The life and profits of a day trader can be as volatile as the markets he tracks. Technical analyst Nooresh Merani says that it's practically a 24-hour job, which requires a combination of science and intuition—and a continuous evaluation of the trading style.
6 am to 9 am
Go online to check how the Dow Jones and the European indices performed overnight. Also, get an idea of the current situation in the Asian markets. The SGX Nifty in Singapore opens much before India (about 2.5 hours earlier) so it helps to get some hints about how the Nifty will open in India.
Modify the stock lists and observations for the day. (Technical, pivot and data traders are ready with a list, whereas system traders rev up their mechanical engines, which generally don't deliver much).
9.55 am to 3.30 pm
Boot up and check the ticker regularly. Some traders rely only on ticker reading, which is a study of price and volume fluctuations. The markets are volatile; look away and there will be an accident. It is best to combine intuition, ticker reading and technical analysis. If a trader wants to make a profit, he cannot afford to be distracted and should be able to take split-second decisions.
3.30 pm to 5 pm
Before sitting back and relaxing, it's important to take stock of the day's activities. It's time to finish calculations and note down the open trades or the profits made during the day. It's also time to gear up for the next few hours of analysis and preparation for the next day's trading.
Time for Analysis
This is what sets apart the amateurs from the professionals. Amateur traders don't realise that this part of a trader's life is as important as making good calls. Technical traders go through charts; mechanical traders test their system to come out with a list of possible stock ideas for the next trading session and evaluate current positions. Every trader needs to keep evaluating, modifying and optimising his trading style to stay in the loop. If not, he should be prepared for the market to kick him out.
Self-evaluation
Human nature is frail and one does make mistakes. With time and experience, traders learn that if you make a small loss early, you can make a killing the next time around by not repeating it. Ultimately, we all learn: 'Respect the Screen; Markets are Supreme'. A trader looks for intuitive hints on the screen. If he doesn't do so, market ni kamai, market ma samai (money made in the market stays in the market). A wise trader knows how to make money and take it home regularly.
The author is a Partner, Analyse India; www.nooreshtech.co.in
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