18. November 2015 20:48
Most people think intraday trading in futures and options is very risky and a sure shot way to lose money - damn right !!
The key word is risk. Most people equate the word risk with loss which is not correct. Risk means uncertainty and in the markets - uncertainty of profits and losses. Most people think that they trade a technique or method for intraday trading but the fact is you trade your own biases, fear and greed. The market is neutral, driven by demand and supply. You have either been trained to trade or you are a novice. Both are driven by greed and hope to be right. This desire to be right causes most of the big losses in intraday trading. In fact with all your technical and fundamental analysis the only thing you get is a probability and you have to trade that probability.
For example you are trained in technical analysis and the price on daily chart closes above the bollinger band in a distribution zone and the last candle is a doji. You immediately have a selling bias that triggers in your mind and you have an urge to buy a put or short a future. Greed replaces fear and loss becomes invisible. You take the trade and are sure that the price will go down as soon as the market opens. The price starts going down. You are euphoric as you have been proved right. A great ego boost. The screen is showing 10k profits in just 30 min and 20k starts showing in your mind's eye. Greed in not allowing you to book profit and emotions have taken over the logic. Then, without warning, the price does a U turn and starts to go up and your finger freezes. You should get out and you can't. Have you experienced this. Then your 10k profit in front of your eyes turns into 10k loss. Now your greed turns into fear and loss increases to 15k. Now you have hope. Then the candle shape turns into an inverted hammer and you remember it as a reversal candle. Price starts going down you are again greedy, then it goes up and you are again scared. The roller coaster continues. Who are you trading - market or yourself ?
After 10 years in this market I have learned that there is a lot of money in this market only if you can control your greed and fear. Risk management is the key. BIG LOSS NOT ALLOWED. Your being right is not important. Understanding your emotions is the key. You never trade a logical market always the emotion. The face value is Rs 2 and market price is Rs 400 - where is the logic. You are partner in the company, but only for Rs 2, rest is the emotion.
I trade everyday in my trading room with my traders and in the last 3 month have been able to make 190% gross profits by being right 75% time. Check the attached photo for trading details. I have no big loss in the system and big profits only 20% of the time. Most of the money is made by small and medium profits by controlling the greed and to get out fast with small loss when market is proving me wrong. This is the only method, rest is commentary.
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