trading lessons from Everest

day before yesterday, on 29th, was the 60th anniversary of the conquering of the Mt.Everest

summit by Edmund Hillary and Tenzin Norgay in 1953.

it was a sheer coincidence that i was reading a book by arjun bajpai (world's youngest non-

sherpa to climb everest) since last few weeks and ended it around midnight (00:03hours) on

29th may. i never knew that everest was conquered on 29th may till i read it in th elast pages

of arjun's book "on top of the world".

all these weeks i felt as if i too were climbing world's highest mountain alongwith arjun. so

excited was i that i just couldn't come off the submit once the book was out.

i wanted more of everest. i wanted to know more.....experience it more. i checked for books on

everest and found one "into thin air" by Jon Krakauer. i downloaded it, read it. then i

downloaded and watched the movie adaptation of this best seller book.

still thirsty, i downloaded and watched 2 BBC documentaries on everest.

by now, i knew the route to the summit by heart, the heights, the camps, the rules, the

tragedies, the risks, the weather.......and a lot more. though i may not be able to attempt a

climb everest for many reasons, i have somehow felt as if i have climbed top it a few times

already, on the back of those climbers.......and died a few times along with those who choked,

fell and got buried on the way up or down.....

i can go on and on but that some other day.

today i want to register / pen down (rather key down) certain lessons which i learnt while

virtually climbing mt.everest. having been climbing trading mountain (arguably higher than the

everest, and certainly no less treachorous) for so many years, it suddenly struct me that

many, if not all, rules of mountaineering on everest were astonishingly applicable to trading

as well. why not recognize them....and record them?

now here are those rules. there may be many more (which i will keep adding as and when i

receive them). one more thing, i have deliverately kept the rules short and terse, with

minimum explanation. mainly because of two reasons : one - to stimulate you to go climb or

read or watch about everest for yourself ( i want you to google and learn more), two - i am

plain lazy. all i am doing it writing the everest rule followed by trading adaptation comment.

so, here are the rules:

-------------

* acclimatize : go slow, adapt, acclimatize.....or get killed.
= every new trader wants to conquer the trading summit without acclimatizing to the altitude,

the oxygen, the body metabolism.....getting altitude sick and dying

* first learn the basic mountaineering, the rock climbing, the tools, the gear.....
= no alternative to this in trading as well.....basic technical skills and awareness is a must

* study, read, learn, hear, watch a lot about the mission before going there
= know what to expect. be mentally ready.

* try lower hills first.
= paper trade, mini-trades....

* climbing everest is not a passtime...not a picnic
= same about trading. trading is not an escape haven where you go and seek shelter from life's

other losses and rejections.

* fix the logistics
= and the computers, the internet connections, the demat accounts etc.

* fix your turn-around time before you start. better return alive to attempt the summit

another day (final summit push, beyond camp 4, is started by the climbers around midnight so

that they reach summit before noon and return before it turns hot, avalanche-prone, or before

the weather turns bad.....you have to return to the highest camp, below the "death zone" under

8000m before it turns dark. if you are not at the summit by 1 pm, it is time to turn back,

come what may.)
= if trade is not going your way, turn around.

* don't force the climb
= the market won't be tradeable just because you are there ready with your climbing gear.

* beware of the avalanches
= aplenty in the market. know how to get out of the way.....or take advantage

* beware of the crevasses
= pitfalls, traps of trading.....they are always there, often covered.learn to spot them.

* use ropes, and hooks....
= and stop losses

* don't move out without checking the weather report
= macros

* wait for the window of opportunity....stay put till then.
= 90% trading chance will come in 10% time.

* improvise when stuck
= once your sub-conscious is attuned, it can advise you when u r stuck/

* never mind the coughs
= fluctuations are normal....including a few ribs crackings.

* mind your self talk
= no negative talk.no fool hardy. "any sufficiently determined idiot can reach the

summit...the trick is to get down alive"

* every climb is a different one
= overconfidence kills. good traders avoid reputations.

* respect the mountain (god). (everest decides who climbs it)
= market decides who makes the money.

* love the mountain
= love the market

* never under-estimate the mountain forces
= just because you have been spared doesn't mean you can bet it all.

* pray
= pray

* be lucky
= be lucky

* remember
= be thankful

4 advanced rules for trading success post HMP

post HMP (Honey Moon Period)* only those traders can make it big in stock trading 

1. who can ruthlessly stick to a closed-ended system (with well defined & fixed entry and exit points which don't change at the dictats of markets or emotional states). constantly improving that system is, however, allowed.

2. who can play with "sufficiently" small amount (e.g. a billionaire can play with a million dollars)

3. who are in no hurry to come in the 'top ten wealthiest persons in the town' list

4. have the head and nerves for compounding principle without violating the above three rules. 

* unlike normal life, HMP in trading can last long.....real long.......sometimes forever!

my own laws and rules of day-trading

my first introduction to stock market was in november 2003. but i got serious only in jan 2009. though i had become literate about trading by that time, my real education and training started only after that. and what a journey it has been in these 46 months. full of sweat, tears, blood, death and re-birth....

majority portion of this journey is archived in the form of my 1000+ articles and posts in mudraa.com as well as my blog.

while the learning is still on and will and should always be, i have no hesitation in admitting that i have passed out of the univ and started my pro journey.

in the past 2-3 months i have been seriously devoting time to fine-tune and test and retest and improve my trading method. during this period, i have written and shared quite less due to the time constraint.

today, was in quite a relaxed mood and took the liberty of teasing myself with one of my favourite self-questions - "what are the laws of day-trading as per you as of today as per your method and understanding?"

this is one question that i have been asking myself very very regularly so that i always keep the larger picture right before my eyes and mind.

here is the latest list of my laws and rules for day-trading.

- trade pro-trend and even your blunders will be pardoned. (i have devised my methods to identify the three phases - up trend, no-trend, down-trend)

- technical indicators are the time tables of operators. operators and bandits never stick to time table. don't fool yourself with technical indicators but be aware of them anyway. look for the clue of the operator movement. retail traders play at the technical level and lose at the tactical level. retail traders will lose lesser simply by playing the trade rather than trading the trade.

- market does opposite to the majority opinion.

- use options, not stoploss.

- do your homework and enjoy the "game" of operators. choose right, sit tight.

- never spend your profit. plough it back after taking out contribution to the buffer fund. start with small principal, don't infuse any more capital. resolve to be a millionaire from one coin with the clever method.

- when you realize your mistake or see that the situation has changed since your homework, admit it and save whatever coins are left. stand up and win back lost coins and more.

- play points and not money. gradually, you will develop strong stomach muscles for bigger bets without butterflies.

- take advantage of the temporary adversity rather than succumbing to it.

- divide your capital in parts and start only with one. don't rush to become an operator overnight. learn to stand before you walk, learn to walk before you run before you fly....multiplication will take care of any amount of time you take to wait and learn addition and subtraction.

- experts know nothing. whatever they say won't happen. atleast that way, that day. not because they don't know, but because operators make it a point to go the other way, the other route. operators' modus operandi will never get exposed openly. because when it gets exposed openly, the operators would have abandoned it much earlier.

- all days are not tradable, all trades are not of same duration and juice. all trades are different in tactically.

- more study takes you away from the truth. finally, you would have to unlearn all to bring the real thing back in focus. the world of conventional trading training is fake. it is creating an army of goats for the predators.

6 passwords of day trading - VI

day trading is an enigma.
investing calls every new trader but none goes there first.
many never go there.
all come pulled towards day trading like hypnotised souls.

this write-up is for those souls
who want to live and die with their obsession
the day trading.

if day trading is a vault of money.
here are the 6 passwords to open that vault.

--------------------------

password 6 = don't "trade"

this one is controversial, exciting, mysterious
and most rewarding!

genious and most successful traders
never look like one!

they are never conscious or excited about trading.
for them trading is a routine business of common sense.
and common-sense is nothing but emotional wisdom.
they are not desperate for money
so they don't take "hyper" decisions.

they don't"look" like a trader at all!
they look dull and pretty ordinary.
they have no hoopla or air of a trader!

they don't trade with money but their edge!
they don't trade for money but for vindication of their edge!

that they put in money
and that they get a loads more back
is just incidental.

they know emotions are the handles operators catch the small traders.
by being emotionless, they are beyond the traps of market manipulations.

when things go or don't go their way
they are not excited or scared.

all they humm to themselves is
"is it!"
"o, i see!"
"all right. so be it!"

they trade like a machine.

they don't trade with a software
they trade like a software.

for them loss is just a "pickle" with the main dish of profit.

6 passwords of day trading - V

day trading is an enigma.
investing calls every new trader but none goes there first.
many never go there.
all come pulled towards day trading like hypnotised souls.

this write-up is for those souls
who want to live and die with their obsession
the day trading.

if day trading is a vault of money.
here are the 6 passwords to open that vault.

--------------------------

password 5 = "edge"

i am shocked to see
amateur day-traders entering trading pit
with only money stacked in both pockets of their pants!

no wonder
while coming out
they have not only lost all that money
but also their pants!

and what a relief it is
to see a trader
with money in one pocket
and a "secret personal trading weapon" in the other!

this "weapon"
may be a combination of deadly indicators
a support-resistance-breakout-breakdown gameplan
a gap opening strategy
a price-volume momentum plan
...some trick
...some secret knowledge edge!

the point is -
money is not enough to fight!
you need some method, some weapon,
some trick, some advantage,
a unique gameplan you specialise in.

all in all
you need a dependable edge
on the basis of which
you can bet your money.

trading without an edge
is like trading with orphan money
which is begging to be "adopted"
by a responsible deserving trader.

an edge is your personal specialised trading idea
that has proven to be successul for you
majority percentage of the times!

once you have got that edge
don't bother whether it works in that particular trade or not
just keep repeating it
ruthlessly
and repeatedly.

if the edge was right
it will get you money
majority of the times.

specialise and keep improving your edge!

one good one is more than enough!

6 passwords of day trading - IV

day trading is an enigma.
investing calls every new trader but none goes there first.
many never go there.
all come pulled towards day trading like hypnotised souls.

this write-up is for those souls
who want to live and die with their obsession
the day trading.

if day trading is a vault of money.
here are the 6 passwords to open that vault.

--------------------------

password 4 = "time"

well begun is half done, they say!

so true in day-trading!!

when to enter a day-trade is decisive.

if you enter at the wrong time
even if your direction of trade is right
you may slip into loss for some time before the trade actually turns in your favour!

by that time, you may have panicked and chickened out or quit.

even otherwise, you are unnecessarily inviting stress.
you are unnecessarily cutting down potential profit.

i have seen many day-traders enter positions randomly.

even when you are on the side of smart money
even when you are mentally aligned and aware of the bigger picture
even when you are prepared for the "guerilla" war
you need to enter at the right time!

i give some examples below:

- enter only at a higher low (for a long position)
or a lower high (for a short position)

- keep intraday fibonacci retracement levels in mind.

- keep support and resistance levels in mind.

- don't enter the position without the permission of the indicators, if you have some on your payroll.

"never try to time the market" may be a rule for investing but certainly not for day trading.

6 passwords of day trading - III

day trading is an enigma.
investing calls every new trader but none goes there first.
many never go there.
all come pulled towards day trading like hypnotised souls.

this write-up is for those souls
who want to live and die with their obsession
the day trading.

if day trading is a vault of money.
here are the 6 passwords to open that vault.

--------------------------

password 3 = "run"

day trading is not for wealth creation
it is for cash flow generation.

it is an atm.

you never retire from day-trading.

if u want to accumulate wealth
go to swing trading and then to investing.

day trading is self-employment at its best.

i have seen many day-traders bleeding to financial death
by not getting this basic password right.

they expect to become rich by trading trading
and all their trading decisions go wrong because of this.

greed of "all the money" immobilizes them.
fear of "recovering that gone wealth" freezes them.

day trading is a guerilla war.
you don't go there with tents and bonfire!
you go there on a mission
do it
and get lost!

what a paradox
that amateur day-traders
fear losing money
and hence don't buy multiple lots
but still expect big money.

this leaves them with only one way
stay in the position for long....and this traps them.

day trading doesn't mean you have to be there all day!

it is not a 9 to 3 job dammit!

as i said earlier
it is like a visit to an atm
put in the debit card of indicator
key in the amount
wait for the machine to count
take the money before it re-enters the machine
hold it tight
and go!

6 passwords of day trading - II

day trading is an enigma.
investing calls every new trader but none goes there first.
many never go there.
all come pulled towards day trading like hypnotised souls.

this write-up is for those souls
who want to live and die with their obsession
the day trading.

if day trading is a vault of wealth
here are the 6 passwords to open that vault.

--------------------------

password 2 = "write"

there is nothing right
nothing wrong
in day trading.

all morality, righteousness, should, would and could
are taken care of
and neutralized
within one minute
of the day's opening.

the gap up or gap down eats up
all pressure of the accumulated overnight developments.

the real drama starts thereafter.

95% of the day-trading money
is in the hands of just 2% of the players.

after the opening
a game is triggered by the "big pockets"
which seems to have nothing to do
with the weekly theme being played in the market.
despite the fact that it always stays within those boundaries.

afterall the smart money is not fool money!

i have seen that majority day-traders are trapped
and stay trapped
wondering why the obvious is not happening!!!

the rope of being right
gets them butchered.

they fail to see
that if 'the right' keeps happening
nobody makes money
as everyone knows what is right!

the should and could never would
in day trading!!!

what is happening is the reality.
what should happen is the trap!

don't be caught in the dilemma of right or wrong
be on the right side of the trend.

more and more day traders are opting for options.
they buy cheap options
written (sold) at unlimited "risk" by smart money.

smart money has the money power to control
accumulation and distribution game.

this is the reason
why the option (whether call or put) on the top of the traded-volume chart
is the wrong way for that time for that day.

if you are with the trend
then you are right
even when you are "wrong".

"right" is not right in day-trading
"write" is right.

stay with the trend.....whatever.
no if, no but.

6 passwords of day-trading - I

day trading is an enigma.
investing calls every new trader but none goes there first.
many never go there.
all come pulled towards day trading like hypnotised souls.

this write-up is for those souls
who want to live and die with their obsession
the day trading.

if day trading is a vault of wealth
here are the 6 passwords to open that vault.

--------------------------

password 1 = "light"

= day trading is the refuge of those who fear the night.
those who fear the darkness.
why i say so?
well, one day is just a part of the bigger picture being painted.
not all billions in the market are taken out every evening.
if that were so, nifty to crash to zero every evening!!!
markets don't fall like newton's apple.
they just yo-yo.

market moves in cycles.
there are cycles inside cycles inside cycles.
there are yearly cycles
with monthly cycles inside them
with weekly or fortnightly cycles inside them
with one or two day cycles inside them.

while majority money stays in outer cycles
mischievous money does play the one or two day cycle.
that is where a day trader should focus to have any chance
of making money in day trading
and that too consistently.

market is overwhelmingly packed with day traders.
beeing a day trader is itself a sign that
the trader has accepted the reality
that making big money and creating wealth in stock trading
is not for him or her.

he or she has consoled the self
to focus on daily earning of bread!

these day traders
treat every new day as a new puzzle to guess and crack.
they forget that the day is only a part of
the weekly or monthly puzzle being solved.

the only difference is
that the mischievous money
cause and use day trading volatility and unpredictability
to play catch-me-if-you-can trap game.

almost all day traders
get trapped in this.

if only the trader were to realise
that this mischievous money
has serious limitation
of staying within the outer puzzle boundaries
the trader will not run like scared lambs.

"light" of this knowledge
is must.

a day trader
whatever technicals or method or tricks or strategies he or she uses
must know
what theme is being played since last few days!

once this is clear and etched in your mind
the remaining passwords will help you win.


(to be continued)

and the zeroth law of robotics

zeroth law of robotics (this law was added later on to the series) : A robot may not harm humanity, or, by inaction, allow humanity to come to harm.


adaptation of the law to trading system :  A trading system may not harm operators, or, by inaction, allow operators to come to harm.




.....thus underlining the supremacy of the "deep pockets"

trading with three laws of robotics

i was reading 

Isaac Asimov's "Three Laws of Robotics"

it has occured to me that if a trading system is like a robot

it must obey these 3 laws meant for robotics.

here are the adaptations of the three laws of robotics

to the trading system

law one of robotics : a robot may not injure a human being or, through inaction, allow a human being to come to harm.

adaptation of the law to trading system : a trading system may not cause substantial loss to a trader or, through inaction, allow a trader to come to loss.

law two of robotics : a robot must obey any orders given to it by human beings, except where such orders would conflict with the first law.

adaptation of the law to trading system : a trading system must NOT obey any orders given to it by the trader in the heat of the trading - it should trade strictly as per its defined rules, except where such disobedience would conflict with the first law.

law three of robotics : a robot must protect its own existence as long as such protection does not conflict with the first or second law.

adaptation of the law to trading system : a trading system must protect its own existence as long as such protection does not conflict with the first or second law.

6 last laws of trading

* there is no alternative to experience.
= trading without experience will ultimately lead to experience!

* do ph.d. in one or two indicators and stick to them
= if two are not good enough, neither will be twenty-two!
= difference of result comes not from the number of indicators, but the depth of understanding.

* trade only and only when relaxed. stop trading when excited
= the excited will be trapped, the relaxed will be spared and rewarded.

* no risk, no profit
= risk is and will always be there. nothing, i repeat, nothing will happen till you take it.

* use your own head
= others are only confident confused compulsive liars as successful as you.

* take only that much risk which you can afford to bear
= excessive risk hypnotizes good trading

4 steps to become a legendary trader!

While reading Gurcharan Das's masterpiece

"The Difficulty of Being Good" (Penguin Books)

I have been reminded of a beautiful life philosophy we read in school only to forget on reaching the college!

This may sound old-fashioned

but is a fine life-technology

written by a great mind,

sage Manu

in 100AD

in his immortal treatise, Manu-Smriti.

As prescribed by the great sage, the human life span is divided into four stages known as ‘ashrams’ (shelter).

The Vedas define a specific purpose for each ashram and offer specific instructions to be followed in each ashram.

I. The first ashram, Brahmacharya, is the student phase of life when the person is supposed to immerse himself or herself to learn the art of life and that of making a living.

II. The second ashram, Grahasta (meaning householder) ashram is the stage of family life. It constitutes raising a family, earning a living through the skills acquired during Brahmacharya ashram. It encourages the enjoyment of material life.

III. The third ashram, Vanaprastha (Retreat to Forest) indicates living in a withdrawn manner. People in this ashram play the role of mentors.

IV. The final stage is Sanyasa or renunciation. The person wthdraws from society to spend the remaining part of his or her life in meditation and solitude.

----------

I found it interesting as well as scary!

Scary because of seeming impossible implementation of ashrams in today's social setup.

Interestingly, i found it very useful for anyone who wants to prepare for trading.

Stage I:

Brahmacharya = Student phase to learn trading and technical analyses, refraining from trading!

True to expectations - this "Brahmacharya" is impossible for the debonair traders!

Stage II:

Grahasta = Making-a-living-by-trading phase

True to anticipation, ill-trained traders (who skipped the first ashram) fail in this stage except 'enjoying the material life' at the expense of the principal amount!

Stage III:

Vanaprastha = Retreat to forest (of investing)

This stage never comes! One can't be a good mentor if he hasn't been a good student!

Stage IV:

Sanyasa = True to the Inevitability, the dejected and rejected non-trader gets ejected from the market to spend his or her remaining life in meditation and solitude.

Strangely, this lost trader takes up the Brahmacharya (student phase) after the pain and humiliation of the Sanyasa!

In this second innings, Grahasta phase (making a living and enjoying the worldly pleasures) comes but with the spirit of Vanaprastha, courtesy the bitter experience of the first innings!

---

5 M's of trading

Trading is a one man industry!

Like any industry there are 5 crucial M's

--------------------------

"Man"

there is only one!

and that is you!!

Employ, train and manage a good "you"

Fire the bad "you" before it "fires" you!

--------------------------

"Money"

the principal amount

must have enough to deploy

must have enough in reserve

safeguard it

but use it

--------------------------

"Material"

margin amount and opportunity are the material of trading industry!

together, they are the raw material for the finished product

- profit!

both are important - alone none is of any use!

don't waste these materials which are in short supply and very costly!

also, in this industry, no re-work is permitted on the finished product!

--------------------------

"Method"

Yes, method is a must in this industry also

no method = all rubbish

--------------------------

"Machine"

The trade is the machine in this industry

Till you put the material in this machine

nothing will come out!

so, overcome your fear and take that trade!

--------------------------

"5s" of a trading mind

Everything in the world is created twice!
First in the mind, then in reality!!
A trader's dream success also obeys this rule.
And for this to happen a trader's workplace and his mind must be organised!
"5s" is the way for this!
"5s", invented in Japan, stands for five (5) Japanese words that start with the letter 'S':
--------------------
Seiri
(Tidiness)
"Throw away all rubbish"
= a trader should forget about all the jargon, trade simple and remember just the key lessons that matter!
--------------------
Seiton
(Orderliness)
"Set everything in proper place for quick retrieval and storage"
= all important lessons and checkpoints should be listed and available easily for quick reference when required!
--------------------
Seiso
(Cleanliness)
"Clean the workplace"
= a trader should maintain neat and clean body, mind, bank account, computer, net connection, trading room and intentions!
--------------------
Seiketsu
(Standardization)
"Standardize the way of maintaining cleanliness"
= a trader must have a method
--------------------
Shitsuke
(Discipline)
"Practice 5s daily - make it a way of life"
= a trader must follow the method!
--------------------

10 laws of effective trading

Law 1 : Trade less

= saves you from 80% of the losses

----------------------------------------------

Law 2 : Use method

= protects you from 80% of the mistakes

----------------------------------------------

Law 3 : Wait now to avoid waiting later

= saves from entering wrong trades 80% of the time

----------------------------------------------

Law 4 : Learn more

= saves you from 80% of the mistakes caused by ignorance

----------------------------------------------

Law 5 : Trade is complex but trading is simple

= simple but sound approach saves you from complex traps

----------------------------------------------

Law 6 : Feel the trade to sense the result

= protects you from the traps logic can't foresee

----------------------------------------------

Law 7 : Emotions which calm you are good, emotions which excite you are dangerous

= this single fact can protect you from 80% mistakes caused by trading hysteria

----------------------------------------------

Law 8 : Accept today, Trust tomorrow

= saves you from quitting when you must not!

----------------------------------------------

Law 9 : Respect the difficult situation

= saves you from picking the wrong fights

----------------------------------------------

Law 10 : Just behind the obvious is the reality

= the favorite hiding spot of the market's true intentions!

----------------------------------------------

11 Bitter Pills of Trading!

Trading Bitter Pill #1:

Either you are among the winners or among the losers.

If you have any misconception, clear it first!

-----------------------

Trading Bitter Pill #2:

Now when you have accepted that you are among the losers decide who is responsible for this situation!

If you think the responsibility lies with the market forces or bad luck or slow internet connection or bad advice of broker etc then there is little scope for you ahead.

-----------------------

Trading Bitter Pill #3:

Now when you have acknowledged that you yourself are responsible for your being in the losers' herd and not in the winners' group, find out what is not working!

(since you are losing repeatedly, majority of the things you are doing and the way you are doing ARE NOT working)

-----------------------

Trading Bitter Pill #4:

Now when you know what worked and what didn't in your past trades

....start rebuilding your trading career around what worked!

Shamelessly keep repeating the trick that works!

Exploit and milk it to the max!

Trading is about reward, not fair-play award.

A trick that works is worth 10 that promise to work.

Winners don't know more tricks.

Winners know more effective tricks!

-----------------------

Trading Bitter Pill #5:

Courage is the fear whose prayer has been said!

Trade is the risk whose homework has been done!

There can be risks without wins

but there are no wins without risk!

-----------------------

Trading Bitter Pill #6:

Knowledge is not money.

Knowledge in action is!

-----------------------

Trading Bitter Pill #7:

Nobody knows the answers in stockmarket...only opinions!

Ask keeping this in mind!

-----------------------

Trading Bitter Pill #8:

Trading losses have nothing to do with being unlucky for trading.

Its all a method, psychology and risk-management issue.

-----------------------

Trading Bitter Pill #9:

Market hits our actions, not us!

Market rewards our actions, not us!

-----------------------

Trading Bitter Pill #10:

Forgive your mistakes, remember the lesson, stand up and move forward!

Every winner has a history!

-----------------------

Trading Bitter Pill #11:

If you are not clear and specific about what and how much and by when you want from the market, you won't get it!

Also, be clear about what you are willing to give in return?

8 Laws of Trading Risk

Law 1. No risk, No advancement
No trader ever became really rich without taking risk!
90% of traders don't ever make it to the higher orbit due to fear of risk!

------------------------------------------------------

Law 2. Risk with minimum risk
Risk should be taken at the point of maximum probability of its going in your favour.
The risk war is already won by the true trader before the start of the war!

------------------------------------------------------

Law 3. Risk as per appetite
Know "How much is too much".
Bite what you can chew, otherwise it can choke you!
Never risk all. Keep spare regeneration seeds.

------------------------------------------------------

Law 4. Risk correct
Think about taking risk only when you know how to!
Don't go for the Lion Safari without Knowledge and Experience.

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Law 5. Risk with boundaries
Draw the line beyond which the risk would be accepted as having gone wrong and position closed.

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Law 6. Avoid risky risks!
There are times when risk is risky and should be respected and spared.
When in doubt, stay at home.

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Law 7. Insure the risk
Have a plan B ready.

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Law 8. Identify your favourite risk
Many traders became millionaires by repeatedly taking their "favourite" risk.
Risk which they have mastered.
Risk which has been exposed before them.
Risk whose every contour they know by heart!

8 paradoxical commandments of stock trading

1. Losers shall be the winners!

= losing positions need to be stopped. such losers will be rewarded.

= those who hate losing, will not trip losing trades and hence they will definitely lose.

2. Those who "don't know" shall be the winners!

= traders who say they "know all" will be humbled.

= those who, despite knowing, know that they "might not be knowing still", will be rewarded. "Experts" are humbled in the market.

3. Those who are willing to sacrifice will get!

= those who can't withstand the emotional pressure to book profit too early just because of the fear of losing that profit, will never be given big.

= those who are willing to sacrifice the small for the big (till the exit bell rings) will be rewarded.

4. Those who avert risk will be put in risk!

= and those who seek safety will not be safe!

5. Those who ride emotions will be shown logic!

= Those who ride logic will be presented emotions!

6. Those who can't wait will be made to wait for profit!

= Those wait shall not be made to wait any more for the profit!

7. Those are not willing to sweat will be made to pay in blood!

= Those who willingly sweat will be rewarded in flood.

8. Those who put money before the method will get money only after the method

= Those who put method before the money will get money immediately after the method.

Life lessons from RSI

* you can't keep a good man down for long

* a bad man can't keep himself up for long.

* no thing or situation can remain in highly excited state for long.

* no thing or situation can remain in highly depressed state for long.

* if things are good due to some genuine reason, expect them to get better to the extreme unless there is a change in the fundamental realities.

* if things are bad due to some genuine reason, expect them to get worse to the extreme unless there is a change in the fundamental realities.

* any highly excited state is unsustainable and unstable and is an opportunity.

* any highly depressed state is unsustainable and unstable and is an opportunity.

* before jumping into any extreme situation, wait. the biggest sting comes just before reversal.

* any wave of situation, emotional, financial, social, physical, political etc. is likely to continue till it reaches an extreme, and then it recedes.

* while receding, the situation is likely to retest and retry to regain its earlier heightened state atleast once.

* if it fails to regain it, the situation is surely dying.

* if any heightened situation remains constant but perception of the participants starts receding, it is a pause before the continuation of the severe situation.

* if the situation is improving but the perception is worsening, or when the situation is worsening but the perception is improving, the situation is likely to reverse soon.

* any situation is likely to pause or reverse at its extreme.

* excess of everything is "bad"