Studying past winners can improve your trading significantly

Developing your own unique understanding of the market is key to profitable trading. Studying immediate past winners tells you what is working in the market and what kind of setups to look for to find those kind of winners.

This kind of study should be regular habit. Knowing what worked ten years ago may or may not be useful, but knowing what is working in last one week, month, quarter or year is more helpful as it reflects current market situation. 

Historical precedent analysis is a common theme you will see in most successful traders journey to profitability.

Prioritising this kind of study is important. Lot of time we get caught in day to day trading and do not spend sufficient time on developmental work that will generate new setup ideas and help us to be in tune with the market.

I prioritise this kind of an effort at start of the day. First thing in the morning I obsessively study stocks that make 8% moves and 5 dollar plus moves in 5 days and study stocks up 80% plus from 52 week low. This is a daily habit.

Doing this regularly alerts you to subtle changes in setups or market environment. doing it daily also helps you see new setup variations.  

As i trade two types of setups, one looking for big moves and another looking for short term moves, I focus my efforts on studying that timeframe and magnitude move. Those are the kind of stocks I want to be in next week or next quarter.By studying them daily, I remind myself of what works and what to look for in swing moves or longer term moves. 

When you do it over and over again you start finding small nuances to look for in successful breakouts. The process also help to embed in your brain these setup patterns. Sometime while going through them you start questioning some of your own guidelines for selecting trades or you start questioning commonly touted market rules.

One of the best reason for doing this is it is based on actual past winners in immediate time frame. It gives you lot of information on what is working currently. Unlike that you see lot of commonly touted patterns are based on this that may have stopped working.

Most days it takes only 10 to 15 minutes to do this. Some days while going through them you find something and then it can trigger a deeper study. Then it can become a project to develop new trading setups.

In order to master a setup or an idea you need to be at it day in and day out. If you do it for few months , you see things others may not see , or gain insight others may not have. If you do this for six month on your own you will gain more insight in to markets and more importantly find very profitable setup and you will own it up as it is based on your own unique understanding of it.

Study these 8% moves closely to see how the move happens.

What was the setup before the start of the move

What was the 5 day action before start of this move

Was the stock up or down before start of the move

Was it near 52 week high or low

what kind of Trend Intensity it had

what triggered the move

what kind of breakout

How much was it up on first day of breakout

what kind of volume on breakout and pre breakout and post breakout

how did the move progress

what was the magnitude of move in first 3 days

and so on...

A daily effort like this cumulatively builds your understanding of the setup you trade.

In order to do this I run 2 scan for  bullish and bearish.

Bullish 8% plus or 5 dollar plus in 5 days

c/c5>=1.08 or c-c5>5 and minv3.1>100000 and c>=5

Stocks up 80% plus from low

c/minl252>=1.8 and minv3.1>=100000

Bearish 8% plus or 5 dollars plus in 5 days

c/c5<.92 or c5-c>5 and minv3.1>100000 and c>=5

Stocks down 50% plus from high

c<=.5*maxh252 and minv3.1>=100000

After running the scan everyday I study these moves. The first thing in the morning I review these candidates. Write down my observations, capture images of some of them, put notes on those setups and so on.

A daily study of past winners can substantially improve your trading.


Mac said...

Hello Pradeep, here is your big fan speaking; your common-sense approach to observing the markets, as I'd call it, is what I love (and why I am going to sign up as a member soon) and I sincerely hope you are doing well on a consistent basis!
And one question I'd like to ask - you are using the TC 2000 (am I correct?) for running your scanning queries. Now, will I be able to use this tool (for analytical purposes only, that is) in a 'stadalone' mode without having to open an account with a select broker and all this for more than a trial period? If not, could you recommend a different tool capable of performing identical analytics, please?

Many thanks,

Unknown said...

Hello, I love your website! It has been very informative, I have a question for you. When you do those scans and you find these past stocks, are you adding them to your watch list for future movement and possible positions or are they past moves that you just want to study to get yourself trained for those same moves in real time to capture on other stocks? I hope that makes sense? I wan to get a better understanding of your study process.\


Pradeep Bonde said...

past moves that you I want to study to get trained for those same moves in real time to capture on other stocks. Based on studies like this I have developed setups for finding similar trades.

Unknown said...

Hi I wonder where can I find the past winners? thanks