Tuesday, September 27, 2011

A tale of two trades

This is tuesday morning. I am discussing yesterday, two different trades that I took. First, we have the Nifty. At 3 PM, yesterday, the 60 minute chart gave a buy signal (Nifty around 4860).  Short term trend was up, supported by a rally from deeply oversold in momentum. I took the trade. I am long in the Nifty - a swing trade.

Then at 5.15 PM, I looked at Gold and Silver. I am not upbeat on Silver, so Gold is my preferred trading instrument. My 180 minute chart closes its bar at 6 PM so any signal that comes will be available at 6 PM. But, I am in front of my screen, I wanted a trade 'NOW'. I am a fairly proficient technical trader, so I know all the tricks. I changed my trading screen to a 15 minute chart. Now, Gold was inside a trading range, which actually means that trading signals were coming quickly and often. Never trade when prices are inside a trading range. In my desire to get some action, I easily forgot this basic rule. Well, these things do not have a happy ending. I took six trades, was exhausted by the absurdity of what I was doing, then gave up at 9.30 PM. Two breakeven, three losers, one winner. 

Meanwhile, the 180 minute chart did  not give a buy yesterday, since the shorter trend change to up was not supported by momentum or the longer trend.

Reader experiences are welcome.

4 comments:

RS said...

Sir,

What amazes me is the fact that you have the courage and audacity to at least accept that even a person of your caliber can go wrong in the trades. That's called simplicity and humility of the highest level.

I have seen many other analysts, always saying that "they took profits off the table" each time they trade esp. the ones on ET Now.

It takes courage and humility to write what you wrote.

RESPECT
RS (Baba)

Jitender Yadav said...

Respected Sudarshan Ji
I have another tale to tell. Last month I made profits 4 days in a row,and my cash level increased to xx9999. On the fifth day I thought of making a profit of at least 1 rupee at any cost even at the risk of breaking my rules to make my cash level to cross the psychological round figure. There was no particular trade that day in which I had confidence but as it was a matter of making only 1 rupee at least and I was overconfident by 4 days of back to back successes. I indulged in random trades. The result-At the end of the day my cash was at round figure but less than rupees 999.
The market gives you what you want I wanted a round figure and it gave me.
Your fan
Jitender Yadav
New Delhi

Rigel Capital said...

I caught the falling knife Silver HNI @ 55400 @ 9:15 PM on friday. I took the trade for Rs. 200-300 move.It started going down and I was stuck because of consecutive lower ckts. On Saturday I could cover it @ 53500 but thought my price will come in a week & I became sort of 1 - 2 month investor till 05 Dec 2011 (contract expiry date). On Monday with consecutive lower ckt openings it was sort of panic. I bought again 47737 and thought will cover it at 50000 and hold the other at get till breakeven. Price moved till 45825 and it was sort of panic. I said to myself wait dont panic but it so happen I kept sell order at 47838 to get breakeven on one and leave the second open. I covered that at 50500 booked my loss of around 1.5 lakh at 5:30 before kitco opens. Just than it started moving up and went high till 52500 - I started cursing myself - I should have waited. Right now i see silver up 1 Dollar in Spot @ 31.3 and it makes me feel like a dumb as I could have been in tight profit if i hold both. Gist says Trading without plan and not folloing rules will kick me out.

Thanks,
Patel
Rigel Cap

jigs said...

I think Larger timeframe suggesting weak momentum in gold and silver. 1hour and 4hour chart suggest too much oversold so bounce came but still day and week timeframe favour bear and that will show its colour. Be prepared for bear attack