Thoughts on Day/Swing Trading Part 2

[Gaur_Krishna]

Fantastic PTK, you said all that so many of us have expressed to him directctly by posts and thru mails. GREAT! Nice to read a heartflet post after a long time! All the very best for your trading career. Keep us posted.

@PM: I think, once you cross 50 odd posts, you will be allowed (just IMO)

Regards,
Gaur_Krishna

Dear Smart_Trade,

Thanks a lot for your reply. You have no idea how much your reply has helped me. My confidence has got an immense boost. I have been struggling for so many years with the stock market in general.

I am based in Pune and I work in IT. These days job market isn't that good and its been there on my mind for quite sometime to have a secondary source of income and stuff like that.

I in fact lost quite a lot of money in stocks by doing all the wrong things...traded options futures paid people for calls...you name it I have done it. Finally I stopped everything in 2007.

Came across reading about Warren Buffet through a friend. Read all his annual shareholder reports countless times. Things got a lot clear about the long term. Devised a strategy by 2008 end for investing (roughly its to buy at nifty PE ratios of around 10-12 when stocks are available at book values lump sum and then buy every month till the PE is under 15. Sell everything when the PE is higher than 25 and sit out of the market with the money parked in FDs). I thought (and still think) this strategy will work decently in the long run but I am still waiting for the right time..

This was about long term, and I have kept some money aside for the above after taking care of all the expenses retirement etc, in short, even if the above money becomes 0 I will not bleed. And if Buffet is to be believed the returns will be far higher than 0 is my belief.

But I continued to have nightmares about job loss and secondary source of income etc. Then I came across Traderji, I read various articles...but somehow did not trade...then I came across that other forum and read various articles from Saint and you. No doubt Saint has helped immensely to clarify various aspects of short term trading, it were your posts with which I connected a lot better. To this day, I do not understand DERL, ERL VPH, VPL and that Level 2 stuff even after trying some many times.

I focused on your threads. Read oscillators thread, read money management ideas in these threads (read that 20 wins / 20 loss game) everything made so much sense. Read your replies to people who were literally criticizing you for having copied stuff etc...your replies were so positive, got so much respect for you.

You have made a permanent impact on my life through your postings in a similar way that Buffet has made through his writings. It has gone beyond making money and more about philosophy.

These days I have some thread from you open and an annual latter from Buffet open and I keep reading either stuff when I get some free time.

Tried to send you a PM but I am not allowed to do that, I don't know why.

It is now hard to imagine my trading life without you and I really hope that you remain active on this forum(unlike the other one) and I request you to share some contact information of yours where I can get in touch with you (even an email ID is fine).

I had said in my earlier post that I have a lot more to write, and its about all this.

I went home yesterday and told my wife that I have got a reply from you about my trades and that I am on the right track and we were so happy to get an acknowledgment from the Guru himself.

Sorry for being lengthy. Thanks a lot and be assured that there will be so many guys like me who have your impact on their lives even though they haven't explicitly made a mention about it.

Thanks again,

Regards,
ptk

 

[dhinakar113]

Dear Smart_Trade

I am paper trading one of your methods that you have elaborated on some other forum.

I am doing the following:-
1. Spot Bani Nifty charts. 30 period MA, 5 min charts.
2. I treat gap days same as non gap days.
3. If prices under MA and MA falling, I short the break of pivot lows, previous PH is my Stoploss.
4. In the attached image, I have shown Adds as a new trade.
5. I am taking 2 Adds even for buys.
6. My risk per trade is Rs 1000 which is 1% of my portfolio of 1 Lakh.
7. Even for my Adds, I am taking the quantity based on risk of Rs 1000. I understand that when I have 3 open positions (original position + 2 Adds), my risk per trade is more than 1000Rs, but by the time I take the 2nd Add, the SL level is moved in my favour so the total risk is very less than 3000Rs even though slightly more than Rs 1000 but please ignore this for the moment.
8. I understand that bank nifty can be traded only in futures and the quantities I have shown are not possible in reality but please ignore this point for the moment.

In the past 3 days my total returns (paper trades only) for a risk per trade of Rs 1000 (1% of 1L) are Rs 31000 i.e. 31%.

At the end of the first day in which the returns were 9%, I was saying to myself that even if I get 1 such day in a month and for all the remaining days I am able to break even, its good enough.

I am trying to use this strategy in nifty, Tata motors and DLF but find it very difficult and rather very easy doing it on bank nifty.

I have following questions which I request you to answer:-
1. Am I missing something, are the returns 31% really? I have charts for these 3 days as well which I can attach.
2. Why it is easier to trade BNF than NF or other stocks?
3. Can you please recommend a couple of stocks on which I can use this strategy so that I dont have to start my trading in futures initially and I can day trade (long or short) individual stocks.

I plan to paper trade this strategy upto August end and begin trading from September. Your reply will help me a lot to do any fine tuning in this period.

Please be assured that I have read all threads started by you on both the forums I dont know how many times.

I have printouts of your strategy and the charts and I am helping my wife teach to understand this strategy with the explanation of pivots etc.

I have a lot more to write but I dont want to elongate this post of mine and dilute it.

I request you to reply.

Regards,
ptk

Very glad to see your post about ST Da's helping hand and guidance to our fellow traders. He is such a nice, great, very experienced and humble person. I owe a lot to him.

Btw, in your trades you posted, the quantity should be in multiples of 25, for BNF lot size. wishing you all the Best.

Dkr

 

[anup]

Can anyone post TDST trade once it gives signal

 

[trade4joisar]

Nothing is negated. The rally expected was a antitrend rally which we get after 8th,9th,or 10th set up day. It came on 10th day. This rally was there for couple of days. Now the original downtrend has resumed. We have to go down much more and next 15-20 days will be bearish, small rallies notwithstanding.

We may finally bottom at below 5500. But the exact day and levels will be known as the downmove unfolds. But that stage is atleast 15 days away...Market behaving exactly as it should, in a text book sequential pattern.

Smart_trade

Hello ST sir,

As a part of buy setup, today was also part of antitrend rally, i am not sure if it is 8/9/10th setup day.

Still NF is not able to close above 6102 as a part of original downtrend which was suppose to be negated once closed above 6102 else we can bottom out around 5500 as you said earlier.

I am not sure how it will work when next month nifty is already in premium and can close above 6102. will this be valid?

So does it mean we are very near to sell setup?

 

[yashodhan]

ST da,

Sorry for reposting the same. Plz answer when you have time.

Regards,
Gaur_Krishna

Dear ST Sir,

What filter should one use for Nifty and Bnaknifty? 5 seems too small for BNF ( although I am not an authority on this.)

Sorry I am reposting what Mr. Krishna has posted. BUt, your answer would help me as I plan to start using this strategy from now on.

Regards,

 

[Gaur_Krishna]

Just Copy-Paste of ST Da's post from VJAY's excellent thread. Just for reference here ......

VJAY: " BNF swing

Only luck saved this month as I broke my rule exiting pos without any rule .......
if not broke that rule then Model trades would be profit of 11 points from 11trades"

ST DA:

"VJAY,

This month gap ups and gap downs were bad for 30 min swing trades because we were in a large sideways range and the market was reacting to various overseas inputs.

But in such circumstances also I have found that the market shows its hand earlier day before the gap. One technique which I have found useful in trading such period is End of Day exit. Suppose you are long and the market takes out 2-3 pivot highs....but in the end while closing, it closes below the last pivot high which it broke. This shows that market is unable to sustain above that Pivot high so sell your position there, and take position again next day when market opens. I have found that it saves us from many gap up /gap down situations. The same holds for short positions also.

See if the above helps."

Smart_trade

 

[Smart_trade]

Dear ST Sir,

What filter should one use for Nifty and Bnaknifty? 5 seems too small for BNF ( although I am not an authority on this.)

Sorry I am reposting what Mr. Krishna has posted. BUt, your answer would help me as I plan to start using this strategy from now on.

Regards,

If daytrading then Filter in NF and BNF could be 2 points and 5 points. If swing trading they could be 10 points and 20 points respectively.

Smart_trade

 

[midas touch]

is that 30SMA or 60 SMA for BNF,ST Da ?

tnx

pls do reply Da

 

[Smart_trade]

pls do reply Da

In original Swift method I had said 60 SMA for volatile scrips like BNF and 30 SMA for other counters. But 30 SMA or even 20/21 SMA also works great with BNF. Average line is only for giving a sense of trend, so 30 SMA is also OK.

Smart_trade

 

[Gaur_Krishna]

Thanks Da ...

Regards,
Gaur_Krishna

In original Swift method I had said 60 SMA for volatile scrips like BNF and 30 SMA for other counters. But 30 SMA or even 20/21 SMA also works great with BNF. Average line is only for giving a sense of trend, so 30 SMA is also OK.

Smart_trade