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CHRISTMAS GIFT: The Operators' End GameFirst of all, the secret or trick (whatever you want to call it) that I am going to reveal here are very rare and are not available in any book or youtube stuff. I learned trading through experience, mind my words "trading" not "technical analysis". I learned TA from books but trading -- I learnt through practice, and by practice I mean losing money :) I think no one can ever learn trading without losing money. Any ways... Secondly, the trick is applicable on everyday basis. Infact, it is applicable on 90% of trades that you take on intraday basis. So before you lose your patience, here is the secret: Let's discuss this stuff on a long trade and u can apply it on the short side later by yourself. Let's say you find an interesting setup to go long. You took the trade and put a stoploss and target orders. The stock moves in your direction and you are quite happy with the trade. Now it is, say, half way your target point where you might have considered to to trail. Suddenly the stock takes a dive down and hit your stoploss. The moment it hits your stoploss, it resumes its previous trend (upward in this case) and reaches your target in a strong momentum. You are just stunned, staring at the chart and scolding the market or yourself uttering you are a fool..you can never learn trading..bla..bla. To my knowledge, it would have happened to everybody unless one has silicon brains. Let's see what happened with the trade. Not only you but there were many other traders who were looking at the beautiful buying setup. The moment the setup started yielding results, it came on scanners of some big traders or trader. But they have a problem with breakout trades. They do not enter untill they are confirmed about the breakouts. Once the BO is confirmed, they look for entries. But they have another problem you know -- they have huge money. Yes, huge money is a big problem. The price has already run far enough and if they pump in their money at this point, they would be buying at highs. Their huge orders will makes the 'ask' go higher and it will make the price to run up even faster, so they will have to buy at even higher prices. No..No..No..that's not what they like coz they know that's how 95% people have been losing money in trading. Their only desire is to buy at lower prices, on pullbacks. They just look for points where most of traders have placed their stops. Because it is those points where there is lot of supply, stop loss orders you know..sell..sell..sell..everybody is moving out of the stock which is in an uptrend after BO from an incredible setup. It is only those selling orders which can fulfill the huge demand of big traders without even raising the bids. Ultimately, the demand overpowers the supply and the stock shoots back to resume the trend. How the price was forced to hit the floor? That's a different story. Some call it operators' game. Such activities are more common in the afternoon sessions, when volumes are sucked. We call it churning session, where there is change of hands. So why don't a retail trader trades with the market maker. It may be because of lack if awareness or lack of experience I must say. But once you know the market makers' psychology and adapt to it, you will make money in more than 75% of your trades. You just have to look for such opportunities on the charts. OR ELSE you will have to go for wider stops, which most of the traders could not afford. You may combine this knowledge with my VWAP SETUP that I am going to link with this post. HAPPY CHRISTMAS and HAPPY TRADING in 2019 I wish we all make good money in 2019 Hit Like if it has added to your knowledge. Comments are also welcomed. Regards Bravetotrade
NSE:CNXITEducation
by Bravetotrade
41
Share Trading: Is it a Better Business ?? For Whom ???Put 10k in the market, buy stocks worth 50k or more on leverage and sell at 1k profit which is 10% profit on the investment capital..That's amazing!! Isn't it? The bad part is, the anomalies to this hypothesis adversely impacts more than 90% of time. And the so called 'better business' turns out to be a losing affair for more than 90% of our trading community. Let's first discuss about our losing 90% trading community: A beginner takes his first trade on hunch and wins.. beginners luck..builds confidence..takes second trade and wins..no fear..may be he wins a couple of more and the beginner increases the trade size..over confidence and greed..he starts losing and bursts his account in aggressive attempts to win back profits at first and regain the losses lately. What went wrong with this beginner? Greed prevailed rationality Lack of strategy or Edge in the markets Revenge attitude What about the remaining less than 10% of the trading community? The most successful ones start with a predefined strategy..primary reliance on trade management..patterns and techniques come next..backtesting the strategy..paper trading..followed by real trading..flexible approach as far as the edge in the market is concerned..no fear..no greed..just exact plan execution. So what makes these 10% better over the others? The answer is..some important traits. Let's briefly discuss some of these important traits. Trade management Pros are always ready to miss a trade not qualifying the pre defined risk to reward ratio. Normally 1:1 RRR is good, 1:2 is better and anything higher than that is the best. Not only RRR but trade management also involves trade sizing which is a subset of RRR. Suppose I want to take max. risk Rs. 1000 on a trade. On a particular set up, my stop comes out to be 2 points on a 200 Rs. stock. In this case my trade size would be 500 shares..just an example. Edge in the market OR the strategy which tells where, when and why to buy or sell. It could be a candlestick pattern or a combination of patterns. It could be an indicator buy or sell signal. The key here is to have patience for the signal. If there are multiple confirmations confluencing at the signal, it would be a high probability setup. Our Edge in the market and trade management then go hand in hand to make our day. No fear no greed According to best practitioners it's good to take some profits off the table at first predefined target. B'coz no matter how high probability the set up is, there are always some chances that it could turn out to be a loser. Remaining position can be trailed for substantial bonus gains. If a trade does not go in favor at first instance, just get out at predefined stop without extending losses. Suppressing greed would definitely improve win to loss ratio. Greed kills but fear is a psychological breakdown. Fear bores over-protection in the trader. The trader may miss several best setups due to fear of failure. A beautiful trade missed is as painful as a losing trade. It has been observed that simple breathing exercises have significant impact on our cognitive functionality, which helps in overcoming fear of taking calculated risks. So who can teach the trader the cannons of best trading practices? No one but the trader himself. Of course a good mentor can make things less difficult but it all comes with practice and experience. However, the fact is that, most of us would not learn unless we lose some or most of our hard earned money. Although I deliberately missed some concepts due to time and space constraints yet I hope the brief discussion highlighted important points concerned to share trading. Do hit Like and comment. Trade safe, be healthy. Regards Bravetotrade
NSE:NIFTYEducation
by Bravetotrade
14
The Biggest Intraday Trading Myths and RealitiesLet's discuss.. Intraday Traders are losers Ohkay..let me mend this statement a bit. " The Indisciplined Intrday Traders Are Losers "..now it seems correct. Not just in trading but in any field of life, if one is not disciplined he will be a loser. Then why such hate for day trading..well !! we live in a free country and everyone has right to speech and expression. But don't get misguided by the false notions. It just needs learning, Time and Practice-- the LTP if you may allow me to call it. One needs time to learn and practice before the latter two make you perfect or good enough. One do not need Lakhs to enter into trading business. A handful of money would work. Its just that with very lesser funds it would take more time to build up the money-base large enough to take trades which can yield fair amount of profits. Avoid first 15-30min and last 15-30min Open any chart and you see big moves during above mentioned time only. The basis here should not be -- when to avoid, but when not to avoid. Many a times the chart patterns are formed in the last few candles of the day, in intraday charts. Due to time constraint and overnight uncertainties, the traders do not want to take risk and leave it for the next day. So the first few minutes provide an opportunity window in those cases. Of course we would not trade any random pick in the morning..right?? But if it is well researched..just do it. Always place stoploss orders Rather I would say, " NEVER PLACE HARD STOPS ". This helps in avoiding those one to two flash trades which take the stops, especially when the stop is too tight. Its not that some one is watching your stop order to be placed and he will sell off just to have 'your' shares. Its because the stop might be too small to handle stock volatility. Its better to watch the chart instead and concentrate on candle closings for deciding stops in 'mind'. Hope we can do that much as our hard earned money is involved..right?? If a trade seems too risky..just reduce the quantity. If you feel very uncomfortable without stop orders in place, have stock's daily range in mind. Volatility kills Will you buy a stock which does not move at all? I hope you would say NO, unless you want to practice how to place buy, sell and stop orders. Volatility is traders' friend. The stock should move in either direction in sufficient magnitude to make potential buy or sell trades in it. Unless the stock can't rush Adrenaline in your brain, its not volatile. I suggest drink plenty of water and do stress relieving Yoga to trade intraday volatility :D Avoid less liquid stocks Once the trader has a grip over reading charts and tape, he can take up less liquid stocks. I don't say trade any Tom, Dick and Harry category of stock; but traders' favourite. Normally highly volatile stocks are traders favourite and there are many less liquid stock which are highly volatile. Just keep in mind to trade with LIMIT orders and not MARKET orders in these stocks. Reason being the Bid-Ask spread is sometimes too wide in these stock so inorder to avoid loss trade these stocks at your KEY price. Do not Reenter after loss..its revenge trading The stopped out situation is bad for a trader and inability to enter a good setup in same stock due to fear is the worst. The only psychological condition to avoid is the revenge attitude..that's right. If one can take every trade as a fresh trade forgetting losses made in the past, without fear, then one may not miss many good setups. Many a times the worst looking trade may come out to be the best trade of the day. Do hit like and share your thoughts in the comment section. Trade safe, be healthy Regards Bravetotrade
NSE:NIFTYEducation
by Bravetotrade
36