So today I want to talk to you about the
importance of knowing your own trading
style and trading
strategies that suit you.
Now this is a very important topic
that is not discussed that often.
I think every beginner needs to address
this first that is knowing his type and
what kinds of strategies suit him and
then he should move forward in order to
execute trades in the market.
Now the reason I say so that knowing your
own type and your strategies that suit
you is important, is because once you
start knowing more about yourself,
you are going to trade less which in
turn means you will be dishing out less
commissions and you will be only
trading when the opportunity is right.
One more important aspect that is not
talked about that much is that the moment
you figure out what kind of trading
method suits you or what kind of trading
style suits you,
you can then spend considerable amount
of time honing skills in that particular
method.
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Well,
let's consider this example that I'm
someone who likes to swing trade more,
but I do spend a lot of time researching
about day trading or even positional
trading.
So the moment I figured out this thing
about myself that is I'm someone who
prefers swing trading,
I would then stop spending
time on positional trading
and I would stop worrying
about day trading as well.
In this particular case,
I would then use my time to research on
swing trading and then I would aim to
hone my skills more.
This is how you should be progressing
and this is the advantage of knowing your
own trading type and the style you prefer.
And let me tell you a couple of
more advantages of knowing this.
Now we are living in a world of social
media where we are paying too much
attention on what others are doing.
So let's assume you have a friend
who is good at day trading.
So what you will do is,
unnecessarily You will try and focus on
what he's doing rather than focusing on
your core skills. That is
in terms of swing trading.
Now the more you focus upon yourself
and your method and the trading style,
over a period of time,
you will see your overall psychological
health will improve and yes,
psychological health is something
that every trader should worry about,
because this is directly related to the
amount of stress that you will take in
your life. Now do not ignore
the importance of keeping
your stress levels lower,
because the moment you
start taking less stress,
your overall life will see an improvement.
See, not many people realize this,
that when they are thinking too much
or in this particular topic that I'm
discussing, in case you are
someone who likes to swing trade,
but you're spending considerable amount
of time looking into position trading
and day trading as well.
What is happening behind the scenes is
that your brain continuously releases a
hormone called cortisol.
Now cortisol is directly linked with
stress and your aim in life has to bring
your stress levels lower.
I cannot emphasize this
enough that trading success
has a lot to do with amount
of stress you take in life.
In case you're someone who
keeps your stress levels low,
Who is more comfortable
with what you are doing,
you will automatically see your stress
levels moving lower and that will have a
positive impact on your life. So
important question that comes is,
how do you know your trading
type depending on what you
do in your life and how
you need to assess this
in order to move forward.
Now the number one thing that
I would tell you is that,
in case you want to become a day trader,
there are a few things that you need to
be aware of with respect to day trading.
So the first thing that I will
tell you is that in day trading,
time and volatility are
completely against you.
What I mean is that timing a
trade becomes more important,
and you have to constantly track what
is going on in the market as volatility
will have impact on the way market moves.
One more important thing that you need
to be aware of day trading is that you
need to be focused at all times.
Now in case you have taken a position
where it comes to data trading,
you have to monitor it constantly because
things change pretty fast on a day to
day basis and hence you need to make
sure that you don't leave your positions
unattended.
So what this essentially means is that
in case you're someone who has a full
time job somewhere and you are working,
so day trading is not for you because
you will need to focus on your job and on
your trades and let me tell you,
that is exceptionally difficult.
Now day trading is about price and volume
analysis and with each minute you need
to see what is happening in the market
and simultaneously focusing on your full
time job. Well, let me tell you,
this is something that very few people
can do and especially if you're a
beginner in the market,
then this is something you should consider
avoiding doing when it comes to day
trading. Now do register for this
month online training. It will be on
February 29th,
2020 and even if you watch this video
after February 29th you can still access
these trainings as these are
available on our website.
So the topic for current
month is identifying strong
stocks and sectors using C
R S that is comparative relative strength.
Now details are given in the description
box below and in the comment section
below. Now when it comes to
instrument selection in data trading,
let's say you still want to
go ahead with day trading,
then options is not the right
instrument in that case.
Because options move a lot in
general and in about 5- 10 minutes,
It's not unusual to see options
rising or falling about 20 - 25%.
So if you cannot dedicate full time
with respect to tracking your position,
then let me tell you,
you will save a lot of money
in case you avoid day-trading.
And let us not forget that the entire
system is designed to make you trade more.
If you take apps, something
like mobile charts,
if you take something like low brokerages,
everyone out there is
encouraging you to trade more.
And this works for some people,
but for others it does not.
Therefore you have to make sure that
you understand your own needs better,
You understand your limitations better
and you try to improve yourself within
that defined limitation.
So if you are someone who has a full
time job who cannot focus a lot during
market hours,
then please don't attempt date trading
because day trading is a full time job
and it requires constant
monitoring of your positions.
So let me now come to swing trading.
Now swing trading is something
that requires less amount of time,
let's say in terms of tracking your
positions constantly and this is also
something that is suitable for full time
and part time working professionals.
So if you were to take my advice on this
and in case you are a full time working
professional or a part
time working professional,
then swing trading is something that
you should definitely look into,
as this will suit you more.
Now I have done a series of about 16 to
17 videos on swing trading and do check
these out. These will help you
become a successful swing trader.
Now as far as instruments
are concerned, yes,
with the advent of a weekly options,
it has become difficult to trade options
with respect to carrying position,
But in swing trading you can still
attempt trading options and equities.
So in my opinion, in swing trading,
the two instruments that you should
focus upon are equities and options.
So start with equities first. And
if you start doing well in that,
then migrate to options.
One more advantage of swing trading is
that you have the option of doing weekend
studies. You don't have to necessarily
dedicate a lot of time on Week days.
And this is where Swing trading becomes
so useful for full time professionals
and part-time professionals. Another
thing that I can think about is that,
Volatility is not completely against
you and you do have an option to assess
volatility on end of the basis
and then adjust accordingly.
And in order to become a
successful swing trader,
all you need to do is focus
on only one to two setups.
And in case you can master those,
your trading will improve over time and
you will start seeing positive results.
And in case you still want
to try our Day trading,
check out my 16 to 20 videos that I've
done dedicated on day trading because
that will help you move
forward in the right direction.
So let me now come to the third style
of trading, which is positional trading.
Nowt in position trading,
the one advantage I see is that time
and volatility are on your side.
You do have a lot of time to analyze your
trades and day-to-day volatility does
not affect your positions that
much in positional trading.
This kind of style is also suitable for
trend traders and if you're someone who
is into mean reversion trading,
then position trading is
something that is not for you.
But in case you believe in long
term trends and medium term trends,
then positional trading is one
style that can benefit you a lot.
Now I haven't done a series on positional
trading yet and in case you want me to
do a series on positional trading,
then do let me know in the comment section
below. Again based on your response,
I will decide whether I
will do that series or not.
So based on the feedback
that I got from you,
the Renko series is already underway and
my next couple of series will be on VSA
and Point and Figure.
And again this was the feedback
that I got from the comment section,
so make sure to let me know if you
want a dedicated series on positional
trading.
Now one more advantage of positional
trading that I can think of is that you do
have a lot of time to reassess your
position and you don't need to react to
every day's price action like you have
to do in something like swing trading or
even day-trading. Now when it
comes to instrument selection,
I think something like equities and
futures is most suitable for positional
trading. I won't say
options are that suitable.
When it comes to equities and futures,
You can devise a lot of strategies
including risk management strategies,
money management strategies,
and in the end your own trading strategy
and those you can apply on equities and
futures. And when it comes
to time frame selection,
I think positional trading again offers
you a lot of benefit here because as a
positional trader,
you can only focus on something like a
daily time frame or a weekly time frame
chart. You don't need to get down
to something like 30 minutes,
15 minutes because that is
something you can totally avoid.
And also when it comes to your
overall trading psychology,
I think positional trading is a lot
easier on someone's psychological comfort
because you do have a lot of time in your
hand. You can reassess your positions,
you can go back and see
where you're going wrong.
And in case you are trading in equities,
you can adjust your positions accordingly
because there's no fixed lot size
here. And that does give
you a lot of flexibility.
So when it comes to positional trading,
it does have a lot of
advantage when it comes to,
when you compare it with something like
a swing trading or even day trading.
So let me tell you how I designed
my overall trading portfolio.
So when it comes to me, you must be
seeing, I do a lot of day trades.
This is something I share
on my telegram channel.
The link to the channel would
come up in front of you,
but let's say I have in total rupees 100
(hundred) to allocate in stock market.
So what I basically do is,
I allocate somewhere between 65
and 70% in positional trading.
I then allocate about 20% ,
let's say if 70% money I have
allocated in positional trading,
I then allocate about 20% to 25% in
swing trading and the remaining 5 to 10%,
I allocate in day-trading.
So clearly my preference when it comes
to allocating main portion of my money is
in positional trading and then for
let's say daily income or weekly income,
I focus on swing trading and day trading.
Now allocation that I just discussed,
that was just the trading
portfolio that I create. Otherwise,
when it comes to my overall money,
most of the allocations
go to longterm investing,
because that is what gives you a huge
edge in the market and you do have a lot
of time there as well to
adjust your overall positions.
So I have also done a series of
videos on how to invest your money.
That is with respect to stocks and
even through a sip method. Again,
I will link out those videos in the
description box below and in the comment
section below.
So you won't find many books talking
about the subject that is starting by
knowing your trading style and
strategies that you prefer.
And in my opinion,
this is the first thing that any person
should start with because this is what
will determine how you will move forward,
what kind of books you will read,
what kind of psychological profile
you'll develop and eventually which
strategies you will
implement in the market.
So do let me know if you prefer watching
such videos because this is one video
where I'm directly talking to you about
things in market that are not often
spoken about. And again, based
on the feedback you give me,
I will make this a regular feature where
every week I'll pick out some topic
related to either trading psychology or
especially focused towards beginners.
And then I will make a video about it.
So kindly consider hitting the like
button and sharing this video if you find
this content useful, Thanks a
lot for watching this video guys.
Take care and be safe.
