Thursday, November 10, 2011

Stop Loss and other issues

Pratik Mukasdar said...

Sir a very important part of trading is putting stop losses.
How should one keep a stop loss?
Should it be a rupee a stop,near a resistance/support level
or keeping in mind the risk reward ratio ..Sir pls explain

My Notes:

Stop Losses come in two types:

First, a catastrophic stop loss. This represents the maximum loss that you are prepared to suffer in the trade. This is the ‘last resort’ stop. Suppose you risk a maximum of 1% of your trading capital, in any one trade. Then, for every trade, you have a catastrophic stop at a level where you lose 1%. Such stops should be triggered only rarely.

Second, a ‘trade is not working’ stop. This is a stop that is actually useful. AT some point in your trade, you get a sense that the trade is not working. That point should act as a stop. Since the point of ‘not working’ will be different for different traders based on their entry rules, this stop loss is personalized. Each trader will have his or her own level.

If you have entered a trade based on higher highs / higher lows, then the breakdown from a previous low will be your exit signal. If you have entered based on the MACD buy then a reversal of the buy or even a divergence could be your exit signal.

My point is: Exits are different for each trader and different for setups.

 

ramprasad said...
dear sir,
COULD U PLEASE EXPLAIN ME FIRST 15 MIN RULE WITH AN EXAMPLE PLEASE.

My Notes:

Please do a search of my blog and you will find many posts that give this answer.

 

rocky said...
How to develop a view on markets each day before we actually start trading

My Notes:

Use the end of day chart to determine the short term trend of the market. You should have one of three choices: up, down or choppy.

In the morning, check out overnight markets, pre market rates (SGX Nifty for example) and news, if any. Correlate the eod trend and the pre market indications. If both are similar then you expect a satisfactory trading day. If they differ, then expect choppy market conditions.

Kuldeep.rk said...
Dear Sir,

People like me, who are big fans of yours & follow your guidelines but working people, do not get a chance to see CNBC during market hours. Most of the times, we do some swing treads in NF, based on own analysis backed by your kind words.
Request you not to stop updating NF & other trades on this forum, which really put value in our trades.

My Notes:

Thanks to Balu for a proper response to Kuldeep. This is what Balu writes:

Balu said...
@Kuldeep.rk

You can find all views by sudarshan on cnbc here

www.moneycontrol.com/technicals

(technical outlook)

5 comments:

Rushabh Shastri said...

its out of this subject But somehow IT index dont look encouraging at current time, bulls need some more confirmation it looks targeting below 6000 cnx it.

ramprasad said...

dear sir,
I WAS SURPRISED BY U R PREDICTONS. I SAID THIS BASED ON TATA MOTERS &INFOSYS. WHEN TATA MOTERS TRADING AT LEVELS 1150-1120 & INFOSYS TRADING AT LEVELS 2850-2800. U R PREDICTION IS TATA MOTERS WILL GO DOWN BELOW 1000 LEVELS SOON. & ON INFOSYS WILL TOUCH 2400. HONESTLY I WON'T BELIVE THIS. BUT U R PRDICTION COME TRUE WITH IN SHORT TIME. REALLY I WAS SURPRISED.IT'S GREAT PRDICTION. MY QUESTION IS HOW U PREDICT. IT'S GREAT. KEEP IT UP SIR.

ramprasad said...

dear sir,
I FIND IT FIRST 15 MIN RULE BUT I CONFUSED. PLEASE EXPLAIN ME WITH AN EXAMPLE OR FALLOWERS OF THIS EXPLAIN

Balu said...

Sir

Infact, we are thankful to you because you are a great industry expert and your speciality(kindness) is you are available to any indian trader across the world to clear any confusion during critical trading conditions through this blog.. I am sure if any valid technical point comes to discussion, we will get an answer here..

Regards
Balu

Unknown said...

DEAR SIR,
CAN US CFA COURSE HELP IN SHARE MARKET