Thursday, December 29, 2011

Managing a Position Trade

A position trade tracks the intermediate trend of the market. It follows that the trade should continue while the intermediate trend remains in place. But, trade management does not always blindly follow the trend. A number of exit rules may be built in, which are necessary for proper money management.

A position trade that I took for the Nifty was based on these rules:

1. I am expecting a move down to 4000. I will consider exiting once prices come in the 4000 - 4200 zone. this is my profit target.

2. Because I am looking for a large profit, I have to give a fair amount of room to the trade, accepting a number of counter trend rallies while the main trend remains down.

3. If I have clear signals of a rally, I may consider closing my positions, only to restore them after a rally or after a failure of the market to rally. In the first case I will make a small trading profit while in the second case I will have to reenter at a lower price. Since I am prepare to restore my closed position, I consider that I am in the position trade even when I may have actually closed my position partially.

4. My positions consist of mid month Puts.

My notes on these rules: I actually closed most of my positions at the close at 4560 - almost at the low of the swing. These positions were restored when the nifty crossed 4700. The reason I closed my positions was the relentless decline in the market day after day. Finally, 60 minute charts were giving large positive divergences at 3 PM.


Tomichan said...

agreed to ur comments on cnbc. But market will rise atleast upto 4 jan. jan and feb (likely) will be bear months.

Tush said...

Sukhani Sir,

I have respect for you. I don't care how many right calls you got. For me your stategy proved.

I have question for you. I have prepared my own Algorithmic. It worked according to expectation. I have used last whole year with discipline. I don't care whether its winning or loosing trade but follow signal. Sucess Ratio was 50% but good thing I made money. Being trader I have met expectation of my trading desk. But I'm too conservative. Even I know my system does work I took very small position. Say 10 contracts at time where I could play with 40 to 80 contracts at time. It looks like I did good in net practice but afraid to go out and play in match.

I thankful to myself for following tightly the Algo irrespective of news and sentiment.

Could you please provide me some tips so that I come out from net and start play big games.

I really appreciate for your guidence.

Kind Regards

Bashu said...

Hi, You said: Finally, 60 minute charts were giving large positive divergences at 3 PM.

Could you please explain how to identify such divergences?

marketrider said...

Respected Sudarshan Sir,

First, I thank to you for your sharing Thoughts.

Sir, I am a small trader, but attatched to the market last 9 years.but not achived extraordinary.

sir, I attached to this blog last long time, I don`t remember from when.

I read ur all posts and like them.
I am silent viewer of this blog.

I am attached to you because of your thinking - Market is Supreme and market will do that want to do.

I want to know about setup
if, I want to prepare any setup.
what should be in my mind to become
a solid setup. I know trading have Risk/Reward and no setup will be profitable always.

so, if you explain, It will be very helpful for me and other readers.

with Heartly Thanks.

rock_it_on said...

respected sir
i have bought a jan 4900 call whether i should exit or hold my position or buy a 4400 put???
if you could help it will be really helpful for me


alhad said...

Sir, I have read a lot about swing trading in your blog, can you please suggest some books on this topic


pradeep rajput said...

Hello Sir,

Got and gone through your book. Please tell me how do i relate your published news latter in today scenario? Also how can i receive your ongoing news letter? means how do i subscribe...

Please revert.

Wish You Happy New Year 2012!

jigs said...

Happy new year sir

ameet said...

hiii..sudarshan sir..r you using any kind of software to improve your technicals in markets ???..sir please tell me which software is best..!!!