[icecool]

I was shown door

This is how my stop placed just below 130 triggered



In hindsight, that candle where my stop for the remaining half triggered, appears to be a perfect shakeout. But discipline is discipline. Stop has to be revised only upwards and not downwards, since this is a long trade. I notice that there was a valid 1 – 2 – 3 pattern when my stop was hit. Plus this pattern took place right after hitting the area which I had noted earlier at the start of the day as probable resistance area. Plus, there was a break of that demandline as well. Once I see these things in realtime, I shall certainly close my long trade rather than guessing as to whether this candle will be a shakeout or not.

That is how my trade ended.

Lessons learned are
1. I have to learn much more as to trade selection, especially risk reward ratio.
2. I have omitted accounting for slippages and commission at the time of planning the trade.
3. Whether my stop placement technique could have been managed in a better way is still to be examined and if necessary, fine tuning is to be done.
4. On trade management side, I have not considered adding on to my position (i.e. pyramiding my position) once the trade moves in my favour. Since, I am yet to study this aspect, I did not dare to attempt to do it in this trade.

This is how the chart looked just 9 minutes before the close of the market. Just for curiosity and to for record purpose

[DbPhoenix]

Why Crompton Greaves? Whatever happened to ICICIBANK?

[icecool]

Originally Posted by DbPhoenix »

Why Crompton Greaves? Whatever happened to ICICIBANK?

I have not stopped following ICICIBank. While going through charts in the morning, I just came across Crompton Greaves chart and found interesting. This trade was just accidental and also to test whether I can form and execute any trade plan at all. Blowfish had pointed out that I must have a proper trade plan and I am lacking there.

[DbPhoenix]

Originally Posted by icecool »

I have not stopped following ICICIBank. While going through charts in the morning, I just came across Crompton Greaves chart and found interesting. This trade was just accidental and also to test whether I can form and execute any trade plan at all. Blowfish had pointed out that I must have a proper trade plan and I am lacking there.

Not sure what you mean by "trading plan". I may have missed this, but what are your reasons for selecting these stocks in the first place? What is your primary trading goal (preferably something more specific than "to make money")?

[icecool]

Originally Posted by DbPhoenix »

Not sure what you mean by "trading plan". I may have missed this, but what are your reasons for selecting these stocks in the first place? What is your primary trading goal (preferably something more specific than "to make money")?

Db,
Very insightful questions. Thanks.

Honestly, all that I could gather and believe by "trading plan" is how to select stock for trading (i.e. identifying trading opportunity), devising an entry method, due attention to risk, management of trade (if entry is made) and exit.

Money making is one of my goal, though not the most important goal. Right now I am trying to read the charts correctly and to devise a "trade plan" as I have understood that concept and as I have explained earlier. I am concentrating more on survival, i.e. preserving capital even after having several trades and to learn lessons from each and every trade I take in this process. I am not aiming for any homerun. I have noticed that there is vast difference between paper trades and real trades. I am also trying to control my emotions by taking real trades.

What are things that I have missed?

[DbPhoenix]

Originally Posted by icecool »

Db,
Very insightful questions. Thanks.

Honestly, all that I could gather and believe by "trading plan" is how to select stock for trading (i.e. identifying trading opportunity), devising an entry method, due attention to risk, management of trade (if entry is made) and exit.

Money making is one of my goal, though not the most important goal. Right now I am trying to read the charts correctly and to devise a "trade plan" as I have understood that concept and as I have explained earlier. I am concentrating more on survival, i.e. preserving capital even after having several trades and to learn lessons from each and every trade I take in this process. I am not aiming for any homerun. I have noticed that there is vast difference between paper trades and real trades. I am also trying to control my emotions by taking real trades.

What are things that I have missed?

A trading plan encompasses far more than just selecting a stock and trading it, i.e., strategy and tactics, just as opening a restaurant is much more than just calling your supplier and ordering $2000 worth of "food". You say you are trying to "read the charts correctly", but to what purpose? Why stocks? Are you looking for something to hold for days? weeks? months? years? Or are you interested in daytrading? What kind of daytrading? Swing trading? Scalping? Trend trading? I ask because unless you answer these most basic questions for yourself, you will very likely end up trading the wrong stocks at the wrong time and thus lose your capital.

Using your first choice, you selected a bank. Why? You also took a macro view, from monthly to weekly to daily to intraday, which is all well and good, but, after all this analysis, you seemed prepared to settle for only a few points profit. Why? You also acknowledge that when I reflect back, I notice that there was no definite trade plan in my mind at the time of entering the trade. I tried to develop one as and when the chart developed. There was no definite holding period (i.e. whether to take intraday trade or delivery trade) nor the exit method was fully satisfactory. Now I am asking myself why did not I wait for the break of the trendline or for the formation of lower high pivot? These are all good questions, and I suggest that you stop trading with real money until they are answered. There are traders who can take a trade simply because it seems like a good idea, and you could very well be one of them. Only your brokerage statement will tell. But if you fear that you are not, then developing, testing, and implementing a consistently profitable trading strategy will be a necessary prerequisite to putting your money at risk with "real" trades and real money.

[icecool]

Db,

Thanks for the valuable inputs. Yes. Now I notice that there are many many more things that I have to answer before developing a trading plan. In fact, I had never thought of these questions earlier. Now I realise that I must answer them for my own good and for my own survival.

Now I am back to drawing board. I shall try to find answers to the questions raised in your post.

[DbPhoenix]

Originally Posted by icecool »

Db,

Thanks for the valuable inputs. Yes. Now I notice that there are many many more things that I have to answer before developing a trading plan. In fact, I had never thought of these questions earlier. Now I realise that I must answer them for my own good and for my own survival.

Now I am back to drawing board. I shall try to find answers to the questions raised in your post.

Those who are new to this often have a natural sensitivity to the thrusts that price makes on its way through the day, and since they have not yet racked up the losses that will interfere with their judgement later on, they can be much more likely to act on what that sensitivity is suggesting they do. After they read all the books, take the courses and seminars, watch the DVDs, etc, they'll second and third and fourth-guess themselves so much that they'll forget they ever possessed that sensitivity in the first place and turn to something else less natural to guide them, e.g., a canned "approach", or an indicator or two or six.

Therefore, though thinking about these questions may be beneficial, don't start doubting yourself. You may, for example, have had perfectly sound reasons for choosing a bank. You may have had perfectly sound reasons for choosing this particular bank. But you should get them out there and acknowledge them so that if all of this works for you, you will stand a better chance of finding something else that works as well once this particular stock goes into hibernation.