Losses prevent profits

Friday's excuse. A couple of initial losses changed what could have been a great day trading day.

Nifty M3 Price Action Chart

The open action was just above/near the previous day high. The volume action was not great, but only the fact that price was above range, and looking like it would come down, tempted me to go short - twice. If the action was in the previous day's range, I would have sat on my hands.

The small Stop Losses on those trades resulted in losses, and prevented me from going short again. Thinking about it, a wider Stop Loss would have resulted in a smaller loss than the total losses in those 2 losing trades.

When later, the price broke down with volume, I was not sure of which way it would turn, but just to avoid being left out of a down move, I placed a short at the low of the day. That trade cleared my losses, but my exit was bad. I was anxious to lock in some profit after the initial losses. Then, placed another short at low of the day to catch further momentum, if any. Another loss, and I was back in red.

The price was popping up, but I was patient and waited for a consolidation. And when the consolidation happened, I was not so patient and took a short instead of a long.

At this point, I had 4 losses in 5 trades, on a very good day trading day. To top it, the last 2 trades were even wrong directionally. So, I switched to mechanical trading and managed to recoup losses. I do not intend to post mechanical trades. I believe that I should have stuck to discretionary trading, and tried to make in work. I plan to trade discretionary again this week, and hopefully my resolve will hold this time...... depends on the results.

Getting the direction right

Here are my thoughts on the last 2 days of trading.

Markets are in a sort of range?, but also grinding upwards?.

Wednesday:

Nifty M3 Price Action Chart (Wednesday)

Initially, the price traded within previous day's range. The price had been rangebound in the previous days. So, held back.

The first DP was the low of the day. I did not want to miss a potential sudden drop. So, went short. But then, it began to look like a Breakout Failure, and I immediately reversed. This second trade was the only trade that I got directionally wrong in the last 2 days. If I had kept the Initial Stop Loss of the 1st trade intact, I would have caught the fall.

The next trade was the Breakout Failure of 10600. Booked when momentum appeared later. Then went short when the momentum stalled.

Thursday: 

Nifty M3 Price Action Chart (Thursday)

Again, the price was dull at open, with a small range within previous day's range. Then, a Master Candle happened that covered the Day's High and the Previous Day's Close. I placed triggers at both ends of that Master Candle. When the long triggered, I tightened the Stop Loss. In hindsight, that was a mistake. Also, in hindsight, an aggressive entry with smaller Stop Loss within the Master Candle's range would have worked. The lower risk on the tight Stop Loss would perhaps have kept me from tightening the Stop Loss prematurely.

The next long worked. I was able to book at the momentum candle, even though my data feed painted the candle after some delay. Then, the long tails inspired me to go short. The Stop Loss just 1 point higher would not have been hit. Later, I went short again. This time it worked, but not before a scare that almost took my Stop Loss.

The fall was good and took out 10650. I reversed to long when the momentum stalled.

Observation:

So, I only got one trade directionally wrong in the last 2 days, but still did not earn much. Now, would it have been wiser to keep the Stop Losses wider and avoid SL hits in many trades. But then, what would have happened if the direction was wrong. After all, at the point of entry, I never know if the trade is going to work out. The perpetual dilemma continues....