Learn How To Fish
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Excellent post by XRAY bro ...these points are missing most of traders which stopping them to grow even with their positive methods.....
My little knowledge on compounding :
Compounding is more lucrative term for traders particularly intra day,there are many misconceptions on compounding,back testing,one of member who started a trade dairy could not answer basic question of mechanical system,back testing terms and started compounding which reached dead end
i’m bring my little knowledge on this ,please go through with of peace of mind
Few points on compounding on intra day through index fut:
Points you need keep in mind:
1. You need a winning mechanical system ..what is that ?? a system with edge that is a system with expectancy ratio with higher R:R ,this first criteria ,with less no of trades with luck factor at low point ,which is objective not subjective ,which I have explained long back in this thread
2.Trades should not cross more then 2 per day on average it should be around 1 per day if you take into account NTD
3.Whole capital calculation is based on DD in point terms…say your Nifty system Max DD is 300 points so capital calculation 2 to 3 times the margin..per lot ,so risk of ruin probability is negated
Ex:300 *75=22500+broker Margin
For scaling I’m going with FRMM ,as per RYAN JONES ,this is not only MM ,each person can constuct his own money management
4. we have to add qty when our profit cross DD points ,above example 300 points..similarly we have to reduce when DD has hit in point terms
i had received many PM from newbies ,some old members , could not answered every PM so bring this faq
FAQ
My little knowledge on compounding :
Compounding is more lucrative term for traders particularly intra day,there are many misconceptions on compounding,back testing,one of member who started a trade dairy could not answer basic question of mechanical system,back testing terms and started compounding which reached dead end
i’m bring my little knowledge on this ,please go through with of peace of mind
Few points on compounding on intra day through index fut:
Points you need keep in mind:
1. You need a winning mechanical system ..what is that ?? a system with edge that is a system with expectancy ratio with higher R:R ,this first criteria ,with less no of trades with luck factor at low point ,which is objective not subjective ,which I have explained long back in this thread
2.Trades should not cross more then 2 per day on average it should be around 1 per day if you take into account NTD
3.Whole capital calculation is based on DD in point terms…say your Nifty system Max DD is 300 points so capital calculation 2 to 3 times the margin..per lot ,so risk of ruin probability is negated
Ex:300 *75=22500+broker Margin
For scaling I’m going with FRMM ,as per RYAN JONES ,this is not only MM ,each person can constuct his own money management
4. we have to add qty when our profit cross DD points ,above example 300 points..similarly we have to reduce when DD has hit in point terms
i had received many PM from newbies ,some old members , could not answered every PM so bring this faq
FAQ
- 1. Can scaling be done to stock fut ..no its not possible as mechanical system for stocks or stock fut.will not work in that way
- 2. Any mechanical system can be used for scaling : No we need to know the DD and its should give less no of trades as I pointed above
- 3. Why cannot we trade more per day : More trades per day squeezes energy ,almost its a broker rich program ,ultimately account will blown
- 4. Can we move to 100 lots or 200 lots: yes possible
- 5. Why a system with all MM and risk management /compounding is not sold or shared : if all is there who will sell a money machine to make others rich,jokes a part risk of slippage with mass usage brings ultimately effects ISL and TSL
- 6. Why cannot this same principles be used for investment compounding: Risk of Black swan for open position is far big.
- 7. Watching a trade log of a pro help in cracking his system ?? : Unless you know the exact rules you cannot making any thing.only eye sockets will come out
- 8.How to making a mechanical system: You need to know back testing in proper way ( its not just adjusting EMA or CHANGING INDICATOR ), for this you need to read books which I have quoted in the thread
- 9.Can we manage both intra and investment and swing with scaling: For this you need to be trader and trading for living is main step, if you are part time,just stay back go on with investments ,handling needs live market presence
- 10.Investment can be done with mechanical system : yes can be done with mechanical system ,which is popularly known as quanta fundamental way
- 11. Discretionary system cannot be used for compounding,many terms of back testing cannot be obtained it will turn in subjective.
Dear leraners,
Thanks for the participation ...Am happy as its clear that no one seriously intrested in this method...even when I took pain to in live market ...EOD marking are very easy to any one ...I just rememberd those days with saint & others we are waited sleepless nights for understand method correctly ...that time all members are genuine and passion in trading and learning ....What are those days ...many Tj ians not forget those days ...
Thanks for the participation ...Am happy as its clear that no one seriously intrested in this method...even when I took pain to in live market ...EOD marking are very easy to any one ...I just rememberd those days with saint & others we are waited sleepless nights for understand method correctly ...that time all members are genuine and passion in trading and learning ....What are those days ...many Tj ians not forget those days ...
Madan's tweets about trading current market .....
Many traders made money by random trading (without any plan) in the past 2-3 weeks and it is very easy to think it is because of our ability to know the direction of mkt.
Sooner or later, we would realize that the market movements(volatility) were so huge intraday that we were lucky to be in-the-money by 50/100 points in minutes. Even if we have a plan, there is this psychological battle that is going on.. Let me try to elucidate this..
When we put on a trade, there is a psychological battle that usually kicks in. It’s that classic scene of a devil on one shoulder and an angel on the other
One tells us to hang in there with all our might...
that things are going to go our way eventually, no matter what the evidence suggests. The other screams in our ear to preserve our capital, to get out, to take a tiny profit or a tiny loss. Just get out
It’s a powerful sensation especially for the beginning trader.
This is why a clear trading plan (mechanical entry/exit rules) is extremely critical. A trading plan in which we can place our faith is like a pair of mufflers, blocking out the sound of that noisy chorus. It is like trying to compose music in a crowded veggie mkt.
Trading without a game plan is like swimming in the Amazon River with a couple of raw steaks strapped to our waist
We might get some good exercise,but the longer we are in the water,the greater our chance of a violent end
Use this lockdown to create a trading plan !!
Many traders made money by random trading (without any plan) in the past 2-3 weeks and it is very easy to think it is because of our ability to know the direction of mkt.
Sooner or later, we would realize that the market movements(volatility) were so huge intraday that we were lucky to be in-the-money by 50/100 points in minutes. Even if we have a plan, there is this psychological battle that is going on.. Let me try to elucidate this..
When we put on a trade, there is a psychological battle that usually kicks in. It’s that classic scene of a devil on one shoulder and an angel on the other
One tells us to hang in there with all our might...
that things are going to go our way eventually, no matter what the evidence suggests. The other screams in our ear to preserve our capital, to get out, to take a tiny profit or a tiny loss. Just get out
It’s a powerful sensation especially for the beginning trader.
This is why a clear trading plan (mechanical entry/exit rules) is extremely critical. A trading plan in which we can place our faith is like a pair of mufflers, blocking out the sound of that noisy chorus. It is like trying to compose music in a crowded veggie mkt.
Trading without a game plan is like swimming in the Amazon River with a couple of raw steaks strapped to our waist
We might get some good exercise,but the longer we are in the water,the greater our chance of a violent end
Use this lockdown to create a trading plan !!
Some hints on make rule for Trade management
1.When entry setup ready just observe current market structure to get some clue
2.When entry triggers be aware of which setup is and where we entered ...eg...is it mp's ,vp's or counter trend trades....
3.Keenly look where and how entry bar closing....and plan the moving TSL as per that
4.When trade moving with trend observe how its moving and try to get is it steady or exhaustion move..to plan tsl
5.If trade is counter trend trade try to direct exit in key areas or any reversal seen....
1.When entry setup ready just observe current market structure to get some clue
2.When entry triggers be aware of which setup is and where we entered ...eg...is it mp's ,vp's or counter trend trades....
3.Keenly look where and how entry bar closing....and plan the moving TSL as per that
4.When trade moving with trend observe how its moving and try to get is it steady or exhaustion move..to plan tsl
5.If trade is counter trend trade try to direct exit in key areas or any reversal seen....
Calculate Draw downs.....
Easiest way is...
Calculate total loss amount of test/trade period * Number of continue loss trades
Another one is ...
Look cumulative profit & loss ....look High and low P/L ...calculate high &low difference
Always be ready for loss of historical highest draw down amount multiple with 2 OR 3...
Looking DD with cumulative profit chart
Easiest way is...
Calculate total loss amount of test/trade period * Number of continue loss trades
Another one is ...
Look cumulative profit & loss ....look High and low P/L ...calculate high &low difference
Always be ready for loss of historical highest draw down amount multiple with 2 OR 3...
Looking DD with cumulative profit chart
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Another great post from XRAY bro ,,,,
Psychological drill which i have adopted:
Psychological drill is nothing but routine which a successful trader should follow for flaw less execution of his plan ,to keep attached to system and for get riding system hopping thought process .it is not much useful for newbie and struggling traders as they need to learn lot on system, risk management and position sizing still in learning phase to develop a system.
i'm not a coder, nor interested in algo so followed below routine points,which have worked for me,it is not universal proof ,just pinning general points to keep it simple.
1. Study your system rules daily before market start,never ever violate this routine to bring focus and calmness in mind.
2. To keep phase always start small ,stop watching MTM screens ,this helps in get riding of result oriented mind set ,thought process should be to the follow the plan rather then dreaming results, practice this for at least one quarter ,later move to original qty, after you notice flawless execution, i have done this for 6 month, to 1 year..basing on intra /swing /positional
3. Never watch trade log of other traders ,which are available in social media,just to keep in mind that its a fallacy , every system is different and results will be different ,what matters is your system and position sizing,execution
4. Matrix of system is reality it is part and parcel, you cannot runaway from it ,don’t try for magical movement.
5. Get out of social media particularly of traders account /forum for a month , if needed for more months to adopt flaw less execution and follow through, later come back to test your thought process.if you notice you are still running after any new system or change of ideas after watching trade log/,posts. repeat above process once again 1 to 4. after all we need soldier mind set for success
Psychological drill which i have adopted:
Psychological drill is nothing but routine which a successful trader should follow for flaw less execution of his plan ,to keep attached to system and for get riding system hopping thought process .it is not much useful for newbie and struggling traders as they need to learn lot on system, risk management and position sizing still in learning phase to develop a system.
i'm not a coder, nor interested in algo so followed below routine points,which have worked for me,it is not universal proof ,just pinning general points to keep it simple.
1. Study your system rules daily before market start,never ever violate this routine to bring focus and calmness in mind.
2. To keep phase always start small ,stop watching MTM screens ,this helps in get riding of result oriented mind set ,thought process should be to the follow the plan rather then dreaming results, practice this for at least one quarter ,later move to original qty, after you notice flawless execution, i have done this for 6 month, to 1 year..basing on intra /swing /positional
3. Never watch trade log of other traders ,which are available in social media,just to keep in mind that its a fallacy , every system is different and results will be different ,what matters is your system and position sizing,execution
4. Matrix of system is reality it is part and parcel, you cannot runaway from it ,don’t try for magical movement.
5. Get out of social media particularly of traders account /forum for a month , if needed for more months to adopt flaw less execution and follow through, later come back to test your thought process.if you notice you are still running after any new system or change of ideas after watching trade log/,posts. repeat above process once again 1 to 4. after all we need soldier mind set for success
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