Monday, September 29, 2014

my dear operators!

self talk, 3:04pm, 29sep, cmp=7949spot

what do i want myself to do? keep running like a scared dog at every sound of fundamental?

why look at fundamentals when trading technical(+tactical)

and why look at technicals when trading (investing) fundamentals

"technicals know that the news is coming" - as they say

i don't think i am that fool to buy the theory that operators don't know the "news" beforehand!

now, stop that nautanki and do what u r dying to do, my dear operators!

Thursday, September 25, 2014

only obedience

whether it is to play the dead cat bounce 
or to short again 
or to be ready for the next trend/swing, 
the best best best thing is to wait and let the market make the first move. 

operators want you to make the first move (by greed or fear). 
the ones who resist the temptation escape the operators' trap and enter the trade in winning position. 
right now, market is in this very position. 

the greedy may blink too fast and the bleeding will be too eager to settle the score and "snatch back" the lost money. 

perfect setting for an abetted suicide. 

the more u wait at such crossroads, the better. 

u don't only make money while inside the trade, but also while u wait outside. 

give operators enough room to bluff. bluff is their only tool to trap the majority.

will like to wait on the sidelines with my hands and legs tied, eyes half sleep.

no prediction of the market, only obedience. no hurry, let her make the first move.

Wednesday, September 24, 2014

catching the missed train

- entering trade midway is risky, till there is a pullback. pullbacks are the least risky points to enter the train who couldn't at the platforms.

- it is least risky to enter at the appearance of the signal. entering in-between (once the trend has started) is quite risky as market may retreat/pullback or trend may reverse prematurely. entering immediately at the signal gives lot of safety cushion. often, i have got away "rate to rate". earlier used to think "let the trend get established and then will enter." not correct!

see u in the whatsapp group

to join whatsapp group for my nifty trade sharing,  email ur name city and cell no. to niftyshots123@gmail.com

Sunday, September 21, 2014

trading is essentially answers to these 3 questions!

for me trading is essentially answer to 3 questions:-

1. is there a trade?

= should i trade or should i stay out?

2. which direction?

= if there is a trade, judging the direction is the next question. finding the trend, knowing which way the market is or about to move is the single most important decision. this is decisive! this is the heart of the trading. it took me years to get this right. once this step is right, rest is fine tuning, though therein lies the efficiency of the trade.

3. what quantity?

= this decision, answer to this question, decides the effectiveness / efficiency of the second decision above. not all situations are to be traded with same quantity. you have to enter and exit in steps. u have to commit the stake depending upon the probability, risk. u have to hold some cards for the contingency!

once the answer to first and second question are settled, all i am left to do is keep adjusting and managing the third one. i have to keep reducing or increasing or monitoring the magnitude of my stakes.

all this depends upon my market analyses and my answer to operator games. this also took many years to spot and learn.

i am rarely with zero stakes in the market when the answer to first question is 'yes'.

limitations handicaps weak points of operators

in the financial jungle, operators (hedge funds, large banks, fii's, cartels etc) are the predators preying the smaller and retail players.

fight with them face to face and u stand no chance.

fortunately, they are not invincible. they have their loop holes. they have their weak links. they have their unguarded lacunas. they also leak. they have their pockets of inefficiencies. they have their moments of vulnerability.they have their "situations". they also have times when they have their guards down. they are also....quite mortal....

so, what are those limitations, handicaps, weak points?

here are some i have identified and am learning to exploit:-

- operators can't hide the traces of their moves in technical indicators. they can make it complex, confusing and smart, but they can't erase their tracks.

- operators can't stretch beyond a point. they have to obey fundamentals. they can go this way that way to an extent. beyond a limit they might strangulate themselves. and farther they go from fundamental reality, faster they have to retreat.

- operators have to eat all the premium before the expiry of the series. they can't keep their cakes in their hands and just run. they have to go into the caves if ranges, whether they like it or not, so that they can eat the cake in their hands and make the money their "clients" want them to, come-what-may.

- operators have to fight with other operators. there are times when sharks come too close and there is a clash of interests. though they are fairly integrated, yet they are competitors and vying for the same pool of investors' trillions. operators can't be too insensible to be stumped by competition.

- operators have to let smaller operators make some money. they have to "keep some people happy". they can't afford enemies "who know what they do". they have to "share". so, operators can't be that reckless as they are thought to be.

- operators have to keep giving some crumbs to the retail fish traders. they can't just let the small fish starve to death. otherwise, who will come to the markets? just to be preyed?

- operators can't overdo it. afterall, there are market regulators, watchmen, media, governments, whistle blowers, activists.....nobody can afford the collapse of the system.

- operators don't know everything. well, they know many things, they have all the crucial insiders' information, but they don't know everything. they can't control everything in the world. there are bound to be "surprises"! they can't be too adventorous!

- operators have to do stupid things to trap the overwhelming majority of retail traders. the one who can see their bluff and call it can make a lot of easy money ridiculously easily!

- operators have to balance indices with stocks and stocks with indices. operators have separate positions in stocks and indices. there is a limit to micromanage positions in everything in perfect balance.

- operators are human.....and prone to stupidities and overlooks!

- world is too complex to comply to a single or a few dictats! you simply can't manage everything.

- operators have targets to meet. they have to return the easy money to the nervous banks. operators are traders themselves.

- operators have very limited room to play the game. they can take the market either up or down or keep it rangebound. their options are very limited. this is too boring and limited in scope! they have to do the dodge trick within these constraints.

- operators are big bluffers. that's what is their only tool. call it surprise, shock, dodge, moneypower, bluff, confusion, irrationality, speed....they try to "get rid of you", trap you....with every possible deceptive way! and this is where they are vulnerable......anyone, who refuses to be intimidated, befooled, tricked, confused......anyone who can see thru their game.....can not only escape their trap but hit them where it hurts. the only consolation for them is that such retail players are too less.....almost insignificant proportion.

a retail trader can take advantage of all this. operators are poor chaps. they have their limitations. they pray that u don't get those. if you can, you can turn the tables and bleed them. u can be the perfect suckers to the suckers.

be a guerilla fighter with the giants.it is where it hurts them and they can do little about that!

Saturday, September 20, 2014

"hone ko to bahut kuchh ho sakta hai?"

"hone ko to bahut kuchh ho sakta hai?"
(as it is, anything can happen)

market can rise unexpectedly, market can collapse.....

that u can come to know only once it has happened! u can ofcourse wait to see what happens and then come in the trade. but then what's use? what was to happen has happened? u were not in the contention for the possible rewards.

trading and fishing are rarely meant for those who intend to keep sitting at the shore waiting for the absolutely calm sea......which anyhow, as they say, never makes a skillful sailor!

"hone ko to kuchh bhi ho sakta hai!"

but u can't make a living out of trading like that! u can't realise ur dreams like that!

here, probability comes into play.

trading, as i always say, is probabilistic and not deterministic.

there are times when the market's move in a particular direction high probability and then there are times when the said probability is low.

a good trading method + trading judgement is the one which can segregate the low prob opportunities from high prob ones.

a trade can never be assured. otherwise, all trader universe will jump in that direction and there will be no buyers for sellers or sellers for buyers! market will vanish!

probability is the sister of opportunity.
sensing the probability is like spotting the opportunity.

with time, practice, experience and learning, probability picking skills can be astonishingly honed!

and the beauty of the probability going wrong (mostly initially, rarely later) is that a trader anyhow always has the brakes and steering in his/her hands.....isn't it?

u can always stop and turn!!!

indecision is dangerous in trading. doubt freezes ur ability to act.

it is the indecision which causes loss in trading.

how to paper trade?

do u play chess?

if yes, has it ever happened that u made a move only to forcefully request your opponent to let u retract the move?

what if ur opponent refuses to let u?

chances are that u might have quit the  / surrendered / scrambled up the game!

why do u do that?

possibly because of frustration.....knowing the sheer hopelessness of the situation u find urself in courtesy that one wrong move.

but, if ur partner lets u withdraw the move, he/she is doing harm to u by programming u with the habit of always being careless with the moves knowing that u will be allowed to take it back.

on the contrary, if ur partner doesn't let u do that, he/she is doing u a world of good to u.

u will soon be free off the habit and start making right well thought of moves. u will act slow and own the responsibility for ur moves.

paper trading is like such a game of chess.

budding trader should do paper trading before he/she commits hard earned money to the market black hole.

just like a trainee pilot who initially is allowed to fly a jumbo in a  simulator!

but how to paper trade.

if u paper trade in the way that chess player was playing knowing that u can always take back the move, the purpose behind that paper trade is deafeated.

ur ego is intact. u r emotionally not involved. nothing is at stake.

so, how to make paper trade real like? how to involve almost real emotions which u r likely to encounter in the trading war time?

one good way is to announce ur paper trade. this way, though ur money is not at stake, ur pride is.

ultimately pride or face loss is as painful as the money loss.

u can announce that paper trade to urself (as by writing/noting in a diary whose page u would not tear), or to ur peers in a forum (like mudraa.com) etc.

once u have announced it, u have taken the plunge, bitten it. u would now have to chew it!

now, u can't disown it. u would have to face "the consequences"

u r "in" the trade....."in the real learning"

keep a record of 5 such trades and look in the mirror............u will see something real!

after the pride, get ready to pawn ur sweat, tears and blood....money can wait for the safe shores!

Thursday, September 18, 2014

avoid this deadly phase difference

don't trade on what market "will do" or "is about to do"

trade on what market "has started doing".

otherwise, market will do what u thought it would do, but it will be too late for u to be there in a position to profit from it.

there is generally this deadly phase difference which prevents even knowledgeable traders from profiting.

"will do / about to do" is for preparing only

4 key words of operators

the trouble with most traders is that they always try to see logic in the trade, understand it, feel comfortable, reduce fear......whereas the fact is that there is none.

though it is hard to do all this, there isn't any other way!

operators have 4 key words

- illogical

- difficult to understand the reason

- uncomfortable

- full of fear

promises they never keep!

in trading

elephants can fly
fish can sink

spiked price can spike further
sunk value can sink deeper

why?

because there is an element of surprise in it
there is entrapment, there is numbness-creating effect in it

majority don't believe it
minority is too small

operators love minority.....just a tiny one!!!

the majority knows physics (gravity), chemistry and maths.

operators love philosophy
promises they never keep....

Wednesday, September 17, 2014

a yogi can be a better trader!

do u ever feel the same chill down the spine when u watch a horror movie without sound?

then why trade without muting the sound of business channels!

or swallowing every bit or opinion being thrown about in every article or discussion or group! experts have explanations, extrapolations and expectations but not predictions. otherwise, they would be trading themselves.

and consensus of amateurs means nothing except the bait for the operators do exactly the opposite

stay silent, stay studied, stay disciplined

opportunity won't come just because u r ready

it will, rather, come when u r not!

only practice of discipline can make u be successful in market.

a yogi can be a better trader!

3 possible strategies for the trader who gets stuck

there are 3 possible strategies for the trader who gets stuck in a bad situation:

1. i am gonna win everything even if i have to risk losing everything
2. i am gonna save my capital substantially even if i have to forego quite a bit of profits which become subsequently possible
3. i am gonna save every penny of my caiptal even if if have to forego all the profit which subsequently appears quite possible.

the first one u can afford if u r an advanceed player and what u risk is much much less than ur total kingdom

the second one is a wise but defensive approach somehow hinting that either ur money management or ur method hasn't yet come of age

the third one is the best remedy for the trader who has got it all wrong

depending upon which one u choose, u need to build ur gameplan around it.

remember, the market doesn't know what ur position is, what ur size is. markets are like politicians. a poor individual doesn't matter or interest them. they are interested in the masses.

market will do what it has to.

so, u do what is in front of u. bat technically correct. trade ruthlessly unemotionally, like an intelligent algo. 

Tuesday, September 16, 2014

2 types of trades

there are 2 types of trades i (am forced to) take

one= when my technicals whisper that the market is about to move in a particular direction.

two = when technicals enter a dark tunnel (are unable to see), and only tacticals are there to guide.

in the second case, while there is no or little directional indication from technicals (i typically call it fog), tactical possibilities with operators to dodge/surprise/maneouvre/shakeup-the-market are good invert indirect indications.

presence of fear covered with froth of disbelief keeps such opportunities covered and potent.

while the first type are pro-active trades, the second ones are more of anticipatory types.

no wonder, it is easier to catch the formers than the latters.

(the current long position in a downtrend is a typical second type of trade)

Wednesday, September 10, 2014

the hidden truth of trading

there is an unholy question which many avoid, many ignore, many distrust and few acknowledge
"does insider trading happen?"
well, well, well!!!
what a question....
it's something like asking
"does betting happen in cricket?"
o my my!!!
what do i say!!!
in my humble understanding
trading is "meant" to be "insider trading" by the "big" guys
for the majority, the unsuspecting retail traders, the public, the masses
it is 99.9% pure and holy!
--
how many executives of a company know what the numbers of the company's quarterly figures are going to be?
how many officials of a govt department know what the new policy or decision is going to be?
does nobody know a judgement before the judgement?
does nobody know a strategic clearance?
does nobody know a coming or going order?
doesn't the big mafia which is funding a terror network know when what is going to happen?
is that mafia or entity so naive that it won't take "benefit"?
does any new discovery happen in one eureka moment?
does any bank fail in just one day?
the examples are not in dozens or hundreds
they are in millions
there is a very thin line between information sharing and insider trading.
with the corruption at all times high globally it is anybody's guess as to how much secrecy is being / can be maintained in above matters.
some experts are of the opinion that just as the secondary market is bigger than the primary market, insider trading gains are bigger than the primary market gains! so much so that the primary market exists because of the secondary or tertiary (insider) market!!!
how do big investment banks / hedge funds gain edge over competition competing for billions of dollars worth AUM (Assets Under Management)?
if u think that only trading skills are being used, then god bless you!
honestly is too costly and ineffective road for the financial world!!! 
there is more inside to the trading than outside!
"they" know what is going to happen before it happens!!!
the "they" here is a class, not an individual or one institution.
insider trading is a global omnipresent phenomenon.
the one who gets caught brings a bad name to everyone who is doing it "nicely" and "professionally".
insider trading is a big truth like some dirty professions which nobody wants to admit acknowledge or discuss.

never try to recover the loss

dear A

u are holding 8000pe lots @ 95
right now, it is around 33 (loss of 62)

now, u have to recover 62 points, that's obviously ur first aim

well, here is my first, off-the-cuff frank advise

"never try to recover loss, try to gain if there is a possibility

that gain will automatically bridge/erase/cover the loss

but never trade with negative mindset

that fills u with nervousness/fear/anger/frustration leading to wrong decision and lot of stress

if a loss has come, it won't go away just because u need it to

prayers don't work in the market because god's men are on both side of the trade, including those of operators!

while a loss can't be erased per se, profit can definitely come

assume u were not in loss, then what would u have done?

if u knew it might fall, u might take fresh short position
or if u knew it is likely to rise, u might take fresh long position

--

so, if i were in your situation
i would square 8000pe's straightaway (money saved is money gained)
tomorrow morning i might get atleast 30 bucks for it.

putting 35 bucks more, i would have bought 8100pe lots

right now
8000pe=33+
8100pe=62+
8200pe=111

if (and everything depends on this if)
the market falls another 100 points

8000pe will become=30+ (surprising)
8100pe will become=100+
8200pe will become=170+

ur loss of 62 can be recovered only by 8200pe
that comes with condition of "risking"/putting more money on the table!!!

alas, there is nothing called free lunch!

sorry, for ur loss. take it, as of now, as price u pay for learning (i  used to assume losses as fees for my MBA (Trading) from the University of Operators!

pardon my language!

best wishes!!!

---

alternatively,
if market opens gap down tomorrow, or slipss too fast at opening, u gain some crucial points
i expect market to be volatile thereafter till expiry, which is quite away
u will get opportunities to make money
just need to keep ur calm
such experiences help in thickening of skin (which lady traders can't avoid) which helps u gain with less pain

reality of investment bankers / hedge funds - II

assume u r sitting in University College London among the students in these videos and listening to Anton Kreil (ex-Goldman Sachs super trader) 

get to know the first peep into the reality of  "operators"

though this is a talk about investment bankers and hedge funds, it gives u a good idea of the jungle and the mafia

try downloading it using torch browser (or any other way) and watch when u r absolutely free and in fresh mind

these videos are one of the many which helped me develop trading muscles in the mind

(will post advance videos later)

enjoy

https://www.youtube.com/watch?v=vbuborn14Mc
https://www.youtube.com/watch?v=-UG11JzWzMY
https://www.youtube.com/watch?v=OReolQm34TQ
https://www.youtube.com/watch?v=apOUbIDOu0A
https://www.youtube.com/watch?v=ZfrRsTd_-mE

Tuesday, September 9, 2014

soap operas of the market

i don't generally watch soap operas
neither on tv, nor in the market.

my way of trading is simple

- find the direction of the trend (if any trend is there)
- align
- wait for the reversal signal
- in between keep booking/adding as the case may be

all the tamtrums and dramas and baits of the market operators are more boring than the tv melodramas.

i simply mute the market and practice pity on the poor souls.

love to hate them! but they are so magnanimous that they still teach me!!!

Monday, September 8, 2014

mole

dear rakesh,

technicals are the moles of the operators

they were planted to create a mass consensus which operators could exploit

which operators, no doubt, do

but still, being a mole, and not a spy, they do give u some critical clues!

--

as i said 

technicals are right, but we don't have patience

also, we are so honestly obedient to the technicals that we miss the woods for the trees!

--

i am beyond the trader age when one assumes.

trade with a poker face

if u r surprised at the market,
then market is right and u r wrong.

the market is gonna surprise u even more
till u stay surprised.

if u r not surprised,
and pretty confident that market will do what u think it will do
then, either u r a pro,
or the market has a surprise for u!

perplexed!!!

--

well, markets job is to surprise u
only that way it can keep u among the majority
whom it will squeeze
while being the minority.

--

so what to do?

learn, practice and master the game,
till then
distrust ur surprise.

once, u come of age, and have arrived,
hide ur lack of surprise
under the veil of surprise
and walk with the market
with a poker face.





(read "market" as "operators")

Sunday, September 7, 2014

trade in the present

dear harish
thank u!
to answer ur first question as to whether there can be a fall of 2-3% in coming days
= i don't know. and i doubt if operators have decided that this early! i doubt if anyone can be sure about that this much in advance!
it is certainly possible......though chances are less.
i would like to say one thing.....a range bound movement during a trend is generally of 50-150 points....which comes out to be 2-3%......but if that comes, it will be like a drift of the market and buying chance. the market is in a pause mode / ranging as of now.
the tools i have developed accurately indicate me the instantaneous trend only. i.e. trend as of now. they tell me the time when trend changes. but they don't tell me that much in advance. but i am more than satisfied by this much. i have to live the present first. and the next week will come next week and that too in the form of present.
intentions of the market can't be known before market finalises its own intentions!
for the future gazing (1 week and beyond), i have to rely on my other (lesser evolved) tools which tell me that we are yet to peak in this short-term rally.
i am absolutely sure that the down trend has not started AS OF NOW. i can bet any amount on this. and i strongly expect that resumption of upmove is unlikely for the next 1-2 days. i am long as of now in nifty. at the indication of resumption of up-trend, i would like to add to long positions.
--
about ur second question as to whether market can slip 20% or so in coming weeks/month
= i don't know......can't rule out. frankly, i don't have tools to ACCURATELY predict that.  i doubt if any one can. studied guesses can be made, but accuracy....i doubt.
--
but i strongly feel....where is the need to think about what will happen after 1 week or later? (unless, of course, if u r stuck in wrong side trade, in which case u should immediately square and take right side trade. chances of recovering and making money are more in the direction of the rend, which is up, as of now)
just trade the present. future is only in the mind! it doesn't actually exist!
trade the present successfully....and u will always be successful!

reality of investment bankers / hedge funds

this is a highly simplified (though sincere) explanation attempt for the sake of understanding the basics. readers' discretion requested
----------------

What is an investment bank?

= it is the trading BROKER to banks, funds and sophisticated hni clients. Gets COMMISSION to execute trades of its clients mostly DECIDED BY CLIENTS. They don’t trade with their own funds (except for a very small portion). Practically all they do is take orders like salesmen and punch in the computers. 100% of the trade is done by algorithms.  

Very few funds, banks etc hire them for their stock/investment research these days as everyone has their own in-house research teams. Investment bankers are endangered species. Investment bankers these days are living hand-to-mouth lives.

So, if someone says he is an investment banker, it will sound as “order clerk” to me (except for very few, which i will mention later)

---

What is a hedge fund?

= (hedge fund is what i respect after knowing the definition of an investment bank.) a hedge fund, simply put, is the “mutual fund” of banks,funds and hni clients! Not only that, the main thing is that they put in their money also to trade (this is one of the clauses). So much so that they are bound to plough back 50% of their performance bonus back into trading (this is also in the clauses). This gives funds etc confidence to “risk” their money with a particular hedge fund.

Why is hedge fund so called?

Well simple....they take equal no of long and short positions (by value) to give broad umbrella security to the fund god forbid something really terrible happens! This is nothing but hedging. Any money they make while fulfilling this hedging condition is by picking and choosing good stocks for long and good stocks for short opportunities (highly simplified explanation)

They charge

a) fund management fee (typically 1% of AUM asset under management),
b) performance bonus (typically 20% of profits earned)

so a $1billion hedge fund will get $10million in management fee and $40million in performance bonus assuming $200 million profits.

(commission for investment bankers is 0.25% by the way....... not surprising for what they do)

a hedge fund client typically expects an annualised return of 20% with max volatility (running carried forward loss) of 15%, failing which he generally quits with his money in search of a better hedge fund, taking along, in the process, pride, reputation and track record of the hedge fund!

a hedge fund manager is more of a fundamental investor than a technical trader, though he is a quite skilled trader.

I was shocked to know that while fund management fee is invoiced locally, tax is payable on this in the country, while the performance bonus is invoiced at the out-of-country tax-haven office of hedge fund so that taxes are minimised, if not avoided!!!

Since hedge funds are thriving and investment bankers are “starving”, all good traders have left investment banks and either joined hedge funds or doing their own trading! (difficult to retire once u have smelled the big money)

by the way, every consistently successful trader is a mini hedge-fund manager (though managing, as of now, only one side of the hedge!) 

u will never look at the market like that again!

I used to get depressed everytime i heard someone say
“now i can’t make money.....market has already run up so much!”
Till i realised a great truth
“all u need to make money in trading are
1. a reliable method
2. a moving market”
--

It doesn’t matter whether the nifty is at 4500 or 6500 or 8500 or 10500
All that matters is that it should be moving!
Up or down never mind.....
If it is at 6500 it should either be moving up or down
If it is at 10500 it should be either be moving up or down
Unless ofcourse, u r options writer who makes money by eating premium with the ketchup of ur blood! (ughhh...)
Would u care and give a damn if u make money at 7700 and not at 8700 or 5700?
Frankly, whose health does it effect as to at which height the market moves? Till it is moving and u know in which direction?
I have seen traders lose money at 4600, 5600,6600,7600.....and i am sure they will be losing at 8600 also! And the beauty is they have always been complaining at all these levels that the “market has moved up so much already!”
Isn’t it amusing!
I no longer am scared of market heights!
NiftyAcrophobia conquered, i guess!!!
Right now, nifty is howering around 8100. Am i scared? Ha, ha!!!
I have drawn a horizontal line, floor zero, at 8100. Above it will be plus 100, 200 et all. Below it minus 100,200...
Keep moving the floor zero!!!

u don't need to be smart to trade

http://www.theforexguy.com/mark-douglas-trading-psychology/

bet on self

every budding/potential/amateur trader is a like a stock

he/she doesn't rise till its fundamentals are strong

if his/her p/e ratio is high but artificially jacked, it is a fit case for a bubble and its subsequent painful bursting

and if his/her p/e ratio is genuinely high, he/she can bet on self!

bat with a lose grip

gullible traders tend to believe what they want to believe! 

we must trade with a lose grip at the trading handle. 

holding the handle makes us ready and aligns us roughly. 

the rest should be left to be decided by the market cherry. 

this way, trading is slightly different from batting in cricket.

in cricket, u decide where u want to hit the ball. in trading, be ready with the bat, align ur body roughly and let the ball decide where it should be hit!

good enough?

thanks a lot K for ur kind words and feedback!!!

i have heard about india vix but couldn't/didn't learn it for the same reason that a science student avoids commerce classes.
there are, i think, many alternate ways to tame the market.

i was fascinated by rsi, william %r, sma and tactics.
​​

so i spent a hell lot of time in just specializing in these. any other indicator and parameter would have required another life and hence not immediately required. had these parameters i chose failed me, i would have continued my search for more.

i always felt, that any indicator is good enough to win in the market provided we are good enough in that indicator.

regards
Jagmohan






On 6 September 2014 19:53, K wrote:

Hello JS Sir,

Just read your blog!!!
Nicely Written, easy to understand language.
The only thing that I did wrong was, I started to read it from 2014 instead of 2010.So I re-read the blog again :)

Well, Just want to know your thought on this, you have given lot of parameters & indicators to help understand the Buying & Exit points, I would like to understand if you have ever considered using the INDIA VIX for assessing the entry & exit points or atleast to gauge the upmoves or down moves in the market.

As per my understanding, India Vix is the sentiment of the crowd for next 30 days, could that be used as an indicator anyhow to gauge the value of Nifty or Bank Nifty.

Your thoughts & suggestions are welcome!!!

--

K

Why u should avoid trading contra

because

- U r not a pro yet (if u r, this article is not for u). u don’t probably know as yet how when and how much to trade contra. U probably are like abhimanyu who knows how to enter the chakravyuh but doesn’t know how to come out.

- Operators time the fall in up trend and rise in down trend very cleverly. Their sole purpose is to create panic, fan greed or fear, disturb the weak minded herd so that they either book out or get trapped or get in the wrong direction. U are likely to get the timing wrong, if not terribly. 

- risk reward ratio is simply not in the favour of against-the-trend trades. 80% of the money during uptrends are to be made in up moves (and vice versa). Only 20% is in the contra corrections/pullbacks, which by their sheer nature are meant to be honey-traps. Corrections or pull backs in trends are actually meant to prolong the trend for the operators and make the runs juicier for them.

- Even if u get the timing right as a matter of chance, u r likely to be full of fear of getting trapped by sudden turn of tide in the direction of the trend (if u don’t fear, u r either a pro or nuts). This anxiety is likely to underdo it. The stress will be quite high and not worth it.

- The very fact that u r unable to identify, catch and ride the trend proves it that it is ten times more unlikely that u won’t be able to spot, catch and ride the pullbacks/corrections! Don’t fake it that u know by trying to be a don Quixote to gain browny points for ur ego. Focus on money, honey. If u r unable to pick the dollars when clearly possible, what do i say about ur dare-devilry to steal the pennies when the hunters are out!

- Corrections and pullbacks are not meant to be traded, they are meant to accumulate/distribute and manipulate. 

- the tragic part is, what many upcoming traders get trapped in by thinking as corrections/pullbacks are just volatility designed precisely to do this very thing - trap the desperate! even theorectically, there is contra trade in real pullbacks/corrections and not in volatility which falsely promises to be the real thing.

- as confirmed by elliot wave theory, pullbacks/corrections are one third the extent/duration and three times faster. 

Ability to spot the trend is the no. 1 requisition (if not the only one) in becoming a successful, rich trader.

Saturday, September 6, 2014

winning is not a big thing

so many times i see traders jump at small or big profits which they themselves know was more of a fluke or stroke of luck.

one way to know whether any profit was a fluke or pre-conceived is to ask oneself - will i fear in the similar trade next time? would i enter another trade with the same logic/method/reason? did i have one?

if u r fearful, in most likelihood, u were lucky. it was  chance that trade went right.

if it is not repeatable, it is a fluke, or to put in more respectfully, a lucky trade.

this is precisely the reason why we see traders make money in a trade and lose it all (if not more) in the very next.

winning an occasional trade is good enough motivation for amateur traders to keep losing!

many times we don't even come to know that the winning trader has lost it all, because while the winning trader is a "news" and hence visible, the same trader doesn't hit the limelight when he/she loses. rather, he/she consciously goes off the radar (not for hiding, probably, but to recuperate)

so, winning is not a big thing (certainly losing is neither) but winning repeatedly is! in other words, knowing that you are going to win is a sign of having made it!

when winning is surprise, it is surely not a surprise!

this is precisely the reason why i repeatedly felt bad at making money because in heart of hearts, i knew the reality!

losing, for a learning trader is an honest friend! it tells the truth.....in face.....and leaves no false images (misconceptions) in one's head!

winning, if not with a solid foundation, is a treacherous friend! never believe it! never be befooled by it!

“Do you have it in you!!!”

There are on an average around 5 big opportunities in any market / index every year when a huge rally happens.

e.g. There have been 5-6 in nifty in last 12 months, 6 in CNX-IT and 4-5 in FTSE (UK)

the shortest is of 1 month duration while the longer one is 4-5 months long!!!

It is not impossible to catch those ‘mother of rallies’, it is easy to anticipate them but difficult to mouth and digest them whole (or a substantial part) without skill, strategy and mindcontrol.

I have not done these as yet. But since i developed the advance methodologies in the last 1 year, i am itching to catch the next one. Till that time, i am preparing patiently and practicing identifying and riding them (downscaling/simulating them in intra-month rallies).

In between every such rally is an intermediate ranging, sometimes small sometimes quite long.

Some of these rallies are short, and u may outstay in it, while other times the rallies may surprise you by the extent they keep going,  u having quit early!

All this need practice and skill with select tools.

Such rallies can’t be expected but followed as and when and to the extent they are, till they are!

But the point i want to make is twofold

minor– if u miss these 5-6 odd mega chances, what if you catch other peanut opportunities? And if u catch these, what if u lose all others!

Major- if the stakes to claim are that high (each rally can be 10-20% index rally can potentially make u quite rich in just a few weeks), are we in a position to leverage / encash it to the max?

Skill, technology, mental toughness, experience are one thing, capital (funds) and financial management (risk management) when u r in the big ride, is critical and decisive.

So much so that on one side we are desperate to encash it and on the other hand, when the opportunity is right there in front of our eyes, we either chicken out or play it small or are simply not ready for it!

The real fear of any sufficiently advanced trader is not the threat of loss, but the nightmare of missing the big profit!

So many times i have seen traders praying all life for the big opportunity and when they get it, they just say hello and turn back!

I strongly feel that so many struggling traders are in the real danger of self-hypnotism whereby they double cross themselves by convincing their conscious minds that they want it and programming their subconscious minds as to why they can’t do it!

I recall the Indian Army ad punchline – “Do you have it in you!!!”

I ask myself sincerely – “Do i have it in me?”

Thursday, September 4, 2014

ego of a trader

i may be a fool enough to argue with
my wife, my boss or even my god

but never with the market

-

i use technical indicators and tactical sense as languages to understand and estimate the desire and lust inside the mind of the operator.

as in linguistics, the more i practice and listen and observe, the better i learn the language.

but every now and then, and even after so many years, operators come out with a new phrase of their ever evolving language!

that is surely the time when i must kick my ego like beckham and be as docile and obedient like a dog, moving behind my master, wagging my tail.

in the barter, i update my book of language!

-

moral of the story = never mind the knowledge and analyses, be flexible and humble and teachable. be a good (na great loser)

the right lens

nifty talk
4 sep
----
"this is all based on 1 month chart
since i trade only positional (and not intera-day) only 1 month chart gives me the indication for that period
it is like using the right lens with the right focal length for the right distance.
and i use only google chart. all other charts of software or sites use different least counts. since i have been using google finance charts since many years, they talk to me and i hear them well, quite well. 
on 1 month chart, there is only a subtle hint of "end of the run". rsi generally throws a big indication for the turning of the market.
chances of the market turning down from here (going purely and only by rsi and not taking any other mandatory cross reference) are only 20%. from my experience, such subtle hint has fructified in actual turning only in 1 out of 5 times, or even lesser.
it is here, cross reference check from other indicators comes to our rescue.
william % r is clearly clearly clearly hinting that this rsi turning is NOT out of those 4/5 times i mentioned above.
--
further, w/r pattern is clearly clearly clearly hinting that it will take 1-2 days more for the pause to unpause.
couple this with the operator mindset and the nasty unholy habit of eating premiums and dodging the majority, u come to the conclusion that i shared.

the waves

nifty talk 
3:07pm, 4 sep 2014
cmp=8100spot

i used to love waves especially after going to thailand, but no more.

i have noticed that when operators watch you watching the waves, they create false ones and disturb them. they use it as a tool to drown traders.

i am of the school of thought that operators have the muscle, the intention and the skill to disturb technicals

i always say that " we are playing at the technical level and getting beaten at the tactical level"

this is one of the reason i allow tactical mindset a big say in my trades.

anyhow, if i do indulge in looking thru the waves, i see that there is no clear wave formation.

we are in a phase where technicals are being distorted by the deep pockets.

waves are like nightmares, technical traders are tempted to see them even when they are not there.

if i allow myself to be scared, i see the end of second wave.

but i would rather use the tools/eyes which have promised to serve me well 

Wednesday, September 3, 2014

why it is important to shed load

when u r in profit, and still reasonably sure about market's / operators' ultimate intentions 
it is still not a bad idea to drop some load on the way if you "feel" like doing so 
resulting in following benefits

- it saves/locks profit so far

- gives u confidence to go further (quite far) with remaining lots

- gives u golden opportunity to re-enter at lower levels if market plays volatility, thus milking it more

- saves u from the humiliation of looking a fool which operators hate to make you all the time, thus saving ur most precious asset, called self-confidence, which if lost, results in every other loss.

operators sole aim is to off-load as many leech traders from their direction of the trade as possible

u need lot of resilience to be able to fight those monsters especially when ur resources are laughable when compared to their's

no point in playing against them with a rigid mind.

as jesse livermore had said

"selling down to the sleeping point"

--

one of favorite movies is "terminator 2"

but my heart goes out less to the hero (arnold) and more to the terminator (liquid metal, shapeshifting - Patrick)

the way the terminator refuses to leave his targets despite the ruthless arnold, is a treat to watch

the sheer resilience, determination, dogmatic unending chase of the terminator is tremendously confidence boosting

in stock trading, one has to be like that "villain", one has to be like a terminator

even when the operator "innocent" arnold is out there to stop you, get u off the target "profit", even when he melts you down, blasts u to pieces, it is u who should be saying "hasta la vista", keep trickling back, keep joining ur drops, keep rising

even if some or many drops of u are left behind, gather whatever of you is still at hand, just be a leech and keep getting on board, keep chasing!