How to trade with an oscillator

[Smart_trade]

ST,

When I trade with small quantity I am comfortable.
When I try to trade with little more than usual quantity I tend to make mistakes.
Plz answer at your free time.

krish,

The trade quantity should depend on your trading capital and the distance of your stoploss point from your entry point. To give you an example say your trading capital is Rs 2.00 Lacs and your stoploss point is 30 points away and if you are risking 1% of your capital on each trade you can trade 60 Nifty or 3 Lots mininifty. Dont increase your quantity unless your trading capital increases. One is not comfortable when the qty increases without increase in trading capital. Also have a very clearly defined stops which will reduce the fear of taking positions.

In day trades take only 1% risk on each trade till you become comfortable riding your winners and cutting your loosers. Never risk more than 2 % on any trade no matter how strongly you feel about a trade.

Smart_trade

 

[Smart_trade]

hi,
i m enclosing a chart of banknifty 1 hr tf. rsi and stochastics are showing opposite divergences. how to trade?
ps:-daily tf- banknifty is in ob zone for last 8 days on stoch. whereas rsi 14 is in ob for 1 day and showing negative divergence although candles involved are 3 only.
regards,
girish

In a strong trend the trend will not reverse on one divergence.....it may take 2 or even 3 divergences for the trend to mature and reverse. So trade from the long side as of now.....

Smart_trade

 

[Agardas]

krish,

The trade quantity should depend on your trading capital and the distance of your stoploss point from your entry point. To give you an example say your trading capital is Rs 2.00 Lacs and your stoploss point is 30 points away and if you are risking 1% of your capital on each trade you can trade 60 Nifty or 3 Lots mininifty. Dont increase your quantity unless your trading capital increases. One is not comfortable when the qty increases without increase in trading capital. Also have a very clearly defined stops which will reduce the fear of taking positions.

In day trades take only 1% risk on each trade till you become comfortable riding your winners and cutting your loosers. Never risk more than 2 % on any trade no matter how strongly you feel about a trade.

Smart_trade

Sir,

Considering abv same criteria..Does it mean, if stoploss is 10 points away then one can increase trading lots?

 

[Smart_trade]

Sir,

Considering abv same criteria..Does it mean, if stoploss is 10 points away then one can increase trading lots?

Yes , very true. Our risk on any trade should be fixed. So if the logical chart based stoploss is 10 points away, you can do 3 times the quantity. And if the stops are further away than 30 points trade that much less quantity.

What we are really doing is trading our money ...not the chart,not the share, future....etc. These are all trading vehicles. We trade our money. We risk 1 % of our capital and try to make 2-3 % ( or more ) from that trade if it goes in or favour. If it does not, we loose 1% . So we are really playing a game where the rewards are 3 times ( or more ) the risk.

If you identify trades where stops are small, one can trade large quantity without taking unduely large risk amountwise.

Smart_trade

 

[murthyavr]

What we are really doing is trading our money ...not the chart,not the share, future....etc.

Smart_trade

Very aptly put, ST. It made me realize few newer things. :clap:

Thank you.

 

[krish4166]

ST,
Can we intraday trade with one min TF , if we do not see any signals on 5 min TF of OSC OB and OS staying more than five candles.

 

[Smart_trade]

ST,
Can we intraday trade with one min TF , if we do not see any signals on 5 min TF of OSC OB and OS staying more than five candles.

Stay with the timeframe you are comfortable with.Dont switch the timeframes just because on your timeframe there is no signal for a few hours. If you can manage 1 min TF...great but trade with the help from pivots as 1 min TF will give you too frequent OB/OS signals.

Smart_trade

 

[krish4166]

ST,
Plz explain, market wentup from low nearly 100 points still there was no OSC OB more than 5 candles. On 5min nf TF

 

[krish4166]

ST,
Is it correct on 5 min NF TF. Plz explain.
http://imgur.com/DJRMy

 

[krish4166]

ST,
When stoploss triggers, can we reverse our position, plz explain
http://imgur.com/4g0Xa