Wednesday, July 31, 2013

Can We follow System Religiously?

Though our Short Trade is going from 6025 level of Aug Future, Many of my new trader friends joined the party from 5915 level, And on 30th Jul near the closing bell of market, They were getting 110+ points in paper profit though Trailing Stop Loss was at 5860.

When Today on 31st July, Nifty opened with gap down and fell further and made a low of 5715, I asked my subscribers one question, How many of you still have the shorts open? And I was NOT surprised when only 40% of them said "Yes". Most of them booked the shorts on 30th July itself a day before when they were getting 110 plus points.

My reply to them, "See, There will be times when we will get whipsaws and will loose points. To make up for those days, we have to take full advantage of this trend and should not book prematurely against our trend following system. I want some more "Yes" next time, if I ask the same question."

Now I can be wrong by not booking profit until my TSL/SAR hits, because of gap-up.
But I know one thing - Following system and making loss is better than violating system and book profit.

My IT Friend gave me analogy for my above statement - Its better not to be able to fix the bug in code but knowing the root cause , than to fix it by hit and trial without actually knowing the root cause, He made a very solid point here.

Kudos to those 40% subscribers who are still holding shorts without worrying about gap up. Here is not the question of who made more points, the question is - who followed the system?

I can also avoid interaction with my subscribers the way other service provider avoid, But to me, the one of the motive of my service is to make them emotional ready to trade markets so that one day they can make their own system and follow it without any psychological issues. Because its the emotions only, which stop many of them to not able to follow calls, even if they have confidence in my calls.

Cheers
Pawan

4 comments:

  1. Thanks Pawan,
    Get answer to all my question, even more i got from the post.

    Regards,
    Saravanan

    ReplyDelete
  2. Sir your post are awesome...all I need is to perfectly apply this my trading.
    Thanks
    Ankit Bhardwaj

    ReplyDelete
  3. Sir excellent short call on opening i got 100 points in nifty! super prediction !

    ReplyDelete
  4. Mukund Thanks But, I just said that open short at the opening bell, I did not say that it will go 100 points lower from our shorting level :), As I said in my earlier Post, I do not Predict, I just react :)..Thanks for the comment anyway.

    ReplyDelete