Seeing the 15min Chart as is.
I have only begun to realize one concept, out of several others, that Mark Douglas said about traders not completely accepting risk (in a trade). Simply voluntarily punching in the order is not enough.
So, what would it mean to accept risk?
It would mean that you are totally fine with losing that money you put on the table. In fact, you wish for market to take it away, but only that much. You, in all your powers, do not wish to get out of this risk even if given the chance and would like to see the trade through.
At what stage of development as a trader, would one be ready to completely accept the risk?
When he is confident about the setup he is taking his trades by. Else, there will always be a lingering doubt. Market ticks are designed to magnify this doubt into fear. Ticks in themselves are powerless, but only when they get the seed of doubt, they will make it a tree of fear.
The pro-trader knows that with this setup the odds are in his favour. So he is more than happy to be in a trade as along as the setup holds.
Here is something surprising to new readers, when you completely accept the risk in a trade you are happy to lose that money and the level of happiness is almost same when you win. This is because, when you are attached to the detecting a setup, when that is your focus, you start to like the process of trading. You feel nice for having done the right thing.
And when you take trades in which you hadnt accepted the risk, and you lose, you feel terrible. And when you win, you are ecstatic as if somebody gave you a super-duper pleasant surprise... something which you never expected and you got.
It is said in Hindu shastras, that to have all the Gunas, good qualities, you needn't go about acquiring each of them. Instead, pursue only one particular Guna and the rest will follow: and that Guna is of "Satya": Be what you are outside as you are inside.
Similarly, I believe, if I learn to accept the risk in a trade, all the other qualities of a good trader will have no option but to assemble by themselves, I won't have to gather them.
Thanks to MD, for introducing this concept "Acceptance of Risk". With each passing day, I wish and pray to understand this concept better, as I know this is where my success lies.
So, what would it mean to accept risk?
It would mean that you are totally fine with losing that money you put on the table. In fact, you wish for market to take it away, but only that much. You, in all your powers, do not wish to get out of this risk even if given the chance and would like to see the trade through.
At what stage of development as a trader, would one be ready to completely accept the risk?
When he is confident about the setup he is taking his trades by. Else, there will always be a lingering doubt. Market ticks are designed to magnify this doubt into fear. Ticks in themselves are powerless, but only when they get the seed of doubt, they will make it a tree of fear.
The pro-trader knows that with this setup the odds are in his favour. So he is more than happy to be in a trade as along as the setup holds.
Here is something surprising to new readers, when you completely accept the risk in a trade you are happy to lose that money and the level of happiness is almost same when you win. This is because, when you are attached to the detecting a setup, when that is your focus, you start to like the process of trading. You feel nice for having done the right thing.
And when you take trades in which you hadnt accepted the risk, and you lose, you feel terrible. And when you win, you are ecstatic as if somebody gave you a super-duper pleasant surprise... something which you never expected and you got.
It is said in Hindu shastras, that to have all the Gunas, good qualities, you needn't go about acquiring each of them. Instead, pursue only one particular Guna and the rest will follow: and that Guna is of "Satya": Be what you are outside as you are inside.
Similarly, I believe, if I learn to accept the risk in a trade, all the other qualities of a good trader will have no option but to assemble by themselves, I won't have to gather them.
Thanks to MD, for introducing this concept "Acceptance of Risk". With each passing day, I wish and pray to understand this concept better, as I know this is where my success lies.
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Accepting Risk - 2
One would argue that if he is punching in an order, then isn't it a sign enough that he is accepting Risk?
No it isn't. One could place a trade and have a storm boiling inside of him.
If one has truly accepted risk, then he would happily give up "trying to control" the ticks. He would not be on high alert during market hours. Otherwise, one would be glued to the screen absorbing information from 1 Min Chart even if he is trading on 5 or 15 mins.
If one has truly accepted risk, then he would not "jump the gun" and take trades that only match the setup he has backtested. He knows that even the territory that he has charted has good number of failures, then why would he go into the uncharted.
One would argue that if he is punching in an order, then isn't it a sign enough that he is accepting Risk?
No it isn't. One could place a trade and have a storm boiling inside of him.
If one has truly accepted risk, then he would happily give up "trying to control" the ticks. He would not be on high alert during market hours. Otherwise, one would be glued to the screen absorbing information from 1 Min Chart even if he is trading on 5 or 15 mins.
If one has truly accepted risk, then he would not "jump the gun" and take trades that only match the setup he has backtested. He knows that even the territory that he has charted has good number of failures, then why would he go into the uncharted.
If one has truly accepted risk, then the mind would be filled with a feeling of calm and quite throughout the day. A sense composed concentration. When you stop trying to control what cannot be controlled, profitable trading will start.
In this state of mind, every mistake you make will teach you a lesson. As you build upon one lesson after another, and a little help from your friends on TJ, you will be a different trader in matter of months.
In this state of mind, every mistake you make will teach you a lesson. As you build upon one lesson after another, and a little help from your friends on TJ, you will be a different trader in matter of months.
Exit Policy for intraday trading:
----------------------------------------
Focus: To ensure that each day ends with 10 points profit, or at break-even at worst.
1) Profit target = 10 points.
2) In case of a loss, in the next trade add this loss to profit target.
3) After 2 p.m, if two trades are in loss. Then forget profit, set target to cover today's loss.
4) Even if after 2 p.m. there is no move, and day ends in loss, then carry forward this loss to next day.
5) Sometimes the move will be quick and will cover a good distance in short time. Giving u obvious and a clear reason to not exit at 10 points. Anything I collect above 10 points will be added to the buffer.
----------------------------------------
Focus: To ensure that each day ends with 10 points profit, or at break-even at worst.
1) Profit target = 10 points.
2) In case of a loss, in the next trade add this loss to profit target.
3) After 2 p.m, if two trades are in loss. Then forget profit, set target to cover today's loss.
4) Even if after 2 p.m. there is no move, and day ends in loss, then carry forward this loss to next day.
5) Sometimes the move will be quick and will cover a good distance in short time. Giving u obvious and a clear reason to not exit at 10 points. Anything I collect above 10 points will be added to the buffer.
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Earlier version was complicated.
Focus: To ensure atleast 10 points of profit after clearing losses.
1) As i see that there is no way to by-pass bad trades, and only way to cover these losses is by bagging a good trade. Therefore, rule #1
1) Set exit to all losses+expenses+10 points
2) If loss is less than 20 points, then exit only end of day.
Focus: To ensure atleast 10 points of profit after clearing losses.
1) As i see that there is no way to by-pass bad trades, and only way to cover these losses is by bagging a good trade. Therefore, rule #1
1) Set exit to all losses+expenses+10 points
2) If loss is less than 20 points, then exit only end of day.
Earlier version was complicated and too "profity".
Focus: Trade towards, primarily, protecting capital.
As i see that there is no way to by-pass accumulation of losses from bad trades, and only way to cover these losses is by bagging a good trade. Therefore, rule #1
Rule #1) Set exit of a trade to: Entry+Accumulated Losses+Accumulated Expenses+10 points
Once losses are capped, and there is no sting left in trading. Then comes the need to allow room for profits. Hence Rule#2
Rule #2) If accumulated loss is less than 20 points, then use trailing stop for exits.
If done correctly, this will open the possibility to get big days. Which is where a trader succeeds. Rest all is grunt-work.
Focus: Trade towards, primarily, protecting capital.
As i see that there is no way to by-pass accumulation of losses from bad trades, and only way to cover these losses is by bagging a good trade. Therefore, rule #1
Rule #1) Set exit of a trade to: Entry+Accumulated Losses+Accumulated Expenses+10 points
Once losses are capped, and there is no sting left in trading. Then comes the need to allow room for profits. Hence Rule#2
Rule #2) If accumulated loss is less than 20 points, then use trailing stop for exits.
If done correctly, this will open the possibility to get big days. Which is where a trader succeeds. Rest all is grunt-work.
Last edited:
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