Even if you tell the trader what to buy and sell, how much to buy and sell, he could still lose money because of indiscipline.
Stop telling the markets what to do based on your analysis and bias and start listening to the markets and what it is doing.
Patience is essential. Wait for the right setups.
Sengukoi’s Laws of trading
There is no risk free trade. Ergo, all trades have risk. Minimize it.
Its impossible to have all winning trades. Ergo, some of your trades will be losers. Manage them wisely and professionally. Trade high probability as far as possible.
Its impossible to know which trade will be a winning trade. Ergo, always know when to get out if the trade is not working.
Its impossible to catch tops and bottoms. Ergo, you will be able to capture only a part of the move. Stay in the trend until it gives signs of reversal. Learn from your previous trades.
Its impossible to track all the scrips. Ergo, chose the ones you are comfortable with and specialize in it.
Its impossible to capture all the moves in the scrips you track. Ergo, don’t feel bad about a missed opportunity. Learn about it and why you missed it and move on.
Sengukoi’s Discipline
1) Follow the method and Risk management.
2) Cut short your losses , let your profits run.
3) Don’t get too happy due to profits, don’t get too sad because of losses. Have a baseline.
4) Always keep a stop loss, either mental or physical.
5) Never average a losing position, no matter what.
6) Always maintain a trading diary. Write down why you have entered the trade, when will you exit the trade and what is going on with the trade everyday. Save each and every contract note systematically. Write down the lessons you have learnt from both winning and losing trades.
7) Its better to not make money rather than lose it. Guard your capital. Play a great defense.
8) Primary goal should be to reduce risk rather than maximize profit.
9) If you are not sure of something, don’t do anything. Not having a position is also a position. Its the only position in which you are guaranteed you will not lose money.
10) After a string of profits – Be extremely cautious of self-sabotage behavior. You will be prone to taking excessive risks, you will get overconfident. You will be on top of the market. Don’t be an idiot. Be on your guard and be careful of such behavior.
11) After a string of losses – Be extremely cautious of depression. Money and markets are not everything. Be philosophical. Take a break, analyze what happened and why it happened, reduce position size (automatically reduces stop loss risk as a percent of capital), increase reward:risk, trade extremely high probability setups and try again. If its not working out then stop trading altogether.
12) Trend is always a function of the time frame. The trend could be extremely bullish on a 5 minute chart but extremely bearish on a daily chart.
13) Flexibility is essential.
14) Always look for value. Be a value speculator (in similar lines to a value investor). Value in an uptrend is to buy when the price is below its average, Value in a downtrend is to sell when the price is above its average.
15) Never tell your trades (when they are open) to anyone.
