Friday, 23 June 2017

Nifty Future 23062017

It opened around PDC and started to move down.  There were multiple levels just below.  Looking at the price action yesterday, there was an expectation of rangebound move and with good level of support just beneath, it is not a good idea to go for a BPB short trade.  Rather it makes sense to buy around 9580-85 level with the expectation of rangebound move and earlier price behavior at that level.  Have a look at this chart,

On the other hand, Bank Nifty presented a good setup to go for short after the open and also provided another opportunity to short at range high.

Thursday, 22 June 2017

Nifty Future 22062017

It opened full gap up and found support at PDH.  At this time, there was a TST setup to go long which moved well.  After that prices could not sustain above the broader range high 9700 and presented an opportunity to go short as marked.  If someone missed this setup, markets presented another setup to go short as BPB of PDC which also moved well.

Last time I shared with you an observation that I made regarding analyzing Order Flow with the help of position buildup.  Today, I share another observation of analyzing the Order Flow by studying volume on price charts.

If you observe volume closely, you would notice a tallest volume bar at PDL.  Why the max volume happened there? What does it indicate?  Any clue?

Well, "the highest volume after a prolonged directional price move indicates mostly exhaustion of the move and likely reversal of the move."  This kind of highest volume of the day generated towards the top or bottom of the day happens mostly because of Smart Money entering into the markets.  Smart Money never sell after a major selling and never buy after a major buying.  Rather they do opposite of that.  They are ready to absorb all the buying or selling that happens there and that is the main reason for the big volume.

Today prices had already traveled around 100 points from the top (prolonged move) and were testing an important level.  Also it was a level which the Smart Money defended strongly the last time prices visited there.  Have a look at the chart,

So next time when you see such a price movement at such an important level, be ready to place your orders there and join the Smart Money.  Today joining the SM there would have yielded 25 points in less than 15 minutes.

Monday, 19 June 2017

Analyzing Order Flow (Nifty Future 19062017)

Yesterday's analysis played out well.  It broke out the last range B at open indicating pullback or correction was over and prices were ready to move toward highs.  It in fact made the high of 9697 rewarding all the traders who believed in price reading analysis.

I would also like to share one important observation that I made today.  I discussed the same yesterday with Srinivas, a passionate trader during mentoring session, while discussing different ways to properly analyze order flow.  The observation is about reading the order flow when Nifty approaches the important level.  The order flow at the important level will give us a clue of likely outcome.  One of the ways to read the order flow is studying the building up of positions. " If large number of positions are built up at or around the level ahead of testing of that level, markets will often do something at that level."  This will produce a good trade opportunity.  Now lets discuss it on today's chart,

As you can see in the chart, there were 2 attempts made to break the important level, HOD.  First attempt was not successful, but the second was.  Now lets try to find out the reason behind this by analyzing positions that were built up ahead of these attempts.

It shows before the first attempt to break the level, there wasn't significant build up of positions, marked by red circle.  It means there was lack of conviction among the traders about the breakout. However, before the second attempt, there was significant build up happening, marked by green square.  Also there were few shorts built up just before the breakout which may fuel the rally on successful breakout, marked by red rectangle.  So the stage was set before the actual breakout and upon breakout others participated which generated high volume and made the breakout successful.

Highest intraday profit in stock futures

I feel very happy to share with all of you that today I made a highest single day net profit of Rs. 15000 in 1 lot of stock futures since I started trading in stocks few months back.  My personal earlier best was Rs. 8500 in a single day in April 2017.

In Voltas I regret booking out at target price of 478.  So far 11:35 am it has made the low of 474.25.

Click here  for performance report of this month.

Sunday, 18 June 2017

Nifty Future Next Week

As you might be aware, Nifty is currently in a very low volatility phase and hence moving less intraday.  Once we are aware of this information, what we need to do most is, adjust to this new information that the market is giving us and trade it rather than getting frustrated and doubting our trading system.  Since the markets are in compression mode, we need to satisfy ourselves with 10 to 15 to 20 points of profit in a trade because most trading opportunities will not be able to offer more than that most of the time.

Markets need a trigger to move and unless it is able to find that trigger, it will continue to refuse to move significantly.

Now with the above vital information about the markets, let's assess how it can possibly move next week.

First let's assess what the current picture is so that based on that current picture, we can build some expectations.

As you can see in the above chart, I have marked all the valid ranges that were visible in the chart.  It is very much apparent from formation of these ranges that markets are going up.  First 3 ranges formed one above another, then a pullback in the form of A, then it resumed its uptrend and formed 4, 5 and 6 ranges.  After that, currently it is in some sort of correction or pullback and has formed range A and B, one below another in the form of envelope.

So in nutshell, currently a pullback or correction is going on in an uptrend.  Once this correction or pullback is over, we can expect the trend to resume and prices to start going up once again.

Now having got the answer about what the markets are doing currently, lets assess where this current correction can stop.

In the above chart, I have drawn support and resistance levels.  9580-9540 area is expected to work as support based on prior price action.  If it proves to act as a support, then prices can bounce from there and go towards 9700.  If this area does not lend support, then prices can likely come to 9350 level.

With this information, now it can become much easy to trade next week along with our DP's, intraday range formations and reading of price action.

You can learn too from me how to draw the correct ranges, how to do proper assessment of what is going on in the markets and how to build expectations without any bias, provided you are really willing to learn.

Wednesday, 14 June 2017

Nifty Future 14062017

As discussed in yesterday's post, it did provide an opportunity to go long right at the last line of support, i.e. BRN 9600, not only once but twice.

Who showed the courage to buy right at the level without any confirmation?

Tuesday, 13 June 2017

Nifty Future 13062017

It opened within yesterday's narrow range but was able to break out PDH.  After that there was no follow-through and prices formed barbwire around PDH.  At 10 o'clock this barbwire got confirmed, so it was impossible to trade that tight range till around 2:30 pm.  At 2:30 pm it broke out but again produced no good setup to trade on short side as PDC, PDL and BRN were below it, a strong line of defense.  Have a look at below chart to understand the significance of BRN 9600 level.

Trading Guidelines for Success

Dr. John Keppler, an author of the book "Profit with the Market Profile" has beautifully given some simple guidelines for trading success.  Here they are,

Some simple guidelines that if followed, will immensely help to increase the likelihood of success and survival in the market. The following guidelines must be understood and taken seriously by all new traders:

  • Trading is not gambling or a game of chance. It is a skill and a discipline that can be learned.
  • Consistently profitable trading cannot be accomplished without a coherent understanding of the market and how it works.
  • Learning to trade requires developing both mental and psychological skills.
  • Never practice or try to learn to trade with real money.
  • Never trade with money you cannot afford to lose.
  • Never trade without a tested strategy. Every trade entry must have at minimum a target and an exit.
  • Risk management is an essential component of any trading strategy.
  • Never trade live with a strategy that was not extensively paper traded or practiced first.
  • Never trade in a market that you do not understand.
  • Never enter a live market until you are prepared.
  • Start small and grow.

If you are not making money, review the above guidelines and identify which ones you have violated.

Saturday, 10 June 2017

How to do proper trade management in stocks

I have just made a post on how I manage my trades in stock futures.  Click here to read this.

For stock futures from this month onward I have also made it possible for other traders to use Bracket order option which requires very less margin and there is no need to keep separate orders for SL and target. I normally give one or two recommendations like this,

Short AsianPaint at 1138 with SL 1142 and Target 1131

Also I have now enabled "One Day Free Trial" for trading with me in stock Futures. You will be given an access to my Telegram trading channel for one full day to trade with me, crosscheck past performance and evaluate accuracy and profit potential of short-term trading.

This June month is turning out to be a good month for trading in stock Futures.  Click here to check out the performance.  I also published a chart on Twitter describing what made me take trade in Ultracemco on Friday.  Here is that chart,

Thursday, 8 June 2017

Nifty Future 08062017

It opened just above PDC and got rejected again from BRN PDH zone.  The down move was very quick and did not present a good setup.  After that prices remained in a narrow range.  In the afternoon expected a good BO from this range but that failed.

Tuesday, 6 June 2017

Nifty Future 06062017

It opened full gap up but could not sustain and broke below PDC which presented a nice BPB short setup.  After that it just remained in a narrow range and refused to move out of that range.

Saturday, 3 June 2017

Stock Trading Performance May 2017

Here I am sharing with all of you my cash stock as well as stock future trading performance for the month of May 2017.

Click here for stock futures.

Click here for cash stocks.

This performance proves if traded with discipline and proper risk management, even less than 50% of accuracy can generate enough profits from short term trading.  Even after deducting brokerage, taxes etc stock future trading for the duration of couple of hours generated the profit worth 230 Nifty points.  In cash stocks the profits were even better.

I hope to improve this performance further in the coming months as my trades now have more than 1:2 risk reward ratio which will be improved further to 1:3 or even more in the near future.  Also I would try to take few trades in afternoon hours also so the full time traders trading with me can benefit from it.  Here while trading with me traders get full assistance in trading, How to place orders, when to exit, when to trial stop loss, when to scratch, etc. If traders desire, they can even learn the trading strategies that I apply for stock trading.  The only objective of trading with me is to help you to be a successful trader. We are working on a proper trading plan with limited risk and less trades in a day.

Friday, 2 June 2017

Bracket Order - Very Useful in Day Trading

Bracket order is the kind of order placement utility which allows us to enter into the trade with predefined stop loss or trailing stop loss and target price.  You can read more about it and how it works by clicking here.

Many a times bracket order becomes quite useful when the volatility is very high and we need to enter and exit quickly. Also it allows us to trail stop loss and help manage the trade better.  No need to say that it also requires us to keep very little margin, as low as Rs. 11K, as our risk is managed.

In stock trading where the price movements are very quick and sharp, I would always like to block my profit whenever I am in the profit.  To play safe I feel it is better to trail stop loss at every Rs. 1000 profit in stock trading.  If I enter into a trade at 408 and its lot size is 1000 and stop loss is 406 then if price moves in my favor lets say till 409, I would trail stop loss to 407 from 406.  At around Rs. 2500 of profit, I would also like to shift stop loss to close to entry point because if prices reverse from there I can close that trade with no profit, no loss.  All the management of trade like this becomes much easy with Bracket orders.

Here is an example of Axisbank bracket order placement.

I will place the order as shown like this. Rs. 2 stop loss, double target and half of the value of stop loss in trailing stop loss.  This order will automatically trail my stop loss at every 1 Rupee move in my favor till the target is achieved.  I will remain tension free without worrying about price fluctuation.  I also don't need to worry in middle of the trade about what will happen if my PC breaks down, what will happen if my broker does not pick up the phone to square off my order, what will happen if there is no internet connectivity, etc etc.

If the Bracket order is not there, I will require to keep observing the prices and frequently modify the SL orders and also keep separate target order.  Also taking multiple trades at the same time and keeping the focus on trade management will become a big issue without the Bracket order.

So all in all, Bracket orders are made for the intraday traders like us who like to trade in high risk instruments like futures and options but still want to control the risk and manage the trade better.

Nifty Future 02062017

This is how I tried to analyze the price action in morning session.

Prices broke at open the narrow range that it formed over last few days.
Once such kind of consolidation is broken out, we can expect follow-up or continuation, but unfortunately that did not happen as prices were unable to move higher than first 3 min candle.
Since the prices are not showing momentum after the BO, we can expect range bound moves for some time.
So now what can be the likely range for range bound movement?
Well, it can be 1) 9650 to 9670, 2) 9640 to 9670, 3) 9630 to 9670. I have rounded off the numbers.

So wait and see what range actually plays out.  Whatever range prices confirm, we can trade that range.  Also we can trade that range with keeping overall trend in mind which is up.  If the trend is up, it is good for us to buy at range lows.

So summing up the plan, wait for the range to get confirmed. Once it gets confirmed, wait for a good pattern at or around range lows/DPs to go long.  Also always be ready to change the plan if prices start behaving differently.

Summary at EOD:  Prices behaved as analyzed and remained in the range whole day, 9650-9670 without giving an opportunity to trade.

Thursday, 1 June 2017

Today's Trades 01062017

Nifty is stuck in a narrow range.  Yesterday it traded in a 30 point narrow range whole day.  Today since it was also trading close to PDH in the morning, it was expected to break out but it disappointed. In the afternoon it tried to break PDL BRN and this time too it failed. Big picture analysis suggested BRN a good level to trade.  Have a look,

I also traded in few stocks and I would like to share with you the setup that emerged in morning in Divislab which was traded in cash.  Have a look at the Big Picture chart comprising price action of last 6-7 days.

If we try to read the story the prices tell us remaining unbiased, we can find a good setup such as this and benefit from it.

Some sort of similar kind of setup was there in Sunpharma.  Here the volume part was missing. It was traded in futures and moved well too.

Here is the snapshot of trades that were discussed.

Monday, 29 May 2017

Saturday, 27 May 2017

Being honest as a trader

The most critical concept that has helped me become a good trader is being honest with myself as well as others around me. I always try to be honest because I believe honesty always develops trust better than anything.... trust in my trading method, trust in my trade plan and If I am honest with you, you will also develop trust in me as a trader. The things to success are simple but we make them look complex which is why staying honest with oneself helps trader realize his/her mistakes and improve trading capabilities, clear dusty cloud off the mind, think straight and clear and keep on learning and improving oneself to climb the ladder of success. This is very simple thing but still not understood by human psych.

Also being honest with oneself helps practice discipline....again the most critical in trading.  Once I have made my trading rules, I just need to be honest in following them.  If I need to exit out of the trade on the break of certain level, I need to be honest and exit at that level.  If I need to stop trading after certain loss making trades, I need to be honest with myself and stop trading.  I cannot cheat myself by allowing myself to widen the stop loss or continue trading with consecutive losses.  If I start doing that, I know for sure it will only lead me to disaster.

As you all know, I regularly post end-of-day Nifty future charts along with little bit of thought process involved in spotting a setup. The trading may look very easy to you by just going through those charts but in reality trading is not that simple. As a trader, we have to deal with different trading situations and these situations make the trading complex. Let me give you few examples.  We will be often put into the situations where it will just trigger the entry and after triggering the entry prices will never move in our favor.  Prices will start to move only once we exit the trade.  After hitting the stop loss, it will only move in favor.  Prices may move very quickly in favor but we cannot profit out of it because it may retrace quickly too vanishing all the profit. It may so happen we wait for the prices to reach the target but prices reverse without reaching the target and take away majority of profit.  We keep on looking for the setups but they either do not appear or get missed.  The list will go on and on like this.  Also there will be lot of stress and emotions involved which too make trading difficult.  So what I try to do in my posts is I try to present the charts demonstrating how best one could have followed the trading method and benefited from it by being honest to the trading method. It never reflects my actual trading.

Of late I have started trading stocks.  I have not kept it only to myself but also made an effort so that it becomes possible for you to copy my trades and to learn how I trade the stocks too. I trade systematically and share my stock trading performance with all the transparency.  If you closely go through the stock trading performance, you will realize how I have managed to be honest, not only with myself but with you too.  If I had to stop trading after 2 consecutive losses, I had stopped trading for that day.  I never widened the stop loss.  I was in front of screen and be ready all the time before the market open.  I never allowed the fear of losses or stress or emotions to gain control over my trading.  I also shared with all the honesty whatever trading I was able to do without worrying about the end result.  I am able to do that because I am aware in short term, there will be lot of things happening which will affect the trading performance but in the long run everything gets even out. Sometimes there is high volatility, sometimes less, sometimes there is heavy news flow driving the prices, sometimes very dull markets. So these are things which is not in our control and we cannot let them dictate the trading performance.

Trading, blogging, educating others on trading and even allowing them to trade with me, all became possible because I have full faith in my trading method and I am honest as a trader.

Friday, 26 May 2017

Bank Nifty Future 26052017

Bank Nifty was little sluggish in the morning and traded in the narrow range till noon time.  It provided two setups as marked to go long.

Thursday, 25 May 2017

Nifty Future 25052017

Expiry day.  Opened within previous day's range but was able to trade above PDC and then BRN. This indicated strength in buyers or in other words bullish bias. Then there was a good BPB of BRN setup.  Unfortunately, it did not move much and prices remained in narrow range for around 2 hours.  It then first tried to break the lower range extreme but failed.  You might have probably heard that a failed attempt to break one range extreme often leads to successful break of another range extreme.  You might have also heard that once the prices consolidate enough, they will be ready for the move.  You also might have heard that during expiry day, prices often move from BRN to RN or another BRN.  Plus there was a bullish bias with range forming higher than earlier range.  All these indicated to go for a direct BO ignoring PDH above.  This direct BO yielded around 100 points of gain.

One more observation I would like to share with all of you.  Lately, on expiry days it is observed that markets often make a final sizable move exactly after 3 pm.  Just wait for the clock to hit 3 and immediately after that it will give a good move.  I have marked an arrow on 3 pm move to illustrate my point.  It was around 40 point move.

Tuesday, 23 May 2017

Nifty Future 23052017

It opened within previous day's range and soon broke below PDL.  The down move was very sharp and quick and did not allow the entry.  After that it consolidated below BRN for a long time. Expected a good move out of this consolidation.  The BO of range high was a good setup which did reach to LOL of PDL & PDC.  Here again the prices got rejected and gave another good down move.

Monday, 22 May 2017

Nifty Future 22052017

It opened within yesterday's range.  Once it broke below PDC and got accepted, there was a BPB short trade setup.  PDC continued to act as a strong flip the next time prices came back there and again presented a BOF setup for a short trade.

Friday, 19 May 2017

Nifty Future 19052017

Yesterday it showed the sign of volatility coming back to the Index trading after a long long time. Today it opened within yesterday's range and made a counter-trend up move which failed at the confluence of BRN and PDH.  This presented a nice BOF setup to go short.  If trailed properly, this setup generated a profit of 70 points plus.  After this big 100+ move, it was expected to take some rest and remain range-bound which it did.

How to read the price action at BRN PDH level for BOF setup:
1) Trend:  Nifty in a micro trend decline mode.  It is a very fresh trend which just started yesterday.  Since the trend is fresh, we can expect a good move in the trend direction.  So lets look for the setup which allows to trade with the trend.  BOF of BRN PDH will be the good setup.
2) Location and earlier price behavior:  Confluence of level BRN & PDH, so a good location.  Last time, yesterday, when the prices reached at the same level (BRN), it worked as a energized fencing and forced the prices to go away from the level quickly.  If history repeats itself today, we can expect the same thing at the same location today also, i.e. prices going away from the level very quickly.
3) How the prices reached there and possibility of reversal:  Prices reached there with orderly pull backs, traveling around 50 points.  This indicates critical mass probably took position in this counter-trend up move.  Also CT moves of 40-50 points normally gets exhausted at the strong S/R level.
4) Pattern:  Breakout of the level was good with good volume.  But even with this good BO, follow-up buying did not come.  This indicates prices unable to move higher.  So now if this BO fails, it will trap not only BO traders but also the critical mass.
5) Risk reward: It is more than 1:1 if the prices reach to LOD which can act as FTA.   If it breaks LOD it came go to PDL PDC to fill the gap.

This is a kind of rare setup where everything supports like trend, location, space, PA, critical mass, pattern etc.  How a trader following DP trading tactics can miss this trade!

If you put an effort to read the prices this way, you will have lot of confidence to take such setups. If you want to learn how to read the prices this way, take the help of Consistent Trader video tutorial which focuses on reading the PA and finding the good setups with ease.

Thursday, 18 May 2017

Nifty Future 18052017

It opened full gap down.  After that it traded in a narrow range.  Towards the fag end, it could break out of that narrow range and presented a BPB setup which moved well.

Wednesday, 17 May 2017

Nifty Future 17052017

It opened within previous day's range and traded in a narrow range.  Towards the fag end, there was BOF of PDH setup which did not work.

Markets are trading at all time highs but very quiet.  As a trader, it requires us to adjust to this low volatile phase of the market keeping our expectations low.

Tuesday, 16 May 2017

Nifty Future 16052017

After yesterday's very narrow range day, it broke out of that range in morning.  Looking at the momentum, it was difficult to go long on BPB of PDH/PDC.  After that it again formed a range and broke out of it in afternoon.  It then presented a nice BPB setup which moved well.

Saturday, 13 May 2017

How much money you need to day trade

The most essential requirement for day trading is "capital."  Capital is day trader's lifeline.  If you don't have money in your trading account, you will not be allowed to trade.  It is as simple as that. Also traders need to have enough funds to withstand a string of losses and have the flexibility to take a wide array of trades.

Now in order to determine the funds needed for trading, risk management must be addressed.  As a normal practice, traders normally follow a rule of risking only 1% or less of the total capital.  It means, as an example, on a capital of Rs. 1 lakh, a trader cannot risk more than Rs. 1000 per trade. To make it easy for you to understand, here is an  example.  If you buy a stock at Rs. 100 and place a stop loss at Rs. 99, risk is Rs. 1 on the trade.  If your trade position is 1000 shares, your trading risk on that trade is 1000 x 1 = Rs. 1000, i.e. 1% risk on a trading capital of Rs. 1 lakh.  This trading risk always must be 1% or less than that of the day trading account balance.  If you suffered few losses and your capital goes down to, lets say Rs. 90000, you cannot risk more than Rs. 900 per trade.  So as your capital grows, your risk taking capacity will grow and as your capital shrinks, your risk taking capacity will also go down with it.  By following this 1% rule, capital will be preserved during losing streaks, which inevitably occur.  By only risking one percent, even a ten trade losing streak keeps most of the capital intact.

Leverage and minimum capital requirement:
Day traders can typically leverage 20 to 40 times on their capital.  If there is Rs. 25000 in the trading account, a trader can take a position in Nifty Future which current contract size is around Rs. 7 lakhs, giving a leverage of 28 times.  Even when leverage is used, the one percent risk rule is always applied to actual account balance (Rs.25000 in this case).  In that case. only Rs. 250 risk per trade for Nifty Future is allowed, which is not possible.  Minimum risk of trading Nifty Future comes to around 12 points or Rs.900. So for every Nifty Future trade where the risk is around 12 points, the minimum capital requirement will be Rs. 90000 to Rs. 1 lakh.  In other works, to trade 1 lot of Nifty Future, a trader needs to keep always around Rs. 1 lakh (least minimum) in the trading account, and not just Rs. 25000.

Same way to trade in 1 lot of stock futures, I keep the trading capital around Rs. 3 lakhs.  This amount is 3 times more than the amount required for trading in Nifty Future and this is because the risk is more in trading stocks. I take a risk of 0.5% of the stock price for my trading in stocks.  As an example, if I want to take a position in a stock which quotes at Rs. 300 which lot size is 2000 shares, I will keep a stop loss at Rs. 298.50 (0.5% of 300 = 1.50).  So this way my total risk for that trade will come to Rs. 3000 (1.50 x 2000).  In other words, 1% of my total trading capital of Rs. 3 lakhs.

If you have Rs. 25000 as a trading capital and you want to trade in cash stocks, you can do that.  You can take each trade worth Rs. 50000 and still follow a 1% of risk rule.

Proper utilization of trading capital:
We do not need to keep all the required capital in cash with our broker.  We always can take some margin on our investments in stocks, mutual funds, ETFs etc.  Lets say you decided to trade in only Nifty Future and for that you require Rs. 1 lakh.  You have also some stocks and ETFs worth Rs. 50000 in your demat.  In that case, you can pledge these stocks and ETFs to your broker and get a margin of around Rs. 40000.  Now you need Rs. 60000 only in cash.  Out of this Rs. 60K, keep around Rs. 20K with your broker and rest amount of Rs. 40K in a bank FD and earn an interest on it. You stocks will also earn some dividends for you. This way you will be able to properly utilize the trading funds, making your idle funds to earn some money for you.

Lastly, again as another risk measurement, if somehow you exhaust this Rs. 20K very quickly in your trading account, you need to stop trading immediately.  You should not re-fund your account.  Take a break from trading and think about the reasons for your losses and work on them first.

If you are facing difficulty in your trading and not able to manage the losses, you can join me to copy my trades in stocks and learn how to follow a strict discipline and benefit from it.  I have also updated my stock future trading performance for the current month.  Click here to view it.

Friday, 12 May 2017

Nifty Future 12052017

It opened CT full gap down.  Once it seemed like prices were getting accepted below PDL, it was possible to take BPB of PDC PDL which moved till BRN.  After that it formed a range and gave BOF of range high which also moved till range low/BRN.  There was an expectation of barbed wire at BRN and it did in fact form a barbed wire.

Have a look at earlier price behavior at BRN and see what it did.

Thursday, 11 May 2017

Nifty Future 11052017

It opened full gap up.  I was hesitant to trade the BPB of PDH setup so avoided trading it.  After that there was not any good setup to trade and it remained in a narrow range for rest of the day.

Monday, 8 May 2017

Nifty Future 08052017

It opened within previous day's range.  It tried to break PDH but failed and gave a BOF of PDH setup.  It was expected to reach to LOD PDC area but reversed without testing it.

Saturday, 6 May 2017

Proper Order Placement

In day trading, trade execution plays a big role and for the trade to get executed it requires us to place the order in time and at proper level.  We also need to place the orders in such a way that it allows us to enter into the trade at our desired price.  Entering into the trade far away from our desired price is not going to serve the purpose of trading.

Here are some guidelines that I follow for placement of orders into the system.

I first find a good setup  to trade.  Once I spot that setup, my next job is to identify a price level beyond which I would like to enter. Almost 100% of the time  I like to enter with SL trigger orders at the identified level.  There are two types of SL trigger orders in India which brokers allow us to do.  One is SL limit order and another is SL market order.   I hope you all are aware of these two order types, so I will not go into further details.  Out of these two types, for entry I always use SL limit order.  For exit, many a times it is safe to use SL market order.  The reason is simple, exit is not in my hand.  Exit is something which markets force me to do, so I will accept whatever price the markets offer me at that time.

1)  Now how to place this SL trigger order.  For Nifty or Bank Nifty is is quite simple.  Usually, trigger price is at 0.5 point away from the level and keeping a 0.5 point of difference between trigger and limit for Nifty is enough.  Sometimes while placing an order for direct BO setup, this difference has to widen to around 1 or 2 points for Nifty and around 5 points for Bank Nifty.

In stocks, order placement will vary from scrip to scrip.  It varies because some scrips are of lets say Rs. 80, some are of around 300, some are around 500, some around 1000 and some even more than that.  For example, if the stock trades at lets say 105, I will keep the trigger at 105.05 and limit at 105.10.  Having said that, sometimes depending upon the volatility of stock, I may not allow any difference between trigger and limit and keep both at the same price level.  For the stock trading at Rs. 450, I will keep the trigger at 450.10 and limit at 450.25 or 450.30.  Similarly, for the stock quoting at 1400, it will be like 1400.5 and 1401.  So here you might notice, depending on the price the stock is quoting at, I will have to adjust my orders.  I cannot keep the trigger order at fixed price and also difference between trigger and limit will vary.

If you are trading in highly liquid cash stocks, placement of orders in this way will work most of time and your order will get executed for normal/average quantity in normal market condition.  However, for stock futures, it is better for us if we also take into consideration the spread between bid and ask price.  Let me discuss it more with an example of Titan future.  Here in the snapshot of my broker terminal (SAS Online), notice I have kept both, price ladder as well as top 5 bids/asks.  As you can see, for the LTP of 494.50 the bid rate is at 494.30 and ask rate is at 494.95, a difference of 0.65 which is not normal.  Now lets assume, the LTP of 494.50 is your trigger level for entry.  You wanted to enter a long beyond 494.40, so you kept a trigger at 494.50 and limit at 494.70.  Now once the price hits 494.5 your order gets triggered, it travels from your broker to exchange with the limit buy price of 494.70.  But it will just stay with the exchange and will not get executed because at that time the ask rate is 494.95 (seller's price).  Now you have two options.  One is either you match the seller's price of 494.95 and buy it at 494.95 or wait for the seller to come to you and sell to you at your price of 494.70.  Instead of doing this, lets assume you were aware of this huge spread between bid and ask that was going on at that point and you were willing to buy even at slightly higher price and with that in mind, you kept your order like, trigger at 494.50 and limit at 495.  In that case, there is high likelihood that your order will immediately get executed.  So in nutshell, it becomes necessary to also take into consideration the spread and adjusting the placement of order or modifying it once the price reaches close to the trigger level for the trade execution.  However, it all depends on urgency of entering into the trade.  Many a times I will prefer to wait for my price.  Rather than chasing the price, I will allow to let go the trade if it does not come to my price.  There are lots of trade opportunities.  If I could not catch this, fine.  There will be always another waiting for me.

2) Another important aspect of reading the price ladder for order placement is to check whether there is any big or good sizable order close to the trigger price.  If there is any big order sitting there, I would wait for that order to get exhausted and then enter.  Let me give you an example of SBI future below.  The LTP is 302.40 and lets assume my trigger level for a long entry is at 302.60.  As you can see in the snapshot, there is a sizable single order for sell at 302.70 of 11 lots.  Now if my trigger is at 302.60 and limit at 302.70, I will be buying ahead of this sell order.  It simply means even after my trade, there will be still big quantity left in the system to sell which will not allow prices to move in my favor for some period of time.  So why not wait for that big 11 lots of sell order to get exhausted and then enter.  So once I notice this kind of order flow into the system, I will modify slightly my trigger at 302.75 and limit at 302.80 or 302.85 to enter after that seller is over with his sell orders.

 Sometimes due to certain market condition, even after taking care of different aspects for placement of order, it is still possible that the orders will not get executed and prices will jump the order.  But that should not stop us in getting our act right.  We need to be always vigilant of what is going on in the order flow side so that we can better position ourselves.  Remember, there are plenty of setups happening all the time.  If this stock does not allow me to enter, there will be always another one waiting for me.

Hope this post helps you in your order placement and better order execution.

If you are eager to check out the performance of stock trading for month of May 2017, you can click here.

Thursday, 4 May 2017

Nifty Future 04052017

I kept an eye at the open to see whether it was able to break the Range High as discussed yesterday but it could not.  In the afternoon, there was a setup at BOF of PDC and intra range low. I did not want to trade that narrow range so avoided.  Towards the fag end it appeared like it was making an attempt to break past 9370 level.  Attempted a long on BPB which ended as a scratch.

Wednesday, 3 May 2017

Nifty Future Range

As you can see on the chart Nifty is stuck in a 90 point range since April 26th.  Trading within this narrow range is very difficult.  Today was no exception.  Today it traded again in a narrow range and that too within this 90 point narrow range.

A good trade setup would emerge only at extremes of this range 9370 - 9280.

Tuesday, 2 May 2017

Nifty Future 02052017

After the open it tried to break PDH and trade above it but failed and gave a good BOF of PDH setup which moved well.  After this 90 point move in a straight line as expected prices remained range bound and no good setup was there to trade.

Friday, 28 April 2017

Become a Champion Stock Trader

If you are a trader or interested in trading for the very short term and need some helping hand, you can join me through my Telegram Channel, Champion Stock Trader and copy my trades. I follow price action trading concepts for my trades and my objective is to benefit from the short moves that the stocks make like 0.75% to 1%.  For the stocks, 1% of the move is nothing but for me it is a big gain.  Further more this kind of moves are very frequent and easily predictable.

Benefits of copying my trades:

  • It requires less than couple of hours of time commitment, Monday through Friday.  After 10:45  am or 11 o'clock, you are free to do anything you want and enjoy your life.  
  • You can trade as per your risk appetite.  You can even trade with the capital of 10000 or less.  Trading in stocks allows you to choose your own quantity.
  • You will develop trading discipline.  You will always enter and exit at pre-decided levels.  You will never bother about missing the trades, booking out early or losing on few trades.
  • You can also learn the trading in stocks so that down the line you can start trading on your own independently.  I will teach you each and everything of stock trading, the way I trade and manage my trades provided you have a desire to learn.  Till the time you make your decision of learning the trading, you can trade with me and develop the vital habits that a good trader requires, earn some money and build confidence in yourself as a trader.  Even after learning everything, following me for some time period will improve your confidence and conviction.  

If you have still any doubt about it, you can check out the trading performance of last few months by clicking here.

Understand the red flags:

  • You will be required to remain totally focused, remain in front of the screen during this short trading period of couple of hours.  You will also need to react fast.
  • You need to understand trading is the risky business.  Losses can and will occur.  There is no guarantee for success, no matter how hard we try.  If you want to enjoy profits, you have to have a capacity to bear for the losses. 
  • It is almost impossible to duplicate my trading performance 100%.  Yes, I don't want you to remain in la la land.  If you trade good with proper discipline, it may be possible for you to match around 70-80% of my performance.  For example if I am able to make lets say 1 lac, by following me and trying to copy my trades, you can expect to make around 70000 to 80000.  If you are really good in trading, you can even beat my performance and make much more than that.  It happens this way because sometimes you may miss few trades or sometimes markets may not allow you to enter at right price. Sometimes you may struggle to follow discipline and make some mistakes of entering prematurely or exiting prematurely or not managing your trade properly.  Don't worry about it.  You may begin your journey as novice but by spending time with me, you will surely improve and be able to match my performance.

I am ready to teach you how to trade successfully and even spend my precious time to help you trade and allow you to copy my trades so that you too can make some money.  Who else will do that?

Let's trade together.

Have a look at the kind of response that I have received from other fellow traders and this is really what gives me sense of achievement.  Making money from the markets is the secondary thing.

Thursday, 27 April 2017

Nifty Future 27042017

It opened within yesterday's range and remained rangebound.  In afternoon it seemed like it was going to break PDH.  Attempted that trade as marked but unfortunately it did not work.  No other trades.

Wednesday, 26 April 2017

Nifty Future 26042017

It opened at PDH/BRN and started moving up without giving us a setup to go long.  After that it started consolidating and gave BOF of Range Low. It moved nicely to Range High.  Toward the fag end, it made an attempt to break PDH/BRN and failed.  Hesitated and missed the up move.

As you might be aware, I have been trading stocks in the morning session for quite some time now.  Few traders decided to join me to trade with me at the beginning of this month and they traded with me in cash stocks and stock futures.  The performance of stock trading has been fantastic. A trader thanked and confessed to me this was the first profitable month of trading in his 10 years of trading career.

Month of May has been historically very volatile month.  As a trader, what we only want is lot of volatility, and I am sure it will provide lot of good trade opportunities.  If you are ready to spare just one or two hours in the morning, you can join me to trade with me in cash stocks or stock futures.

Let's trade together and benefit most out of it. You have only few days left of the current month to make the decision.

Click here for the April month performance sheet.  I have also provided there snapshots of last couple of weeks of Telegram messages to give you an idea how convenient it is for you to trade with me.

Tuesday, 25 April 2017

Nifty Future 25042017

It opened above PDH and after remaining rangebound it broke out and presented a nice BPB setup.  It moved some.  In the afternoon DO/range high acted as a flip and gave another setup to go long.  It just missed the BRN target.

Friday, 21 April 2017

Nifty Future 21042017

It opened full gap up but there was no follow through.  This was the first sign of weakness.  After that traded in a very narrow range below PDH for a long time. Second sign of weakness.  Made an attempt to reverse but failed.  Another sign of weakness. Then broke out below the range which confirmed the weakness and presented a BPB setup.  The trade moved very well. Towards the fag end it made multiple attempts to break BRN but failed.  Did not expect a V shape reversal at that time and hence avoided BOF of BRN.

Thursday, 20 April 2017

Nifty Future 20042017

It opened within previous day's range.  Attempted a BPB of PDH which did not work.  After that it formed a range envelope without giving any further setup to trade.