It’s 5.30 AM in the morning and I have successfully spent another sleepless night. Well I was pondering and researching on few questions about trading and investing that have been bothering me for days now.
Now that I have successfully survived a full year in the market, although with much bruises and wounds, I have solved few of the basic questions that every novice trader faces.
Now I have a working strategy which is giving me consistent returns in day trading. I am continuously fine tuning it with greater and greater results, as and when I learn something new (as I am still in a process of learning) or some new idea struck me. But there are few things that I am unable to solve as of yet. @nithin, @Karthik, @Matti , @Neha_Raghuraman, @Lakshmikanth_Jadhav, @vijender88, etc etc
Dear all please solve few of my queries.
While trading nifty I have been observing for few days that towards 2:45 pm nifty suddenly plunges down from a cliff within one candle itself. Any body trading with 15 min candle would have no chance to capture this movement or exit the losing position. Now Why was Nifty behaving like that? & How to capture/preempt/predict such movements esp if one is trading 15 min chart? You are forced to see your gains wipe out or loss accumulate as you cannot exit before the candle end.
The 2nd question is more about stock picking and swing trading. After pondering for quite a lot on the subject of stock picking, I came across one interview of 60D winner. The idea of exclusively trading in Nifty & NiftyBank struck me and since then I have been trading exclusively in NIfty & NiftyBank. But many a times when Nifty is choppy and there is no trade at all I get bored and think that may be I look at charts of some scrips. But I am still unable to identify which stocks to trade in! I have heard and experienced that trading randomly any stock is not a good idea as one is unaware of its behaviour in long run. I read somewhere that it is good idea to select 10-20 stocks and closely follow them and then trade in any 1 or 2 of them on a given day. Is this true? If yes then which stocks shall I follow? or Which stocks are most popular among day traders?
I too follow same routine & still unable to come out of it!
I have heard that people who sleep very late or don’t sleep at all are more intelligent!
But oppositely to it, there’s a phrase in hindi, which says raat ka ullu!
I am also one of them. Haha
Market is driven by market makers, retail volumes are fractional of total turnover. Retail volume can’t make the markets move significantly.
Markets have become more than difficult n unpredictable than ever as the participation of learnt retail traders has increased.
Market makers won’t let small traders win so easily.
Following 10- 20 stocks for few days is not a good idea. But try to find stocks which are days top gainers losers, High volumes gainers, or near 52 weeks high low, or stocks which are in news occasionally over some core reason related to their fundamentals.
I would say, better don’t jump into stocks if u r getting bored with index.
Focusing on index is more easier than focusing on endless stocks. Built your mastery over index.
Also, index can’t be manipulated unlike stocks which can be operator driven. Index offers clean transparency & high liquidity. All these things are at times missing in stocks.
If u have money then write 1- 2 index options when market is boring & sideways. Safe bet.
If u wish to trade stocks, find them from NSE website as I mentioned.
I suggest you shift to a 5 min chart after 2.45pm, which helps you be more nimble in taking action.
Yes, it is true as you will be more focused as the distraction due to multiple stocks is tough to handle. I am more comfortable trading in stocks between 50 & 150 and most liquid ones.
Maddy, seems u have been observing the markets too much. Please take out some time to trade also. I mean if u have been observing the sudden fall in nifty around 2-45 pm , then u should have utilized it also by being extra cautious.
Have you noticed today Index management was going in NIFTY?
These were the Stock to trade today.
I think today was the day all about Index management.
NIFTY wanted to fall but the stock which have high weightage Were going up or some were stable
(So, it gives an illusion that market is going up but in real Majority of Nifty 50 shares were going down)
When ever you see situation like index management You can take buy side in those stock which have high weightage in NIFTY 50 and are stable and going up.
Nifty has a mind of its own that it wanted to fall!
This type of situation is more suitable for option writers. Problem with stocks is that you need to take swing trade otherwise intraday opportunities are not much.
Swing trading in stocks can open a gateway to heaven if someone has margin , emotional balance & right approach.
Intraday traders lose money because they have to fight against time. Whereas swing traders often make great money.
Intraday is like doing timepass. You may win or you lose. Majority of the time, intraday traders loose always.
Firstly, rest is a very important aspect when trading. Trading is stressful enough, make sure to sleep well, have hobbies, take breaks. These will all improve odds of winning significantly. If you want to spend time studying, maybe don’t actively trade until you finish studying. But when trading, try to rest as much.
Capture/preempt/predict are all extremely tough. But if you know your strategy is consistently losing money at 2.45 pm, maybe you should adapt and exit before that time. Or make some other change to your strategy.
If you look at professional trading firms, traders typically just trade one underlying. You will have people who trade only crude, or gold, or S&P, etc… If you are day trading, I’d advise you to just stick to trading one underlying and get the pulse of how it moves in various conditions. Trading is also about patience, so not doing anything is probably the most important trade.
If you are a programmer and trading using algo’s it then makes sense to track a lot more stocks at a time for intraday trade. But if you are trading using your gut, i’d say one at a time.
I have the following as my response and i hope it helps
If you read the book on candle charting from Steve Nison (sorry if my spelling is wrong), you will know, when the market begins trading and coming to a close for the day there will be choppy/volatile movements on the scrip or index. This is somewhat a mechanism towards price discovery for it.
I know a lot of successful trading guys who do trading or their trading will be heavy in the time band between 2.30 to market close. This is for the same phenomenon mentioned above, we can term this as 2.30 breakout or breakdown strategy.
Whatever happens do trades only with the amount as risk for the trade that you can afford to lose. If you trade like this with your own consistent strategies it will help you protect your capital and at the same maintain a healthy bottomline.
If you want to trade scrips too, then my suggestion is you try and trade those scrips which have news flow in it. Chose stocks that has a lot of liqudity and volume so that when you trade even if you lose, you will have an opportunity to exit your trade.
when you take trade your trade should start perform in the direction of your trade within 15 minutes of your entry, If there is no peformance you can exit the trade and no need to wait for the SL to hit
