Hi AIM,
I am so happy to see you starting into trading in right way. (I never got started like this with proper trade plan). You know number 1 reason for failure of traders is they dont have written trading plan. Well done and wishing you all the best.
With my personal experience of active trading from last 3 yrs, being in market for last 10yrs, and helping few other traders draw their trading plan, I cant resist to reply your questions. I wish someone has guided me when I started.
My answer is only my view and my belief about the market. People with different belief trade the market successfully. So there is no one single way or holy grail of trading. Hope my answers help you and other members on the forum.
Happy trading
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(Q1: How to confirm trend - How many continuous bars/candle-sticks of same behavior form a trend? What if two bars are Series of Higher Lows and Higher Highs then again one bar breaks the trend and again two bar of Series of Higher Lows and Higher Highs) - Having difficulties in clearly identifying Trend..!!!
- Decide your main Timeframe and identify trend on this timeframe. Practice on charts marking pivot levels, and follow HH/ LL seq. It will get easier with practice. Saints thread is great place to start with. Dont give up just by the size of that thread. Trading business is lot tougher then what it looks from outside. Trend following strategies have higher success rate and lower drawdown compared to counter trend and breakout strategies. And believe me, it is lot easier to get consistency in this method and get your trading to good start.
(Q2: Is it safe to do so practically?)
Nothing is 100% safe here. Every trade will have probability attached with it. Have confidence in your analysis and execute the trade based on your conviction. Place stoploss to protect your capital.
(Q3 : Indicators - Are these enough or do we need more to be sure? In simplest English how to interpret each of them and how useful they are from your experience please? )
I 1000% agree with uasish. Price is the only reality that is traded in the market. Understand price chart/ price patterns (pivot levels, candlestick, reversal, continuation etc) and you will be able to listen to the market and find the opportunity. Better to spend time in understanding price first rather then running behind 200+ other indicator. Use indicators to support your price reading. Eg. Pivot level break is occurring and Stoch has just come out of OSold zone, then you have better odd in your favour. Any strategy with more then 3 or 4 decision criteria is too complicated. Keep it simple. Trading is about making money, not about showing off how many indicators one uses. I use indicators to support my decision based on price pattern.
(Q4 & Q5 ): Software and RT feed - Which one gives QUALITY for money with least possible investment )
It is a capital investment decision in your trading buss. At starting level, I will be happy with the feed provided by the brokers platform. Once you start making money, then reinvest the profit in the buss and buy datafeed. Select your broker for services that are provided (lowest commission one may not be the providing the services that you want).
(Q6 : Is it right to first look at 60 mins then 15 mins and then 5 mins for Intraday? ) How to confirm to get into trade for Intraday?
Depends on your timeframe. There is no one correct answer for this. Decide your main timeframe first. In a trading day of 5.5hr = 330min you have 165 2min bars , 66 - 5min bars and 22 15min bars,. How long can you concentrate and what suits your personality. My experience says - Shorter the timeframe, more market noise and choppier the bars. Shorter the timeframe, lower the success rate (more Stoploss will be hit due to choppiness). At the same time, longer the timeframe, less number of opportunities, bigger the stoploss, higher success rate.
Try to address questions like what is the average size of bar in my timeframe, what will be average stoploss distance (as a thumb rule, it can be taken as double the size of the bar), can my account afford to have such a big stoploss, can I psychologically handle such a stoploss and will not loose sleep, is it ok if I dont see even a single opportunity on this timeframe in a day etc. etc.
So it is tradeoff. Decide on timeframe and stick to it. Otherwise getting consistency might be difficult. Due this lack of clarity, many of my trades became long term investment during dotcom crash or in many cases my entry on short term chart became holding on higher timeframe and finally stop loss at higher timeframe was hit.
If you want any more clarity on this then do read about trading multiple trimeframes. There is a video on this topic at FXSTREET dot COM site / webinar section..
(Q7 : What are best supportive indicators/osc for Intraday? )
1) Price, price, price.
2) Support and Resistence levels from longer timeframe, prev day and intraday (I know they are not indicator but they are respected more by the price then anything else)
3) Trendline, intraday as well interday
3) Daily floor Pivot Point, R1, R2, S1,S2.
4) Fibonacci retacement levels
5) If you still want indicators then for Trend either ADX or MACD, for timing RSI or Stoch
Q8: How to identify scrips to trade from 500+ scrips ?
In the beginning, best to daytrade on Nifty or Mini nifty. That will reduce your work on scanning whole market and following many charts. Just stick to one. There are enough opportunities in Nifty. Better to limit to one instrument and master it, rather then jumping everyday on new stock.
Trading is about making money Consistently. It doesnt matter if it comes from on instrument or many. So why to complicate it.
Q9: Do we use software to filter it first? Followed by manual analysis?
Refer to prev answer..
Q10: When do we do it? Before market opens? During market hours?
1) analyse long term charts and identiy Support and Resistence levels from longer timeframe, prev day and intraday
2) Trendline, intraday as well interday
3) Daily Pvt Point, R1, R2, S1,S2.
4) Based on analysis, anticipate what might come from market and draw your strategy to play it
Dont hold on to you analysis on point 4, if market does not behave as you anticipated. Adjust to current trend and follow your trading rules/plan.
4) Scan for any important announcement, other global markets, etc Safegaurd yourself from the
Make sure that you are well prepared with the analysis before the market. During the market, focus on execution,, and keep the analysis to just todays level.
During mkt hours
1) keep watch on higher timeframe trend.
2) Keep watch on price when it reaches longterm S&R levels
3) For current wave, anticipate what will be the retracement levels and wait for re-entry in the direction of main trend as soon as retracement is over and you get buy signal from small timeframe.
4) Go down to lower timeframe when your intermediate timeframe reaches key price levels and identify the trading opportunity as per the rule.
5) Keep check on yourself, if you are in synch with the market or not. You are not getting overconfident due to prev winning trades. Or you are mentally down because stoploss has been hit on prev few trades.
6) Take regular short breaks and get some fresh air. Once you listen to the market, it will tell you when there is no action in the market and price is just fluctuating in a narrow range with limited opportunity. I will better do something else and wait for move to develop.
7) Be familiar with the alert system of your trading platform and use it effectively to give you audio/pop-up alerts.
Q11: Do we look at sectors or index as whole?
For daytrading, it doesnt matter so much. More relevant for swing or long term trading
Q12 : Do we keep looking at news once entered in the trade?
Do you think batsman looks at the crowd and noise when bowler has just released the bowl? Once in the trade, you have put your money in the market. You should be putting in your SL and Target orders and monitor your trade.
IF you cant focus on the trade, then close the position and do whatever you like.
Have faith in the chart and its price levels. Believe in the market. Market will reflects news and events in the price. And if something is not reflected then price will adjust itself. You can see the effect of news getting developed in price. As a trader, we trade price and patterns. If market is going up and chart is telling you that, then why to investigate the reason if it is due to news or something else. That is time to grab the opportunity, not CNBC. I believe that News impacts the speed of price movement. In most of the cases, price will respond to support and resistance levels as they should. You can capture this momentum thru price bars which is much easier then trying to guess the impact of news with all fundamental factors around it.
Q13 : What channel to watch ? CNBC Awaaz?
Watch music channel (it works for me) or listen to radio if that helps in relaxing. Business channel should have no impact on your trading. Infact, they influence your trading decision ively by various stories. Watch these channels after market hours. (I have traded breaking news from channel and had many loosing trades. So now I prefer to songs atleast that doesnt impact my trading logic).
Q14 - Does it sound practical? Is it missing anything?
Yes. Couple of points.
A) You are missing something which is #1 requirement for any trader i.e. Discipline. You need to have certain points in trading plan to address Discipline. Even if trader has the most profitable trading strategy in his hand, but does not follow strict discipline to execute it, he cant have long term success in trading.
Address the points like
1) Routine before start of the day read the trading plan, chk pc and internet, be ready with yr acct number and telephone number of broker (as backup), check your mood, pray any god (if thats what you do before any important event), preparation of trading day by studying chart etc
2) Post Market routine log your trades, analysis the execution, rate yourself if you had followed your trading plan 100%.. / what mistakes you made on losing trades, How would you execute similar trade next time. Update your diary or Log, record all trades, take stock of trading account and your trading goals and see how are you performing against them. (Hope you have some daily, weekly goals that needs closer tracking).
b) Why are you trading? What do you want to achieve? Why do you think that you can be successful trader?
Answer to above questions might seem quite obvious but put some thoughts behind them and answer them in few bullet points and include it in your TPlan. You need to regularly keep telling your mind the reply of above questions so that it doesnt push you back when you few loosing trades/ days / months. Trading is a profession and professionals dont make big money in first 2 months/ 1 year after the college. They make big money when they have learnt the skills, got the experience of practicing that skills for long time that it becomes second nature to them. Take any profession Doctor, Businessman, Lawyer, Pilot, CA, Engineer, Politicians etc.
c) What are your trading goals? Obvious answer that most people will give here is to make x% on the account, make x lac rs in 2 yrs time. Be careful and respect it as a profession. Professional has to master the skills first before getting financial rewards. For trading core skills are Discipline, Money Management, Risk management, trader mindset, developing strategy with positive expectancy and backtesting it to prove the strategy before putting money on it etc. If you dont focus on it, then it will never be done and your trading career will be having holes in foundation.
d) What are your trading strategies? It should not have any ambiguity in setup or prerequisite, entry rule, exit rule(target and stoploss), money management rule and risk management rule. It should be so short, crisp and clear that any other person should also be able to execute it. If it is not, then it becomes difficult to implement and you will end up breaking these rules most of the time.
Backtest your trading strategy and make sure that it has positive expectancy.
Expectancy = (%winning trade*Average win amt) (%lossing trade * avrg losing amt)
Successful trading is about executing trades when odds are in favour. If a strategy (i.e set of rules) have not made money over a duration in the past then what is guarantee that it will make now.
One needs to have confidence in the strategy and thats where backtesting helps to large extent. I am sure, any batsman would practice reverse sweep shot on the nets first, before using it on 1-day match.
Successful traders, knowingly or unknowingly, address all of the above points. They have learnt it hard way from their mistakes over a period of time. If you want to reduce time required on the journey to successful trading, then address these points at the start.
Q15 - What is strongest indicator/technique to identify entry/exit?
Price Price and only price
Happy Trading..
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