| Enter every trade with a plan and stick to it. Understand first who you are as a trader. Do you like to daytrade? Do you prefer swing trading? What is your risk tolerance level? Everyone has a unique style and situation. As a result, what might be a great entry point for a swing trader may turn out to be a not-so-good entry for a daytrader. A trader with a low tolerance of risk might find that trade far too risky. The key here is to know why you’re entering a trade, what it would take for you to exit (stop loss) and an appropriate target. These should all be determined BEFORE you enter the position. Many unsuccessful traders have one or two of these criteria figured out before they enter the trade. It’s the third one that derails them. |
Archives of “target” tag
rssDay Trading Mistakes
There are some major day trading mistakes that just about every new trader will make early on in their career. The ones who survive are those who can recognize these mistakes and take corrective action.
The first mistake many day traders make is to skip the planning phase of the day or a trade. Every day you sit down in front of your monitors you should have a general plan for the day. You should understand the major trends and support/resistance of the major indices, and the stocks you plan on trading. In addition to that, once you see your stock setting up for a trade you should have a plan that includes an entry, a target and a stop-loss before you even pull the trigger on the trade.
Another mistake that we often see in day trading is the inability to exit on a losing trade. If you have issues with getting out of the market when your pre-planned loss has been hit on your own, try using stop-loss orders. Never. Never ever ever move a stop loss order once it’s been placed. This requires some discipline but it will save you tons of money in the long run. You should never be hoping that your stock will turn around, and go where you expected. You should be executing your plan to the letter.
On a similar note, you also never want to move your targets. If you keep moving your target away from the stock’s current price, you’re never going to take your profits. A typical day trading exit strategy is to take profits at predetermined levels as you proceed into green territory. This means that before you’ve entered the trade you’ve chosen two or more targets. You exit a portion of your trade at each target. Now, if you think your stock is going to trend for the day, you can plan for that too. This is called a trade-to-hold. It doesn’t mean you move your target, but rather you try to stay in the trend by setting a trailing stop. A trailing stop can either be automatically set at a certain percentage or point value behind the stock price, or you can mechanically keep moving your stop loss up to obvious points of resistance or support behind your trending stock. (more…)
Focus on the Bulls Eye
Every day that we trade, we need to ensure that we have a specific goal in mind.
Without any goals, we will never know if we had a successful trading session or not. Profit is not the only indicator for success.
The best traders continue to fine tune their goals and the target gets smaller and smaller. If you aim for the bulls eye, even if you miss, you still end up with a good result, because when you aim small even if you make an error, those errors are also small.
ARE YOU SMART?
Talking about goals. Having goals in trading is more than important, because at the end of the day you have to see if you are still on track or if you lost focus. There will be days that bring you closer to the status you want to obtain and there are days which are bringing you nowhere. But how do you know which type of day you have just had? By having goals.
To define goals that motivate you and really guide you, you should use a formula that helps creating the right goals.
It is called SMART, which stands for
S pecific,
M easurable,
A ttainable,
R ealistic,
T ime phased.
Your goal needs to be specific; you have to know what you want to reach. (more…)
The Hidden Variable in Your Trading Success
Most traders realize that trading involves a lot of psychology. And most traders readily admit that a significant portion of their trading losses, or lack of performance, is due to “psychology”. Although the term ‘psychology’ isn’t always mentioned as an explanation, you can see it easily enough in the following statements ……”I froze just as I was about to pull the trigger”….. ”I hesitated and missed that trade and was so pissed that I got myself into an impulse trade right after”….. “That large loss was not what I wanted, I held it thinking it would come back because last time I bailed out of this type of trade I got stopped out right before it reversed”….. “I was really nervous about losing money again so I got out of my winning trade way before my target”
Those are four common examples of trading psychology issues manifesting in one’s trading. Do you recognize yourself in the above statements?
All four of those statements have in common one thing, fear. Whether it’s the fear of not being perfect, the fear of being wrong, fear of losing money, fear of missing out, the fear of not being approved by others, or some other fear, the common theme is fear. Most trading mistakes are a maladaptive attempt to deal with fear or anxiety.
Emotions like fear and anxiety cannot be eliminated; it is part of the human experience. But how you respond (your behavior, the action you take in response) to anxiety and fear will determine how successful you are as a trader. Some traders recognize this and do something about it; they learn to work with the fear and anxiety to reduce the chance that they’ll continue to fall into the same old behavioral response pattern to fear and anxiety.
Fear will never disappear. Yes, maybe some days you feel more ‘in the zone’ and fear is less of an issue, but most days you’re probably not in the zone; and on those days the fear is unavoidable. Most likely, those are the days when you have your largest losses. The question is, what are YOU going to do to work with the fear? If you cannot eliminate fear, you must learn to work with it, use it to your advantage. Emotions are a form of self-communication; you need to learn what the message is (e.g. If this trade loses I won’t succeed as a trader) in order to begin to learn how to control your actions in response to the fear and anxiety. Your performance will not change until you learn to manage yourself differently when experiencing fear and anxiety.
Book Review :Elder, The New Sell & Sell Short
Most traders have read Alexander Elder’s Trading for a Living, originally published in 1993. Elder has, of course, written other popular books such as Come into My Trading Room (2002) and Entries and Exits (2006). His latest work, The New Sell & Sell Short: How to Take Profits, Cut Losses, and Benefit from Price Declines (Wiley, 2011) is an expanded second edition of his 2008 book. It comes with a built-in study guide: three sets of questions and answers. Although it is a paperback, the charts and graphs are printed in color and the stock is of high quality.
The first part of the book covers Elder’s signature contributions to the trading literature: psychology, risk management, and record-keeping. It is brief because we’ve been there before, but Elder does describe some new ways to keep records—an ongoing project because he believes that “the single most important factor in your success or failure is the quality of your records.” (p. 341)
Part two tackles the all-important question of how to exit a (long) trade. Elder offers three alternative scenarios: sell at a target above the market, be prepared to sell below the market using a protective stop, and “sell before the stock hits either a target or a stop—because market conditions have changed and you no longer want to hold it.” (p. 59)
Elder then moves on to shorting stocks, futures, and forex; he also has a section on writing options. Finally, he points out some lessons of the 2007-2009 bear market. (more…)
Jesse Livermore :Timeless lessons
All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical (technical) formations and patterns recur on a constant basis.
The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.
Don’t take action with a trade until the market, itself, confirms your opinion. Being a little late in a trade is insurance that your opinion is correct. In other words, don’t be an impatient trader.
It is foolhardy to make a second trade, if your first trade shows you a loss. Never average losses. Let this thought be written indelibly upon your mind.
Remember this: When you are doing nothing, those speculators who feel they must trade day in and day out, are laying the foundation for your next venture. You will reap benefits from their mistakes.
When a margin call reaches you, close your account. Never meet a margin call. You are on the wrong side of a market. Why send good money after bad? Keep that good money for another day.
Successful traders always follow the line of least resistance. Follow the trend. The trend is your friend.
A prudent speculator never argues with the tape. Markets are never wrongopinions often are.
Few people succeed in the market because they have no patience. They have a strong desire to get rich quickly.
I absolutely believe that price movement patterns are being repeated. They are recurring patterns that appear over and over, with slight variations. This is because markets are driven by humansand human nature never changes.
When you make a trade, you should have a clear target where to sell if the market moves against you. And you must obey your rules! Never sustain a loss of more than 10% of your capital. Losses are twice as expensive to make up. I always established a stop before making a trade.
I am fully aware that of the millions of people who speculate in the markets, few people spend full time involved in the art of speculation. Yet, as far as I’m concerned it is a full-time jobperhaps even more than a job. Perhaps it is a vocation, where many are called but few are singled out for success.
The big money is made by the sittin’ and the waitin’not the thinking. Wait until all the factors are in your favor before making the trade.
It was never my thinking that made big money for me. It was my sitting…Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after this that a stock operator can make big money. it is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of ignorance.
Give up trying to catch the last eighth – or the first. These two are the most expensive eighths in the world.
Without faith in his own judgment no man can go very far in this game. That is about all I have learned – to study general conditions, to take a position and stick to it.
Remember that stocks are never to high for you to begin buying or too low to begin selling.
That is where the tape comes in – to enable you to decide as to the proper time for beginning. Much depends upon beginning at exactly the right time. (more…)
“Intraday – Instant Gains…Position Calls – Bumper Gains”
So it happened Yesterday as well. Once NF crossed our Laxman Rekha of 5077, it went to 5139 – our level mentioned in the morning was 5140 !!!!
Now Look at Instant Gains in Intra-day: I wrote yesterday morning that above 103 JINDAL COTEX will shoot upto 109, 111 and could hit circuit too. It’s a tribute to Technicals, it actually skyrocketed to 120-70.
See the precision in day trade. TULIP went upto 962.50 – our level was 963, it would have taken off brilliantly only had it crossed.
Now see the Bumper gains in Position Calls. I am writing since 1 week about bullishness in AIRLINE Stocks. All had a rally. My best pick was KINGFISHER Airlines: Recommended @ Rs.52 on 26th Nov / Thu to buy with a target of 74+ and even 100 too. The lowest that it can slide to before the rallying was 49. Mesmerisingly it touched a low of 49-50 in last weeks Dubai debacle only to rally upto 57-10 today. So far in Just 4 sessions a gain of Rs.30000+ per each F&O Lot of 4250. Anything else is called Bumper Gain ???
-In Last two sessions enjoyed rally in DLF ,Unitech ,HDIL or not ?
Yesterday on website we have mentioned only 2 stocks. But to our subscribers:
Manali Petro upperfreeze, CONCOR rallied from 1185 to 1220, Rel Media from 265 to 280 and many others.
Our Levels pour money in your lap before you could even count.