Situational Awareness

Trading is all about Decision Making As traders we are continuously making decisions. No doubt profitable trading requires good decision making skill. Good decision making in trading requires right perception of market environment, ability to analyze the complex signals in real time and projecting the future probabilities of price action.. This requires Situational Awareness.(SA). SA is the foundation of successful decision making.

Situational Awareness is a military terminology. But it is very well applicable where complex decision making skills are required. SA training is given to the personnel where complete, accurate SA is essential such as aircraft pilots, fire fighters rescue forces and security staff.

Situational awareness is the perception of environmental elements with respect to time and/or space, the comprehension of their meaning, and the projection of their status after some variable has changed, such as time, or some other variable, such as a predetermined event. The most common theoretical framework of SA is provided by Dr. Mica Endsley  Endsley's model illustrates three stages or steps of SA formation: perception, comprehension, and projection. ( Read More)


People typically operate on five distinct levels of SA namely  "tuned out," "relaxed awareness," "focused awareness," "high alert" and "comatose. The basic level of situational awareness that should be practiced most of the time is relaxed awareness, a state of mind that can be maintained indefinitely without all the stress and fatigue associated with focused awareness or high alert (Read More)

Situational Awareness in trading is about changing your strategies based on change in situation. Next step is to think of situations before they develop and anticipate markets next move. As traders we must learn to operate in a complex market environment by making appropriate decisions and taking effective action.

07022013

Nifty gaped down below PDL and moved down . I was looking to go short on a pull back to PDL/DO. First bar acted as IR. Nifty broke above IRH/DO. Missed the sudden up move.I did not expect such a move. I was expecting a fall below IRH to go short. Went short on TST of PDH. My target was PDL/PDC, but this moved much more. Long on BOF( TST ?) of IRL( I ignored the tail)..Reversed the trade on  BOF of PDL. TP at LOD.. BOF of LOD gave another signal to go long.This trade also moved well.

06022013

Nifty opened within previous day closing range and this happened to be the previous days range. IR formed . Too narrow to initiate a trade.. Went short on BOF of PDH..Thought it will bounce of the IR low. But the MC and Price flip helped to avoid a premature exit.. TP at PDL. Went long here. TP when Nifty failed to remain above IR Low.

05022013

After two days fall Nifty consolidated within a 20 point rangeWent long on TST of IR low. Scratched the trade. Missed the next sudden up move. Short on BOF of PDL. TP at LOD

04022013

Nifty opened within previous day range. IR formed. A cigarette pattern formed. Did not short the break of low as I suspected PDL to give support. BPB of IRL/PDC gave a short signal.TP at BRN.

01022013

Nifty gaped up above PDH. CT outside gap. My expectation was a channel which did not happen. Went long on BOF of IRL. Scratched this trade. Market made 3 pushes to break above IRL. Went short when the fourth attempt also failed. Nice move down. Another short ar BPB of PDH. TP when the move failed to continue below the previous low.