Friday, February 27, 2009

Taking Profits

The Nifty continues to move inside a trading range between 2700 and 2800. A breakout on either side may not provide a sustained trend. Just after 2800, w ehave resistance at 2850. On the lower side, below 2700, there is support at 2635. Thus, we can expct choppy market conditions to prevail while the Nifty makes up its mind on where to go.

Meanwhile, let us discuss on the ways to take profits.

When do I get out of a trade? Our exits are controlled by Fear and Greed. Fear gets us out too early and Greed keeps up in too long.
The answer lies in having your rules to take profits. While the rules should be matching the market flow, here are some examples:
1. For a day trader:
If a position is not profitable, I will exit after 60 minutes.
If a position sees a sudden move in my favor (range expansion), I will quickly close half of my position.
I will not allow a profitable position to become a loss. Thus, once a trade is profitable for 30 minutes, I will move mys top to break even.
2. For Swing Traders:
I will carry a position only if it is not closing at a loss.
When I am buying a dip in equities, I will exit on a 2% move in my favor.
I will enter when price touches a Support/Resistance level. If price does not quickly move in my favor then I will watch for an opportunity to close out as close to breakeven as possible.

I hope you get some ideas.

10 comments:

chandu said...

Thank you very much for your valuable ideas,i will implement on my trade,have a great day tomorrow in surat.

good night.

Saptarshi Mandal said...

Dear Sudarshan....very well said....This is probably the best way to trade these days....

rajv malik said...

namaskar sudarshan ji,

extremely useful and practical tips for day/swing trading.
thanks a lot sir !
you are really doing a great service to the small traders like me. your blog is sheer education for us.

warm regards
rajiv malik
rajivhtc@gmail.com

saket said...

sir i have been tracking your post for the last one month and am thankful to you for sharing your experience and ideas with us.I am new at trading and would want to know the differnce between swing and positional trading n also which charts to use i.e 5min,60 min daily etc for which trading(intraday,swing n positional)Thank you.

Manish Chauhan said...

Thanks Mr. Sudarshan

Thanks for giving these points , I have myself thought of some points like these (with a little differnt numbers like 15 min instead of 60 min) , But the toughest part is to follow what i have thought .

I understand the importance of these things but looks like at the point of executing the plan , its very hard to do it . Thats the reason i am still making losses despite having better than average knowledge .

Manish
http://www.jagoinvestor.com/

piyush sharda said...

sudarshanji, this was a very educative strategy on exits. I am your Day V subscriber and I follow the system signals religously.your point no. 1(to exit a trade in 1st 60 min if unprofitable )can cut losses to a great extent.3 rd point to move stop to breakeven level after 30 min of profitable position) can work very well too. A lot of times i have sat in despertion when i see a profit turning in a loss. I wait for signals from your side to book profit, shud i do the same after 30-50 point move in nifty/bank nifty. and do you recomend me following the point 1 and 3 too. I feel they will give good results. Only you can back test and tell the results as we are not doing it currently. my email piyush_sharda@rediffmail.com

stockchart said...

hello sir,i just missed an oppornutiy to meet you while you are in surat,i was at other place,just cant reach..my opinion about nifty..my understanding of combinaation of some indicators suggests that nifty is on the verge of a very big break down..only a close above 2800-2850 (your levels) can save it,if in next 2-3 days nifty cant cross those levels on closing basis,we will see a fall of more than 100-150 points in a day,,,may be a bad event coming our ways ??..god save bulls !!!!!!!

rohit said...

Sir,
Please tell support and resistance for gold

manohar said...

Sir,what is the meainig of buying on dips,Technical expert's like you often says:buy on dips.
Please tell us how much fall can be considred as dip
What is considered as dip a 5% fall after 10% rise or 2% intraday fall?
Than you

manika said...

Sir,
Please tell us can intra day raders can trade counter to the trend when there is sudden spike on an up day ,can they go short and vice-versa for downtrend?

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