TEMPERAMENT FOR TRADING

Intellect & Temperament

"Success in life(in general) and share market (in particular) depends less on intellect and more on temperament."

Came across this excellent post in icharts forum written by someone called "yesican".
Q
Letting Profits Run: Becoming Your Own Trading Coach 

 We set our profit targets and trade strategy while we are in one state of mind but then, as the trade progresses, we enter an entirely new state. That new state very often involves worried thoughts about losing unrealized profits or having gains turn into losses. It generally brings an elevated heart rate, increased muscle tension, and more rapid and shallow breathing. As we become aware of the nervous feelings, that helps to perpetuate the negative thoughts and altered physical state, which in turn can amplify the anxiety. Very often, cutting positions short before profits can run is simply a coping device to manage this anxious state. We exit the position for emotional relief, not for reasons of sound strategy and money management. 

The solution focused approach calls on us to review those occasions in which we have been able, in some measure, to let profits run--even just a bit. What did we do differently on those occasions? Those exceptions from our problem patterns are what we have to build upon: they are our potential solutions. 

In my case as a trader, there are several things I've done differently when I've been successful in letting profits run: 

* I have planned the trade well in advance with research; it is not a spontaneous trade, so I've had time to think clearly about what I want to do. 

* I have a clear profit target in mind based on research and refuse to waver from that target unless the market takes me out with a predefined stop. I consider myself a person of integrity, so I tell myself that I have to show integrity and loyalty to my trade idea and target; 
it will hit my stop. I make a conscious effort to let go and not micromanage the trade; 

* I keep myself calm and clearly focused by purposely getting up from my chair, doing some stretches, breathing deeply, and getting away from the screen. I keep myself in a state that is incompatible with anxiety; 

* I rehearse constructive self-talk during the trade. I tell myself that I've done my preparation and established my edge. Any individual trade can go against me, but if I take all the good trades I can, eventually I'll benefit from good odds and a good risk-reward ratio. If I lose money on the trade, I'll figure out why and what that might be telling me about the current market. 

All of these steps, taken together, form a template for how I manage to hold onto positions to maximize profits. Now the key is to turn this template into a habit pattern. I want it to become automatic--an internalized part of me. 

To accomplish this, I wear my heart monitor and go out for a morning jog prior to the market open. I use the monitor to ensure that I maintain an elevated heart rate and a good jogging pace. While I'm running, I'm mentally rehearsing each aspect of my template. I'm imagining my trades, and I'm imagining what I'll do if they move in my favor. I rehearse the proper self-talk, and I imagine getting away from the screen and staying loose. I also imagine, with plenty of emotion, how happy I'll be sticking to my ideas and reaping enhanced profits. In short, I'm getting physically *and* emotionally pumped up during the jog. 

This becomes a routine every morning. Repetition and powerful emotion are the keys to turning patterns into routines and setting new spots on our radio dial of consciousness. After a while, those thoughts, images, and feelings from my jogs begin to appear on their own, as they increasingly become familiar parts of me. Then, during my break from the screen while I'm letting a trade run, I go on my treadmill for a few minutes or simply jog in place. I get myself back into the pumped up state and recruit everything I've rehearsed. Instead of feeling anxious while riding the trade, I'm feeling energized. 

Again and again, during each trading day. 

Notice that you could substitute any desired behavior for the holding onto trades and make this technique work for you. It does take practice and repetition, but once you have a positive habit pattern, you have it potentially for life. The key is focusing on your strengths and turning those into patterns that can be triggered when you enter into associated states of mind and body. In my example, I used jogging to create the unique state. I could have just as easily chosen meditation or self-hypnosis. 

Once you grasp this method and become good at it, there are many positive patterns you can program--in your work, relationships, and trading. There is no need to become bogged down in problems when you can build upon your own solutions.


UnQ

copied from Shri RAGHUVANSHI Sir's Blog.

MY INTRADAY SYSTEM

IMPORTANT NOTES-OI

I consider:
Rise in OI with rise in prices - Bullish
Fall in OI with rise in prices - Bullish
Fall in OI with fall in prices - Bearish
Rise in OI with fall in prices - Bearish
by shri Illango

IMPORTANT NOTES

In simple terms
....Up & buy on dips above 5 high ema
....dn & sell on rises below 5 low ema
....sideways & trade supports & resistances as long as it closes
inbetween 5 high ema & 5 low ema.

IMPORTANT NOTES-PROFIT BOOKING & RE-ENTRY

Ilangosaid...

@ Univesh,

Part booking & re-entering comes only with experience.

There are few methods to follow to reach there:

1. Observing the price cluster points in an hour chart of 30 to 50 trading days would guide you on the likely price points such as the recent one being "5382".
2. Understanding the maturity of an upmove/ downmove and the different T/F technicals would guide you to hold back on profit booking if the trend is still young. Hour TA with +ve or -ve div are good points to part book. 75 to 120 points away from the recent top/ bottom is a good place to re-enter. Re-entry should be avoided if a threat of reversal looms.
3.Knowledge of EW helps to understand various kinds of wves/ retracement possibilities for part booking & re-entries

IMPORTANT NOTES- SIDE WAYS

How do you identify a sideways market for trading?
In uptrend, it is the close below DHEma that suggests of a correction and it normally extends upto 10-20 points below DLEma. Depending on the nature of correction, it could even close below DLEma one day and reverses.

In downtrend, it is the close above DLEma that suggests of a correction and it normally extends upto 10-20 points above DHEma. Depending on the nature of correction, it could even close above DHEma one day and reverses.

Divergences are excellent indication of stretched market/ exhausted market

MY TRADING DAIRY-21-Mar-12

Today i had some work in the morning. i came to my trading terminal at 1pm. i saw price is going up. waited to cross and close above J10SAR in 15 min chart and took long @5368 NF. 

MY TRADING DAIRY-20-Mar-12

yesterday's position is squared off with 6.2 points loss. and shorted at 5291 thinking market go down since it opened with -ve bias. but price moved up to 5314. with 20 point filter i squared off at 5311.47. also ORB triggered on +ve side. but after touching 5314 price started coming down. again at 5291.2 took short. i could not understand sir's comment on @5264 NS. i mistook his advice and squared off at 5288.5. later even though price is moving down i just observed and did not trade.
as price closed above WLEma yesterday i thought reversal might happen. hence i took long yesterday. later i understand "closing above/ below weekly values indicate sideways movement for the next day or so, especially when Day and Hour closing below/above values. Ms. Smita helped me to understand this. today also scenario as yesterday with little difference ie., Hr closes are erratic. i will wait tomorrow   and observe. also JNSAR value is 5375. there is a time to take trade.

IMPORTANT NOTES

Using HEma & LEma for Trading from Tech.Table(TT):
In the TT, there are four guidelines given for using HEma & LEma in trading:-
When prices move above Low Ema & Closes: Buy on dips to High ema+
When prices move above High Ema & Closes: Buy & Hold as upward momentum picks up.
When Prices move below High Ema & Closes: Sell on rises to Close Ema/ Low Ema-
When Prices move below Low Ema & Closes: Sell & Hold as downward momentum picks up.

Trend indicator in TT is 5DEma. One could opt for JNSAR too.

While the market is comfortably above 5DEma/JNSAR, the close below HEma suggests weakening of upward momentum which means short term traders would move into sell on rises...investors have taken a pause as well as do part booking.
Subsequently, if market survives the LEma, it would attempt to move higher. In a strongly trending market, such as the current one, market is coming only upto 5DEma so far. And after a two days of sideways move, it has closed above DHEma & poised to take another move higher. In normal conditions, the close below HEma generally takes the market towards LEma-20pts.
Markets have occasionally closed above HEma but has gapped down next day. Most TA studies suggest overbought conditions but the corrections have been of “intraday” nature so far.

While the market is comfortably below 5DEma/JNSAR, the close above LEma suggests weakening of downward momentum which means short term traders would move into buy into dips...investors return to re-enter into their fallen favourites.
Subsequently, if market is unable to close above HEma, it would attempt to move lower again and the downward momentum returns once it closes below LEma.
Knowing the market strength/ weakness with the help of prices’ positioning in the Tech.table of different Time frame, one could choose good trade set ups and initiate trades at appropriate levels. The levels are arrived at using Pivot table and Tech.table and other considerations such as Fibonacci table, Elliott wave study, etc.

While reading the TT during uptrend, it is very important to know that as long as the Week TA is in upmode(green), the down (red) that appears in day TA will not give sharp falls except at the point of major reversal. Similarly as long as the Day TA is in upmode(green), the down (red) that appears in Hour TA will not give sharp falls except at the point of major reversal. And during downtrend, read the same appropriately by respecting the higher T/F TA. ......BY ILLANGO SIR

DATES OF REVERSALS

FROM FEB 22nd 2012
6/03, 10/03, 15/03, 20/03, 25/03, 31/03,
6/04, 13/04, 21/04, 29/04,
7/05, 16/05, 26/05
4/06, 15/06, 26/06, 
8/07, 20/07,
1/08, 14/08


Observe +/- 3 days of these dates. There may be trend reversal in NIFTY.

ELLIOT WAVES

MY TRADING DAIRY

19-Mar-12
Since market opened below pivot assuming -ve bias sold MiniNifty at 5324.60.
As expected nifty slowly broken ORB and went on to S1. Being first day I did not wait up to S1. Squared off at 5291.8. later nifty gone beyond S1 and touched  5260.

Later at last half hour I found price is crossing WLEma and closed above it. Hence I have taken Long position at 5276.3. I don't know whether this is correct way or not, since price closed below DLEma and HLEma. Tomorrow  if market opens -ve I will Square off and see.

I Thank You Shri Illango for his continues coaching. Shri Ramki instilled hope in me. Shri Illango induced confidence in me. I thank both of them very much.

IMPORTANT NOTES

Ilango said...

@ VK,

I have revised the "Trade Table" to show only "re-entries" in the direction of JNSAR, though one could trade their JNSAR positions. This requires knowledge of few studies such as TA, ORB, Pivot trading.

Once in longs and market has travelled far from JNSAR and TT shows "Incomplete Uptrend", you could use ORB or other considerations to sell your JNSAR trade with a 20 point SAR(incase market resumes suddenly upwards). It is meant for "Intraday only".

By selling your JNSAR position in good profit, you lock in your profits and by re-entering in the direction you remain in JNSAR direction till a reversal emerges.

March 15, 2012 12:41 PM

PIVOT TRADING

Step 1
"In general, if the day's Price Action starts above the Pivot, it will tend to stay above the Pivot.
This simple observation provides the basic rules for two of the simplest Pivot trading systems.
System 1:
Open is above Pivot: Buy
Open is below Pivot: Sell
System 2:
Place Buy and Sell stops bracketing the Pivot. Whichever is not filled acts as safety stop for the other.
These "systems" are very much too raw for my tastes. Too much chance of getting whipsawed. Let's take it one step deeper. Let's refine these simple systems just a bit more:
Step 2
First Fundamental Of Pivot Trading After the opening range (first 15-30 min. to one hour), if price is above/below the Pivot, Price Action will strongly tend to remain above/below the Pivot for the session.
Although this rule bids us to wait out the Opening Range and thus avoid much of the wildness and whipsawing, overlooking the next Fundamental Of Pivot Trading could be disastrous:
Step 3
If the market opens, or later trades at the extremes (R2, R3 or S2, S3), it will exhibit a tendency to trade back toward the Pivot. Thus, the general rule, 'Avoid buying the High or selling the Low', becomes increasingly more stringent as price moves farther from the Pivot.

CHANNELS-Jeffrey Kennedy Channeling Technique

Five waves break down into three channels, and three waves need only one. The price movement in and out of these channels confirms each Elliott wave.

Base Channel
Figure 61 shows three separate five-wave patterns with three different channels drawn: the base channel, the acceleration channel and the deceleration channel.

The base channel contains the origin of wave one, the end of wave two and the extreme of wave one (Figure 61A). Of the three channels, the base channel is most important, because it defines the trend. As long as prices stay within the base channel, we can safely consider the price action corrective. Over the years, I've discovered that most corrective wave patterns stay within one price channel (Figure 62). Only after prices have moved through the upper or lower boundary lines of this channel is an impulsive wave count suitable, which brings us to the acceleration channel.
Acceleration Channel
The acceleration channel encompasses wave three. Use the extreme of wave one, the most recent high and the bottom of wave two to draw this channel (Figure 61B). As wave three develops, you�ll need to redraw the acceleration channel to accommodate new highs.
Once prices break through the lower boundary line of the acceleration channel, we have confirmation that wave three is over and that wave four is unfolding. I have noticed that wave four will often end near the upper boundary line of the base channel or moderately within the parallel lines. If prices break through the lower boundary line of the base channel decisively, it means the trend is down, and you need to draw new channels.
Deceleration Channel
The deceleration channel contains wave four (Figure 61C). To draw the deceleration channel, simply connect the extremes of wave three and wave B with a trend line. Take a parallel of this line, and place it on the extreme of wave A. As I mentioned before, price action that stays within one price channel is often corrective. When prices break through the upper boundary line of this channel, you can expect a fifth-wave rally next.
In a nutshell, prices need to break out of the base channel to confirm the trend. Movement out of the acceleration channel confirms that wave four is in force, and penetration of the deceleration channel lines signals that wave five is under way.

IT IS A NEW BEGINNING OF LIFE WITH ILLANGO SIR

Since 2007 i roamed in the world of trading. every try is given a new injury to finances. i am beginning again.