Behavior of a typical trader and how to avoid it (with personal example)
A ๐งต
#stockmarkets #trading
A ๐งต
#stockmarkets #trading
Confusion:
When the tape starts running at 9:15, the trader would be confused what to trade, whether stocks, or index, futures or options.
If you are a new trader or struggling in the markets, do not try to trade everything that moves. Result at EOD would be
(1/2)
When the tape starts running at 9:15, the trader would be confused what to trade, whether stocks, or index, futures or options.
If you are a new trader or struggling in the markets, do not try to trade everything that moves. Result at EOD would be
(1/2)
drained account and emotions. Have a plan and have a plan to make a plan. Which means, define a process using which you will do your homework/EOD analysis/trade plan for next day.
Most traders do not make a plan because they do not know where to start.
(2/n)
Most traders do not make a plan because they do not know where to start.
(2/n)
More importantly, decide on the instrument you wish to trade and stick to only that instrument until you become profitable.
Do not dip your hands in too many cookie jars.
(3/n)
Do not dip your hands in too many cookie jars.
(3/n)
My process:
Every evening, I do my analysis on Nifty and BN (as I am an index trader majorly).
What do I check for:
1. Context of the both indices (where did they close and how can the expected behavior be)
(4/n)
Every evening, I do my analysis on Nifty and BN (as I am an index trader majorly).
What do I check for:
1. Context of the both indices (where did they close and how can the expected behavior be)
(4/n)
2. Where are the major buyers and sellers present on larger timeframes
3. Who dominated majorly on intraday basis (buyers or sellers)
(5/n)
3. Who dominated majorly on intraday basis (buyers or sellers)
(5/n)
4. What will my entry be if market opens with a gap down/up/flat
5. What are the locations where I won't take a position?
(6/n)
5. What are the locations where I won't take a position?
(6/n)
6. Trend direction location entries and possible reversal areas (to decide risk; Risk for TF and reversal bets differ)
7. Comparative analysis of Nifty and BN. Helps me guage which index to go long if market shows strength and which one to short if market show weakness
(7/n)
7. Comparative analysis of Nifty and BN. Helps me guage which index to go long if market shows strength and which one to short if market show weakness
(7/n)
8. Save the chart templates and go to sleep.
The entire process takes me 20-30 mins after years of following the same process.
(8/n)
The entire process takes me 20-30 mins after years of following the same process.
(8/n)
This is how I make a plan. Similarly, define a process for yourself to plan trades for the next day.
As the topic is an extensive one, will add one sub-topic periodically on it.
(9/n)
As the topic is an extensive one, will add one sub-topic periodically on it.
(9/n)
If you liked the contents of this thread, make sure to follow @KillerTrader_ for more such content.
Re-tweet and like for max spread.
#trading #Nifty
Re-tweet and like for max spread.
#trading #Nifty
2. Balance of mind and revenge trading (personal example included):
If a trader has sorted their confusion (read from the beginning of this thread if you missed) of what to trade and has come with a prepared plan to the markets, doesn't mean it is happily ever after.
(11/n)
If a trader has sorted their confusion (read from the beginning of this thread if you missed) of what to trade and has come with a prepared plan to the markets, doesn't mean it is happily ever after.
(11/n)
Plan is ready, in live market entry point triggers. The trader puts on a trade.
In sometime, it hits stop. Now comes the anger/frustration factor.
(12/n)
In sometime, it hits stop. Now comes the anger/frustration factor.
(12/n)
Mind voice can tell: I made a loss when I had no plan, but now I came with a plan fully prepared but still I made a loss.
I will not let the market win against me today at any case.
The next trade is taken with a larger size. Plan goes for a toss. Larger is the loss.
(13/n)
I will not let the market win against me today at any case.
The next trade is taken with a larger size. Plan goes for a toss. Larger is the loss.
(13/n)
Once again, the trader feels cheated by the markets.
Sounds familiar? I faced the exact same problem.
(14/n)
Sounds familiar? I faced the exact same problem.
(14/n)
I used to increase my position sizing after a loss in anger and frustration thinking no way this trade can go against me.
How did I overcome it?
(15/n)
How did I overcome it?
(15/n)
What should be understood here is that lack of awareness of risk management is not the issue.
I knew what not to do but simply did not have the self-control to NOT do it.
(16/n)
I knew what not to do but simply did not have the self-control to NOT do it.
(16/n)
I decided to take a 30 mins break between each trade. Profit or loss, 30 mins break was mandatory.
Focus was now mainly on emotional stability and discipline.
(17/n)
Focus was now mainly on emotional stability and discipline.
(17/n)
I used to tell myself every morning (still do sometimes): You have one job - Don't lose your S**t.
Everything else can be handled.
Wrote down in a book few points and read it everyday until it became a part of me
(18/n)
Everything else can be handled.
Wrote down in a book few points and read it everyday until it became a part of me
(18/n)
a. The market does not belong to me. It owes me no money.
b. I have enough money to live a comfortable life for a long time. I will not go hungry if I do not make money the next day or month or quarter or even years for that matter
(19/n)
b. I have enough money to live a comfortable life for a long time. I will not go hungry if I do not make money the next day or month or quarter or even years for that matter
(19/n)
c. Main job is not to lose what I have and more importantly, no point trading if am going to lose my sanity over it.
Then started identifying what triggered me to take stupid decisions in live market and started working on them.
Over time, progress in that area showed
(20/n)
Then started identifying what triggered me to take stupid decisions in live market and started working on them.
Over time, progress in that area showed
(20/n)
If you liked the contents of this thread, make sure to retweet and like.
Will keep adding such pointers periodically to it. Thread will stay pinned to my profile.
#StockMarket #trading
Will keep adding such pointers periodically to it. Thread will stay pinned to my profile.
#StockMarket #trading
3. Non conductive markets:
After you trade for a certain time, you will understand that you thrive in some types of markets but some other types will expose your weaknesses.
(21/n)
After you trade for a certain time, you will understand that you thrive in some types of markets but some other types will expose your weaknesses.
(21/n)
It is not needed to master every type of trading out there. You can first focus on one, become very good at it and then focus on next.
But do not make the mistake of trying to learn all types of trading (ex: breakout trading vs pullback trading) all at once.
(22/n)
But do not make the mistake of trying to learn all types of trading (ex: breakout trading vs pullback trading) all at once.
(22/n)
And I know many do not believe, but there is nothing like one is best and others are waste.
Whenever market favors a particular type of trading method, a trader will feel that is the best.
(23/n)
Whenever market favors a particular type of trading method, a trader will feel that is the best.
(23/n)
When market dynamics change, it will not produce the same results it did earlier and now the trader will think another method is the best.
If you keep changing methods, chances are you will mostly end up on the worst side of things.
(24/n)
If you keep changing methods, chances are you will mostly end up on the worst side of things.
(24/n)
It is imperative to understand your trading weaknesses and if the existing market conditions exposes it.
Let me give you an example
(25/n)
Let me give you an example
(25/n)
I am good at trading mean reversions, breakouts and fairly succeed on the W and M and what not patterns sometimes intraday charts make.
But one market type that bleeds me is narrow ranged movements.
(26/n)
But one market type that bleeds me is narrow ranged movements.
(26/n)
Much of last week, market was in a context that am not so good at trading.
What did I do? Filtered my trades more than usual.
Reduced risk per trade. Reduced no of trades.
(27/n)
What did I do? Filtered my trades more than usual.
Reduced risk per trade. Reduced no of trades.
(27/n)
You have to realize that you cannot thrive the same in every market condition and play the game same way.
It is simply not possible for one trader (again rare exceptions are there) to master every style of trading.
(28/n)
It is simply not possible for one trader (again rare exceptions are there) to master every style of trading.
(28/n)
Focus on what you are good at, comfortable at and smash it when things go your way.
If you like the contents of this thread, follow @KillerTrader_ for more such content.
Like and re-tweet for max spread.
#trading #nifty
If you like the contents of this thread, follow @KillerTrader_ for more such content.
Like and re-tweet for max spread.
#trading #nifty
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