Monday, 8 December 2014

Followup on Make or Break Level

Today for Apollo Tyre there was a good trade setup on the break of significant level 235.75, below PDL 235.20 on BPB of PDL.  It went up to around 230.


For Adani Enterprise, per my chart it moved too fast breaking the significant level and PDL in the first candle and that first candle contained the rest of the day price action.


Sunday, 7 December 2014

Make or Break Level for Very Short Term


Today while looking at the stock charts for last few days I could find these two stocks at the significant level which may act as a make or break level in the immediate future, at least on Monday.


For Adani Enterprise 455.6 level is working as a flip for last five days.


For Apollo Tyre 235.75 is acting as a flip for last five days.

I will post intraday charts for these two stocks on Monday and may try to analyze how could we trade this level using DP concepts.

Saturday, 22 November 2014

Why I am not trading fulltime

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Today there was a comment from a reader "Chota Bheem" as follows:

Hello Ur Dave, I just came across your blog (thanks to niftynirvana). :) Looking at your performance, I think you are making an average of 300+ points in NF every month. Considering, one trades with lets say 6 lots (old quantity), one can easily make about 1L/month. Please dont take in wrong sense, but I'm just wondering what makes you still stress urself with your full time job ? I guess you can start trading bigger lots just with about 3 lakhs of capital (50k/lot to be safe). Again.. this is more of curious question.. hope I didn't sound offensive...

I thought about replying to this in the form of a post so that other readers having the same doubt can know about my views.



I would like to talk some about the financial aspects of trading full time.  Here I go,

If I was 23 to 24 years of age, about to start my career, had no responsibilities, I probably would have been trading full time.  Today at 41 years of age I am the only earning member in my family.  My wife is a home maker taking care of our two little princesses, age 10 and 3.  So I have the responsibility of all three of them.  Also I have some other financial liabilities, like home loan etc.  Currently, I am earning 50K plus each month from my job and I would like to ensure when I start trading full time I earn at least 50K per month.

What I have planned is that, first get rid of all financial liabilities and save some funds which can take care of my expenses for few years while I am trading and also some trading fund.  So that way I do not have any restrictions financially.  Even if I blow up my trading account or do not make a penny while trading, I can survive for few years at least.

There are lot of uncertainties when you opt trading as a career.  I am fully aware of that.  You do not know whether at the end of month market will pay you your remuneration.  It is not your usual full time job where you are ensured a fixed amount at end of each month if you work properly.

Currently I am in a learning phase.  My aim right now is to get my strategies right and build up the confidence by applying them in live market with minimum risk.  Make less mistakes, as less as possible, and learn from them.  Also I am in the process of making preparations for future, finance wise, creating a good corpus of fund.  I want to enter into the market full time only when I am fully equipped skill wise, emotion wise and finance wise.  I do not want to hurry.  Let it take time.  I do not know about the time period it is going to take but I am sure one day I will be trading for living.


 


Saturday, 8 November 2014

Struggling Phase



 
In our career or profession, in initial phase we all go through some form of struggle till we achieve success.  Trading as a profession is no different.  This struggle actually makes us more strong and capable and helps us to be successful if we learn the lesson out of it.  When I first started day trading with DPs I was struggling a lot.  Most of my trades were hitting the initial stop loss.  It forced me to stop trading.  Then I tried to analyze what was going wrong. I found out that my one of the problem areas was related to discipline, self-discipline. I was lacking discipline.  I was keeping the SLs and adhering to it but not following good money management, not following other rules of trading.  Sometimes I was overtrading, sometimes I was hesitating to initiate trade.  So I decided to work on that.  I made some rules and decided that I would strictly follow those rules.

Rules that made a difference in my trading:

Maximum number of trades in a loss (where initial SL gets hit) allowed per day is 2.  Maximum number of loss days allowed per week is also 2.  If there are losses for two consecutive weeks, stop trading for that month.
This helped me to limit my losses to around 5K for the Nifty 50 lot per month.  I never lost more than that once I started following it.

Restrict to only one losing trade per DP or cluster of DPs.  If the trade was in a loss, do not trade again at the same DP.
This kept me away from overtrading and kept my emotions under check while trading.

Avoid taking the trade when the price is in a channel or DP is barb wired between the range.
This also helped a lot in controlling the losses whenever I was able to suspect it early.

Avoid taking the trade in same direction when it has run up a lot, e.g. 40 to 50+ or more.
This helped me to avoid trading overextended, over-stretched, big gaps kind of moves where we can suspect range-bound movement after such moves.

No BO trade of any type, PP, cigarette, range BO etc.
Most BOs fail and this rule saved me a lot from those failures, though I missed sometimes very good BO moves.

Take a break for 20-30 minutes after every trade.
Break means focus off the trading screen and not thinking about it for some time.  Doing something else, like chatting with others, listening music, anything.
This too helped me a lot.  A small break after the trade, no matter what, winning or losing, helps in many ways to keep me calm and focused and think from the scratch.

Plus, I avoided trading in the following situations where I felt it was hampering my thought process and making me take wrong decisions.

  • When I was mentally upset.  Because I feel your surrounding/environment, at home or at work, should be conducive to trading.  You should not be worried or anxious or angry or upset over something.
  • Crying over spilled milk.  You missed a good trade and that feeling of being left out makes you not to think straight.
  • Itch to trade.  You are not getting good opportunity to trade and the itch is so strong that you end up taking wrong trade.

I simply avoided trading for the rest of day once such emotions started affecting me very strongly and I was not able to get out it.

These self-made rules initially were very difficult for me to follow, but I decided strongly to stick to it.  There were many days where I had lot of reasons not to trade and I did not trade actually.  I was getting upset easily, was crying over lost opportunity, was watching the trade to move in my anticipated direction without me.  I did not escape from those emotions or tried to control them.  I just avoided trading in those situations till I was more mature enough to handle them.

This approach to address the self-discipline and cut the losses by being a disciplined helped me a lot and gradually over a period of time I started making the right decisions.  Later I modified those rules as I gained experience and confidence.  I even started taking the BO trades more confidently.

If you feel you are in the same struggling phase where self-discipline is the culprit, make your own set of rules, be honest to yourself and be disciplined in following them.  The rules that you make and follow, make sure address your problem areas, your personality, your lifestyle and your goals.  What works for me, may not work for you.

Wish you all the best.

 

Friday, 7 November 2014

07112014


Nifty opened just below PDC, within the previous' day range.  Then broke the PDL. I could take the BPB of PDL as I was not at my place.  Then in the afternoon there was a good pressure play setup at PDL.
1) BO of PDL. Entered a point above PDL.  It did not move well, getting resisted at IRL. Scratched it at breakeven.
No other trades.


It seems like it won't be possible for me to trade for next few months at least because of heavy workload at my work place.  However, I will try to update the blog whenever possible, mostly on weekends.


Wednesday, 5 November 2014

05112014




Nifty today gaped up, inside yesterday's narrow range.  It traded today again in the narrow range of 30-35 points the whole day, giving opportunity to trade only at the extremes.
I was busy today, could not trade.

Monday, 3 November 2014

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Today was a day after a big trending up day.  Usually price need to consolidate after the big moves, so expected a range-bound type day today and it was no exception.  It remained in a roughly 25-point range whole day, giving trade opportunities only at the range extremes.
I was busy today so was not able to trade.

Saturday, 1 November 2014

Thursday, 30 October 2014

30102014


Today Nifty opened just below PDH and PDC and broke the PDH in first candle.
1) BPB of PDH. Waited for the BRN also to get broken.  It moved well.  Trailing SL got me stopped out below RN.  Profit of 47 points.
Later it traded in the range at top end and gave good BOF of range low.  I could not take it as I was away.