Thursday, May 14, 2015

Making High Probability Trades

This comes from a website article which you can read here.

The summary is:

If you are a technical trader, you can move the probability in your favor by following the trading tips given in the article. Some of these tips are: 

Know what the trend is and trade with it. Rewards can be found for traders buying against the trend, but why risk it? Remember that the trend is your friend, until it bends.

My Notes: Almost all of us have this strong desire to catch tops and bottoms. The best way to trade is to fight this desire. Never give in. All your trades should be in the line of the trend.

Do not chase the market. If you do- you may find people will profit take and you would have bought right at the top of the market.

My Notes:   When we see a market suddenly moving, we have this strong impulse to jump in. The wisest action is to wait. Remember, the market will be here tomorrow, the day after and after another 100 years. So, what is one trade in your lifetime? If you miss this trade, so what? Have patience and trade as per your plan, not as per your emotions. 

Have a reason for every trade. If you don’t- do not take the trade.

My Notes: This one is self explanatory. Keep a brief trading journal to track your out of the rule trades. 

A reading of the original article is worth the effort.


Tick Learner said...

Hello Sudarshan,

Pleasure to read a bit from you after a long time. But as a trader, at times, I get confused, shall we follow the trend of the trading chart or a time frame above the trading chart.

Whats your advice on this.


Manish Chandra said...

Hello Sudarshan Ji,

Thanks for the continued great articles.

I thought of posting this question. Please post/include in next article when possible

I have 2 systems to trade a particular script. System 1 is more of mechanical where I have to blindly trade irrespective of the market condition as long as rules are met. System 2 is mix of mechanical + discretionary with comparatively higher returns vs System 1.

Question is - In long run, which system is more likely to cause success or failure as a full time trader ? System 1 which requires less effort but moderate return or System 2 which has higher returns but not being mechanical has itz flaws of missing out smtimes.