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. 

8 comments:

  1. Hi AJ,

    Tks v much for ur detailed reply. It helps me gauge, the GAP bt/wn my current Trading Behaviour & that of a full-timer like u :-)

    My mathematical view, is PATTERN (esp REVERSAL / Slingshot setup trading) offers the HIGHEST %prob chance of ENTERING a position & Trailing it in a way to Lock capital

    This way the no. of SL pops is v v low.. This can be further amplified by selling OTM options rather than Buying ATM or trading in Futurz.

    Also, regd. tracking.. reason for asking u was.. i note many pro-traders track RIL / SBIN / L&T & BNF along with OI to estimate NIFTY direction.. dont u do it ?

    Tks a lot

    ReplyDelete
    Replies
    1. Hi,
      What is "REVERSAL / Slingshot setup trading" - Can you share some online link for the same.

      No I only track nifty. Just price action trading. Very limited indicator usage.

      Delete
  2. Hi AJ,

    Slingshot is like "Guler" , when price 1st goes in 1 direction a bit, and then reverses with 2x force in the Opp. Direction

    The aim is to catch the Price-shot @ the pt of RELEASE from the CANNON... hence the word sling-shot

    It involves 2 things :-
    1. Identifying REVERSAL patterns (WW , harmonic, HnS , CnH etc)
    2. ENTERING @ the bottom of the pattern (as against Breakout trades which r done > Neckline), using Oscillator Hidden Div to Time the entry ..


    ReplyDelete
  3. My dear, There are ppl whom I saw that they are earning 5 lakhs a day being full time traders. I did not see they are stressed. I do not agree that every person who is into full time trading needs other source of income. Its up to the person ability to manage the funds in market. Few may not even have time to manage if they invest into other areas. I could say its ur perception.

    ReplyDelete
  4. Thanks a lot for enjoying this informative post with me. I am appreciating it very much! Looking forward to another great article.and you try to add some great article Epic Research like Good luck to the author!

    ReplyDelete
  5. Nice questions and an answers provided which definitely less the confusion about various options and terms to be included while trading.
    Equity Market Tips

    ReplyDelete
  6. 1) Markets are not going clear these days like in past years, Indicators, Oscillators & SAR are creating full whipsaws..what to do, stop trading or shall shifted to Options & Stocks rather than nifty & banknifty..?

    2) I have read all your blog, you have not provide any SAR calculating method in Excel, pls provide so that we can clear concept as par your trading experience.

    Thanks.

    ReplyDelete
  7. To know more about finance and trading, visit the website of Epic Research Pvt. Ltd.

    ReplyDelete