Thoughts on Day/Swing Trading

[Smart_trade]

Posting a 15 min Nifty futures chart of last 3-4 days. See how TDST lines are giving resistance to the upmove and support to the downmove. Combine TDST,Power of 9, failures and rejections on lower timeframes near TDST lines and price action and you have a great method to trade the markets.....

The next post will show how rejections and failures in 5 min timeframe can be used to set up some wonderful trades in last few days....

Smart_trade

 

[Smart_trade]

Posting Nifty Futures 5 min chart. Market unable to take out blue resistance TDST but cracking red support TDST was a clear pointer that the market wants to trade lower, which it did eventually......all that a trader has to do is select his low risk entry points , keep your stops and let the market do the work....

Smart_trade

 

[EagleOne]

ST, I have recently read in Capricorn's thread something like, if the tops in the Double-Top fomation are 6 months or so apart, it is invalid. But I find them in many scrips' weekly/monthly charts having a predictble effect on subsequent patterns.

If it is not much of a bother, please shed some light on it whenever the time permits you. Thanks.

 

[HNI]

hi st,
can you describe the metods forselling near resistances and buying near support as mentioned above. this would be of great help to all newbies like me.
wish u a fast recovery from spondlytis and best health
regards,
girish

The entire trading is based on two very important concepts.....1) Reward/Risk ratio or R/R and 2) Money Management ( MM )or Position sizing. Both these concepts are more important than which of our trade is successful and which is not.

I read a book called " Mathematics of Money Management " by Ralph Vince. This is one of the three finest books on MM by the author and some of the concepts in that book opened my eyes to what trading really is... I am giving below a small excercise from this book to stress a point that in final results, which of your trade made money and which lost money makes NO difference at all.....

THE POSITION SIZING AND MM GAME

Make 40 small pieces of paper,on 20 write SUCCESS and on 20 write "FAIL" and fold them and put them in a glass bowl. Then ask a small child in the family to pick up each slip from the bowl and you read whether success or fail.

The sttarting capital is Rs 1,00,000/- and At each trade you will risk 25 % of the capital. If the trade is success,you make double the amount of money risked on a trade and if it is failure,you loose the amount risked on that trade. So for first trade your cum equity balance is Rs 1,00,000/- and the amount risked is 25000/- so if the slip says success,you make 25000*2 =50,000/- and your cum equity is 1,50,000/- now and on next trade you bet 25 % of 1,50,000/-. so go on like this till 40 trades are over.

The final amount you will have is not dependent on the sequence of your winning/loosing trades,consecutuve looses,wins etc and final amount is over Rs 10,50,000/- Dont believe me ? Try it out. I have spent 3 hrs on this game early in my career and tried coin toss,various sequence of alternate win/loss,10 losses and 10 wins in sequence etcBut the final wealth is same not even a rupee more or rupee less.

What does this prove ? Have a competent system,backtest,have a good mm and trade with confidence. Your sequence of losses and gains make no difference in ultimate results of building your wealth as long as your method has a positive expectancy and edge. Hope you enjoyed the game and learnt something from it..About expectancy, we will discuss later...

I am no way advocating risking 25% on every trade. This is just illustration because optimal f for this system is 25 %. But 25 % is way tooo high. Start with 1-2 % and put your profits to work for you.


Smart_trade

thahnks for this g8 post it is dream thread for any T A. st sir i searced hard in google but can't find this book [ mathematics of money management]. in filsonic and rest have been deleted . please provide me link.
thanks

 

[anuragmunjal]

ST, I have recently read in Capricorn's thread something like, if the tops in the Double-Top fomation are 6 months or so apart, it is invalid. But I find them in many scrips' weekly/monthly charts having a predictble effect on subsequent patterns.

If it is not much of a bother, please shed some light on it whenever the time permits you. Thanks.

hi E1
though ur post is adressed to ST, thought should chip in with my point of view..
a top to me signifies that the mkt. has reached a point where the buyers do not have any furthar buying interest at that point in time or there is a major chunk of sellers waiting who feel that the particular level is appropriate to offload their stock and the buyers meet with a significant resistance frm the sellers in which the sellers gain a upper hand.
now if the same level is breached in a few days' time, the same dynamics may work as not much would have changed fundamentally.
but if there is a passage of few months in between, the fundamental scenario may have changed completely.now the buyers may be more agressive or the sellers may have already finsished selling their stock or may not be willing to sell stock at the same levels again. therefore, I would be wary of giving much importance to double tops/bottoms that may occur after a significant passage of time.

regards

 

[girishhu1]

stda,
thanks a lot. the post shows hard work done by you earlier. will study the setups and then may revert back. thanks once again
regards,
girish

 

[EagleOne]

Thanks, Anurag. I am afraid my query was not about the mechanism of DT formation. I am already aware of your post's stated obvious reasons that go into it, and also of decreasing significance of the pattern (any pattern) with the passage of time. However, this was not I am looking for. I am curious as to whether an insightful, master trader like ST see/has seen what I noticed.

Thanks for you input.

hi E1
though ur post is adressed to ST, thought should chip in with my point of view..
a top to me signifies that the mkt. has reached a point where the buyers do not have any furthar buying interest at that point in time or there is a major chunk of sellers waiting who feel that the particular level is appropriate to offload their stock and the buyers meet with a significant resistance frm the sellers in which the sellers gain a upper hand.
now if the same level is breached in a few days' time, the same dynamics may work as not much would have changed fundamentally.
but if there is a passage of few months in between, the fundamental scenario may have changed completely.now the buyers may be more agressive or the sellers may have already finsished selling their stock or may not be willing to sell stock at the same levels again. therefore, I would be wary of giving much importance to double tops/bottoms that may occur after a significant passage of time.

regards

 

[EagleOne]

Bro, I think ST has this book as a hard copy. It is a Wiley publication, can be easily bought online. Besides reading it as a PDF won't do justice to its contents. It is more like a mathematical text book, I must say.

thahnks for this g8 post it is dream thread for any T A. st sir i searced hard in google but can't find this book [ mathematics of money management]. in filsonic and rest have been deleted . please provide me link.
thanks

 

[murthyavr]

Bro, I think ST has this book as a hard copy. It is a Wiley publication, can be easily bought online. Besides reading it as a PDF won't do justice to its contents. It is more like a mathematical text book, I must say.

Despite EagleOne's suggestion to buy it online, if any one wants a soft copy,
please send a PM to me.

I will give the link, which will be valid for a week!

 

[Smart_trade]

thahnks for this g8 post it is dream thread for any T A. st sir i searced hard in google but can't find this book [ mathematics of money management]. in filsonic and rest have been deleted . please provide me link.
thanks

I have a hard copy ( a hard bound one )of this book bought in pre e-book era when I used to spend Rs 3000 to 8000 on buying good books on trading and MM. I used to get those books from my friends going abroad and pay them the cost here in Indian Rupees.....I used to get to know about these books from a journal "Technical Analysis of Stocks and Commodities " which I was subscribing for many years.

This book is highly mathematical. I am an Engineer by education and supposed to be ok with mathematics but still I am unable to get past first 50 odd pages inspite of my several attempts.... The funny part is Ralph Vince himself has not studied beyond high school . He has developed all those mathematical stuff by self learning.....hats off to him.....

Let me search the net....in case I get the download link I will let you know. Have you tried 4shared ?

Smart_trade