Well, its been quite a while since I've been off the radar. There were quite a few reasons on the personal front for that. But there was one major trading reason for that. I successfully stayed in cash, i.e. without taking up a single trade for the whole month of January. That was a missed trading opportunity as most of the stocks went up by a lot in that period.
There were couple of reasons why I chose not to trade in that period.
1. The markets were in a continued downtrend for more than a year. And when it broke into an uptrend, I was sceptical about it, thinking that this is another wave of short covering. But I was wrong.
2. Mine is more of a swing trading system. There were hardly any pullbacks in most of the stocks that I followed. For example, at first look if you see Tata Motors, it unidirectionally went up all the way from 150 levels to 290 levels. Momentum trading scares me, and that's why I chose not to trade.
Staying in cash is also a strategy and I was happy to be in cash, as I saw my investment account go up bigtime. Most of my long term investment stocks which were in RED for more than a year did very well.
By end of January I was getting a feel of the market trend, and was able to sense that the short term uptrend was about to end. I quietly stood on the sidelines till the reversal occurred and took up a few short side trades. I even decided to hedge my investments to some extent.
For a change, I was correct in my approach and both my accounts were able to see some good profits. In the last 3 months, both my accounts have handsomely beaten the returns given by Nifty and Sensex, the benchmark indices.
Before I can come to my trades, I'd like to mention some useful links.
1. Google for Hakija.It's the best EOD data downloader for our markets available for free. Works well with Metastock.
2. Periodically go through Swing Trading Wiki. I certainly benefited a lot from this, and some of my trades were a direct result of my learnings from this website.
In this period I had some big winners, and fortunately equal number of small losers. Some mental aspects of trading that I adopted are :
1. If not confident, don't take up a position. Staying in cash is also a valid strategy.
2. Cut the losses and let the winners run. Corollary to this, "When in a trade, and if not confident due to market conditions after entering the trade, then exit with small losses."
I had some winners in LT(traded twice), Yes Bank, SBI, Nifty, Tata Motors. The first two being big ones.
I wish I had a better exit in LT (the second time around), SBI and Tata Motors. I was going off on a long trip, away from places with reliable internet connections. So I had to close them at smaller profits.
There's one pattern that I've traded with good degree of success. That's the Shooting Star pattern in an overbought region. I've shown two charts where I was able to find this and trade with success.
LT:
Tata Motors:
Recently, the Swing Trade Wiki was updated. And I found Top 10 price action tips, a great article on 10 top price action patterns that swing traders can use. I found one such pattern called "Gap and Trap" in Yes Bank and was able to have a big winner(by my standards) in that.
And I had some small losers too in Tata Motors, LIC Housing Finance, Yes Bank, TCS.
They were mostly due to bad entry points, where I jumped the gun and quickly got stopped out. In case of Tata Motors, I chanced a re entry slightly later and then made decent profits in the trade.
No regrets with the losers this time, as such trades are bound to happen. I was just happy that my losses were small and I was able to quickly move on from those trades.
I hope this trading form continues for a while. Hope to update again sometime soon with some interesting charts.
Bye and Happy Trading!
There were couple of reasons why I chose not to trade in that period.
1. The markets were in a continued downtrend for more than a year. And when it broke into an uptrend, I was sceptical about it, thinking that this is another wave of short covering. But I was wrong.
2. Mine is more of a swing trading system. There were hardly any pullbacks in most of the stocks that I followed. For example, at first look if you see Tata Motors, it unidirectionally went up all the way from 150 levels to 290 levels. Momentum trading scares me, and that's why I chose not to trade.
Staying in cash is also a strategy and I was happy to be in cash, as I saw my investment account go up bigtime. Most of my long term investment stocks which were in RED for more than a year did very well.
By end of January I was getting a feel of the market trend, and was able to sense that the short term uptrend was about to end. I quietly stood on the sidelines till the reversal occurred and took up a few short side trades. I even decided to hedge my investments to some extent.
For a change, I was correct in my approach and both my accounts were able to see some good profits. In the last 3 months, both my accounts have handsomely beaten the returns given by Nifty and Sensex, the benchmark indices.
Before I can come to my trades, I'd like to mention some useful links.
1. Google for Hakija.It's the best EOD data downloader for our markets available for free. Works well with Metastock.
2. Periodically go through Swing Trading Wiki. I certainly benefited a lot from this, and some of my trades were a direct result of my learnings from this website.
In this period I had some big winners, and fortunately equal number of small losers. Some mental aspects of trading that I adopted are :
1. If not confident, don't take up a position. Staying in cash is also a valid strategy.
2. Cut the losses and let the winners run. Corollary to this, "When in a trade, and if not confident due to market conditions after entering the trade, then exit with small losses."
I had some winners in LT(traded twice), Yes Bank, SBI, Nifty, Tata Motors. The first two being big ones.
I wish I had a better exit in LT (the second time around), SBI and Tata Motors. I was going off on a long trip, away from places with reliable internet connections. So I had to close them at smaller profits.
There's one pattern that I've traded with good degree of success. That's the Shooting Star pattern in an overbought region. I've shown two charts where I was able to find this and trade with success.
LT:
Tata Motors:
Recently, the Swing Trade Wiki was updated. And I found Top 10 price action tips, a great article on 10 top price action patterns that swing traders can use. I found one such pattern called "Gap and Trap" in Yes Bank and was able to have a big winner(by my standards) in that.
And I had some small losers too in Tata Motors, LIC Housing Finance, Yes Bank, TCS.
They were mostly due to bad entry points, where I jumped the gun and quickly got stopped out. In case of Tata Motors, I chanced a re entry slightly later and then made decent profits in the trade.
No regrets with the losers this time, as such trades are bound to happen. I was just happy that my losses were small and I was able to quickly move on from those trades.
I hope this trading form continues for a while. Hope to update again sometime soon with some interesting charts.
Bye and Happy Trading!
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