It’s been long time I did high level analysis of trading
journey. Today I got some time to look back, analyze and plan for future.
I thought of doing it as blog post, as it may be useful for whom
following my blog.
My 98% of trades so far are in Nifty alone. I analyzed trades done between Aug 2016 – May 2018.
Why this period? This
is the time I started nifty trading with 10 lots after good break!
I started trading with 10 lots from Aug-2016... it was going
very well till May 2017. Average gain used to be around 150 points per month.
May, june, july 2017 are narrow sessions. Where i tried to
trade with 15 lots sometimes... couldn’t handle and back to 10 lots.
Again from Jan 2018 (bear market?) average net monthly gain
came down... hanging around 80 points as of now.
322 points in 2018 so far... means net 80 points per
month... means 24% ROI so far... 6% per month.
But i don’t think its good return, if I think in terms of
capital employed and growth of capital (in percentage) while Scaling UP.
Why?
See below
DP Trading -- 1st 26 session performance
Total : 829 Avg per
Day : 31
My first month with DP Method... this is called Beginners
Luck... Now i can’t even imagine 800 points in a year... once i made it in a
month... but 800 points with 2 lots then is equal to 160 points with 10 lots
now. Means lot size increased five folds... but average net gain fallen down by
10X
There are two reasons I could think of not doing so well in
2018 (in terms of capital growth in %)
1.
It’s no more structured Bull Run where we get to
see nice trend days, where I make most if entered early.
2.
Unable to handle huge pull backs, though I am
trying to mitigate risk by downsizing lot quantity to half where ever required.
3.
Lot of choppy days, nearly 50% of small losses
can be avoided if don’t attempt. Its pshylogically difficult to sit doing
nothing.
When I realized this down curve in February 2018, I along
with my husband started exploring new ways to trade,, in fact we put a BREAK to
nifty trading for 15 days and explored 4-5 TA methods.
But none gave
satisfactory results that it suits my personality. For me they appeared like
Blind trading. Concluded that they are not my cup of tea.
Then started exploring ways to trades. Below
are list of different ways explored.
·
PDH/PDL Cross
·
Scan for Pin Bars
·
BOF at PDH/PDL
·
Trading trending stocks after a PB till VWAP
·
Candle Patterns like Sash, Engulf at PDH/PDL
·
Filtering range stocks EOD and trading range BO
All of above are tested in sequential manner.
Document System à
Manual Back Testing in 4-5 stocks à
AFL Coding à
Scan in Amibroker à
Analyze Chart à
Do other checks like order flow, space etc
à
Trade with small quanity à
Weekly Performance Check.
None of them gave us consistent results and not
comfortable in the way we doing it.
Reasons could be
1.
Time invested EOD for range bound stocks... Most
of times we missed entry at right time and keeping alerts every day is very
hectic.
2.
Redundant amibroker scan results and lot time to
analyze charts and after analyzing very few tradable signals.
3.
Scan for pin bars, candle patterns didn’t went
well
4.
VWAP trades, it requires lot of intraday hunting.
After testing these ways, what we
concluded is we are hunting for momentum moves after market settles... Say
after 10 AM. This is where problem lies.
Most of stocks move happen in
first 30 minutes actually, I used to be active with Nifty either monitoring or
managing trades.
Then we decided to split the work.
I take care of NIFTY alone & My husband look to trade stocks alone in
morning hours.
He tested few more ways what he
observed in couple of forums like Trader Ji & StocksOnFire discord group.
But no good result, either they too much time consuming for hunting signals or
they not suitable for our price action eyes/mind set.
Off late he started observing
TRADING TOP GAINER/LOOSER!
For couple of weeks in April, he
simply observed how top gainer/looser opening and they behaving after open.
Most of times whatever stocks we
see as Top Gainer/Looser by 9:16 – 9:20 time, either they continue in trending
direction where opened or reverse in other direction and trend.
He concluded that trading top gainer/looser
is less time consuming for analysis and much easier for trade initiation and
management. All above it suits our PA eyes and mindset.
Why we think trading
Top Gainer/Loser is wise idea?
ü
Our observation for top gainer/loser… Big
players take position which they want to move up as soon as market opens… they
mostly buy pre-open which result gaps.
ü
Overnight News may attract lot of order flow
during open.
ü
Range bound for last N days... breakthrough in
form of Gap or fast move in first 10-15 minutes generally & continue
gradual trending move henceforth.. If momentum keeps going.
ü
Sometimes we get counter trend gap up for stocks
in downtrend in higher time frame... with counter trend gap’s we can expect
short covering intraday… (Or) if such gap is to TRAP intraday players, my
observation is that even though they opened counter trend gap, they tend to
move in direction of higher time frame quickly. In that case our trade won’t get
triggered.
From month of MAY, he started trading in stocks with 10% of capital. It going very well.
Let me summarize the process.
Steps:
1.
Add nifty50 stocks as watch list
2.
At 9:16, Sort by High to low and make a note of
top 5 stocks,, similarly note top 5 looser
3.
Quickly open all 10 charts
4.
Go through one by one... if Nifty seems in
Uptrend,, look at top 5 gainer charts first
5.
Filter stocks which satisfying any of condition
·
Stock broke out of range formed over last 3 or
>3 days
·
Stock which is in down trend and today opened
gap up, if gapped above PDH much better
·
Stock which is in downtrend and got quick
rejection from PDL or any higher time frame support during open time
·
Stock which is in good uptrend and currently
trading above PDH
·
News driven gap move -- coupling with any of
above condition
6.
Decide position sizing based on risk involved in
trade
7.
Pick short candidates in similar fashion as
described in step 5
Refer below post for visual idea
Basically we are using same PA concepts what learnt from
SMART TRADER.
Selection of right stocks to monitor at right time and with
right mindset is the KEY here.
That selection we achieved by Sorting NIFTY stocks at opening time &
mindset to decide which one has potential to move in trending direction,, which
one may not move is something we applying based on learning’s from Nifty Nirvana
& own experience of judging PA.
Below is the statement i would like to share (just to inspire DP Traders that we can trade stocks as well successfully with DP method).
I generally don't like MTM showoff, as that is the way majority of fake people do fishing. i am making an exception today.
We will continue trading stocks with increased quantity for every 2 weeks of GREEN MTM.
Till today traded with 10% of capital only. From monday going to trade with 20% of capital as we got 2 weeks of green mtm. I hope this momentum gets going as we SCALE UP :)
Successful stock trading in early morning keeps you motivating for rest of day and also you will be fit physiologically to skip not so good setups in Nifty/Bank Nifty. One Shot Two Birds!
Thanks You if you are reading this lengthy post till now :)
Special Thanks to URD for being the role model that we can trade stocks successfully with DP Method.
