o You might have subscribed to many Analyst giving Stock Trading Tips. They claim that their clients are earning huge money.
o You might have attended so many seminars and listened to lectures on various topics like Fibonacci numbers, pivot points, Elliot waves, dow theory, gann theory etc. etc.
o You might have bought and read so many e-books, CDs and DVDs showing their extra ordinary results.
o You might have got free tips from your friends, from your brokers, from TV channels, from newspapers etc. etc.
But the net result is a zero
Ohh…! not only zero, but a Big Big Zeeero….
Imagine you are losing most of your hard earned money in the stock market……
Imagine how you feel, if you are losing even your hard earned savings every day step by step in stock market…..
At last you are frustrated and decided to quit stock market.
But mind well......
Quitters never win….
Firstly, I would advise you to examine yourself about your own trading, examine the reasons why you are losing in trading.
Mostly you enter either buy or sell trade as per the tips you have subscribed for or from your friends or broker or from TV channels or newspapers, but never follow the tips in full and final way. What I mean to say you hardly use the given stop loss order for the tips got. Many a times you keep psychological stop loss means determine to cut your trade if the stop loss level arrives, but when the price moves to that stop loss level, you change your decision and determine your own stop loss level for that particular trade.
Many a times you enter a trade for intra day, but when price moves against your expectations not keeping stop loss, you change the term of your trade and become positional trader for that trade, and ultimately you become investor for that stock. And whenever price moves just a little bit higher or below your entry level, you forget your target set at the time of entering the trade, and you exit from the trade just to release your funds, earning minor profit. Again you enter for intraday trade and do the same mistakes very often. This process of changing from intra day trader to investor and from investor to intraday trader continues for a long time. Ultimately you cannot do your intra day trading nor positional trading efficiently due to lack of enough liquidity of funds.
Some times after entering into a trade without using stop loss tool, price moves against your expectations for such a longer period of time that you tired with that trade and cut the trade in a heavy loss.
If you use your stop loss tool without considering the daily volatility of the market, naturally it will hit very often resulting into losses.
Many a times, you enter into a long trade in script A without making any plan for that trade, and when price moves against your expectations, and at the same time you find some another script B with rising price, you are tempted to cut your previous trade in loss and enter into another long trade in the script B. But unfortunately what happens, you enter into long trade in script B at such a higher level that as soon as you enter in it, its price starts declining……again you find yourself in losing trade. You again cut your that trade making loss….loss and nothing but loss….And this continues for many a times.
Why does this happen to you….?
It is only and only due to lack of knowledge of technical analysis. If you are aware of resistance and support levels of that particular script, you may not have gone for a long trade at a higher price, instead wait for level to come to enter into a trade.
In each market, price is determined by the buyers (the bulls) and sellers (the bears). If there are more buyers than the sellers, price tends to go up and if the sellers dominate the market, the price tends to go down. But in case of intra day, it is impossible to know who is going to rule the market for that particular day, whether bulls or bears. And lack of this knowledge leads you to losses.
In short, you earn little & little, but lose more & more, this practice ultimately reduces your capital to a great extent.
Just watch the following chart, and ask yourself, whether you are practicing this or not…..?
In fact, in case of intra day trading system, profit can be earned only if you have enough capacity to judge the intraday market trends. And you have sufficient positioning capacity. Intra day trading in smaller quantity with expectations to make huge profits is not possible at all. And intra day trading in bigger quantity involves huge risk. This is so because in case of intra day trading you have to collect little little profits and hence quantity has to be kept bigger, smaller quantity gives you profits, but in total it will look too much small and negligible considering your expectations. In short, to earn to the level of expectations, one is required to enter in to intra day trade in big quantity with big risk involvement.
If you really want to earn huge profits with limited capital requirements, with limited risk involvement, you must be equipped with
- an efficient trading system,
- an efficient money management
- an efficient trading psychology.
And all these three components are too much important that if you are missing any one, you may have to face struggle in trading.
In stock market, trades can be done intra day or positional. If you are capable of devoting enough time to sit before the terminal, if you are capable of trading with right positioning, if you are capable of judging daily market trends efficiently, then and then you should accept intra day trading system, otherwise should remain positional trader. All the above mentioned three components can be easily adopted, if you remain positional trader.
Big big money can be made with low risk involvement, with limited amount of investment only in case of positional trading system, and more particularly in swing trading system having enough knowledge of technical analysis.
From: kumar A
at 05:25 PM - Mar 19, 2016( )
There are four stages that a trader passes through.
1) You don't know; What you don't know.
2)You know ; What you don't know.
3)You know ; That you don't know.
4)You know it; you mastered it.
1)You don't know ; what you don't know
Here we will take an example to illustrate this . You are a new trader/ car driver. On a rainy night, when roads where clear you made a 100 mile journey in just 20 minutes with a top speed of 150 mph ( just imagine please. don't calculate).
This is the stage where you don't know , What all risk that where there . But the time was good and you made it for that one particular drive.
2)You know ; What you don't know
Next morning in newspaper you read an article about a car crash. This crash occurred in the same route that you did the driving last night. Infact this car crashed say 15 minutes after you passed that point. It skidded off the road and fell off the bridge.
Yea..! Now you know, what you don't know. Next time you will never hit 150 mps , or drive within twenty minutes. Likewise in trading you won't take a huge bet after watching an unexpected event screw a trade.
3)You know ; That you don't know
You started discussing about this to everyone. Every guy pitched in his experience of rash driving. You came to know about mud on road issue, sharp turns, A animal could stand in middle of road etc. NOw you are very well aware of risk involved in reaching 150 mphs .
Trading news affects you. What obama said, how fed reacted all those tiny things remind you all potential reversals in market or risks. At this stage you are more focused in knowing more about risk and , what all things that could go wrong.
4)You know it; you mastered it.
From being a novice first time driver, now you are an experienced driver with 10 years of experience. Hell there is no way you will take that stupid "risk" of driving so fast ever again.
Likewise the encouraging news, the optimism that you had at beginning has been over shadowed by risk and fear of loss. You have mastered every risk scenario so well that, you wont sit in profit for long. Every slight correction will bring your heart to mouth and shake your confirm believe of holding the position till target meets. Every potential trade will be followed by analysis paralysis. Too much risk analysis and too little patience.
Oh well, only difference between driving and trading is.....
" In driving with years of experience , probability of crashing your car will reduce. In trading, you crash your account balance eventually and repeatedly !! "
From: kumar A
at 06:49 PM - Mar 19, 2016( )
Trade Blunders – Crimes of Thinking
consider the following list of blunders, consider how much money you've lost or failed to make as a result of these "crimes of thinking".
* There's too much risk. This is basically an excuse for fear. It's been said that "you don't know how deep a hole is until you stand in it". This applies to the risk of trading as well. If it's the degree of the money at risk that's bothering you then there are many ways in which this problem may be resolved. Risk evaluation is an intangible. If intangibles scare you then don't drive a car. If you really think about what could happen to you on an expressway then you'll not want to drive. If you think about the risk of trading then you won't trade.
* I don't feel good about this trade- it scares me. Here's a favorite cop out on the list of excuses. Assuming that your signal to trade came from a computer or from a mechanical trading system then your excuse is without merit. Your computer had no idea that you don’t like the trade. Nor does the computer care about your feelings. Following feelings or “the force” may have been good for Luke Sykwalker, but it's totally bogus approach when signals come from a mechanical system or a computer.
* The trade looks good but. . . Here's a worthless bit of reasoning. The signal looks good but. . . BUT WHAT? You want to get in cheaper . . . you want to wait for a pullback . . . you want more confirmation . . . you want to wait for a report . . . you want to wait for the next signal. . . . You want to talk to your broker first. . . EXCUSES . . . all poor excuses, which are the * child, of what you think is good thinking! You might as well wait to ask your dead grandfather if the trade's good.
* Let's see how the market opens before I enter my order . . . let's check it after the first hour of trading . . . lets put in an order below the market...above the market. Here’s an excuse I’ve used hundreds of times. IT’S ALL B.S. I TELL YOU! These are also fatherless children of the crime, which comes from too much thinking. Stock trading is very much a game of stimulus and response. The signal is your stimulus and you must make the proper response.
* It just doesn't look right - and last, but by no means less absurd is the "it just doesn't look right" excuse. This one comes from truly deep thought. It comes from an analysis of the economy, trends, possibly even volume and open interest, and of course, from the input of too many traders and advisors. It you want to get totally confused and frozen into inaction think about -all the facts and opinions, evaluate them all, throw them into the hopper and decide that you can't decide because something doesn't seem right. Here's the real thinking traders excuse. And it's another totally worthless one.
Try a little experiment. Make a commitment to take the next ten trades without thinking about them. After you've done so evaluate your results. See how you've done. See how you feel. Here's what I think you'll find: you've spent less valuable time on meaningless thought; you've made the trades you were supposed to make; you’ll feel better about yourself-more confident and more secure; and you've probably made money as well.
From: kumar A
at 06:56 PM - Mar 19, 2016( )
Always remember: this is a game of hits, losses, and misses. Those that can take them best ARE the best.
From: kumar A
at 10:31 AM - Mar 20, 2016( )
In a bull market you’re not as smart as you think you are and in a bear market you’re not as dumb as you think you are.
The problem is that fear and greed don’t always allow us to come to these conclusions in the moment — we tend to default to the opposite.
As markets continue to fall this year many investors are likely beginning to question their own intelligence just as people in 2013-14 were feeling pretty good about how brilliant they were in a rising market. Along these same lines, here’s a quick comparison of some of the different feelings and perspectives investors have depending on which kind of market we happen to be in:
Bull Markets: Fear of missing out.
Bear Markets: Fear of being in.
Bull Markets: Everything I buy is going up — I’m a genius.
Bear Markets: Everything I buy is going down — I’m an idiot.
Bull Markets: See, fundamentals always win out.
Bear Markets: See, technicals and sentiment rule the markets.
Bull Markets: I knew I should have had more of my portfolio in stocks.
Bear Markets: I knew I should have had more of my portfolio in bonds.
Bull Markets: That guy’s been calling for a crash for years — he’s an idiot.
Bear Markets: That guy just called the crash — he’s a genius.
Bull Markets: I want to be a long-term buy and hold investor.
Bear Markets: I want to be a short-term trader.
Bull Markets: I’m glad I was buying during the last market crash.
Bear Markets: Never try to catch a falling knife.
Bull Markets: I’ll sit tight when the market falls.
Bear Markets: Dear Lord, get me out of stocks NOW!
Bull Markets: Time to buy stocks?
Bear Markets: Time to sell stocks?
Bull Markets: Warren Buffett is washed up.
Bear Markets: Wait, Buffett is buying here?
Bull Markets: Buy & hold works.
Bear Markets: Buy & hold is dead.
Bull Markets: I’ll be greedy when other are fearful.
Bear Markets: I lied — I’m fearful when other are fearful.
Bull Markets: Buy the dip.
Bear Markets: Sell the rip.
Bull Markets: Why didn’t I invest earlier in my life?
Bear Markets: I’ll never invest again.
Bull Markets: Why would I want to diversify?
Bear Markets: Why was I so concentrated?
Bull Markets: I’m just waiting for a healthy correction to put more money to work.
Bear Markets: This market action is not healthy at all.
Bull Markets: Don’t worry, we’ll outperform during the next downturn.
Bear Markets: Don’t worry, we’ll outperform when the market turns around.
Bull Markets: It feels like markets will never fall again.
Bear Markets: It feels like markets will never rise again.
From: kumar A
at 10:46 AM - Mar 20, 2016( )
Most people that we call day traders look at the market which strictly technical analysis. They are normally classified into three different types of traders; scalpers, intraday traders, and swing traders. All three types of professional day traders are looking to do the same thing, make a profit based on a different in value. The only difference between the three is the amount of time they are involved in positions.
Professional day traders that make money in the stock market with high frequency and lower profit are called scalpers. The goal is to take advantage of small inconsistencies in the market in addition to quick movements (changes in value in a matter of seconds or minutes).
A scalper may only be in a position for five or 10 seconds or possibly a minute. A scalper also tends to place a higher frequency of trades and as their profit is normally lower per trade. A higher frequency of positions (entering and exiting trades) is needed in order to make higher profits.
Types of day traders
Professional day traders that make money in the stock market on a daily basis are considered intraday traders. An intraday trader never holds a position overnight hence the term “intra-day”. Intraday traders are typically in positions from within a few minutes to possibly a few hours. Intraday traders are typically not as high frequency as scalpers but due trade more often than swing traders.
I would consider myself an intraday trader as I normally trade between an hour or two a day with TheDayTradingAcademy.com. Most of our traders make their money within an hour or two a day. Our live classes are normally a few hours as well since the best activity in the markets come within the first few hours.
Professional day traders that make their money swing trading involves a much longer period of time. A swing trader uses fundamental or technical analysis but stays in trades over a few days or even weeks. To compare the differences between a scalper or intraday trader, a swing trader may be in a position for a few days or weeks whereas an intraday trader never holds a position overnight.
This swing trader term infers that someone plays the swings in the stock market rather than the quicker movements.
There are also much longer term day traders called position traders which hold trades for several weeks or even months. We won’t highlight these kinds of traders on today’s post.
The whole basis of a professional trade day trader making money in the stock market involves accurately gauging the value of a stock. A stock of a company is in essence the price at which the general public says it’s worth.
Since the financial system has changed it has become more complex and there are more investment vehicles than just stocks to invest in. These can be stocks, futures, options, and even forex (currency fluctuations). The basic premise of making money in the stock market is simple, gauging the value of something and making a profit when your estimation was correct
From: kumar A
at 10:49 AM - Mar 20, 2016( )
How to make profit from Intraday trade.
The Golden rule of intraday trade is ride with the trend. Hence the first step to make profit in intraday trade is to identify the stock. Intraday charts are the best way to identify stocks for trading intraday. Also one should make a good home work before entering in intraday trade. Home work means, study the historical charts and find out the upward or downward moving stocks. Then see the previous days intraday chart. Find out the support and resistance levels. The better strategy will be buy at previous days support level and short at previous days resistance levels. Also shorting below support level and buying above resistance level are good ideas.
Keeping Stop loss
Keeping stop loss is very important for intraday trade. Otherwise one will loose heavily. Where to keep stop loss is a very important question. Again previous days intraday charts will help. If one shorted in a stock, keep stop loss at previous days high or days high. Also if bought, keep stop loss at previous days lows, or days lows. Another thing to remember is keep trailing stop loss and revise stop loss when one is in profit. Instead of booking profit, one can keep stop loss for profit and can revise according to upward movement. Normally this will help a lot in intraday trade.
Panic and Greedy
The two things to avoid in stock market and particularly in intraday trade is panic and greedy. When one enters in a trade and goes in opposite direction, don’t be panic. Wait some time, keep strict stop loss. If stop loss triggers, don’t enter again. Wait some time and relax, watch the market trend and enter in some other stocks. Another thing to avoid is greediness. Some people will not book profit and wait for more and more profit. But such people will end up in loss only. In intraday trade book profit in every highs. Wait for a dip and enter again if trend sustains.
Timing is important for successful Intraday trade
The best time to enter for intraday trade is after 20 to 30 minutes when the market opens. Some people will jump in the market at the opening bell itself. It is risky always. Watch the market in the early trades and find out the trend. First enter in some small quantity, say 25% of the quantity one is intended to buy. Then buy more in the next 10 to 15 minutes. The trend observed is intraday trading is stocks will shoot up till after 45 to 1 hour when the market opens. This is the best time to book profit. Once booked profit in a particular stock, better wait some time and watch the next movement and enter accordingly.
From: kumar A
at 09:26 PM - Mar 23, 2016( )
Lack of a plan
A trading business plan will make you accountable for your actions. Many traders do not want to put together a plan because they do not want to admit to themselves that they are working with a strategy that does not work. They also do not want to feel accountable to their strategy. They want to be master traders who follow intuition/discretion before they prove they can follow their technical strategy.
Until you have a plan, you will not reap the greatest rewards from your strategy. You will not be able to fully understand what needs to be adjusted and transformed.
From: kumar A
at 10:06 PM - Mar 26, 2016( )
Motivational Video By Sandeep Maheshwari - Give Your Best Shot
From: kumar A
at 09:26 PM - Apr 06, 2016( )
We all focus a lot of attention, perhaps too much attention, on where to buy and sell a market, on where to enter trades. Today, let’s spend some time looking at the other side: where are you getting out?
Some categories are useful here, and they are not complicated. First, we have exiting at a loss, or at a profit. (This is not necessarily the same as saying exiting on a stop or at a profit, because a (trailing) stop can often be a profit-taking technique.) Both of these can then be divided into two more categories: Exiting at the initial loss or a reduced loss, and Profit taking against a stop or at a limit. Let’s spend a few moments thinking about each of these.
The most important think about initial stops is that you have one. Though so many trading axioms and sayings do not apply universally, one that does is “know where you’re getting out before you get in.” For every trade, you should have a clearly defined maximum loss, and you should work hard to make sure that loss is never exceeded. In practice, bad things will happen. You will have the (hopefully rare) experience of a nasty gap beyond your stop, and sometimes will see losses that are whole number multiples of your initial trade risk. (I remember one lovely -4.5x loss in YHOO years ago. Though these events are rare, they are also a good reminder of we do not, for instance, risk 10% of our accounts on a trade. A 45% loss on a single trade would be a disaster, but 4.5x a reasonable risk (1% – 2%) is merely annoying.)
Initial stop placement is an art in itself, but, in general, I think too much of the material on the internet probably uses stops that are too tight. I’ve never seen anyone trade successfully with stops that are a few ticks wide. For me, initial stops usually end up somewhere around 3-4 ATRs from the entry. These stops are wide enough that many traders find them uncomfortable, but simply reducing position size to manage the nominal loss is an obvious solution. Taking losses is perhaps the most important thing you will do as a trader, so do it well and do it properly.
We have defined that initial “never to be exceeded” (ideally) stop at trade entry, but many traders find it effective to move that stop rather quickly. Another possibility to consider is the time stop, in which we take steps to limit the position risk if the trade does not move in some defined time. There are many possibilities here, ranging from tightening the stop, to reducing the position, to exiting completely.
I have made a good case for not reducing the position at a loss because it effectively “deleverages” your P&L in the “loss space.” (See the chart above, which is drawn from pages 242 and 243 of my book.) Personally, I’ve found that simply taking whole, but smaller than initial, losses is more effective, but your experience may be different. A key point here is that all of this–entry, exit, position size, moving stops, taking targets, re entries, adding to positions, partial exits, etc.–all of this must work together. You change one piece, and the whole system will change. This is why some techniques may be effective in some settings but not in others.
To simplify, think of reduced stops as being moved when the trade does not immediately go far enough in your favor, and consider the use of time stops.
Profit targets are usually limit orders, as opposed to stops (which, not surprisingly, are usually stop orders.) In general, I find that it makes sense to have profit taking limit orders working in 24 hour markets, though we may not wish to work stops in the same after hours environments. People sometimes make mistakes or do silly things in afterhours, and I’m always happy to provide liquidity at the right prices.
There is a school of thought that says that all trades should simply be exited at profit targets, while there is a conflicting school that says we must let our winners run. How to reconcile these two approaches? I think the answer lies in trading style. For trend traders, we must let our profits run. As countertrend traders, we must take quick profits, usually at pre-defined areas. I have not found chart patterns or points to be any more effective than simply setting a target 1X my initial risk on the “other side” of the entry. Many people like to use pivots or trendlines, but I’ve executed well tens of thousands of trades (one of the advantages of spending years as short-term trader) and have simply not found these to be that effective. (For intraday traders, highs and lows of the day do deserve respect.) Consider the tradeoffs in simplifying your approach.
Trailing stops can be managed in many ways, and I have found these to be very effective in many types of trading. We can trail at some volatility-adjusted measure, and there are even times we trail a very tight stop, effectively hoping to be taken out of the trade. This is a good problem to have: sometimes you may trail a stop at yesterday’s low, and be shocked as the trade grinds in your favor week after week–there’s nothing to be done in these cases but be forced to stay in the trade and make more money, but guard against hubris: many of the times this has happened to me I have been properly positioned into a climax move. When these moves end, they often end dramatically, so simply ring the register and step away from the market.
Putting it all together
This is certainly not an exhaustive list of all the possible ways to exit trades, but it will get you started in the right direction. I find that combining these techniques, using a pre-defined target for part of the trade, trailing the stop on the rest, and moving quickly to reduce initial risk on my rather wide initial stops, this works very well for swing trading the markets I follow. (
Consistency certainly matters, but consistently doing something that works will, not surprisingly, lead to consistently losing money. Make sure you have a well-designed system with an edge, and that the system is one you can follow in actual trading. Make sure you trade with appropriate size and risk, and that you monitor your performance accordingly. With these guidelines, you can be a few steps closer to developing your own system and approach to trading.
From: kumar A
at 04:48 PM - Apr 19, 2016( )
Don’t ever average losers.”
When a trade is going against you it means you are wrong. Adding to a loser just usually makes it bigger and your stress overwhelming.
“Never trade in situations where you don’t have control.”
Getting into a trade that you can’t easily get out of is a dangerous trade in itself. Liquidity risk, headline risk, and volatility can be dangerous when you are at their mercy.
“If you have a losing position that is making you uncomfortable, the solution is very simple, Get out.”
Many times exiting a trade is the easiest way to stop a losing trade from getting worse, managing stress, or freeing up capital for other uses. You can always get back in.
“Don’t be too concerned about where you got into a position.”
All that matters about your current positions is what you should do now based on the current price action not your cost basis or entry level.
“The most important rule of trading is to play great defense, not great offense.”
Trading offensively is trying to grow you capital while defense is protecting what you have. Winning trades are how many points you score and losing trades is how many points you give up to the other team. While offense is great for a show defense wins championships.
“Every day I assume every position I have is wrong.”
Mental flexibility is the ultimate effective habit of successful traders. Being willing to accept that a trade is wrong will lead you to cut losses fast, keep losers small, and lose your opinion not your money.
“Don’t have an ego. Always question yourself and your ability.”
Being over confident and arrogant leads to trading too big and staying on the wrong side of a trend for too long. Most account blow ups and ruin comes when a trader believes they are smarter than the markets and stay with their strong convictions after being proven wrong.