November 27, 2020

Trader's query on day trading, managing emotions

Dear KPL Sir,

I introduce myself as a fellow junior trader who has been doing swing trading for the last 2-3 years. I track days high and low along with OI and take positions only in index Future. Been a win some and lose some trader and have always kept my size and SL under check hence not blown aways my capital till date.... thankfully. Every expiry brings something new to learn and understand.

I follow your website and articles regularly but not a member of your forum as I do not have much to contribute in this initial journey except to observe as much as possible. 

I am approaching you for small guidance actually. I started day trading around Jan this year and have realised that this involves huge emotional capital which is very difficult for normal human beings like me (not made big losses but no big profits either till now in intra day) and was looking for a system based trade for index and checked the KPL swing system that you have on your website. 

Request you if you can help in understanding if I can start using this indicator in 5 min/15 min time frame for intra day trades. Since you do show this indicator on your website and have been using this since long, can you pl guide me in understanding if I too can follow this system blindly and be profitable. I am looking to follow a system which takes out my emotions and discretion from trades and more importantly be profitable.

Just to let you know, I do not use Amibroker as yet and trade out of the trading terminal only.

Thanks for your guidance and being a helpful trader in the community.


Any trading system (kplswing, supertrend etc) will work beautifully in trending markets but will give whipsaws in rangebound markets. This is normal.

Your choice of timeframe can  affect the outcome. So there will be situations where you have been unable to earn using 5 min charts but trades can be profitable using 15/ 30 min charts (positional).

On a higher level, the trading system (indicator, timeframe etc) has a smaller effect on your P&L. To clarify, there are hundreds of systems/ indicators but people following it will not make the same money. The psychological aspect of trading kicks and it is your ability to rigorously adhere to a system and risk management which will eventually get you the money.

This ability will be unique to every individual. Unfortunately, for most people it means after the first 1-2 losses, they will jump from one system to another always searching for the holy grail which does not exist.

My experience is higher the timeframe the easier it is to make money. Someone using hourly charts is immune to the noise from 5/15 charts and someone using weekly or monthly charts is not bothered by hourly/ daily charts.

But trading using monthly charts calls for a tremendous amount of patience which is in short supply (and hence this automatically becomes an edge). 

And someone using a buy and hold strategy for 10-20 years will be most successful. For this person, even the monthly chart does not matter as he continues to receive dividends both in bull markets and bear markets.

To specifically answer your queries:
- develop a system in sync with your personality
- ideally, lesser the indicators, the better
- the best indicator is no indicator
- take atleast 100 consecutive trades with your system
- do not risk more than 1% of your capital in any trade
- before taking a trade, define your SL
- expect half your trades to fail... this will take care of emotions
- accept the role of probabilities in any trade
- you can control your loss... profit is what the market gives... this is not in your control

Some ideas
- there will be times when the SL is beyond your acceptable limits
- this happens to me very often in 30/ 60 min charts
- here I use deep OTM options to take a trade
- this can work wonders if market moves substantially
- risk is fall in IV and time decay

- I use kplswing solely for entry
- my exit is always based on 5 bar low or some reversal bar (for a long position)
- I know atleast half my trades will fail so a loss does not bother me

- I am now attempting to trade atleast 2 timeframes at same time
- reason is a market rangebound in one timeframe can be trending in another
- this is work in progress

- if you do not have Amibroker, you can simply use crossover of last 10-20 bars or prev hour high low  to initiate a trade.

Hope this helps.

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