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Pyschology

Day 34 of Live Algo Day Trading JournalDay 34: What a bad day it has turned out to be. Market gyrations has given me losses for all the trades taken. The algo was correct, the logic captured the direction of the market, however the intraday pullback of the market was beyond its normal limits (or as per the set calculated limits over a certain time) and kept hitting SL everytime. Took four trades, all wrong. Setback: today's market has made me thinking if I should incoporate something else in the logic to figure out the major direction and take trades only in that direction? This will keep me occupied for the weekend.
NSE:INDUSINDBK
by Hiren1
Emotions in Trading Performance: Overcoming Fear, Greed & HopeThe Impact of Emotions on Trading Performance: Overcoming Fear, Greed, and Hope Introduction: Emotions significantly influence our decision-making process, which holds true for trading as well. During trading, our emotions can either be advantageous or detrimental to our performance. The Role of Fear: Fear plays a crucial role in trading. When fear takes hold, traders may hesitate and avoid necessary risks, ultimately missing out on profitable opportunities. Unfortunately, fear can lead to impulsive decisions rather than careful analysis and adherence to a well-thought-out trading plan. Consequently, managing fear effectively is crucial for success in trading. By cultivating emotional control, traders can make objective and rational decisions based on trading strategies and market analysis. This disciplined approach will enhance trading choices and overall performance. The Impact of Greed: On the contrary, greed-driven behavior can also have a significant impact on trading outcomes. Greed often arises when traders become overly fixated on making quick money. Consequently, they may take excessive risks or hold onto losing trades, hoping for a miraculous turnaround. This behavior, fueled by greed, often results in substantial losses. To overcome the negative effects of greed, traders must adhere to their risk management strategy and avoid impulsive decisions. Disciplined trading based on sound judgement and strategic planning is crucial to long-term success. The Influence of Hope: Hope is an emotion commonly experienced by traders. It fosters optimism and a desire for positive outcomes in the market. However, hope can also lead to biased decision-making and unnecessary risks. Traders may hold onto losing positions for longer than necessary, hoping for a reversal that may never come. To counterbalance an excessive reliance on hope, traders must maintain objectivity. By implementing a rational approach and sticking to their trading plan, traders can make well-informed decisions that reduce the impact of hope on their trading outcomes. Real-Life Examples: Let's examine several real-life examples that illustrate the impact of emotions on trading performance. Example of Fear: Consider a trader who invests in a stock, only to learn about negative news regarding the company. Fearing losses, the trader hastily sells the stock at a significantly lower price without conducting thorough analysis or assessing the company's long-term prospects. In this instance, fear overrides sound judgement, leading to impulsive decision-making. Example of Greed: Imagine a trader who experiences a series of successful trades, resulting in substantial profits. Driven by greed, the trader becomes overconfident and deviates from their risk management strategy. By taking on larger positions and increasing their risk exposure, the trader encounters a significant loss that erodes their previous gains. Example of Impulsive Behavior: Consider a trader who identifies a potential trading opportunity but enters the trade impulsively without proper analysis or confirmation. This impulsive behavior, driven by emotion rather than a well-defined trading plan, results in an unfavorable outcome and monetary loss. Strategies for Emotion Management: Successfully managing emotions during trading is vital for consistent and sound decision-making. Here are some effective strategies: Recognize and acknowledge emotions: Be aware of the emotions you experience while trading, particularly fear, greed, and hope. Recognize that emotions are a part of the process, but they shouldn't dictate your decisions. Stick to a trading plan: Develop a comprehensive trading plan that includes entry and exit strategies, risk management guidelines, and profit targets. Adhering to this plan will minimize the influence of emotions on your choices. Practice discipline: Exercise discipline in all aspects of trading. Avoid impulsive actions driven by emotional impulses and the fear of missing out. Stay committed to executing your strategy consistently. Set realistic expectations: Understand that losses are inevitable in trading, and not every trade will be a winner. By setting realistic expectations, you can avoid excessive disappointment or overconfidence. Take breaks and manage stress: Trading can be stressful, amplifying emotional reactions. Take regular breaks, engage in stress-relieving activities such as exercise or hobbies, and maintain a healthy work-life balance. Seek support and education: Surround yourself with a supportive trading community or seek professional guidance. Continuously expand your knowledge through trading education, which will help you manage emotions effectively and enhance your trading performance. Maintain a trading journal: Keep a journal to record your trades and the emotions you experience during each trade. Reflect on the impact of these emotions on your decision-making process, and use this self-reflection to identify patterns and develop strategies for better emotional management in the future. Conclusion: Emotions have a significant impact on trading performance, and understanding how fear, greed, and hope affect decision-making is crucial for success. By implementing effective emotion management strategies such as discipline, a well-defined trading plan, and self-awareness, traders can achieve more rational and objective decision-making, ultimately improving their trading outcomes.
NSE:BANKNIFTY
by sbkurandwad77
'Shades' of 'Trades' - color of the marketIn this color season let's have an insight into how the market plays 'Holi' with traders with its binary colors. The above line sounds fascinating but it's not let me elaborate a bit more. Yes, the market plays with colors with traders but the market uses only binary colors. Many of you may think of white and black as binary colors, but this is not the case here. The market only uses two primary colors green and red to play with traders but we play with colors only on 'Holi' it seems that markets are very fond of playing with colors so it does probably every trading day it either colors the trader's position page with the green of red. Though we have only two colors in markets which can be divided into four shades which are the following:- -> Light Green - symbolizes a small profit -> Dark Green - symbolizes a big profit ( Trader's Favorite ) -> Light Red - symbolizes a small loss -> Dark Red - symbolizes a big loss ( Hazardous to account ) In this article let's dive into the depth of these colors and the reason for incurring such colors on your position page. -->How to get light green color -- Aimed for steady and regular profits . -> Trader can incur this only if they are consistent and aims for regular profit cause markets aren't trending every day. -> Discipline is the key to consistency. I think many of you have heard of the story of sage Vishwamitra who was meditating for a purpose and Menka was used to break the meditation and misguide him from his path. The same is the case of markets if you are in the market to generate regular profits then you must be disciplined as markets have negative behavior of creating illusions to trap the traders just like Menka . -> I suggest developing a trading system or set of rules on which you are going to take the trade if you want to generate regular and steady profits cause if the system is profitable you will also be profitable. Don't rely on price action on an intraday basis unless you're a champ in the same. -->How to get dark green color -- Aimed for sporadic and occasional profits. -> Though everyone wants profits it's not obvious as said earlier markets aren't trending every day. -> But if you are keen on watching market movements, you could probably catch these sporadic days and generate big profits. -> Fear should reside out to ride big profits. I think why many of us aren't able to ride big profits because of the opulence of loss that has developed fear in our minds due to which we try to book profits early without getting any sign of weakness in our trades. Our mindset says to us "Something is better than nothing". -> To overcome this fear I suggest backtesting your trades which can help you in gaining self-confidence if anyhow you can develop faith in yourself then fear naturally resides. -->Reasons to get light red color -- Quite obvious as a part of the game. -> It's quite obvious if you getting small losses as loss is a part of the trade game. -> There is nothing to be stressed about or to ponder upon these small losses if it comes along with profits as there is no such trading system or trader which only gives or generates profit. -> This usually happens when stop-loss is hit and you must be thankful to yourself that you had placed a stop and accept the small loss. Markets reward traders who admit their errors and change their ways whereas punish traders who are obstinate and won't change. I think everyone must check the reason for each loss they incur if it's due to the system you are following and the system is profitable in long run then the loss is fine but if it's due to your own mistake, learn from it and rectify the same as quick as possible. -->Reasons to get dark red color -- Hazardous and may lead to termination. -> One must avoid these big losses at all costs; otherwise, you may find yourself in a situation where you are unable to pay any costs. -> Most hazardous and may sometimes lead to the termination of your trading journey. -> This usually happens due to the stubborn nature of traders where they don't accept that they are wrong or don't have the guts to book their stop losses. I think why many of us incur big losses because of neglecting the use of system stop-loss. Traders have realized the significance of stop-loss hence they decide on the sl before entering into the trade but what they do is keep sl in mind rather than the system and when the price reaches the sl level they don't have the guts to book the loss due to which small loss turn into a big loss. This is the reason why everybody should place system stop-loss as a computer doesn't have emotion. As stated earlier Markets reward traders who admit their errors and change their ways whereas punish traders who are obstinate and won't change. That means that if the trader does not recognize their mistake and book, the sl market will penalize them with a large loss. I suppose that all of you have got great knowledge of the 'Shades' of 'Trades' and an insight into all outcomes of a trade. And I think that I was able to explain to you how the market also likes to play with color and now the first line doesn't seem to be fascinating but obvious. I hope this 'Holi' market colors you all with dark green, and wish you all a 'Happy Holi'.
NSE:NIFTYEducation
by Chaser30
6
How to trade forex without blowing up accountMany people including me start as a gambler in forex trading and trade until they lose it all. But this can be avoided and a consistent income can be generated through forex trading if we follow few rules (no rule is perfect, I have made them using my exp, they might not be same for you) -Maintain journal note book -always enter target and SL or trailing SL in the system before entry itself to remove emotion from trading -Don't get greedy and always have realistic targets -Avoid overtrading -Avoid trading during events unless you are sure -Trust your system and instinct -Remember you cant be rich in single day and treat trading as business -Exit market after achieving target or SL Guys I tried my best to add points I could recollect. Add points if you have some in comment box
by priyanshu1132001
LTI : SWING TradeLARSEN & TOURBO INFOTECH Method: Rectangle breakout. LTI after consolidating in a rectangle pattern gave a breakout on the upside with huge volume. Money Management: Note- False breakouts are possible (traders need to manage risk accordingly) My personal tip is to risk only 2% of your trading capital. Buy 30% of your position at CMP & if price respect levels of 4500 then execute your remaining 70% position. The whole idea is to lose less money when you are wrong and to win more money when you are right. Mindset: Trading is a game of probabilities, no matter how much analysis you do there is always a 50-50% chance. Remember that the trade we are taking is just 1 of the next 1000 trades we are going to trade. We should not get so much emotionally attached to it that we end up losing our sleep if it doesn’t go according to the plan. By minimizing the importance of that one particular trade, we can really trade with ease and would be in a better situation to take sound decisions. Remember to be profitable you don’t have to be right every time, you just have to be right big and wrong small.
LLong
by Indrajit08
The best trades work almost right away.A breakout trade will work almost right away from the start, if the breakout happens with huge momentum and then you see Doji candles or hammer then there is a problem with follow-up. A bullish breakout must always be accompanied by a good follow up, else it cannot sustain. Bullish breakout needs good bullish candles, not Doji. Note-As soon as you enter a breakout trade it has to work within 15-20 days. If it does not move with huge momentum then exit it after 15-20days with whatever the result may be, don't wait for the stop loss to hit or for your target. The above rules apply only to Swing trade and breakout trading.
NSE:DIVISLABEducation
by Indrajit08
2
SBIN : SWING TradeSBIN: Positional & Swing Pick!!! Method: Symmetrical Triangle breakout. Risk management : Enter 30% of your position at CMP, if the price respects the level of 425 then execute your 70% position. Place your stop loss below the recent swing low, at 416 Go for risk-reward of 1:2 The key is capping the downside risk when you’re wrong, but leaving the upside profit potential open. Remember to be profitable you don’t have to be right every time, you just have to be right big and wrong small. Mindset: THINK LIKE A TRADER Trade with a probabilistic mindset no matter how much analysis you do there is always a 50-50% chance of trade to work. TIP= Get in the habit of focusing on your trading system and following the process for entries, exits, and position size, rather than the money you are making or losing at any particular moment.
NSE:SBINLong
by Indrajit08
Setups are not as important as you thinkSetups are a very small part of what is necessary for a complete trading system, yet people still claim their setup conditions are their systems. When you see the setups in stock, you have an increased probability that the stock will go up. But it is through position sizing strategies & managing the ratio of risk to reward throughout the trade that produces great profits in the trade. DR REDDY: Positional & Swing Pick!!! Method: Support & Resistance role reversal Risk Management: Risk only 2% of your capital Buy 30% of your position at CMP, and wait for the pullback, if the price respects the level of 5500 execute your 70% position. Mindset: Note= Trade with probabilistic mindset, no matter how much analysis you do there is always a 50-50% chance. Our main objective is to ''Cut your losses short and let your profits run.' ' Remember to be profitable you don’t have to be right every time, you just have to be right big and wrong small.
NSE:DRREDDYEducation
by Indrajit08
11