Trade Less Trade Better:How to Apply in Trading

By | December 26, 2017 12:23 pm

How often do you see big moves in the market like we in 2017 Nifty rallying all the way from 7894 to 10490 , but you never find yourself profiting much from them? How often do you close a trade out prematurely just because you think you have made enough or with a small fall in trade you just exit the trade.  Our Golden rule for Trading is Trade Less Trade Better

As any consistently profitable trader will admit, it takes a consistent conscious effort to hit big winners in the market. The inevitable retracements and ‘whip saws’ that hit a market are events that shake out most amateur and inexperienced traders. The mental discipline required to simply ‘do nothing’ after you enter a trade, and instead let the market do the ‘work’, is something that not many traders possess.Most of the traders wanted to be in action all the time trying to capture small small move and in process miss the big move.

Why Traders cannot Hold the Trade

A simple fact of trading, is that if you want to make a lot of money, you’ve got to have the patience to hold trades for longer than you might be comfortable with.  As the saying goes Life starts when we move out of our comfort zone.

Most traders do very well on paper trading  before they start putting live trades. Think back to when you were paper trading, You mostly put SL and Target and do not interfere with your trading positons.

On a demo account, traders tend to be less-involved with their trades because they simply don’t care that much since there’s no real money on the line. The end result, is that they stick with their original trade idea most of the time. This is the main reason why people tend to do very well on a demo account.

The point is this; the psychology of holding a trade is a very very tricky thing. To succeed on a live account, you need to do what you did on demo; which is basically just “less”. It’s hard to achieve, since real money is on the line, but if you really want to catch big moves in the market and make big money, you’re going to have figure out a way to ‘sit on your hands’ more often when trading a live account.

The power of ‘doing nothing’

Trading might be the world’s most rigorous test of one’s mental discipline and strength. In the face of a trade that’s moving against you and in negative territory, how will you react? Conversely, in the face of a trade that is up a nice profit, but has not yet hit your target, how will you react? The most difficult thing to do in each of these situations is also the most profitable thing to do over the long-run; NOTHING.

Closing out a trade for a small loss, before it hits your stop loss, is an example of letting fear control you, and doing so directly limits your profit potential because you’re not giving the trade proper time to play out and you’re also voluntarily taking a loss.

Closing out a profitable trade too soon can also be detrimental to your overall trading success. If you have pre-defined your profit target or profit taking / exit strategy before entering the trade, you will only be doing yourself a disservice most of the time by not sticking with that exit strategy.


Examples of Holding on to tradee

Titan took support at Moving Average and continue to rally higher.


Nifty gave short entry whipsawed it and continue with its uptrend


Multiple Entry Given by Century Textile

Nightmarish chart for trader for Balrampur Chini –Whipsawing a lot

Nifty gave Perfect Entry as per ABCD pattern and big rally

The idea of above charts is not to discuss a system but to show big money is made only when you get into habit of Holding on to the trade. You can follow a simple system as Following moving average or Gann or Harmonic but try to capture big moves. 20% of trades make 80% of the Money.

Give your trades a chance to play out in your favor, stop prematurely closing them before your stop loss is hit, just because you are afraid of absorbing a full loss. You should always predefined what you’re comfortable with potentially losing on a trade, and just accept that as the cost of doing business in the market as in above chart of Balrampur Chini.

As we Approach new year try to develop the discipline of holding on to your trades.



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