EWATSS® Elliott Wave Analysis and Trade Selection Trading System
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It is the Investor who has to grow first, before his investments can grow.
Some thoughts for Stock Futures trading (subject to final due diligence and decisions of the trader himself alone) :-
- Stock Futures trading can give bigger and faster profits but can also give bigger and faster losses;
- Risk comes from not knowing what you are doing;
- It is the trader who is the biggest risk to himself than trading itself per se;
- There is risk in every aspect of life including trading;
- Trading has risk which the trader must learn to manage through education and practice;
- Trading is not risk free but don't make risky trades; there is a difference between risk and risky;
- Stock Futures trading may be undertaken by those who are good risk managers;
- Stock Futures trading may be undertaken by those who have the capacity to comfortably absorb the loss if a trade goes against them;
- Stock Futures trading may be undertaken by those who are good at controlling their own mind and emotions, to be able to cut their losses when suggested by their Trading Strategy/System;
- Use only your ‘Risk Capital’ (i.e. money with which you can take risk of losing without affecting your lifestyle and needs) for Stock Futures trading;
- Your loss in a trade should remain only a minor annoyance to you; and not be allowed to become a bigger devastating loss;
- Cut loss emotionlessly when Price closes beyond your Trailing Stop Loss;
- If you are prematurely stopped out and close a trade (on a small loss or profit) emotionlessly when Price closes beyond your Trailing Stop Loss, be willing to take the next trade entry signal in the same Stock Futures when sensed by your Trading Strategy/System;
- While making a new trade entry in Stock Futures, there will be options to use (i) Current Month expiry or (ii) Next Month expiry or (iii) Far Month expiry.
- Prefer to use the Stock Futures with expiry in the Far Month, to have enough time for the trade to develop;
- Prefer trades where the Margin Money per Lot does not exceed Rs. 1 Lakh or so;
- Prefer trades where Lot Size is in a few thousands, not hundreds;
- In the beginning stages of your Stock Futures trading business, prefer to take only one trade (of 1 Lot only) for any Stock Future Symbol, and not add to the initial position. This will help you limit risk and also help you become more consistently profitable.
- If you have a Trading Account Balance of Rs.10 Lakhs, use no more than Rs.5 Lakhs (or so) (i.e. 50% or so) for use/blocking as Margin Money in Stock Futures trades; hence leave enough cash balance in your Trading Account to allow market enough room to breathe up and down as per market’s nature (till it does not close beyond your Trailing Stop Loss level);
- If your Trading Account Balance grows due to floating profits to Rs.12 Lakhs, and the Margin Money used/blocked in live Stock Futures trades is still Rs.5 Lakhs (or so), you may use an additional Rs.1 Lakh as Margin Money for an additional Stock Futures trade entry;
- Hence you will be (i) using Rs.6 Lakhs as Margin Money in your live trades which will be about 50% of your Trading Account Balance (ii) using market floating profits to use as Margin Money to launch your next Stock Futures trade and (iii) re-investing market floating profits leading to compounding domino effect.
- Bigger Traders (Smart Money) can see where most smaller amateur Retail Traders (Dumb Money) are placing their Stops. It is not uncommon for Bigger Traders (Smart Money) to indulge in Stop Loss hunting to shake off weaker hands of smaller amateur Retail Traders (Dumb Money); hence also Risk Management and choosing conservatively sized Lots of Stock Futures are important.
- Always exercise your due diligence;
- Always use a trading style/strategy in which you have confidence and appeals to ‘who you are’ as a trader, since then only you will be able to stick to it.
Best wishes.
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