for me trading is essentially answer to 3 questions:-
1. is there a trade?
= should i trade or should i stay out?
2. which direction?
= if there is a trade, judging the direction is the next question. finding the trend, knowing which way the market is or about to move is the single most important decision. this is decisive! this is the heart of the trading. it took me years to get this right. once this step is right, rest is fine tuning, though therein lies the efficiency of the trade.
3. what quantity?
= this decision, answer to this question, decides the effectiveness / efficiency of the second decision above. not all situations are to be traded with same quantity. you have to enter and exit in steps. u have to commit the stake depending upon the probability, risk. u have to hold some cards for the contingency!
once the answer to first and second question are settled, all i am left to do is keep adjusting and managing the third one. i have to keep reducing or increasing or monitoring the magnitude of my stakes.
all this depends upon my market analyses and my answer to operator games. this also took many years to spot and learn.
i am rarely with zero stakes in the market when the answer to first question is 'yes'.
1. is there a trade?
= should i trade or should i stay out?
2. which direction?
= if there is a trade, judging the direction is the next question. finding the trend, knowing which way the market is or about to move is the single most important decision. this is decisive! this is the heart of the trading. it took me years to get this right. once this step is right, rest is fine tuning, though therein lies the efficiency of the trade.
3. what quantity?
= this decision, answer to this question, decides the effectiveness / efficiency of the second decision above. not all situations are to be traded with same quantity. you have to enter and exit in steps. u have to commit the stake depending upon the probability, risk. u have to hold some cards for the contingency!
once the answer to first and second question are settled, all i am left to do is keep adjusting and managing the third one. i have to keep reducing or increasing or monitoring the magnitude of my stakes.
all this depends upon my market analyses and my answer to operator games. this also took many years to spot and learn.
i am rarely with zero stakes in the market when the answer to first question is 'yes'.
1 comment:
How to determine the direction in which a stock or market will go?
Post a Comment