Saturday, May 17, 2014

Questions and answers with "Shriram"

"shriram" has some questions. He has asked these questions in Ilango's blog

1. how do u evaluate / review & push the accuracy of trade entry up ?
2. Do u follow a SAR trade strat or pattern trade style ?
3. Are u a Futurz player , or Option buyer / or Option writer / or Delivery player... which works in which MARKET MODE per ur exp. ?
4. What are the PITFALLS of Full time trading ?
5. What has been ur best / worst monthly return (Nifty pts or % ROI)
6. Do u have a check-list / Ritual / Routine every morn. to get into GROOVE
7. How many scrips / Indices do u track ?
8. How many days does a typical trade last (entry-exit time diff.) ?
9. Do u have a monthly tgt of Nifty pt ?
10. What do u do once Monthly tgt is done ? Do u gun for more, or shut shop ?

Anything else, pl feel free to elucidate !


My answers below :

1. how do u evaluate / review & push the accuracy of trade entry up ?
Answer: I don't do this much as of now as I am trading Options these days. Earlier I tried it after learning "trade grading" from Alexander Elder book - Come into my trading room. Just to give a brief idea, he says you can grade your entry based on intraday range of the day. Your long entry should be made close to day's low and short entry should be made close to day's high. He asked to document this in your trading journal and find ways to better your entries and exits. This surely helps to curb impulse trading and over the period of time increase your profitability. You can read it in detail in his book. I found it was very tedious and gave up the idea. I need to admit that I am not that disciplined in keeping records.

2. Do u follow a SAR trade strat or pattern trade style ?
Answer: I follow SAR strategy when I trade futures. I have been a trend follower always. Never did trend fading in my trading career although most newbies generally start trading with trend fading.

3. Are u a Futurz player , or Option buyer / or Option writer / or Delivery player... which works in which MARKET MODE per ur exp. ?
Answer: I keep changing my strategy. I think this has become my biggest mistake over the period of time. May be it was because I never got any formal training for trading in the market and learnt everything by hit and trial. I trade in all segments. Trading options mostly followed by futures followed by delivery. Delivery is negligible.

4. What are the PITFALLS of Full time trading ?
Answer: One needs to have an alternative source of income apart from trading. Old saying "don't keep your eggs in one basket" applies to full time trading perfectly. Having different income sources keeps you confident and stress-free at your full time trading job.
Short term traders tend to become internet junkies over time. You don't socialize much. Health problems like backache slowly emerge. Trading is just like any other business same risks.

5. What has been ur best / worst monthly return (Nifty pts or % ROI)
Answer: I have had very volatile returns as I traded in futures mostly. I lost almost entire account in January 2008 and also made a lot when RCOM went up 15 % in 3 hours intraday last year and I was long in options! Both these trades were outliers. I have tempered down my expectations from markets, to reduce the volatility of my account so anything in access of 50 points in Nifty per month is fine for me as long as I don't lose my sleep.

6. Do u have a check-list / Ritual / Routine every morn. to get into GROOVE
Answer: No I don't have a checklist earlier I did try to make one. I feel you need a checklist when you are new at something. Over the period of time you internalize the checklist. But like in aviation industry, no matter how skillful the pilot is, he carries a checklist. It can definitely help a trader who is not disciplined or who tends to lose focus when trading intraday.

7. How many scrips / Indices do u track ?
Answer: I track only Nifty. I do track all the markets and certain stocks if I sense opportunity or just out of interest in trading. But I track Nifty only when I trading Nifty. For example I don't let a movement in USD-INR or Dow to influence my Nifty trade.

8. How many days does a typical trade last (entry-exit time diff.) ?
Answer: This is not fixed it can last intraday or to the end of expiry. Depends on target and stoploss. I don't part book. I hold for long periods just like day JNSAR.

9. Do u have a monthly tgt of Nifty pt ?
Answer: Earlier I never had a target as I believed in trend following. Now I have a minimum target of 50 points in Nifty in a month. Maximum no limit.

10. What do u do once Monthly tgt is done ? Do u gun for more, or shut shop ?
Answer: I keep on trading. When you have the right setup you need to trade. You get variable returns in the market. You can't sit out just because you have met you monthly target. But you need to sit out when you don't have a setup. Minimum target level is just to keep your drawdown in check and to get a feeling of satisfaction. It is more to do with trading psychology than trading system's efficiency.

Shiram, I hope you find the answers helpful. Please share your thoughts and ideas as well. Thank you.