THE IMPORTANCE OF STRATEGY IN THE VIOP
With the Viop leverage effect, it is a market that allows you to make high amounts of transactions with low amounts of money. I do not go into details such as collateral accrual, tax, double-sided investment opportunity, hedging. With the formation of micro trends, trading opportunities can be used during the day. But the micro trends and leverage effect here are like a double-edged knife. You have started to write losses while trying to make a profit.
You can stay upside down while trying to catch the little trends.
With the leverage effect, you can experience more losses when you say I earn a lot.
If your term is limited to the intraday, if you are trading with every decline and rise during the day, transaction costs start to become an additional burden on your back.
As you can see, it has risks as well as attractiveness. I saw so many traders who started trading on VIOP but wished I hadn't left their stocks. In addition, there are traders who say that this place is their own, I have worked in vain for stocks.
In fact, the markets do not matter much here, whether they are stocks or vıop. The important thing is the perception world of traders. There are those who say, "Don't connect everything to psychology, if you buy from below and sell from above, if you make shorts from above and close positions from below, you will win." But the goose's foot, unfortunately, is not like that.
Who cannot manage his perception in any market. In expectation. Only those who cannot relate what is happening at that moment to the past, cannot answer the question of how I will act in the next time frame, and may experience major problems in a short time.
Once he is in stock, he must know what he will earn if he is in a viop. Let's say you are trading with 10 contracts. Let's assume that the amount of 10 contracts is 10 thousand TL. The rule you set for short in the market has come true. You made a short too. How much do you expect to earn with 10 contracts. Probably, your profit in that short position will not be 10 thousand TL. In order for your profit to be 10 thousand TL, the market must decrease approximately ten thousand points in that position. Well, has such an event occurred in the history of VIOP in daily transactions? You have caught a trend and you may have earned ten thousand points by staying in that signal for 3-5 days. I want to tell you, when you get into position, set real goals. Your account will grow steadily as your goals are realized and your success rate increases.
When you enter this market, sorry there are five problems you need to solve before entering this market. Or in other words, you have to build a strategy. What are the parts of this strategy? Volumes of books can be written about these pieces. There is written and drawn in a world. The arrow does not stop reading. Those who do not like to read should learn it for 1 year instead (only the amount you allocate for this live training, so your transaction amount is small).
1) What will be my trading rule (system)
2) How many contracts I will trade. (Money management)
3) How much damage I will do if I damage. (What will be risk control, stop distance)
4) What will my Risk / Profit ratio be? (Where the money is approaching to earn, how much should I earn for the money I risked for the stop)
5) Psychological competence. (Discipline, usually money is lost due to deficiencies here.)
As you can see, entering, exiting in the strategy, how much of your money will be traded, your stop level, if there is a mechanism to take profit and re-enter the position, the method of stop and re-entry followed, how much you need to earn for each loss, to be psychological competence that can be gained with experience. must.
In other words, your equipment must be high in order to be able to say that I entered the position and won.
1) Trading rule
Whether you trade manually or send an automatic order to the market, both must have a trading rule. We agree on this matter.
So what is essential in these rules, what kind of a trading rule will we create? The most emphasized issue of the market is the process of establishing these rules.
There are a lot of indicators written down. Moving average, macd, rsi, stochastic,… ..vs etc etc. Most of these indicators are from the 1940-1950s. How will we create a trading system using these indicators.
For example.
It is an al rule that the 5-period exponential moving average passes over the 20-period exponential moving average. The sat rule is that the opposite, 5-period exponential moving average falls below the 20-period exponential moving average. We have now created a trading system with this rule. So what is the success rate. Will money be in our pocket if we implement this system? It is necessary to examine this and make additions to the system according to the results.
“There are a lot of system writers. They share screenshots. It seems nice monthly profits. They used many indicators. There are color buying and selling rules. It has lines. Good looking. Did we write a system with 2 averages now? " Yes, this is a trading system. It binds you to a rule. This rule puts you in position or takes you out, at least according to the direction of the moving averages, according to the trend in the price within the period.
Everyone's understanding of risk and maturity are different. First, how many points do you want to earn in a week-month or a position. This has to be determined at a value that makes sense to reason.
“I want to stay in position according to the market situation, wherever the market turns from now”. If you say, you need to set rules accordingly. It is necessary to measure and assess what would happen if you included the market volatility.
2) How many contracts will I trade with?
Money management in VIOP starts with determining the number of contracts to be traded. Why is the number of contracts important?
It is useful to answer the following questions while determining the number of contracts to be processed.
a) How many buyers and sellers in the market. Does the number of contracts I intend to trade exceed the market liquidity?
b) Trading with low contracts while winning with high contracts while losing can melt your account in a short time. Therefore, if the number of contracts will change dynamically, it is necessary to determine in advance where the contracts should be increased and where contracts should be decreased.
c) In transactions, will all contracts be included in the position from the same place or gradually.
d) Will the positions be closed from the same place or gradually?
e) Will the number of contracts be constant?
f) Will you trade with all the money in your account or will you take a position with a certain amount of this money.
g) If you are using a trading system, will you take positions on all signals generated by this system?
3) How much damage I will do if I damage.
You got into the position and things went wrong. You did long but the price started to drop.
Do you know where to return? Just as you do not know where to go when you do long, you do not know where to turn from when falling. In fact, what you see clearly in this market is the rise or fall of the amount of money in your account. Then you need to keep the risk under control. The risk is your chances of losing. You will stop compulsorily to limit your loss. You made long, the price dropped, you stopped. After a while it rose again. It came to your reception place. Now you are a sucker. No. You have implemented the stob, which is part of your strategy. You may experience this situation several times. Is it annoying? Yes. Is it depressing? Yes. Is there anything else to do? No.
You may lose money. But one day it protects you from such a reverse movement that you will be surprised. Have this in your mind once. Stability brings success. Your goal in this market is to make stable profits. This can only happen with a specific strategy. It is part of the strategy at the stop. You may not be able to predict the price direction, but you can avoid big losses by staying in the strategy.
In order to keep the risk you take under control, you need to put your stock as far as the normal swing of the market but close enough not to upset you. The risk here is essentially your likelihood of losing.
5) Psychological competence. (Discipline, usually money is lost due to deficiencies here.)
Competence arises after your experiences.
Experience is gained by living, not by aging; and time ripens pears, not people. -Peyami Safa-
It is important that you combine toric knowledge with practical knowledge. How can this happen. Either you will be trading for many years or come from the past to this day on the chart and examine the price movements. You need to observe what would happen if you followed certain strategies. However, you need to learn to be able to take a live position and tolerate loss or gain. What's the harm in gaining when you realize the loss. This is a double-edged blade. It eats the capital when the profit is raging. It may cause you to act more risky.
At least when you follow a system, you must have the skills to comply with it.
How do you react when the volatility in the market starts to hurt your position? Your reaction is normal. It's abnormal that you don't even react. What matters is the content of this reaction.
I did not see the man who was happy when he did long and fell into stoba. The reactions given here.
I did 1-Long, the price is falling. I am hurting.
I did 2-Long the price is falling. So there is something wrong. This is a warning. I need to stop and check what's going on.
As you can see, strategy is important. The strategy allows you to steadily move in one direction through the market chaos. Let's assume that you also take into account, for example, swaps during the day. Relying on the current exchange of buyers and sellers throughout the market can tire you. When the conditions change, the buyer-seller exchange also changes. Or, if the conditions are desired to be changed, the buyer-seller exchange can be changed instantly. It is more important that you fit into your system. Since system components have already been created by considering every possible situation, you just need to comply. For example, it is important to have a take profit level in the system. Take profit while preventing the stop portfolio melting, it enables portfolio growth. At this point, the system can be enriched with additional rules. For example, after taking a profit, by taking a position in the system at half the position before taking profit, if things go wrong in the new position, it can be ensured that the profit you have taken is melted at a minimum level. The system is an obstacle for the sake of the trader and the position.
When circumstances change, you need to be able to change your position. No position goes forever.
We will move on to system examples in the next article.
AUTHOR:
Ali Erkan TANACIOĞLU
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