Augubhai's diary and notes
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Hi Sanjn,
I have been trading range breakout methods on and off for about 4 years now. Every time I modify my rules slightly.
I have doubled my money using this 3 times. It takes a few months to double money using this method. but I have lost all the money that I made in a few weeks.
All due to poor money management. Whenever the system did well, I would ramp up pretty quickly. For example, I used to add one lot for every Rs. 30000 profit. Soon I would be trading very large quantities, and even a small drawdown would eat up all my profits and more. Hopefully, I have learnt my lesson and will ramp up slower, going forward.
While range breakout makes profit over the long term (at least i am confident about Nifty), it also gives prolonged drawdowns. I have experienced drawdowns lasting more than 2 months (where 95% of the days end in losses). Even the current phase of the market, since the 3rd week of June has been terrible for this system.
So if you want to trade this system, your money management should be good enough to handle a few months of drawdown. The alternative is to identify the whipsaw phase for the system and stay out. I do not have a clue about how to avoid a whipsaw, and as you can see in my diary, I trade this system almost everyday, though some people may say that it is so easy to identify that the market has been rangebound and trendless in July.
Does this info help?
I have been trading range breakout methods on and off for about 4 years now. Every time I modify my rules slightly.
I have doubled my money using this 3 times. It takes a few months to double money using this method. but I have lost all the money that I made in a few weeks.
All due to poor money management. Whenever the system did well, I would ramp up pretty quickly. For example, I used to add one lot for every Rs. 30000 profit. Soon I would be trading very large quantities, and even a small drawdown would eat up all my profits and more. Hopefully, I have learnt my lesson and will ramp up slower, going forward.
While range breakout makes profit over the long term (at least i am confident about Nifty), it also gives prolonged drawdowns. I have experienced drawdowns lasting more than 2 months (where 95% of the days end in losses). Even the current phase of the market, since the 3rd week of June has been terrible for this system.
So if you want to trade this system, your money management should be good enough to handle a few months of drawdown. The alternative is to identify the whipsaw phase for the system and stay out. I do not have a clue about how to avoid a whipsaw, and as you can see in my diary, I trade this system almost everyday, though some people may say that it is so easy to identify that the market has been rangebound and trendless in July.
Does this info help?
Since April, I have been trading range breakout with the following rules. I trade per these rules almost everyday, including today.
Go long/short is day's high/low is touched. Initial SL at 0.6%. Trailing SL at 0.8%.
If SL is hit, enter again if day's high/low is touched.
Close positions end of day.
Go long/short is day's high/low is touched. Initial SL at 0.6%. Trailing SL at 0.8%.
If SL is hit, enter again if day's high/low is touched.
Close positions end of day.
thanks for info , one thing i understand that keep lot size always constant .
trade with proper MM.
is there any more info from ur experience , u want to provide for nifty.
can on 5 minute chart 30 minute range is best or other u suggest ?
is there previous day close , low r also effect on it ?
sorry not read above msg
trade with proper MM.
is there any more info from ur experience , u want to provide for nifty.
can on 5 minute chart 30 minute range is best or other u suggest ?
is there previous day close , low r also effect on it ?
sorry not read above msg
the first trade that I take is the break of the 5 minute opening range, though on some days I wait a little longer. This is pure intraday - means I do not consider data from previous days
about MM for this system (assuming that you are not able to keep out of whipsaws), plan for a few months of drawdown. That will automatically limit your position size.
The other thing that I do is to not to reduce the position size when faced with a drawdown. Because when things swing the other way, then I will not be able to take full advantage of it with a reduced position size. I do this because I am pretty confident of this system. (I am not suggesting that you should also not reduce position size). Finally, your mental make-up will decide what kind of system and MM suits you.
about MM for this system (assuming that you are not able to keep out of whipsaws), plan for a few months of drawdown. That will automatically limit your position size.
The other thing that I do is to not to reduce the position size when faced with a drawdown. Because when things swing the other way, then I will not be able to take full advantage of it with a reduced position size. I do this because I am pretty confident of this system. (I am not suggesting that you should also not reduce position size). Finally, your mental make-up will decide what kind of system and MM suits you.
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