Thursday, 29 June 2017

Stock Future Trading June 2017

It gives me immense pleasure to share with all of you my performance of stock future trading for last 3 months in the morning session.  I traded with only 1 lot from market open to 11 am.  Few other traders also joined me in trading and were able to earn along with me following strict discipline while trading.

Analysis of 3 months of stock future trading:

Some of the key highlights:
Total number of trades taken: 102
Total profit: Rs. 1,46,746/-
Approx. expenses including brokerage, taxes: Rs. 18,246/-
Net profit:  Rs. 1,28,500/-
Profit making trades: 69
Loss making trades: 33
Accuracy:  68%
Risk to Reward Ratio:  1:2
Max loss per trade limited to:  Max Rs. 3000 since 1st June 2017.
Max profit in a single day: Rs. 15550
Max loss in a single day: Rs. 4250 since 1st June 2017.

My objective was to earn around Rs. 25K per month from this short term trading but with God's grace and all your wishes, it ended up giving more than Rs. 40K a month.

Area of further improvement:
Maximizing profit from winning trades.
Increasing lot size from 1 to 2 lots from 1st July.

Click here for the monthly excel sheets for more details.

Nifty Future 29062017

Expiry day.  Opened CT full gap up.  There should not be any hesitation to trade this BPB setup after such an open.  On expiry days, RNs and BRNs are very significant levels.  A short trade as marked was possible on prices breaking below RN in the afternoon.  Same way a long trade could have been attempted at BRN.

The third trade as marked is not per the DP system.  If you remember, on last expiry I shared my observation with all of you.  Click here if you are not aware of it and read the last paragraph.  So the third trade was an attempt to catch the final move that it makes at 3 pm on expiry days.

In trading, we always learn from other traders and from our own observations that we make (i.e. from markets).  I made this observation of how prices move typically on expiry days and earned 30 points per lot today from that observation. If you are also making your own observations like this, keep sharing with others.

Wednesday, 28 June 2017

Nifty Future 28062017

After a good move yesterday, expected range bound move.  There were 2 setups possible to fade the range extremes.  BRN 9500 in between lost its relevance as the new range got formed, hence ignored.
As a DP trader, today was the perfect day to trade and earn around 40 to 50 points trading one lot.

Tuesday, 27 June 2017

Nifty Future 27062017

It opened at PDC but could not sustain and soon broke below all the important levels.  There was not any pullback so did not allow to enter.  Then it started consolidating and after a proper consolidation once it failed to move higher, it was possible to take a short trade as marked. This moved well.

Friday, 23 June 2017

Nifty Future 23062017

It opened around PDC and started to move down.  There were multiple levels just below.  Looking at the price action yesterday, there was an expectation of rangebound move and with good level of support just beneath, it is not a good idea to go for a BPB short trade.  Rather it makes sense to buy around 9580-85 level with the expectation of rangebound move and earlier price behavior at that level.  Have a look at this chart,

On the other hand, Bank Nifty presented a good setup to go for short after the open and also provided another opportunity to short at range high.

Thursday, 22 June 2017

Nifty Future 22062017

It opened full gap up and found support at PDH.  At this time, there was a TST setup to go long which moved well.  After that prices could not sustain above the broader range high 9700 and presented an opportunity to go short as marked.  If someone missed this setup, markets presented another setup to go short as BPB of PDC which also moved well.

Last time I shared with you an observation that I made regarding analyzing Order Flow with the help of position buildup.  Today, I share another observation of analyzing the Order Flow by studying volume on price charts.

If you observe volume closely, you would notice a tallest volume bar at PDL.  Why the max volume happened there? What does it indicate?  Any clue?

Well, "the highest volume after a prolonged directional price move indicates mostly exhaustion of the move and likely reversal of the move."  This kind of highest volume of the day generated towards the top or bottom of the day happens mostly because of Smart Money entering into the markets.  Smart Money never sell after a major selling and never buy after a major buying.  Rather they do opposite of that.  They are ready to absorb all the buying or selling that happens there and that is the main reason for the big volume.

Today prices had already traveled around 100 points from the top (prolonged move) and were testing an important level.  Also it was a level which the Smart Money defended strongly the last time prices visited there.  Have a look at the chart,

So next time when you see such a price movement at such an important level, be ready to place your orders there and join the Smart Money.  Today joining the SM there would have yielded 25 points in less than 15 minutes.

Monday, 19 June 2017

Analyzing Order Flow (Nifty Future 19062017)

Yesterday's analysis played out well.  It broke out the last range B at open indicating pullback or correction was over and prices were ready to move toward highs.  It in fact made the high of 9697 rewarding all the traders who believed in price reading analysis.

I would also like to share one important observation that I made today.  I discussed the same yesterday with Srinivas, a passionate trader during mentoring session, while discussing different ways to properly analyze order flow.  The observation is about reading the order flow when Nifty approaches the important level.  The order flow at the important level will give us a clue of likely outcome.  One of the ways to read the order flow is studying the building up of positions. " If large number of positions are built up at or around the level ahead of testing of that level, markets will often do something at that level."  This will produce a good trade opportunity.  Now lets discuss it on today's chart,

As you can see in the chart, there were 2 attempts made to break the important level, HOD.  First attempt was not successful, but the second was.  Now lets try to find out the reason behind this by analyzing positions that were built up ahead of these attempts.

It shows before the first attempt to break the level, there wasn't significant build up of positions, marked by red circle.  It means there was lack of conviction among the traders about the breakout. However, before the second attempt, there was significant build up happening, marked by green square.  Also there were few shorts built up just before the breakout which may fuel the rally on successful breakout, marked by red rectangle.  So the stage was set before the actual breakout and upon breakout others participated which generated high volume and made the breakout successful.

Highest intraday profit in stock futures

I feel very happy to share with all of you that today I made a highest single day net profit of Rs. 15000 in 1 lot of stock futures since I started trading in stocks few months back.  My personal earlier best was Rs. 8500 in a single day in April 2017.

In Voltas I regret booking out at target price of 478.  So far 11:35 am it has made the low of 474.25.

Click here  for performance report of this month.

Sunday, 18 June 2017

Nifty Future Next Week

As you might be aware, Nifty is currently in a very low volatility phase and hence moving less intraday.  Once we are aware of this information, what we need to do most is, adjust to this new information that the market is giving us and trade it rather than getting frustrated and doubting our trading system.  Since the markets are in compression mode, we need to satisfy ourselves with 10 to 15 to 20 points of profit in a trade because most trading opportunities will not be able to offer more than that most of the time.

Markets need a trigger to move and unless it is able to find that trigger, it will continue to refuse to move significantly.

Now with the above vital information about the markets, let's assess how it can possibly move next week.

First let's assess what the current picture is so that based on that current picture, we can build some expectations.

As you can see in the above chart, I have marked all the valid ranges that were visible in the chart.  It is very much apparent from formation of these ranges that markets are going up.  First 3 ranges formed one above another, then a pullback in the form of A, then it resumed its uptrend and formed 4, 5 and 6 ranges.  After that, currently it is in some sort of correction or pullback and has formed range A and B, one below another in the form of envelope.

So in nutshell, currently a pullback or correction is going on in an uptrend.  Once this correction or pullback is over, we can expect the trend to resume and prices to start going up once again.

Now having got the answer about what the markets are doing currently, lets assess where this current correction can stop.

In the above chart, I have drawn support and resistance levels.  9580-9540 area is expected to work as support based on prior price action.  If it proves to act as a support, then prices can bounce from there and go towards 9700.  If this area does not lend support, then prices can likely come to 9350 level.

With this information, now it can become much easy to trade next week along with our DP's, intraday range formations and reading of price action.

You can learn too from me how to draw the correct ranges, how to do proper assessment of what is going on in the markets and how to build expectations without any bias, provided you are really willing to learn.

Wednesday, 14 June 2017

Nifty Future 14062017

As discussed in yesterday's post, it did provide an opportunity to go long right at the last line of support, i.e. BRN 9600, not only once but twice.

Who showed the courage to buy right at the level without any confirmation?

Tuesday, 13 June 2017

Nifty Future 13062017

It opened within yesterday's narrow range but was able to break out PDH.  After that there was no follow-through and prices formed barbwire around PDH.  At 10 o'clock this barbwire got confirmed, so it was impossible to trade that tight range till around 2:30 pm.  At 2:30 pm it broke out but again produced no good setup to trade on short side as PDC, PDL and BRN were below it, a strong line of defense.  Have a look at below chart to understand the significance of BRN 9600 level.

Trading Guidelines for Success

Dr. John Keppler, an author of the book "Profit with the Market Profile" has beautifully given some simple guidelines for trading success.  Here they are,

Some simple guidelines that if followed, will immensely help to increase the likelihood of success and survival in the market. The following guidelines must be understood and taken seriously by all new traders:

  • Trading is not gambling or a game of chance. It is a skill and a discipline that can be learned.
  • Consistently profitable trading cannot be accomplished without a coherent understanding of the market and how it works.
  • Learning to trade requires developing both mental and psychological skills.
  • Never practice or try to learn to trade with real money.
  • Never trade with money you cannot afford to lose.
  • Never trade without a tested strategy. Every trade entry must have at minimum a target and an exit.
  • Risk management is an essential component of any trading strategy.
  • Never trade live with a strategy that was not extensively paper traded or practiced first.
  • Never trade in a market that you do not understand.
  • Never enter a live market until you are prepared.
  • Start small and grow.

If you are not making money, review the above guidelines and identify which ones you have violated.

Saturday, 10 June 2017

How to do proper trade management in stocks

I have just made a post on how I manage my trades in stock futures.  Click here to read this.

For stock futures from this month onward I have also made it possible for other traders to use Bracket order option which requires very less margin and there is no need to keep separate orders for SL and target. I normally give one or two recommendations like this,

Short AsianPaint at 1138 with SL 1142 and Target 1131

Also I have now enabled "One Day Free Trial" for trading with me in stock Futures. You will be given an access to my Telegram trading channel for one full day to trade with me, crosscheck past performance and evaluate accuracy and profit potential of short-term trading.

This June month is turning out to be a good month for trading in stock Futures.  Click here to check out the performance.  I also published a chart on Twitter describing what made me take trade in Ultracemco on Friday.  Here is that chart,

Thursday, 8 June 2017

Nifty Future 08062017

It opened just above PDC and got rejected again from BRN PDH zone.  The down move was very quick and did not present a good setup.  After that prices remained in a narrow range.  In the afternoon expected a good BO from this range but that failed.

Tuesday, 6 June 2017

Nifty Future 06062017

It opened full gap up but could not sustain and broke below PDC which presented a nice BPB short setup.  After that it just remained in a narrow range and refused to move out of that range.

Saturday, 3 June 2017

Stock Trading Performance May 2017

Here I am sharing with all of you my cash stock as well as stock future trading performance for the month of May 2017.

Click here for stock futures.

Click here for cash stocks.

This performance proves if traded with discipline and proper risk management, even less than 50% of accuracy can generate enough profits from short term trading.  Even after deducting brokerage, taxes etc stock future trading for the duration of couple of hours generated the profit worth 230 Nifty points.  In cash stocks the profits were even better.

I hope to improve this performance further in the coming months as my trades now have more than 1:2 risk reward ratio which will be improved further to 1:3 or even more in the near future.  Also I would try to take few trades in afternoon hours also so the full time traders trading with me can benefit from it.  Here while trading with me traders get full assistance in trading, How to place orders, when to exit, when to trial stop loss, when to scratch, etc. If traders desire, they can even learn the trading strategies that I apply for stock trading.  The only objective of trading with me is to help you to be a successful trader. We are working on a proper trading plan with limited risk and less trades in a day.

Friday, 2 June 2017

Bracket Order - Very Useful in Day Trading

Bracket order is the kind of order placement utility which allows us to enter into the trade with predefined stop loss or trailing stop loss and target price.  You can read more about it and how it works by clicking here.

Many a times bracket order becomes quite useful when the volatility is very high and we need to enter and exit quickly. Also it allows us to trail stop loss and help manage the trade better.  No need to say that it also requires us to keep very little margin, as low as Rs. 11K, as our risk is managed.

In stock trading where the price movements are very quick and sharp, I would always like to block my profit whenever I am in the profit.  To play safe I feel it is better to trail stop loss at every Rs. 1000 profit in stock trading.  If I enter into a trade at 408 and its lot size is 1000 and stop loss is 406 then if price moves in my favor lets say till 409, I would trail stop loss to 407 from 406.  At around Rs. 2500 of profit, I would also like to shift stop loss to close to entry point because if prices reverse from there I can close that trade with no profit, no loss.  All the management of trade like this becomes much easy with Bracket orders.

Here is an example of Axisbank bracket order placement.

I will place the order as shown like this. Rs. 2 stop loss, double target and half of the value of stop loss in trailing stop loss.  This order will automatically trail my stop loss at every 1 Rupee move in my favor till the target is achieved.  I will remain tension free without worrying about price fluctuation.  I also don't need to worry in middle of the trade about what will happen if my PC breaks down, what will happen if my broker does not pick up the phone to square off my order, what will happen if there is no internet connectivity, etc etc.

If the Bracket order is not there, I will require to keep observing the prices and frequently modify the SL orders and also keep separate target order.  Also taking multiple trades at the same time and keeping the focus on trade management will become a big issue without the Bracket order.

So all in all, Bracket orders are made for the intraday traders like us who like to trade in high risk instruments like futures and options but still want to control the risk and manage the trade better.

Nifty Future 02062017

This is how I tried to analyze the price action in morning session.

Prices broke at open the narrow range that it formed over last few days.
Once such kind of consolidation is broken out, we can expect follow-up or continuation, but unfortunately that did not happen as prices were unable to move higher than first 3 min candle.
Since the prices are not showing momentum after the BO, we can expect range bound moves for some time.
So now what can be the likely range for range bound movement?
Well, it can be 1) 9650 to 9670, 2) 9640 to 9670, 3) 9630 to 9670. I have rounded off the numbers.

So wait and see what range actually plays out.  Whatever range prices confirm, we can trade that range.  Also we can trade that range with keeping overall trend in mind which is up.  If the trend is up, it is good for us to buy at range lows.

So summing up the plan, wait for the range to get confirmed. Once it gets confirmed, wait for a good pattern at or around range lows/DPs to go long.  Also always be ready to change the plan if prices start behaving differently.

Summary at EOD:  Prices behaved as analyzed and remained in the range whole day, 9650-9670 without giving an opportunity to trade.

Thursday, 1 June 2017

Today's Trades 01062017

Nifty is stuck in a narrow range.  Yesterday it traded in a 30 point narrow range whole day.  Today since it was also trading close to PDH in the morning, it was expected to break out but it disappointed. In the afternoon it tried to break PDL BRN and this time too it failed. Big picture analysis suggested BRN a good level to trade.  Have a look,

I also traded in few stocks and I would like to share with you the setup that emerged in morning in Divislab which was traded in cash.  Have a look at the Big Picture chart comprising price action of last 6-7 days.

If we try to read the story the prices tell us remaining unbiased, we can find a good setup such as this and benefit from it.

Some sort of similar kind of setup was there in Sunpharma.  Here the volume part was missing. It was traded in futures and moved well too.

Here is the snapshot of trades that were discussed.