Self derived knowledge builds a long term foundation to profitable trading
Self derived knowledge builds a long term foundation to profitable trading.
Your own understanding of markets and nature and magnitude of moves helps you build trading strategies and fine tune or change them when markets change.
Much like any other field to become good at trading you have to study historical moves and apply lessons from that to current conditions.
Studying immediate past winners tells you what is working in the current market conditions and what kind of setups to look for to find those kind of winners.
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.
Doing this regularly alerts you to subtle changes in setups or market environment. doing it daily also helps you see new setup variations.
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 15 to 30 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
Bearish 8% plus or 5 dollars plus in 5 days
c/c5<.92 or c5-c>5 and minv3.1>100000 and c>=5
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. If you study these moves for 3 months you will discard lot of beliefs and often repeated phrases.
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