My day trading process honed over years where I made all the mistakes in the book, got frustrated, learnt and then have come down to this process. This is my process, yours may differ. Take what suits you and discard the rest.
1. Having a end of day / higher time frame view. I create a view based on eod and 55 min charts, study COi , options chain , do some data analysis.
Net : bullish or bearish or neutral(kuch samajh me nahi aa raha hai)
Net : bullish or bearish or neutral(kuch samajh me nahi aa raha hai)
If neutral : no daytrades till 10 am, position size / risk is 25% of normal risk.
( btw, I am talking from the POV of an options buyer)
( btw, I am talking from the POV of an options buyer)
Bullish or bearish : will trade only in the direction of the main trend. If opposite trade comes , say a bullish trade while eod is bearish, simply sit out and watch
Trade from 9.15 am to 11/12 noon max. Then again after 2 pm.
Have a profit /loss target for the day, shutdown if either is hit.
Have a profit /loss target for the day, shutdown if either is hit.
I will add more points to this thread in the evening
Repeating the importance of not taking a daytrade contra to the eod view. This will take the biggest discipline. Markets will continue to move opposite and one by following rules has to just sit out the move. This is where majority will start dancing as per screen and lose
Specialise in only 1 or max 2 instruments. From the day I started focussing on just BNF and sometimes Nifty, my trading has improved. I don't daytrade stocks. Evening analysis is also easier and faster, one remembers the key levels. Intuition / 6th sense develops on that scrip
I daytrade index options. Some simple rules :
1. Always trade ATM Or slight ITM options. Stop trading OTM options
2. On BNF, focus on the 500/1000 strikes for liquidity and OI view, the mid strikes don't matter that much
3. Over night trades should be spreads or next week optns
1. Always trade ATM Or slight ITM options. Stop trading OTM options
2. On BNF, focus on the 500/1000 strikes for liquidity and OI view, the mid strikes don't matter that much
3. Over night trades should be spreads or next week optns
Markets move from large daily ranges to small daily ranges ( wide range days and narrow range days). Have a clear understanding where in the cycle that day lies and what's the expectations from that day
Avoid event days or trade small
Avoid event days or trade small
When starting, don't trade between 9.15-9.30. Mark that range on your charts and see how markets trade above, below or within that range.
Avoid trading between 12-2pm.
Avoid trading between 12-2pm.
Keep an eye on the vwap.
Below vwap avoid longs, above vwap avoid shorts. Simple but majority don't follow this rule. If you do, you won't enter majority of the wrong trades
Below vwap avoid longs, above vwap avoid shorts. Simple but majority don't follow this rule. If you do, you won't enter majority of the wrong trades
If you play size like me, don't enter full size at one go. Enter 25% first, then if that trade at profit start increasing position at 25% increments and move stops thus managing absolute risk.
Keep a minimum risk reward ratio of 1:2 for your trades, more the better. Anything below this and you won't make money in net in daytrading
Even if you are discretionary, have a systematic approach and use a checklist. What are the conditions which needs to be ticked for you to enter a trade. Unless all conditions fulfilled, don't get seduced by the screen
Stop watching TV during market hours, stop watching your terminal, don't see your net PnL.
Just focus on your charts /system and take trades /exits as per your system
Just focus on your charts /system and take trades /exits as per your system
Be very fast in booking losses, get out at first signs of unease. Be patient while taking profits.
Daytrading is not everyone's cup of tea. If it doesn't suit you, go positional. You may not be psychologically fit for daytrading. No shame in that.
Daytrading is not everyone's cup of tea. If it doesn't suit you, go positional. You may not be psychologically fit for daytrading. No shame in that.
If daytrading index options, you DO need a basic idea of the greeks and how VIX affects movement. Have an idea about what volatility regime you are in, high or low.
If buying naked options scares you, start with spreads. A basic bull or bear spread gives you much more time to wait with the trade. As you gain experience, you can switch to naked options buying.
" If someone stays in the markets long enough, the markets will give you money. The trick is to survive long enough" - Larry Williams
The rules I have given will help you to survive 🙏
The rules I have given will help you to survive 🙏
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