self talk

i generally try to take and share trades with stoploss of 10-15 points.
like the last one where the stoploss is just 11 points away.
if one trades in nifty futures and trades with 1 lot (say), then the max risk in a 11 point SL is of 550 rupees. add another 150 rupees as brokerage (majority brokers charge less), this adds up to 700 rupees.
if the trade goes in the desired direction and gives a profit of 30 (say) points, the benefit amounts to 30x50=1500 rupees. minus brokerage of 150, it comes to 1350 rupees.
if one trades with mini-nifty, all this gets reduced proporationately.
if one can't take this much of risk with this much of potential for profit, one should not consider taking up trading. instead he or she can opt for occasionally buying lottery ticket.
otherwise, it can be a pretty decent self-employment.

only 3 conditions : a) i am assuming that the trader has got basic trading skills, b) he ruthlessly and strictly uses stop loss preferably using bid option, so that no time is wasted if SL is hit, c) re-enter the trade if price crosses back the SL (preferably in the same session).

the only game spoiler can be = a sudden sharp move that jumps the stop loss bid range.

this may happen occasionally. this is stock market - a semi-war zone!
this is why it is so important that we lose small and profit max possible - to build a buffer for such occasions.
trading is simple but not simplistic! 


(niftyshots.blogspot.com)

the great tamasha!

a madaari was amusing the non-traders
by making the captive monkey
dance to his tunes.

he was shaking the dugdugi of technicals with one hand
and beating the stick of fundamentals on the ground.

all the while
the poor simian
was being held from the neck
by the long rope of his own money
held firmly
under the foot of the madaari!

the non-trader public
instead of getting amused at the dance of the monkey
stood shocked to see him amused
at his own plight!

the fellow monkeys at some distance
see their buddy dancing.

they also see bunches of bananas
in the madaari's bag.

they too are dying to come
dance
eat the bananas
and join the party!

(niftyshots.blogspot)

no gains, without (the right type of) pains

risk can't be separated from trading.
a trader must accept this fact.
once you accept this, it will be prudent to understand that there are four choices of trading risk you can take
1. small risk taken, small gain booked
2. small risk taken, maximum gain booked
3. large risk allowed, small gain booked
4. large risk allowed, large gain expected.
while type 4 risk remains a dream, rather a nightmare,
type 3 risk is what amateurs do on the way to becoming pro's (provided they survive)
type 2 risk taker is a pro
and type 1 risk is the sign of a maturing amateur.

(niftyshots.blogspot.com)

my views on stop-loss

below, i share my notes about "stop loss".

- any trade is based on probability and not on certainty. so there is always a chance of the
trade not going the intended way. (however, better the trade anticipation theory, higher the
percentage of trades going the intended way)

- stop loss is not a irritant, it is not a necessary evil as well. it is, infact, the most potent
profit yielding tactical tool. you can take any promising trade with intelligently decided
stoploss. without stoploss, all trades are risky and with it, no trade is risky. since risk is a
perception, it is linked to fear. and fear kills more traders than loss. fear cripples your
ability to react to adverse market moves. stop loss is like the rope in the neck of a fierce
hound tied to a pole and threatening you. with that stop loss rope, u r always safe from that big
bite. stop loss is a safety assurance which invites you to take any trade. just as they say that
courage is the fear whose prayer has been said, profit is a trade whose homework has been done
and stop loss cleverly decided.

-personally, i don't use the word "stoploss", i call it "stop chase". this nick name is based on
the reason and logic behind my definition and usage of the stop loss. here is it = i take a trade
on the basis of a formation/indication. just at the time of entering the trade, i decide as to
what will be the point where the formation/indication to take the trade can be considered as
having been destroyed/disturbed/spoiled/over. that point i take as the stop loss (in my language
= "stop chase"). why stop the chase? because there is no point chasing when you realise that the
chase was false!!!

- one more thing, if the stoploss (or the stop-chase point) is too away, i tell myself that it is
not the best time to start the chase (i.e. to take the trade). i wait. this is what i call
setting an "intelligent" stop loss (stop-loss chase point)

- after breaking my head for months and years against market theories, indicators and tactics, i
have realised that a trader's edge depends as much on deciding the stop-chase pole location as
much as on his or her ability to identify trading opportunities. the successful and profitable
trader may not necessarily be more intelligent or knowledgable, but definitely smarter in picking
the chase and stop-chase points.

- a time comes in a trader's professional journey when there is little scope of further improving
the skill of identifying credible, dependable and sure trading oppotunities in an
ever-treachorous operator-driven markets, the only way to become a still better trader is by
practicing and improving and mastering the art of chosing better and intelligent and clever
stop-chase pillars!

www.niftyshots.blogspot.com

why traders struggle - III

if you can't see blood

don't be a doctor.

if you can't see a temporary loss

don't be a trader!

minor corrections are part of a trade. that's the only way price moves. majority trades experience low blood pressure and abnormal pulse rate at the sight of an adverse price movement. those who are not sure of their trade and those who can't see temporary loss can't hang on.

(caution : don't lose more (blood) than is warranted)

why traders struggle - II

they

DON'T TRUST THE TREND.

majority traders are insecure fearful adament rebels

who take premature unwarranted prolonged reverse positions!

why traders struggle - I

the trouble with struggling traders is not that they don't take risk

the trouble is that they take wrong type of risk.

they take risk with losing trades

but avoid risk with winning trades!!!