Thursday, June 30, 2016

Too little, too late: Expiry Day - Day Trading: June 30, Intraday

Overtraded. Did not stick to my plan. Got stuck in a bad whip zone on Expiry Day. The move in the later half could not do much.

Nifty M3 Candlestick Chart

The plan was to only take counter trend moves or fake outs, but the fear of missing moves overcame me.

Trading Expiry Days is always tricky. Market can go to sleep, or jump up with a start - as in today's chart.

Day began with a gap up - which is strange for an expiry day. That got me on the edge, and I took entries in both directions hoping for a directional move. Took 6 losses while the market was dull. By the time the move came, I had been cut me up badly. I could have maybe booked better in the dip bar in the last trade...

Rest of the story at my live tweets... click image below to go to the twitter thread

Live Tweets @BakwaasTrading
Live Tweets @BakwaasTrading

Thursday, June 16, 2016

Sailing against the wind - Day Trading: June 15, Intraday

Wednesday was potentially good day turned into a bad day, quite deliberately at that.

Nifty Discretionary Trades

Trade 1: Long green bar right at open, and I wanted to go long in the opening second. That did not happen, and the price pulled back slightly below 8150. I thought that I had saved a few points, but when the price came back to 8150, I took the long.

Trade 2: Reversed to short as a Breakout Failure of 8150, looking for a gap closure. Loss. Stop Loss was at 8150.10 instead of 8150. Filled with a slippage of 5 points.

Trade 3: Long on Breakout Failure of range. Could have improved my entry by a few points. This trade moved very slowly and broke 8150. This was followed by a period of volatility in Nifty50 Futures, but calmness in Nifty50 Spot, with Spot staying firmly below 8150. This indicated that Futures would spike whenever Spot broke 8150. Booked at spike.

The Short Bias: The spike was followed by an ascending triangle. Though this is generally bullish, I was looking to short a Breakout Failure of the upper range. The upper range finally broke with a big spike, and there was no Breakout Failure, but I stayed with my short bias.

Day's trades - Live Tweets
Day's Trades - Live Tweets

My first opportunity to discard my bias was then the triangle broke on the lower side. This was a potential long setup, but I decided to hold out for a Breakout Failure of the upper side.

The second opportunity to discard my short bias was the big spike. I had was expecting a regular Breakout Failure, not this huge spike. Besides, there was no Breakout Failure.

The rest of the trades, sailing against the wind: Trade 4 was a short on loss of momentum. Did not work. I shorted right in the spike bar. If I had ignored my bias and been patient, then the next inside bar could have been an opportunity to go long.

Trade 5 was taken as a Breakout Failure of 8200. I was not trading the news. I came to know of the news that caused the breakout only after the Trade 5 entry. These news breakouts can move either way after the spike. Today's news set the trend for the rest of the day.

Trade 4 and 5 could be justified in some manner, but there is very little justification for Trade 6, except something that reinforced my short bias - for no good reason. The Stop Loss for Trade 5 was 8201, but the fill happened near 8199. That made attempt one more short at 8200, but even then I should not have move the trigger above 8200... but the bias.

Trade 7 was a last attempt to go with the trend. Failed.

Markets seem to be in red again. Let's see what today holds. For the moment, I am continuing with discretionary trades.

Wednesday, June 15, 2016

Another loss - Day Trading: June 14, Intraday

I am almost done with this phase of discretionary trading... but not yet. Another loss day. Frustration. But not as bad as Monday. A single win can change the day's mood.

I was looking at one my old trading charts. That is where I want to be, and that is what I attempted to do. Here's how it turned out...

Nifty Price Action Trades

The missed move: It opened in yesterday's range. I was ready to go long as the price approached 8100, but did not take the trade waiting for a better setup.

Live Tweets of Day's Trades
Live Tweets of Day's Trades

Trade 1: My bias was long, but I took the short trade with the hope that price would fall back into range and then do better. It did, and I was able to exit for a profit, but only because I ignored move in my trading time frame. The move was smoother in higher time frame, but was jerky in my trading time frame. And there was more steam in that move after my exit.

Trade 2: I thought that this was a good breakout failure, but lost. Did not attempt trailing stop. The exit could have been a reversal point, but I ignored.

Trade 3: Hoping for a crash (with momentum), since the trend is down, but it turned into a Breakout Failure of Previous Day's Low.

Trade 4: Attempted an early Breakout Failure of 8100. Failed. Stopped trading for the day.

Monday, June 13, 2016

In the dumps, again - Day Trading: June 13, Intraday

Today was one of the usual days for me, where I lose a lot and wonder what I should do next.

It doesn't appear that this phase of discretionary trading will last long. Maybe, I overtraded. Maybe, I did it all wrong. Maybe, it's just one of those days. I am not even sure.

Nifty Price Action Chart

Gap down: The day opened with a large gap down. Price hung around 8100 Nifty Spot. If not for the 8100 BRN below, I would have shorted below the range.

Trade 1: When even after the gap down, price could not reach 8100 for a long time, I took a long after a range compression in the bottom. Loss.

First Trade Entry - Live Tweet
First Trade Entry - Live Tweet

Trade 2: Breakout Pullback of 8100. Another loss. In both trades 1 and 2, I could have trailed tighter.

Trade 3: Breakout Failure of 8100. This one burned me quickly.

Trade 4: Trend Continuation (or is it Breakout Pullback, I am not sure of the terminologies) entry. Unlucky to have my stop hit. This is the one trade in which I tightened my Stop Loss early, and this is the one trade on which it would have been better not to. Damned if I do, and damned if I don't.

Trade 5: Breakout of Day's High. Maybe, I could have bettered my entry by a couple of points. I was hoping for a gap closure. False hope. Maybe, I should have scalped this one to reduce today's pain, but no - I live on hope.

Sunday, June 12, 2016

The Surprise Side - from the Phantom of the Pits

Here's an excerpt from the PHANTOM OF THE PITS. I know that this is something that I should know about trading, but I never thought about it this way. It's (instinctive) common sense to look both ways before crossing the road, regardless of what the rules say.

The Surprise Side

POP: When the walk light comes on, assume there is traffic that will run the red light at each intersection you cross. What do you do now before you cross the intersection?

ALS: I would double-check and look both ways before crossing.

POP: Of course, that is the correct answer -- you know what I am after. Now, just because you looked both ways before you crossed and each time you cross you looked both ways and each time there wasn't any traffic that ran the stop light, is there any reason to stop looking each time you cross the intersection? Your answer, of course, is no, you won't stop looking.

What kind of limits did I just give you? Are they life-saving limits before you cross the intersection? Yes, they certainly might be, but you will never know that if you follow the restriction each time you cross the intersection. You can't know if it saved your life for you prevented finding out by looking each time.

But what if you don't look and you lost your life. You certainly won't know you should have looked either.

Does the restriction tell you that, if you look, there will never be any traffic running the stop light? No. Does your experience of crossing and looking tell you what the probability of someone running the light will be? You can make an assumption based on your knowledge at this point. What does an assumption do? It actually presents criteria based on proven facts that are a possibility. It in no way gives you a high probability or low probability but the best answer you can present.

I don't want to lose you in this thinking but to point out that it's the same in trading as in crossing an intersection. We need to make our best assumption of what is possible. We must plan for that assumption in trading as long as it is a possibility and not just when it is probable. This is a very important point in understanding Rule Number 1 correctly!

If you were never to look at the intersection until proven wrong for not looking, wouldn't it be too late? It is the same in trading. You must protect yourself from any possibility in trading and not just protect yourself when the probabilities are high.

This will be the surprise side in trading The surprise side is a possible outcome but not a very high or likely probability like today's grain trade. When someone gives you a gift, you are surprised by it. Getting that gift was not a high probability. However, you are prepared for that surprise because you say, "Thank You!"

Most traders plan only for the probability side and that, to them, is always what they consider the winning side. This is the biggest mistake you can make in trading. Instead, you must plan for the losing side.

Reversal day - Day Trading: June 10, Intraday

Friday was a great reversal day. On Thursday, CNBC was telling us about how it was the first significant fall after the rise from 7700s. On Friday morning, there were analysts on the channel revising estimates upwards, and the afternoon there were analysts on the channel revising estimates downwards.

Nifty Price Action Chart

Missed upmove: In the pre-open, Nifty was below 8200, so I was hoping for a long entry around 8200, even before the trading session began, but I was fooled out of the upmove.

Day Trades - Live Tweets
Day Trades - Live Tweets

After open the VWAP stayed around 8216 for a long time, and I had no ideas while it was ranging. Then the price started creeping up slowly, and I still had no plan on how to enter.

Trade 1:  I saw a Pin Bar after some time, and took the counter-trend short. Even when price got back to creeping up again, I was hopeful that it would not crack the tail of the Pin Bar. And if it did crack, I could still look for longs above 8250. But crack it did, and how!!

After the spike: As it got close to 8300, it was obvious to start looking for shorts, but I decided not to trust my quick fingers. Then there was that period within the spike bar, where I could have gone either long or short.

Trade 2: Finally, I decided that the price had cooled down and went counter-trend short. After some hesitation, there was that crash. Moved my stop to just above 8200, hoping for a further crash, but the stop hit.

Trades 3 & 4: Made a couple more attempts to go short with the bias at pivots. Both were losses, but Trade 3 has an MFE of +14 points, but I still made a loss on it.

Failed to book profit at extreme - Day Trading: June 9, Intraday

The day open looked like a continuation of Wednesday's range, but then it broke lower without a hint. Or if there was a hint, I never got it.

Nifty Price Action Trading

Trade 1: After the fall, there was some volatility - all below 8250 - followed by a range contraction. I went counter-trend long above the contraction, hoping for a reversal of the fall.

Trade 2: Reversed to short when there was a Breakout Failure at 8250, since it was with trend. Exited when price bounced from the near the day's lows.

Trade 3: The bounce did not reach 8250, and my bias was short because of the morning fall. Kept an open short below the pivot, that triggered.

Day Trades - Live Tweet
Day Trades - Live Tweet

When the price closed in on 8200, I was ready to lock in at 8206, but then decided to waited for a breach of 8200 to do so. That never happened and the moment was gone. Exited much later for paltry points. It's good to lock profit at lows and highs, but there is always the anticipation that the momentum might further extend the move.... delay and the moment is gone. Book or reverse position, and you might regret (or not).

Trade 4: After the fall, the price started moving up again. I would have gone long, if I saw a good setup. However, once it dipped below 8229, and started moving up again, my mood turned short.

Finally, the reason for going short was a glitch in my chart, but (to my credit?) I did not cancel that trigger.

My new avatar in discretionary trading - Day Trading: June 8, Intraday

Since Wednesday, I have started my next phase of discretionary trading. I do not know how long this phase will last since I am given to system hopping. I hope to update my trades on this blog as well as real-time on twitter. The updates on this blog will be delayed, but I will try to update... until I don't ;)

Nifty Price Action Trades

Trade 1: It was a dull open, and I took the first Breakout Failure of the opening range. The trade failed, but the BOF that followed broke the other extreme of the range went near 8300. The second BOF was also a BOF of Tuesday's swing low, whereas the first BOF had not touched that swing low.

Time to go Short - Live Tweet
Time to go Short - Live Tweet
As the price hovered below 8300, I was planning to short, especially if it touched 8300. Finally, did not take the trade. Price fell and broke the low of the day.

I was not interested in the taking the next Breakout Failure because of the range above.

So, Wednesday ended up as a single trade day.