Thoughts on Day/Swing Trading Part 2

[Smart_trade]

Hello Smart Trade,

This analysis does give a very good insight. Thanks a lot for sharing it. I have recently joined the forum and was lucky to come across this thread so soon.



Can you please explain the reasons which make you get out of a trade without a stop loss being hit? Is it that if the market does not move in your direction of trade for sometime, you decide to get out in anticipation of SL being hit sooner or later? or is it because some specific price action you notice that makes the probability of SL being hit more that makes you get out as a scratch trade? Your reasons for this would be really helpful in understanding risk management.



Can you please also throw some more light on the above statement on your tight risk control? How do you manage to keep your losing trade below 10 points? Many a times I see that the stop loss for a trade in nifty is 20 points or even 23-25 points away. How do you manage to keep it below 10?

Hope I am not asking too many questions as a new joinee? Do reply at your convenience.

Thanks,
Ramesh

It is possible. Suppose you shorted below a pivot low, and after going some distance, the market comes back and closes above the pivot low which put us in a short trade, get out of that trade. If the breakout is genuine and strong, the market should not close above the pivot.

This works well for me as stops are small.but as a tradeoff it gives some some premature exits and thus diluting my success rate to less than 60 % but my RR is 6:1 which is unheard of in daytrading.

Just as an example today we had 5 loosing trades in which we lost 26-27 points , but last short trade made all the losses good. And on a good day we make 40-60 points or even more in nifty futures.

Think about such solutions and these are possible.

Smart_trade

 

[Tlahuicole]

It is possible. Suppose you shorted below a pivot low, and after going some distance, the market comes back and closes above the pivot low which put us in a short trade, get out of that trade. If the breakout is genuine and strong, the market should not close above the pivot.

This works well for me as stops are small.but as a tradeoff it gives some some premature exits and thus diluting my success rate to less than 60 % but my RR is 6:1 which is unheard of in daytrading.

Just as an example today we had 5 loosing trades in which we lost 26-27 points , but last short trade made all the losses good. And on a good day we make 40-60 points or even more in nifty futures.

Think about such solutions and these are possible.

Smart_trade

6:1 awesome ST, but mine also similar numbers 0.6:1 RR

 

[ramesh_s]

It is possible. Suppose you shorted below a pivot low, and after going some distance, the market comes back and closes above the pivot low which put us in a short trade, get out of that trade. If the breakout is genuine and strong, the market should not close above the pivot.

This works well for me as stops are small.but as a tradeoff it gives some some premature exits and thus diluting my success rate to less than 60 % but my RR is 6:1 which is unheard of in daytrading.

Just as an example today we had 5 loosing trades in which we lost 26-27 points , but last short trade made all the losses good. And on a good day we make 40-60 points or even more in nifty futures.

Think about such solutions and these are possible.

Smart_trade

Thanks a lot Smart Trade. This is a wonderful advice. I did notice this earlier too in my trading, but the hope that market will ultimately go in the desired direction always prevented me from bailing out, and it invariably hit the stop loss point more than it went in the desired direction.

Can you please give the details of your 6 trades of today - with entries, stop loss and exit points. That will give a good idea of today's trades and the way you exited the 5 loss trades with only 27 points loss. I had two trades today .. but both resulting in a loss of 45 points in total. And then didn't take the 3rd trade which would have been in profit.

Regards,
Ramesh

 

[Smart_trade]

Thanks a lot Smart Trade. This is a wonderful advice. I did notice this earlier too in my trading, but the hope that market will ultimately go in the desired direction always prevented me from bailing out, and it invariably hit the stop loss point more than it went in the desired direction.

Can you please give the details of your 6 trades of today - with entries, stop loss and exit points. That will give a good idea of today's trades and the way you exited the 5 loss trades with only 27 points loss. I had two trades today .. but both resulting in a loss of 45 points in total. And then didn't take the 3rd trade which would have been in profit.

Regards,
Ramesh

Taking 5 losses in a row is quite a pain in the ***. Dont have energy left to post these crap trades....dont even want to see that chart.

ST

 

[arcus]

I did some analysis of my intraday Nifty Futures trades . My success ratio is 55 %. So in every 2 trades I win 1 trade and loose on 1 trade. In loosing trades I have included those trades in which I got out early( scratch trades where I got out in 3-4 points ) as per my trading system though the trade may not have hit the stoploss. My average loosing trade is 8 points and average winning trade is 24 points. I normally have 2 trades in a day...sometimes 3 or 4 . Assuming 2 trades in a day and one looser and one winner, my average points per day in Nfity futures come to 24-8 = 16 points

The figures above are average figures.This data I worked on 3 months so the sample size is not very large to get any definite trends, but thought it may help you.

Smart_trade

Day traders thrive on volatility. (provided its not "random" volatility)

I think the return in points is really variable and depends on the underlying volatility of the security traded during the period under consideration.

For example, in the past month or so, there has been a spike in volatility. I'm pretty sure you must be making on average more than 16 points a day.

Maybe its better to give your points relative to a volatility indicator, perhaps an ATR%.

 

[Smart_trade]

Day traders thrive on volatility. (provided its not "random" volatility)

I think the return in points is really variable and depends on the underlying volatility of the security traded during the period under consideration.

For example, in the past month or so, there has been a spike in volatility. I'm pretty sure you must be making on average more than 16 points a day.

Maybe its better to give your points relative to a volatility indicator, perhaps an ATR%.

In August we did average 25-28 points a day.This is after deducting the loosers.

ST

 

[love2trading]

hi,

In August month opening range breakout strategy in nifty works well.. last month i am in profit

but this september ORB strategy not worked so far.. now my netprofit in minus.

lets see 12 days more for this month,.

thanks

 

[arcus]

In August we did average 25-28 points a day.This is after deducting the loosers.

ST

As I suspected.

1.37 (60 day ATR% as on 31st July) / 16 = 0.085
2.12 (22 day ATR% as on 30th Aug) / 25 = 0.084

Which is about constant and a function of volatility.

 

[ramesh_s]

Taking 5 losses in a row is quite a pain in the ***. Dont have energy left to post these crap trades....dont even want to see that chart.

ST

No problem Smart Trade. I fully understand. It's difficult especially after a hard day of trading.

You can provide a couple of example whenever you are free, maybe over the weekend. No rush at all. Went through many of your posts and they are truly informative. Thanks a lot for the guidance you are providing.

Regards,
RS

 

[arcus]

This works well for me as stops are small.but as a tradeoff it gives some some premature exits and thus diluting my success rate to less than 60 % but my RR is 6:1 which is unheard of in daytrading.
Smart_trade

If the average loss is 8 points and the average profit is 24 for you, then the R:R should be in the lines of 3:1