ATTITUDE SURVEY

This survey have been taken from the “Trading in the Zone” by Mark Douglas.

Answer to below questions are my personal opinion.

I have tried to answer the attitude survey questions and those are my personal view.Just want to say this questions are so critical that they can make or mar your trading career.I have been trading for almost four year now. I have seen some success with lot of failure,until  I................

1. To make money as a trader you have to know what the market is going to do next.

No. I just need to know my edge. My edge will define my profit and Loss. Edge means tried and tested trading plan. Because I know following my plan over long period of time will automatically bring money to me.There is no way to find out what market is going to do next .

2. Sometimes I find myself thinking that there must be a way to trade without having to take a loss.
 No. There is always a Loss.  Every time my edge tell me to take position in the market .Sometime it work and some time it doesn't. An edge is nothing more than an indication of a higher probability of one thing happening over another. Remember ,probability is not guaranty. Every trade has a potential to go against you .

3. Making money as a trader is primarily a function of analysis.
No. Just follow your trading plan and ignore everything.Making money as a trader is primarily a function of following your trading plan.You only need to know your trading Plan.

4. Losses are an unavoidable component of trading.
 Yes. Every time I make entry to market, there is every chance of stop loss getting hit. However, we should have a believe over longer period I will make money by following my trading plan.

5. My risk is always defined before I enter a trade.

Yes. We should define our risk before we enter a trade .If we are uncomfortable with the risk we should simply ignore the trade and move on.

6. In my mind there is always a cost associated with finding out what the market may do next.

Yes. An edge is nothing more than an indication of a higher probability of one thing Happening over another. But at the end it is just a probability and not guaranty.

7. I wouldn't even bother putting on the next trade if I wasn't sure that it was going to be a winner.

We will never know what next trade will be winner or a loser. I need to take all the trade to make consistent money. There is a random distribution between wins and losses for any given set of  Variables that define an edge.

8. The more a trader learns about the markets and how they behave, the easier it will be for him to execute his trades.
 just need to define my edge and follow it religiously .I don’t care about anything else. Ignorance is bliss.

9. My methodology tells me exactly under what market conditions to either enter or exit a trade.
True .Trading plan define your entry ,exit and Risk management.

10. Even when I have a clear signal to reverse my position, I find it extremely difficult to do.
No. We should improve it by following our trading plan seriously.

11. I have sustained periods of consistent success usually followed by some fairly drastic draw-downs in my equity.

True.There is a random distribution between wins and losses for any given set of  Variables that define an edge.

12. When I first started trading I would describe my trading methodology as haphazard, meaning some success in between a lot of pain.
True.but later I have improved by learning and continuous improvement.

13. I often find myself feeling that the markets are against me personally.
 No -Market is not that intelligent. I just need to know my edge. My edge will define my profit and Loss.Initially I felt like market is doing exact opposite to my position.

14. As much as I might try to "let go," I find it very difficult to put past emotional wounds behind me.
True. Continuous improvement and following your trading plan will make it slowly fade it away

15. I have a money management philosophy that is founded in the principle of always taking some money out of the market when the market makes it available.
True. Just define the role of exit management (take some money out and let rest follow).

16. A trader's job is to identify patterns in the markets' behavior that represent an opportunity and then to determine the risk of finding out if these patterns will play themselves out as they have in the past.
True ..............Very ,very true.

17. Sometimes I just can't help feeling that I am a victim of the market.
No.   We can really be victim of not following our trading plan and not defining our edge properly.

18. When I trade I usually try to stay focused in one time frame.
Dual time frame guaranty better success. Always we need to have bigger picture in mind.

19. Trading successfully requires a degree of mental flexibility far beyond the scope of most people. 

 False .just follows your tested plan and ignores everything. Ignorance is bliss.

You don’t need to be intelligent to make money in market .You need to follow Tested plan over long period of time and success will automatically follow.

20. There are times when I can definitely feel the flow of the market; however, I often have difficulty acting on these feelings.
True.  I need to improve and follow our plan regularly. 

21. There are many times when I am in a profitable trade and I know the move is basically over, but I still won't take my profits.
Just define the role of exit management (take some money out and let rest follow).

22. No matter how much money I make in a trade, I am rarely ever satisfied and feel that I could have made more.
I never know what will happen next .My trading plan should define entry and exit. I will just follow my plan. Just define the role of exit management (take some money out and let rest follow).

23. When I put on a trade, I feel I have a positive attitude. I anticipate all of the money I could make from the trade in a positive way.
Feel positive by following your trading plan.

24. The most important component in a trader's ability to accumulate money over time is having a belief in his own consistency.
True

25. If you were granted a wish to be able to instantaneously acquire one trading skill, what skill would you choose?
Follow my trading plan and trade in the moment.

26. I often spend sleepless nights worrying about the market.
No.I would rather prefer  sleepless nights for improving my plan.

27. Do you ever feel compelled to make a trade because you are afraid that you might miss out?
I have got away from this by following my plan .

28. Although it doesn't happen very often, I really like my trades to be perfect. When I make a perfect call it feels so good that it makes up for all of the times that I don't.
I would like to make trade entry of my plan rather concentrating on it being perfect or imperfect.

29. Do you ever find yourself planning trades you never execute, and executing trades you never  planned?
I have got away from this by following my trading plan .

30. In a few sentences explain why most traders either don't make money or aren't able to keep what they make.
Proper money management is needed to retain the money you have or what you have earned.

Consistently follow your trading plan ……………………Success will follow.

Source: “Trading in the zone”

Trading in the Zone with these 12 steps

The following principles are taken from the “Trading in the Zone” by Mark Douglas.

Here they are in numerical order:

The 5 Fundamental Truths of Trading:

1. Anything can happen.        You have an edge and you may have probability on your side. But at the end it is just a probability and not guaranty. Lot of things which are not quantifiable can take place in market.   

2. You don’t need to know what is going to happen next to make money.  Ignorance is bliss . Just execute your edge and place the probability on your side.No Body knows what is going to happen next.

 3. There is a random distribution between wins and losses for any given set of  variables that define an edge.In other words, based on the past performance of your edge, you may know that out of the next 20 trades, 12 will be winners and 8 will be losers. What you don’t know is the sequence of wins and losses or how much money the market is going to make available on the winning trades. This truth makes trading a probability or numbers game. When you really believe that trading is simply a probability game, concepts like ‘right’ and ‘wrong’ or ‘win’ and ‘lose’ no longer have the same significance. As a result, your expectations will be in harmony with the possibilities.

4. An edge is nothing more than an indication of a higher probability of one thing happening over another. An edge  is just a likely hood  of one things over other .Probability => Quantifiable likelihood (chance) of the occurrence of an event expressed as odds. 

5. Every moment in the market is unique. It is important to remember that every moment in the market is unique. Just because the market did one thing one day does not mean that it will do the same thing the next day. The participants in the market change from day to day and even hour to hour which makes every single experience in the market completely unique.

The 7 Principles of Consistency:

1. I objectively identify my edges.  You already know what you are looking for. You should know your entry , risk parameter , profit objectives. Edge  can be combination  of any sets of pre determined variable , which have been back tested and found to give 50-55% winning trade.

2. I predefine the risk of every trade.  We know that every trade  has a potential to be a loser , so we should be pre decided about the dollar amount we are going to risk on the trade to find out whether the trade is working or not .Best time to  put a stop is before you put the trade on.

3. I completely accept the risk or I am willing to let go of the trade.  Sometime we can be uncomfortable with the dollar amount we have to risk to put the trade on . if you are not completely comfortable , then either you cancel the trade or scale back on your position to make yourself comfortable with dollar amount .

4. I act on my edges without reservation or hesitation.  Once the edge present itself just put the trade ON.We have learned, usually quite painfully, that we don’t know in advance which edges are going to work and which ones aren’t. so, I have stopped trying to predict outcomes. I have found that by taking every edge, they correspondingly increase their sample size of trades, which in turn gives whatever edge they use ample opportunity to play itself out in their favor, just like the casinos.

5. I pay myself as the market makes money available to me.  I take money out from my system after execution of 30 trades and and if I am in profit . You can have your rule .

6. I continually monitor my susceptibility for making errors. Common Errors are 

•  Refusing to define a loss.
•  Not getting rid of a losing trade when it is obviously a loser.
•  Getting locked into a bullheaded opinion about market direction.
•  Focusing on monetary value of trade instead of market structure.
•  Revenge trading to recoup a loss.
•  Not reversing a position when the market is clearly changing direction.
•  Not following the rules of your strategy.
•  Planning for a trade and then not taking it.
•  Not acting on your intuition.
•  Giving back recent gains due to over trading or inconsistency. 

7. I understand the absolute necessity of these principles of consistent success
and, therefore, I never violate them.  Read  it every day before market Opens  and follow it.

Source: “Trading in the zone”

10 Market Insights from Mark Douglas

1. The four trading fears

95% of the trading errors you are likely to make will stem from your attitudes about being wrong, losing money, missing out, and leaving money on the table – the four trading fears

2. The proverbial empathy gap

You may already have some awareness of much of what you need to know to be a consistently successful trader. But being aware of something doesn't automatically make it a functional part of who you are. Awareness is not necessarily a belief. You can’t assume that learning about something new and agreeing with it is the same as believing it at a level where you can act on it.

3. The market doesn't generate happy or painful information

From the markets perspective, it’s all simply information. It may seem as if the market is causing you to feel the way you do at any given moment, but that’s not the case. It’s your own mental framework that determines how you perceive the information, how you feel, and, as a result, whether or not you are in the most conducive state of mind to spontaneously enter the flow and take advantage of whatever the market is offering.

4. The flaws of fundamental analysis

Fundamental analysis creates what I call a “reality gap” between “what should be” and “what is.” The reality gap makes it extremely difficult to make anything but very long-term predictions that can be difficult to exploit, even if they are correct.

5. A good trader is a confident trader

I’ve worked with countless traders who would spend hours doing market analysis and planning trades for the next day Then, instead of putting on the trades they planned, they did something else. The trades they did put on were usually ideas from friends or tips from brokers. I probably don’t have to tell you that the trades they originally planned, but didn’t act on, were usually the big winners of the day. This is a classic example of how we become susceptible to unstructured, random trading—because we want to avoid responsibility.

6. Anything could happen

The best traders have evolved to the point where they believe, without a shred of doubt or internal conflict, that ”anything can happen.” They don’t just suspect that anything can happen or give lip service to the idea. Their belief in uncertainty is so powerful that it actually prevents their minds from associating the “now moment” situation and circumstance with the outcomes of their most recent trades.

They have learned, usually quite painfully, that they don’t know in advance which edges are going to work and which ones aren’t. They have stopped trying to predict outcomes. They have found that by taking every edge, they correspondingly increase their sample size of trades, which in turn gives whatever edge they use ample opportunity to play itself out in their favor, just like the casinos.

7. Most people are obsessed with being right

Why do you think unsuccessful traders are obsessed with market analysis.They crave the sense of certainty that analysis appears to give them. Although few would admit it, the truth is that the typical trader wants to be right on every single trade. He is desperately trying to create certainty where it just doesn’t exist.

The typical trader won’t predefine the risk of getting into a trade because he doesn’t believe it’s necessary. The only way he could believe “it isn’t necessary” is if he believes he knows what’s going to happen next. The reason he believes he knows what’s going to happen next is because he won’t get into a trade until he is convinced that he’s right. At the point where he’s convinced the trade will be a winner, it’s no longer necessary to define the risk (because if he’s right, there is no risk). Typical traders go through the exercise of convincing themselves that they’re right before they get into a trade, because the alternative (being wrong) is simply unacceptable.

If he exposed himself to conflicting information, it would surely create some degree of doubt about the viability of the trade. If he allows himself to experience doubt, it’s very unlikely he will participate. If he doesn’t put the trade on and it turns out to be a winner, he will be in extreme agony. For some people, nothing hurts more than an opportunity recognized but missed because of self-doubt. For the typical trader, the only way out of this psychological dilemma is to ignore the risk and remain convinced that the trade is right.

8. Trading has nothing to do with being right or wrong on any individual trade

For the traders who have learned to think in probabilities, there is no dilemma. Predefining the risk doesn’t pose a problem for these traders because they don’t trade from a right or wrong perspective. They have learned that trading doesn’t have anything to do with being right or wrong on any individual trade. As a result, they don’t perceive the risks of trading in the same way the typical trader does.

9. We have to be rigid in our rules and flexible in our expectations

We need to be rigid in our rules so that we gain a sense of self-trust that can, and will always, protect us in an environment that has few, if any, boundaries. We need to be flexible in our expectations so we can perceive, with the greatest degree of clarity and objectivity, what the market is communicating to us from its perspective.

10. Market losses are simply the cost of doing business

When I put on a trade, all I expect is that something will happen. Regardless of how good I think my edge is, I expect nothing more than for the market to move or to express itself in some way. However, there are some things that I do know for sure. I know that based on the markets past behavior, the odds of it moving in the direction of my trade are good or acceptable, at least in relationship to how much I am willing to spend to find out if it does. I also know before getting into a trade how much I am willing to let the market move against my position. There is always a point at which the odds of success are greatly diminished in relation to the profit potential. At that point, it’s not worth spending any more money to find out if the trade is going to work. If the market reaches that point, I know without any doubt, hesitation, or internal conflict that I will exit the trade.

The loss doesn’t create any emotional damage, because I don’t interpret the experience negatively. To me, losses are simply the cost of doing business or the amount of money I need to spend to make myself available for the winning trades. If, on the other hand, the trade turns out to be a winner, in most cases I know for sure at what point I am going to take my profits. (If I don’t know for sure, I certainly have a very good idea.) The best traders are in the “now moment” because there’s no stress. There’s no stress because there’s nothing at risk other than the amount of money they are willing to spend on a trade. They are not trying to be right or trying to avoid being wrong; neither are they trying to prove anything. If and when the market tells them that their edges aren’t working or that it’s time to take profits, their minds do nothing to block this information. They completely accept what the market is offering them, and they wait for the next edge.

Nifty Analysis & Daily Chart for 19 Sep,2013

Daily Trend is up above  5745(SAR)

Weekly remain bullish above 5632

Trailing Stop loss for SAR  5726

Bearish Engulfing Pattern @5932

Raising window support 5460,5688

Weekly Indicator is bullish and Daily Indicator has given bearish signal  in OB .

Support are 5210-5315-5350-5410-5448-5487-5515-5550-5606-5606-5630-5675-5720-5748-5840

Resistances are 5920-5970-5985-6080-6113-6150- 6187-6230-6284

Low of the Hammer are still protected 5254 and 5118 on  weekly basis. 

78.6%  of the last major fall  5882 need to crossed for trend to turn completely bullish.

Divergence on 9 day RSI Chart

"What does it mean to think in probabilities? 
It means to believe at the very core of our identity that:

1. anything can happen
2. every moment is unique
3. there is a random distribution between wins and losses on any given set of variables that define an edge

1. Each one of these beliefs will keep your expectations in line with what is possible from the markets

1.  perspective. To the extent your expectations correspond with what is possible from the markets perspective, you eliminate the potential to define and interpret market information as painful.

Ultimately

 ~ you can get to the point where you can trade from a "carefree" and "objective" state of mind where you are making yourself available to perceive and act upon whatever the market is offering you in any given "now" moment from its perspective."

Nifty Analysis & Daily Chart for 17 Sep,2013

Daily Trend is up above  5700(SAR)

Weekly remain bullish above 5632

Trailing Stop loss for SAR  5652

Bearish Engulfing Pattern @5932

Raising window support 5460,5688

Weekly Indicator is bullish and Daily Indicator has given bearish signal  in OB .

Support are 5210-5315-5350-5410-5448-5487-5515-5550-5606-5606-5630-5675-5720-5748-5840

Resistances are 5920-5970-5985-6080-6113-6150- 6187-6230-6284

Low of the Hammer are still protected 5254 and 5118 on  weekly basis. 

78.6%  of the last major fall  5882 need to crossed for trend to turn completely bullish.

TO ACHIEVE  CONSISTENCY , I SHOULD 
1.Be able to identify an edge (trading method)
2.Have a trading plan on how to utilize the edge
   Risk Parameter , Money Management (Position Size), Profit Objectives
3.Able to execute the edge without making trading Error
4.Think in probabilities
5.Making a mental shift from trade to trade perspective to series of trade perspective 
6.Believing that you don't have to know what is going to happen next on trade by trade to win or make money.
7.Develop the ability to recognize you have crossed the threshold from normal self confidence to the state of euphoria.

Nifty Analysis & Daily Chart for 16 Sep,2013

Daily Trend is up above  5674(SAR)

Weekly remain bullish above 5632

Trailing Stop loss for SAR  5607

Bearish Engulfing Pattern @5932

Raising window support 5460,5688

Weekly Indicator is bullish and Daily Indicator is bullish OB.

Support are 5210-5315-5350-5410-5448-5487-5515-5550-5606-5606-5630-5675-5720-5748-5840

Resistances are 5920-5970-5985-6080-6113-6150- 6187-6230-6284

Low of the Hammer are still protected 5254 and 5118 on  weekly basis. 

78.6%  of the last major fall  5882 need to crossed for trend to turn completely bullish.

Nifty Analysis & Weekly Chart for period 09 – 13 Sep,2013

Weekly Stochastic/RSI Chart still support bullish view.

Low of the Hammer are still protected 5254 and 5118 on  weekly basis. 

Weekly remain bullish above 5632

78.6%  of the last major fall  5882 need to crossed for trend to turn bullish.

5688 is the immediate support , 6093 is the immediate support on weekly chart

Monthly chart show 5950 ,6093 as resistance 

MACD - no signal yet

Nifty Daily Chart Update -13th Sep 2013

Daily Trend is up above  5629(SAR)

Bearish Engulfing Pattern @5932

Raising window support 5460,5688

Weekly Indicator is bullish and Daily Indicator is bullish OB.

Support are 5210-5315-5350-5410-5448-5487-5515-5550-5606-5606-5630-5675

Resistances are 5720-5748-5840-5920-5970-5985-6080-6113-6150- 6187-6230-6284

Low of the Hammer are still protected 5254 and 5118 on  weekly basis. 

Weekly remain bullish above 5632

78.6%  of the last major fall  5882 need to crossed for trend to turn completely bullish.

Nifty Daily Chart Update -10th Sep 2013

Daily Trend is up above  5450(SAR)

Weekly Indicator and Daily Indicator is bullish .

Support are 5210-5315-5350-5410-5448-5487-5515-5550-5606-5606-5630-5675

Resistances are 5720-5748-5840-5920-5970-5985-6080-6113-6150- 6187-6230-6284

Low of the Hammer are still protected 5254 and 5118 on  weekly basis. 

Weekly remain bullish above 5632

78.6%  of the last major fall  5882 need to crossed for trend to turn completely bullish.

Thought Process Before You Put The Trade ON

TO ACHIEVE  CONSISTENCY , I SHOULD 
1.Be able to identify an edge (trading method)
2.Have a trading plan on how to utilize the edge
   Risk Parameter , Money Management (Position Size), Profit Objectives
3.Able to execute the edge without making trading Error
4.Think in probabilities
5.Making a mental shift from trade to trade perspective to series of trade perspective 
6.Believing that you don't have to know what is going to happen next on trade by trade to win or make money.
7.Develop the ability to recognize you have crossed the threshold from normal self confidence to the state of euphoria.


Main Components of  My Trading Plan 

Risk Management

Why do we need Risk control and Money Management ? 
Some losing trade are normal part of the trading. My responsibility as trader is to Keep my losing trade small  and let the winner run . Every trader has a potential to be loser ,if it is loser then i need to protect my self from loss. 

Money Management 

• Allow me to be wrong 
• Help me control risk 
• Take into  account every trade can be potential loss
• Separate the pros from the novice 
• Money Management is the state of the mind .

WARNING SIGNAL :- If your draw down on last 10 trades exceeds 12% ,then your are exposing your self to obscene risk . (Based on Risk of Ruin Table)

GOAL:- Let your winning trades run and cut your losing trade short !!!

Healthy Money Management Psychology begins when you believe that  and acknowledge that each trade outcome is unknown at the time you enter the trader!. 

Trade Risk Versus Market Risk 
"Trade size" control the Trade risk .Can be controlled through protective and trailing stops.  
"Account Size" control the Market Risk .Cannot be controlled  ex. huge Gap up/down .
If you control your Trade Risk then there is high probability of recovering the Market Risk. 

Risk of Ruin 
The probability of an individual losing sufficient trading money to the point at which continuing on is no longer considered an option to recover losses. Make Risk of ruin work for you .

Win-Ratio Formula 
Win Ratio =# of wins divided  # of trades
Ex := 60%= 60 divided by 100

Pay off Ratio Formula 
Pay off Ratio =Average winning trade divided  Average Losing trade
Ex :=  3= 300 Re  divided 100 Re or (3:1)

Relations between Win-Ratio and Pay Off Ratio
Screen shot below show even if we get the 2:1 risk  : reward and  50 % winning : Risk of ruin is reduced to 0.8%.Make Sure you make risk of ruin work for  you than against it.

Two Percent Risk Formula 
Account size × 2% = Risk amount
Ex:= 1,00,000 *2% =2000 -(These is the dollar amount you can afford to lose if you get stopped out.)

Trade size formula

[Risk amount − Commission]÷ Difference between entry and exit = Trade size
Ex:= [2000-500] ÷ (15*50)=2 (Maximum contract you can purchase)

Please find the link of  some more articles on Risk Management 
1.Nifty Future Risk Management Plan
2.Risk Management Checklist
3.Fine Tuning Your Money Management System

Nifty Weekly Chart Update -9th Sep 2013

Weekly Stochastic Chart Show bullish view .

Low of the Hammer are still protected 5254 and 5118 on  weekly basis. 

Weekly remain bullish above 5632

78.6%  of the last major fall  5882 need to crossed for trend to turn bullish.

TO ACHIEVE  CONSISTENCY , I SHOULD 
1.Be able to identify an edge (trading method)
2.Have a trading plan on how to utilize the edge
   Risk Parameter , Money Management (Position Size), Profit Objectives
3.Able to execute the edge without making trading Error
4.Think in probabilities
5.Making a mental shift from trade to trade perspective to series of trade perspective 
6.Believing that you don't have to know what is going to happen next on trade by trade to win or make money.
7.Develop the ability to recognize you have crossed the threshold from normal self confidence to the state of euphoria.