Attitude is the most important thing in life. One can lose everything but the attitude and bounce back again in life (read trading too). If attitude is lost, the game is over. I mean you a fighting a lost battle.
I have had failures in my trading career and many of these were disasters and almost put me at the bottom of the sea, but what I didn't lose was the confidence and attitude. I never called myself a failure, I had the attitude to come up, learn, unlearn and emerge more level headed and reasonable.
As regards vision in trading...it is like on - off switch, which means devoting focussed time to trade and then defocussing from trading and living a fuller life. Even in between the trades I am not concentrating on my positions and am into some other activity. This helps me in getting out of losing position much early and quickly without any emotions. This I think is very important in trading i.e. to cut short on losses.
In my opinion, most of us who have spent considereable time in market can mostly spot good trading opportunities and can make money quite regularly. But the porblem isn't there, the problem is that one trade which screws our happiness and puts us back to where we started. And this happens with most of us experienced traders. And this one / two wrong trades are good enough to demoralise and challenge all the learning and experience we have had of all these years.
Hence what I have realised is to attain trading success, more important than getting winning trades and more winning trades, the entire focus and engeries should be put on cutting the wrong trades early and quickly.
If you ask me how I cut my losses, once I open a position I am out from my system and am defocussed from trading ( I undertake some other activity) only when my review time comes, I check what has happened, if things are not as desired, I close my position. And if the position is in substantial loss, I am off from my system for a large period of time, some times I would skip the entire day. But to do this I have to undertake some other activity which will help me defocus from trading. I undertake one such activity (mostly it is outdoor or meeting somebody) and hence I am detached.
I don't know if this helps you but I focus primarily only on cutting losses .
...............................................................
this prized post r coming to light.............as desired by Tnsn2345.His desire is ORDER to me...........so other members should get the benefit.
Regards
..........................
question:your psychological clarity is admirable.
IN stock , i want to know how u create .....a low risk plan implementable
.....................................................
Reply :I have a system developed by me which gives me a list of stock (scans the entire market - top 100 /200 / 300 stocks), I run this system every fortnight / month and get the list of stock to trade. This is a propritory system hence cannot divulge much details. But it is purely a mathematical model, not TA or FA.
Once this list of stock is drawn, I check which stock I should invest on the basis of basic TA, like candlestick charts. I do not use any indicator but I look for certain patterns which is on the basis of my experience. And nothing more.
The most important thing is how much to invest, this is very important, which I monitor through excel. All my allocations (in different instruments, stocks, F&O are dynamically managed through a simple excel file. Nothing complicated at all.
To protect my long stock positions I have to hedge it with Options, so many times, stock and Options are traded for same setup
.............................
First things first...
As the age rises, the more difficult it is to change, hard fact of life it is sometimes not possible to change as we have spent most of our life living the way what we have been. So keep this fact always in your mind. And this is the truth.
Attitude is the most important thing in life. One can lose everything but the attitude and bounce back again in life (read trading too). If attitude is lost, the game is over. I mean you a fighting a lost battle.
I have had failures in my trading career and many of these were disasters and almost put me at the bottom of the sea, but what I didn't lose was the confidence and attitude. I never called myself a failure, I had the attitude to come up, learn, unlearn and emerge more level headed and reasonable.
As regards vision in trading...it is like on - off switch, which means devoting focussed time to trade and then defocussing from trading and living a fuller life. Even in between the trades I am not concentrating on my positions and am into some other activity. This helps me in getting out of losing position much early and quickly without any emotions. This I think is very important in trading i.e. to cut short on losses.
In my opinion, most of us who have spent considereable time in market can mostly spot good trading opportunities and can make money quite regularly. But the porblem isn't there, the problem is that one trade which screws our happiness and puts us back to where we started. And this happens with most of us experienced traders. And this one / two wrong trades are good enough to demoralise and challenge all the learning and experience we have had of all these years.
Hence what I have realised is to attain trading success, more important than getting winning trades and more winning trades, the entire focus and engeries should be put on cutting the wrong trades early and quickly.
If you ask me how I cut my losses, once I open a position I am out from my system and am defocussed from trading ( I undertake some other activity) only when my review time comes, I check what has happened, if things are not as desired, I close my position. And if the position is in substantial loss, I am off from my system for a large period of time, some times I would skip the entire day. But to do this I have to undertake some other activity which will help me defocus from trading. I undertake one such activity (mostly it is outdoor or meeting somebody) and hence I am detached.
I don't know if this helps you but I focus primarily only on cutting losses .
...............................................................
this prized post r coming to light.............as desired by Tnsn2345.His desire is ORDER to me...........so other members should get the benefit.
Regards
Just quoting the above post to refresh my flow, though there has been occassional overlap here - there but I guess that much is ok.
Now coming to the skills of traders...and my last post on
Core Incompetency
Core Competency
Chor Competency
I had mentioned that you can profitably trade even while focusing on your Core Incompetency...
Ok let us see how,
What are general flaws of a traders (i.e. incompetencies, and we call it 'core' incompetency because how so ever hard a failed traders tries, he cant get rid of it and always sticks to these traits)
Some generic flaws are:
1) Trading without a TP
2) Changing TF of trades
3) Taking a trade in vengeance
4) Not putting SL
5) Changing SL adversely
6) Adding to losing positions
7) Exiting from profits early
.... etc ...etc...the list is endless....
Above are some of the very common flaws of failed trader. Sometimes there is an effort to correct these, and sometimes not. Given the human nature it is difficult to change as you grow up and the older you get, more difficult for one to change. The upbringing, culture and our thinking from our childhood makes things difficult for us to change. And even if there is a change, it will be marginal w.r.t to the effort put in. So, is there a way out to profit from such flaws....I always thought...Why change...why change...Can I make use of my core incompetency to trade profitably. Yes....is the answer...just by changing a little....very very very little and this is possible...(will give examples in the next post)
Coming to the Core Competency part, each of us traders here (failed or consistently successful) have some or other core competency, viz...
1) A good trading system (discretinary or mechanical)
2) A good intutive / gut feel
3) Ability to be paitent (to enter late and to exit later when in profits)
4) A good ability to allocate money, RM, MM and TP
5) Ability to stand out from the market when we do not understand what is happening.
6) Having control over self only to enter trades where there could be a handsome profit and not just a small proft.
etc...etc...
There could be a few more core competency areas. And all can lead profitable trades.
The point here is not how many are our core incompetency or core competent areas. But the idea is to IDENTIFY them. The first step begins with identifying...once you identify them, then can you find a solution...as I said the solution is within you...Even if there in just one Core competency, you can sharpen it so much that you can milk the market with that one thing itself for eternity. And similarly if you identify and focus on core incompetencies, howsoever many they are you can still use it in your favour by just a small tweaking....
....
Now coming to the skills of traders...and my last post on
Core Incompetency
Core Competency
Chor Competency
I had mentioned that you can profitably trade even while focusing on your Core Incompetency...
Ok let us see how,
What are general flaws of a traders (i.e. incompetencies, and we call it 'core' incompetency because how so ever hard a failed traders tries, he cant get rid of it and always sticks to these traits)
Some generic flaws are:
1) Trading without a TP
2) Changing TF of trades
3) Taking a trade in vengeance
4) Not putting SL
5) Changing SL adversely
6) Adding to losing positions
7) Exiting from profits early
.... etc ...etc...the list is endless....
Above are some of the very common flaws of failed trader. Sometimes there is an effort to correct these, and sometimes not. Given the human nature it is difficult to change as you grow up and the older you get, more difficult for one to change. The upbringing, culture and our thinking from our childhood makes things difficult for us to change. And even if there is a change, it will be marginal w.r.t to the effort put in. So, is there a way out to profit from such flaws....I always thought...Why change...why change...Can I make use of my core incompetency to trade profitably. Yes....is the answer...just by changing a little....very very very little and this is possible...(will give examples in the next post)
Coming to the Core Competency part, each of us traders here (failed or consistently successful) have some or other core competency, viz...
1) A good trading system (discretinary or mechanical)
2) A good intutive / gut feel
3) Ability to be paitent (to enter late and to exit later when in profits)
4) A good ability to allocate money, RM, MM and TP
5) Ability to stand out from the market when we do not understand what is happening.
6) Having control over self only to enter trades where there could be a handsome profit and not just a small proft.
etc...etc...
There could be a few more core competency areas. And all can lead profitable trades.
The point here is not how many are our core incompetency or core competent areas. But the idea is to IDENTIFY them. The first step begins with identifying...once you identify them, then can you find a solution...as I said the solution is within you...Even if there in just one Core competency, you can sharpen it so much that you can milk the market with that one thing itself for eternity. And similarly if you identify and focus on core incompetencies, howsoever many they are you can still use it in your favour by just a small tweaking....
....
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