38 steps to becoming a trader

38 steps to becoming a trader

They are as follows:

1. We accumulate information - buying books, going to seminars and
researching.
2. We begin to trade with our 'new' knowledge.
3. We consistently 'donate' and then realise we may need more
knowledge or information.
4. We accumulate more information.
5. We switch the commodities we are currently following.
6. We go back into the market and trade with our 'updated' knowledge.
7. We get 'beat up' again and begin to lose some of our confidence.
Fear starts setting in.
8. We start to listen to 'outside news' and to other traders.
9. We go back into the market and continue to 'donate'.
10. We switch commodities again.
11. We search for more information.
12. We go back into the market and start to see a little progress.
13. We get 'over-confident' and the market humbles us.
14. We start to understand that trading successfully is going to
take more time and more knowledge than we anticipated.

MOST PEOPLE WILL GIVE UP AT THIS POINT,
AS THEY REALISE WORK IS INVOLVED.

15. We get serious and start concentrating on learning a 'real'
methodology.
16. We trade our methodology with some success, but realise that
something is missing.
17. We begin to understand the need for having rules to apply our
methodology.
18. We take a sabbatical from trading to develop and research our
trading rules.
19. We start trading again, this time with rules and find some
success, but over all we still hesitate when it comes time to
execute.
20. We add, subtract and modify rules as we see a need to be more
proficient with our rules.
21. We feel we are very close to crossing that threshold of
successful trading.
22. We start to take responsibility for our trading results as we
understand that our success is in us, not the methodology.
23. We continue to trade and become more proficient with our
methodology and our rules.
24. As we trade we still have a tendency to violate our rules and our
results are still erratic.
25. We know we are close.
26. We go back and research our rules.
27. We build the confidence in our rules and go back into the market
and trade.
28. Our trading results are getting better, but we are still
hesitating in executing our rules.
29. We now see the importance of following our rules as we see the
results of our trades when we don't follow the rules.
30. We begin to see that our lack of success is within us (a lack of
discipline in following the rules because of some kind of fear)
and we begin to work on knowing ourselves better.
31. We continue to trade and the market teaches us more and more
about ourselves.
32. We master our methodology and our trading rules.
33. We begin to consistently make money.
34. We get a little over-confident and the market humbles us.
35. We continue to learn our lessons.
36. We stop thinking and allow our rules to trade for us (trading
becomes boring, but successful) and our trading account
continues to grow as we increase our contract size.
37. We are making more money than we ever dreamed possible.
38. We go on with our lives and accomplish many of the goals we had
always dreamed of.

Most traders will identify with this list and should be able to place
themselves within these steps. Keep in mind that very few people
progress through these steps in an orderly fashion. Developing your
trading skills is an iterative process. For example, you may reach
Step 13., find that although you were making money, your basic
premise for trading was flawed (you might have been benefiting from
the bull market, rather than your own trading prowess and then have
been rudely awakened when the market entered a bear phase) and you
may drop back to Step 4. and start 'climbing' the steps again.
Having the proper mindset, attitude and psychological makeup becomes
increasingly important as you progress through the steps. The focus
of the earlier steps is on external issues, i.e. developing
proficiency in the mechanics of trading while the focus of the
latter steps (particularly from Step 30, on) is on internal issues,
i.e. improving ourselves mentally and psychologically, maturing as
trader

Education of A Trader - Kent Calhoun

Education of A Trader - Kent Calhoun

There are two types of education: learning obtained from books and seminars, and knowledge obtained from the experiences that life teaches. Formal education may or may not teach an individual how to trade, but allows the trader to learn from the mistakes of others. This is a good learning experience, since it would take the trader a long time to make all the same mistakes. Education from real life trading experiences teaches individual survival instincts.

The final step to achieve success is to apply analytical evaluation to the actions taken in step three. This places emphasis on repeating actions that produce the desired results, and carefully examine closely what does not work. Once the reasons are clearly understood why some technical actions do not produce desired results, they should be adjusted, improved or discarded,

This basic approach of how to achieve success may leave the reader with the false impression that trading success is an easy process. Not so. General George Patton stated, "a warrior's greatest asset is self-confidence." This demands knowing what should be done, and why it should be done. This will be presented later, when I will examine the reasons that prevent most people from achieving success, and what can be done about correcting them.

The importance of a positive attitude, the two most important psychological laws, and the four steps to achieve success have laid the foundation for understanding the nature of personal change, why most traders lose money, and actions responsible individuals take to correct losing behavior.

The Three Reasons Why Most Traders Lose - One way to change from a losing t reader to a winning trader is to change the thoughts that preceded the actions responsible for the losses. It is difficult to alter the habitual thought processes that have embedded themselves deeply in a trader's personality over a number of years, due to the powerful influence of three intertwined emotions: fear, anger and guilt.

Fear is an emotional state of anxiety due to the presence or perceived presence of danger. (Stress is often defined as anxiety from an unknown source.) Each newborn child has only two natural fears- fear of loud noises, and fear of falling. Most fears produce learned behavior to a specific set of conditions, called conditional responses. Pavlov pioneered this research with dogs in the 1920's, then B.F. Skinner with human beings and animals in modern times.

Fear often impairs the rational trade decision-making process by emotionally relating the possibility of past financial losses to the future. Fear often immobilizes the trader's decision-making process resulting in no trading decision, or a delayed incorrect trading decision response.

Fear will elicit a trader's "flight or fight" response when he is confronted with methodology's trading signals. The trader will either take actions as demanded by his trading methodology, or remove himself from the presence of danger. An acronym for Fear may be "false expectations appearing real." Attitudes determine actions. Traders with positive attitudes have positive expectations, and take decisive goal-directed trading actions despite fear.

The winning trader accepts the possibility of losses or mistakes, yet has the self-confidence to take action despite fear. Winners manage fear, and losing traders are controlled by it. The greatest mistake is to fear making a mistake. Trading success is based on knowledge of what works and what fails. Managing fear and accepting mistakes are an essential part of the trading educational experience that makes success possible. Winning traders learn from mistakes, losing traders repeat them.

Self-confidence naturally develops from self-discipline as a trader learns what actions should be taken from a given set of technical conditions. The more accurately a trader interprets price action, the better his trading results should be. Thought precedes both emotion and action, yet thoughts combined with emotions determine actions. Self-confidence comes from believing in one's abilities, assessing and accepting risk, then taking actions. The winning trader knows personal or financial growth is impossible without risk assumption, which is part of an educational process.

Only emotionally healthy traders can adequately assume risks, because losses must be emotionally and financially acceptable to each individual trader. Each trader must define their own thresholds of pain for each, and develop the self-confidence to accept them. Fear of being wrong may be more important to a trader's ego than fear of sustaining a financial loss.

In a similar manner, many traders can't accept financial success, because it does not conform to their negative self-image as a losing trader. There are various ways fear can be creatively used for financial destruction by the losing trader, but the one common denominator is allowing fear to control trading actions.

It is important to analyze fear and determine its origin to learn why it is being experienced. Most fear is based on irrational beliefs adopted years ago. If fear of losing money is causing anxiety or loss of self-esteem, the trader may wish to simply stop trading until this fear is understood and positively accepted as part of the trading experience. Traders should never borrow money to trade, or risk money they can not afford to lose.

While fear may immobilize the trade decision-making process due to financial losses that may occur in the future, guilt may immobilize the trade decision making process due to financial losses that occurred in the past. Guilt emotionally associates past financial losses, and any negative emotions experienced with them, to the present decision making process.

Guilt is a form of self-punishment, a recrimination today for something that happened yesterday. There are two common trading mistakes that the beginning trader makes that often lead to experiencing quilt:

Incorrect price action analysis before entry, and failure to adhere to trading discipline while the trade was active. These common mistakes often lead to an unacceptable risk-reward assumption before entry, a delayed incorrect entry price and/or protective stop placements, poor stop re-adjustments, and taking profits or exiting losses prematurely.

The most important technical aspect of trading is knowing at what price the initial risk assumption is incorrect. A trader who does not know at what price his analysis is incorrect does not deserve the profits even if his trade makes money.

Before a trade is initiated, an acceptable trade risk-reward ratio must be defined by the trading methodology. A protective stop loss order must be placed upon trade entry, then readjusted according to the trading discipline until the method determines the trade is to be closed.

A winning trader is a winner before the trade is initiated, while the trade is active, and after the trade is exited regardless of the result to the degree he adheres to his trading discipline. There is no logic-based reason to ever experience guilt so long as the trader has executed the actions demanded by his trading discipline. Once a trader psychologically and financially accepts the worst outcome that may occur and does all he can to prevent it, fear and guilt become intellectually useless emotions.

Anger is a hostile emotional response either inwardly directed, or outwardly expressed towards others. Anger may result from confrontation with the guilt or fear aspects of the trade decision making process, or negative trading results. Rational trading decisions are very difficult to make when the brain is processing anger, due to physiological and psychological reasons.

A trader may choose to ignore a signal due to a recent loss, fearing another loss will result. If the trade makes money, guilt and or possibly anger is experienced for not taking the trade. Guilt is a natural response after anger has been vented. If the trade loses money, the trader feels justifiably rewarded for not taking the trade thus making it more difficult to execute the proper trading discipline required for his next entry signal.

Does this mean there is no subjective aspect to trading? Burton Pugh, who wrote excellent technical analysis trading commentary in the 1930's, stated "forecasting prices is a science, but trading is an art." Only a master trader, who can technically justify reasons for ignoring a trade, should override trading signals. One of the Calhoun Four Automatic Trading Rules, "always look to buy a market oversold into support," is expecting a sharp currency move mid-Sep 95, and current system sell signals are not being taken.

Resolutions to Solutions of Fear, Anger and Guilt - Four basic actions allow traders to manage fear, anger and guilt. First, forgiving one's self for past losses. Second, forgiving others associated with past trading experiences. A person is mentally healthy to the degree he may forgive himself and others. Forgiving one's self for past trading losses resolves guilt. Third, asking forgiveness of others who may have been injured from the trading experiences. Lastly, vowing to take full responsibility for all past and future losses.

The four-step resolution process allows any trader to begin to heal emotionally. By intellectually accepting the past, traders may view their actions with a new positive perspective. The past can not be changed, but its perspective must be changed from a negative experience whereby the trader sees himself a victim, to a positive learning experience that will allow the trader to achieve success. Until a trader positively resolves his past, he will not accept important learning experiences yet believe he is a person unworthy of success. Resolving the past demands taking total responsibility for it, and personal commitment to not repeat the same trading mistakes.

Recognizing a problem exists is necessary before resolutions can be examined. Anger is a financially self-destructive emotion that exacerbates fear and quilt by obscuring solutions to them, while creating itself as another problem. There is no such thing as justifiable anger related to the trading process. If a trader can financially and emotionally accept losses, execute proper trading and self-discipline, the powerful negative emotions of guilt, anger and fear should not become part of or create trading problems.

The relationship of fear, anger and quilt is a very complex subject matter. The psychological problems of losing traders can not be expected to be adequately resolved in a cursory discussion of this nature, however all resolution to a trader's psychological problems must consider the key aspects presented in this work. Once traders make the critical adjustment from a losing to a winning trader, they often come to realize the psychological aspects of trading being equally important as correct price action analysis.

A degree in psychology may be more valuable than a degree in economics for a professional trader, because markets are value based yet emotionally priced. Understanding the psychological perceptions of market traders correlates directly to the what and how prices are recorded for any stock or commodity.

Preventing Future Psychological Trading Problems - There are many successful trading approaches, but all of them demand the trader develop a positive relationship with financial risk acceptance. Traders to whom money represents self-esteem or security suffer unduly when losses are sustained, because they see themselves as being punished by forces beyond their control. Professional traders do not spend time lamenting the money they have lost, they express gratitude for the many blessings they still possess. Again, a positive attitude makes the difference between winning and losing, or some cases even heaven and hell.

A samurai swordsman went before an esteemed Zen master and shouted in the temple he wanted to learn the difference between heaven and hell. The master looked at the samurai and shouted, "you mean they let a big, ugly fool like you become a samurai swordsman?" The samurai quickly drew his sword raising it high above the master's head. The master calmly raised his finger and pointed to the samurai's eyes, and said "that is hell." Slowly the samurai sheathed his sword, nodding his head as he knelt before the master, placed his hands together then bowed. "And that is heaven," stated the master.

Understanding and correctly analyzing price action is absolutely necessary before trading success is possible. Yet even with profitable trading methods, traders must develop a positive relationship with themselves, others and their trading environment before success may be achieved. The professional trader recognizes no one else may give him success, he must earn it by careful preparation, proper execution of trading discipline, and careful analysis of trading results.

Trading decisions based on scientific analysis of price action make statistically accurate price forecasts possible. Placing a protective stop loss order to exit the market at the price the initial risk analysis is incorrect is the best psychological asset. Even if the trade loses money, the trader adhered to his trading discipline. Statistically, a trade 60% accurate with payoff equal to losses may risk 5 percent of the total capital with only a 0.0085 probability of financial ruin.

Failure is a good teacher only to those who possess a positive attitude to learn the valuable lessons from their mistake. Accurate execution of trading discipline requires a protective stop placement on order to avoid failure, and diminish the negative psychological effects of fear and guilt. Self-discipline demands doing what should be done, when it should be done, whether or not a trader wants to do it. Self-confidence is born from self-discipline, and makes the risk acceptance process acceptable because potential losses are acceptable.

Developing a positive attitude is essential for human beings to successfully live life and achieve their maximum potential, since all other higher human values come from it. Respect for truth, honor, dignity, honesty, integrity, courage, loyalty, patriotism and wisdom is cultivated by an individual who recognize these values not only enhance the quality of his life, but the lives of all he encounters. His attitude states others are worthy of these values, just as he possesses enough self-worth to expect them to be returned.

The Green Bay Packers had three very basic plays they ran over 80% of the time. These plays reflected Vince Lombardi's winning philosophy and he expressed it very simply. "Son, the only thing you can do is to get off your ass and stop feeling sorry for yourself and do it! Work out your method. Work out your system, and execute it." Was Lombardi talking about playing football or trading? This simple philosophy inspired the Packers to two consecutive NFL Super Bowls. Not bad advice to conclude my "Psychology of Successful Trading."

Twenty-Five Facts To "Successful Trading" by Tom D'Angelo

Twenty-Five Facts, Topics & Aspects To "Successful Trading" by Tom D'Angelo

These Are Some Topics I Covered in a Seminar on Money Management I Recently Gave in San Diego

1. 95 % of all Futures, Stock and Options traders are long term losers

2. The 5% that win will earn the money the 95% lose since futures trading is a zero sum game

3. You must master three disciplines to achieve long-term successful speculation: a. Trading methodology (long or short-term, technical versus fundamental analysis, type of trading system, etc); b. Psychological discipline (controlling emotions of fear, greed and anxiety); c. Money management (risk reword decision analysis for each trading opportunity - when, where, why and how to bet on a particular event)

All three disciplines are necessary, but not sufficient individually - only all three combined are necessary and sufficient to achieve success.

You must develop a trading personality which integrates all three disciplines to achieve long-term success in speculation. If you do not, you will fail.

4. 95% of futures traders concentrate on trading methodology and ignore disciplines two and three. If you only focus on trading methodology, you will eventually fail in speculation. The only question is when you will fail, not if.

5. Psychological problems are caused mainly by uncertainty . . . which creates fear, greed and anxiety.

6. Uncertainty can be significantly reduced if the trader has information and knowledge which creates certainty rather than uncertainty. Certainty reduces fear of the unknown, greed, anxiety, and creates confidence and success.

7. 95% of traders are totally disorganized as to analyzing their trading results . . . and have no concept of how to organize their profitable and unprofitable trades.

Practical organization of trading results is a primary prerequisite in mastering the money management discipline.

8. Brokers' statements provide absolutely no value or practical use in mastering the three disciplines.

9. To master the money management discipline, the trader requires information which is: a. timely; b. accurate and; c. practical. All three tests are necessary and sufficient. Each individual test is necessary but not sufficient.

10. Futures trading is just like running a business. If you do not approach trading in the manner of a successful business, (such as IBM, Sony or Apple Computers) you will. Probably fail in the long run.

11. All three disciplines are inter-linked. If you make progress in one of the three areas, the other two areas will automatically improve.

12. 95% of all traders play as customers in a casino and not as the casino.

13. You must play as the casino and not as a customer to achieve long-term successful speculation.

14. The customer in the casino will always lose and the casino will always win in the long run.

15. Long-term success can only be achieved by playing a game with a positive expectation - (or playing a negative expectation game which you expect to become positive - a more risky technique)

16. The best approach is to play a game where you have a positive expectation and make small bets (playing as the casino). The 5% of traders who succeed fall into this category.

The worst case is to play a negative expectation game and make large bets . . . Most of the 95% traders who fail are in this category.

17. Before you make your first trade, you must establish your risk profile approach towards trading (conservative, moderate, aggressive). You must know who you are. This risk profile will determine your approach to the risk./reward decision making process.

18. Before you make your first trade, you must establish monthly, quarterly and annual goals for each profit center. These goals should be both operating and financial goals.

19. Nearly every trader who is successful was a consistent and/or heavy loser when he/she first began trading (paying their dues), losing significant amounts of capital in the process. This is a situation which stems from the fact that traders focus on the trading methodology and ignore the other two disciplines.

Losing significant amounts of capital can be avoided if the trader is making a sincere effort to integrate the 3 disciplines into his/her personality.

20. 95% of traders do not know where they have been, where they are or where they are going in their trading. They operate like a plane in a fog trying to fly with no instruments. They are disorganized, uncertain, anxious, fearful and eventually are forced out of the speculation game. If you emulate this 95% group of individuals, you will wind up equally frustrated and you will eventually fail.

21. The more you trade (day trading), the more sophisticated your money-management discipline has to be.

22. The less you trade (long-term positions based on fundamental analysis), the less sophisticated your money-management discipline can be.

23. You should classify any contemplated trade into one of the following five categories before putting on a position:

a. Entrance into congestion
b. A trade within a congestion
c. A breakout from a congestion area
d. A trend run
e. Trend reversal

24. The trader will have difficulty in formulating a successful and intelligent risk/reward (entry/exit) plan unless the trade is properly categorized before the trade is taken. The risk/reward parameters are different for each of the five types of trades.

25. Having timely, practical and correct information of trading results instantly available enables the trader to make rapid, unemotional and informed trading decisions.

Trading will then be less victimized by emotions and instead become more "scientific," unemotional and mechanical.

Gann Dates

The following dates should be watched for important changes in the major trend of both Industrial and Railroad stocks. If any stock makes top or bottom around any of these dates, you can expect a reversal in trend, especially if there is a sharp decline or a sharp advance around these dates: Feb 8th to 10th, March 21st to 23rd, May 3rd to 7th, June 20th to 24th, August 3rd to 8th, Sept 21st to 24th, Nov. 8th to 11th, Dec. 20th to 24th. These dates are based upon a permanent cycle, which does not change. Important dates are based upon a permanent cycle, which does not change. Important tops and bottoms are made in many stocks every year around these times. Watch the stocks that reach extreme high or low levels around these dates.

DATES FOR ACTIVITY AND WIDE FLUCTUATIONS 

The following dates indicate times when stocks will be very active and have wide fluctuations, making tops and bottoms. While all stocks will not make tops and bottoms around these dates, some of the most active ones will and if you watch the ones that turn around these dates, it will prove helpful in your trading:

January 5th to 7th, 12th to 15th, 18th to 24th

February 9th to 12th, 20th to 22nd, and 27th to 28th.

March 10th to 11th, very important for change in trend; 21st to 22nd important; 28th to 29th another very important date for change.

April 3rd, 9th to 10th, 13th to 15th, 21st to 23rd.

May 3rd to 4th – watch stocks that make top around this date; 9th to 11th another important date when some stocks will make bottom and other stocks will make top.  22nd to 23rd and 29th to 31st – very important dates for change in trend; watch for stocks that will make top around this date.

June 1st to 2nd – quite important; 7th to 10th another important change; 21st to 23rd a more important change.

July 3rd to 5th – very important for change in trend; 9th to 10th also quite important; 21st to 24th more important.

August – one of the most important months for change in trend. Many stocks will start on their long down trend. 7th to 8th – quite important; 16th to 17th important; 23rd to 24th important, 29th to 30th of minor importance.

September 2nd to 3rd important; 16th to 17th important, should be bottom of a panicky decline. 21st to 24th important for top; 27th and 28th important for bottom of a big break.

October 2nd; 8th to 9th; 18th to 20th very important, - which stocks which start to decline and go with them; 26th to 28th minor importance.

November 10th to 22nd – a very important period for wide fluctuations. Airplanes, radio and some electrical stocks may have sharp advances. Other important dates for changes are 1st to 2nd, 17th to 19th, and 24th to 25th.

December 1st to 2nd important; 16th to 17th of minor importance; 23rd to 24th greater activity and of major importance.

The above dates are not only important for changes in trend and times when bottoms and tops should be reached, but on these dates important news is indicated and some will be of a sudden, unexpected nature, at times favourable and at other times unfavourable, but causing stocks to be active and fluctuate, making tops and bottoms and changing trend.

HOW TO TRADE WITH THE FORECAST

The time given for tops and bottoms is the most important factor for you to know and watch. It makes no difference about the price a stock is selling at. So long as you KNOW WHEN it will reach low or high levels you can buy or sell and make money. When the Forecast indicates bottom at a certain date and stocks decline, you should buy the ones given as in strong position or the ones we recommend buying and place a stop loss order 3 to 5 points away according to the price the stock is selling at. With stocks that active and have wide fluctuations, making tops and bottoms. While all stocks will not make tops and bottoms around these dates, some of the most active ones will and if you watch the ones that turn around these dates, it will prove helpful in you trading:

January 5th to 7th, 12th to 15th, 18th to 24th.

February 9th to 12th, 20th to 22nd, and 27th to 28th.

March 10th to 11th, very important for change in trend; 21st to 22nd important; 28th to 29th another very important date for change.

April 3rd, 9th to 10th, 13th to 15th, 21st to 23rd.

May 3rd to 4th - watch stocks that make top around this date; 9th to 11th another important date when some stocks will make bottom and other stocks will make top. 22nd to 23rd and 29th to 31st - very important dates for change in trend; watch for stocks that will make top around this date.

June 1st to 2nd - quite important; 7th to 10th anther important change; 21st to 23rd a more important change.

July 3rd to 5th - very important for change in trend; 9th to 10th also quite important; 21st to 24th more important.

August - - One of the most important months for change in trend. Many stocks will start on their long down trend. 7th to 8th quite important; 16th to 17th important; 23rd to 24th important; 29th to 30th of minor importance.

September 2nd to 3rd important; 16th to 17th important, should be bottom of a panicky decline. 21st to 24th important for top; 27th and 28th important for bottom of a big break.

October 2nd; 8th to 9th; 18th to 20th very important, - watch stocks which start to decline and go with them; 26th to 28th minor importance.

November 10th to 22nd - a very important period for wide fluctuations. Airplanes, radio and some electrical stocks may have sharp advances. Other important dates for changes are 1st to 2nd, 17th to 19th, and 24th to 25th.

December 1st to 2nd important; 16th to 17th of minor importance; 23rd to 24th greater activity and of major importance.

The above dates are not only important for changes in trend and times when bottoms and tops should be reached, but on these dates important news is indicated and some will be of a sudden, unexpected nature, at times favourable and at other times unfavourable, but causing stocks to be active and fluctuate, making tops and bottoms and changing trend.

Trading strategies 3-13-39 days EMA

Hi I am a nifty trader and I am using 3,13,34 min EMA Nifty Charts for my day trading purpose in combo with RSI and stochastic which yields me . And this EMA setup works well for me. And I am able to trade confidently every day without and fear. And moreover I am able to guess the entry and exit points in nifty. In my opinion nifty is a good instruments to play for intraday what do you say???

Dear Friends,
                  Here i give simple how to apply day trading Three Moving Average System, for short term daily,profitable,
 
   EMA-3 DAYS,   EMA-13 DAYS   ,   EMA-39DAYS   apply these all in your chart,

  Trading Signals

       1.Go long Entry  EMA 13 crosses above 39 EMA,
       2.Go long exit   EMA 13 crosses above 3 EMA,
       3.Go Short Entry  EMA 39 crosses above EMA 13,
       4.Go short exit  EMA  3 crosses above EMA  13 

315 Method

The first step is to understand what is 315 .. its advatages and disadvantages.

The second step is to understand some rules I have derived to use it effectively. Rules are related to effective entries, effective SL management, effective profit bookings, effective re-entries and in the end effective money management or effective safeguarding the capital.

In this post I would focus on step 1 i.e what is 315 etc.

315 Strategy for swing trading

315 is a simple swing technique which tries to identify a trend very early. In this strategy we use only EMAs name EMA 3 & EMA 15 (hence the name 315).

People ask me why EMA 3 and EMA 15 .... for me last 3 days define the immediate average price ... to find the slightly longer term trend i use the factor of 5. This is becuase 5 has an interesting relevance to markets.... we have approx 5 hours of trading everyday, 5 trading days in a week, almost 5 trading weeks in a month .... So I simply multiple 3 by 5 to get my 15 EMA which defines my medium term average price.

Now in simple terms, if our immediate average price is higher than the medium term average price that means we are entering in a bull swing ... and visa versa. Hence the strategy entries are:

1 Enter Long when 3 EMA goes above 15 EMA
2 Enter Short when 3 EMA goes below 15 EMA

Advantages of following 315 strategy

1. A simple technique using just 2 EMAs, no other oscilattors or indicators required. NO advanced charting softwares required.

2. System is based on following the ULTIMATE indicator available i.e price action.

3. Keeps a trader in the trend, lets the full swing to complete. Never gets a trader against the trend.

4. Since we are just following price action, we dont need to worry about divergences etc.

Disadvantages of 315 Strategy

1. Works brilliantly in a trending market but can whipsaw in extremely ranging markets. However this can be overcome by certain rules and money management to be explained later in this thread.



So this is what the strategy is folks, do some chart reading and see how it works on EOD charts. Do post any questions you have here.

I will come back to talk about Step 2 again.

Keep an eye on Nifty charts, 315 is going to generate a signal soon... dont miss.

Hi Bandlab/Ankit - Sorry for the delay in responding to all your posts and putting my rules here. I just wanted to leave the strategy here for people to digest the 'concept' first before i put forward my money management and other system details.

Its great to see you guys have done some chart reading. Bandlab, great that you have tested it on some intraday time frames as well.

Coming back to my rules... I will talk about Entries, position sizing, pyramiding and Exits (yes, its not always in a trade method) !!

BUT FIRST OF ALL, PLS APPLY 315 TO EOD ... believe me i have thought (and tried) applying 315 to intraday but success ratio is too low. 315 is for traders to trade less and make more money.

Coming to rules....

Entries

Entries are simple, you wait for a candle to close above 15 EMA, next candle to open and see if 3 EMA is above 15 EMA or not. If the answer is 'Yes' you go long. For shorts you need an exact opposite setup.

Position Sizing

Since in this system SL cannot be defined as a 'level' your initial position sizing has to be small. Depending on the trading capital, you dont want to put more than 25% capital which you want to put in this trade in as the first trade i.e assume if you can trade a total of 4 lots max, you will start with 1 lot. Rest 3 lots we will add later as our position moves into profit.

Pyramiding

Pyramiding or 'adds' are obviosly done once our position has 'swung' into profits. The rule is we add when the markets correct after a swing, price comes and touched 15 EMA again (but 3 EMA hasnt crossed over). This means that we add very close to our SAR hence keeps the risk small and also ensures that even if SAR is triggered we still end up in net profits (since our initial position is in profits hopefully now).

Exits

Yes, we do exit at certain points even when our SAR is not hit. These exit points are obviously when our position is suddenly in deep profits becuase of an extreme rally or crash in our favour. The exit points are where you find our 'current' EOD candle is not touching 3 EMA at all. On this candle, we book profits and wait for markets to correct back and touch 3 EMA again. As soon as 3 EMA is touched we jump back into our initiaal position. So in a way we stay with our position, we just exit it once and get back in after a small correction.

I would let you guys analyse, examine and apply these rules to some of the trades which you have identified. I am also posting an NF chart below showing entries, Pyramids or 'adds', Exit and jump back in and finally SAR.

Please do post any questions you have here.

In the end, I would try and touch the most important piece which is 'how to protect capital from whipsaws' .. but thats later.....

NF Chart in next post below.

Link for downloading intraday data from google finance

How to free download last one month intraday data from Google finance?

 In Google finance, we can view even the intra-day stock chart for last one month may be even more for 1 minute time interval. As we increase the time interval the view span can be increased significantly. But there is no link to download this data directly.  I dig into Google finance and find out something very interesting. Whatever the chart you can see for an individual symbol, you can  download it also but with a little pain than yahoo finance  For intraday or 1min, 5 min, 30 min or 1 hr interval there is no way we can download it from yahoo finance. So here comes the Google finance to help us out.

Copy the link below and paste into the browser

http://www.google.com/finance/getprices?q=SUZLON&x=NSE&i=120&p=1000d&f=d,c,o,h,l&df=cpct&auto=1&ts=1266701290218

q= stock symbol on Google finance

x= exchange symbol

i= interval (here 1=120 means 120 sec (2 minute interval))

p= no of period

f= parameters (day, close, open, high and low)

df= difference (cpct is may be in % change , not sure)

auto =1, and ts value I don’t know.

Here I have chosen period p=1000d to get the maximum data possible. you can choose your own set of value depending upon your need.

After getting the data copy and paste the data into a spreadsheet and format little bit to make it usable.

Though I have found it works pretty well for me. IF it has any error then any comment and suggestion is invited to improve it.  Any way it is free so giving a try is worthwhile since you have nothing to lose. I hope you will like it. Enjoy the free data mining

Here is link for NIFTY for one miniut data for 10 days here p=10 is for 10 day data

http://www.google.com/finance/getprices?q=NIFTY&x=NSE&i=60&p=10d&f=d,c,o,h,l

Trading Strategies for Swing Trading:

(You should get greedy when other are fearful and fearful when others are greedy.)

1. Follow higher top / bottom and lower top / bottom.
2. Always enter in to trade when market goes below or higher of the previous day high / low.
3. Use stop loss few tick above or below the previous day high / low.
4. Next day of NR4(Narrow Range) or NR7 or ID(Inside Day) are better days to enter in a fresh trade after brake out.
5. Follow 3 day down/up 1 day up/down reversal in trend (Mark Rivalland theory). If you are a aggressive trader even than you should look for at least two bar pullback (correction) to enter trade (trend knockout pattern) above 1/16 point away from previous days high / low.
6. Play between support and resistance.
7. Follow the Trend
8. If the position is not comes profitable within two days and not stopped out, exit the trade MOC (Market on close).
9. When in doubt, Get out, if market is dull or quite after entering into a trade and no progress in our direction, don’t wait to hit your stop loss. Don’t trade in dull or quite market, when market is trading in very narrow range, avoid any fresh position.
10. Don’t carry loosing trade overnight if there is a substantial loss.
11. If market gives you windfall profit or the market has a range expansion move (big trading bar) or one way swing for more than three or more days, book profit fully or partially, or follow with trilling tight stop loss.
12. It is important to lock in the best trade. Be defensive and don’t give back profit when swing trading.
13. Most of the time small profit / loss might come and only two or three trade comes with big profit in a month.
14. Enter in one position and don’t add any more whether in profit or loss.
15. Move your stop when you are in profit.
16. Don’t let your decision influenced by any Guru or experts.
17. It is better to enter only one trade per day either fresh position or square off trade.
18. Trade without Emotions.
19. Don’t carry (Over night) any position when next day is an event day like Budget, Election result, Company results etc.
20. Do home work at night for the next day trading.
21. When trade is in good amount of profit and more profit is looking ahead, use weekly chart for determining the stop order.
22. As and when trade comes in profit on intraday basis, use stop loss near (above or below) the trade price and also consider brokerage charges while using stop loss.
23. When price more than 35% above the 200 DMA, get ready to trade short.
24. Success is based on Discipline, Hard Work and bit of Fair.
25. First see the weekly chart and than confirm in daily chart for the trend and than decide to go long / short or stand aside. Never go short when weekly chart tells us to buy.
26. Watch Macd Histogram and Macd Lines. In Macd Histogram higher high at latest higher top and higher bottom at the latest bottom is very good divergence.
27. Watch Moving averages.
28. Watch simple Moving averages of Volumes.
29. Do not rush for trade; let the trade come to you. You must observe everyday but not trade every day.
30. Always use trend line before any fresh trade and also check the patterns.
31. Move fast in / out (don’t hesitate)
32. Cut losses at the earliest possible.
33. Take profit on half of your position at a point between half and two third of the distance to the stop loss and move stop loss to breakeven.
34. A very short bar after following a massive move often indicates a reversal is coming.
35. Trade as per your chart not what your opinion is.
36. Use always Limit Order instead of Market Order.
37. In Option always buy In the Money Call / Put.
38. Let the bar turn in Blue from read to go long and vice-versa.
39. Always first look at Sensex or Nifty than sector index and than individual stock before enter in to any trade.
40. When Bollinger Band expand it is good time to write option and when contract it is better to buy them.
41. In a major trend, if market reverses for few days, the major trend should cover the losses in fewer days than the reverse days other wise market goes sideways for some time.
42. When there is confusion in short term time frame chart than look at the longer time frame chart.
43. It is perfectly ok to make mistake, but not ok to repeat them.
44. Always follow 2% and 6% stop loss rule. Maximum 2% stop loss on each single trade (if have a capital of Rs. 1,00,000/-, stop loss should not be grater than Rs. 2000.00 for given single trade) and total 6% stop loss on all open trade at any point of time.
45. Always use limit order to get in and market order for get out.
46. If market looks almost perfect but some thing missing, walk away.
47. Trade only when risk reward ratio is better.
48. The hardest part of trading is to stay cool without any emotion, greed, worry, and try to detach yourself from the money and think of this as a point of game.
49. If the indices and stock have the same pattern, stock run faster then indices. So find the stock which has similar chart as indices.
50. If you see three or four in a range that are the narrowest in the last 20 days, it shows the tightening of forces and there is going to break out either way.
51. Start writing notes every trade about reason of entry, exit, success, mistake etc. weekly or monthly basis review every trade and try to find out the mistakes you have done, reason of success.
52. Start trading with small position.
53. When an indices or stock trade in a very quite and in a very narrow range, add than in your watch list. Look at the weekly chart for the very narrow range, than look at daily chart for potential move.
54. Try to avoid placing a stop where everyone’s stop is going to be.
55. A narrow range out of the channel is a typical sign of a weakness.
56. Prices going below the moving average while trend is up, it does not confirm reversal of trend until moving averages crossover.
57. Never trade in a very volatile stock.
58. In options, selling call and puts are more profitable than buying.
59. A stock must hit new high if it is in uptrend. A two month calendar high (approximately 43 days) is good rule of thumb to use here and vise versa.
60. When a stock close within the top 25% of its range, it is a good sign to carry the trade for over night if you are long and vice versa..
61. Wide range bar – the stock range is greater than the last five days bar.
62. Go long when two or more days low are greater than the 20 DMA
63. use 10 simple DMA and 20 and 30 Exponential DMA.
64. use simple DMA for short term and Exponential DMA for longer term time frame.
65. The 2/20 DMA break out system looks to go long after two or more days lows are grater than 20 DMA
66. The market only trend 30% of time and ignore remaining 70% of time.
67. If stop loss (previous day low / high) is far away from the entry point, that use % wise stop loss to protect money.
68. When an outside day (make lower low and higher high than previous day) occurs and strong closing in a pullback, it suggest that the correction (pullback) is over.
69. The stock should have 3 - 4 wide trading (range) bars in last two months.
70. Ask a simple question—where’s the money? Take profits and focus on avoiding losses instead of trying to prove yourselves right.
71. Managing money in your trading account is essential for surviving the inevitable draw downs and prospering in the long run.
72. Before you put on a trade, be sure to know whether you’re investing, momentum trading, or countertrend trading.
73. Advanced traders may listen to tips but always drop them into their own trading systems to see whether that advice will hold up.
74. Use a computer or a ruler to draw a line, connecting nearby tops. If it slants up, it shows that bulls are becoming stronger, which is a good thing to know if you plan to trade from the long side. If that line slants down, it shows that bulls are becoming weaker, and buying is not such a good idea. The longer the trend line and the more points of contact it has with prices, the more valid it is. When they rise or fall at 60° or more, their breaks tend to lead to major reversals. It is better to draw trendlines as well as support and resistance lines across the edges of congestion areas instead of price extremes.
75. A one-day splash of uncommonly high volume often marks the beginning of a trend when it accompanies a breakout from a trading range. A similar splash tends to mark the end of a trend if it occurs during a well established move. Divergences between price and volume tend to occur at turning points
76. Moving average : Trend following indicator, Buying near the EMA helps maximize gains and minimize risks. Use a system of dual moving averages to identify trends and enter positions, Use the longer EMA to indicate the trend, and the shorter to find entry points

Welcome

Welcome to my first blog. I am trading in shares and currency on technicals and created this blog to share my experience in trading.