Introducing our new contributor - G.Bharadwaj


#46

Very True reply sir!


#47

:smiley: Actually I have many more questions to ask. :smiley: :joy:

Though I started with intraday trading in markets, have been a fundamental investor for past few years now. Wanted to allocate some portion of my portfolio to trading going forward and see how it plays out. Want to learn as much as possible and plan before jumping in with real trading. Zerodha is helping me by creating an opportunity to interact with an experience trader like Bharadwaj. Thanks to Zerodha!


#48

@san15

Regarding your query about trading plan, journal and finer details, like many stalwarts of this forum and on the net have repeatedly pointed out, what works for one will not work for the other in the stock markets. Each trader will develop his/her own unique and unparalleled way of trading over a period of many years. It will be highly interesting and kind of educative to dwell deep into another traders style, but it surely cannot be replicated for the simple reason that each individuals thinking and decision making process will be as unique as a fingerprint or a retina :slight_smile: For a young trader exposed to modern tech analysis tools my methods are very boring, primitive and traditional to say the least :wink: Further would like to stress the same rule again and again - risk management is everything… everything else is nothing !


#49

@G.Bharadwaj Thanks for the candid reply!

I got you. Its better to keep it simple than than complicating it with too many tools etc. :slight_smile: As long as it works why to bother.

You have put it very well :+1:


#50

Well said.

Can you say what do you think about the following:-

Set ups- Some experienced traders say they keep tweaking the set up a little bit every month or so as they go along. Some others like PeterLBrandt say they have not changed their setup (classical charting based) for decades.

  • is it something like traders keep experimenting with set ups for say about 10 years and settle down permanently for a single set up or what?
    (in my case, I use price action -pattern, supply demand, trend lines but every now and then I keep experimenting with some tech indicator before eventually discarding them)

Practice:- What practice does to a trader. What happens on mind / thought process when traders keep trading and trading and trading encountering losses and profits repeatedly


#51

Professional traders actually find a method that works for them , use strict money management , have iron discipline and have a highly objective mechanical rule based trading plan that they follow on a day to day basis. Some even have a trading plan for each and every trade they take. Once they have the plan they lock it up and never share it with anyone. And hardly changes or tweaks it.

Like @G.Bharadwaj pointed out money management is everything really. Even a strategy with sub par performance like below 50% or 40% can be used to make money consistently if the trader uses strict rule based risk management.


#52

I know, experienced traders turning to a robot emotionally is a myth. After all PeterLBrandt after 40 years of very successful trading accepted in many interviews and tweets that he still makes silly mistakes (FOMO, stop missing, large position size or missing an opportunity etc).

We are a human so long as we are alive. Trading is mostly about managing / doing thinks against human instincts

My question was how the thought process of experienced traders has evolved over period about “set ups” and what practice of trading has done to them emotionally in terms of approaching loss and profits


#53

Only then does a trader have an edge over the others. An edge over the herd mentality of the masses.


#54

hmm nail on the head.

In 2009, i invested a couple of lakhs to spend 2 exclusive one on one live market days with a renowned tech analyst. After thoroughly going through my simple methods he suggested a couple of indicators to improve profitability further, but by the end of the second day he candidly said, “Continue to do what you are doing without any modifications. Given your necessity to take home profits week after week and given stringent risk management principles you already have in place, I am not the person to suggest wrong or ‘not needed medicine’ for the sake of being paid a fee!”

Anyway the only changes in my trading has been the shift from equity to F around 2014 and now from F to O. Infact many times especially in the last 2-3 years i have tried to hold positions for longer, but my scalping mindset just prevents me from doing so :sweat_smile:. I tried to buy good stocks and forget in another account but for someone who has fought and won the battle against '>0.25% loss 'about 1.5 Lakh times, its just impossible to see a position in even 2 or 3 % red. So i gave up 'cos i dont want that parallel line of trading/investing mindset to slowly creep into my scalping discipline and ruin my bread and butter :grinning:

But minor changes, tweaks and gearshifts do happen based on market conditions atleast couple of times an year, i will elaborate on this soon.


#55

Thanks for that tip! But how to implant that algorithm into one’s mind and should one be worried about it if he thinks his investment is going to stick for long time without much worrying about short term fluctuations?


#56

@G.Bharadwaj Sorry to get here a little late and bother with too many queries, just in case you are still answering queries, if you can please help with:

(1) As a scalper, you make multiple small quick profits. So, do you always go for limit price while entering the trade? Or go for market ones to be quick.
(2) Do you follow the 1-minute chart (applies even for Nifty and BankNifty)
(3) I know you said, you don’t put stoploss, but lets say, if you are entering with Nifty Futures, how many points against would you tolerate, before you call it quit? (It might always happen, the position is against you, but still it didn’t break a logical pivot, so would you stay or quit after some “n” points.)
(4) Since the next entry price depends on the average price of all trades, so do you take next trade like: 1st limit, next Cover, next Normal CNC etc? (In order to get a new buy price everytime, or do you enter the same ones)

Again, sorry to bother with too many questions…but i have always wondered how a successful scalper works, hence there is no one better than to ask you.


#57

@PassionateTrader1

(1) As a scalper, you make multiple small quick profits. So, do you always go for limit price while entering the trade? Or go for market ones to be quick.

The first order the instant i see an opportunity will be a market order, if the trade starts moving my way the second order will be limit order about point 1% more than first order(in case of buy and vice versa) third order i would put about point 1% below first order (in cases there is choppiness and spread is more than usual). If the trade starts moving opposite to me, 2nd order will be a limit order based on orders in the market depth window. While booking profits or loses, i sell 1 lot at a time through limit orders placed on the basis of market depth.

(2) Do you follow the 1-minute chart (applies even for Nifty and BankNifty)

Yes i follow 1 minute chart of Nifty and the stock under consideration. 90% of my trades are stock F/O while 10% bank nifty.options

(3) I know you said, you don’t put stoploss, but lets say, if you are entering with Nifty Futures, how many points against would you tolerate, before you call it quit? (It might always happen, the position is against you, but still it didn’t break a logical pivot, so would you stay or quit after some “n” points.)

I hardly trade nifty futures, so my answers will be on my tryst with stock F O… ultimately its my risk management mechanism which is 1000 to 1500 per lot max loss i am ready to tolerate. Order window will be open and I will be ready to hit enter the second loss is near 1k per lot.

(4) Since the next entry price depends on the average price of all trades, so do you take next trade like: 1st limit, next Cover, next Normal CNC etc? (In order to get a new buy price everytime, or do you enter the same ones)

I enter the same ones.


#58

@TraderVenk Which platform is this? You seem to be using with NIFTY50 index.


#59

IB. TWS has layouts/screens specific to style of trading like scalper, option traders, scale trader etc. The screen shot was from market depth trader layout for nifty future continuous contracts.

BTW I m mostly into stock options and index /currency futures. So I dont use that layout.


#60

Hi
@G.Bharadwaj Ji
thanks for being with us…

I have a question , so as scalper we need market depth charting platform etc…

So we use zerdha kite so please guide how to setup it… it is need zerodha pi or zerodha nest trader or kite… for successful scalp trading.


#61

I have read first few pages of that book too and started analyzing volumes and not using any of the indicators and TA stuff. I can say that if you become good with reading volumes and price action, nothing can beat you.

However, to me it was a bit heavy and difficult analysing price and volume because it gives so many different combinations.

Falling market, rising market, big candles, small candles and volume.

So I kinda started using this info together with a few TA stuff and it has started becoming quite accurate.

For basics, if there is a large red volume candle (I am using Sharekhan’s Trade Tiger software and it gives a colored volume charts, i.e there would be a big red volume candle if price is falling and vice versa), then know that in near term, the stock will fall for sure. So even if price starts to go up I am still bearish on the stock and it falls sooner or later.

The problem here is “big” is just a relative term here. If you are following a green volume candle where it might look big to you, but if you zoom out the chart it may become tiny.

So I don’t know yet how to interpret this data.

End result, I rely on MACD and other TA stuff… However, I do keep a watch on volumes as well.

For example, TATAMOTORS futures had rising red volume candles yesterday at closing. Which means the next red volume candle was bigger than previous red volume candle. Result, today it opened with a gap down. So if you had sold 1 LOT at 249-248 yesterday, you would have made atleast 3000-4500 at todays opening of the stock.

Please, I am not a certified expert on price-volume analysis, so do your own due diligence before you base your trade on volume change.


#62

Starting to analyse price action these days without any indicators … it looks a bit difficult to me at this stage as i don’t receive many clues of reversals except hammer and doji candles. I watch smaller timeframe more …but if you apply one or two indicators alongside like macd and stoch …work becomes a lot easier … however I still end up entering not very near reversal points … because after I make entry based on indicators crossovers etc. Prices jump one last time in the previous direction before continuing in the new direction…so I am trying to perfect my entries so that I am able to catch that last jump too


#63

I don’t know how successfully you can do that, as everything is relative in terms of using TA to read charts. So I rather fill up my account and leave enough margin to cover that extra jump and not try to make my entry perfect. Rather I enter when I see that it has high chance of success and as such exit the position as soon as I get in profit. I don’t try to make big profit in one trade but small profits in several trades.

I think it kinda keeps me safe from uncertainties of the stock market as well as growing my capital in long term, which is most important part of trading activity.

EDIT:

And regarding volume candle, it is not same as the candlestick chart. In pi when you add volume to the chart, it shows yellow bars (at the bottom part of the chart). In pi, all the volume bars are yellow in color. In my trade tiger software, there are two modes of showing volume, one is the basic yellow one and the other one is where, red and green bars are shown corresponding to sell or buy in price action.

I am talking about these volume bars and not the candlestick. Candlesticks are different. You might want to use opening and closing price of candlesticks together with volume bars to set support or resistance for them.

EDIT 2:

Use longer time frames for smoother and more stablish hints. That way, even if you enter wrong, there is very high chance that you will still close in profit. Time frames Like 50, 100, 200 etc.


#64

Okay
Another thing that confuses me sometimes is that the 3 min and 30 min chart indicators give buy signal while 5 min and 1 hour and day chart indicators give opposite signal ie sell

Catching the best price becomes very confusing then


#65

There is no problem with charts and time frames. Your observation is quite correct. If it is showing sell in larger time frame charts then you keep your view as bearish and use sell opportunities in shorter time frame charts; and not using buy opps. as they may be against the larger trend. That way you may have higher chances of success as you are following a larger trend.

However, you need to be alert at all times, as it has been difficult for me reading the signs of reversals in short term charts. So, as said earlier, I enter only when I sense high chance of success. Keeping aside all that I read from the charts. Because too much TA can really confuse you. Follow the larger trend, keep an eye for reversal.

Don’t trade at the reversals itself. As is the famous saying, trend is your friend. Follow the trend, stay away when you sense a reversal.