heavenly chat with a guru

Js: Traders fed up with the rise a few days ago are fed up with fall now...

Trading is a game of cycles and trends.

Without cycles and trends, big players can't make money

Krish: This means human nature is always predictable?

Js: i would say that in a slightly different way...human schemes and the response to those schemes by other humans are always predictable. in fact, as legendary strategy gurus al ries and jack trout say, humans can't tolerate confusion. whether the operator or traders, the ruler or the ruled....all are predictable while trying to avoid confusion.

it's just that many times, clever men complicate, disguise, or camouflage things in such a way that the masses start thinking as if the confusion is really incomprehensible.

Krish: So that means, market reaching equilibrium too is non-acceptable.

Js: if an expert is at the driving seat of the operators or the establishment, it is almost surety that the confusion is just an encoding or encryption of some degree. because the moment confusion goes out of hand, empires and schemes crumble like a pack of cards....

equilibrium is the truth dead clocks kiss twice every day but hate it.

it is all a game and hence can be played. you only have to refuse to believe that you can't understand it. because you can.

it is all fixed and rigged.....beautifully and mathematically

Krish: As they say, there are patterns in the chaos too.

Js: yes....chaos too is a pattern...whenever you are sure that a pattern is emerging, you can be sure that it will change.....anyways, humans can't survive the chaos, including the operators. and as long as humans are controlling the algos of their trading machines we can rest assured that chaos can't be true.

Js: but the day, computers take over from their masters, assuring them profits in return at all cost, wild moves will be common and markets will die because a billion sheep will lose the attraction to the slaughterhouse.

Js: a trader may not earn even a rupee in the market all his life, but he can never lose love of life if only he ensures that he doesn't lose more than he can afford to....

Krish: That's so true, what maximum then they can do is, create an illusion of chaos to that perfection that it becomes so hard to crack by the same organization that created it..only the elite has the key to keep changing this pattern?

Js: such is the life giving quality of the markets.....

the illusion of chaos...yes....

that's the challenge, that's the hint....to crack the code

Krish: Mass is been fed with this narrative simultaneously to create another confusion.

Js: o yes...bullseye

Js: all tv's, books, videos, etc are all crimes by the innocent, on the innocent

Krish: An illusion becomes belief if taken on an everyday basis, so no wonder it becomes addictive too

Js: but you can't fight them, convince them, upset their cart, damage their dhandha or change their mindset.....and why do it.....as i often say....never argue the system, short it

absolutely

and we start loving the illusion. so much so that we are ready to die defending it

markets are mini-universe

markets only magnify what we truly are.....to horrible multiples

Krish: True, deep down this illusion has its base on the "fear" factor of masses. That's the only emotion that can be kindled with a few extra million out of their profit kitty.

Js: yes

greed too is the vengeance of the fear

a fearless man can be rarely greedy

a greedy man will often be fearful

game I play

[12:38PM, 05/06/2015] jagmohan: many times i am not sure of market direction. i prefer to protect my capital at those junctions. i re-deploy the funds (re-enter the market) when i am reasonably sure of the direction/move. (not that i always get it right when i am sure, but atleast i try to enforce this self discipline by being in the market when i think i am reasonably sure, without faking it......self talk

[12:43PM, 05/06/2015] jagmohan: e.g. i know some down side left, but i am not sure whether it will be straight away (today) or after a small or good step up. i had around 170+ points to protect....so i stepped out with auto stop loss. am i now sure of upside.....not exactly....though i know (from options spread) that markets are likely to be in a volatile 300 odd points for next 2 weeks. i also, strongly feel that 8080-8090 or below is due.....so , i am waiting outside, waiting for a reasonably and honestly sure point to re-enter.

[12:43PM, 05/06/2015] jagmohan: lemme also share a game i play......

[12:55PM, 05/06/2015] jagmohan: i start with option worth rs.80-90.....then i let it grow to say 170 or 200 or even more (depending upon the surety of the move) and then get out. and when i re-enter, i deploy the same amount but in the nifty option which is at roughly the same point where i left.....eg. i just squared 8200put (bought @93) at 171. now, whenever i re-enter the market,whichever side, i will buy the call or put which will be 171 or around......then take it to 250,275,300 or whatever possible......the cycle will be repeated till it reaches to a level when i double or tripple the lots and accordingly decrease the option face value....eg. when this reaches say 500 with x lots, i may take 5x lots worth 100 face value......

[12:59PM, 05/06/2015] jagmohan: this way i keep going deeper in-the-money repeatedly and thus minimizing premium outflow......i also, tackle fear of loss better.....it becomes a game of point and not money. it helps in better accounting of money besides redeployment / plough back of funds. i end up playing just with the money earned and not "my own money". less fear results in lesser pressure and better decision.

[1:00PM, 05/06/2015] Mudraa Guru Mysore: JS, just a doubt, so 80-171 profits are also included in the second move from 171 ?

[1:00PM, 05/06/2015] jagmohan: yes

[1:00PM, 05/06/2015] jagmohan: jo jeeta....vapis table par.....

[1:01PM, 05/06/2015] jagmohan: and in case 93 becomes 53, i start with 53......if we have the capability we can convert 53 to 530 again......otherwise whats the point of even betting those precious 53?

Weekend group discussion

Murli Chainani: Dear JS, You trade in nifty only or in stocks also?

Js: Only nifty Murliji

Js: Some reasons for this....

: 1.stocks don't obey technicals as much as indices do.....not difficult to understand why...because indices are average of the stocks and hence vibrate less

: 2.high liquidity

: 3.you don't have to study fundamentals of so many stocks....just macro

: 4. Premium is not bloated like that of stocks

: 5.stocks can crash like sky fall (Satyam etc), much more than index

: my technicals fail on stocks.....accuracy drops dramatically....

: earlier i used to blame my skills....but when same method worked beautifully in nifty, i got suspicious and checked deep.....only to discover that stocks are like single cylinder enfield bullet engine that vibrates a lot while nifty is an 8 cylinder coupe engine with all vibrations smoothened....

Rajan: Beautifully explained

Js: nifty can't sleep for more than a few hours....stocks can remain sleeping for years

JP: Just joined....interesting discussiona

Js: that is, perhaps, the reason why they say trade the stock which has started moving....otherwise leave it till then

: good stocks are seeds which should be acquired and planted in one's backyard before they start shooting into trees.....or, in other words, before they start growing even bigger....much bigger

JP: Great stuff..

Js: so, stocks are great for investing.....

: but for trading, only those stocks should be touched which have said good morning....

JP: Veer ji. I wish to be your student...

Murli Chainani: Nurturing explanation

Js: everyone is a teacher of something....everyone is a student of something😀

JP: Amazing..

Js: for day trading in stocks, algo trading is the only sensible profitable repeatable way....

JP: But every one can't access algo..

Js: true....

JP: For non tech savvy ...what is the way out..

Js: if u r determined enough, u can still do it....but won't be a match for equally determined rajans

: for non-tech savvy traders like me, sticking to one day trading tactic and sticking to one or two stocks or just nifty or bank nifty is enough

JP: Yes... Its easier that way

Js: one of the unbeatable advantage of algo trading is that it can throw up a just-awakened stock out of a lot of hundreds and thousands of stocks.....

: since manually u can't match that, it is better to stick to ur favourite naughty stocks

: which almost never sleep...

: it is like asking someone to reproduce a thousand replicas of a handcrafted gun......

JP: 👌

Js: a handcrafted trade will be a masterpiece even before the algo assembly line

: and a millionaire like u jp can always hire a techie to inject ur trading secrets into an empty algo

: i, for that reason, am a craftsman....only nifty, only one trade at a time....unlike the henry "rajan" ford assembly line

: but one day, i'm afraid, we artists will be extinct making way for the rajan robots....who will rule the world.....

: we will be cleaning them after every trading session and earning our livelihoods....

: one day, trading will change beyond imagination......

: we will miss the trading we don now....

Loganathanmoorthy: Very appreciable

Js: like those pit traders of the last century who have tears in their eyes recalling their pasts

Loganathanmoorthy: Trading never dies

Js: enjoy ur every trade....enjoy your every day in the terminal pit....enjoy your every win....celebrate ur every loss....

Loganathanmoorthy: May i know how to get algo p

Js: there are many skeletons available in the market.....buy one and program it with ur method....or get someone do it......

: if u google, u will come across them....i forgot the one rajanji is using....

Loganathanmoorthy: Are you using rajanji algo

Js: i am old fashioned illiterate craftsman trader using free google charts and half empty head...i don't have access to any algo.....it is like urdu to me...rajanji ke paas jaata hoon to chai biscuit ke baad vaapis bhej dete hain...

Arun Singla: 😄😄😄😄😄😄

Js: but someday i will hire a about-to-be-dead software programmer to code my method just before dying without making copies of that program

Arun Singla: 😄😄😄

Loganathanmoorthy: Good, very nice

Js: i still belong to the school of thought that believes that human mind can beat computers in mischief and counter mischieves be it trading or anything.....

Arun Singla: Tajmahal banwa ke haath katwa diye shehan shaah ne...aap bhi aisa hi sochte ho kya 😄😄

Js: yes....fortunately...

: not because i am that greedy or selfish....but because

: the day i openly reveal my method (as if that is a khajaanaa...anyhow) if it is of any worth it will become ineffective as the operators will change the setup...

: operators are like smart bacterium which quickly adapt to the over used antibiotic and change into a newer strain

: a close whatsapp group is harmless

: incubator of ideas...

: my friends as my  guinea pigs😜

Js: just joking.....i know my buddies have a terrific sense of humour

Arun Singla: I m not agree with ur algos suggestion....

Reason:
If trading can be done so easily by modifying algos, all technical experts or programmers from IIT would be millionaire..

It requires patience, discipline, money management and skills to make money..

Algos dont have such qualities, only it can calculate on pre fitted assumptioms we fixed their...🙇

Js: successful trading requires a child's mind....

: a child is a great gamer....

: successful trading is nothing but great gaming.....

: i always say that as long as we are trading we will keep getting beaten....

: don't trade it....play it...like a game....

Rupinder S Raina: Indeed

Js: we are playing on technical or fundamental level and getting beaten up on tactical level....

: a child can beat us all hand down...

: u and me stand no chance....

: the only thing is that that child doesn't know the jargon and is still a child....but given a chance children and make us run for covers in trading.....

: till of course, they continue playing the trades and don't start trading....

: this is the reason why engineers and physicians and ph.d.'s and ias and iit'ians and scientists etc are all losing miserably till operators make them forget who they are....

: i think a chess or kho-kho player or any sportsman can be a great trader...

: any thief or scamster can be a great trader...

: we have had many in history....i don't want to name them

Loganathanmoorthy: Great......

Js: do u think that it is a coincidence that all the top business dons are actually not ph.d. or iit'ians or doctors!!!

: operators play.....u can survive and thrive only by playing....simple

Arun Singla: No they hire for themselves people around all the corners.

Js: they decide the program....they get techie goondas to code the algo and run it

Arun Singla: 😄😄..not techie goondas...the top 10 programmers around the world at their mouth fill salaries..

Js: i recently read "freakonomics" by steven d.levitt wherein he has elaborated how the top dons exploit the poor down-the-ladder poorly paid bonded-labour-goondas

: not that techie techie.....only software is not tech...how to run a mafia operation is also tech

: i was talking of those techies....

: though u qualify for both buddie....

: i know u have great sense of humour too...

Trading like cricket

[10:41AM, 28/01/2015] Jagmohan Singh: trading is like batting in cricket.....and operators are the bowlers as well as fielders and wicket keepers....out there to catch,bold,stump, run you out
[10:42AM, 28/01/2015] Jagmohan Singh: you can't decide your next stroke pre-maturely....before the bowl has been delivered
[10:43AM, 28/01/2015] Jagmohan Singh: you decide your stroke as per the bowl......whether u r going to play it defensive, sweep it, loft it, square cut it, play off-drive, hook it etc etc
[10:44AM, 28/01/2015] Sub Mathurji: Better to be on non strike
[10:44AM, 28/01/2015] Jagmohan Singh: got to respect the good delivery adn punish the bad one....
[10:44AM, 28/01/2015] Jagmohan Singh: lol
[10:44AM, 28/01/2015] Sub Mathurji: 😊
[10:44AM, 28/01/2015] Jagmohan Singh: running between the wickets has to be sharp
[10:44AM, 28/01/2015] Jagmohan Singh: every technique will be tested
[10:45AM, 28/01/2015] Sub Mathurji: Lets other batsmen (mutual fund) do all the scoring for u
[10:45AM, 28/01/2015] Jagmohan Singh: your stance has to be perfect...
[10:45AM, 28/01/2015] Jagmohan Singh: good, mathurji!
[10:46AM, 28/01/2015] Jagmohan Singh: but the joy of playing will be absent from the pavilion
[10:46AM, 28/01/2015] Sub Mathurji: Neglect sharp singles...
Dont back up too much...
Take single in place of 2
[10:46AM, 28/01/2015] Jagmohan Singh: all ones and twos count....
[10:46AM, 28/01/2015] mudraa Dinu prasad: 
[10:46AM, 28/01/2015] mudraa p murlidhar: Learning alot sir
[10:46AM, 28/01/2015] Sub Mathurji: Then just be the umpire...
Do running all over the field without fear of getting out
[10:46AM, 28/01/2015] Sub Mathurji: 😊
[10:47AM, 28/01/2015] Jagmohan Singh: you have to read the pitch.....turning, swinging, dead...
[10:47AM, 28/01/2015] Mudraa Jammu Rupinder S Raina: And take calculated risk
[10:47AM, 28/01/2015] Jagmohan Singh: lol, mathurji
[10:47AM, 28/01/2015] Jagmohan Singh: or bcci!!!
[10:47AM, 28/01/2015] Jagmohan Singh: making big(bigger money) without playing!!!
[10:48AM, 28/01/2015] Jagmohan Singh: see out the dangerous spells
[10:48AM, 28/01/2015] Jagmohan Singh: batting is more of reactiing to the bowling which decides it all
[10:49AM, 28/01/2015] Jagmohan Singh: and these bowlers always bowl to the impeccable field setting!!!
[10:49AM, 28/01/2015] Mudraa Jammu Rupinder S Raina: Yes Sir
[10:49AM, 28/01/2015] Jagmohan Singh: all these matches are fixed excluding the batsman...
[10:50AM, 28/01/2015] Jagmohan Singh: and you are the only batsman....from the openers to the last man standing....
[10:51AM, 28/01/2015] Jagmohan Singh: so much so, that you are yourself the 12th man and the physio.....got to nurse yourself yourself...
[10:51AM, 28/01/2015] Jagmohan Singh: got to stand on the crease and protect your precious wicket.....if you ensure that....runs will come
[10:51AM, 28/01/2015] Mudraa Jammu Rupinder S Raina: One many army
[10:53AM, 28/01/2015] Jagmohan Singh: “ Play with a straight bat ”
- In trading, it is important to do the right things rightly.
[10:53AM, 28/01/2015] Jagmohan Singh: “ Stay at the crease ”
- Have patience. You will have ample correct opportunities.
[10:53AM, 28/01/2015] Jagmohan Singh: “ Footwork ”
- Be adventurous. Use your talent. Be passionate
[10:54AM, 28/01/2015] Jagmohan Singh: “ Concentrate on line and length ”
- Consistency is crucial
[10:54AM, 28/01/2015] Mudraa Jammu Rupinder S Raina: 👍👍👍👍👍👍👍👍
[10:54AM, 28/01/2015] Jagmohan Singh: “ Keep the scoreboard ticking. 1’s and 2’s are also important“
- A little progress everyday adds up to big results.
- Keep progressing and improving.
[10:54AM, 28/01/2015] Jagmohan Singh: “ Helmet, Guards, Pads, Gloves”
- Safety net in trading is important- Live life sensibly.
[10:55AM, 28/01/2015] Jagmohan Singh: “ Don’t get hit-wicket ”
- Beware of wrong decisions which can be detrimental
[10:55AM, 28/01/2015] Jagmohan Singh: “ Build the foundation of innings”
- First few years of trading are crucial. Concentrate on investing in foundation. You have to learn to walk before you run and take off
[10:55AM, 28/01/2015] Jagmohan Singh: “ Build partnerships ”
- What clicks, keep clicking. Stability is important.

Bluff called Levels

Rajanji, don't support and resistance levels work because everyone is looking at them because everyone are taught that....?

These are not based on fundamentals or psychology.....I think.....they work because these are wide spread beliefs.....People believe in the channel theory, horizontal levels....which other than mass hysteria reasons is totally make believe working crap

There is a multi billion dollar consultancy, training, publishing, media, brokerage industry based on all this....

Otherwise, reason behind any level of any stock in the past cannot be the same months and years later.....what to talk of macro economy of the country and worldwide.....

It still works because sufficient people believe in this theory.....

Operators take advantage of it.....mercilessly, as per their convenience and necessity....

Newer and amateur traders are taught technicals to become unsuspecting victims.....

They play at technical level and get beaten on the tactical level...

That is why I believe that if someone trades like one plays video game he or she will make more money then with technicals....

A kid who doesn't know technicals can beat his technical father or mother hands down in trading.....in my opinion

Markets and market situations are always new.....and we play them with outdated reference points...

Reason why even the most sophisticated trading software can't guarantee profits without human intervention of high quality...

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.

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!!!

never trade without having lunch

when i learnt to play chess seriously around 20 yrs ago

one of the first things i learnt was

that a chess game can be broadly divided into three phases

1. opening game

= opening game generally lasts around 15-20 moves. as the name suggests, this is the opening phase when positions are taken and army is deployed. the first move previlege lies with the white camp. the black camp just responds to the opening moves of the white pieces. the white camp is the decider and attacker, black camp is the responder and defender. how the middle game will proceed, what colour the war will take depends on what shape the opening battle takes. since there are dozens (if not hundreds) of opening moves possible, there can be so many number of opening scenarios. the white camp tries to create a battlefield scenario of its choice. the purpose is to lure and trap the enemy in a situation decided by the first mover! it is rare to see the white to attack the black camp in the opening game or vice versa. particularly if the opponent is not a walkover. even kasparov didn't dare that (except rarely) against karpov. any attack without porperly unfolding and readying the defense can be suicidal especially against a strong opponent. so, all in all, opening game is to open and deploy the defence as well as offence.

2. middle game

= middle game takes over from opening game. it typically last for 20-30 moves after the opening game. once the army is deployed and the specific position-for-the-day has been taken, the real battle starts! all tactics, strategems and killings are made in this part. the real loss or gain or manoeuvring happens here. how well, the opponents had read each other and prepared in the opening game shows up here.

3. end game

= the game is all but over by the end of the middle game. though one opponent would have did a collateral damage to the other in the middle game, the game still needs to be won comprehensively. no battle is over till the king is captured or killed or check-mated. some smart warrior kings escape daringly even even from seemingly hopeless positions! an end game generally lasts 10-20 moves but much lesser time.

--

day-trading setup is also like a chess game.

one prominent difference = retail traders always play with black and can only react and respond to what the white camp, the operators do.

another difference = retail traders start attacking the white camp, the operators right in the opening game.

third difference = here the kasparovs or the karpovs or the anands play against novices!

a trading day can be divided into three phases

1. opening phase

=  opening phase is the one when the operators set the battlefield for the day. everyday, they come up with a different trap. everyday, the setting and situation is different. in the opening phase, operators butcher the retail traders who come charging without waiting.....just swept in the rush of blood. opening game is the phase which is often deceptively contra to the trend. this is the time when dreams are sold by the operators. mirages and expectations and desires of retail traders are treachorously fanned and fuelled by the white camp. and when the trapping is complete, the middle game is a one sided affair. when the operators just trap the early blind moths desperate to enter the fire!  

this opening phase of trading typically lasts till the midpoint of the session - the lunch time!

2. middle phase

= once the drama, the bluff, the trap, the volatility, the contra-dream, the lure is over in the morning session, the operators are left with no option but to do what sanity and trend and fundamentals allow. they swifty start doing what they should be doing.

3. end phase

= like a chess game, the trading end game is just a small tail.....more of a formality......sometimes to dress the wounds of the loser....sometimes to kill him decisively. mostly it happens after in the last half hour or so.

--

big moves happen mostly in the afternoon. what happens in the forenoon session are not big moves but bluffs and whipsaws.

you will rarely see direction changing (except once at most) in the afternoon session.

you will always see big move after lunch whereas you will notice that forenoons are mostly dull or indecisive or rangebound.

--

amateurs mostly trade in the opening phase, professionals mostly trade in the middle phase.

--

whipsaws are aplenty before lunch and rare after lunch.

avoid trading without lunch, before lunch.

how about winning?

do u play games?

when was the last time u played cricket?
are you a batsman or bowler or alrounder or "jonty" fielder?

and when was the last time u played football?
are you a center forward or anyone-play-anywhere?

did you play well?
did you enjoy playing?

what else do you play?

computer games?

which ones?

and do you play games with people?
at office?
in society?
life in general?

how well do you play?
do you enjoy playing?
do you play consciously or has it become a second nature?

and here is the most important question
do you use indicators to play all of the games i talked above?
charts? software? tips?

well,well,well...

i think you got what i want to say...

games are games are games....
they are to be played with head and hands and legs.....
mental and physical skills are developed......
talent and enjoyment are the bedrock of being a champion in any game
hardwork does the rest.

and by the way
do you play stock trading?

well, you read it right
i said "play" stock trading?

obviously not.
you "do" stock trading.

and that is why
you use software, charts, indicators, etc. etc.

all
except mental and physical skills
without enjoyment!

why not play stock trading?
why not take it as a game?

because money is involved??
well, money is involved in cricket and soccer and other sports as well?
do they make a move as per charts and indicators?

if sony was to introduce a trading game for its playstation
would you play it with charts and indicators?
chances are that you would
given the habits!

but what if you play it like you play other games?
what if you first play a few times understanding
the "controls"
the "levels"
the "rules"
the "curves and diffculties and challenges"?

what if you lose some times
then taste your first success
then win more often
then develop the habit of winning
and then become a professional?

the fact is
that indicators and technicals and charts and bla bla
have taken the fun out of the "game"
the biggest realtime game of all times!

and fun is not just "fun" that has gone
alongwith has gone the sub-conscious "learning"!

millions and millions of "trader" minds have been locked for sub-conscious game-programming.
rather, they have become a game for the big pockets!
they have become a "pokemon" in the games operators are playing!

how about learning the game of trading?
how about playing it?
how about becoming a kid once again?

how about winning?

6 rules to avoid getting trapped by operators!

you can't beat the operators

so the best thing

and the only thing you can and should do is

be with the operator!

===

here are the 6 rules for being with the operator (dedicated to mihir shah who provoked me to coin these)

* expect the opposite of the expectation to happen

= the one u think is against logic, is not easy to happen (like fall after huge fall or rise after already huge rise etc.), the one which is against logic, one which is not obvious

* be prepared for unexpected directional changes at unexpected times to unexpected extents. even expect extraordinary straight gradual climb up or climb down when everyone is expecting change in direction.......this is not jugglary of words, it is the straightest i could put it! if u say it is difficult, who said trading was easy (till ofcourse you train yourself!). having said it, let me add that doing all this requires full attention fulltime! only a well trained trader can hope to make money. otherwise, trading is a bermuda triangle if not a black hole!

* in cricket, fast bowler kills not just with a rocket ball but also with slower ball. similarly, in trading, if a move is slow, don't mistake it to be weak and short-term, and if it is fast don't label it immediately as big and sustainable move. a slow move may be a bull-dozer and fast move may be high decibel quicky! anyway, it requires lot of pratice and training to achieve this finesse to negotiate the challenge of the jumbo operators.

* never worry about zig-zag movement. look for the direction of the zig-zag!

* in trading, forget about fundamentals. they are just excuses!

* and last, but not the least, be with the minority (especially while trading in options)

how to trap traders (operators' manual)

* direction

= do opposite to expectations

= do the unthinkable

= do opposite to the logic

= do the difficult-to-do

= if both bulls and bears are equally divided about the direction, trap both by being rangebound till they divide in majprity-minority ratio.


* change

= keep changing the direction

= do it with stealth


* extent of directional move

= small, big, very small, very big? keep changing? keep them guessing

= how soon will the next direction change - keep them confused


* pace of the move

= do it slowly so that they don't come to know what is exactly happening

= do it so fast that they can't do anything about it


* never move straight

= move in zig-zag

---

and how do they do it? what tools do they use?

# support

= withdraw support to buying during upmove and it will fall

= withdraw support to selling during downmove and it will rise

= support buying and it will soar

= support selling and it will sink


the objective:

trap the majority

at the cost of the minority

---

how?

keep them guessing

keep them confused

catch them on the wrong foot

if u think operators are against the fundamentals

think again!

they do what fundamentals tell

but in the least obvious

and least predictable way.


and if you think

that during strong and big rallies

majority are with the rally

you are mistaken

it is again

the minority that is calling the shot

with majority money!

is their only one operator?

no....there are many

but as compared to the number of retail and small trading houses

these are very few

but with much much more financial muscle.

if they are more than one

how do they co-ordinate?

they don't co-ordinate with each other

they co-ordinate indirectly

via common principles mentioned above.

so what can you do?

simple

trade with an operator's mind.

as a french saying goes -

to be a good bull fighter

learn to be a bull!

but

when you catch their bluff

don't shout

just sit quiet

and see the drama unfold!

remembering my uncle!

when i was a kid

my uncle from U.S.

used to visit us every year.

whenever he came

he brought many toys and gadgets for me!

i always waited eagerly for his next visit

dreaming what gift he would bring for me this time!

--

for the time he stayed with us

he would play with me

and let me win!

he would teach me tricks

which got me accolades

when i displayed those tricks in front of my friends!

--

when he returned back

he left behind packets of candies and chocolates

pens and other memorabilia!

--

i remembered him long after he went back

and would wait for his next visit!!!

--

i was reminded of him after long time

after yesterday's big fall in the market.

--

FIIs are like traders' uncles in stock market!

they too are from US and other rich countries!

they too come here every year

and go back!

every year we eagerly look forward to their visit!

when they come

they indirectly bring us lots of gifts

by way of profit

resulting from rise in stock prices!

for the period they stay with us

everyone around them is happy

for their mere presence

is enough to cause stock prices to soar!

--

but the similarity between FII uncles

and my childhood uncle from US

ends here.

--

when the FII uncles are here

and see my stock price slide

they cunningly don't intervene

to stop the slide

even when they easily can!

they let me bleed!

and step in only when i am unconscious!!

--

they use their big moneybags

to unsettle every trade i and my friends take!

they start buying things from everybody

causing others to start buying too!

and when the price has gone too high

they start distributing

those very things

in our neighbourhood

at much higher cost!

they play tricks

but unlike my childhood uncle

take our money!

--

these uncles

when they go back

they don't leave me with candies and chocolates!

rather, they take away all my hidden candies and sweets!

they take all toys of my kids!

they take back much more than they bring here!

they leave back memorabilia of nightmares!

--

today i am remembering my childhood uncle!

understanding crowd - II

As already mentioned (in part-I)

a crowd is not a crowd in psychology till it has certain characteristics.

In psychology,

Group + Influence = Crowd

So the important factor is

"Influence"

Who influences?

What influences?

Is it the politics?

economics?

A group of sheep never goes anywhere!

So, the influence on the group is rarely from inside.

It has to come from outside!

Political or Economical developments are definitely among the influences!

But these have small effects.

Sheep traders, who are majority in number but minority in value

don't move much immediately in the wake of any political or economical happening!

they just wait for secondary triggers - initial outcome of the original happenings.

so, who decides those secondary triggers?

who is behind those thick dark veils in the market ?

who actually influences the stock market crowd?

It is "the big money"

it constitutes FIIs, DIIs, Funds, Banks, and alike.

the big surplus money flow in the world comes in handy in such adventures!

These big pockets can kneel down an elephant what to talk of overbought RSI

and jack up the blue-whale what to talk of severely oversold SMA

They can bulldoze the logic

and create severe ripples of sentiments...

...

...

...

(to be continued)

The real horses in the race!

A horse came into the stable and went straight to his buddy horse!

"I am very angry with you!"

"Why, dear?"

"The Mayor in the party was telling his friend that he is going to bet on you in the Sunday race on the tip of your jockey! Your jockey is a dishonest man!"

"But the jockey is bluffing!"

"Why?"

"Because I never told him that I am gonna win on Sunday!"

"Why?"

"Because I don't know it myself! And even if I knew about my fate, i don't know the fate of you fellow friends who will race with me! And even if I knew that, I don't know human language and my jockey doesn't know mine!"

"Oh, I see! But then why is your jockey lying?"

"Well, he says the same thing - that I am going to win the next Sunday race - to every new customer every week! He knows that someday I will. Either that will happen by law of averages, or I will have to do it lest I be shot! The client, on the other hand, is always dying to believe some story just before the race, courtesy his warm pocket!"

"But doesn't your jockey lose face whenever you don't win?"

"Well, the jockey blames it all on me. And the client can't say anything to me as I never gave the tip to him that I am going to win!"

"Wao!!"

"And that is not all. All jockeys are saying the same things to their clients. No horse minds that. The horses are getting good stuff to eat, jockeys are getting paid, brokers are making money......."

"Poor clients! These fat betters have got the bucks and want to throw them. We just give them a nice joyous way! They are the real horses in the race whom the brokers are betting big on!"

"Cheers! Neigh......Neighhhh..........."

"Cheers! Neigh......Neigh.....Neighhhh..........."

Clear Hai!

God and Advertisements are everywhere.

Nothing moves without them!

And anything moves with them!!!

Ads are of 6 types:

1. Logical

Ads which appeal to your left brain!

= Like the ads of LIC, Water purifiers, Tata Sky, Dettol

2. Emotional

Ads which want to "set" your Attitude in the right brain!

= Like the ads of Fevicol, Raymonds

3. Abstract

Ads which want to "set" your Ego

= Like the ad of Scorpio, Bournville' !

4. Demostrative

Ads which know they have to "prove it" to "win it"

= Like the ads of Harpic, Dove, Fair & Lovely!

5. Endorsement

Ads directed at the sheep inside every human

= All ads by celebrities!

6. Experiential

Ads which make you feel "it"

= Like the ads of Old Spice, Axe, D-cold, Maggi,

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

Stock markets trap you by using these 6 kinds of ad methods!

1. Logical

e.g. " It is severely oversold. Can't go down any further. "

2. Emotional

e.g. by fuelling the panic & greed,

by fanning the left-out feeling....

3. Abstract

symbols of prosperity and powerplays before your eyes

4. Demostrative

trader interviews and success stories

5. Endorsement

all expert opinions and recommendations

6. Experiential

every accidental profit traps your mind for a larger fall!

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

To protect myself from all this

I always keep 'Sprite' in my refrigerator!

Clear Hai !!!

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

Prepaid Trading - IV

Life, they say, is the art of possibilities!

If that is so,

Trading with options is nothing less than the dance of possibilities!

And when you know that buying an option guarantees

"unlimited profit, limited loss"

then why not dance this dance!

My friend Rishant is real good at this!

In his words

"In life as well as trading, it is not what 'IS' that is exciting!

What's really thrilling is the thought of what 'CAN' be!"

Every month he sets aside a few thousand bucks for this "thrilling gamble".

He doesn't smoke, he doesn't drink, he is not a spendthrift either.....

but he does spare some money for this!

He calls it "lottery in the dalaal street"

Every month he buys this "lottery ticket"

He buys a cheap stock option for the next month series

of a good-stock-in-the-pit

(on the basis of technical analyses of 1 year chart)

of a strike value "what CAN be" instead of "what is"!!!

He bets for the seemingly impossible!

He bets for the opposite!!

Amazingly, more often than not, the opposite is what that has been happening

(albeit to different degrees!)

and over the months, he has surely become the artist of possibilities!!!

Prepaid Trading - III

Here is a clever trading tactic used by one of my friends who is an Army Major just retired from short-service commission.

He calls this Reconnaissance Ambush Trading!

This he does with a team of Options and Futures.

Whenever his TA (Technical Analyses) suggests that the market is going to make a big move

he gets ready but doesn't deploy his "futures" straightaway!

Instead, he "sends in a reconnaisance team of commandos" to "test the waters"!

He buys an "out-of-money" call or put option (as the case may be)

and waits....

This option is like a reconnaissance mission which is used to determine the enemy forces disposition, intention, composition and capabilities without exposing the troops to danger.

He uses option as "cover" for his main "cash" troops!

If the option goes in his favour, that's what his TA predicted and that's what he wanted!

He is in a profitable position and all he needs to decide now is whether he should reinforce his winning position to make it big or just let the option run alone as far as possible.

If the option goes against his TA

he doesn't mind it!

This is precisely the reason he sent in his "options" before his massive "cash" troops!

There is a strong chance that market is bluffing and will give him more juicy position to deploy his big backup cash reserve!

Since he has an "out-of-money" option position, the loss is much lesser and limited as compared to the adverse movement in the market.

e.g. a 100 point fall results in a 25 point option bleeding. But a full recovery with futures or bigger option will result in net 75 point profit!

So, he patiently waits till the tide turns

and then he goes all out on the offensive either with bigger "in-the-money" option or with futures!

In his words

"When I get the signal, I send in the option squad. On the basis of information I get from this core team, I decide whether and when to send my entire company in the battlefield! Many a times, these Option commandos are enough for the assignment!"

"Let's play a game!"

"Let's play a game" market said to the trader.

"What game?" the trader asked

"I will either go up or go down. You have to guess my move and catch me!" the market explained the game.

"But you will see what I do and will never get caught!" the trader quipped.

"Ok! I will be blind folded all along and will not come to know whether you have taken long or short position." the market assured!

"That's fair." sighed the trader.

"But that will leave you at a disadvantage to me in the game!" the trader said to the market after some thought. "Both of us should have equal opportunity!"

"Yeah, you are right! If I am blind-folded you will catch me everytime." the market agreed.

The market started to think and then said

"Ok....! To make it fair, I will also be bluffing and excessively vibrating to dodge and confuse you!"

"Wao! It will be a great game now!!!" said the trader.

Several years have passed and the trader has been losing miserably!

All this while the market has been blind-folded

and kept the promise to move only up or down (no third direction)!

But its bluffs and vibrations have proved to be too much for the trader to bear!

"Can we change the rules a bit again!" the trader whispers!

Trading stocks in a Casino?

Day trading (or extremely short term trading) is less of trading and more of casino poker - the grand bluff game!

Various versions of poker are there but the general rule is to bet on the basis of cards you get. A player may get good cards or bad cards in the deal. He may continue to play or fold depending upon his mood, the cards he has got, the expressions and body language of his opponents or as part of a strategy.

If it were as simple as folding when you have bad cards and staying put if you have good cards, poker would be a dumb boring game. Fortunately, it is not! In reality, a good player with bad cards can play the bluff game well and win while a bad player with good cards can spoil the pot with his tactless expose' and win peanuts or even lose!

Everyone on the table is bluffing. So much so that for the onlookers, nobody seems to be bluffing. Bluff seems to be the reality! Sometimes even the tactless straight play is also a bluff!

Such poker play can be seen everywhere in the stock market everyday!

A stock which "should" go up generally goes down and stock which "should" go down generally goes up. Obvious thing never happens till it is not so obvious. The point is to bluff in a way that the big pockets trap the maximum possible numbers of small pockets. Had this been not so, there would be almost no money in short-term trading!

But ultimately even the big pockets know that they would be fools to drive a stock too much away from the fair value. Even the fair value is highly subjective and subject to perception manipulation, thus giving enough space for the poker play!

Day-traders or short-term traders who think they are trading are sadly mistaken. In effect, they are playing poker with trading rules and hence highly disadvantaged against those who are trading with poker rules.

So it is not important how well you can judge the oversold or overbought position of a stock or the market. What's really important is how well you can judge the poker bluff being played on the stock or the market.

If you are nimble professional you can go with the bluff otherwise you should wait till the bluff has gone too far and then bet for the collapse of the bluff.

However, if you are a medium to long term player no need to worry about the bluff. Bluff missiles don't have that much range. Contrary to the popular belief, it is easier to predict the market in the long term than in the very near future.

The Tip of an Iceberg!

Desperate unsuspecting traders are more than willing to tip over any tip that comes their way!

But often this tiny tip drowns them!

the reasons are not hard to find.

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

The tippers never tell you that they themselves are trading on super high speed always-on lease line connections!

- that you may be in a highly disadvantageous position if you are trading by other slower means

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

They never tell you that they always have auto Stop-loss bids in place in their dedicated terminals with powerful software!

- that you may not be able to trigger stop loss fast enough in case of a stampede and that there may be a huge gap between your order stop-loss price and the actual executed price!

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

They never tell you that they are operating on penny brokerage plans and that their own cost of trading is peanuts and hence their net loss in case of a SL-hit is much lesser!

- that your brokerage plan may not make it easier for you to afford even a stop-loss!

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

They never tell you that they have more than enough buffer funds to hold onto their losing positions if required

- that your risk may not be justified in the absence of adequate buffer funds and you may be on the road if your stop loss remains un-triggered!

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

They never tell you that the client is expected to make money only IN THE LONG RUN as some losses are inevitable

- that you may be left behind if you stop trading after the loss and are expected to keep following the tips even when you lose!!!

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

They never tell you how many more clients are receiving and acting on that call, and that such mass tip circulation is a favourite hunting environment for the big-pocket pick-pockets

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

- that you may actually be volunteering to be a sitting lame duck for the hunters!

(This probably explains why I found majority of the calls going the wrong way after a mass tip in the media or from a big brokerage house!)

(Manipulations thru mass tipping is common these days where only the first few benefit!)

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

They never tell you that their own actual exposure to that particular scrip or trade is much lesser as a part of their entire portfolio and hence a loss in this particular trade may not hurt them much overall.

-that you may be putting all your eggs in a single basket which doesn't even belong to you!

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

They don't share the basis of the call and whether the tip is a copy paste from another source!

- that you may be tipping on a tip that has no or frivolous base!

(Putting your life into the hands of someone who is not even sure about his!)

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

A tip is not just a simple innocent tip.

It is the tip of an Iceberg!