MY STYLE - BLOG
This is a question I keep asking myself every week. And the answer relies on just point. Are we trading consistently? Which means is our trading method giving consistent profits - sum of winning trades over losing trades remains consistently positive. And the answer is a resounding YES.
If I asked this question a month ago, I had the niggling doubt, that we were getting exposed to whipsaws now and then and losing good profits in a few bad trades. Now that has changed. How?
First our trading systems use small stop losses for all classes of trades. For intraday trades for Nifty the stop losses are as small as 4-10 points and for Bank nifty 12-25 points. This implies that we can survive more stop loss trades (not that we need to have them more often!) in our risk management approach. The second and more significant improvement is being able to make right interpretations of the bigger picture during market hours so trade trends are correctly identified and trades are entered at the right levels.
That is where our proprietary research into identifying trends and supports and resistances has come to play. A visual display of this information is displayed by a conventional bar chart and is superimposed onto point and figure precision. Infact, the two systems now help double check against one another like a closed loop. The impact was felt today -- expiry volatility in intraday trades was completely managed! See the example of BankNifty trades below. The light green and reddish brown lines are the resistances and supports, which another proprietary program generates, trades are generated using a P&F system and the trade monitoring robot generates the stop losses based on these levels. The result is amazing precision! And thanks to pretty original research that generates these charts.
The original swing theory of higher highs and lows for long trades and lower lows for short trades remains king. The issue where traders stumble is to filter the noise out and identify the highs/lows. Thats where technical traders come in with their arsenal. If you can master this, and I am not yet fully there, but slowly moving in that direction, trading takes the level of an art! Because you try to project trader psychology onto the charts, and that can be subjective and disastrous at times. The upside is that you trade only with price action, the purest form of market direction. Think about this!
Abnash Singh, Am a Trader helping small traders to realize their dreams.