Thoughts on Day/Swing Trading

[Nihilistic]

Excellent, Smart Trade. Thanks a lot. If you can put any more light on the subject matter whenever you think of something useful to add, it would be a great help for noobs like me.

Regards,
:thumb:

 

[Prashant Patel]

HI S_T,
First of all my kind compliments for starting this wonderful, not thread, but the topic which I think I was looking for in 'TJ' and other forums. :thumb:
Not only myself but more of new traders need this sort of enlightenment rather than the proposition being made what to buy/sell or what not to.
Thanks a ton for the efforts you are taking for US.
Awaiting for your further inspiring, knowledgeable thoughts/view which would help us in becoming self reliable.

 

[Prashant Patel]

HI S_T

I'm posting suzlon intraday chart 1min TF.
Can u suggest me what days moving avg to use and also what TF MCAD to be used.
I'm using 1min TF mainly for scalping.

 

[Smart_trade]

Prashant,

I dont trade on moving average or any other oscillator though I have earlier traded on both MA and oscillators.I trade purely on price.

If you are trading 1 min bar ....you can try 60 bars MA...but use this as trade direction decider.....if 60 bars MA is coming down and the price is below the MA...take all short trades based on crack of pivot lows....you may buy to close your short position but no long trades below 60 bars MA...

Hope it will help...

Smart_trade

 

[TraderRavi]

Hello Nihilistic,

Try the following...they might help you to improve your success rate and profitability :

2) If the breakout/breakdown fails and the market closes in the range which it broke then it is a breakout failure and better to get out of your position without waiting for stoploss to hit ......

Wait for clearly set up trades....that will help. Trading bothways requires good understanding of market action...dont attempt that initially.

Smart_trade

Hi ST, if breakout/breakdown fails, then is it advisable to book loss and reverse position...as say upperbreakout fails then reverse position to short as market will try to reach support etc....I have lost much money in nifty options in false breakout/breakdowns......

 

[Smart_trade]

Hi ST, if breakout/breakdown fails, then is it advisable to book loss and reverse position...as say upperbreakout fails then reverse position to short as market will try to reach support etc....I have lost much money in nifty options in false breakout/breakdowns......

Hi Ravi,

Yes...breakout /breakdown failures are strong signals indicating that the market is not yet set up to go in the direction of the breakout/breakdown....so if if you reverse the position you can participate in reverse move with a very close stoploss....a good R/R trade

But you need to keep a tight stoploss of the swing hiigh/low to guard you against any sudden change of direction.

Smart_trade

 

[joy.edakad]

How do we determine breakout failed, is it when the bar closes below breakout level

 

[Smart_trade]

How do we determine breakout failed, is it when the bar closes below breakout level

Yes Joy...Close below the breakout level and cracking of low of that downclose bar will indicate breakout failure. Many people follow crack of low of breakout bar or if it is breaking out from sideways range, then crack of low of that sideways range .

Smart_trade

 

[Smart_trade]

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 etc…But 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

 

[munde_77]

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

Thanks ST da:thumb: