30082013

Nifty opened within previous day range. Moved up and broke PDC and PDH. Long on BPB of PDH. Covered when the second push up failed. Shorted below the range low as FTC above HOD. I was expecting PDH to give support. But it went further down to BRN.Went long above PDH on BOF of LOD and BRN. TP at HOD.

29082013

There was only one trade signal. BPB of IRH, TP around the BRN 5400

27082013

Nifty opened below PDL and broke BRN 5400. Short below the IR as BPB of BRN. It was a cool ride till BRN 5300. TP near BRN. The bias was clearly down. Market consolidated for a while forming a range. Another short on BOF of Range High. I was expecting a bounce from BRN but this one went further down and gave nice profit

26082013

Nifty gaped above PDH. IR formed. First signal was a short on FTC of IRH. Skipped it as there was BRN, IRL and PDH/C close below. Attempted a late short on BPB of PDH and this trade was a disaster. Sold at the lowest price it seems. Skipped the later long opportunity of BOF of LOD and PDH/PDC.as I suspected a channel. Shorted below IRL on BOF of BRN/IRL and TST of HOD. This trade moved well.

23082013

Attempted two short trades today. BPB of BRN in the morning and BOF of  HOD in the evening.First one was a stop out and second one a scratch.

22082013

Nifty opened below PDL. Skipped the BOF entry as FTA BRN and PDC was very close  Entered on the BPB of BRN/PDC. Later scratched this trade. Next signal was the BPB of IRH/PDC. This one moved well and exited at BRN 5400.Nifty is respecting the Decision points well despite high  volatility.

20130821

Nifty gaped above PDH .FTC above the IR MC gave a short signal. My target was PDH. Ended as a type one trend day respecting all the pivots and flips

Falling Rupee

20082013

Nifty Gaped below PDL. FTC below the first candle gave a long signal. Went long above MC. TP at PDL. Second trade was the BOF of BRN. I expected it to hit PDL, but it did not. A scratch. Market gave another BOF of BRN trade which moved well. TP on BOF of PDL. Here I could have gone long targeting BRN

19082013

Nifty opened below PDL and fell another 100 points.Did not attempt any trades. All the signals ( BOF of IRL, BPB of IRL , BOF of Range Low, BPB of BRN ) were trades into DPs or strong Flips.

Order Flow Trading

Many traders think Order flow trading is all about watching the order book and making decisions. System peddlers and snake oil vendors are responsible for this misconception. I don’t think it is possible to trade the markets looking at the flickering DOM of our trading terminal. Algo trading super computers can feed, modify and cancel orders in milliseconds and many of these actions are for deceiving retailers and other Algos.

Looking at the order book of any kind is not the way to proceed. Traders are creating order flow by feeding the orders. Conventional technical analysis does not address this aspect. Deconstructing the logic processes of other participants is the way to go.We must learn to operate inside other traders OODA Loop.Real trading is  metagaming. It is engaging the other players.

For me Order flow analysis is a mindset. It is anticipating future orders and making decisions on it. I don’t think we need to see the actual orders on our DOM to do this. It is all about projecting the future price move based on other trader’s behavior.

 Market is a place where count less traders executes countless strategies at the same time and it is very difficult to anticipate their future actions It is very important to know who is in control of the market at the moment. Day traders, swing traders and investors react differently to a situation. For example you might have noticed that when higher time frame players dominate, Decision Points will not work as expected. Our method work well when the day trading brigade controls

Real order flow trading involves anticipating where large enough traders are going to enter and exit en masse and acting there without hesitation allowing their orders to move our position to profit. Always think order flow. We need to enter where there is enough order flow to support our direction and exit where there is opposing order flow.

Patterns and setups are not that important. Trading is all about people, their decisions and orders.  

16082013

Nifty Opened within previous day range. Went short on BPB of BRN. TP at BRN 5600. Attempted another short at BPB of range low which I scratched later.

SCORE

As you know, my trading revolves around Decision Points. I never trade into a Decision Point and  always trade away from it. Basically I am looking for the three simple trade setups around these areas.If you  are trading these setups as stand alone patterns, it is not going to work.

The method is purely discretionary and our "feel" and "read" of the price action is going to play a vital role in this method.If you think this is all about setups and patterns, you are likely to get disappointed.Like any other discretionary method, this involves judgement.Remember this judgement has to be made in a probabilistic environment where there is no certainty. It is all about what goes into your judgement process.

When price approaches a Decision point, I visualize my trades. My preference is always for trades in the direction of current Market Bias. Then I "SCORE" these trades before making a decision to act. Here is how I do it.
Space.        
 Is there sufficient space for the trade to move ? Where is the FTA ?. How to deal with the FTA ? whether we should target the FTA or enter on break of it ?
Critical Mass.
 How day traders are positioned ? Are they in profit ? when they are going to book profits ? where they will panic ? Who is in control of the Market ? 
Order Flow
Where are the orders ? Where other traders will keep their stops ? Where we should enter to ride these orders ?
Risk
How much we are risking on the trade ? Where to place stop ? what should be our position size ? Is it within our comfort level ? Ensure RR  is favourable.
Earlier Behavior
How the level behaved when price visited it last time ? Rejected ? How far ? How fast ? How long price stayed at the level ? How the price returned to the level ?

These are all guidelines only. We cannot make rules for all these things. Preparing a flow chart and programming the process is not possible. We must  take a trading decision only after processing all these relevant  information. There are no shortcuts. You need to train your mind and it is really going to take some time and lot of effort. 

13082013

Nifty opened below PDC tried to break BRN 5600. BOF of BRN gave a long signal. TP at 5680.Nice 70 point move. Did not get any other reliable signal.. Type 1 trend day.

12082013

Nifty gaped above  above PDH.. Missed the down move and the up move as there was no reliable signal. Long on BPB of IRH which I scratched. Thought of going long above 5630 but hesitated as Nifty had already moved more than 60 points. FTC at HOD gave a short signal which moved well TP at IRH

OODA Loops

Col.John Boyd of US Air Force was one of the most gifted and effective fighter pilot of all time. John Boyd understood the challenges of time pressured decision making and developed a decision making framework for combat situations. It is known as OODA Loop. The acronym OODA stands for Observe, Orient, Decide and Act.

The application of OODA is not restricted to warfare alone. It is applicable to Trading as well. Aim of OODA is to act fast. The right way is to decide and act fast so that more time can spend to observe and orient.

Observe. First step is to observe what is happening at the moment. Gathering relevant information happens during this stage. Almost always, under time pressure, traders forget to pay attention to the details. Better to simplify and avoid observing irrelevant information.

Orient. Once we gather the relevant information, the next step is to process it and position ourselves for a decision. Orientation will depend upon our beliefs and mental model. Observation and orientation will decide our trading edge. We have to ensure that our methods are based on the reality and not on illusions.

Decide. The next step is to decide a course of action. Depending on the gathered information make a decision to act.

Act. This is the final stage. Implement the decision. Once a decision is taken do not second guess or hesitate. Simply take action. Go back to step one and observe. Cycle through the OODA Loop.

Finally,do not hesitate to use the ejection lever if something goes wrong.  Ensure survival. We need to trade another day.

07082013

Nifty opened near PDC and sold. First candle acted as a MC. Shorted below the MC/IRL/PDL with a stop just above this level. Covered quickly as I expected a range. Went short on the TST of BRN and BOF  of HOD /IRH/PDC. TP on IRL.
Tomorrow morning leaving for  Palani Hills on a pilgrimage . Friday is exchange holiday. Will be back on Monday. 

06082013

Nifty gaped down below . Short on BPB of PDL. Exited on a small profit. Next signal was a short on BPB of BRN 5600. I was not very confident taking this as Nifty had already moved a lot. But this trade was a clear winner.

05082013

Nifty opened within previous day range. IR formed. Long on TST of BRN. BRN was also the PDC and IR low. I was ready to scratch if it bounced from IRH. This trade made good money. Missed the down move as I was not confident to trade around 5740 which happened to be a BRN of spot Nifty.Tried another long on BOF of IRH. Scratched later.

Habits

A habit actually leads to a goal. For example to lose weight we must develop an exercise habit and a suitable food habit. Behavior modification is possible only through creating positive habits that can lead to your goals. Creating new habits are not easy and requires continuous conscious practice

Think about learning classical dance or gymnastics. We consciously practice some movements repeatedly and deliberately. With continuous deliberate practice we become good at these movements. Once we master the basics, more complex moves are practiced to improve the skill.

This is applicable to our entire lives. We are knowingly or unknowingly practicing and creating good and bad habits all the time. But we are not aware of it. People are practicing to get up late, to smoke, and to eat junk food. Think about it for a while. Are you happy with what you are practicing?

Profitable trading also requires behavior modifications. The most important thing is “Awareness”. Be conscious of what you are practicing. Decide whether this is an action or thought pattern you want to practice to develop the right habits for attaining your  goal of trading consistency .

Start to practice the actions you want to be good at and eliminate the rest. We will become good at what we repeatedly do for sure. if you are regularly doing what doesn’t work or not doing what does work, permanent failure will be the result

02082013

Nifty opened within previous day range. IR formed. Went short on BPB of IR low. I expected a move to PDL. But Nifty refused to move and I had to scratch. Nifty tried to break above IRL and channeled down. I expected a long trade on BOF of PDL or BRN 5700.. There was no week end short covering as I expected.

01082013

Nifty opened above PDH. Went long on the BPB of PDH/BRN. I was expecting a channel. But FT and NSEL spoilt the party. I was not confident to short to a cluster of supports and missed the entire down move. The fall was halted at  BRN 5700. Went long on the BOF of PDL above the MC. Trade moved well into the Fluid . TP at BRN. Did not attempt any other trade as I expected some chop