Thoughts on Managing Your Trade

This chat on or about 5/10/2009

19:28 The Donald: thanks, I’ve got a bad habit of exiting too soon. Trying to see if some different settings will help.
19:29 osho: it may not be due to chart settings
19:29 osho: charts are neutral like markets
19:29 osho: it’s we who mess up stuff
19:30 osho: so you have to find out what is the sequence of thoughts that trigger you to get out of the position
19:30 osho: also market is always right and so very important no personal opinion
19:30 osho: it has been seen in most cases
19:31 The Donald: http://charts.dacharts.net/2009-05-09/VK557321-01.png
19:32 The Donald: http://charts.dacharts.net/2009-05-09/VK557321-03.png
19:32 osho: we are responsible for imposing our opinion which blinds us from seeing what market is presenting to us
19:32 The Donald: yeah, that’s definitely most of my problem
19:33 osho: there is a solution to that
19:33 osho: very easy one
19:33 osho: once you enter a position
19:33 osho: and you have determined the general direction
19:33 osho: of the market
19:34 osho: you stay in your position until those requirements are met
19:34 osho: which means that you have follow each and every candle that is formed after your entry candle
19:34 osho: yep
19:35 The Donald: requirements?
19:35 osho: like for example
19:36 osho: once you enter the yellow candle that was formed after 11.48
19:36 osho: on your chart
19:36 The Donald: I see it
19:37 osho: look at how candles have systematically formed higher than the previous one s
19:37 osho: pay attention to the body
19:37 osho: do not worry about wicks
19:39 The Donald: my next book on the list to read is one on price action
19:41 osho: yep price action is absolute requirement for day trading
19:41 The Donald: so where would you exit on that position
19:41 The Donald: yellow candle?
19:42 osho: if I have mulitple postions
19:42 osho: which I normally take
19:42 osho: I would get out 1 contract at the HH
19:42 osho: you see the spike
19:42 osho: in that candle
19:43 osho: usually this spikes are single trades with big volume
19:43 osho: these are one time fill or kill trades
19:43 osho: now as long as you have the candles forming above the black ma
19:44 osho: you stay in the position
19:44 osho: also you need green candles
19:44 osho: the moment you see a red candle
19:44 osho: you get cautious a
19:44 osho: and if it crosses the black ma line you get out
19:45 The Donald: wait for a red candle close?
19:46 osho: yep
19:46 osho: the idea is if the market is bullish traders will be willing to pay higher price to get in the move
19:47 osho: and that is what we want to see
19:47 osho: what the majority is doing
19:47 The Donald: makes sense
19:47 osho: for they move the markets
19:47 osho: as an individual all we can control is entry
19:47 osho: the rest is up to the market
19:48 osho: so you could have a good entry
19:48 osho: but if the majority do not agree with you
19:48 osho: the market will go down
19:48 osho: and that is when you get out
19:48 osho: no questions asked
19:48 osho: now as per your chart
19:49 osho: every yellow candle it formed
19:49 osho: market has responded
19:49 osho: the extent may vary
19:49 osho: so one thing is for sure that yellow candle is giving you good entries
19:49 osho: so all you have to do is to see if the market is responding to it aggressively or not
19:50 osho: by watching the volume etc
19:50 The Donald: yea
19:50 osho: and also the formation of the next candle
19:50 osho: the idea is if the others agree with you
19:50 osho: than you will see higher candles
19:50 osho: if they do not
19:50 osho: than your entry has failed
19:51 The Donald: I haven’t tested it yet but it looks like it would be pretty good
19:51 The Donald: I’ve got a dinner date
19:51 osho: yep
19:52 nini: hi osho
19:52 osho: sure no problem
19:52 The Donald: I appreciate the advice
19:52 osho: you are most welcome
19:52 nini: I have reading your post
19:52 The Donald: see you monday
19:52 osho: donald hope it helps you
19:52 nini: questiontion
19:52 osho: hi nini
19:52 osho: see you
19:53 osho: yes nini
19:53 osho: go ahead
19:53 nini: when you enter the market, and thing it not work out
19:53 nini: how do you decide to get out,
19:54 nini: or let the market take you out
19:54 osho: you get out when the market is not doing what it is supposed to do
19:55 osho: for example let us take donalds chart
19:55 osho: http://charts.dacharts.net/2009-05-09/VK557321-04.png
19:55 nini: ok
19:56 osho: once you enter the yellow candle which formed right after 11:48
19:57 osho: if you see a red candle forming after the entry and crossing the black ma line
19:58 osho: that is an indication that your entry is failing
19:58 osho: now if you see another red candle below the black line
19:58 nini: are you get out right away, no waiting
19:58 osho: than it is considered that your entry has failed
19:58 osho: yep
19:58 osho: you have to
19:59 osho: other wise you will end up losing more money
19:59 osho: and not only that, it will effect you mental balance
19:59 nini: agree
19:59 osho: and that would mess up your other trades etc
20:01 osho: it is very important to know what is exactly in our control and what is not
20:01 osho: market is neutral it can move in any direction
20:01 osho: it all depends on the participants at that point
20:01 osho: once an entry is taken
20:02 osho: great emphasis has to be given on how the market is treating your entry. is it acknowledging it or not
20:03 nini: what kind of chart do you use, tick , volume or minute
20:03 osho: I use only 1 time frame chart
20:03 osho: 1 min chart
20:03 osho: for reference I use 5 min chart
20:03 osho: and some times 60 min chart
20:03 osho: thats all
20:04 nini: nice to know
20:10 nini: I am quiet frustrated with my trading, win a little and lose a lot
20:11 osho: yep it is quite normal it is part of the learning process
20:11 osho: the key is to understand and grasp the underlying movement of the market
20:12 osho: all the traders are constantly trying to achieve that
20:13 nini: I love to trade, profit for whole 2-3 week, and lose all in one day
20:13 osho: the whole purpose of plotting this charts etc is to be able to gauge how the group reacts to price
20:13 osho: that usually happens when you are rigid
20:14 osho: or adamant
20:14 osho: these are so called in built qualities
20:14 osho: in us we are sort of born with it
20:14 osho: they are very hard to go away
20:14 osho: I bet you the day you loose a lot is basically due to listening to your self
20:15 osho: and ignoring what market is trying to tell you
20:15 nini: yep
20:15 osho: see a trade has to be broken down in to 3 parts
20:15 osho: ENTRY+MANAGEMENT+EXIT=PROFIT
20:16 osho: sorry for the caps lock
20:16 nini: np
20:16 osho: we just care about profit
20:17 nini: I am mad at myself and blame my setup
20:17 nini: I think it is my attitude
20:17 osho: yep and that is wrong
20:17 osho: that is why I always emphasis on no personal opinion
20:17 osho: when you sit in front of the market you become one with it
20:17 osho: it is as if you are not existing
20:18 osho: all you do is just do what it tells you to do
20:19 osho: I will give you an example
20:19 osho: the chart I posted
20:19 osho: earlier
20:19 osho: http://charts.dacharts.net/2009-05-09/VK557321-04.png
20:19 nini: ok
20:19 osho: now do you see the red arrow marked in the last at 921.75
20:20 nini: yes
20:20 osho: now what would be your thought process at that level
20:20 nini: if around 10:15, too low to short
20:21 osho: you would most likely think that market has risen a lot and so it should most likely drop
20:21 osho: and so you will sort of become bearish and get ready to take a short trade there
20:21 osho: am I correct?
20:21 nini: y
20:22 osho: I am talking about the red arrow right after 12.05
20:22 osho: on the chart
20:22 osho: ok
20:22 nini: ok
20:22 osho: but if you see carefully
20:22 nini: yes,
20:22 osho: market has not shown any sign of bearish pattern
20:22 osho: we have green candle
20:22 osho: candles
20:23 osho: and more or less flat
20:23 osho: but it is still above the ma
20:23 osho: line
20:23 osho: now what most traders do is to they go short right in those candles
20:24 osho: but the question is the market showing sign of dropping
20:24 osho: no, at the most it is showing the sign of just stalling
20:24 osho: which means it could take a breather and than move higher
20:25 nini: I see how you think now
20:25 osho: yep you have to wait till the market shows sign of dropping
20:25 osho: than you enter
20:25 osho: see millions others are also looking at the same chart
20:26 osho: the important thing is are they reacting to this pattern or not
20:26 nini: patience
20:26 osho: we have to look for those signs
20:26 osho: than you enter
20:26 osho: yep
20:26 osho: that is key
20:27 osho: so if you enter short at the red arrow
20:27 osho: it was solely your opinion
20:27 osho: not the market opinion
20:28 nini: how do you know it it market opinion
20:28 osho: simple
20:28 osho: if the market wants to drop here
20:28 osho: first buying will stop
20:28 osho: so no more higher long candles
20:28 osho: second it will stall
20:29 osho: or go flat
20:29 osho: third you will see sudden spikes
20:29 osho: as the bigger lots get sold
20:29 osho: quickly
20:29 osho: so you will see lots of wicks
20:29 osho: also you will see contradictory candles
20:29 osho: those are the sign that market is not interested in moving ahead
20:30 osho: and than you will see the first red candle
20:30 osho: you still wait
20:30 osho: it is only when it makes the second red candle that you enter
20:31 osho: nini I am sorry I have a phone call to take
20:31 osho: can we continue this converstation later
20:31 osho: I am sorry
20:31 osho: have to leave though
20:31 nini: yes
20:31 osho: thanks
20:31 nini: thank you