31072013

Nifty opened below PDL. Did not take the short below the first MC as BPB as I expected some consolidation after continuous fall. Tried a long above the swing high as FTC . quick 15 point trade. Did not get any other reliable signal today.

30072013

I was not watching the market in the morning session. When I came market was drifting down. I expected a BOF at BRN 5800. But it came very late In hind sight analysis there were two nice signals. LOL BOF of BRN/IRH and BPB of PDL/IRL. I would not have taken these trades  as I generally do not trade during announcements.

29072013

Nifty Opened within previous day range. Broke below PDL and BRN. Avoided the BPB of BRN as there was no momentum to the down side. First trade was the BOF of IRH. shorted below PDL. This trade moved well. Avoided the BOF of Range low as there was no space.

Practicing to Fail !

Last week, I was reading about Michael Jordan, the legendary Basket Ball player. His life is very inspiring. . I was very surprised to note how he practiced the game. Despite being number one in the game, his game practice was very basic and simple, like free throws and just dribbling.

Getting the basics right is very important whether it is Basket Ball or Trading. We need a solid foundation to build on. Otherwise the whole structure may collapse. If you get away from the basics, the bottoms will fall out for sure

Unfortunately, many traders do not understand the fact that they are practicing useless skills. They work hard and practice well. Still trading consistency remains elusive for them. They think their problem is psychological or discipline related. Wrong.

The real problem is that they do not understand the “Reality of the Market”. They have no idea how a dual auction market functions and what move prices. Any methods that ignore these realities are destined to fail. The more they practice, the more they will fail and they will become experts in trading the wrong way

Message from Michael Jordan is very clear and relevant even in the field of Trading. Jordan warns that when you “get away from fundamentals… the bottom can fall out of your game, your schoolwork, your job… whatever you’re doing.”

"You can practice shooting eight hours a day, but if your technique is wrong, then all you become is very good at shooting the wrong way. Get the fundamentals down and the level of everything you do will rise.”   Michael Jordan

Are you practicing to fail ?

25072013

Expiry day. I am not comfortable trading expiry. I simply do not trust the market on such days. Today also lost a little. Nifty opened within previous day range. IR formed. Broke IRL and PDL and formed a Barbed Wire around PDL for a while. Went short on the BPB of range low. Market went down respecting all the Flips. But after stopping me out for a point.I was not confident to re enter. Missed a 50 point trade. Tomorrow I will not be available Will be back on Monday.

No Excuses

"Maybe it’s my fault. Maybe I led you to believe it was easy when it wasn’t.”  

“Maybe I made you think…that my game was built on flash and not fire.” 

“Maybe I led you to believe that basketball was God-given gift and not something I worked for, every single day of my life.”

“Maybe I destroyed the game, or maybe you’re just making excuses.”

 Michael Jordan

We should not limit ourselves by thinking that becoming great requires natural gifts. We can all improve our game every day through practice, attention to detail and perseverance.Greatness in sport, or in any other field, is something that takes years of hard work and determination.

24072013

Nifty gaped down below PDL. IR formed. Shorted on the BPB of IR low.Broke BRN even though it gave support for a while. Rest of the day Nifty traded in a 20 point range.Skipped TST of LOD and BOF of BRN as I could not find a favourable entry point.

23072013

Nifty gaped up above PDH and spiked. There was no space for it to channel as it was very near to BRN 6100. Nifty made a tight trading range between IRH and BRN. Short on BOF of BRN. I was expecting it to go to PDH  at least. But it reversed before that. No other signals.

22072013

Nifty opened below PDL and bounced back. Long on BOF of PDL. TP when price refused to go above PDH. I was expecting a range between PDH and MSP. Later Nifty broke the MSP and pulled back. Shorted below the MC as BPB. Covered at PDL. BOF of PDL, which came very late, gave a long signal which did not move. Scratched it.

Space

Space is simply the profit margin of a trade. It is the distance between our entry point and profit target. Space determines our risk reward ratio. Before entering a trade we need to ensure there is enough space for the trade to move. I think many traders ignore this aspect.

In fact this is one of the most important things to consider when entering a trade. Price takes the path of least resistance. Most of the time the First Trouble Area will give some opposing order flow and cause the price to stall. I have written a post on how to deal with FTA earlier ( Read)

Most of the time the space between entry and FTA will not give us a favorable RR, Price may bounce back from FTA forcing us to exit or it may break through it. We will never know for sure. Exiting all the trades at FTA is not a solution as we cannot let our winners run.

Identifying the right location and patterns to trade is only a part of the game plan. Managing the trade is the next challenge .There is no option other than depend on our “Feel” and “Read” of the markets. This makes trading difficult.

Mechanically trading the three patterns at Decision Points will give us a substantial edge for sure. But the real breakthrough will come only when we achieve expertise in managing the trades. It may take much more time than we think.

18072013

Nifty opened within previous day range. Attempted to break PDH/BRN but failed. Made a  trading range of 20 points. Went long on the break of cigarette as BPB of PDH/BRN. Nifty tested the patience for an hour and finally rewarded  with a 50 point move.Almost same price action as 12072013

17072013

Nifty opened above PDH. First candle acted as IR. No long trade  as BRN was too close. BPB short of PDH did not work so was the BOF long.. scratched these trades. Shorted below the then LOD. This moved well. BOF of LOD gave a long. It was quick nice trade into a fluid.

16072013

Nifty gaped down 100+ points. Got trapped in a range till afternoon. Did not attempt the BPB of range high as PDL was close. No trades today.

15072013

Nifty opened within previous day range attempted to break below BRN and failed. First candle was a MC which acted as IR. Short below the MC low with SL above BRN. Scratched the trade when the next push down failed. Nifty then channeled. Long above PDH as BPB of IRH was a good trade in hindsight. Missed it. Skipped the last signal BOF of HOD

Thank You, Lance

I am really excited to see the review of Nifty Nirvana by Lance Beggs in his latest news letter (Read). I am so happy to get a positive review from someone I consider as my mentor and guide. I consider this as recognition for the efforts I have taken for the last 18 months to build this blog. The review has really given a boost to my confidence in the method.

Lance Beggs is a full time day-trader with a current preference for Forex, FX futures and Emini-futures markets. His style of trading is discretionary, operating in the direction of short-term sentiment within a framework of support and resistance.

He is the founder and chief contributor to YourTradingCoach.com, which is literally a treasure trove for the price action trader. He is publishing a weekly news letter on the subject which you can subscribe for free. His 6 volume book “YTC Price Action Trader” is a must read for every price action trader

Thank you very much for the review, Lance. God Bless You.

12072013

Today I was not trading. Nifty gaped up above PDH and sold. Broke the PDH and made a Barbed Wire around PDH. Only trade opportunity was a long on BPB of Range High.A Classic Barbed Wire pattern after a long time.

11072013

Nifty gaped up above PDH and BRN 5900. I was not very confident to go long after the pull back. Went long with a SL below DO/BRN. as the risk was within my comfort level. Not a bad trade

10072013

Nifty opened just above PDH and attempted an up move, but failed. Did not attempt a BOF short as PDC was very close.. Skipped the BOF of PDC  as there were two resistances within 20 points PDH and IRH. Strong BOF of PDH gave a nice short trade, but PDC was holding well. Finally it broke PDC and made a nice down move which gave 40 points.I was expecting it to reach BRN 5800.

09072013

Nifty gaped up above PDH and spiked. IR formed First trade was a BOF of IRL and TST of PDH. TP when price failed to break IRH. BOF of HOD gave a short signal. I expected it to reach PDH. This did not move as expected. So scratched.

08072013

Nifty gaped down below PDL and spiked. I was not confident to short the BPB of BRN as Nifty was already down 90 points from PDC. Further I was shorting to 04072013 low from where Nifty rallied, but still did. Ended as a scratch. Long on BPB of BRN. Covered when the second push above 5820 failed. Another long on BOF of BRN. TP at HOD

Emotions

Trading is all about Decision Making. Decision making involves analyzing the possible outcome of various available decision options and taking the appropriate action. Decision making in an uncertain and probabilistic situation faces many challenges. Most of them are discipline related and psychological.

If you search the web, there is no shortage of articles on trading psychology. But I feel most of the trading psychology writings revolves around Expected Utility Theory. This theory assumes decision making takes place by calculating the expected utilities of all the possible options and choosing the option with the highest expected utility.

Trading psychologists advise us to be disciplined and advocate controlling and ignoring the emotions. They ignore the role of emotions in decision making and advise us to aim for an idealized rational approach. In my humble opinion this is not at all practical in an uncertain environment like trading. Further the probabilistic nature of the market makes it much more difficult to practice.

I find Antonio Damasio’s Somatic Marker Hypothesis (SMH) much more relevant to trading than the conventional stuff. SMH gives a central role to emotions in decision making. Somatic Markers trigger automatic reactions to situations in human beings. Whenever a decision is to be made each option induces a somatic response which is experienced as a feeling or emotion and these responses will depend on the past experience. These somatic responses will almost always over ride. The more you resist, the more it will dominate.

The theory consists of two ideas.1.Somatic Markers affect decisions and 2. Somatic Markers depends on past experience. If we want to get rid of emotions  emotion related issues from our trading decisions we must have enough experience to develop right Somatic Markers to support the ideal action.

I think ultimately our edge will determine our trading success. If we are trading a method with an edge and doing well, slowly we will develop ideal Somatic Markers. Instead of contradicting and over riding the ideal decision, these SM will start producing what we call   “Intuition” or “Gut feeling”. This will help the decision process in an automatic manner and our discipline and psychological issues will disappear for ever.

05072013

Nifty gaped up above PDH. BOF of  BRN gave a short signal. Shorted below the opening bar. I was expecting a gap closure. Scratched. Second trade was another short on break of Cigarette. Ended up as another scratch.

04072013

Nifty opened within previous day range. First bar was a MC and it acted as the IR. Long on the BPB of PDH above the IR High. Second trade was a short below the range low as FTC.TP at LOD. Another long on the LOL BOF of LOD/BRN. Took profit at HOD.

03072013

Nifty gaped down and broke BRN. Went short on break of IRL as BPB of BRN. It was a smooth 30 point slide  respecting all the flips. Rest of the day Nifty traded in a range. BOF of Range low came very late.

02072013

Nifty opened within previous day range. IR and an envelop formed. BOF of Range low gave a long.. Covered when break of range high failed. Did not look for any other trade as the market was choppy.

01072013

Nifty opened within previous day range. Broke PDH and pulled back. Long on BPB. Scratched the trade as there was no momentum. Further after a steep rise on the previous day, I suspected a range. Long again on BOF of PDH. This trade moved well. Did not get any other opportunity during the day