Wednesday, April 4, 2018

Totally goofed up, but the day saved me!!!

If I made a profit today, it's totally because of the market. None of the credit can go to me, because I goofed up big time today.

I did follow all my pre-decided trailing rules today - it were the rules that were not good enough. I have been checking my recent charts. I find that the current rules are ok for periods when the momentum and volatility are normal or low.

But for periods when the momentum/volatility are high, I need a different set of rules for trailing the Stop Loss. In fact, I had already considered the rules to be applied for such periods, only I was yet to incorporate them into my pre-decided Trailing Stop rules.

The rule is simple:
During periods of high momentum/volatility/volume activity, do not trail aggressively. But as soon as the momentum/volatility/volume activity returns to normal from high, trail aggressively.

This rule could have kept me out of the whipsaw, that cost me nearly 60 post-brokerage points. Today, instead of following this rule, I tried to trail aggressively during the momentum/volatility period. Off course, it's not as if this rule is a magic wand. It will have to be proven on days of high volatility. Trailing during periods of high volatility is fraught - as I had cribbed after missing the 3 PM fall on expiry day.

The other thing is that though I was on twitter all through the day, I was not looking at the news until quite late in the crash. I had no idea about China's retaliation to the US tariffs. So, going forward, I will try to be off random tweets during trading hours, and maybe follow CNBC on twitter. That would be good for my trading, and also good for my eyes.

Nifty M3 Price Action Chart
Nifty M3 Price Action Chart

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