Friday, April 30, 2010

Fill it, Shut it, Forget it!

According to a corollary of the Murphy's law

"If you fiddle with anything long enough, you are sure to break it!"

Nothing is more true with regards to the stock market pains of traders than this statement!

We enter a trade and immediately start worrying!!!

The ECG like movement of the graph increase our heart beat further.

Finally, our blood pressure, anxiety level and stress increase so much that one big move and we are out with loss!!!

It all happens despite our having done good homework before entering the trade.

It all happens because we keep on "fiddling" with the dance of the graph with our eyes and hence the mind!

I, too, was a victim of this deadly habit.

Bad habits die hard, they say!

For months and years I wondered when will I be able to have patience to leave the trade alone!

When will I give a genuine chance to my method to reach its "destination" before I trip it!!!

Until I found three reasons which gave me the way out.

First, if you don't have confidence on your method, you can never be confident of the trade! Period.

Second, if you are confident of the method's reliability, you must leave the trade alone once triggered.

Third, you can't win big if you can't bet the small profit for the big and complete profit! (provided your method's message is still in your trade's favour)!

Have guts to "turn off the computer"

and get out of the room!

Don't expect the curd if you keep stirring the milk.

Stop fiddling with your trade.

Fill it, Shut it, Forget it!

To RSI Sir, with Love!

30th april, 2010 AD





1 month Chart,

Google Finance,

World Wide Web.


Dear Sir,

At the outset I wish to admit that I am a big fan of you and your family of rsi charts (14/1w, 14/1d and 14/2min).

I read your interview yesterday at mudraa that you trade alone. And that your family is self sufficient in estimating the trend and timing the market.

Being your longstanding admirer, I totally agree with what you said.

But, Sir, I have a longstanding desire to work with you.

I want to be your assistant.

Please let me be in your team. I shall be indebted forever for your this act of kindness!

Every great Singer, Musician, Magician, Sportsman, Politician, Godman, etc has someone as assistant. Why not you, sir!

Just see, how tired you are when you get exhausted at the end of the rally.

Just as one rally ends, another one starts.

Please take me as your assistant.

I will help your students pickup exact points of buying and selling!

You just need to give them approximate signal and I will do the rest,Sir.

Whenever I reach near top of my chart, it will be a "Buy" signal except when you order the continuation of the strong bear rally.

Whenever I reach near bottom of my chart, it will be a a "Sell" signal except when you order the continuation of the strong bull rally.

Sir, I will totally obey your rally signals.

My signals during your special orders can be ignored, Sir!

Also, sir, whenever you get exhausted near the ends of the rally, I will signal the exact point of final-exhaustion by banging my head against the ceiling (in case of bear rally) or against the floor (in case of a bull rally).

This way your followers will be able to know your exact point of total exhaustion.

They will profit more and bless you, Sir.

During your rangebound movement, I will signal your every turn by banging my head against the ceiling or floor, as the case may be.

Whenever you wish to reverse your direction as a light-hearted bluff during a rally, I will drop the hint to your followers by banging my head again!

Don't worry, Sir! My head will not hurt. I wear helmet all the time!

Please don't ignore my application.

Pleaaaaaaaaaaaaaaaaaaaaaaaaaassssssssse hire me!

with deep regards,

your obedient indicator,

William %R


1 month chart

Google finance

World wide Web

Wednesday, April 28, 2010

Amazing Side-Effects of RSI

* You just can't buy at 'resistance' and sell at 'support' - a major mistake traders commit.

- because you buy at rsi exhaustion in "over-sold" zone & sell at rsi exhaustion in "overbought" zone only!

* Emotions are out!

- RSI takes the decision!

* You trade with the trend.

- RSI tells u the trend.

* It gives you a reason to take the risk at the right (risky & difficult) time!

- RSI is the logic behind the magic!

* You trade with a method, not without.

- RSI is that method!

* You (thank God) have a trading plan!

- "I will buy at RSI bottom "exhaustion" and sell at RSI top "exhaustion"!"

* You trigger the start and end of the trade with clear 'entry' and 'exit' signals!

- RSI exhaustion is the signal!

* "Big moves rarely come without warning" -

- RSI is that warning!!!

* 'Patience' is inbuilt in RSI-based trading system!

- You don't trigger the start or end of the trade till RSI exhausts!

* You can go long as well as short!

- RSI tells how and when!

* You can "time the market" to reasonable accuracy

- RSI clock tells you that (see "4 hands and 1 window" post)

* You can't "over-trade"

- RSI exhaust = trade in one direction over, trade in opposite direction start!

* You can "bottom-fish"

- RSI exhaust in "oversold" zone!

* You can FINALLY stop losing and start profiting!!!!!!!!!!!!!!!

- ????????????????????? (check for yourself!)

Tuesday, April 27, 2010

8 stages of the Price-RSI rocket




Stage I : RSI rises, Price rises

Stage II : RSI flat, Price rises

Stage III : RSI falls, Price rises



Stage IV : RSI falls, Price falls

Stage VI : RSI flat, Price falls

Stage VII : RSI rises, Price falls

Stage VIII : RSI rises, Price rises

(Stage VIII is same as stage I.)



1. Stage I starts from the deep valleys of oversold RSI.

2. Traders should keep the stages of the rocket in mind to plan their "journey"

3. The rocket can skip stage II &/or III during ascent if rally is weak

4. The rocket can skip stage VI &/or VII during descent if rally is weak

5. During bull runs, stage VI & VII are likely to be absent.

6. During bear runs, stage II & III are likely to be absent.

7. A stage has not ended till the next has started.

Friday, April 23, 2010

8 voices Overheard in a coffee house near stock exchange!

"What do you trade?"

"I prefer trading Nifty Futures!"

"I prefer midcaps."

"My favourite is Suzlon."

"Mine is Bank Nifty. I stick to it."

"I trade momentum stocks."

"I prefer writing options."

"I trade index stocks."

"What about you? You haven't shared!"

"I trade opportunities!"

Wednesday, April 21, 2010

RSI - the fox!

Dogs are smarter than Cats,

Dolphins and Chimps are more clever than both,

But foxes are known to be the most clever!


Recently, it has been found that RSI can humble even the fox!!

RSI has double meaning to whatever it does

When it hits its head in the oversold or overbought wall

-it may mean it is indeed "over" sold or bought

-it may mean "ye to sirf shuruaat hai, aage aage dekhiye hota hai kya"!

When it retreats back after hitting the oversold or overbought wall

-it may mean price is going to correct

-it may mean the rsi is making room for itself to hit again harder!

When the rsi is not moving at all

-it may mean the price has paused

-it may mean that the price trend is losing the steam!

When the rsi is horizontal and price is not

-it may indicate rise in price if rsi is in the lower band

-it may indicate consolidation or fall in price if rsi is in the upper band

When the rsi is parallel to the price line

-it may indicate trend reversal if both are horizontal

-it may indicate trend strengthen if both are rising or both are falling

beware of the fox in the trading jungle

the RSI!

It knows a lot but is foxy in revealing!!!

Trading, MF or ULIP ? Straight Talk.

If u r an expert trader, trading is better than Mutual Funds for you.

You are likely to beat the returns of MFs.

But If trading is not ur cup of tea, then mutual funds are good options for you.

Professional managers manage the fund to get good return.

They put ur money in the stocks after doing thorough research.

But the best option is ULIPs!

They too are managed by professional fund managers but have the added advantage of


Whenever the market is dangerously high u can "switch" "out of the market" to safer funds.

This will protect your profit as the market corrects.

After the correction, you can again "switch" back from debt or safe fund to equity fund, thus making huge profits!

In case of mutual funds u have to slide down with the market except when u shift to another fund at a cost!

But even safer funds slide with the market.

The mortality & fund management charges are dwarfs before the huge extra profits locked by "Switching" in ULIP.

That ur family is getting "insured" is not bad, i suppose!

Pity, people don't use the best option of the ULIPs - the facility to Switch!!

How to time the switch?

Well, use RSI combination of 14/1d (3 month chart) and 14/30m (1 month chart).

Switch out of "Equity" fund when rsi combination has exhausted in overbought territory.

Switch back to "Equity" fund when rsi combination has exhausted in oversold territory.

ULIPs of all companies are good.

However, Insurance is subject matter of solicitation.

And ofcourse, if u r good at trading with rsi urself, u can consider taking up an insurance agency and advise ur clients about when to switch (at their risk)!

Happy "Switching"!

3 "hands" and 1 "window"!

Can you tell the exact time by a clock

which only has the 'hour' hand?

Obviously not.

That can give you only approximate time!

You also need the 'minutes' hand.

But, to get exact time, you need 'seconds' hand as well!

All three together can give you the accurate time.

But something will still be missing...

One more crucial info is missing.

You need the date window!


These 4 make the clock complete

Similarly you need 3 "hands" and 1 "window" to make a complete rsi "watch"!

RSI 14/1week (date "window")

RSI 14/1day (hour "hand")

RSI 14/30min (minute "hand")

RSI 14/2min (seconds "hand")

To time the market, you need to see all 3 "hands" and 1 "window" of the rsi "watch"!

Never try to read rsi "time" from one "hand" only!

Tuesday, April 20, 2010

Onions with a pinch of salt!

Two persons Mr.A & Mr.B are talking to each other.

How many persons are there?

Well, as I just said, there are two of them!

Sorry, the psychologists don't agree.

According to them, there are 6 persons talking to each other!


Let's see:-

First person : What Mr.A thinks he is

Second person : What Mr.B thinks Mr.A is

Third person : What Mr.A actually is

Fourth person : What Mr.B thinks he is

Fifth person : What Mr.A thinks Mr.B is

Sixth person : What Mr.B actually is

This is the fundamental reason behind the chaos of views and opinions all around!


This is similar to what happens in stock market.

Many of us trade on the basis of opinions of others!

When we ask opinion from one person, we are actually asking from three!!!

And the beauty is, opinion of each one of those "three" persons is a mixture of

1) What he "thinks" the market is going to do

2) What he "wants" the market to do

3) What he "fears" the market might do

4) What the market is "actually" doing


5) the opinion of experts he has heard on the TV!

Pity, we believe opinions given with confidence!!!

And they often kill with confidence!

Opinions (of others) are like Onions. They make you cry and there is nothing inside them!

Learn a method. Be self dependent.

Then enjoy all onions with a pinch of salt!

Monday, April 19, 2010

"Long-term greedy"

Here is a good advice from a "bad" but brilliant man - Goldman!

"as long as money is made over the long term, trading losses in the short term are not to be worried about."

This is Goldman's famous philosophy of being "long-term greedy"!!!

This applies wonderfully well to the learners in stock market!

As long as the new budding amateur traders are learning and improving

"mistakes" and losses are pardonable.

These are like consuming ammunition to train the budding soldiers......

These are like trainee pilots crashing the trainer jets but ejecting just before that.....

These are like friendly goals of budding football champs....

These are like broken bones of budding boxing champions....

As long as the lessons are being learnt

and experience is being gained

and methods being hardened

loss should be accepted with a mature smile!

as a cost of learning!!!

Afterall, training a stock trader is as costly as training a fighter pilot!

Be a proud "trainee fighter pilot" of The Royal Air Force

of National Stock Exchange!!!

Itch thrills but kills!

Why Mahabharat happened?
-itch to redicule ("andhe ka beta andha!" by Draupadi)

Why Ramayana happened?
-itch to inflame (Manthra's advise to kaikayee to ask for vardaans)

Why Gulf war happened?
-itch of Saddam to attack Kuwait knowing very well the consequences

Why Hiroshima, Nagasaki happened?
-itch to use Atom bomb

Why Indian batsmen fiddle with wide balls?

Why Jallianwala happened?
-itch of General Dyer to use force to "teach them a lesson"!

What causes maximum accidents on raods?
-itch to overtake!

Why riots happen?
-itch to take revenge, release energy and "do something"

Why people marry?

Why a person is born?

Why people fall in love?

Why people deceive?
-itch to have their way

Why people get deceived?
-itch to believe

Why people don't live "today"?
-itch to secure life of tomorrow

Why parwaana hits the candle flame to die?

What's the marketing strategy bet of credit card companies?

Why wrong trade on wrong side at wrong time with wrong logic with wrong stock with wrong amount happens?
-itch to trade

Why is it soooooooooooooo difficult to stick to a trading method?
-itch to trade

This world is being driven by itches!

Behind majority of problems in the world is an itch!

Only the one without an itch is truely happy!

Use itch-guard. Keep cool!

Don't buy an itch so costly!!!

(An itch was behind this article too!)

"Thank you, Sethji!"

A beggar rushed to his daily begging spot outside Bombay Stock Exchange (BSE).

He had to be there well in time before the market opened

so that he could beg from the traders getting in.

Since January he had to get up atleast one hour early due to enhancement of the trading times.

Anyhow, just like everybody else, he had no option but to get adjusted!

Today also, he managed to get there just in time.

He saw a big, fat and familiar trader coming towards the exchange.

He knew that this trader was primarily a day trader.

"Jai Sri Krishan, Sethji! 10 rupay deejeye na!" asked the begger.

The trader looked hawkishly at the begger, cold shouldered him and entered the exchange without yielding anything.

The begger was, obviously, disappointed.

He had just missed the "profit" to "fund" his breakfast!

Inside the exchange, the trader closed his eyes, prayed to his deity and started the trade!

It turned out to be an unexpected and tough day.

Markets were very volatile.

The trader lost good amount in day trading.

Hours passed.

Everyone waited for the closing bell.

Tired and dejected, the trader picked up his bag and came out.

The begger was still there.

"Jai Sri Krishan, Sethji!" the begger said.

The trader ignored him again,

but couldn't ignore the smile on his face.

"why are u beaming?" asked the trader to the begger.

"First tell me, Sethji, why are you so sad?" the begger shot.

"I lost a good amount in day trading today", murmurred the trader.

"But why r u so happy", the trader again asked the begger curiously?

"Sethji, when u didn't give me 10 rupees, I tried my luck in day trading, and I won a good amount" replied the begger.

"I think I won your money. My neighbour begger had told me that day trading is a zero sum game!"

"Thank you, Sethji!"

Sunday, April 18, 2010

RSI Protocol

Among the various types of RSI charts, the seniority list is as below:-

14/1week on 2 year chart (General)

14/1day on 3-month chart (Brigadier)

14/30min on 1-month chart (Colonel)

14/2 min on intraday or 5-day chart (Captain)

To interpret the Captain's move, keep an eye on what the Colonel is doing.

To interpret the Colonel's move, keep an eye on what the Brigadier is doing.

To interpret the Brigadier's move, keep an eye on what the General is doing.

If the junior's actions are ante to his superior expect the junior to be repremanded and forced to change his direction.

Don't take big positions on ante junior positions!

If the General is not tired on a trend-mission it is safe to assume that the Brigadier has not exhausted!

If the Brigadier is not tired on a trend-mission it is safe to assume that the Colonel has not exhausted!

If the Colonel is not tired on a trend-mission it is safe to assume that the Captain has not exhausted!


If junior's state-of-affairs is not ratified by any of his superiors, don't take any position.

If junior's state-of-affairs is ratified by his immediate superior only, take small to medium positions for short term.

If junior's state-of-affairs is ratified by all of his superior ranks, take larger positions for extended peiods of time.

This way, you will never make a wrong assessment of the ground situation.

Friday, April 16, 2010

The Final Method (U'll never lose ever again/Will recover all lost)

If short term trend is up,

BUY when rsi 14/30min

on 1 month chart

goes below 30.

wait for 2-4 days and see the magic.

book profit when rsi has exhausted in the overbought zone.


If short term trend is down,

BUY when rsi 14/30min

on 1 month chart

goes below 20 and exhausts.

wait for 2-4 days and see the magic.

book profit when rsi has exhausted in the overbought zone.

(if, during down trend u buy at rsi below 20 but without waiting for its exhaustion
book profit when rsi touches 60

because it is expected that price will fall after this brief relief rally, for rsi to exhaust.)


Never short!


Bite the size you can chew!


By "exhaust", I mean the rsi bangs its head quite a few times in the 30-0 or 70-100 rsi wall while the price is falling falling and falling or rising rising rising.


A) go to website (
for stock pl search stock in the column before "Get Quotes"

B) click on '1m' inside graph window

C) click on "technicals" below graph window.

D) Click on "add technical"

E) Select RSI (14/30min will appear automatically), Select period as 14

F) You are ready!

Be punctual ! Use Watch !

When the market is going down
=We buy it, fearing it will move up and leave us behind.

When the market keeps going down
=We square off, fearing it may keep going down.

When the market starts going up
=We fear it will start falling again, so we keep out

When the market keeps going up
=We say "now it is surely going to fall" so we should stay away

When the market has gone up
=We say "we should have traded"

When the market doesn't stop going up
=We jump in!!!

When the market, then, stops going up and turns
=We ignore the turn and turn our back to the the fact

When the market starts going down
=We "expect" it to turn around again and "give" us "profit", we hold on

When the market has fallen a lot
=We square off!!!

Moral of the story :

Be punctual! Use watch (indicator)!

Thursday, April 15, 2010

Real Tears,Sweat and Blood! (Paper trading with money!)

Dummy fake trading (without money) where we just record our trasactions on a paper (or in mind) is called Paper Trading.

Many traders opt for this to test the water, wet their feet before actually jumping into REAL trading where the sweat, blood and tears are REAL!

But traditional paper trading has many short comings.

Often, traders don't take it seriously.

The discipline required to paper-trade is often missing.

Following shortcomings have been seen:-

1) Psychological seasoning (ups and downs and dull periods) doesn't happen

2) Patience is not learnt

3) Performance under pressure is not tested.

4) Method is not truely tested due to lack of seriousness without money at the stake!

5) Consistency is not tested (rarely have i seen a trader paper-trade for more than one day or one trade!)

6) Real pain of losing is not experienced!

7) Slap of the stupid decision is not experienced!

8) Hidden traps and minor but crucial points are not learnt!

9) Self-confidence doesn't come. Fear of losing money still remains.

10) Real feeling of triumph is not experienced after big and earned profits!!

All fighter pilots have to be trained on a sub-sonic Trainer Jet before flying a Sukhoi.

Can't expect the lieutinent to fly the monster after just "paper-flying"!

So, what is required is : a trading training with minimum or no risk of losing
and yet with real experience with real tears, sweat and blood!

So, what to do? How to do?

Trade real but tiny.

e.g. Buy just 1 or 2 shares of a company.

And mentally multiply with 100.

e.g. I bought 1 Ranbaxy share in 2004 for 980/- and assumed that I had bought 98,000/- worth of these!

If profited 12 rs., i took it as 12x100=1200/- profit. similarly, for loss.

I held on to it for more than 1 month and experienced every thrill, every lesson, every setback i could have!

An unmatched learning without burning my fingers and yet experiencing the emotions of losing and gaining money.

If we can spend thousands on seminars and diplomas and certifications, why not a few hundred in brokerage for training!

Tuesday, April 13, 2010

What my 28 teachers tell me when i am afraid to take risk!

Life is a risk.
-Diane Von Furstenberg
If you don't risk anything you risk even more.
-Erica Jong
First weigh the considerations, then take the risks.
-Helmuth von Moltke (1800 - 1891)
Great deeds are usually wrought at great risks.
-Herodotus (484 BC - 430 BC), The Histories of Herodotus
If you're never scared or embarrassed or hurt, it means you never take any chances.
-Julia Sorel
It seems to me that people have vast potential. Most people can do extraordinary things if they have the confidence or take the risks. Yet most people don't. They sit in front of the telly and treat life as if it goes on forever.
-Philip Adams
Our lives improve only when we take chances - and the first and most difficult risk we can take is to be honest with ourselves.
-Walter Anderson
What you risk reveals what you value.
-Jeanette Winterson
And the day came when the risk to remain tight in a bud was more painful than the risk it took to blossom.
-Anais Nin (1903 - 1977)
Unless you try to do something beyond what you have already mastered, you will never grow.
Ronald. E. Osborn
Vision is not enough, it must be combined with venture. It is not enough to stare up the steps, we must step up the stairs.
Vaclav Havel
We cannot swing up on a rope that is attached only to our own belt.
William Ernest Hocking
We won't even attempt to achieve what we do not believe at a deep level we can have or deserve.
Ruth Ross
What you have to do and the way you have to do it is incredibly simple. Whether you are willing to do it is another matter.
Peter F. Drucker
When written in Chinese the word crisis is composed to two characters. One represents danger, and the other represents opportunity.
John F. Kennedy
The greatest glory in living lies not in never falling, but in rising every time we fall.
Nelson Mandela
The man who can drive himself further once the effort gets painful is the man who will win.
Roger Bannister
The man who does things makes many mistakes, but he never makes the biggest mistake of all - doing nothing.
Benjamin Franklin
The man who makes no mistakes does not usually make anything.
Bishop W. C. Magee
The more you seek security, the less of it you have. But the more you seek opportunity, the more likely it is that you will achieve the security that you desire.
Brian Tracy
The person who goes farthest is generally the one who is willing to do and dare. The sure-thing boat never gets far from shore.
Dale Carnegie
The results you achieve will be in direct proportion to the effort you apply.
Denis Waitley
The reward of a thing well done is to have done it.
Ralph Waldo Emerson
Never measure the height of a mountain until you have reached the top. Then you will see how low it was.
Dag Hammarskjold
Never mistake activity for achievement.
John Wooden
Nothing splendid has ever been achieved except by those who dared believe that something inside them was superior to circumstance.
Bruce Barton
Often the difference between a successful person and a failure is not one has better abilities or ideas, but the courage that one has to bet on one's ideas, to take a calculated risk - and to act.
Maxwell Maltz
One that would have the fruit must climb the tree.
Thomas Fuller


Markets are non-living things.

Markets don't have plans or schemes "against" you!!!

Like the "madhushala" of legendary poet Shri Harivansh Rai Bachchan,

Stock markets don't discriminate on the basis of

religion, caste, race, sex, colour of skin, state, etc.

Market doesn't know whether u r holding a long (bought) position or a short (sold) position.

Market is not out to kill you!

Market doesn't know u did ur homework or not before entering a trade!

Market doesn't know whether u r nervous or sleeping confidently!

As i said, markets are non-living things.

Markets are virtual mass-gaming arenas!

Those in the majority (money-wise) get the upper hand!

That is why they say

Go with the trend

Know when to be with the mob

and when to leave the mob.

It is worth repeating again,

Markets are non-living things.

They are not against you

They don't want to frighten u

U yourself are frightened

U get frightened because of your imagination

and fears.

Market wants u to trade without fear

with head but without headache!

Market loves everyone

it unites everyone

it is fair to everyone

just like Bachchanji's "Madushala"!

87½% chance of profit!

How risky is stock trading?

Lets do some back-of-the-envelop quick calculation.

Suppose you buy a stock or index futures.

a) The price will either go up or down.

So, there is always 50% chance of it going your way.

That makes it 50% success chance assured.

b) If you bought when rsi had exhausted (i.e. severely over-sold condition),

that adds another 25% chance of profit.

This takes the total chance to 50+25=75%.

c) If u still land up with remaining 25%,

i.e. if the price still goes down

there is half probability of it coming back pretty soon.

This further adds 12½% of the remaining 25% chance of success.

Total now becomes 75%+12½%=87½% chance.

So, the assured success rate for a sensible trade (based on a method/system) = 87½%.

Chances of loss = 12½%

If u r using a stop loss, this 12½% will always be peanuts.

So, if you trade 100 times as per your method / system,

you will profit 87½ times (big +small)

you will lose 12½ times (small)

That is not a bad deal!!!

The key factor, however, is

the method or a trading system

which decides the entry as well as the exit point

and not the gut feel or emotions or tips!

Happy trading!

Monday, April 12, 2010

Essay on "trader" written by a trader's son in matric exam!

1) The planet is full of traders - trading in vegetables, automobiles, arms, contrabands, emotions and gods, etc.!

2) There appear to be more traders than consumers in the world. Everyone I meet calls himself trader. This is hurting the name of the real traders. Government should do something about them!

3) By definiton, a Trader is the one who neither produces nor consumes a product or service, but makes more money than both the producer as well as consumer by buying cheap from someone to sell costlier to someone else!

4) A trader should never behave like a consumer. Unlike a consumer, a trader is not interested in the use of the product. He never gets emotional about the product or his "trader" title. He is just interested in making money from trading the product. He hates consumers. He hates behaving like a consumer! A true trader never marries a consumer daughter of a consumer father!

5) My friends in stock market also call themselves "trader". But many behave like consumers rather than traders! They get excited in a rally mela when they see everyone buying. They forget their real role and start buying like a consumer! Government should do something about them.

6) A trader accumulates "highly useful" products during "off-season" at cheap rates to sell them during "peak-season" at peak rates! Younger generation traders even buy at high rates to sell at even higher rates. This is very risky and the elder traders are really worried about the fading art of traditional trading these youngsters are spoiling in the name of excitement!

7) A trader is interested in buying anything which values more than it costs and will have good demand in the market.

8) A truely great trader is never interested in trading till he is getting extra-extraordinary price!!!

9) Ordinary traders make money at the time of selling! Extra-ordinary traders make majority money at the time of buying! They buy the same thing much much cheaper than ordinary traders. So, even when they sell at the same rate as ordinary traders, they make much more profits. Extra-ordinary traders know that there is competition at the time of selling but there is little competition at the time of buying!

10)Traders have strong hearts but weak souls. Income tax authorities should treat the traders a little bit politely!

Is it a Bye or a Goodbye?

In school our english teacher had once taught us that

you say "Bye" when you are taking leave for short period like a few hours to a few days

and "Good Bye" when you are leaving forever or for long periods in between.

Lately, I noticed that this applies equally well to Nifty also.

Whenever it falls in a bull market or rises in a bear market

I check whether it is a "Bye" or a "Good Bye"!

This helps me take the right decision.

I have seen that whenever nifty makes the contrarian move without rsi eshaustion, it is a "Bye".

It comes back smiling, very soon!

And whenever it does so at the rsi exhaustion, it is a "Good Bye".

And I don't see his pretty face for a long time!

And during its "Good Bye" journey, any re-reversal is a "Bye".

It continues its "Good-Bye" journey till rsi has exhausted again!

So, whenever someone dear to you says "Here I go!"

check whether it is a "Bye" or a "Good Bye"!


Sunday, April 11, 2010

Stop! Face it!

Imagine that u initiate a long trade after doing proper homework.

Your understanding says that the price will go up.

Your method says that it is perfect time to enter the trade.

You even have more than sufficient buffer funds to handle any adverse price movement.

In spite of all this homework and conviction

why do u have butterflies in stomach?

why do u feel nervous?

why are u restless and uneasy?

God forbid, if the price actually dips

the fear of loss takes its toll and u square off after putting a brave face for some time! Only to find the stock recover and rise!!

Even in case the price goes up,

the fear of losing the profit results in premature exit!

The funny part is that all this while u know that your reaction is wrong.

So, why do u still succumb to this fear?

What do u do to overcome this weakness?

Fortunately, "James-Lange theory of emotions" can help us understand and overcome this.

This theory was developed independently by two 19th-century scholars, psychologist William James and physiologist Carl Lange.

According to this theory "we don't run away because we fear, but we fear because we run away".

Both the scholars conducted several experiments to prove their theory.

As explained by the scholars :

".....suppose you are walking in the woods and you see a grizzly bear. You begin to tremble and your heart begins to race. The James-Lange theory proposes that you will interpret your physical reactions and conclude that you are frightened ("I am trembling, therefore I am afraid.").

Likewise, on seeing the adverse movement of price in stock trading, if (by habit) your first reaction is to square off, you will panic! Resulting in actual square off!

If, on the other hand, your first reaction, out of conviction of your homework and safety measures, is to ignore any adverse price movement, you will not panic and hence not square off!

Think it over.

"We don't run away because we fear, but we fear because we run away"

Aladdin's Genie and the stock trader

A stock trader once found Aladdin's lamp.

He had struggled so much in the stock market that at first he didn't believe in his good luck!

He thought the lamp was fake and just a decoration piece of brass.

He rubbed it gently and half-heartedly.


A genie came out!!!

The poor trader couldn't believe his eyes!

"Make a wish! My Master!!" said the genie.

"Make me as rich as Warren Buffet!", the trader shot from his mouth.

"As you wish, My Master!"

"How much time do you give me to do that for you?" asked the Genie.

"Can't you do that first thing tomorrow morning?!" slipped out of trader's mouth.

"Are you crazy? Market will be in the upper circuit. You would need circuits everyday for the next 2 years to reach anywhere near Mr.Buffet! Give me a realistic time frame" commanded the Genie.

The trader never expected this conversation.

"OK, Pl make me Warren Buffet in 5 years" he compromised.

"Which method do you want me to use to make you Warren Buffet in 5 years? I mean should I use RSI or 34/8 or Trix or Mass Index or what?" asked the Genie again.

"You also need a method? what kind of Genie are you?"

The trader was now visibly restless and annoyed.

"Mr.Trader, other traders in the market have not come in my wedding that they will let me have my magical ways get thru. Pick the method"

"Ok, do it with RSI" the trader murmurred.

"How much Principle amount do you have?", Genie asked again, with that serious look on his face!

"Why do you ask that?", asked the trader, visibly surprised at the blunt question.

"No, I need to know that!", quipped the Genie.

"I have very less amount. You are Genie. You should have guessed it!" the trader felt exposed!

"You want me to make you a Warren Buffet from that principle!!!"

"Wake up Mr.Trader. Stop day dreaming. Be realistic. Otherwise you too will lose your shirt like me and would only be doing it for others and live in a lamp or under a lamp post! Good Bye!!!"

Difference is in the language!

Some say : "Oh God! It is falling!

Others say : "Thank God! It is now available for less!"


Some say : "It is very risky opportunity"

Others say : "It is risky, that is why it is an opportunity"


Some say : "I feel terrible at 7000 Sensex."

Others say : "How would I feel when it get backs to 21000 in a few months!!!"


Some say : "Everybody is selling"

Others say : "If everybody is selling, then who is buying from them & why!!!"


Some say : "Hurrey! I've got the profit!"

Others say : "Hurrey! My method has profited!"


Some say : "God! Help me!"

Others say : "God! Help me help myself!"


Some say : "Will I be successful in trading?"

Others say : "When and how will I be successful?"


Some say : "What is the market going to do now?"

Others say : "What will I do if the market does this and what will i do if the market does that?


The difference is in the language!

What a difference!!!

Saturday, April 10, 2010

"You won't do it"

World War II ended with the bombing of Hiroshima & Nagasaki in 1945.

Japan was devastated.

The country rose from ashes like a pheonix.

Whereas "Made in Japan" was considered synonymous with poor and shoddy quality before WWII, it transformed into the guarantee of astonishing quality. All within a few decades.

Legends like Dr.Edward Deming and Joseph Juran helped Japan become a quality Mecca!

Entire world was awed by the transformation.

Every country in the world started feeling the heat of Japanese quality in the world markets.

Everyone wanted to know the Japanese secrets behind their quality revolution.

The Americans sent a team to Japan to dig out "the secret".

They went to one of the best companies of Japan and tried to fish "the secret".

To their shock, the Japanese manager started openly discussing their best practices, their new ideas, their "secret".

He discussed everything in detail and with passion.

He told and showed them all!

When the American delegation was about to leave, they couldn't resist the temptation of asking the manager

"why did u tell us all ur secrets?"

The manager smiled.

He asked the delegation to follow him.

He took them to his cabin and pointed towards a packard with something written on it in Japanese.

"This is the reason why!", he said with a wider smile.

The delegation was clueless!

They didn't know Japanese.

Do you know what was written on that signboard?

"You won't do it!"


Stock market or any other field.

We all learn a lot of things.

But we don't do it!

The Good,the Not-so-bad & the Ugly timing

They say you can't and shouldn't time the market.

But they don't tell you that although you can't "time the market", you can "time the trend"

Also, good timing is better than no timing.

And no timing is better than bad timing.

It is sad that most traders have bad "trend timing".

As someone rightly said, "Don't be an eleven o'clock bull or a five o'clock bear."

So, never be misled by the statement that "never try to time the market".

Time the trend with your trading method.

Many unsuspecting retail traders mistake "never try to time the market" statement as a license to trade at "any" time.

And they get trapped!

That is sheer bad timing.

You can time the trend of the market to very high level of approximation.

Only a few point inaccuracy this way that way is left.

RSI exhaustion is one of the best ways to time the market.

MACD, 34/8, Base line theory etc. are some of the most useful tools for timing the market.

Often traders use emotions rather than technical indicators to "time" the market.

Often traders hang on till they can emotionally withstand the market pressures. Then they throw in the towel irrespective of the trend-timing.

This is known as "I-can't-stand-it-anymore" timing system.

It relies on emotional reactions to market fluctuations. And, needless to say, this is the virus responsible for majority of trader ailments.

So, forget what they say.

Just "time the trend" with technical indicators.

Friday, April 9, 2010

How to trigger Stop Loss and still be happy?

Mr.Happy bought 100 shares of Happiness Unlimited at Rs.1000/- per share.

Total investment = Rs.100,000/-

He had done his homework thoroughly.

He was pretty sure that he had bought the stock at exhausted rsi lows.

He was sure that stock couldn't fall by more than 3 or 4 bucks from his purchase price.

So, Mr.Happy happily put the stop loss at 95.

After a few days, something rare happened.

Markets started slipping.

The price of Happiness Unlimited started to decline.





Mrs.Happy (Mr.Happy's wife, ofcourse) ordered him not to trigger the stop loss of 95.

(Wives are always more intelligent and intuitive!)

"It will rebound." She explained.

"Then why have a stop loss?" Mr.Happy argued.

and without listening to her reply, he triggered the Stop Loss and exited.

Mrs.Happy became very unhappy!

"How dare you?"

"Being life partner, I was 50% partner in this trade as well! Why was not I consulted?" She shouted, hands on her waist!

Mr.Happy scented trouble.

But he gathered courage to explain

"Dear wifi! Something beyond our understanding is happening. There is a good chance of the price falling even further. It is does, we will get the golden gift opportunity to buy it at mouth watering price. We anyhow know it has the potential to reach 130 in 2-3 months.", he said.

"And what if it doesn't fall." Mrs.Happy challenged!

"We will buy it again. 95 will act as 'buy again' level for us, honey!"

Unexpectedly, Mrs.Happy saw the logic.

Truce was called.

Mr. & Mrs.Happy lived happily for ever after!

Never mind what happened to Happiness Unlimited's price.

You got the moral of the story.

"Never trade in front of wife. Just hand over the profit. Period"

So, don't worry, be Mr.Happy

Pull that (stop-loss) trigger!

Do u have a "Swiss" Bank account?

One of my trader friends in Shimla has been silently multiplying his net worth through trading since a few years!

He is a thorough introvert.

I met him yesterday evening over a cup of coffee at Indian Coffee House on the Mall Road to specifically ask him a few questions.

I was sure to find something important to learn from him by asking him his trade secrets!

I was not disappointed.

"How do you manage to keep smiling even when the market falls like it did today?" I asked.

"See, Jigs, my philosophy is simple," he started.

"Markets have the natural tendency to go up. To go down and keep going down forever is not their natural behaviour. So, if and when they fall, small or big, I am 100% sure that the markets will come up. There is an unsaid guarantee of that here in India. I am not living in Combodia or Ethiopia or Haiti, you see!"

"Secondly, I enter the markets only and only when the market is severely beaten down. I use RSI
and MACD besides my eyes, head and blood pressure to judge whether I am near the intermediate
bottom. Similarly, I decide on the exit point."

"The probability of the market going further down from my entry level is extremely low."

"Thirdly, if at all the markets do something unnatural, something totally unexpected and
abnormal, by falling from my "home-work" levels, I don't mind"

"I always ensure that for every nifty futures lot I buy I keep Rs.40000/- spare as back-up fund
in my HDFC account. This 40000 buffer gives me a cushion of 800 nifty points! I can hold my
nifty position in case of a sudden catatrophe of upto 800 points. And that is hell of a cushion
below my 'home-work entry level'!!!"

"Frankly, Jigs, I don't expect that cushion to be used even 50% in my entire life! Otherwise, my
homework analyses about the entry-point is useless and I need to go back to the KinderGarten of
stock trading again."

All this while I was keenly listening to him, recording (with his permission) the audio of this
entire conversation on my Mobile.

"And how do u feel when some amount is debited from your account in the evening due to
unexpected fall in the day?"

"Why should I feel anything, Jigs?"

"Long ago, I developed a childish but damn effective psychological way of dealing with this
daily debit-credit thing."

"I assume that I have a secret invisible vertual 'Swiss' Bank account. I assume that the money
debited to my HDFC account is deposited into my 'Swiss' account by my broker."

"I assume this to maintain my peace of mind. I know that the money taken away will be returned.
I assume that it is still with me only but in my other account. I know that it is going to be
'transferred' back to my HDFC account the moment markets come up again. And come up they will, for sure"

"So, tell me Jigs, what difference does it make anyway whether my money is in my this or that
account? I am anyway not going to spend it even if it is in my HDFC account!"

I was speechless. I had got what I wanted.

I asked the waiter for the bill of the coffee and dosa, and paid happily with the money I had
withdrawn from my HDFC account!

and I decided then and there to open a "Swiss" Bank account that very day.

(Swiss=Stays With "I" Safe & Sound)

Wednesday, April 7, 2010

Do u have this money plant at home!

Scindapsus aureus or Money plant


Among the plants that you needn't pamper!

No watering or regular monitoring required. Just leave it.

Thrives with the minimum of fuss.

Adds to greenery!

Also, In olden day the money plant kept in the house/backyard/courtyard was believed to bring the goddess of wealth to the house with prosperity ,wealth etc. following her.

This led to the plant being called as a money-bringing plant (money plant).

There is a money plant in stock market as well.

Its scientific name is

"Nifty Futures"

Just plant it when RSI 14/1d on 3 month chart is exhausted near the lower wall of 30-0.

That is all!

Historically, it has been seen to keep growing for next 2-4 months by 300-600.

No watering or regular monitoring required. Just leave it. Just like the money plant!

Every morning don't put an alarm in your mobile phone to wake up.

Instead, everyday you will be woken up by an sms from your bank informing that so and so amount has been credited to your account for the previous day's gain in nifty.

All you have to do is

- Keep replacing the water (carry forward to the next series on expiry day, if required)

- Discard the old plant (book profit) when the RSI 14/1d on 3 month chart has exhausted near the upper wall of 100-70.

- Wait for planting the next one.

The latest Nifty money plant was planted on 10 Feb 2010 and is likely to continue growing (without any fuss) till April'10 end or May'10.

Similarly, previous to this one, the Nifty moneyplant was planted from 4 nov'09 to 19 Jan'10.

Shubh Labh!

Keep a Money plant!

Sunday, April 4, 2010

How to BTST with RSI

BTST (Buy Today Sell Tomorrow)
STBT (Sell Today Buy Tomorrow)

BTST any good stock near closing if

1) it has exahusted near lower rsi wall (30-0) in the last few hours, or

2) it has just given a charge towards upper rsi wall (70-100) (preferably after exhausting near lower rsi wall)

3) it has remained by and large within 35-65 range for the entire day after remaining near high rsi wall the previous day (meaning it is in strong uptrend and is refusing to go down before another charge up)


STBT any good stock near closing if

1) it has exahusted near upper rsi wall in the last few hours, or

2) it has just given a charge towards lower rsi wall (preferably after exhausting near upper rsi wall)

3) it has remained by and large within 35-65 range for the entire day after remaining near lower rsi wall the previous day (meaning it is in strong downtrend and is refusing to go up before another charge down)


RSI is said to have exhausted if it has banged its head against the upper or lower wall a few times while the price was clearly trending.


The same applies to nifty futures as well.

Also, obviously, only stock futures should be taken for btst or stbt for cost considerations.
The stock or nifty is likely to give you handsome profit in the morning. Due to global pressures, if the stock chosen as per above rules behaves adversely, it is most likely to rebound.

Saturday, April 3, 2010

The Man who brought the world down?

Mr.GS is declared "trustworthy" by the Govt.

People deposit money with Mr.GS.

Mr.GS gives a part of that money to political patrons.

The Govt, in return, distorts policy to help Mr.GS get easy access to cheap money

Mr.GS puts that money in crap stocks

The crap stocks start shining.

General public starts chasing the shining crap.

The shining crap turns gold.

Mr.GS starts selling it

and bets heavily on the shining crap going bust (i.e. shorts it) !!!

(only they knew that crap was crap)

The crap finally goes busts.

Mr.GS has made a mountain of a killing!

Record profit when the world was going thru its worst crisis!

Mr.GS gives huge "shameless" bonuses to its "men"!

People who had bought crap go broke.

They go to Mr.GS who happily lends "back their own money" !

At an interest!!

And thus makesmore money!!!

Markets plummet further and Mr.GS buys good stocks at crap price.

Govt further gives bailout money to Mr.GS.

Mr.GS buys more 'good stock' at crap price with that bailout money.

Seeing Mr.GS buy, markets recover.

Several funds start buying again.

People start buying again.

Markets move up.

Govt gets the credit.

Mr.GS's 'good stock at crap price' starts rocketing to its real value!

Mr.GS starts looking for the real crap.

for next innings!

Who is this Mr.GS?

He is Mr.Goldy Singh!

A Man with dirty Socks.

Lives across the Atlantic!

"Hello! I am Lakshmi Ramachandran !"

"Hello! I am Lakshmi Ramachandran.

I have been studying technical analysis since Jan 2001.

Life was too boring with a stagnant job as an officer at Bank of Baroda.

I wanted to do something which threw challenges almost on a daily basis.

At 45 years of age,there was not much oppurtunity to jump jobs.

Moreover I wanted to be my own master.

Then came the oppurtunity of a lifetime.

Banks were offering voluntary retirement schemes and luckily I qualified for it.

Stock markets always attracted and intrigued me.

It seemed confusing and complex.

Yes, this was just the thrill i was looking for.

Despite the risk of losing out on a good, cushy, respectable and lucrative job which I could
have continued for another 15 years, I Quit.

I had found my calling."


I read this simple, amazing and inspiring introduction at

The lady is a role model for many!


Thought I should share this.

Stock Market is a dream destination in this journey called life!

Live your dream!

Have a heart!


Friday, April 2, 2010

Exhausted RSI is worth a million dollars!

Watch the rsi of falling stock/nifty

If it rebounds from above 30, ignore!

If it rebounds from below 30, sit up and watch carefully!

If the price continues to fall, rsi continues to repeatedly (2-4 times) bang its head in the
very low rsi wall (say 30 to 5) and never rising more than 55-60 in-between,

get ready, your prey is in front of you!!

And when the stock or nifty has fallen "a lot", rsi has exhausted falling down and is starting
to move up while price is still down, pounce!!!

You have just entered a trade in which the odds are highly favourable to you and the stock is
extremely oversold in the given time frame.

Then hold till the base line becomes horizontal.

For weak hearts, hold till rsi crossess 80.

For Day Trading take rsi 14/2min

For Swing (1-3 months) trading take rsi 14/1d

U can verify the trade by ema 34/8 in swing trading and ema 10/50 in day trading (just to amuse
urself, otherwise verification is not required).

Similarly, reverse is true for the up moves.

Cautions :

1) Don't carry forward day trading.

2) If u don't get the exact signal as above, don't trade.

a diary page found on the road!

It is wrong to read someone's diary.

But what if someone found a torn page of a struggler's diary on the road?

Can't help but read it...

Here is what it reads...


"I know I should have become successful by now.

Believe me

I would have

if I could have.

But I didn't

because I couldn't.

I couldn't

because I thought

I can't!

I can't became I don't!

I don't became I won't!

I won't became I shan't!

But now

I shall.

I shall when I will.

I will when i do.

I do when I can.

I can when I know.

I know if I will.

I will

if i have the will.

I have the will

to win

and keep moving!"


Seems as if it were mine!

"ye suicide hi tha!"

Market doesn't know u r holding long position.

Neither does it know that u r short.

It will move in the direction it has to move and not in the direction to kill u!

Market only knows whether the majority is long or short

or whether the majority are over-reacting or returning from over-reaction.

Over-reaction creates trading opportunities

which get encashed while returning from over-reaction.

So, market in itself is not ur enemy.

It didn't ask u to go long or short

Market never kills anyone

it doesn't want to!

why should it?

As they say, Market always does the obvious in the least obvious way!

It is not the markets but the sharp players in the market who play tricks on you

to scare u to give them ur money.

They know u lack confidence.

They know u haven't done ur homework.

They know u have prematurely jumped into the trade without waiting for the odds to be in ur

They know u r scared.

They know u are unwisely leveraged.

They know u don't have sufficient buffer funds to hold to ur position.

They know u have a stop loss and where.

They know how to whipsaw u.

It is they and not the market per se which is out to "kill" u!

I repeat, market never knows whether u, as an individual, have a long or short position.

It has no intention to "kill" u.

U kill urself.

By taking incorrect position.

By taking premature position well before the odds are overwhelming in ur favour.

By weak money management.

U urself become a sitting duck for the predators and blame the market for it.

Stock trading is virtually the biggest online game in the world "played" by millions everyday.

Amateurs are playing for "thrill"

Pros (young as well as veterans) are playing for "profits" from "trading opportunities"

People say 'they are unlucky'

I say 'u choose to be unlucky'

As Principal Bhupinder said in his article

"Luck is just Pluck!"

In the movie '3 Idiots', 'Rancho' tells 'Virus' "Ye suicide nahin, murder tha!"

But in your case, whenever u lose

"ye suicide hi tha!"

Thursday, April 1, 2010

What is the blood group of a trader? is not A,A+

Neither is it B, B+, O+ or O-....

It is different, special and unique!

It is "W+"

'W' because he can "Wait" endlessly for "the trading opportunity"!

and "+" because that is the only mathematics he knows.

A trader never enters a trade till the odds are in his favour!


He doesn't "enjoy" trading.

He enjoys only "profitable opportunities"

In fact, he has already "ensured" profit at the time of initiating the trade.

Only confirmation is left!

He has traded at extreme!!!

His favourite word is "No"

His favourite line "Trade in haste, Repent at leisure"

His favourite confession "Profits doesn't lie in a 'trade'. Profits lie in waiting for the right trading opportunity."

Like a professional gambler, a professional trader sticks to a tight set of rules.

He is not at all interested in trading till "his" trading signal is there.

He allocates more money to higher probability outcomes and less or no money to the lower probability ones.

An inexperienced trader often thinks that he always needs to be in the market and trades for the sake of it.

It is not his fault, it is his blood group!

So, whenever you want to know whether a person in the stock market is a trader,

just ask him his blood group!