How did your trading and investing go this year, I did quite well in investment. However, trading experienced a significant loss. The truth is that there are days when I want to give up and days I felt I should trade with larger capital. As an individual with many expenses, it is impossible to put money on the table completely trading.
I started 2022 thinking that one approach or strategy would help me in making good money in markets. Later, I realised it doesn’t wrong like that, a few trading days were good, and a few few were exceptional. Yet, when you have a large loss day, it is quite easy to tilt. When I look at the profit and loss statement, I see small gains and large losses.
This is what happened with me this year. Tell me about your 2022 and how your trading performed.
This is a classic trader pitfall. Getting out of profitable trades quickly out of fear and letting the losses run out of hope. All consistently profitable traders do the reverse - they cut out of loosing trades quickly and they let their profitable ones run. Risk / money management is the corner stone of profitable trading.
That can happen either by experience as history can repeat, or by a mathematical setup with no place for emotions. Traders want to book profits in fear of losing them, you know that.
So it is not a mistake on their part per se, but the lack of a system that can show that the trade they are in is profitable. No one will book full profits if they can see that their trade will continue to be profitable.
So look at it from their perspective, even if you were not in their place
For investors, the Indian market was very forgiving. And it’s surprising because we had every reason to fall. A strong dollar, possible global recession, attractive fixed income yields, geopolitical tensions and raging oil prices.
For traders, I think this has been a hard market to trade. Often, we would have large opening gaps in either direction, followed by a choppy price action for the rest of the day.
I believe that the only way to remove emotions is to trade systematically, by automating through an algo or to appoint someone who would put in the trades according to your system. That’s because nothing works all the time and by trading discretionally, we’re constantly going through a flurry of emotions. At the end of the day, we may or may not make money, but we will definitely lose our sanity if we continue to day trade discretionally.
If the markets are not making huge sized red or green candles - there is a high possibility that the week could be range bound. Plan to deploy short iron fly and make adjustments if the view goes against.
If the moves are above the ATR (normal swing range) plan to deploy a debit ratio spread 1:2 or 2:3 or 3:5 and wait
Expiry trading will always make money - sell naked calls or puts with a stop loss - either boom or bust.
Go for credit spreads if you feel markets will go in the direction you have in mind - the max loss is preset so that you dont have to worry if the market goes against you.