31032014

Nifty gaped up above PDH. IR formed. Price failed to go above IRH. Avoided the short as  RN ,NS BRN and PDH was below. Price traded between RN and PDH for a long time and broke down. Went short. Covered when the second push down terminated at 6710. I was hoping a move till BRN.Long on break of the swing high . I was looking for a quick trade to PDH but price traded in between for a long time and went up breaking PDH. Covered at a 20 point profit

Reading: Procedural Memory

Do you want to improve your trading?
Pradeep Bonde

Then learn how procedural memory works. Trading success is about developing expertise. When you try and develop expertise you train your procedural memory. Procedural memories are implicit memories. They allow us to lower cognitive load. They are learned intuitions.

Procedural memory is memory about how to do a process. It is stored in memory as one schema. A process containing say 32 steps is not stored in memory as 32 discrete step but as one sequence of step. When performing that task the brain efficiently recalls all those steps simultaneously so you can do the task effortlessly.

Procedural memory helps free up the brain to do other things. It frees the brain by reducing cognitive load. We have thousands of procedural memories developed over our lifetime. They make our life easy. For example take a simple skill like flossing your teeth, it is a procedural memory.Once you develop it you can perform it daily without thinking or while doing some other task without focusing on a step by step sequence.

Click to read the rest

Testing Times

I came across a thread started by a young trader at Traderji forum. He is just 25 years old . He lost more than 35 Lakhs in seven months, trading Crude Oil contracts and had to sell his home to make good the loss.Many such people get wiped out by the market

Remember the first law of holes?.
"If you find yourself in a hole,stop digging"

If we are in such a situation, the best thing to do is to stop trading. Do not think that we can turn around and recover the losses with a different strategy. It will never happen. We will end up losing much more.

The reason is very simple. The key success factor in trading is "Time". In fact time is a big factor in achieving success in any performance activity. You have to remain engaged in the activity long enough to get good at it.Trading is no exception.We will not develop the required knowledge,skill and behaviours required for trading success overnight.We have to survive a long learning curve before entering the earning curve.

Do you have the resources to stay in the game long enough?

Ensure that you have enough capital to trade and funds necessary to meet household expenses till your trading clicks. Supports from your family and friends are equally important.Without these safety nets in place,do not venture into full time trading.It may end up as a misadventure.

28032014

Nifty gaped up within previous day range. Tried to go above PDH but failed. BOF of PDH gave a short signal. Skipped considering IRL,BRN and PDC. Then a Barbed Wire around BRN with DO and PDC as range extremes. Shorted BOF of PDH on break of MSP. Trade failed creating a TRAP pattern.Exited at a small loss. Long on break of PDH. There was no momentum as expected but price finally  moved up after a pullback.TP at market close.

27032014

Another expiry day.These days have become less choppy after the introduction of xx50 strikes, it seems . Could take two nice trades. Nifty opened near PDC and attempted to go down. First candle was a MC and acted as IR. Went long above IRH and covered the trade at PDH. For a long time Nifty made a  Barbed Wire around PDH. Long on break of  PDH  on BOF of Range Low.Covered at 20 point profit. No more trades.

26032014

Nifty Gaped up above PDH. IR formed. Short below IRL. Trade failed to move. Scratched. Went short on BOF of range high. with stop above HOD. Closed the trade when price bounced back from Range Low above BO candle. Never expected the next down move breaking NS BRN,PDH,PDC and BRN. Stayed away from the long trade also. But trade moved well through the fluid Missed both the major moves of the day.

25032014

Nifty gaped down  open within previous day range. Vertical up move stalled at PDH.Short on BOF of BRN. Price traded in a 10 point range for a while . TP on BOF of Range low.Tried another short at BOF of BRN to the downside. This also ended up as a scratch. Nifty was within a 20 point range the whole day

24032014

Nifty  gaped up above PDH (Ignored Saturday trading). Momentum move stalled at NS BN. Went long above consolidation as BPB . TP around BRN. Tried the BOF of BRN which can also be considered as FTC. Failed to move. Scratched. NO other trades.

Way to Go

Decision Point trading method is in public domain for more than two years now. I am very happy to note that many people are trading the method very consistently and profitably. But still a lot of readers are struggling and not getting the desired results.

In an earlier article titled “Slippery Slopes”, I have written about the process of trader development. It includes defining a structure, finding tactics to trade the defined structure and deliberate practice to gain execution mastery. Here we have a well defined structure and effective tactics to trade that structure. For the time being do not tamper with these.

Almost two third of the work is over. Now you need to work on execution consistency. To execute the method consistently without hesitation three things are needed.These are knowledge of concepts, belief in the method and, trust in our own ability to execute. These will not come easily. It may take some time and you need to survive in the market till it clicks.

If you proceed systematically, you can cut short this learning curve without serious damage to your capital, financial as well as emotional. Let me explain how to go about this.

1. Read all the important posts repeatedly so that you will have a thorough knowledge of the concepts. Go through the past trades posted to know how the concepts are applied in real trading situations. Do not skip the comment section
2. Go through the historical charts and mark the trades on them on your own. Do it slowly and write down the reasons for your action and inaction. Do it at least on hundred charts. More the better
3. Simulate the trades with a software analyzing bar by bar replay. Do the simulation on at least a year’s data. More the better.
4. Watch the market live and identify the trades. Entries and exits. Do not trade for a month with real money. Do it till you get a feel of the price action as it unfolds.
5. Go live with a single lot. Focus on execution rather than on money. Your aim is to perfect your execution.
6. Focus on a single pattern first. I will recommend the BOF. For a month do not touch anything other than BOF
7. You need to wait patiently till a good setup appears. The “Itch” to trade should go.
8. In trading quality is more important than quantity. Trade less and win more. Skip low probability trades because losses can add up quickly in day trading.
9. Cut your losses quickly. When in doubt get out. Preserving the capital to fight another day is the first priority.
10. Finally do not mix and match any other concepts with this initially. Once you gain experience you will know what goes well with this. You can have whiskey on the rock or with water, soda, and cola. But never with buttermilk. .

Slow down and always under trade. This is  purely a discretionary method. You need to train your brain. It will not happen in a day. Please do allow enough time for it to get hard wired and develop “Schemas”. Remember this is a skill with life long utility and be willing to go through a little hardship.

Read

We’re not good enough to be disappointed. We’re bad enough to get to work.

21032014

Nifty gaped up within previous day range. IR formed. Did not take the short of IRL as it was near the NS BRN. Whole day Nifty created a Barbed Wire around this level. Attempted a long on BOF of range low. It did not move as expected. scratched.

20032014

Nifty gaped down below PDL. IR formed.went short below IRL. Scratched when there was no follow up selling. Avoided BOF of  IRL and BO of IRH as there were PDL,PDC and RN above the levels. Short on BOF of PDL/PDC and test of RN. Covered when price moved above NS BRN. Then there was a nice short on a TRAP pattern at NS BRN which has shaken out a lot of shorts and trapped many longs.Trade moved well. TP at BRN.Nifty remained in a Barbed wire around BRN rest of the day.

19032014

Nifty opened within previous day range. Went short on break of IRL. Target was PDL. Stopped out of the trade. Went long on break of IRH. Initially it showed some momentum, but reversed. Scratched it. Tried another long on BOF of RN. Another scratch. Missed the down move. All the three trades disappointed.

18032014

Nifty gaped up above PDH and moved up without a pull back. There was  a BOF of BRN.Can also be considered as FTC after a vertical move. Hesitated for a while and missed the trade. There were too many levels to watch for to the downside. Went short on break of DO.Ignored PDH as I expected a lot of stops below DO. TP at PDC as there was no momentum as expected. Did not attempt any other trade.

Long Haul

There are many approaches to learning and skill development. A lot of studies have taken place to know what makes an expert an expert. Many of the findings are extensively researched and used in high performance skill development training, especially in sports

Many of the findings are equally applicable in trading. For example Fitts and Posner (1967) suggested that the skill development process is sequential and moves through specific stages. According to the study there are three stages to learning a new skill. It is not possible to bypass any of the stages

Cognitive Stage

• Decision fatigue as it demands high degree of focus
•  Lack of synchronization and appear confusing
•  Numerous errors, typically gross in nature
• Inability to determine cause of errors or correct them

 Associative Stage

• More consistent
• Attentional demand decreases
•   Fewer errors and better at detecting cause of error 
•  Begin to develop appropriate error correction strategies 

 Autonomous Stage

• Highest level of proficiency 
• Attention shift to strategic decision-making  
• Consistent
• Confident
•  Make few errors and can detect and correct them.

Which stage are you in? Anyway it is going to be a gradual painful progression. There are no short cuts. Be prepared for the long haul.

14032014

Nifty gaped down below PDL and BRN. A touch trade of BRN was the right trade with stop above BRN and PDL. Went short on break of IRL. This trade did not move. Scratched.BOF of IRL gave another short signal .Another scratch. Finally there was a BOF of range low. This consolidated below NS RN/IRL for a while and moved. Long on the break of BRN/IRH.Stop triggering helped to break PDL,PDC and NS BRN. Covered at a 40 point profit.

13032014

Nifty opened above PDC. IR formed between PDH and PDC. Long on the break of PDH. Covered when price failed to stay above NS-RN 6550. Formed a classic Cigarette pattern for two hours. Finally a break down. Cool 50 point trade. TP at PDL.No other trades.

12032014

Nifty opened near PDL and attempted to go up. IR formed. Went short blow the PDL/IRL. Price refused to go down and came back.Got stopped out above the swing high. Went long on break of IRH. Price went up breaking RN, PDC  and hit NSRN. TP when price came below the Pin bar.Here there was an excellent opportunity for a FTC trade. Missed it. Went short below RN/PDC into the fluid. Trade moved well as expected,but I messed up entering the SL order and got exited at a small profit. Rest of the day price moved in a 20 point range. There was a long signal on TST of  PDL, a BOF of NS BRN. Skipped as I thought the strong flip at 6540 will hold.

11032014

Nifty opened near PDC and moved up .IR formed. Went short on the BOF of IRH ignoring PDC. Covered the short when price bounced from RN and came back above IRL.Could not capture the next down move from IRH.This was the best move of the day. Went long on the break of RN into the fluid. But found the real flip was above RN from which price bounced and stop hit.Could not attempt the next up and down move inside the range. There was a BPB at range low . Skipped it as I was not comfortable trading around NS BRN. Long on BOF on break of MSP. I scratched it, but later it moved a little.

10032014

Almost all the day Nifty traded within the Initial MC bar which acted as the  IR. There were too many levels to monitor. Attempted 3 trades and none of them worked as expected.

07032014

Nifty Opened  above PDH and moved up. Went long on IRH break. TP at NS BRN. Price suddenly fell and got support at BRN.BOF of BRN was a good signal. But I was scared to go long in the light of previous fall. I thought being Friday, Market may reverse. Missed this 50+ point up move.

06032014

Nifty gaped up above PDH. IR formed. Avoided long above IRH as NS RN was very close and  I expected a range day. There was a TRAP at the tight trading range low also MSP. Long above RN NS. trailed till 6415 level. No other trades today.

05032014

Nifty Opened above PDH and sold. Short on BPB of PDH. Covered when price came back above PDC after hitting NS RN. Another short on the break of NS RN after three attempts. This also did not move well. Long on BPB of NS RN on break of MSP. TP above PDH. Tried another short on BOF of DO/RN . This trade did not work. Exited on the break of FlipDid not attempt the last BOF

04032014

Nifty opened near PDC and moved up. I was expecting a range day It was very difficult for Nifty to move further down with three DPs to crack. DO/IRL,PDC and PDL. Went long on the BO of IRH. A BOF of first pull back swing low gave confidence. Then it was trailing all the way to the top.

03032014

Nifty opened within previous day range. Tested PDL and went up. Did not trade the up move as there were PDC and IRH in between. Nifty consolidated for a while after testing PDH. Short below consolidation low. Trailed all the way down.TP at 6240 level. Did not attempt any other trade.