"i have a strange problem." said the talented trader
"i am good at reading the charts
and technical analyses
but when the trade is going my way
and i am having decent profit on the screen
i chicken out
by booking profit prematurely!
I am unable to convert my wins into
real big ones!
this is really preventing me from making it big in stock trading!"
--
the veteran trader was listening patiently to the confession of a bright trader!
he realised that the young man's problem lay in his getting overwhelmed by the sight of the profit!
he remained silent for several minutes
and then suggested
"stop looking at the bank balance
stop looking at the amount of unrealised profit
imagine that you are not trading money
but trading points
or trading the chart lines!
imagine that you are playing a game of reading charts correctly!
let your broker take care of the accounting!"
Tuesday, December 28, 2010
capacity
the auditorium burst
with waves of thunderous applause
by the final year students
of a reputed management institute
hypnotized by the electrifying speech
of the legendary businessman
invited to deliver the annual address!
--
immediately thereafter
open-house question-and-answer session started.
--
question after question
was put forward
only to be immortalised by the answers of
the businessman-of-the-decade!
--
after almost an hour
there was time for just one more question
--
"how do you effortlessly manage to increase
the turnover of your business
year after year
even when the sector is reeling under slowdown pressure!"
a girl student asked!
--
"when i was a child"
replied the veteran business-legend after a brief pause
"i used to accompany my grandfather to the temple.
the priest used to give me very sweet 'parshad' in my tiny folded hands.
it was so tasty that it used to be my main reason for daily going to temple!
but i always felt bad that i used to get very less of it!
my sweets used to finish too quickly!
one day, the priest noticed my sad face
and asked me for the reason!
'why do you give me so less sweets' i askedhim
'because you have so small hands' the priest told me.
that night i couldn't sleep well past midnight!
that day i had got the most precious lesson of my life
which stayed with me ever since.
i have always reminded myself
that to have more and bigger 'prashad'
from destiny
you need to have bigger folded hands to receive more!
you get only what you can comfortably hold and manage!
you get only what you are psychologically ready for...
it's not about the market-size
it's all about the basket-size!
since that day
whenever i have to increase the turnover
all i have to do is
stretch my mental barriers of reality
revise my definition of possible-impossible
upgrade the scale of my blue-print...
and that is the only constraint that i have to struggle to increase.
once that is done
everything else just falls into place
and i get the desired growth!"
with waves of thunderous applause
by the final year students
of a reputed management institute
hypnotized by the electrifying speech
of the legendary businessman
invited to deliver the annual address!
--
immediately thereafter
open-house question-and-answer session started.
--
question after question
was put forward
only to be immortalised by the answers of
the businessman-of-the-decade!
--
after almost an hour
there was time for just one more question
--
"how do you effortlessly manage to increase
the turnover of your business
year after year
even when the sector is reeling under slowdown pressure!"
a girl student asked!
--
"when i was a child"
replied the veteran business-legend after a brief pause
"i used to accompany my grandfather to the temple.
the priest used to give me very sweet 'parshad' in my tiny folded hands.
it was so tasty that it used to be my main reason for daily going to temple!
but i always felt bad that i used to get very less of it!
my sweets used to finish too quickly!
one day, the priest noticed my sad face
and asked me for the reason!
'why do you give me so less sweets' i askedhim
'because you have so small hands' the priest told me.
that night i couldn't sleep well past midnight!
that day i had got the most precious lesson of my life
which stayed with me ever since.
i have always reminded myself
that to have more and bigger 'prashad'
from destiny
you need to have bigger folded hands to receive more!
you get only what you can comfortably hold and manage!
you get only what you are psychologically ready for...
it's not about the market-size
it's all about the basket-size!
since that day
whenever i have to increase the turnover
all i have to do is
stretch my mental barriers of reality
revise my definition of possible-impossible
upgrade the scale of my blue-print...
and that is the only constraint that i have to struggle to increase.
once that is done
everything else just falls into place
and i get the desired growth!"
'the secret' in stock trading
you must have read
rhonda byrne's
"the secret"
the book that has become a phenomenon!
--
all it says is
"you attract things".
in the words of John Assaraf
"thoughts become things"
--
seems magical!
isn't it!
atleast that is what i first thought
when i first saw the movie
and read the book!
--
but
being a science student
i wanted some logic
to believe the law
and understand the philosophy!
--
recently
i got my logic
and i want to share it here!
--
to me
the law means
"what you are searching for
whether good or bad
positive or negative
your eyes locate
and mind recognises!
what you aren't looking for
you miss all!
even if it is right in front of you!"
--
let's understand this with an experiment
--
look at something which is at a distance of about 10 meters
from where you are sitting!
look at it carefully for 5 seconds.
now bring your left thumb
in the line of your eyes and that thing!
without moving your head or thumb
look at the thumb carefully!
--
while looking at the thumb
can you see the details of the thing 10meters away?
obviously, not.
--
now without moving the thumb
can you focus at the distant thing?
yes, you can!
but while focusing on the distant thing
can you see the details of your thumb?
again, you can't!
--
that is why
"what you are searching for
whether good or bad
positive or negative
your eyes locate
and mind recognises!
what you aren't looking for
you miss all!
even if it is right in front of you!"
--
this way
"we attract our destiny and everything on the way!"
and
"thoughts become things"
--
now,
using this law
can we attract profit
in stock market?
also,
if we are attracting loss as of now
what are we focusing at?
what's in our thoughts?
--
i leave the answers on you!
rhonda byrne's
"the secret"
the book that has become a phenomenon!
--
all it says is
"you attract things".
in the words of John Assaraf
"thoughts become things"
--
seems magical!
isn't it!
atleast that is what i first thought
when i first saw the movie
and read the book!
--
but
being a science student
i wanted some logic
to believe the law
and understand the philosophy!
--
recently
i got my logic
and i want to share it here!
--
to me
the law means
"what you are searching for
whether good or bad
positive or negative
your eyes locate
and mind recognises!
what you aren't looking for
you miss all!
even if it is right in front of you!"
--
let's understand this with an experiment
--
look at something which is at a distance of about 10 meters
from where you are sitting!
look at it carefully for 5 seconds.
now bring your left thumb
in the line of your eyes and that thing!
without moving your head or thumb
look at the thumb carefully!
--
while looking at the thumb
can you see the details of the thing 10meters away?
obviously, not.
--
now without moving the thumb
can you focus at the distant thing?
yes, you can!
but while focusing on the distant thing
can you see the details of your thumb?
again, you can't!
--
that is why
"what you are searching for
whether good or bad
positive or negative
your eyes locate
and mind recognises!
what you aren't looking for
you miss all!
even if it is right in front of you!"
--
this way
"we attract our destiny and everything on the way!"
and
"thoughts become things"
--
now,
using this law
can we attract profit
in stock market?
also,
if we are attracting loss as of now
what are we focusing at?
what's in our thoughts?
--
i leave the answers on you!
why we don't trigger stop loss
there are two reasons
why you will pull the trigger of the rifle
in the jungle
in front of a lion!
one
to protect yourself.
second
to hunt the lion.
the lion is likely to get killed
in both the cases
but
there is hell of a difference
between the two motives!
in one
you are defensive
in other
you are on the offensive
one is full of fear
other is full of confidence
similarly,
every trader has two reasons to trigger the stop loss
one
to prevent loss
second
to gain profit
again, there is hell of a difference between the two!
if first one is the motive
you will not trigger the stop loss
because your amateur mind will not be ready to bear even the small loss till that time!
and as far as the second reason
to pull the stop loss trigger is concerned
an amateur trader won't understand it!
he fails to see how triggering the stop loss
can gain him profit!
this is the fundamental reason
why amateurs don't honour the stop loss!
in the words of Harv Eker
the rich play 'to win'
the poor play 'not to lose'!
why you will pull the trigger of the rifle
in the jungle
in front of a lion!
one
to protect yourself.
second
to hunt the lion.
the lion is likely to get killed
in both the cases
but
there is hell of a difference
between the two motives!
in one
you are defensive
in other
you are on the offensive
one is full of fear
other is full of confidence
similarly,
every trader has two reasons to trigger the stop loss
one
to prevent loss
second
to gain profit
again, there is hell of a difference between the two!
if first one is the motive
you will not trigger the stop loss
because your amateur mind will not be ready to bear even the small loss till that time!
and as far as the second reason
to pull the stop loss trigger is concerned
an amateur trader won't understand it!
he fails to see how triggering the stop loss
can gain him profit!
this is the fundamental reason
why amateurs don't honour the stop loss!
in the words of Harv Eker
the rich play 'to win'
the poor play 'not to lose'!
Monday, December 27, 2010
did you fall in trade?
how do we choose our life partner?
we fall in love with somebody
we decide to marry
and when parents come into picture
we start looking for reasons
find some good ones!
but the fact is
we are always decided much before
we start thinking!
(probably, that is the reason they call it
FALLING in love!)
--
just like the sales maxim
"customers decide emotionally and justify logically!"
--
similarly,
how do we invest or trade?
we like a stock or situation
we decide to marry (i.e.trade)
and when parents (i.e. logic, left brain) come into picture
we start looking for reasons
and indicators,
find some good ones!
but the fact is
we are always decided much before
we start thinking!
(probably, we should start calling it
FALLING in trade!)
we fall in love with somebody
we decide to marry
and when parents come into picture
we start looking for reasons
find some good ones!
but the fact is
we are always decided much before
we start thinking!
(probably, that is the reason they call it
FALLING in love!)
--
just like the sales maxim
"customers decide emotionally and justify logically!"
--
similarly,
how do we invest or trade?
we like a stock or situation
we decide to marry (i.e.trade)
and when parents (i.e. logic, left brain) come into picture
we start looking for reasons
and indicators,
find some good ones!
but the fact is
we are always decided much before
we start thinking!
(probably, we should start calling it
FALLING in trade!)
one way to move forward despite losses
one way
to stand up
once more
and
move forward
despite losses....
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forgive yourself
for the trading mistakes!
to stand up
once more
and
move forward
despite losses....
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forgive yourself
for the trading mistakes!
a gift cheque for you!
u spend
hundreds every day (if not more)!
--
a good portion of this is totally avoidable
some portion is a clear wastage
and some part is sheer carelessness!
what to talk of the amount we can save by negotiation and planning!
--
if we just consciously save 10 bucks everyday
out of
the waste, careless and avoidable expenses only
(not difficult i hope!)
we would have saved
300 a month!
not a big amount, isn't it!
--
now if u put this 300 in a mutual fund
thru SIP route every month
for 35 years from the age of 25 to 60
and
assuming a return of 20% pa
and inflation of 7% pa
do you have any idea what would you have saved?
--
25,02,076/-
AFTER providing for inflation!!
TAX-FREE!!!
============
terminal value of the 420 instalments at the end of 35 years (420 months), starting from last instalment and going backwards
300 303 307 310 313 317 320 323 327 330 334 338 341 345 349 352 356 360 364 368 372 376 380 384 388 392 397 401 405 410 414 419 423 428 432 437 442 446 451 456 461 466 471 476 481 486 492 497 502 508 513 519 524 530 536 542 547 553 559 565 572 578 584 590 597 603 610 616 623 630 636 643 650 657 664 671 679 686 693 701 709 716 724 732 740 748 756 764 772 780 789 797 806 815 823 832 841 850 860 869 878 888 897 907 917 927 937 947 957 967 978 988 999 1010 1021 1032 1043 1054 1066 1077 1089 1101 1112 1124 1137 1149 1161 1174 1187 1199 1212 1225 1239 1252 1266 1279 1293 1307 1321 1335 1350 1364 1379 1394 1409 1424 1440 1455 1471 1487 1503 1519 1535 1552 1569 1586 1603 1620 1638 1655 1673 1691 1710 1728 1747 1766 1785 1804 1823 1843 1863 1883 1903 1924 1945 1966 1987 2008 2030 2052 2074 2097 2119 2142 2165 2189 2212 2236 2260 2285 2309 2334 2360 2385 2411 2437 2463 2490 2517 2544 2571 2599 2627 2656 2684 2713 2743 2772 2802 2832 2863 2894 2925 2957 2989 3021 3054 3087 3120 3154 3188 3222 3257 3292 3328 3364 3400 3437 3474 3511 3549 3587 3626 3665 3705 3745 3785 3826 3868 3909 3952 3994 4037 4081 4125 4170 4215 4260 4306 4353 4400 4447 4495 4544 4593 4643 4693 4743 4795 4846 4899 4952 5005 5059 5114 5169 5225 5281 5338 5396 5454 5513 5573 5633 5694 5755 5817 5880 5944 6008 6073 6138 6205 6272 6339 6408 6477 6547 6618 6689 6761 6834 6908 6983 7058 7135 7212 7289 7368 7448 7528 7610 7692 7775 7859 7944 8029 8116 8204 8292 8382 8472 8564 8656 8750 8844 8940 9036 9134 9233 9332 9433 9535 9638 9742 9847 9954 10061 10170 10280 10391 10503 10616 10731 10847 10964 11083 11202 11323 11446 11569 11694 11820 11948 12077 12207 12339 12473 12607 12743 12881 13020 13161 13303 13447 13592 13739 13887 14037 14189 14342 14497 14653 14812 14972 15133 15297 15462 15629 15798 15968 16141 16315 16491 16669 16849 17031 17215 17401 17589 17779 17971 18165 18361 18560 18760 18963 19168 19375 19584 19795 20009 20225 20444 20664 20888 21113 21341 21572 21805 22040 22278 22519 22762 23008 23256 23507 23761 24018 24277 24540 24805 25072 25343 25617 25894 26173 26456 26742 27030 = 2502076 Total
hundreds every day (if not more)!
--
a good portion of this is totally avoidable
some portion is a clear wastage
and some part is sheer carelessness!
what to talk of the amount we can save by negotiation and planning!
--
if we just consciously save 10 bucks everyday
out of
the waste, careless and avoidable expenses only
(not difficult i hope!)
we would have saved
300 a month!
not a big amount, isn't it!
--
now if u put this 300 in a mutual fund
thru SIP route every month
for 35 years from the age of 25 to 60
and
assuming a return of 20% pa
and inflation of 7% pa
do you have any idea what would you have saved?
--
25,02,076/-
AFTER providing for inflation!!
TAX-FREE!!!
============
terminal value of the 420 instalments at the end of 35 years (420 months), starting from last instalment and going backwards
300 303 307 310 313 317 320 323 327 330 334 338 341 345 349 352 356 360 364 368 372 376 380 384 388 392 397 401 405 410 414 419 423 428 432 437 442 446 451 456 461 466 471 476 481 486 492 497 502 508 513 519 524 530 536 542 547 553 559 565 572 578 584 590 597 603 610 616 623 630 636 643 650 657 664 671 679 686 693 701 709 716 724 732 740 748 756 764 772 780 789 797 806 815 823 832 841 850 860 869 878 888 897 907 917 927 937 947 957 967 978 988 999 1010 1021 1032 1043 1054 1066 1077 1089 1101 1112 1124 1137 1149 1161 1174 1187 1199 1212 1225 1239 1252 1266 1279 1293 1307 1321 1335 1350 1364 1379 1394 1409 1424 1440 1455 1471 1487 1503 1519 1535 1552 1569 1586 1603 1620 1638 1655 1673 1691 1710 1728 1747 1766 1785 1804 1823 1843 1863 1883 1903 1924 1945 1966 1987 2008 2030 2052 2074 2097 2119 2142 2165 2189 2212 2236 2260 2285 2309 2334 2360 2385 2411 2437 2463 2490 2517 2544 2571 2599 2627 2656 2684 2713 2743 2772 2802 2832 2863 2894 2925 2957 2989 3021 3054 3087 3120 3154 3188 3222 3257 3292 3328 3364 3400 3437 3474 3511 3549 3587 3626 3665 3705 3745 3785 3826 3868 3909 3952 3994 4037 4081 4125 4170 4215 4260 4306 4353 4400 4447 4495 4544 4593 4643 4693 4743 4795 4846 4899 4952 5005 5059 5114 5169 5225 5281 5338 5396 5454 5513 5573 5633 5694 5755 5817 5880 5944 6008 6073 6138 6205 6272 6339 6408 6477 6547 6618 6689 6761 6834 6908 6983 7058 7135 7212 7289 7368 7448 7528 7610 7692 7775 7859 7944 8029 8116 8204 8292 8382 8472 8564 8656 8750 8844 8940 9036 9134 9233 9332 9433 9535 9638 9742 9847 9954 10061 10170 10280 10391 10503 10616 10731 10847 10964 11083 11202 11323 11446 11569 11694 11820 11948 12077 12207 12339 12473 12607 12743 12881 13020 13161 13303 13447 13592 13739 13887 14037 14189 14342 14497 14653 14812 14972 15133 15297 15462 15629 15798 15968 16141 16315 16491 16669 16849 17031 17215 17401 17589 17779 17971 18165 18361 18560 18760 18963 19168 19375 19584 19795 20009 20225 20444 20664 20888 21113 21341 21572 21805 22040 22278 22519 22762 23008 23256 23507 23761 24018 24277 24540 24805 25072 25343 25617 25894 26173 26456 26742 27030 = 2502076 Total
why u trade decides what u get!
why are you into stock trading?
obviously, for money
but what seems obvious
is not so obvious at the root!
at the root
the reason for coming to stock market may be
- to recover lost money
- to earn some extra bucks
- in search of financial security
- to overcome the poverty
- to gain wealth
- to "prove yourself"
....or any other reason!
--
- if you took to trading to recover lost money, you have brought with you fear and frustration of having been the 'victim of loss'! your subconscious will find ways to prove that you were 'a
victim'! and what better way to prove this than showing you as a victim again! nothing can really happen till you come out of that psyche and trade not to recover, but gain normally!
- if you have come here for that "side income" for "extra bucks", you have reached here with a
baggage of realisation that "it is difficul to making money". your obedient sub-conscious will try its best to defend your belief that it is really "difficult to make monay"! consequently, i won't be surprised if you face so much of difficulty that you don't gain but lose "extra"!
- if you have taken to trading in search of relief from financial insecurity, your psyche is full of fear of insecurity! whatever you earn in stock market, you are unlikely to get that "secure" feeling! your discomfort might increase actually increase! from the insecurity of less money from the insecurity of too much money! the only way left to get security would be to lose this "too much money" and get some relief!
- if you have become a stock trader because you want to come out of years of poverty or financial distress that you and your parents have had to go through, then you have started with an anger against lack of money! whatever money you make in the stock market, is likely to make you remind this anger! rather, the more money you make the more the anger will be there, courtesy that fear of losing it all again. finally, in bouts of psychological stress, your subconscios is likely to land you in losing trades that somewhat relieve you from the pressure!
- if you have started trading to become wealthy you are carrying a strong belief and grudge that
wealth has been eluding you and it is not your fault! your sub-conscious will prove that your
belief is justified. and it is likely to prove this by showing that wealth is still "eluding you"! i am sorry to say that the grudge and belief are here to stay till you nourish them!
- if you are here "to prove" yourself, then i have no hesitation to say that whatever be your
performance you will always have the feeling that you have not "proved yourself enough". this
belief is likely to wrongly influence your decisions which will result in loss that will justify
that "you indeed have to prove yourself!"
--
why do i say all that?
less so because i have experienced one of this myself!
less so because i have seen many around me go thru some of these states!
but more so
because
our minds work that way!
--
whatever is your reality paradigm
whatever is your frame of reference
whatever you think
your subconscious will be out to prove it!
and attract it!!
everything which tallies with your belief world is accepted
everything else is ignored
your subconscious proves what you believe!!!
--
so, what if you have entered the dalaal street with the above reasons?
do you still have hope?
yes!
absolutely!!
but there is a condition!
you have to approach the market with a positive approach!
with a positive reason!
with a positive psyche.
without any negative baggage!
--
remember, if the motive or driving force behind
your taking up trading is
negative
your fate is sealed even before you start!
--
instead
whatever your past
make sure that you are in the market for positive reasons
of aim or ambition or passion or happiness
with darkness behind your back
and your face brightly lit with sunshine!
obviously, for money
but what seems obvious
is not so obvious at the root!
at the root
the reason for coming to stock market may be
- to recover lost money
- to earn some extra bucks
- in search of financial security
- to overcome the poverty
- to gain wealth
- to "prove yourself"
....or any other reason!
--
- if you took to trading to recover lost money, you have brought with you fear and frustration of having been the 'victim of loss'! your subconscious will find ways to prove that you were 'a
victim'! and what better way to prove this than showing you as a victim again! nothing can really happen till you come out of that psyche and trade not to recover, but gain normally!
- if you have come here for that "side income" for "extra bucks", you have reached here with a
baggage of realisation that "it is difficul to making money". your obedient sub-conscious will try its best to defend your belief that it is really "difficult to make monay"! consequently, i won't be surprised if you face so much of difficulty that you don't gain but lose "extra"!
- if you have taken to trading in search of relief from financial insecurity, your psyche is full of fear of insecurity! whatever you earn in stock market, you are unlikely to get that "secure" feeling! your discomfort might increase actually increase! from the insecurity of less money from the insecurity of too much money! the only way left to get security would be to lose this "too much money" and get some relief!
- if you have become a stock trader because you want to come out of years of poverty or financial distress that you and your parents have had to go through, then you have started with an anger against lack of money! whatever money you make in the stock market, is likely to make you remind this anger! rather, the more money you make the more the anger will be there, courtesy that fear of losing it all again. finally, in bouts of psychological stress, your subconscios is likely to land you in losing trades that somewhat relieve you from the pressure!
- if you have started trading to become wealthy you are carrying a strong belief and grudge that
wealth has been eluding you and it is not your fault! your sub-conscious will prove that your
belief is justified. and it is likely to prove this by showing that wealth is still "eluding you"! i am sorry to say that the grudge and belief are here to stay till you nourish them!
- if you are here "to prove" yourself, then i have no hesitation to say that whatever be your
performance you will always have the feeling that you have not "proved yourself enough". this
belief is likely to wrongly influence your decisions which will result in loss that will justify
that "you indeed have to prove yourself!"
--
why do i say all that?
less so because i have experienced one of this myself!
less so because i have seen many around me go thru some of these states!
but more so
because
our minds work that way!
--
whatever is your reality paradigm
whatever is your frame of reference
whatever you think
your subconscious will be out to prove it!
and attract it!!
everything which tallies with your belief world is accepted
everything else is ignored
your subconscious proves what you believe!!!
--
so, what if you have entered the dalaal street with the above reasons?
do you still have hope?
yes!
absolutely!!
but there is a condition!
you have to approach the market with a positive approach!
with a positive reason!
with a positive psyche.
without any negative baggage!
--
remember, if the motive or driving force behind
your taking up trading is
negative
your fate is sealed even before you start!
--
instead
whatever your past
make sure that you are in the market for positive reasons
of aim or ambition or passion or happiness
with darkness behind your back
and your face brightly lit with sunshine!
Sunday, December 26, 2010
snake of loss!
many traders jokingly say
"i will start making money in trading
the day i start taking positions
opposite to what my head asks me to do"
i see pain hidden in this self-joke...
the statement seems to be an utterance in frustration
but in my opinion
is not a bad idea at all...
seriously....
--
why do i say that?
because these traders are almost always wrong
and the opposite of their trades is almost always right!
--
why does this happen?
"negative approach!"
these traders desire profit
but keep thinking and fearing of loss!
consequently
they miss every signal of profit.
what starts in search of profit
ends up a hide and seek with loss!
--
why?
just read this first...
--
once a snake was spotted in the thick bushes
at the end of the lawn in front of the house
the family searched for it frantically
but couldn't find it!
that night they could hardly sleep.
next day they searched again
without any success
"it seems to have gone!" everyone thought
but the fear of snake stayed back.
they kept the light in the verandah on
to scare off the snake
in case it was still around!
none could have a sound sleep that night also
next day they decided that enough was enough
so they set the dry bushes on fire!
all bushes were reduced to ash
and there was no snake!
all family heaved a big sigh of relief!
they expected to have a sound sleep that third night
but somehow they couldn't
the fear of past 48 hours refused to go away immediately!
so they kept the verandah light on for that night too!
night passed off peacefully
next morning
when the lady of the house opened the door of the bathroom
she was welcomed by the snake!
what had happened was that
the burning of the bushes had resulted in the snake being rendered homeless
and hence running out for another shelter
since none existed in the cemented neighbourhood
the wandering snake saw the movement of rodents in the verandah
which were attracted by the light
left 'on' to ward-off the snake.
snake reached the verandah and found the way in!
the very steps to ward-off the snake
resulted in the snake landing directly into the house!
--
fear can do strange things
it can distort your decision making process
and provoke and instigate you to do
exactly what you shouldn't have done
it pushes you in the trap
instead of taking you away!
--
as superbly underlined by rhonda byrne
in the masterpiece revolutionary book
"the secret"
we attract things by thoughts!
--
our compulsive obsessive fear in the head inevitably always shows up!
--
so
don't go after the snake of loss.
he is not after you.
rest assured!
when he appears by sheer chance
just change your path
and leave him alone!
"i will start making money in trading
the day i start taking positions
opposite to what my head asks me to do"
i see pain hidden in this self-joke...
the statement seems to be an utterance in frustration
but in my opinion
is not a bad idea at all...
seriously....
--
why do i say that?
because these traders are almost always wrong
and the opposite of their trades is almost always right!
--
why does this happen?
"negative approach!"
these traders desire profit
but keep thinking and fearing of loss!
consequently
they miss every signal of profit.
what starts in search of profit
ends up a hide and seek with loss!
--
why?
just read this first...
--
once a snake was spotted in the thick bushes
at the end of the lawn in front of the house
the family searched for it frantically
but couldn't find it!
that night they could hardly sleep.
next day they searched again
without any success
"it seems to have gone!" everyone thought
but the fear of snake stayed back.
they kept the light in the verandah on
to scare off the snake
in case it was still around!
none could have a sound sleep that night also
next day they decided that enough was enough
so they set the dry bushes on fire!
all bushes were reduced to ash
and there was no snake!
all family heaved a big sigh of relief!
they expected to have a sound sleep that third night
but somehow they couldn't
the fear of past 48 hours refused to go away immediately!
so they kept the verandah light on for that night too!
night passed off peacefully
next morning
when the lady of the house opened the door of the bathroom
she was welcomed by the snake!
what had happened was that
the burning of the bushes had resulted in the snake being rendered homeless
and hence running out for another shelter
since none existed in the cemented neighbourhood
the wandering snake saw the movement of rodents in the verandah
which were attracted by the light
left 'on' to ward-off the snake.
snake reached the verandah and found the way in!
the very steps to ward-off the snake
resulted in the snake landing directly into the house!
--
fear can do strange things
it can distort your decision making process
and provoke and instigate you to do
exactly what you shouldn't have done
it pushes you in the trap
instead of taking you away!
--
as superbly underlined by rhonda byrne
in the masterpiece revolutionary book
"the secret"
we attract things by thoughts!
--
our compulsive obsessive fear in the head inevitably always shows up!
--
so
don't go after the snake of loss.
he is not after you.
rest assured!
when he appears by sheer chance
just change your path
and leave him alone!
Saturday, December 25, 2010
mind v/s indicators
who makes the trading decision
you or your mind?
obviously your mind.
you are nobody
your mind is the real you
and what is your mind?
is it the hardware which is mind
or the software in it?
obviously it is the software
if hardware were the mind
all minds in the world would have been the same
and you would be making money in the markets as much as
the most succesful trader having the same hardware!
so,
it is the software that is the mind
and it is this software which is trading
not you!
if you are losing more than you are winning
then the culprit is the software!
who programmed this software?
was it programmed in C++ or Java or VB?
how much time would it have taken to develop this software?
well, no programmer programmed your mind's software!
this software was programmed
through a lifetime of
conscious and subconscious learnings and experiences!
whatever you think
is not you but the the software in your mind that is thinking
on the basis of its likes and dislikes
preferences and biases
fears and greeds
lessons and prejudices
programmed into it till date!
--
everyday
during trading hours
this software is pitched in a direct fight
with the logical signals of technical indicators!
do you have any idea who wins this fight
day after day
everyday?
it's your mind's software!
T.Harv Eker has also strongly endorsed this in his classic
"secrets of a milionaire mind".
the poor logical technical indicator is always vetoed
unless he is saying what is same as the programmed mind is saying!
is it surprising any more that you have been losing despite knowing indicators?
--
and for heavens sake
now don't start flogging mercilessly your mind!
it's not his fault!
start reprogramming it with
"millionaire" thoughts and habits and behaviour patterns!
till date you have not been a milliOnaire
and hence your programmed thoughts are not those of a millionaire
rather, you have been hating the millionaire coterie hearts-of-hearts all these years
and hence your programmed minds are anti-millionaire
whereas your conscious mind wants to be one!
--
tell your mind that
money is not a sin!
profit is not a dirty word, loss is!
tell him gently that
it is not a crime to be wealthy!
risk is not bad but a must!
all sweet things are not profitable
and all bitter things are not bad!
tell him to be less fearful and more bold
tell him that the company of the losers is not a good thing
tell him that it is ok to be oppotunist
tell him that it is ok to profit at other's expense
tell him that it is not a sacrifice to lose in the market
.....tell him a hundred more things
ask him to dare to unlearn old things not fit in the ruthless trading world
persuade him to learn new lessons....
because what he learns
will react in your bank balance!
you or your mind?
obviously your mind.
you are nobody
your mind is the real you
and what is your mind?
is it the hardware which is mind
or the software in it?
obviously it is the software
if hardware were the mind
all minds in the world would have been the same
and you would be making money in the markets as much as
the most succesful trader having the same hardware!
so,
it is the software that is the mind
and it is this software which is trading
not you!
if you are losing more than you are winning
then the culprit is the software!
who programmed this software?
was it programmed in C++ or Java or VB?
how much time would it have taken to develop this software?
well, no programmer programmed your mind's software!
this software was programmed
through a lifetime of
conscious and subconscious learnings and experiences!
whatever you think
is not you but the the software in your mind that is thinking
on the basis of its likes and dislikes
preferences and biases
fears and greeds
lessons and prejudices
programmed into it till date!
--
everyday
during trading hours
this software is pitched in a direct fight
with the logical signals of technical indicators!
do you have any idea who wins this fight
day after day
everyday?
it's your mind's software!
T.Harv Eker has also strongly endorsed this in his classic
"secrets of a milionaire mind".
the poor logical technical indicator is always vetoed
unless he is saying what is same as the programmed mind is saying!
is it surprising any more that you have been losing despite knowing indicators?
--
and for heavens sake
now don't start flogging mercilessly your mind!
it's not his fault!
start reprogramming it with
"millionaire" thoughts and habits and behaviour patterns!
till date you have not been a milliOnaire
and hence your programmed thoughts are not those of a millionaire
rather, you have been hating the millionaire coterie hearts-of-hearts all these years
and hence your programmed minds are anti-millionaire
whereas your conscious mind wants to be one!
--
tell your mind that
money is not a sin!
profit is not a dirty word, loss is!
tell him gently that
it is not a crime to be wealthy!
risk is not bad but a must!
all sweet things are not profitable
and all bitter things are not bad!
tell him to be less fearful and more bold
tell him that the company of the losers is not a good thing
tell him that it is ok to be oppotunist
tell him that it is ok to profit at other's expense
tell him that it is not a sacrifice to lose in the market
.....tell him a hundred more things
ask him to dare to unlearn old things not fit in the ruthless trading world
persuade him to learn new lessons....
because what he learns
will react in your bank balance!
Thursday, December 23, 2010
ready for it - II
if being mentally not ready
is responsible for not succeeding in stock trading
here is a different but effective way to develop a 'millionaire mindset'
but to do that first i need to share with you something
--
in his masterpieces
'6 thinking hats'
and
'6 action shoes'
the great thinker and management guru
Edward de Bono had beautifully driven home the point
that every person has and needs many faces
which he shows or can show!
every face is different
and has a specific ability
suitable for a particular situation
represented by different kinds of 'shoes' or 'hats' in de Bono's books!
it is like playing different roles.
the persona has to come in a totally different avatar for each role!
the problem arises when the man plays the wrong role on the wrong stage!
e.g. if one were to sit across the negotiation table
with the mindset of 'formal navy shoes' (formal approach)
in a situation which demanded
the mindset of 'pink slippers' (informal approach)
the outcome is likely to be a disaster.
what you feel like and behave like and look like
in 'formal navy shoes'
is totally opposite to
how you feel and behave and look
in 'pink slippers' or any other type of shoes!
so, whatever the challenge
just select the right kind of 'action shoes' or 'thinking hat'
and succeed!
--
based on the above
here is the trick to develop "a millionaire mindset"
which is otherwise difficult without
a million dollars in your bank account!
--
"Act"
--
in other words
just play the role of a "millionaire"!
i know, you would say that
since you are not a millionaire
your role play will be faulty!
well, don't worry about that.
you will do it quite well
better than a real millionaire!
--
in fact
you can prepare yourself for any role or responsibility
or challenge in life
by just starting to act the role...
first play the role
then it will come out naturally!
--
feel like
behave like
act like
look like
think like
a millionaire in that very situation!
ask yourself
what different would a millionaire think in such a situation?
what would a millionaire do different in such a situation?
how would a millionaire react differently to this situation?
this way you will not chicken out of situations where you shouldn't have
this way you will have the courage to take a risk your indicators say you should have
this way you will survive the difficult situation without booking profit prematurely
this way you will book the stop loss ruthlessly like a seasoned emotionless businessman
...and so on
you will realise that the trouble used to arise
when we used to react in petty and penny ways of
"non-millionaires"!
a change in decisions
will change the results for you!
--
even if you are a rocket scientist or a surgeon or an engineer or a chartered accountant
your daily mannerism and thinking patterns and fears are different from that of a millionaire
and this is the root cause of faulty decisions
which have landed you in your present state-of-affairs!
--
in T.Harv Eker's words
by acting
you are programming your mind
to generate feelings
to create thoughts
to trigger actions
which will bring amazing and different results!
is responsible for not succeeding in stock trading
here is a different but effective way to develop a 'millionaire mindset'
but to do that first i need to share with you something
--
in his masterpieces
'6 thinking hats'
and
'6 action shoes'
the great thinker and management guru
Edward de Bono had beautifully driven home the point
that every person has and needs many faces
which he shows or can show!
every face is different
and has a specific ability
suitable for a particular situation
represented by different kinds of 'shoes' or 'hats' in de Bono's books!
it is like playing different roles.
the persona has to come in a totally different avatar for each role!
the problem arises when the man plays the wrong role on the wrong stage!
e.g. if one were to sit across the negotiation table
with the mindset of 'formal navy shoes' (formal approach)
in a situation which demanded
the mindset of 'pink slippers' (informal approach)
the outcome is likely to be a disaster.
what you feel like and behave like and look like
in 'formal navy shoes'
is totally opposite to
how you feel and behave and look
in 'pink slippers' or any other type of shoes!
so, whatever the challenge
just select the right kind of 'action shoes' or 'thinking hat'
and succeed!
--
based on the above
here is the trick to develop "a millionaire mindset"
which is otherwise difficult without
a million dollars in your bank account!
--
"Act"
--
in other words
just play the role of a "millionaire"!
i know, you would say that
since you are not a millionaire
your role play will be faulty!
well, don't worry about that.
you will do it quite well
better than a real millionaire!
--
in fact
you can prepare yourself for any role or responsibility
or challenge in life
by just starting to act the role...
first play the role
then it will come out naturally!
--
feel like
behave like
act like
look like
think like
a millionaire in that very situation!
ask yourself
what different would a millionaire think in such a situation?
what would a millionaire do different in such a situation?
how would a millionaire react differently to this situation?
this way you will not chicken out of situations where you shouldn't have
this way you will have the courage to take a risk your indicators say you should have
this way you will survive the difficult situation without booking profit prematurely
this way you will book the stop loss ruthlessly like a seasoned emotionless businessman
...and so on
you will realise that the trouble used to arise
when we used to react in petty and penny ways of
"non-millionaires"!
a change in decisions
will change the results for you!
--
even if you are a rocket scientist or a surgeon or an engineer or a chartered accountant
your daily mannerism and thinking patterns and fears are different from that of a millionaire
and this is the root cause of faulty decisions
which have landed you in your present state-of-affairs!
--
in T.Harv Eker's words
by acting
you are programming your mind
to generate feelings
to create thoughts
to trigger actions
which will bring amazing and different results!
Tuesday, December 21, 2010
ready for it? (Part-I)
if you are financially well off
then this article is not for you.
but if you are not
please keep reading.
--
chances are that you must have tried hell of a lot
in your life till this day
to get out of the financial state
you have been
and you are in!
-
by now you must be full of frustration
thinking why are you unable to get out of this situation...
you must be having a good number of dreams and desires...
neither you are able to fulfill them nor forget them!
you have been hanging
halfway between hell and heaven...
neither here, not there!
---
the million dollar question is
why are you there where you are?
and why are you not there where you want to be?
---
if you think that is because of your qualification
then think again...
i can show you a hundred people on the street who are not even literate
but are financially well-off!
i know an illiterate man who has established a flourishing wholesale vegetable supply business worth a few crores of turnover!
i know a barely literate man who is now one of the top civil contractors of the state with turnover of a few hundred crores!
so that excuse is out of the window!
---
if you think it's because of your luck,
think again...
you have had the same opportunities in front of your eyes in the market
as before lacs of other traders!
some made profit from the same opportunity
while others booked loss!
so, don't give me that excuse either!
---
if you have a remorse that you didn't succeed because you are less hardworking
you are again wrong...
i can remind you of several instances in your life
when you had worked damn hard!
so keep that guilt atleast an arm-length away.
---
in case you are thinking that you didn't have adequate capital
you are sadly mistaken...
i don't need to remind you the amount of your money that has gone through your hands into the hands of others over the years!
i can also give you several examples where people have made it big with much lesser!
---
and i am sure you won't commit the mistake of assuming that you don't have ideas!
one of the biggest is right in your hands....stock trading!
---
if you think you didn't succeed because of bureaucracy and corrupt system
think yet again...
we all are surrounded by scores of businessmen who succeeded despite these two blessings!
rather, they saw the disadvantage as a blessing loop-hole and exploited to the full to get ahead fast!
---
so
if you think seriously and honestly
you will realise that you are left with no alibi to justify your state-of-affairs!
---
but
what if i told you
that you and me have not succeeded big time so far
BECAUSE WE ARE NOT MENTALLY READY FOR IT !!!
(to be continued...)
then this article is not for you.
but if you are not
please keep reading.
--
chances are that you must have tried hell of a lot
in your life till this day
to get out of the financial state
you have been
and you are in!
-
by now you must be full of frustration
thinking why are you unable to get out of this situation...
you must be having a good number of dreams and desires...
neither you are able to fulfill them nor forget them!
you have been hanging
halfway between hell and heaven...
neither here, not there!
---
the million dollar question is
why are you there where you are?
and why are you not there where you want to be?
---
if you think that is because of your qualification
then think again...
i can show you a hundred people on the street who are not even literate
but are financially well-off!
i know an illiterate man who has established a flourishing wholesale vegetable supply business worth a few crores of turnover!
i know a barely literate man who is now one of the top civil contractors of the state with turnover of a few hundred crores!
so that excuse is out of the window!
---
if you think it's because of your luck,
think again...
you have had the same opportunities in front of your eyes in the market
as before lacs of other traders!
some made profit from the same opportunity
while others booked loss!
so, don't give me that excuse either!
---
if you have a remorse that you didn't succeed because you are less hardworking
you are again wrong...
i can remind you of several instances in your life
when you had worked damn hard!
so keep that guilt atleast an arm-length away.
---
in case you are thinking that you didn't have adequate capital
you are sadly mistaken...
i don't need to remind you the amount of your money that has gone through your hands into the hands of others over the years!
i can also give you several examples where people have made it big with much lesser!
---
and i am sure you won't commit the mistake of assuming that you don't have ideas!
one of the biggest is right in your hands....stock trading!
---
if you think you didn't succeed because of bureaucracy and corrupt system
think yet again...
we all are surrounded by scores of businessmen who succeeded despite these two blessings!
rather, they saw the disadvantage as a blessing loop-hole and exploited to the full to get ahead fast!
---
so
if you think seriously and honestly
you will realise that you are left with no alibi to justify your state-of-affairs!
---
but
what if i told you
that you and me have not succeeded big time so far
BECAUSE WE ARE NOT MENTALLY READY FOR IT !!!
(to be continued...)
bravery in the market
in stock markets too
"fortune favours the brave!"
but what kind of brave?
--
1. without method and inexperienced?
= never!
(rather, u r going to get killed without the bravery medal)
--
2. without method but experienced?
= sometimes
(but net bank balance remains same or negative!)
--
3. with method but inexperienced?
= more than 'never' but lesser than 'sometimes'
(bank and mental balance always bleeding)
--
4. with method and experienced?
= more than 'sometimes' but lesser than 'always'
(ban and mental balance always growing)
---
so?
a) have a method, and
b) be less brave till you gain experience!
----
finally
what is bravery?
= doing 'it'
or keep doing 'it'
despite fears
when "you know" that it should be done!
"fortune favours the brave!"
but what kind of brave?
--
1. without method and inexperienced?
= never!
(rather, u r going to get killed without the bravery medal)
--
2. without method but experienced?
= sometimes
(but net bank balance remains same or negative!)
--
3. with method but inexperienced?
= more than 'never' but lesser than 'sometimes'
(bank and mental balance always bleeding)
--
4. with method and experienced?
= more than 'sometimes' but lesser than 'always'
(ban and mental balance always growing)
---
so?
a) have a method, and
b) be less brave till you gain experience!
----
finally
what is bravery?
= doing 'it'
or keep doing 'it'
despite fears
when "you know" that it should be done!
Sunday, December 19, 2010
the game doesn't end with technical analyses - II
where were you when there was a shorting opportunity
from nifty 6200 to 2600 in 2008?
where were you when there was an opportunity of going long from march to may 2009
from nifty 2600 to 4600?
where were you when nifty rose 1000 points from 5000 to 6000
in 5 months from june to october this year?
just like me, i bet you would have been here only!
some of the biggest opportunities came and went!
we can't complain we didn't get opportunities!
so the problem is not the lack of opportunities
problem is that we are not ready for it.
problem is we fail to recognize the opportunities!
Why?
because opportunities rarely come sugar-coated and gift-wrapped!
they always come crisis-wrapped and dipped in bitter sauce!
it has been like that always
and it will always be like that only.
opportunities will always keep coming
indicators will indicate
you will be around
but you will keep missing the bus
unless you tune yourself to recognise them in their disguise!
not only that you would have to bear
fear
worry
discomfort
and
all kinds of emotions
as a cost of boarding the bus!
---
the game doesn't end with technical analyses
it just starts from there!
from nifty 6200 to 2600 in 2008?
where were you when there was an opportunity of going long from march to may 2009
from nifty 2600 to 4600?
where were you when nifty rose 1000 points from 5000 to 6000
in 5 months from june to october this year?
just like me, i bet you would have been here only!
some of the biggest opportunities came and went!
we can't complain we didn't get opportunities!
so the problem is not the lack of opportunities
problem is that we are not ready for it.
problem is we fail to recognize the opportunities!
Why?
because opportunities rarely come sugar-coated and gift-wrapped!
they always come crisis-wrapped and dipped in bitter sauce!
it has been like that always
and it will always be like that only.
opportunities will always keep coming
indicators will indicate
you will be around
but you will keep missing the bus
unless you tune yourself to recognise them in their disguise!
not only that you would have to bear
fear
worry
discomfort
and
all kinds of emotions
as a cost of boarding the bus!
---
the game doesn't end with technical analyses
it just starts from there!
Saturday, December 18, 2010
the game doesn't end with technical analyses
there was a time when i thought
knowledge of technical indicators was a sureshot passport to success in stock trading.
so, i studied technical trading religiously!
while my knowledge increased manifold
it didn't show in results!
so, i worked harder and learnt more technical indicators...
but i was shattered when i started losing more and often...
i had no clue as to why i was losing more and more when i was supposed to be winning....big and easy!
infact, i was losing much more than those who knew almost nothing!
i had already "mastered" some indicators
i could foresee many moves of the market beforehand!
still my bank account kept bleeding...
---
my dreams of quitting my job for a fulltime career in stock trading went for a toss!
i must admit that i mentally quit stock trading atleast 20 times
everytime with a big heartbreak!!!
each time i swore not to come back again
each time i "finally decided" to concentrate on job and look for other avenues of making money!
but every time a graph came in front of my eyes, my mind started giving unsolicited opinion
and more often than not, that opinion was damn right!!
--
i was in a situation where i could neither quit nor stay in trading!
i badly needed help!
help was everywhere, but not the one i needed!
i realised that
while both the winning and losing traders know their technical indicators
while both had their "godfather" favourite technical indicators
there was somthing else which made "hell-of-a-difference"
something which i was missing like a big fool!
it started dawning on me that technical analyses was only half the job....rather even lesser!
--
then, one day, i got my hands on
'secrets of the millionaire mind' by T.Harv Eker
and i got my answer!!!
the difference was
"the mindset"!!!
the winner's mindset....
pattern of thoughts....
pattern of response....
pattern of taking decisions!
while both the winner as well as loser traders
use the same indicators
in the same market
at the same time
.....the difference was
in their response!
the way the winning and losing traders respond to same signals is shockingly different!!!
i realised that losing and winning traders
thought
and felt
and acted
differently
even while the indicators indicated the same indication to all!
--
i also realised that there was similarity in the thought patterns of the winners!
and not surprisingly, there was a common-thread in the thought patterns of losers!
same situation but
one buys, other waits!
one buys, other chickens out!
one shorts, other plays safe!
one shorts, other chickens out!
one jumps, other waits patiently!
one buckles, other endures!
--
the message was loud and clear.
i shifted my attention from studying more technical indicators
to studying my thought patterns...
my reactions to situations...
my response to stimuli...
the difference between what i knew and what i did...
--
my technical indicators were still the same
but my mindset was changing!
...not surprisingly, the results started to change too.
---
indicators only tell you what is likely to happen
what you do thereafter makes all the difference!!
without the right mindset
riding the false confidence generated by the steroid effect of indicators
may prompt you to take bigger positions resulting in a bigger hit!
technical indicators cannot take us beyond the first level
winner's mindset does!
the game doesn't end with technical analyses
it just starts from there!
knowledge of technical indicators was a sureshot passport to success in stock trading.
so, i studied technical trading religiously!
while my knowledge increased manifold
it didn't show in results!
so, i worked harder and learnt more technical indicators...
but i was shattered when i started losing more and often...
i had no clue as to why i was losing more and more when i was supposed to be winning....big and easy!
infact, i was losing much more than those who knew almost nothing!
i had already "mastered" some indicators
i could foresee many moves of the market beforehand!
still my bank account kept bleeding...
---
my dreams of quitting my job for a fulltime career in stock trading went for a toss!
i must admit that i mentally quit stock trading atleast 20 times
everytime with a big heartbreak!!!
each time i swore not to come back again
each time i "finally decided" to concentrate on job and look for other avenues of making money!
but every time a graph came in front of my eyes, my mind started giving unsolicited opinion
and more often than not, that opinion was damn right!!
--
i was in a situation where i could neither quit nor stay in trading!
i badly needed help!
help was everywhere, but not the one i needed!
i realised that
while both the winning and losing traders know their technical indicators
while both had their "godfather" favourite technical indicators
there was somthing else which made "hell-of-a-difference"
something which i was missing like a big fool!
it started dawning on me that technical analyses was only half the job....rather even lesser!
--
then, one day, i got my hands on
'secrets of the millionaire mind' by T.Harv Eker
and i got my answer!!!
the difference was
"the mindset"!!!
the winner's mindset....
pattern of thoughts....
pattern of response....
pattern of taking decisions!
while both the winner as well as loser traders
use the same indicators
in the same market
at the same time
.....the difference was
in their response!
the way the winning and losing traders respond to same signals is shockingly different!!!
i realised that losing and winning traders
thought
and felt
and acted
differently
even while the indicators indicated the same indication to all!
--
i also realised that there was similarity in the thought patterns of the winners!
and not surprisingly, there was a common-thread in the thought patterns of losers!
same situation but
one buys, other waits!
one buys, other chickens out!
one shorts, other plays safe!
one shorts, other chickens out!
one jumps, other waits patiently!
one buckles, other endures!
--
the message was loud and clear.
i shifted my attention from studying more technical indicators
to studying my thought patterns...
my reactions to situations...
my response to stimuli...
the difference between what i knew and what i did...
--
my technical indicators were still the same
but my mindset was changing!
...not surprisingly, the results started to change too.
---
indicators only tell you what is likely to happen
what you do thereafter makes all the difference!!
without the right mindset
riding the false confidence generated by the steroid effect of indicators
may prompt you to take bigger positions resulting in a bigger hit!
technical indicators cannot take us beyond the first level
winner's mindset does!
the game doesn't end with technical analyses
it just starts from there!
Wednesday, December 15, 2010
high probability turning points
from my experience i have seen that price has high probability of turning at the following
signals:
level 1 signal: william%r reaches extreme, rsi still away
level 2 signal: william%r stays at extreme, rsi reaches extreme
level 3 signal: william%r and rsi together reach extreme
only a very powerful rally can bulldoze all these three levels of signals.
this information can be used to trade at specific points with stop loss.
just make sure that both rsi as well as william%r are of same duration
e.g. if u r taking rsi(14) then william(14) should be taken
and if u r taking rsi (10) then william(10) should be taken
also, same duration chart is to be taken, whether 1 month or 1 year or 5 days etc.
signals:
level 1 signal: william%r reaches extreme, rsi still away
level 2 signal: william%r stays at extreme, rsi reaches extreme
level 3 signal: william%r and rsi together reach extreme
only a very powerful rally can bulldoze all these three levels of signals.
this information can be used to trade at specific points with stop loss.
just make sure that both rsi as well as william%r are of same duration
e.g. if u r taking rsi(14) then william(14) should be taken
and if u r taking rsi (10) then william(10) should be taken
also, same duration chart is to be taken, whether 1 month or 1 year or 5 days etc.
least painful trading method - II
(this is a sequel to part I. to understand it in the right context pl read part I and the related discussion at http://www.mudraa.com/singlepost.php?messid=74251)
here is a reasonably dependable way to successfully identify and ignore the false price crossover of sma line
in other words, this is a good way to anticipate and foresee a whipsaw before hand:
keep rsi 14 and william%r14 charts open under the main price+sma chart
if the price cuts sma from below and gives a buy signal but
william%r is near extreme overbought boundary whereas rsi is not near any extreme
square-off short position but wait for going long
9 out of 10 times price will reverse and short position will need to be taken again
if all this happens near the close of the trading day
the risk of keeping the short position open is well-taken!
---
conversely
if the price cuts sma from above and gives a sell signal but
william%r is near extreme oversold boundary whereas rsi is not near any extreme
square-off long position but wait for going short
9 out of 10 times price will reverse and long position will need to be taken again
if all this happens near the close of the trading day
the risk of keeping the long position open is well-taken!
---
even otherwise,
this is a superb way of successfully spotting reversals 9 out of 10 times
here is a reasonably dependable way to successfully identify and ignore the false price crossover of sma line
in other words, this is a good way to anticipate and foresee a whipsaw before hand:
keep rsi 14 and william%r14 charts open under the main price+sma chart
if the price cuts sma from below and gives a buy signal but
william%r is near extreme overbought boundary whereas rsi is not near any extreme
square-off short position but wait for going long
9 out of 10 times price will reverse and short position will need to be taken again
if all this happens near the close of the trading day
the risk of keeping the short position open is well-taken!
---
conversely
if the price cuts sma from above and gives a sell signal but
william%r is near extreme oversold boundary whereas rsi is not near any extreme
square-off long position but wait for going short
9 out of 10 times price will reverse and long position will need to be taken again
if all this happens near the close of the trading day
the risk of keeping the long position open is well-taken!
---
even otherwise,
this is a superb way of successfully spotting reversals 9 out of 10 times
Tuesday, December 14, 2010
least painful trading method
i have studied and closely experienced many indicators and techniques of stock trading.
all are good.
but each thrills to kill
each flatters to deceive
if not, then it is too difficult to interpret accurately and timely
i love my indicators like my pets
so, i never had the heart to tell them that they were good but not ultimate.
but, hearts of hearts, i was looking for
a simple
and effective
and universal
and almost foolproof
trading method!
finally, i have one
that was always around but always ignored
that was too simple and therefore mistrusted
that is not perfect but much better than all others.
it's shortcomings?
it demands some blood during valleys and plateaus of ranges
---
it's benefits?
well! there are so many!!!
operators fear it like ghosts fear the cross!
---
and here it is:
"simple moving average"
how to use it?
when priceline cuts sma34/30min line on 1month chart from above = sell
when it cuts it from below = buy
ALWAYS be in the trade, whether long or short
even when there is blood in your hand
if you need to switch sides more than thrice in quick succession
stay away for some time
you may be passing thru range-bound turbulence
---
why have i chosen 34/30min?
whipsaws are minimum in this setting.
(this setting is allowed, rather automatic in google finance. many other software or charts allow sma 34 but not with 30min tick interval)
if you can follow the above method ruthlessly long enough
and if the brokerage is not high
then the pain of ranges will be fantastically offset by the gains of rallies!
---
all are good.
but each thrills to kill
each flatters to deceive
if not, then it is too difficult to interpret accurately and timely
i love my indicators like my pets
so, i never had the heart to tell them that they were good but not ultimate.
but, hearts of hearts, i was looking for
a simple
and effective
and universal
and almost foolproof
trading method!
finally, i have one
that was always around but always ignored
that was too simple and therefore mistrusted
that is not perfect but much better than all others.
it's shortcomings?
it demands some blood during valleys and plateaus of ranges
---
it's benefits?
well! there are so many!!!
operators fear it like ghosts fear the cross!
---
and here it is:
"simple moving average"
how to use it?
when priceline cuts sma34/30min line on 1month chart from above = sell
when it cuts it from below = buy
ALWAYS be in the trade, whether long or short
even when there is blood in your hand
if you need to switch sides more than thrice in quick succession
stay away for some time
you may be passing thru range-bound turbulence
---
why have i chosen 34/30min?
whipsaws are minimum in this setting.
(this setting is allowed, rather automatic in google finance. many other software or charts allow sma 34 but not with 30min tick interval)
if you can follow the above method ruthlessly long enough
and if the brokerage is not high
then the pain of ranges will be fantastically offset by the gains of rallies!
---
Saturday, December 11, 2010
trading decisions!
5 frogs were sitting on a log of wood
3 out of them decided to jump
how many are left behind?
"2" replied the student.
"wrong! all 5 are still sitting there" the teacher shot back!
"there is a difference between making a decision and acting on the decision!" he explained!
---
the story got etched in the student's mind.
days passed
and then years....
the student became teacher
in 'School of Stock Trading'!
---
"let me tell you a story" he announced in the class
"5 frogs were sitting on a log of wood
all 5 jumped off it!
how many had decided to jump?"
students got really confused.
they had heard about the famous story where the teacher asks how many are left behind!
but this story was strange!
when nobody answered
the teacher declared
"none"
"all 5 jumped in panic without thinking"
"they were all amateur stock traders!"
3 out of them decided to jump
how many are left behind?
"2" replied the student.
"wrong! all 5 are still sitting there" the teacher shot back!
"there is a difference between making a decision and acting on the decision!" he explained!
---
the story got etched in the student's mind.
days passed
and then years....
the student became teacher
in 'School of Stock Trading'!
---
"let me tell you a story" he announced in the class
"5 frogs were sitting on a log of wood
all 5 jumped off it!
how many had decided to jump?"
students got really confused.
they had heard about the famous story where the teacher asks how many are left behind!
but this story was strange!
when nobody answered
the teacher declared
"none"
"all 5 jumped in panic without thinking"
"they were all amateur stock traders!"
day trading without indicators
my first brush with stock market
happened in 1990
when binny (aka manpreet oberoi)
my classmate in punjab engineering college, chandigarh
shared with me that his father was an active trader in stock market
besides a regular job with ballarpur industries!
he told us that his father had started trading with 10000 corpus
and during the harshad mehta saga
the market value of his father's stock positions had crossed 1 crore
(equivalent to 32 crores of 2010)!
"i can tell the state of the market from the mood of my dad in the morning!" binny told us!
i was reminded of all this when i was having a serious look at the daily calls of krishnamurthy in
mudraa.com!
his calls are amazingly but deceptively simple and profoundly effective!
since people have the tendency to take only complicated things seriously little surprise that
krishnamurthy's calls have as many critics as are the fans!
this gentleman gives "buy above-sell below" call everyday after a few minutes of market opening.
two lakshman rekhas (trigger lines)
one above and one below the spot value.
though he has not shared the exact criterea he follows to draw those lines but my study says that
he tries to identify an upper as well as lower nifty limit which if breachedn mark a decisive
movement of the nifty for atleast very short term future!
initially i thought he used "universal" support and resistance levels
but many times i realised that he was doing something else.
i also noticed that he was not playing with pivot points or using some stock level calculator.
i have come to realise that he decides the limits by seeking answer to a simple question
"what is the upper and lower nifty limit which if breached would mean that nifty has taken a
decisive direction for the day! and if not breached would mean that nifty is rangebound should be
left alone!"
for this, in my opinion, he uses
1) the previous day nifty boundaries
2) and boundaries marked by its early morning moves!
i found this technique wonderfully simple, easy and very very logical.
there are no technical indicators involved
no short-term long-term chart reading
just staying with the reality of the hour!!!
the trouble with chart and indicator reading is that
they inject the trader with an opinion
and the trader's psychology wraps that opinion with ego
and keeps clinging to it like the captain of a sinking ship!
---
in this "buy above-sell below" method
we follow what the market is doing
irrespective of whether we understand the reason or not
irrespective of whether the indicators and fundamentals and charts agree or not
just plain "follow the trend of NOW" and think later
what is happening becomes more important than what should happen!
this way, no market operator or forces can trick you!
whatever he does, u follow him!
---
but i want to add two words of caution
1) ruthlessly square-off your position if nifty retraces into the lakshman rekha (this does happen
once in a while)
2) book profit when you are getting more than you can afford to let go! (many times nifty retraces
after going reasonably far!)
---
like the mood of binny's father
the mood of nifty in the morning
reveals the immediate intentions of it!
---
i remember, i had shared similar technique in my posts (noon express and forenoon express)
but krishnamurthy's method is much more simple and effective!
happened in 1990
when binny (aka manpreet oberoi)
my classmate in punjab engineering college, chandigarh
shared with me that his father was an active trader in stock market
besides a regular job with ballarpur industries!
he told us that his father had started trading with 10000 corpus
and during the harshad mehta saga
the market value of his father's stock positions had crossed 1 crore
(equivalent to 32 crores of 2010)!
"i can tell the state of the market from the mood of my dad in the morning!" binny told us!
i was reminded of all this when i was having a serious look at the daily calls of krishnamurthy in
mudraa.com!
his calls are amazingly but deceptively simple and profoundly effective!
since people have the tendency to take only complicated things seriously little surprise that
krishnamurthy's calls have as many critics as are the fans!
this gentleman gives "buy above-sell below" call everyday after a few minutes of market opening.
two lakshman rekhas (trigger lines)
one above and one below the spot value.
though he has not shared the exact criterea he follows to draw those lines but my study says that
he tries to identify an upper as well as lower nifty limit which if breachedn mark a decisive
movement of the nifty for atleast very short term future!
initially i thought he used "universal" support and resistance levels
but many times i realised that he was doing something else.
i also noticed that he was not playing with pivot points or using some stock level calculator.
i have come to realise that he decides the limits by seeking answer to a simple question
"what is the upper and lower nifty limit which if breached would mean that nifty has taken a
decisive direction for the day! and if not breached would mean that nifty is rangebound should be
left alone!"
for this, in my opinion, he uses
1) the previous day nifty boundaries
2) and boundaries marked by its early morning moves!
i found this technique wonderfully simple, easy and very very logical.
there are no technical indicators involved
no short-term long-term chart reading
just staying with the reality of the hour!!!
the trouble with chart and indicator reading is that
they inject the trader with an opinion
and the trader's psychology wraps that opinion with ego
and keeps clinging to it like the captain of a sinking ship!
---
in this "buy above-sell below" method
we follow what the market is doing
irrespective of whether we understand the reason or not
irrespective of whether the indicators and fundamentals and charts agree or not
just plain "follow the trend of NOW" and think later
what is happening becomes more important than what should happen!
this way, no market operator or forces can trick you!
whatever he does, u follow him!
---
but i want to add two words of caution
1) ruthlessly square-off your position if nifty retraces into the lakshman rekha (this does happen
once in a while)
2) book profit when you are getting more than you can afford to let go! (many times nifty retraces
after going reasonably far!)
---
like the mood of binny's father
the mood of nifty in the morning
reveals the immediate intentions of it!
---
i remember, i had shared similar technique in my posts (noon express and forenoon express)
but krishnamurthy's method is much more simple and effective!
Friday, December 10, 2010
future of realty sector
* any idea how many of the 120 crore people in the country have their own house?
* any idea how many of those who don't have house want to own one?
* any idea how many of those who already own a house want to own one more?
* any idea how many of those who already own a house want to own a bigger one?
* any idea how many of those who already own a house want to "invest in" many more?
* all houses on the planet will need to be rebuilt after 50-100 years of their safe life!
* and we haven't yet talked about hotels and hospitals and factories and office accomodations and schools and institutions etc.!
* and we haven't yet talked about repair, maintenance, upgradation and alterations in every house!
* and we haven't yet talked about financing the builders and financing the buyers?
* and we haven't yet talked about the designers and architects and furnishers etc.
---
there is hell-of-a-big market out there!
everyone wants a house of his/her own.
the question is who can provide one which fits in respective pockets!
the trouble is corporates don't want profit opportunity, they want profiteering opportunity!
we need assembly line of house production!
so the question is which company can mass produce?
the question is which company can keep the cost down and quality consistent?
the question is which company can come survive the mafia mentality and work with industry approach?
the question is which company can handle the land bank and debt monsters?
the question is which company understands the needs of different species of customers!
the question is which company has the technology and can innovate?
the question is which company has the leadership?
the question is
where are such companies?
* any idea how many of those who don't have house want to own one?
* any idea how many of those who already own a house want to own one more?
* any idea how many of those who already own a house want to own a bigger one?
* any idea how many of those who already own a house want to "invest in" many more?
* all houses on the planet will need to be rebuilt after 50-100 years of their safe life!
* and we haven't yet talked about hotels and hospitals and factories and office accomodations and schools and institutions etc.!
* and we haven't yet talked about repair, maintenance, upgradation and alterations in every house!
* and we haven't yet talked about financing the builders and financing the buyers?
* and we haven't yet talked about the designers and architects and furnishers etc.
---
there is hell-of-a-big market out there!
everyone wants a house of his/her own.
the question is who can provide one which fits in respective pockets!
the trouble is corporates don't want profit opportunity, they want profiteering opportunity!
we need assembly line of house production!
so the question is which company can mass produce?
the question is which company can keep the cost down and quality consistent?
the question is which company can come survive the mafia mentality and work with industry approach?
the question is which company can handle the land bank and debt monsters?
the question is which company understands the needs of different species of customers!
the question is which company has the technology and can innovate?
the question is which company has the leadership?
the question is
where are such companies?
Thursday, December 9, 2010
where to invest?
investing is the most profitable form of trading!
it is a myth that you invest in a company.
the reality is that you invest in a management
and
you invest in a business!!!
if the business is bad
even best management can't do anything for long!
for a moment,
let's assume that the business makes business sense.
then, there are 4 types of "managements" available for investing:
1. good management going thru bad times
= this is the best investing bet, a multibagger!
give then time and they will give you a wonderful gift!
e.g. tata motors' journey from 110/stock to 1376/stock
present example = mahindra satyam
2. good manangement going thru good times
= hold on, this is the best momentum play
stay with them till they are around
e.g. hero honda (since inception)
3. bad management going thru good times
= stand near the exit door if you can't avoid the bait!
e.g. suzlon
4. bad management going thru bad time
= stay away!
it is a myth that you invest in a company.
the reality is that you invest in a management
and
you invest in a business!!!
if the business is bad
even best management can't do anything for long!
for a moment,
let's assume that the business makes business sense.
then, there are 4 types of "managements" available for investing:
1. good management going thru bad times
= this is the best investing bet, a multibagger!
give then time and they will give you a wonderful gift!
e.g. tata motors' journey from 110/stock to 1376/stock
present example = mahindra satyam
2. good manangement going thru good times
= hold on, this is the best momentum play
stay with them till they are around
e.g. hero honda (since inception)
3. bad management going thru good times
= stand near the exit door if you can't avoid the bait!
e.g. suzlon
4. bad management going thru bad time
= stay away!
future of i.t.
* everything on the planet will eventually be run or monitored by software. so just see what all around you is still not managed by software, and you will see the scope for i.t.
* software will compete with each other.
* every software already written in the world will eventually become obsolete and hence would need to be re-written. isn't that hell of a scope for i.t.
* everything on the planet will be converted into data and squeezed to get juice of information that can be gainfully and artistically and innovatively consumed! if u can estimate the amount of data that can be produced for this analyses, then u r almost god!
* the day software is used enmass to produce ideas and solutions instead of just managing the show, it will result in next generation leap!
* from software point-of-view, the world will get more and more demarcated and "niched". each niche segment will become larger than its parent only to be niched again....only to become extinct. the cycle will continue and the universe for software will keep becoming larger.
* software will be required to improve upon everything on the planet including lives, processes, products etc.
* software will make every field converge. this will create new avenues and horizons. the entire world will have to be rewired and reprogrammed.......repeatedly!!!
* every software will need to be maintained and improved!
* every software will need to be trained on!
* every software will need an ever-improving hardware!
* and we haven't yet talked about artificial intelligence.......!!!
* software will compete with each other.
* every software already written in the world will eventually become obsolete and hence would need to be re-written. isn't that hell of a scope for i.t.
* everything on the planet will be converted into data and squeezed to get juice of information that can be gainfully and artistically and innovatively consumed! if u can estimate the amount of data that can be produced for this analyses, then u r almost god!
* the day software is used enmass to produce ideas and solutions instead of just managing the show, it will result in next generation leap!
* from software point-of-view, the world will get more and more demarcated and "niched". each niche segment will become larger than its parent only to be niched again....only to become extinct. the cycle will continue and the universe for software will keep becoming larger.
* software will be required to improve upon everything on the planet including lives, processes, products etc.
* software will make every field converge. this will create new avenues and horizons. the entire world will have to be rewired and reprogrammed.......repeatedly!!!
* every software will need to be maintained and improved!
* every software will need to be trained on!
* every software will need an ever-improving hardware!
* and we haven't yet talked about artificial intelligence.......!!!
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