Friday, July 6, 2012

Trading one side of the Market

My post titled Do you need to hedge your trades has evoked many thoughtful comments from readers. All the comments are worth reading.

Dinesh Rishi says
Quote:
 "In some of your posts you have mentioned that you trade only one side of market.

Plz explain something

"about one side trading" 
 UnQuote

My Notes:


Traders should be aware of the trend. Most of our trading should be done in the direction of the trend. In fact, we do not have to do anything. Our trading setups should give us only those trades which are with the trend.

However, markets do move in both sides - up and down. Often, traders will feel that there are trading opportunities which are against the trend. Such opportunities should be ignored. We should decide the direction in which we want to trade and then stick to it. For intra day traders, a vie should be taken at the start of trading and for that day trades should be done only in that direction. This is a flexible concept. The trader may take a view that he will trade a breakout or breakdown from the first 60 minutes range. Here, he is not having a predetermined view, but is asking the market to give a trend. That is fine.

I feel that buy and sell trades should not be taken in any one trading session because this reflects a confused mind. Again, there will be rare exceptions, but the general idea is to have a view on the trend, then go on that side.

7 comments:

Nirav said...

Sir,

As you have said that Buy & Sell should not be taken in any one trading session. Does this means that Stop & reverse (trend following) do not work in intra-day?

Do it work in positional trading?

Thanks.

Dinesh said...

Dear Sir,
I think you have explained this very well. I fully agree with you that a trader should not dictate the direction of the trade - long or short. It should be the other way around. A trader should be guided by the market and take positions based on what market tells us. If the market is not giving clear signal, it is best to remain side-ways and enjoy the day rather than taking a position & then repenting after loosing money. A trader may not always loose the money but the possibility of loosing is high if a position/trade is bought without any clear signal/trend or conviction.
Regards,
Dinesh

Nivas said...

Thanks for responding to my question and both of these posts. These are valuable information coming from a experienced trader quite hard to get. Keep up the good work.

Sharma said...

sir,

I could understand that buy/ sell should be in the direction of the trend but how to identify the entry level ? If trend is Up but I enter a long trade at a point on which counter trend starts witin a trend, I will be stop out. So pls& what should be stop loss.

regard,
Sailendra

Dinesh Rishi said...

Thanks Sir

for the Mantra

"Often, traders will feel that there are trading opportunities which are against the trend. Such opportunities should be ignored."

Uttam Nayak said...

Dear sir,
Superb teaching technique for us which is a advice.thank you.

Uttam Nayak said...

thank you sir for the superb technique.