nac Calling JOBBERS/SCALPERS

[tnsn2345]

@tnsn2345

You are making assumption that everyone simply waits for stoploss to be hit. As in my previous post I have clarified and as Anurag has also mentioned that choice of exiting the trade before stoploss is hit is always open and often exercised. Also stoploss is used to prevent runaway losses especially during sharp move in opposite direction of trade.

Dear Sanjay,

The definition of SL is clearly your unrealised expected loss in case the trade is wrong. This forms the basis of quantity or exposure you may want to take on a trade. The definition of wrong trade is not necessarily move in the wrong direction but the outcome is not as per EXPECTION.

The second point of large runaway losses in the opposite direction can be termed as something happening exactly opposite to your thinking and the outcome is UNEXPECTED.

If one is using a same SL for both of the above objectives than he may end up taking many low or equal probable trades than higher probable trades. Effectively the success rate of trades may be compromised. See only MM and discipline alone cannot create substantial wealth for a trader. Higher success rate of trades is also a prerequiste to become a successful trader.

Now coming to your analogy of bicycle. Everyone has his own prespective and sees the world accordingly. In my view the smaller wheels are like extra caution, e.g. like someone uses 1 indicator to trade with 40% chance also when he has 2 indicators giving same signal his chances get to say 55%. So he trades only when both indicators give same signal. So he obviously misses some oppurtunity as well. So in my view inherent precautions in ones system are the two smaller wheels.
Now what is stoploss then?
Stoploss is the brakes. It is used to prevent falling in pothole. Now whether you drive 2 or 4 wheeler brakes are paramount. Also its importance increases with increase in stakes. Like one can drive bicycle withot brakes but what about driving a car without brakes!

The small wheels are post facto hence they will not come into play till the rider decides to ride the the bicycle and sits on it and starts paddling. The brakes are reduction in you position as there is uncertainty whether you will reach the destination by the stipulated time. Paddling is adds to the position. Putting foot down due to sudden hinderence is actual exit from your position at that point of time (either in loss or profit whatever it is), slowing down as you reach the destination, stepping down your positions (likely in profit) culminating into final touch down at destination, exiting fully.

Regards,

 

[ranger123]

Sir, I still not able to understand how not putting stop loss will make me take right trading decision. I can take right trading decision and then put a stop loss also.
I using stoploss only to exit my positions all the times. I do not leverage now and I do well now for last 1 year so I get confuse with your thinking. Please help me. Please explain for the benifit of all of us.

Thank you.

 

[nac]

Sir, I still not able to understand how not putting stop loss will make me take right trading decision. I can take right trading decision and then put a stop loss also.
I using stoploss only to exit my positions all the times. I do not leverage now and I do well now for last 1 year so I get confuse with your thinking. Please help me. Please explain for the benifit of all of us.

He ain't saying its wrong using stop loss order. He just asking "WHY" after you have learned to trade. Don't get confused with this. If you think you can do good and even better by using stop loss order, go ahead and use it. There is nothing wrong in it.

You were saying this "Only my nature has been that do what suites me and reject every things else". Now leave things which don't suits you. It's as simple as that...

I started to trade without watching chart or open book. I just see prints or LTP and I traded. After few months I started to use open book, now I started to look at open book not prints. I started to watch like this and continued for more than a year. After I was not provided open book, then I found hard to trade by seeing prints. It's all because what we are used to. I have been used to watch open book for a long period and couldn't adjust right away without open book.

And I don't think I can trade without watching charts even though I am not much into TA. But I was trading without watching it.

You are used with placing stop loss, and feel that you couldn't trade with out using it. So don't get confused. Think about it, try it and decide.

 

[alroyraj]

Sir, I still not able to understand how not putting stop loss will make me take right trading decision. I can take right trading decision and then put a stop loss also.
I using stoploss only to exit my positions all the times. I do not leverage now and I do well now for last 1 year so I get confuse with your thinking. Please help me. Please explain for the benifit of all of us.

Thank you.

What tn is emphasizing is that once we start to identify high probable trades ,we would not need to depend heavily on the stop loss. Also he means that by using Risk Return ,we may choose trades that are of low probability. But more importantly we have to choose higher probability trades of even low RR . This way we end the month positive rather than have small losses every day only to take stock at the end of the month and start worrying.

 

[ranger123]

He ain't saying its wrong using stop loss order. He just asking "WHY" after you have learned to trade. Don't get confused with this. If you think you can do good and even better by using stop loss order, go ahead and use it. There is nothing wrong in it.

You were saying this "Only my nature has been that do what suites me and reject every things else". Now leave things which don't suits you. It's as simple as that...

I started to trade without watching chart or open book. I just see prints or LTP and I traded. After few months I started to use open book, now I started to look at open book not prints. I started to watch like this and continued for more than a year. After I was not provided open book, then I found hard to trade by seeing prints. It's all because what we are used to. I have been used to watch open book for a long period and couldn't adjust right away without open book.

And I don't think I can trade without watching charts even though I am not much into TA. But I was trading without watching it.

You are used with placing stop loss, and feel that you couldn't trade with out using it. So don't get confused. Think about it, try it and decide.

I understand what you say but I not understand that how TNSN sir able to make good trading decision just by not using a stoploss.

Also please tell me what is 'open book' and 'print' you were telling in the before post.

Thank you

 

[nac]

I understand what you say but I not understand that how TNSN sir able to make good trading decision just by not using a stoploss.

Also please tell me what is 'open book' and 'print' you were telling in the before post.

Thank you

Open book - Kinda market depth, which shows the depth of the market.
Print - Kinda tick list, shows price and quantity traded.

 

[ranger123]

What tn is emphasizing is that once we start to identify high probable trades ,we would not need to depend heavily on the stop loss. Also he means that by using Risk Return ,we may choose trades that are of low probability. But more importantly we have to choose higher probability trades of even low RR . This way we end the month positive rather than have small losses every day only to take stock at the end of the month and start worrying.

Thank you Aloyraj and tnsn sir for your great thinking. I now understand what you fellows think about good trading decision making. So the thing here is that if we start with a good trading decision we not has to depend on things like stop loss and if i learn that the trade is wrong i will come out quickly.

Thank you sir for new thinking given to me. I will take time to use it as it is opposite to my trading method.

Thank you and best luck

 

[iamaaditya]

Dear Aaditya, Anurag, Sanjay,

My conclusions:

- Putting SL on trades directs you to undertake any probability trade as primarily there is a soothing feeling that you will be stopped soon and not bear large loss. (Forgetting that the whole idea here is to make money and not exit at 'small' loss)

- Lot of such 'small' loss (due to poor selection of trades) result into a sizeable loss, which may get covered in some good trades, but we have lost time and other great opportunities in between. End of the month where are we? At the same place, or just somewhere near.

- And this make a lot of difference between a super trader (who wins many, loses some), a regular net profitable trader (who wins some, loses some) or a net loser trader (who wins some, loses many)

Regards,

Thanks Tnsn2345, that was a great piece of writing and a great Learning for all of us.

What about profit booking ? I would love to know your, sanjay's, alroyraj's and anurag's Profit Booking Strategy.
I believe this is where experience makes it different, as its more ART than LOGIC (or SYSTEM). Infact Even Saint uses more discretionary while booking profit. May be after day's day's of Retrospection on Trades, we finally get the "Sweet Spot".

Mine's strategy is to book some on first sign of weakness (as i find many a times this is a critical pivot), then some on failure of pullback/rally and then I delibrately leave some part till the END or Breakeven just to ride the trend to maximum.
Especailly most of my trades are NOT SAR, it becomes even more discretionary.

 

[anuragmunjal]

Anurag, with your definition, which most of the traders would do there is an element (howsoever small) of unconviction when you enter a trade. No one likes to see his position going down immediately one enters the trade. But is happens many (or most) of the time, especially to traders who put the SL (as per your definition) as the decision to trade is taken on the basis of R:R rather than probabilitiy of the trade. I would always take a large position even if the reward were very small than the risk (maximum draw down till the end of first review period) if the probability is very very high.

hi Tnsn

yes I do carry the element of unconviction every time I enter a trade because,as I said earlier, I beleive that price movement is random." i believe that my position is wrong untill proven right". there are a lot of examples in the real trading world which show that u can have a very small percentage of winning trades and still be very profitable. a case in point would be Richard Dennis. I think even Aaditya mentioned that his winning trades are not more than 35% of his total trades but still on balance he is profitable.
To me having a large percentage of my trades to be winners is not important.(when I am not jobbing), but what is important is how do I extract the maximum juice out of my profitable trades, even though they may be few as compared to my loosing trades. hence I am always comfortable working with a SL, whether it be in the mkt. or it be mental.

regards

Anurag

 

[anuragmunjal]

Thanks Tnsn2345, that was a great piece of writing and a great Learning for all of us.

What about profit booking ? I would love to know your, sanjay's, alroyraj's and anurag's Profit Booking Strategy.
I believe this is where experience makes it different, as its more ART than LOGIC (or SYSTEM). Infact Even Saint uses more discretionary while booking profit. May be after day's day's of Retrospection on Trades, we finally get the "Sweet Spot".

Mine's strategy is to book some on first sign of weakness (as i find many a times this is a critical pivot), then some on failure of pullback/rally and then I delibrately leave some part till the END or Breakeven just to ride the trend to maximum.
Especailly most of my trades are NOT SAR, it becomes even more discretionary.

hi Aaditya

I do not book a profit on signs of weakness once the position has moved substantially in my favour, on the other hand I add to my position on such an occurance. of course I have a price in mind where I would get out of the total position if proven wrong.

regards

Anurag