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Thread on risk management and psychology focused on discretionary day trading for beginners:
1. Planning.
2. Position sizing.
3. Execution.
4. Retrospective learning.
Thread on risk management and psychology focused on discretionary day trading for beginners:
1. Planning.
2. Position sizing.
3. Execution.
4. Retrospective learning.
Planning:
a. Have a fixed number of trades you will take in a day. Don't exceed 4 or 5 trades in a day.
b. All charts should be prepared before market opens for the next day and trades should be decided. Decide Entry/SL*/2 targets.
a. Have a fixed number of trades you will take in a day. Don't exceed 4 or 5 trades in a day.
b. All charts should be prepared before market opens for the next day and trades should be decided. Decide Entry/SL*/2 targets.
c. Avoid live market analysis since adrenaline rush/excitement/FOMO will cloud your judgement.
d. Set price alerts as per your analysis in the system.
d. Set price alerts as per your analysis in the system.
Position sizing:
a. When learning, use only 10% of your capital. Withdraw rest to bank.
b. Allocate the cap equally to the trades planned. Don't exceed 2x margin.
c* If you cannot manage 10% of your cap with 2x margin, there is no way you can manage 100% cap with 3-4x margin.
a. When learning, use only 10% of your capital. Withdraw rest to bank.
b. Allocate the cap equally to the trades planned. Don't exceed 2x margin.
c* If you cannot manage 10% of your cap with 2x margin, there is no way you can manage 100% cap with 3-4x margin.
d. Everyone tells not to use margin but that is practically impossible for most so better to use it smartly and to our benefit.
Execution:
a. In live market, have only the stocks decided earlier on your watchlist along with benchmark indices.
b. Don't keep looking at charts and analyzing. Your analysis is done earlier.
c. Wait for price alerts to trigger.
a. In live market, have only the stocks decided earlier on your watchlist along with benchmark indices.
b. Don't keep looking at charts and analyzing. Your analysis is done earlier.
c. Wait for price alerts to trigger.
d. When alerts trigger, enter and immediately place SL and set an alert for target.
e. Don't use CO and BO since they won't allow you to part book profits at target and trail the rest.
f. Don't exit a trade unless SL or target alert triggers.
e. Don't use CO and BO since they won't allow you to part book profits at target and trail the rest.
f. Don't exit a trade unless SL or target alert triggers.
g. If target triggers, book 60-70% and trail the rest moving SL to cost for 2nd target.
h. Don't look at MTM or analyse a trade on tick by tick basis. It will mess with your head.
h. Don't look at MTM or analyse a trade on tick by tick basis. It will mess with your head.
Retrospective learning:
a. Take snips of charts prepared before market and after market.
b. Combine them and look how your analysis came through.
c. Maintain a journal with details of all your trades.
a. Take snips of charts prepared before market and after market.
b. Combine them and look how your analysis came through.
c. Maintain a journal with details of all your trades.
Additional points:
a. Don't take trades not planned earlier. Your main aim is to build a path with discipline. Money will follow. It will rain if you are disciplined and consistent.
b. Stick to your analysis and don't look into SM like Twitter or telegram when trading.
a. Don't take trades not planned earlier. Your main aim is to build a path with discipline. Money will follow. It will rain if you are disciplined and consistent.
b. Stick to your analysis and don't look into SM like Twitter or telegram when trading.
c. Don't get carried away by MTMs posted by people on twitter and increase your leverage.
d. You never know how much capital and effort that person put in to get that much profit/if he earns so much regularly/if it was a one off day by luck/if it was photoshopped.
d. You never know how much capital and effort that person put in to get that much profit/if he earns so much regularly/if it was a one off day by luck/if it was photoshopped.
e. No two traders mindsets and risk appetite can ever be the same.
f. Master one segment first preferably cash before thinking of futures or options.
e. Even F&O traders do analysis on cash charts. So better learn TA properly and get discipline before jumping into it.
f. Master one segment first preferably cash before thinking of futures or options.
e. Even F&O traders do analysis on cash charts. So better learn TA properly and get discipline before jumping into it.
Your comments/feedback is welcome. Like and re-tweet if you find it worthwhile.
Next thread will be on channels, wedges and triangles price patterns.
- Abishek
Next thread will be on channels, wedges and triangles price patterns.
- Abishek
