Day Trading Futures
- Thread starter manishchan
- Start date
- Tags day trading strategy tsf
- Status
Following Mr. ST's foot steps on posting PM exchanges that might be of use to the larger community :thumb:
Here is a PM exchange happened today .. hope it helps somebody..
*********************
Question from the member:
*********************
Hi Madan,
Very good morning.
Thought of sharing with you few thoughts that I have.
This year I am in third year of active trading. First 2 years were no doubt at loss which was manageable as I have a full time job which now I realize is a great STRENGTH for me. Now since April 14, I am in strange situation.
Last four months were extremely volatile. Had seen great win days such as election day etc and had great profits and similarly great losses as well. With too many trades put in the overhead bill (STT+Brock+other charges) was close to Rs.xxxx/- and net result after these four months that I am BREAK-EVEN Back to square-1.
So now I am surprised that how did that happen and then I realized I need to reduce number of trades as overheads kill our account and also totally stop using Market order as they too kill our profits by 1-2 points in every trade.
These are great lessons I have learnt and happy that this year will taste some GREEN account. For last 2 years I have filed ITR-4 as I too was expecting this learning curve to be costly and will need 3-4 years to be consistently profitable.
This is my journey so far.
Happy that I am out of Phase-3 trader as explained by Carter. Done with my strategy and back testing. But still I face one big problem. Whenever I get a signal, I am not able to act on it.
I thought of few reasons that may be I am not serious in trading, get distracted by other thoughts, afraid of losses, overly focusing on P/L statements etc...
Now need to work on this aspect. How to be committed to my own strategy? Any thoughts on that and any other subject will be highly helpful.
Please answer whenever you have time.
******************
Reply to this question
******************
XXXXX,
Just saw your message in my inbox. I rarely login to traderji - maybe once a fortnight. I don't trade on expiry day and am flat right now. So, would try to answer your question.
I am gonna put forth some thoughts..bear with me here and am not saying for a moment that you are a victim of all these things. Choose which one is right .. am just throwing off all possible hooks across.
Well, not being able to pull the trigger and get out of a trade is a clear signal of problems either with the trader or the trading system.
Trading system related
----------------------
1. Lack of confidence in the system can enable the trader to not pull the trigger. As you are trading actively for the last 2 yrs, i am assuming that you have a tested system. I am also assuming that it has clearly defined rules.
2. Sometimes, the prospective trade might not fit our rules but we would still want to push the trade in. So, if this is the case, why can't you pass a trade? It anyways does not fit into your rules. So, whats the big deal? There will always be a next trade..no point pushing it. A trading journal with extensive parameters would help identify this problem. If we are not aware of the problem, there is no way to overcome it.
3. The inability to enter into a trade also demonstrates a lack of discipline in sticking to the trading system. Either it’s a “go” for the trade or its not. If a trader’s system has too many poorly defined areas, it should be changed. In my opinion, trading should be mechanical. Either the squares are filled-in or its no trade. Simple. But ego wants to shine and show that it is special and better than some
mechanical system. This is a big problem. One can slowly use discretion after substantial amount of screen hours(say 10 yrs in trading).
3. Trading system must be simple so that the trader should not have to jump walls to pull the trigger. Make sure it is simple as much as possible.
Trader related
--------------
I guess most of the pointers(albeit important) would fall under this category
1. Our minds automatically avoid pain for pleasure. This is how our brain is programmed. Specifically, traders who have the trouble of pulling the trigger associate a trade with a potential loss that can cause financial or emotional pain. A natural response to pain is to avoid the situation that causes it(read as losing trades). The fact is, to some, losing motivates and triggers a reaction to fight back and conquer. But for most, it is just plain easier to deny responsibility and avoid the situation and the risk of pain. To most of us frail human beings, mental and psychological pain is worse than physical pain.
2. Lets say that your system is setting up a trade. As the trade nears the planned entry point, the trader feels the pull of the subconscious emotional fears of being wrong and losing money.
The usual decision is to follow the anecdotal wisdom: “If it doesn’t feel right, don’t do it” and the trader holds off on the entry. Some call this as Intuition(thats a diff topic altogether). No problem. Live to fight another day, right? But when the trade takes-off and becomes a stellar winner, the trader is left standing at the station as the train pulls out. It’s not as painful as actually losing money, but this being left at the station syndrome may force the trader to plunge into the next trade with reckless abandon and get hammered, which multiplies the frustration of missing the opportunity on the first trade. This cycle never ends unless the trader realises it.
3. So, understanding the dynamics of trading is really important. No matter how good a system is, there will always be losing trades. If a trader doesn’t have
a good grasp of the nature of trading and the psychology needed to sustain oneself through the tough times-which will happen for sure -trading can
be a surprising and often disappointing experience. Again, a trading journal would help here.
4. Many traders trade the money they can’t afford to lose. This puts even more pressure on being right (not being wrong) and that is why trading 'scared' money is more scary than any other emotional beast involved in trading
5. Perfectionist mentality - If a trader has a perfectionist mentality when trading, he is really setting himself up for failure, because it is a given that he will experience losses along the way in trading. Again, he has to think of trading as a probability game. He can't be a perfectionist and expect to be a great trader. The objective should be excellence in trading, not perfection.
Possible solutions
-----------------
1. Visualize pulling triggers - pyschocybernetics book is a good starter
2. Trading journal entries can reveal lot more than P/L to a trader(make sure you track your pysche in this journal)
3. Consider trading smaller positions to get the fear of losing out of your system and get yourself focused on execution.
4. Make sure your system is robust and simple.
5. Practice does not make perfect. Only perfect practice makes perfect.
6. I highly recommend a trading mentor to overcome obstacles effectively. Having an experienced and insightful mentor to help teach, guide and debrief trading activity can be very effective. If he/she is local to you, that would be awesome.
Last but not least, one of the intangible benefits of learning to become a successful trader is the fact that you usually become a much more honest and introspective person. You learn to honestly appraise your performance and probe your weaknesses. You learn to stay humble, focused and accepting of things you can’t control. All of these things do more than make just successful traders - they can make for success in life.
Happy trading, my friend.
Hope it helps a bit,
Madan
Here is a PM exchange happened today .. hope it helps somebody..
*********************
Question from the member:
*********************
Hi Madan,
Very good morning.
Thought of sharing with you few thoughts that I have.
This year I am in third year of active trading. First 2 years were no doubt at loss which was manageable as I have a full time job which now I realize is a great STRENGTH for me. Now since April 14, I am in strange situation.
Last four months were extremely volatile. Had seen great win days such as election day etc and had great profits and similarly great losses as well. With too many trades put in the overhead bill (STT+Brock+other charges) was close to Rs.xxxx/- and net result after these four months that I am BREAK-EVEN Back to square-1.
So now I am surprised that how did that happen and then I realized I need to reduce number of trades as overheads kill our account and also totally stop using Market order as they too kill our profits by 1-2 points in every trade.
These are great lessons I have learnt and happy that this year will taste some GREEN account. For last 2 years I have filed ITR-4 as I too was expecting this learning curve to be costly and will need 3-4 years to be consistently profitable.
This is my journey so far.
Happy that I am out of Phase-3 trader as explained by Carter. Done with my strategy and back testing. But still I face one big problem. Whenever I get a signal, I am not able to act on it.
I thought of few reasons that may be I am not serious in trading, get distracted by other thoughts, afraid of losses, overly focusing on P/L statements etc...
Now need to work on this aspect. How to be committed to my own strategy? Any thoughts on that and any other subject will be highly helpful.
Please answer whenever you have time.
******************
Reply to this question
******************
XXXXX,
Just saw your message in my inbox. I rarely login to traderji - maybe once a fortnight. I don't trade on expiry day and am flat right now. So, would try to answer your question.
I am gonna put forth some thoughts..bear with me here and am not saying for a moment that you are a victim of all these things. Choose which one is right .. am just throwing off all possible hooks across.
Well, not being able to pull the trigger and get out of a trade is a clear signal of problems either with the trader or the trading system.
Trading system related
----------------------
1. Lack of confidence in the system can enable the trader to not pull the trigger. As you are trading actively for the last 2 yrs, i am assuming that you have a tested system. I am also assuming that it has clearly defined rules.
2. Sometimes, the prospective trade might not fit our rules but we would still want to push the trade in. So, if this is the case, why can't you pass a trade? It anyways does not fit into your rules. So, whats the big deal? There will always be a next trade..no point pushing it. A trading journal with extensive parameters would help identify this problem. If we are not aware of the problem, there is no way to overcome it.
3. The inability to enter into a trade also demonstrates a lack of discipline in sticking to the trading system. Either it’s a “go” for the trade or its not. If a trader’s system has too many poorly defined areas, it should be changed. In my opinion, trading should be mechanical. Either the squares are filled-in or its no trade. Simple. But ego wants to shine and show that it is special and better than some
mechanical system. This is a big problem. One can slowly use discretion after substantial amount of screen hours(say 10 yrs in trading).
3. Trading system must be simple so that the trader should not have to jump walls to pull the trigger. Make sure it is simple as much as possible.
Trader related
--------------
I guess most of the pointers(albeit important) would fall under this category
1. Our minds automatically avoid pain for pleasure. This is how our brain is programmed. Specifically, traders who have the trouble of pulling the trigger associate a trade with a potential loss that can cause financial or emotional pain. A natural response to pain is to avoid the situation that causes it(read as losing trades). The fact is, to some, losing motivates and triggers a reaction to fight back and conquer. But for most, it is just plain easier to deny responsibility and avoid the situation and the risk of pain. To most of us frail human beings, mental and psychological pain is worse than physical pain.
2. Lets say that your system is setting up a trade. As the trade nears the planned entry point, the trader feels the pull of the subconscious emotional fears of being wrong and losing money.
The usual decision is to follow the anecdotal wisdom: “If it doesn’t feel right, don’t do it” and the trader holds off on the entry. Some call this as Intuition(thats a diff topic altogether). No problem. Live to fight another day, right? But when the trade takes-off and becomes a stellar winner, the trader is left standing at the station as the train pulls out. It’s not as painful as actually losing money, but this being left at the station syndrome may force the trader to plunge into the next trade with reckless abandon and get hammered, which multiplies the frustration of missing the opportunity on the first trade. This cycle never ends unless the trader realises it.
3. So, understanding the dynamics of trading is really important. No matter how good a system is, there will always be losing trades. If a trader doesn’t have
a good grasp of the nature of trading and the psychology needed to sustain oneself through the tough times-which will happen for sure -trading can
be a surprising and often disappointing experience. Again, a trading journal would help here.
4. Many traders trade the money they can’t afford to lose. This puts even more pressure on being right (not being wrong) and that is why trading 'scared' money is more scary than any other emotional beast involved in trading
5. Perfectionist mentality - If a trader has a perfectionist mentality when trading, he is really setting himself up for failure, because it is a given that he will experience losses along the way in trading. Again, he has to think of trading as a probability game. He can't be a perfectionist and expect to be a great trader. The objective should be excellence in trading, not perfection.
Possible solutions
-----------------
1. Visualize pulling triggers - pyschocybernetics book is a good starter
2. Trading journal entries can reveal lot more than P/L to a trader(make sure you track your pysche in this journal)
3. Consider trading smaller positions to get the fear of losing out of your system and get yourself focused on execution.
4. Make sure your system is robust and simple.
5. Practice does not make perfect. Only perfect practice makes perfect.
6. I highly recommend a trading mentor to overcome obstacles effectively. Having an experienced and insightful mentor to help teach, guide and debrief trading activity can be very effective. If he/she is local to you, that would be awesome.
Last but not least, one of the intangible benefits of learning to become a successful trader is the fact that you usually become a much more honest and introspective person. You learn to honestly appraise your performance and probe your weaknesses. You learn to stay humble, focused and accepting of things you can’t control. All of these things do more than make just successful traders - they can make for success in life.
Happy trading, my friend.
Hope it helps a bit,
Madan
If it is ATR(14) or something in today's range, then I won't put much faith in it for the coming days. Being the expiry days, the technicals are very unreliable.
Me, I will wait till 2 O'clock and then cancel my order for 7950CE @6.25, if not executed. If it does dip later then the damage may be more severe than expected
Me, I will wait till 2 O'clock and then cancel my order for 7950CE @6.25, if not executed. If it does dip later then the damage may be more severe than expected
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