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Whats the best way to trade in ranging periods, in specific? Usual trading approaches are all around concepts such as breakouts above or below levels. These levels are market means, swing highs and lows, camarilla type levels and so on. However, all of these methods do not give good results, if you are stuck in a range.
One of the most effective ways to trade, which we are experimenting now is to trade the highs and lows of the market. If you can get that right, you are always entering the momentum before the crowd gets in, and therefore will usually reach your targets. The challenge in this method is to discover the highs and lows from where you will begin trading. And thats something, which we have been working on for some time. This will reflect in our trades slowly but surely.
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From June 11th onwards, the ranging market movement has not given any significant range movement that could allow significant and successful trades. This is a test of patience and consistency in our trading methods. We offered a trial from 22nd June till 29th for new users, but havent been able to notch any significant trades during this period.
The only redeeming factor is that our trading approach has kept losses low and leads us to think on developing norms for not trading when range consistently stays within a specific limit and varying our trade . More on this in the coming days. Our trading methods have changed over time to become more efficient and risk managed. The number of trades per day has dropped drastically to no more than 1-3 trades. We've learnt to avoid ranging periods to a large extent and new services such as intraday positional introduced for Nifty Futures and short term positional for Bank Nifty Futures. These services are free for existing subscribers.
And of course, our traders profile has also changed to process oriented and disciplined ones! Original research using methods that have not been observed anywhere else are being employed to make this happen and more innovations will come in the future! Our Nifty trading results have not been much to talk about for the last 3 days, as we are switching to a smarter more reliable mechanism that ensures that we dont get affected by range movements on dull days or ranging after a gap up/down. Be patient around intraday trading for the next few days as the changes stabilize. However, BankNifty intraday and Nifty positional trades continue to do well as before.
If you are a day trader and you start hopefully at the beginning of a day for a good trading day and then slowly see nothing happening, because of a gap up or a gap down opening followed by a narrow 30 point range movement the rest of the day?
It hasnt been often that Nifty has traded in a range for more than 2-3 sessions at a time or that all the big moves happen only in the gap ups/downs. This is another reason for traders to look at diversifying their trading mix from just one style - day trading - to inlcude position trading or trading in more than one instrument. While Nifty, for example has hardly moved, the BankNifty has been swinging wildly with the volatility that makes a day trader happy. At the same time, positional traders who have stayed with the trend are making their money through the gap ups. Think about it! As traders, you cannot control the results of trading, they occur, because of the market moves and your risk management strategy was able to encash on those moves This is simply amazing. Traders stay quiet and smug while running on the winning trail. But the moment they fall, they get the fear of God and freeze in their tracks like statues. They will stop trading or will trade and get out with 5-10 points profit in their next trade. And see the next long winning run just pass them by.
Why does this happen? Its simple. When you begin trading you need to have a full strategy or plan. And not trade simply on the fly. If you do the latter, you will be counting the pebbles, and miss the bigger story completely. Losses are part of the trading game. On December 1, all my trades were stop loss trades in the morning, but I persisted and won in the later trades, closing with a small profit net for the day. Budget for losses and profits.If your profit target is 100% your total trading outlay should be 150% which accounts for 33% losses in your monthly profit and loss statement. Spread this 33% across each week and calibrate your performance on that basis and not by each trade. Get that emotion out of your mind! and trade objectively. Come to me if you still have a problem. This has a lot of practical and useful information.
Well, you may say, this is no rocket science, but implement this idea in real life and figure out those challenges!
With a specific instrument as an example lets work out the costs.With my system there are 15 possible trades in which 3-4 trades may hit stop losses in a week.. But these 4, saywill lose only Rs 800 in a week and max 800*4 = Rs 3200 in a month.. Now the winning trades will give 12*20*20*4=Rs 19200 in the same period.. Giving a net profit of Rs 16000 from just one lot of minifty! Of course you can knock off 60*5*20=Rs 6000 for costs, leaving Rs 13200 per lot. From 13th July, we are now trading a maximum of 3 trades per day.
We will always trade no more than 2-3 times a day, usually following a trend.
We always trade in one direction. Which means if the trend is positive and moving upwards, we will buy or be long, but never short. Some of you may think, we are missing opportunities, but thats one of the safe trading approached. Win, steadily....and avoid potential retracement whipsaws. When in a trend in one direction, we may exit and re-enter again a few points in the direction of the trend. This can happen more than once and increase the total number of trades in a day occasionally. When we whipsaw around a mean level, and two stop losses hit consecutively, we are out of the market for the day. Again, this is a safe trading approach. We will lose a max of two stop loss points which will never exceed 10 points per trade. |
AuthorAbnash Singh, Am a Trader helping small traders to realize their dreams. Archives
October 2017
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