Thoughts on Day/Swing Trading
- Thread starter Smart_trade
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Read Alex Elder. You'd know why people buy in downtrends. And you'd also know a little bit of psychology.
yeah I've read most of his books...pretty basic stuff...will make you feel good while reading it, but theres nothing that would help in actual trading...
If you really want to learn something new, read "Trader in the Zone" and Tushar Chande's "Beyond Technical Analysis: How to Develop and Implement a Winning Trading System"
Small stoploss? How small? TSL works only in trending market. Right now, we don't know. Hell, we never know anyway!
well, I agree small is subjective...but what I was trying to say that your RR should be good otherwise you would need an impossibly high win rate to compensate for that...
You mean, one should enter with multiple lots from the start? If yes, how one should know it is the right thing?
Scaling in is not very important unless you trade institutional quantities...you will know it is the right move when your SL does not hit
Agree. Exits are as importants as entries. Not more important, BTW!
Disagree...people chase the perfect entry all their life...they stack hundreds of indicators on their charts just to know where to enter...but when it comes to exits, they set arbitrary 20 point/50point/100point targets...no wonder most traders are net losers in the long run
Anyone trying to do so is a fool. Good point.
glad we agree on something
Big Picture? What big picture? Only the TF that you are trading is the big picture!
By big picture I did not mean time frame. I said that we should not focus on the profit or loss of individual trades but look at what they add up to in the long run...
Do you have time to calculate all this while trading, Pride? God, I envy you!
No. These things are calculated when your are not trading. You calculate your expectancy and max drawdown on the past n trades...why trade a system with negative expectancy? how would you even know if your system has positive expectancy if you don't backtest? how would you know that the past 12 consecutive losses are just a part of the system?
I maintain an excel file with all my trades...I know for a fact that my system has positive expectancy over the past 2000 trading days...so I do not hesitate for even a single second before pulling the trigger...I also do not care if I face a 20% drawdown...because I know that historically higher drawdowns have appeared and the system has recovered from that. but I will be concerned if something happens that does not match the past parameters and I will be forced to analyze and optimize the system in the current market's context...
and if you don't do this, then you are trading on luck..how do you know that your past 6 months profitability isn't just sheer dumb luck? how do you know that you have an edge?
What you just said, you are a guru in a way, too. Are you fake? Oh, 1 year on 1 min chart? The only 'things' seen will be the ghosts!
I am not a guru...I don't provide any paid services...I don't make any claims about making you a profitable trader...theres a theory that it takes 10,000 hours of practise to master anything...and you think 1 year will make you crazy?
I understand. Only one question, if you don't mind. Which 'Daroo' brand you had. I would love to have it, too!
Absolut!
yeah I've read most of his books...pretty basic stuff...will make you feel good while reading it, but theres nothing that would help in actual trading...
If you really want to learn something new, read "Trader in the Zone" and Tushar Chande's "Beyond Technical Analysis: How to Develop and Implement a Winning Trading System"
Small stoploss? How small? TSL works only in trending market. Right now, we don't know. Hell, we never know anyway!
well, I agree small is subjective...but what I was trying to say that your RR should be good otherwise you would need an impossibly high win rate to compensate for that...
You mean, one should enter with multiple lots from the start? If yes, how one should know it is the right thing?
Scaling in is not very important unless you trade institutional quantities...you will know it is the right move when your SL does not hit
Agree. Exits are as importants as entries. Not more important, BTW!
Disagree...people chase the perfect entry all their life...they stack hundreds of indicators on their charts just to know where to enter...but when it comes to exits, they set arbitrary 20 point/50point/100point targets...no wonder most traders are net losers in the long run
Anyone trying to do so is a fool. Good point.
glad we agree on something
Big Picture? What big picture? Only the TF that you are trading is the big picture!
By big picture I did not mean time frame. I said that we should not focus on the profit or loss of individual trades but look at what they add up to in the long run...
Do you have time to calculate all this while trading, Pride? God, I envy you!
No. These things are calculated when your are not trading. You calculate your expectancy and max drawdown on the past n trades...why trade a system with negative expectancy? how would you even know if your system has positive expectancy if you don't backtest? how would you know that the past 12 consecutive losses are just a part of the system?
I maintain an excel file with all my trades...I know for a fact that my system has positive expectancy over the past 2000 trading days...so I do not hesitate for even a single second before pulling the trigger...I also do not care if I face a 20% drawdown...because I know that historically higher drawdowns have appeared and the system has recovered from that. but I will be concerned if something happens that does not match the past parameters and I will be forced to analyze and optimize the system in the current market's context...
and if you don't do this, then you are trading on luck..how do you know that your past 6 months profitability isn't just sheer dumb luck? how do you know that you have an edge?
What you just said, you are a guru in a way, too. Are you fake? Oh, 1 year on 1 min chart? The only 'things' seen will be the ghosts!
I am not a guru...I don't provide any paid services...I don't make any claims about making you a profitable trader...theres a theory that it takes 10,000 hours of practise to master anything...and you think 1 year will make you crazy?
I understand. Only one question, if you don't mind. Which 'Daroo' brand you had. I would love to have it, too!
Absolut!
These things are calculated when your are not trading. You calculate your expectancy and max drawdown on the past n trades...why trade a system with negative expectancy? how would you even know if your system has positive expectancy if you don't backtest? how would you know that the past 12 consecutive losses are just a part of the system?
I maintain an excel file with all my trades...I know for a fact that my system has positive expectancy over the past 2000 trading days...so I do not hesitate for even a single second before pulling the trigger...I also do not care if I face a 20% drawdown.
Dear Pride
One doubt here.From ur posts in the past I infer that u trade on discretionary systems rather than mechanical.How do you calculate ur expectancy,drawdown etc.... on a discretionary system.I presume,manually.If it is isn't it too tedious?
I maintain an excel file with all my trades...I know for a fact that my system has positive expectancy over the past 2000 trading days...so I do not hesitate for even a single second before pulling the trigger...I also do not care if I face a 20% drawdown.
Dear Pride
One doubt here.From ur posts in the past I infer that u trade on discretionary systems rather than mechanical.How do you calculate ur expectancy,drawdown etc.... on a discretionary system.I presume,manually.If it is isn't it too tedious?
All the points from Sr no 1 to 8 above are so important that we can have discussions/seminars on each one of them. The 9th point ( of being drunk etc ) I am excluding because there are many who may be experts on the subject I admit my ignorance here....
Unless the trader gives a serious thoughts to the points above, I doubt whether he can succeed in the markets....but all these points are established and accepted good principles of trading. Trading like any business activity needs planning,a very sound and simple idea,flawless execution, a rigid risk control and a business mindset.
We have touched upon some of these points in this thread from time to time and wish to do this in future in the form of trading ideas and thoughts ....
Smart_trade
I admit my ignorance here....Unless the trader gives a serious thoughts to the points above, I doubt whether he can succeed in the markets....but all these points are established and accepted good principles of trading. Trading like any business activity needs planning,a very sound and simple idea,flawless execution, a rigid risk control and a business mindset.
We have touched upon some of these points in this thread from time to time and wish to do this in future in the form of trading ideas and thoughts ....
Smart_trade
Hi Biju,
even with discretionary systems, there needs to be a framework with which you work...there need to be some rules...
there are two ways you can calculate all that:
1. manually backtest: nothing should appear too tedious if related to trading...after all, its your hard earned money that you are risking...
but this method has many flaws...you will never be able to replicate the exact trades...because you will keep peeking to the right and bias is bound to creep in...
2. forward test: start from today...and keep noting all the trades in real time...either trade small quantities or paper trade...soon you will have enough data to calculate all the vital parameters...but keep on adding your trades to that journal...as you evolve as a trader, your journal will reflect it...
by the way, I trade both mechanical and discretionary systems...
@majumdarji, I think eagle was referring to this thread: http://www.traderji.com/day-trading/54907-indicator-free-stress-free-trading.html
even with discretionary systems, there needs to be a framework with which you work...there need to be some rules...
there are two ways you can calculate all that:
1. manually backtest: nothing should appear too tedious if related to trading...after all, its your hard earned money that you are risking...
but this method has many flaws...you will never be able to replicate the exact trades...because you will keep peeking to the right and bias is bound to creep in...
2. forward test: start from today...and keep noting all the trades in real time...either trade small quantities or paper trade...soon you will have enough data to calculate all the vital parameters...but keep on adding your trades to that journal...as you evolve as a trader, your journal will reflect it...
by the way, I trade both mechanical and discretionary systems...
@majumdarji, I think eagle was referring to this thread: http://www.traderji.com/day-trading/54907-indicator-free-stress-free-trading.html
all the points from sr no 1 to 8 above are so important that we can have discussions/seminars on each one of them. the 9th point ( of being drunk etc ) i am excluding because there are many who may be experts on the subject :d i admit my ignorance here....
unless the trader gives a serious thoughts to the points above, i doubt whether he can succeed in the markets....but all these points are established and accepted good principles of trading. Trading like any business activity needs planning,a very sound and simple idea,flawless execution, a rigid risk control and a business mindset.
We have touched upon some of these points in this thread from time to time and wish to do this in future in the form of trading ideas and thoughts ....
Smart_trade
:d i admit my ignorance here....unless the trader gives a serious thoughts to the points above, i doubt whether he can succeed in the markets....but all these points are established and accepted good principles of trading. Trading like any business activity needs planning,a very sound and simple idea,flawless execution, a rigid risk control and a business mindset.
We have touched upon some of these points in this thread from time to time and wish to do this in future in the form of trading ideas and thoughts ....
Smart_trade
Very interesting discussion.
Few points which is purely my individual opinion.
1. To make money in the market one need not have any high level knowledge.a robust system,a certfication.Neither the seminars nor the books makes one a successfull trader.
I have a friend in Mumbai who does catering and who sees nothing but CMP and he is highly successfull.He makes crores both in catering and Trading Per Annum.
Just by looking at CMP he will decide whether to buy or sell.Hence trading is a belief.If you say "YES" its "YES".Other wise its "NO".
2.No books are waste .Either Elder's or some one else's.A duck if given a glass half of water and half of milk ,will only suck milk and leave the water in the glass. We should be like that.We can take what we need and leave the rest in the book!!.
3.People go for shopping and buy products and they get "WARRANTY"for each products they buy.They look for the same in markets.In market and in life there is neither "GUARANTEE"nor "WARRANTY".
A good life is made out of blessings and past good Karma's where as a sucessfull trading is a result of consistent practice and observation.
4.Market does not care whether one is an ENGINEER,CA,DOCTOR or a BEGGER.Because one is a 3 PHD holder ,he cannot say I am/can/must be successfull.Please ask each fund manager how much return he can generate per annum.Starting from me for every one the first barrier to success is EGO.
5.No system is great ,no system is inferior.It depends on the user.A Flute is a instrument (system).For a person who don't know music its a bamboo piece whereas in the hands of a classical musician(user) its a magic wands producing wonderful music.
Few points which is purely my individual opinion.
1. To make money in the market one need not have any high level knowledge.a robust system,a certfication.Neither the seminars nor the books makes one a successfull trader.
I have a friend in Mumbai who does catering and who sees nothing but CMP and he is highly successfull.He makes crores both in catering and Trading Per Annum.
Just by looking at CMP he will decide whether to buy or sell.Hence trading is a belief.If you say "YES" its "YES".Other wise its "NO".
2.No books are waste .Either Elder's or some one else's.A duck if given a glass half of water and half of milk ,will only suck milk and leave the water in the glass. We should be like that.We can take what we need and leave the rest in the book!!.
3.People go for shopping and buy products and they get "WARRANTY"for each products they buy.They look for the same in markets.In market and in life there is neither "GUARANTEE"nor "WARRANTY".
A good life is made out of blessings and past good Karma's where as a sucessfull trading is a result of consistent practice and observation.
4.Market does not care whether one is an ENGINEER,CA,DOCTOR or a BEGGER.Because one is a 3 PHD holder ,he cannot say I am/can/must be successfull.Please ask each fund manager how much return he can generate per annum.Starting from me for every one the first barrier to success is EGO.
5.No system is great ,no system is inferior.It depends on the user.A Flute is a instrument (system).For a person who don't know music its a bamboo piece whereas in the hands of a classical musician(user) its a magic wands producing wonderful music.
Based on my years of experience as a full time trader who trades for living and observing many upcoming traders fail ( and very few succeed ) bring out the following points.
1) Trading requires knowledge and education about how market functions, greed and fear of market participants, probabilities,risk/reward. This knowledge is different than the knowledge which our schools and universities impart.
2) The basic knowledge about trends, patterns etc can be learnt in 1-2 months....but to succeed one requires to blend this knowledge with mindset,money,flawless execution,entries,stops,adds,profit taking,taking a temporary retreat, re-entry.........all these require tremendous practice. One needs such practice in all performing arts such as dancing,singing.......can we imagine artists like Samnyukta Panigrahi or Pandit Jasraj become what they are and perform in the concerts by reading books on Oddissi or Indian classical music ?
This is where most traders fail.....they start with acquiring knowledge,read books,systems,AFLs,psychological stuff........but they never get to a point where all the above come togather in harmony and effortless blend. They never come to a point where they say ....ok this is a definite trade ( here by definate I mean the trade which he will definately take....and not a trade which definately will succeed.....) then second guessing,then the failure sets in, then starts systems hopping, then again frustrations and the same cycle repeats till he is able to break this orbit and go to the next orbit ,some can never do that and there we have one more failure .
3) The traders also need unshakable confidence in the system they trade. This confidence comes by selecting a system which suits our mindset, backtest the method,have proper MM . The confidence also comes when one tastes success on this method........it is very easy to say have confidence in the method when the method is not making money ....but we cannot have confidence on empty stomachs...can we ?
4) Most traders come to trading with very small capital. They think that one does not need capital in trading.....this belief is also nourished by fly by night tip vendors who claim that you just need 10,000 in your trading account to make Rs 2000 per day....nothing can be further from truth. If one has to live off trading one needs atleast Rs 3-5 Lacs capital......I have seen many who say Rs 25,000 is more than sufficient but it is not true......Many are short of capital because they come to trading after they loose their jobs,or fail in business or fail and loose huge amounts in speculation and finally all these people fail in trading too.....
5) The most important quality is ability to accept that one is wrong, get out of the trade at the earliest and go for the next trade which could be in re-entry of original trade direction or in the opposite direction if the market action so demands. Most people get attached because of ego or because they feel they cannot take that small loss ( but eventually they will take a much bigger loss....)
A trader needs to address all the above points in his journey of becoming a successful trader.
Smart_trade
1) Trading requires knowledge and education about how market functions, greed and fear of market participants, probabilities,risk/reward. This knowledge is different than the knowledge which our schools and universities impart.
2) The basic knowledge about trends, patterns etc can be learnt in 1-2 months....but to succeed one requires to blend this knowledge with mindset,money,flawless execution,entries,stops,adds,profit taking,taking a temporary retreat, re-entry.........all these require tremendous practice. One needs such practice in all performing arts such as dancing,singing.......can we imagine artists like Samnyukta Panigrahi or Pandit Jasraj become what they are and perform in the concerts by reading books on Oddissi or Indian classical music ?
This is where most traders fail.....they start with acquiring knowledge,read books,systems,AFLs,psychological stuff........but they never get to a point where all the above come togather in harmony and effortless blend. They never come to a point where they say ....ok this is a definite trade ( here by definate I mean the trade which he will definately take....and not a trade which definately will succeed.....) then second guessing,then the failure sets in, then starts systems hopping, then again frustrations and the same cycle repeats till he is able to break this orbit and go to the next orbit ,some can never do that and there we have one more failure .
3) The traders also need unshakable confidence in the system they trade. This confidence comes by selecting a system which suits our mindset, backtest the method,have proper MM . The confidence also comes when one tastes success on this method........it is very easy to say have confidence in the method when the method is not making money ....but we cannot have confidence on empty stomachs...can we ?
4) Most traders come to trading with very small capital. They think that one does not need capital in trading.....this belief is also nourished by fly by night tip vendors who claim that you just need 10,000 in your trading account to make Rs 2000 per day....nothing can be further from truth. If one has to live off trading one needs atleast Rs 3-5 Lacs capital......I have seen many who say Rs 25,000 is more than sufficient but it is not true......Many are short of capital because they come to trading after they loose their jobs,or fail in business or fail and loose huge amounts in speculation and finally all these people fail in trading too.....
5) The most important quality is ability to accept that one is wrong, get out of the trade at the earliest and go for the next trade which could be in re-entry of original trade direction or in the opposite direction if the market action so demands. Most people get attached because of ego or because they feel they cannot take that small loss ( but eventually they will take a much bigger loss....)
A trader needs to address all the above points in his journey of becoming a successful trader.
Smart_trade
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