Trading Tech Ticks (Be The Trader and Not Gambler)

 "Jai Shree Krishna!!!!"

Before moving to our subject let's have some positive thoughts in mind which help us to become good and discipline trader. I recommend everyone reading this post to repeat this lines everyday before market opening and after market closing....!!! It has tremendous power once we make it our habit... Try It...

1.    I am very Good & Discipline Trader.

2.    Today is my day.

3.    I will get good opportunity of trading.

4.    I will make good profit today.

5.    I am confident about my trading set up.

6.    Tomorrow will be my day.

7.    If I lose then that will be my new learning for the day and   next time i will take care.


Now, let's talk about "Trading Tech Ticks". Trading Tech Ticks means ways of trading according to my understanding and accordingly i am going to explain how we can trade for continuous profit in market.

It is known that "Trading is an Art", but it is applicable for those who are Artist means experienced trader with control over emotions. Except that all other traders are just trading like a Gambling or Luck by Chance. Isn't it??!!. Therefore at the end only Artists win and gambler lose. So Be Artist & Not Gambler" no matter how long it takes but that is only key for discipline & successful trader.

Discipline Trader

Gambler


Today I am going to explain different trading Tech Ticks which can help you to become An Artist from Novice Trader.


"Trading Tech Ticks"

1. Rule of Compounding:-

We all are familiar with term "Compounding",it simply means growing anything by addition of incremental rate. We can relate to our trading then we can consider "Anything" as our Base Capital and "Incremental Rate" as percentage of profit margin. For better understanding let's go through below table.


In above Table starting capital is Rs.25,000/- and closing capital for the day is Rs.26,250/- increased by Profit of Rs.1,250/- for the day. In above table i have used intraday margin of 10 Times (You can change as per your comfort) and accordingly trading margin for the day comes to Rs.2,50,000/-. Now as per my risk taking ability i have fixed Maximum loss for the day at 1% of trading capital of Rs.2,50,000/ which comes to Rs.2,500, and my maximum profit of the day at 2% that comes to Rs.5,000/-. Now i have applied accuracy ratio of 50:50. Meaning by that chances of profit and loss is 50:50, accordingly my maximum loss for the day would be Rs.1,250 and Profit Rs.2,500 and therefore my net profit for the day would be Rs.1,250/- which i have added to my opening capital and became next day opening capital. Next day again by using margin of 10 Times resulting profit comes to Rs.1,313/- and reached to closing capital of Rs.27,563/- and so on. If we repeat the above style of working for 15 days then we will end up with capital of Rs.51,973/- means almost 100% return on opening capital of Rs.25,000/-. 

Hope you understand the structure of above table which is nothing but the "Compounding" calculator that manages our Risk and Reward. You can change Intra day Margin, Risk to Reward and Accuracy ratio as per your trading set up. I have considered simplest form of Risk to Reward ratio and Accuracy of 50/50 just to clear the formation of Table. Many of you would be wonder that how it is possible to have daily profit, then you are right not possible at all but that is just for your understanding purpose.

Now just assume that one day we have made loss and another day profit, in that scenario table looks as below.


Now end result will change and now closing capital at the end of 15 day will be Rs.38,561 with 54% return on capital of Rs.25,000/-. 

On a same way above table can be updated with changes in Margin, Risk to Reward Ratio and Accuracy ratio, ultimate result would be profit. Because the purpose of above table is to understand how "Compounding" works.

"Compounding" is method and not trading set-up. Selection of Stock for trading depends on our technical and price action analysis. Compounding Model is to be associated with your trading style. Your trading set up will decide perfect entry and exit level while compounding model helps to you manage the risk which we have already marked in Compounding table.

Benefit of this model is that we will be very clear about potential loss and profit before the execution of trade. And with the help of this table we can decide trading quantity and value which again depends upon risk taking ability.

I have seen many traders using this Tech Tick in their Trading Career. And after 1 or 2 months when their capital exceeds certain amount say Rs.1 Lac or Rs.2 Lac they transfer the all fund to their bank account and again start with Base Capital and continue to make money. If they can do then why we can't. Start developing such king of model as per your experience and learning.


2. Imaginary Trading:-

This is unique and magical technique for Trading You may not find such trading pattern anywhere. But i have seen somewhere on social media one image and from that Image i have started thinking and that i am writing here. "Imaginary Trading" means application of Technical and Price Action analysis on chart which is going to be emerge in future. 

For Example:- Once we finish watching any movie trailer our mind starts visualizing about entire movie. Right???... And during that visualization we decide whether to see that movie or not. If we are not happy after Visualization then we will not go for it and if like then we go for it. Why our Mind is so powerful to visualize the things, simply because we all have programmed our mind with certain beliefs and that beliefs comes from our experience and knowledge. In past we have already seen number of movies and accordingly we have stored images of that movie in our mind and therefore our mind is able to visualize the entire movie based on image saved in our memory.

This method is directly linked to our Subconscious mind. We know how our subconscious mind works. Same way we can also starts imaging probable price action on chart and whenever in future that level comes we have to take entry. We are clear about Technical Analysis and Price action analysis and therefore we just have to put that analysis on chart with the help of Our Imaginary Mind. Let's understand with the help of Chart.


Above is Hourly Chart of "Muthoot Finance Ltd". Considering downward movement on hourly chart i have created future level with help of white line. These lines are nothing but trendline. Now as per my imagination once price moves towards 1230 i will short for target of 1166 and buy at 1166 for Target of 1210 and so on. The thump rule of this Trading Tech Tick is execution of entry only and only when price moves toward the imaginary levels. 


Let's take another example of "Bharti Aritel".


Above is Hourly chart of "Bharti Airtel". In above chart Bharti Airtel is in uptrend on hourly chart. And by plotting White line as trendline i will execute entry once price reached to imaginary level. 

Through this method we can create our own Opportunity for trading in future. Yes stop loss is always required whatever system we use. People looks for opportunity but with the help of Imaginary Method we can create Opportunity. 

Benefit of this method is that it will control our emotion and increase level of confidence that makes us Real Trader from novice trader. Don't think that this is Assumption base trading, it is discipline base trading method because it is pure technical level base trading which is widely used trading tool all over the world. Only thing we have to do is Execution of trade when opportunity come. That's all!!!!


 3. Avoid Over-trading:-

This is common psychology of majority of Novice Traders. We often used to trade by way of increasing stocks for trading or increasing size of quantity for trading. In both the case we have to suffer lose, because it is over trading. Below are the common reason for Over Trading.

1.    To recover loss.

2.    Not happy with Little profit, so increase the size of trading quantity.

3.    Penny stock tips by News channel.

4.    Most common "FOMO". (Fear of Missing Out).


Out of all above reason the most common and dangerous reason is "FOMO". Whenever we are trading based on recommendation of Experts on TV channel or from any social media, our mind tells us that "Yes this is good recommendation and you should increase the quantity of trading. Because the person recommending stock is very smart he explain the reason with full of positive notes and we easily perceive his statement and store in our Mind. So next time whenever you heard any recommendation your mind instruct you to go for trade because we don't want to lose this trade and for more amount of profit we take more number of trades which later on become our biggest enemy in our trading career. So never listen anybody always do your own analysis to pick the stock and go for it. Your own mind is far far far batter than others but we always doubt our mind and believe on others mind. Just start believing in you and then see the miracle..!!!!! If they can do then we can also do.

During the feeling of FOMO we never think about loss this is another big problem with new traders. During the market hours we only think that we must get Minimum Rs.5,000 or Rs.10,000 or any other amount of profit only, and we totally ignored Probable loss. Because your winning probability is always 50-50. Instead we should start our day with first statement that "I should not Lose more than 1% of my Capital" and you have to set Stop Loss also @1% of your trading size. Now you have only 2 option either book loss at 1% or book profit at 2% or 1.5% which ever applicable as per your Risk to Reward ratio.      

"The way we trained our mind, exactly on a same way he instructs us". 

Over Trading is not trading Tech Tick but many traders using this as Trading Method which is totally wrong. Just think about your losses you will find that majority of your loss was due to Over Trading. Right???.

My intention behind writing on Over Trading is that by Avoiding over trading we can save our capital that we can use in other value added activities. Over Trading is nothing but the pure Opportunity cost for us...!!!

Now let me tell you how people treat Over Trading as trading Tech Ticks. You will be agree once you finish this post. One of my Friend used to trade in Option and end up with huge amount of loss. Why that happens??. During initial stage he was greedy about option trading because Option is very cheaper to buy say Rs.3000 to Rs.5000. And during initial stage he used to book Small amount of profit say Rs.500/- to Rs.3000/-. And he was happy with that. One day he decided to increase the size of quantity because now he was not happy with small profit he fixed in his mind that now we have to increase our size of trade to earn more amount of profit and his mind has stored this message in memory. Only mistake was that he has not stored probable loss if any. And as i stated above our mind is our Manager and we take action based on our Minds instructions. 70 to 80 Percent people have faced this scenario. Isn't it??

Then they start looking for professional course on market and that is again chargeable. In such condition the objective of Trader is not learning it is purely for the purpose of recovery of loss. After completion of training they go for live trading and again start making money as per training course. Again one day our greedy nature tells us to go for bigger trade as you are now professionally trained trader, and as per our minds instruction we start over trading and the moment market reversed we fail to control our emotions and start putting orders just to recover loss but at the end we lose our profit as well as capital. Stay Away from Over Trading..!!1


How to Avoid Over -Trading:-

1.    Exit once your stop loss hit and close the system.

2.    Start preparation for next day.

3.    Note down the reason, that why my stop loss hit??

4.    Divert your mind towards other work and you can go for walk or start reading books.

5.    Power Off TV, Social Media during trading hours.

6.    Just focus on your trade and level.


4.  Rule Base Trading:-

This is common trading method used by majority group of traders like you and me. In this method we should have our won trading principle and we take action the moment our entry and exit trigger. Rule base trading means preparation of Trading system where in everything is Crystal clear like which stock to trade, at what level to trade, when to exit, etc.

The only thing that differentiate is "Discipline". Best example of Discipline trader is "Mitesh Patel" a trader with huge amount of profit every week. The learning point from him is "Discipline" and execution of trade. He has stored charts in his mind and the moment his level comes he start trading that stock with full conviction and end up with huge amount of Profit say Rs.1 Crore in a single day. The reason for his success is confidence level on his trading style. You can visit his posts on Twitter

However, the moment our mind started avoiding Discipline then have to be ready for negative outcome of our trade. Because rules are not for breaking, it is for Following. Follow the rules and you start feeling positive outcomes. 

Rules means something which is True and crystal clear. And discipline is our guardian that controls our emotion and help us to follow our rules. Once rules broken than nobody can save us, not even God.!!


My Rule of Trading (Nifty & Bank Nifty Option Only.)

1.    Wait till closing of 1st Hourly Candle.

2.    At closing price of Hourly candle i decide Trend. (Bullish, Bearish, Neutral).

3.    After that I apply Probability Ratio of Situation formed on Chart.

4.    Then take trade.

5.    Exit if stop loss hit and Book Profit if Probability wins.

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Thank You..

Happy Trading.
"Learn & Earn"...!!




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