Saturday, 14 September 2019

How can I convert my stock trading from a pure gambling to an educated and intelligent technically analyzed trading?

The answer to this lies in your framing of the question itself, ‘educated and intelligent technically analyzed trading’
I firmly believe that every individual has his own style, risk profile and certain way of reactions to volatility and favourable and unfavourable trade positions. Since you’ve anyway realised that you must stop gambling and shift to a scientific analysis based trading, you should try and analyse your own behaviour and responses to market conditions vis-a-viz your trades and develop your trading style.
Secondly, develop a system on which you’ll trade. This may include working on a specific sets of strategies that suit your style and risk profile.
Just follow your system, make your rules, stick to them, and apply a strict disciplined approach.
There’s no one way to trading success. Identify your style, develop it, work on it, keep on improving it and stick to it. Avoid copying others.
Simpler the system and approach, easier it’ll be.
For example: Your study says that Reliance will go up in coming week by 2% from last close. For this you can take the following positions:
a. Buy in equity market x no of shares
b. Buy x quantity of lots in futures market
c. Buy any OTM or ATM call option
d. Sell any PUT option
In the above mentioned example, all the four types of trades are bullish in nature but all have completely different type of risk reward ratios.
This is where your self analysis come into play.
And in deciding which type of trades you’re comfortable with, that’s your first insight into developing you trading style.
Research and trading are two completely different ball games requiring different mindsets.
So, overall, it’s all within you.

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