10 years ago
in a congressional hearing on day trading in US
a report concluded that “a growing number of people are giving up their existing careers or withdrawing their savings to become full-time professional day traders.”
concurrent investigations were launched...............
..........all of these investigations expressed concerns
about the potentially deceptive advertising practices employed by day trading firms.
as a result of these investigations, the NYSE and NASD adopted rules
that required day trading firms to make a determination
that day trading is appropriate for a particular customer.
--
Monday, February 28, 2011
do day traders make money?
do regular day traders perform better than occasional day traders?
= analysis indicates that regular day traders perform better than occasional day traders, though neither group is able to earn sufficient profits to cover transaction costs.
--
do day traders with past profits subsequently outperform those with past losses?
= day traders who historically earned net profits continue to earn profits net of a reasonable accounting for transaction costs.
--
* these are excerpts from research paper submitted by
Brad M. Barber (University of California) &
Yi-Tsung Lee & Yu-Jane Liu (National Chengchi University Taipei)
= analysis indicates that regular day traders perform better than occasional day traders, though neither group is able to earn sufficient profits to cover transaction costs.
--
do day traders with past profits subsequently outperform those with past losses?
= day traders who historically earned net profits continue to earn profits net of a reasonable accounting for transaction costs.
--
* these are excerpts from research paper submitted by
Brad M. Barber (University of California) &
Yi-Tsung Lee & Yu-Jane Liu (National Chengchi University Taipei)
majority individual traders fail early in their careers
"if far fewer day traders are profitable after costs
what keeps new traders coming (into the market)?
.........overconfidence plays an important role
just as participants in lotteries and casinos overestimate their odds of winning,
individual day traders may place too much confidence in their ability
to read market patterns out of the gate.
...the majority of individual day traders fail relatively early in their careers,
something that has been mentioned to me by executives at brokerage firms"
-dr.brett steenbarger
author of 'the psychology of trading'
what keeps new traders coming (into the market)?
.........overconfidence plays an important role
just as participants in lotteries and casinos overestimate their odds of winning,
individual day traders may place too much confidence in their ability
to read market patterns out of the gate.
...the majority of individual day traders fail relatively early in their careers,
something that has been mentioned to me by executives at brokerage firms"
-dr.brett steenbarger
author of 'the psychology of trading'
why 8 out of 10 day traders lose money?
a study of transaction history of the taiwan stock exchange over a five-year period
had revealed the following interesting facts
* individual traders put 22% of their money for day trading
* institutions put 5% of their money for day trading
but the real shocking statistic is this:
"if all day traders (individuals as well as institutional) are arranged in decreasing order of their trade value
then top 1% account for 50% of all day trading volume!!!"
this is the crux of the study
which proves
that day trading is the game which big players play with tiny (i repeat, they said "tiny") players
--
as the authors of the study concluded
"day trading is treacherous, but not entirely a fool's game."
according to them, 8 out of 10 day traders lose money
while a small fraction (i repeat, they said "fraction") of day traders earn large persistent profits.
had revealed the following interesting facts
* individual traders put 22% of their money for day trading
* institutions put 5% of their money for day trading
but the real shocking statistic is this:
"if all day traders (individuals as well as institutional) are arranged in decreasing order of their trade value
then top 1% account for 50% of all day trading volume!!!"
this is the crux of the study
which proves
that day trading is the game which big players play with tiny (i repeat, they said "tiny") players
--
as the authors of the study concluded
"day trading is treacherous, but not entirely a fool's game."
according to them, 8 out of 10 day traders lose money
while a small fraction (i repeat, they said "fraction") of day traders earn large persistent profits.
Sunday, February 27, 2011
keep walking
(a true story)
the sun was yet to rise
it was still pitch dark
and damn cold outside
when i got into my car
turned on the ignition
to drive 120km thru snaky mountain roads
all the way to chandigarh
from shimla
to attend a meeting.
--
i love such journeys
when the entire world outside is sleeping
and i am alone
among the ever-awake
mountains and valleys
echoing with pin-drop latenight silence
giving me an excellent opportunity
to talk to myself!
--
i had barely come out of shimla
and reached shoghi
when i noticed
a medium height
dark shadow
walking some 200meters ahead of me
in the middle of the road!
--
i was jolted out of my thoughts...
i slowed down the car
checked the locks
said my prayer
and focused on the approaching creature
looking like a human!
--
as i neared further
it appeared like a woman
walking with a stick
double her height
with feet as big as those of a hulk!
--
i was petrified.
i never believed in ghosts or spirits
but a doubt always remains!
--
i silently shifted the gear
and got ready to flee at top speed
in case my doubts were to be confirmed!
--
i must have been within a few meters from her
when i saw what i had not seen before!
--
it was a 50plus lady
with dark complexion
in tatters
walking like a dead-woman
holding a 10 foot high stick
(which seemed to be a broken branch of a tree).
--
she never bothered to turn her head
and look at the slow car by her side!
--
who was she
where was she going
at that unearthy hour?
--
and then
i looked at her feet....
--
my eyes went wide open
at what i saw....
--
she was not wearing shoes!
and her jumbo feet
were nothing
but
dozens of
polythene bags
wrapped one over the other
on each foot
to protect them!
--
she was a human!
--
i stopped the car
looked at her
without any fear!
--
she was surely
a mentally challenged
middle aged lady
walking to
unknown destination
back from shimla
which must have failed
to shelter her!!!
--
but where would she go?
every other city she goes to
would just be the same shimla
with another name!
--
i had no answer
i felt helpless
and
decided to move on
with a heavy heart!
--
this entire incidence
got me late by around half an hour!
--
i drove a bit fast
to cover up
for the meeting at chandigarh.
--
all thru the meeting
i couldn't forget her face
the stick she was carrying
and her feet!!!
--
after the meeting
i went to sector 17
to buy a new pair of shoes!
--
i saw several brands
including the ones that said
"impossible is nothing"
"just do it"
"i am what i am"
--
but everytime i asked the price
i was reminded of the lady's feet
wrapped in the polythene layers!
--
i dropped the idea to shop
and started my 120km return journey
into the mountains.
--
it was 7pm
and i expected to reach shimla
before midnight.
--
by now i had forgotten the lady.
--
i turned on the music on the stereo
and kept gliding uphill
when i was again jolted
out of my thoughts
when i saw the same lady
walking downhill
with stick in her hand!
--
the place was jabli
and the lady had covered
over 80 kms
since morning
on foot
on the layers of polythene!
--
i felt a lump in my throat!
--
my head echoed
"impossible is nothing"
"just do it"
"i am what i am"
the sun was yet to rise
it was still pitch dark
and damn cold outside
when i got into my car
turned on the ignition
to drive 120km thru snaky mountain roads
all the way to chandigarh
from shimla
to attend a meeting.
--
i love such journeys
when the entire world outside is sleeping
and i am alone
among the ever-awake
mountains and valleys
echoing with pin-drop latenight silence
giving me an excellent opportunity
to talk to myself!
--
i had barely come out of shimla
and reached shoghi
when i noticed
a medium height
dark shadow
walking some 200meters ahead of me
in the middle of the road!
--
i was jolted out of my thoughts...
i slowed down the car
checked the locks
said my prayer
and focused on the approaching creature
looking like a human!
--
as i neared further
it appeared like a woman
walking with a stick
double her height
with feet as big as those of a hulk!
--
i was petrified.
i never believed in ghosts or spirits
but a doubt always remains!
--
i silently shifted the gear
and got ready to flee at top speed
in case my doubts were to be confirmed!
--
i must have been within a few meters from her
when i saw what i had not seen before!
--
it was a 50plus lady
with dark complexion
in tatters
walking like a dead-woman
holding a 10 foot high stick
(which seemed to be a broken branch of a tree).
--
she never bothered to turn her head
and look at the slow car by her side!
--
who was she
where was she going
at that unearthy hour?
--
and then
i looked at her feet....
--
my eyes went wide open
at what i saw....
--
she was not wearing shoes!
and her jumbo feet
were nothing
but
dozens of
polythene bags
wrapped one over the other
on each foot
to protect them!
--
she was a human!
--
i stopped the car
looked at her
without any fear!
--
she was surely
a mentally challenged
middle aged lady
walking to
unknown destination
back from shimla
which must have failed
to shelter her!!!
--
but where would she go?
every other city she goes to
would just be the same shimla
with another name!
--
i had no answer
i felt helpless
and
decided to move on
with a heavy heart!
--
this entire incidence
got me late by around half an hour!
--
i drove a bit fast
to cover up
for the meeting at chandigarh.
--
all thru the meeting
i couldn't forget her face
the stick she was carrying
and her feet!!!
--
after the meeting
i went to sector 17
to buy a new pair of shoes!
--
i saw several brands
including the ones that said
"impossible is nothing"
"just do it"
"i am what i am"
--
but everytime i asked the price
i was reminded of the lady's feet
wrapped in the polythene layers!
--
i dropped the idea to shop
and started my 120km return journey
into the mountains.
--
it was 7pm
and i expected to reach shimla
before midnight.
--
by now i had forgotten the lady.
--
i turned on the music on the stereo
and kept gliding uphill
when i was again jolted
out of my thoughts
when i saw the same lady
walking downhill
with stick in her hand!
--
the place was jabli
and the lady had covered
over 80 kms
since morning
on foot
on the layers of polythene!
--
i felt a lump in my throat!
--
my head echoed
"impossible is nothing"
"just do it"
"i am what i am"
Saturday, February 26, 2011
4 ways a market can move!
traders want market to move
so they leap at every move of market
including the traps!
--
a market can move in 4 ways
* sharp move with low volumes
= unsustainable trend likely to be reversed
* sharp move with high volumes
= start of a trend
* normal move with low volumes
= just an insignificant drift
* normal move with high volumes
= big trend wave on the move!
so they leap at every move of market
including the traps!
--
a market can move in 4 ways
* sharp move with low volumes
= unsustainable trend likely to be reversed
* sharp move with high volumes
= start of a trend
* normal move with low volumes
= just an insignificant drift
* normal move with high volumes
= big trend wave on the move!
how traders learn!
"you make observations,
you formulate theories about what is happening in markets,
you express those theories as hypotheses,
and you test those hypotheses with specific trades that you place.
over time,
your trading experience
either validates your market understanding
or contradicts it,
supporting or leading to modification of your basic theories."
- dr.brett sleenbarger
author of 'the psychology of trading'
you formulate theories about what is happening in markets,
you express those theories as hypotheses,
and you test those hypotheses with specific trades that you place.
over time,
your trading experience
either validates your market understanding
or contradicts it,
supporting or leading to modification of your basic theories."
- dr.brett sleenbarger
author of 'the psychology of trading'
4 seasons of stock market
market goes thru the following 4 seasons
(though not necessarily in a fixed order)
1. summer
(non-volatile, trending)
= indicators don't work; just go with the trend
2. winter
(non-volatile, non-trending)
= non-tradeable, holidays, stay away
3. autumn
(volatile, non-trending)
= technicals work best
4. spring
(volatile, trending)
= technicals work reasonably ok but not best; stressful times
--
it is dangerous and stressful to maintain same attitude and approach at all the times.
while it is not fixed which season will come when
but if traders are aware that different "seasons" exist, they will be flexible and adaptive
resulting into less stress and better results.
--
seasons may last from a few days to a few months or more!
not just that
the amazing thing is that
every trading season behaves like an independent mini-season
within the broader-outer season!!
(though not necessarily in a fixed order)
1. summer
(non-volatile, trending)
= indicators don't work; just go with the trend
2. winter
(non-volatile, non-trending)
= non-tradeable, holidays, stay away
3. autumn
(volatile, non-trending)
= technicals work best
4. spring
(volatile, trending)
= technicals work reasonably ok but not best; stressful times
--
it is dangerous and stressful to maintain same attitude and approach at all the times.
while it is not fixed which season will come when
but if traders are aware that different "seasons" exist, they will be flexible and adaptive
resulting into less stress and better results.
--
seasons may last from a few days to a few months or more!
not just that
the amazing thing is that
every trading season behaves like an independent mini-season
within the broader-outer season!!
why concentration is so important for a trader?
"there are many patterns in life that we sense,
but cannot fully place into words.
my favorite example is the young child
who creates grammatical sentences when she talks,
but cannot tell you the rules of grammar she is using.
similarly, i can sense clearly
when a person is talking in a very sincere or insincere manner,
but cannot necessarily tell you all the subtle cues--the changes in vocal inflection, the nuances of facial expression--that lead me to that conclusion.
as for the experienced trader, for the seasoned psychologist, it's a gut thing: the result of thousands of exposures to patterns that recur, but rarely the same way twice.
once the concentration of the psychologist or trader is broken,
the access to those subtle gut hunches
is lost.
in that situation, the experienced professional loses contact with years of experience and, indeed, becomes a rookie."
- dr.brett steenbarger
author of 'the psychology of trading'
but cannot fully place into words.
my favorite example is the young child
who creates grammatical sentences when she talks,
but cannot tell you the rules of grammar she is using.
similarly, i can sense clearly
when a person is talking in a very sincere or insincere manner,
but cannot necessarily tell you all the subtle cues--the changes in vocal inflection, the nuances of facial expression--that lead me to that conclusion.
as for the experienced trader, for the seasoned psychologist, it's a gut thing: the result of thousands of exposures to patterns that recur, but rarely the same way twice.
once the concentration of the psychologist or trader is broken,
the access to those subtle gut hunches
is lost.
in that situation, the experienced professional loses contact with years of experience and, indeed, becomes a rookie."
- dr.brett steenbarger
author of 'the psychology of trading'
how our childhood effects trading
"the person who felt unappreciated by parents
now takes on too much risk in markets to become successful and attract the desired admiration;
the trader who experienced painful losses as a child
now freezes up when markets move against him;
the person who rebelled against authority and control in his early years
now finds himself breaking his own trading rules.
when problems from your personal life are interfering with your trading,
it is always the right strategy to stop trading
and pour yourself into resolving those problems.
this does not have to be with a trading coach:
any competent psychologist schooled in brief therapy methods
can help you understand your patterns,
interrupt those,
and replace them with more constructive ways of dealing with the world.
then you can return to trading as a free person with full focus,
ready to acquire and utilize a lifetime of skills."
- dr.brett steenbarger
author of "the psychology of trading"
now takes on too much risk in markets to become successful and attract the desired admiration;
the trader who experienced painful losses as a child
now freezes up when markets move against him;
the person who rebelled against authority and control in his early years
now finds himself breaking his own trading rules.
when problems from your personal life are interfering with your trading,
it is always the right strategy to stop trading
and pour yourself into resolving those problems.
this does not have to be with a trading coach:
any competent psychologist schooled in brief therapy methods
can help you understand your patterns,
interrupt those,
and replace them with more constructive ways of dealing with the world.
then you can return to trading as a free person with full focus,
ready to acquire and utilize a lifetime of skills."
- dr.brett steenbarger
author of "the psychology of trading"
Friday, February 25, 2011
scary difference between developing and developed stock markets!
over the years
i have noticed
one crucial difference
between developing stock markets (india included)
and developed markets (typically uk, us)!
(somehow i always wanted to write about this
but unfortunately i always forgot to)
--
the difference is big
and scary (once u know the repurcussions of the same!)
the difference is
"in recent years underdeveloped or developing stock markets have tended to move more or less in a pattern
while
the developed markets have been moving more or less randomly!!!"
it has serious remifications.
what?
this indicates
that as long as retail trader fraternity is less developed
they can be overpowered
outmanoeuvered
and trapped
by the operators
relatively easily
by using mass-psychology tricks and tools...
but as more and more proportion of the traded money
starts coming from
software-backed trader-units
(as is the case in the developed markets)
it becomes difficult to play the same tricks on them.
this leads the operators
to the next level of powerplay
= ruthless use of money power
how?
random shaking of the market
using raw money or bulk stock dumping!!!
and when and wherever that happens
big money always beats small money!
--
it is near impossible to catch random behaviour
both with technical indicators
as well as
methods based on patterns!!!
and that is going to be the fate of the developing stock markets
sooner or later!
--
i shiver to think
that retail traders will never be allowed to win!
--
mass heist!!!
--
(self talk : we must find guerilla tricks to trade in random movements!)
i have noticed
one crucial difference
between developing stock markets (india included)
and developed markets (typically uk, us)!
(somehow i always wanted to write about this
but unfortunately i always forgot to)
--
the difference is big
and scary (once u know the repurcussions of the same!)
the difference is
"in recent years underdeveloped or developing stock markets have tended to move more or less in a pattern
while
the developed markets have been moving more or less randomly!!!"
it has serious remifications.
what?
this indicates
that as long as retail trader fraternity is less developed
they can be overpowered
outmanoeuvered
and trapped
by the operators
relatively easily
by using mass-psychology tricks and tools...
but as more and more proportion of the traded money
starts coming from
software-backed trader-units
(as is the case in the developed markets)
it becomes difficult to play the same tricks on them.
this leads the operators
to the next level of powerplay
= ruthless use of money power
how?
random shaking of the market
using raw money or bulk stock dumping!!!
and when and wherever that happens
big money always beats small money!
--
it is near impossible to catch random behaviour
both with technical indicators
as well as
methods based on patterns!!!
and that is going to be the fate of the developing stock markets
sooner or later!
--
i shiver to think
that retail traders will never be allowed to win!
--
mass heist!!!
--
(self talk : we must find guerilla tricks to trade in random movements!)
don't carry your buttons to the market!
what is your reaction when u see a snake in font of you in the street?
= affection?
--
what is your reaction when you get 3 marks out of 20 in a class test?
= happiness?
--
what is your reaction when you fall from the bicycle while learning to ride?
= celebration?
--
what is your reaction when the chocolate in your hand slips onto the road?
= sigh of relief?
--
how do you feel when someone picks your pocket?
= gratitude?
--
how do you feel when you miss the bus?
= ecstatic?
--
how do you feel when you accidently put a super hot cake in your mouth?
= intoxicated?
--
how do you feel when the number of the lottery ticket is about to be announced?
= bored?
well....well....well.....
our reactions to situations
is very well-known
to the
operators!
--
they know
what button to press
to
make you jump.
--
don't carry your buttons to the market!
or better still
disable them all!
= affection?
--
what is your reaction when you get 3 marks out of 20 in a class test?
= happiness?
--
what is your reaction when you fall from the bicycle while learning to ride?
= celebration?
--
what is your reaction when the chocolate in your hand slips onto the road?
= sigh of relief?
--
how do you feel when someone picks your pocket?
= gratitude?
--
how do you feel when you miss the bus?
= ecstatic?
--
how do you feel when you accidently put a super hot cake in your mouth?
= intoxicated?
--
how do you feel when the number of the lottery ticket is about to be announced?
= bored?
well....well....well.....
our reactions to situations
is very well-known
to the
operators!
--
they know
what button to press
to
make you jump.
--
don't carry your buttons to the market!
or better still
disable them all!
why overcoming trading weakness is not enough!
do u have a trading weakness?
if you know it,
then do something about it.
--
will it help?
yes and no.
--
"yes", because it will not let you
sink
atleast easily and quickly!
you will be around
for reasonable time period.
the more u stay at the wicket
the more chance that u will score decent!
--
"no", because overcoming weakness alone
won't propel you up!
--
for that you need to
build on your strength and style!
--
but how do we know what is your strength & style?
--
well, there is an indirect way to find it out!
--
note down all your trades and details....
all info like
why u entered? when?
why u exited? when?
profit? loss?
--
and after good number of trades
just analyse your record.
what worked
and what failed!
--
amidst the trades which worked & yielded profit and satisfaction
lie your strengths & style!
--
and wrapped inside your losses
are your weaknesses
and incompatibility with your style!
--
thereafter
take the help of a seasoned trader
to finally pinpoint your strengths and weaknesses!
--
thus
you will know your exact weaknesses
required to be plugged
and
strengths and style
required to be built-on!!
if you know it,
then do something about it.
--
will it help?
yes and no.
--
"yes", because it will not let you
sink
atleast easily and quickly!
you will be around
for reasonable time period.
the more u stay at the wicket
the more chance that u will score decent!
--
"no", because overcoming weakness alone
won't propel you up!
--
for that you need to
build on your strength and style!
--
but how do we know what is your strength & style?
--
well, there is an indirect way to find it out!
--
note down all your trades and details....
all info like
why u entered? when?
why u exited? when?
profit? loss?
--
and after good number of trades
just analyse your record.
what worked
and what failed!
--
amidst the trades which worked & yielded profit and satisfaction
lie your strengths & style!
--
and wrapped inside your losses
are your weaknesses
and incompatibility with your style!
--
thereafter
take the help of a seasoned trader
to finally pinpoint your strengths and weaknesses!
--
thus
you will know your exact weaknesses
required to be plugged
and
strengths and style
required to be built-on!!
training, not just education
"(trader's development).....is typically a lengthy one
and involves numerous setbacks
as well as milestones.
what sustains the growth process
is a very strong interest in the performance field
and a learning process that nurtures continued motivation
and a sense of growing mastery.
talent and interest will not turn into expertise
if they are not channeled into ongoing learning,
review of performance,
and efforts at improvement.
this is why traders require training
(like a physician or Olympic athlete)
not just education."
-Dr.Brett Steenbarger
Author of The Psychology of Trading
and involves numerous setbacks
as well as milestones.
what sustains the growth process
is a very strong interest in the performance field
and a learning process that nurtures continued motivation
and a sense of growing mastery.
talent and interest will not turn into expertise
if they are not channeled into ongoing learning,
review of performance,
and efforts at improvement.
this is why traders require training
(like a physician or Olympic athlete)
not just education."
-Dr.Brett Steenbarger
Author of The Psychology of Trading
i, me and my method!
there was a time
when i used to trade.
now,
i don't.
instead,
my method trades for me.
i just sit on the adjacent sofa
read newspaper, sip coffee
and watch him trade!
--
when i see a situation
i just look at the funny serious face of my method
to check what he is thinking
and what he does?
when he too spots the situation i have already seen
and acts on it the way i think it should have
i feel really proud of it.
but when it doesn't spot the threat or the opportunity
or when he does opposite to what i think
i feel scared.
it takes me a lot of courage
to hold myself back
and silently repeat to myself
that i must not interfere,
and that i must let my method do
whatever he wants!
--
after a while
when i see the outcome of the method's decision
of ignoring the opportunity or threat
i feel ashamed at myself
and double proud of my method!
it is then that i realise
that i did the right thing
in employing my method.
--
now, i have developed
a deep respect and confidence
on my most faithful employee
my method!
when i used to trade.
now,
i don't.
instead,
my method trades for me.
i just sit on the adjacent sofa
read newspaper, sip coffee
and watch him trade!
--
when i see a situation
i just look at the funny serious face of my method
to check what he is thinking
and what he does?
when he too spots the situation i have already seen
and acts on it the way i think it should have
i feel really proud of it.
but when it doesn't spot the threat or the opportunity
or when he does opposite to what i think
i feel scared.
it takes me a lot of courage
to hold myself back
and silently repeat to myself
that i must not interfere,
and that i must let my method do
whatever he wants!
--
after a while
when i see the outcome of the method's decision
of ignoring the opportunity or threat
i feel ashamed at myself
and double proud of my method!
it is then that i realise
that i did the right thing
in employing my method.
--
now, i have developed
a deep respect and confidence
on my most faithful employee
my method!
psychological development - next level of trading (words from masters)
"Eventually, you will be able to take your psychological development to the next level of trading:
you will recognize when others are making the mistakes you used to make.
You will see markets acting on fear and greed
and you'll be able to take the other side of those reactive trades.
You'll observe when market sentiment is tilted one way
and price can no longer sustain its trend.
Developing yourself psychologically doesn't mean that you'll be free of emotion;
it means that you will become increasingly competent
at using your feelings as useful trading information."
- Dr. Brett Steenbarger (Author of the Psychology of Trading)
you will recognize when others are making the mistakes you used to make.
You will see markets acting on fear and greed
and you'll be able to take the other side of those reactive trades.
You'll observe when market sentiment is tilted one way
and price can no longer sustain its trend.
Developing yourself psychologically doesn't mean that you'll be free of emotion;
it means that you will become increasingly competent
at using your feelings as useful trading information."
- Dr. Brett Steenbarger (Author of the Psychology of Trading)
Thursday, February 24, 2011
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)
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)
paradise!
world war started
inflation became 40%
gdp crashed
banks failed
interest rates became 22%
government lost vote-of-confidence
social unrest became threatening
consumption tanked
production nose-dived
FIIs fled
global indices had a free fall
.....enough reasons
for nifty to shed 1000 points in
just 100 days
and that too
after truck loads of
explanations
about why it went up 1000 points
in 80 days!!!
--
what a paradise
of, for
but not by
fools!
inflation became 40%
gdp crashed
banks failed
interest rates became 22%
government lost vote-of-confidence
social unrest became threatening
consumption tanked
production nose-dived
FIIs fled
global indices had a free fall
.....enough reasons
for nifty to shed 1000 points in
just 100 days
and that too
after truck loads of
explanations
about why it went up 1000 points
in 80 days!!!
--
what a paradise
of, for
but not by
fools!
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!
= 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!
Tuesday, February 22, 2011
4 types of trade justifications
there are 4 types of trade justifications
1. trading emotionally and justifying it logically
2. trading logically and justifying it emotionally
3. trading emotionally and justifying it emotionally
4. trading logically and justifying it logically
while the first one is the painful story of traders enmass
the third one is the sign of a casual trader.
--
the fourth one is a sign of a mature trader
while the second is a sign of a legendary trader!!!
1. trading emotionally and justifying it logically
2. trading logically and justifying it emotionally
3. trading emotionally and justifying it emotionally
4. trading logically and justifying it logically
while the first one is the painful story of traders enmass
the third one is the sign of a casual trader.
--
the fourth one is a sign of a mature trader
while the second is a sign of a legendary trader!!!
bicycle of freedom!
have you ever rode a bicycle?
did you enjoy paddling it?
was it easy to balance it?
how hard was it to paddle it?
--
and
have you ever rode a motorcycle?
was it easy to balance it?
--
now i ask you
an out-of-syllabus question
"would you prefer riding a bicycle with paddle
or riding a motorcycle with paddle!!!"
you would, obviously, be puzzled.
you would say that a motorcycle is moved by a motor
there are no paddles with it
and there is no need for it to have paddles!!
--
agreed.
but my question is still the same.
"if there were a motorcyle sized bicycle
would you prefere paddle riding it
or paddle riding a normal bicycle?"
--
you will
without doubt
prefer
paddling a cycle.....
it would be easy
much easier than paddling the heavy motorcycle!
--
well,
what's the entire fuss about?
simple.
if what we ride,eat,wear,use,buy,drink,see,consume,show-off is our status, our lifestyle
then we maintain the balance for that lifestyle-ride
by paddling it with money.
it is much easier to paddle
a lighter lifestyle, a lighter status
than paddling a heavier one
especially
during the uphills of life!
did you enjoy paddling it?
was it easy to balance it?
how hard was it to paddle it?
--
and
have you ever rode a motorcycle?
was it easy to balance it?
--
now i ask you
an out-of-syllabus question
"would you prefer riding a bicycle with paddle
or riding a motorcycle with paddle!!!"
you would, obviously, be puzzled.
you would say that a motorcycle is moved by a motor
there are no paddles with it
and there is no need for it to have paddles!!
--
agreed.
but my question is still the same.
"if there were a motorcyle sized bicycle
would you prefere paddle riding it
or paddle riding a normal bicycle?"
--
you will
without doubt
prefer
paddling a cycle.....
it would be easy
much easier than paddling the heavy motorcycle!
--
well,
what's the entire fuss about?
simple.
if what we ride,eat,wear,use,buy,drink,see,consume,show-off is our status, our lifestyle
then we maintain the balance for that lifestyle-ride
by paddling it with money.
it is much easier to paddle
a lighter lifestyle, a lighter status
than paddling a heavier one
especially
during the uphills of life!
pitcher of profit!
a successful trader was very upset with himself
and his friends and fellow traders didn't know why!
"you are much more successful in trading than we are
then why are you always melancholic?" they asked him
"today, the market moved up and down three times
and covered a total distance of 85 points.
and look what i got.....just 34!
i missed 51 points!!
yesterday also the same thing happened.
i could get only 23 points out of 47 possible!
don't you think this is enough reason to be unhappy about!"
explained the sad trader.
--
day after day
week after week
the trader kept gaining points
but the worry lines on his forehead kept getting deeper and darker!
--
one friday
after trading hours
he packed his bag
kicked start his bike
and rode straight out of the town
to his native village
on the bank of river dausa.
--
his grandparents noted the tension
written all over once-radiant face of their grand child!
"what's the matter, son!" asked his grandfather who had himself been
a successful fruit trader in his life!
the trader shared his dilemma.
"don't worry about it! everything gonnabe ok!"
the grandfather consoled him.
--
next morning
the grandpa woke up early
went to his grandson's room
and asked
"would you like to come with me for a walk to the river!"
the trader was not interested
"no, grandpa, i don't wish to!"
"you will feel better, son!"
the grandpa tried again.
the trader desperately wanted to feel better.
so, this logic appealed to him.
he reluctantly got out of the bed
freshened up
and joined his grandpa.
both walked all the way to the river.
it was very early in the morning
and the view was breath-taking.
the cool breeze by the river had a soothing effect on the young prodigal trader!
and then
suddenly
the youngman saw something
which shook him big!
he saw the village ladies
go to the river bank,
fill their earthern pitchers with water
put the pitchers on their head
and walk away
smiling and singing!
what struck him was
that the ladies
had not insisted on
or worried about
carrying the entire river
alongwith them.
the ladies knew that river was gushing with huge discharge of water
but they knew their own storing capacity
they knew their carrying capacity
they knew their requirement!
they were happy with pitcher-ful of water!
every lady was carrying a pitcher they could afford
small, big, very big
but none was carrying a pitcher which could suck in the entire river
besides, they also knew that
river will not stop running
and that
they will be back
the next day!
the trader got the message.
"it is not important whether you take home the entire rive of profits
whats important is whether you have filled your pitcher of ability!"
his face suddenly got lit with the radiance
which he once had!
he looked towards his grandfather
the old man knew what his talented grandson had learnt!
both smiled
held each others' hands
and walked back home....
with the trader anxious to hear the opening bell ring on monday!
and his friends and fellow traders didn't know why!
"you are much more successful in trading than we are
then why are you always melancholic?" they asked him
"today, the market moved up and down three times
and covered a total distance of 85 points.
and look what i got.....just 34!
i missed 51 points!!
yesterday also the same thing happened.
i could get only 23 points out of 47 possible!
don't you think this is enough reason to be unhappy about!"
explained the sad trader.
--
day after day
week after week
the trader kept gaining points
but the worry lines on his forehead kept getting deeper and darker!
--
one friday
after trading hours
he packed his bag
kicked start his bike
and rode straight out of the town
to his native village
on the bank of river dausa.
--
his grandparents noted the tension
written all over once-radiant face of their grand child!
"what's the matter, son!" asked his grandfather who had himself been
a successful fruit trader in his life!
the trader shared his dilemma.
"don't worry about it! everything gonnabe ok!"
the grandfather consoled him.
--
next morning
the grandpa woke up early
went to his grandson's room
and asked
"would you like to come with me for a walk to the river!"
the trader was not interested
"no, grandpa, i don't wish to!"
"you will feel better, son!"
the grandpa tried again.
the trader desperately wanted to feel better.
so, this logic appealed to him.
he reluctantly got out of the bed
freshened up
and joined his grandpa.
both walked all the way to the river.
it was very early in the morning
and the view was breath-taking.
the cool breeze by the river had a soothing effect on the young prodigal trader!
and then
suddenly
the youngman saw something
which shook him big!
he saw the village ladies
go to the river bank,
fill their earthern pitchers with water
put the pitchers on their head
and walk away
smiling and singing!
what struck him was
that the ladies
had not insisted on
or worried about
carrying the entire river
alongwith them.
the ladies knew that river was gushing with huge discharge of water
but they knew their own storing capacity
they knew their carrying capacity
they knew their requirement!
they were happy with pitcher-ful of water!
every lady was carrying a pitcher they could afford
small, big, very big
but none was carrying a pitcher which could suck in the entire river
besides, they also knew that
river will not stop running
and that
they will be back
the next day!
the trader got the message.
"it is not important whether you take home the entire rive of profits
whats important is whether you have filled your pitcher of ability!"
his face suddenly got lit with the radiance
which he once had!
he looked towards his grandfather
the old man knew what his talented grandson had learnt!
both smiled
held each others' hands
and walked back home....
with the trader anxious to hear the opening bell ring on monday!
trader vs wild
there is a very strong chance
that you would have seen
"man v/s wild"
on discovery!
its hero
bear grylls
served in
UK special forces reserve.
the special forces
have a model known as the 3 S’s
for developing elite soldiers.
this model applies brilliantly
to trading as well!
the 3 S in the model are
skill
strategy
and
state
whether man vs wild
or trader vs market
first thing you need is
skill......
nothing without this!
but this skill can easily
fall flat on its face
and flop
without
'strategy'
'strategy' is nothing but
the skill to use a skill!!
but
both skill as well as strategy
evaporate
in the tense atmosphere
of real and live
trading
when money is at stake!
at that time
you need the third
'S'
to ensure
that the other 2 'S'
don't get hypnotised
and freezed!
and this third
most crucial 'S'
is
'state'
(the state of mind)
physical, mental and emotional state
must be highly trained
without which
any ability
will be multiplied by
minus one
and
boomerang!
mind tends to leave us
when we need it most
unless
we have tamed it!
that you would have seen
"man v/s wild"
on discovery!
its hero
bear grylls
served in
UK special forces reserve.
the special forces
have a model known as the 3 S’s
for developing elite soldiers.
this model applies brilliantly
to trading as well!
the 3 S in the model are
skill
strategy
and
state
whether man vs wild
or trader vs market
first thing you need is
skill......
nothing without this!
but this skill can easily
fall flat on its face
and flop
without
'strategy'
'strategy' is nothing but
the skill to use a skill!!
but
both skill as well as strategy
evaporate
in the tense atmosphere
of real and live
trading
when money is at stake!
at that time
you need the third
'S'
to ensure
that the other 2 'S'
don't get hypnotised
and freezed!
and this third
most crucial 'S'
is
'state'
(the state of mind)
physical, mental and emotional state
must be highly trained
without which
any ability
will be multiplied by
minus one
and
boomerang!
mind tends to leave us
when we need it most
unless
we have tamed it!
catch the dodge
in cricket
can you pre-decide
how much you are going to score
in the next delivery?
can you pre-judge
whether the next ball is going to be
on the off-side?
or on-side?
or straight?
or a yorker?
or a bouncer?
or good-length?
or short-pitched?
if you swing the bat
according to your
pre-decision
you are in for trouble!
similarly
in football
if you are a goalkeeper
facing a penalty kick,
can you pre-decide
which way
the penalty taker
is going to kick the ball?
left top corner?
left bottom corner?
right top?
right bottom?
straight up?
straight down?
slow?
fast?
if you dive
on the basis of your pre-decision
you are going to look
not-so-good
in the tv replays!
if you think
the batsman can read the bowler
and pre-decide
and if you think
the goalee
can read the body language of the penalty taker
then please remember
the bowler is also seeing the batsman moving
and the penalty taker is also seeing the goalee shuffle!
same in stock market!
pre-judge
but don't bet too much on it.
make sure you see the reality
and catch the dodge
ride the trend
hit a six
and save the goal!
can you pre-decide
how much you are going to score
in the next delivery?
can you pre-judge
whether the next ball is going to be
on the off-side?
or on-side?
or straight?
or a yorker?
or a bouncer?
or good-length?
or short-pitched?
if you swing the bat
according to your
pre-decision
you are in for trouble!
similarly
in football
if you are a goalkeeper
facing a penalty kick,
can you pre-decide
which way
the penalty taker
is going to kick the ball?
left top corner?
left bottom corner?
right top?
right bottom?
straight up?
straight down?
slow?
fast?
if you dive
on the basis of your pre-decision
you are going to look
not-so-good
in the tv replays!
if you think
the batsman can read the bowler
and pre-decide
and if you think
the goalee
can read the body language of the penalty taker
then please remember
the bowler is also seeing the batsman moving
and the penalty taker is also seeing the goalee shuffle!
same in stock market!
pre-judge
but don't bet too much on it.
make sure you see the reality
and catch the dodge
ride the trend
hit a six
and save the goal!
Monday, February 21, 2011
dates for shimla workshop
6-day
day-trading training workshop
at shimla
dates : 11-16th april 2011
for agenda :
http://thebestbusinessintheworld.blogspot.com/2011/02/agenda-for-6-day-training-workshop.html
other details :
http://thebestbusinessintheworld.blogspot.com/2011/02/6-day-training-workshop-in-shimla.html
total seats :
15 only (first come first basis)
jagmohan
094180-37474
jagmohanshan@gmail.com
day-trading training workshop
at shimla
dates : 11-16th april 2011
for agenda :
http://thebestbusinessintheworld.blogspot.com/2011/02/agenda-for-6-day-training-workshop.html
other details :
http://thebestbusinessintheworld.blogspot.com/2011/02/6-day-training-workshop-in-shimla.html
total seats :
15 only (first come first basis)
jagmohan
094180-37474
jagmohanshan@gmail.com
Sunday, February 20, 2011
fed-up with inflation! (fedup II)
(this is sequel to "fedup but happy!")
one month had passed...
alpha, beta, gamma and delta had settled in their routine
on their 'fedup' island!
more importantly
they were
finally
happy!
one evening
they were sitting around bonfire
and partying!!!
alpha looked at the hut and said
"i am proud of my creation!"
--
beta looked at the bonfire he had created
took a bite of the kebabs he had cooked
and poudly said
"what food, what bonfire! cheers!!!"
--
gamma picked up his rifle he had used to provide security to his teammates from wildlife on the island
kissed it
and said
"no fear
till i am near!"
--
delta
silently listened to the pride-anthems of his buddies
and wanted to present his also...
but he realised that he had nothing to present proudly!
--
so he silently stood up
slipped into the hut
printed 4 "thankyou" (currency notes)
came out
and handed one to each
while keeping one in his wallet!
--
"hip, hip, hurrey!!!"
everyone got happier on receiving the grand "gift"
"we are proud of the finance minister of this island! our dear delta!"
everyone said in a chorus!
--
the grand party ended on a high note!
--
on monday
alpha gave his extra "thankyou" note to beta for extra fruits!
gamma saw alpha enjoying extra fruit and ordered for the same to beta
"here's my thankyou!" he said to beta, extending his note!
just then delta entered the hut
and saw alpha and gamma enjoying their "purchased extra"!
he too took out his extra buck and ordered for "more" fruit.
"its finished!" replied beta, making delta sad!
"have a heart, dear delta. none is left for me too! sold it all to alpha and gamma."
delta consoled himself.
--
but that evening
while alone
beta realised
that his supply for fruit was limited
but money supply in the camp had increased by 33% (4 notes to the 12 existing!)
he knew he couldn't produce more fruits overnight
he also knew more "thankyou's" were chasing his existing supply.
he realised that he couldn't disappoint anyone as well.
he had to do something!
--
by morning
he came out with a "unique" solution to the situation
he increased the price of the fruit platter
(rather every food item)
by 33%!
--
tuesday's newspaper
(printed by delta from his colour printer)
announced
"INFLATION REACHES FED-UP! SOARS BY 33%"
--
by afternoon
delta, the finance minister
decreased his cash-reserve ratio
snatched back extra 4 bucks from everyone (including himself)
tore them apart
to reduce money-supply
and tame inflation.
one month had passed...
alpha, beta, gamma and delta had settled in their routine
on their 'fedup' island!
more importantly
they were
finally
happy!
one evening
they were sitting around bonfire
and partying!!!
alpha looked at the hut and said
"i am proud of my creation!"
--
beta looked at the bonfire he had created
took a bite of the kebabs he had cooked
and poudly said
"what food, what bonfire! cheers!!!"
--
gamma picked up his rifle he had used to provide security to his teammates from wildlife on the island
kissed it
and said
"no fear
till i am near!"
--
delta
silently listened to the pride-anthems of his buddies
and wanted to present his also...
but he realised that he had nothing to present proudly!
--
so he silently stood up
slipped into the hut
printed 4 "thankyou" (currency notes)
came out
and handed one to each
while keeping one in his wallet!
--
"hip, hip, hurrey!!!"
everyone got happier on receiving the grand "gift"
"we are proud of the finance minister of this island! our dear delta!"
everyone said in a chorus!
--
the grand party ended on a high note!
--
on monday
alpha gave his extra "thankyou" note to beta for extra fruits!
gamma saw alpha enjoying extra fruit and ordered for the same to beta
"here's my thankyou!" he said to beta, extending his note!
just then delta entered the hut
and saw alpha and gamma enjoying their "purchased extra"!
he too took out his extra buck and ordered for "more" fruit.
"its finished!" replied beta, making delta sad!
"have a heart, dear delta. none is left for me too! sold it all to alpha and gamma."
delta consoled himself.
--
but that evening
while alone
beta realised
that his supply for fruit was limited
but money supply in the camp had increased by 33% (4 notes to the 12 existing!)
he knew he couldn't produce more fruits overnight
he also knew more "thankyou's" were chasing his existing supply.
he realised that he couldn't disappoint anyone as well.
he had to do something!
--
by morning
he came out with a "unique" solution to the situation
he increased the price of the fruit platter
(rather every food item)
by 33%!
--
tuesday's newspaper
(printed by delta from his colour printer)
announced
"INFLATION REACHES FED-UP! SOARS BY 33%"
--
by afternoon
delta, the finance minister
decreased his cash-reserve ratio
snatched back extra 4 bucks from everyone (including himself)
tore them apart
to reduce money-supply
and tame inflation.
fed-up but happy!
dejected by the hit they got from the stock market
four friends
α(alpha), ß(beta), γ(gamma) and δ (delta)
left everything behind
and settled on a far off island
undiscovered and untouched by humans so far!
they named the island 'fedup'
why this name?
well they were obviously fed-up with the abnormal "normal" life,
but they wanted never ever to forget the "fed"
the federal bank which made the policies
that made them come to this island!
--
on reaching 'fedup'
they decided to make their own civilisation.
first of all,
they divided work among themselves.
α was given the task of making and maintaing the hut
ß took the responsibility for arranging for the fire, food and water
γ agreed to provide security cover from the wildlife, and
δ accepted the role of keeping accounts and managing the money supply from the colour printer they had brought along.
--
δ printed 12 currency notes
(they called it "thankyou")
δ distributed 3 thankyous to everyone included himself.
everyone gave 1 thankyou to the other 3 for their respective services!
this way
everyone provided one service
everyone consumed every service
everyone spent all three thankyous in his pocket
and was still left with 3 thankyous!!!
this cycle kept repeating beautifully
perfect money supply!
perfect economy!
everyone contributing
everyone consuming
no tension!
all inhabitants of "fedup" became happy!
--
till one day............
(continued in part 2)
four friends
α(alpha), ß(beta), γ(gamma) and δ (delta)
left everything behind
and settled on a far off island
undiscovered and untouched by humans so far!
they named the island 'fedup'
why this name?
well they were obviously fed-up with the abnormal "normal" life,
but they wanted never ever to forget the "fed"
the federal bank which made the policies
that made them come to this island!
--
on reaching 'fedup'
they decided to make their own civilisation.
first of all,
they divided work among themselves.
α was given the task of making and maintaing the hut
ß took the responsibility for arranging for the fire, food and water
γ agreed to provide security cover from the wildlife, and
δ accepted the role of keeping accounts and managing the money supply from the colour printer they had brought along.
--
δ printed 12 currency notes
(they called it "thankyou")
δ distributed 3 thankyous to everyone included himself.
everyone gave 1 thankyou to the other 3 for their respective services!
this way
everyone provided one service
everyone consumed every service
everyone spent all three thankyous in his pocket
and was still left with 3 thankyous!!!
this cycle kept repeating beautifully
perfect money supply!
perfect economy!
everyone contributing
everyone consuming
no tension!
all inhabitants of "fedup" became happy!
--
till one day............
(continued in part 2)
Saturday, February 19, 2011
the 4th option!
a horse
is grazing
in the woods.
suddenly he notices a lion at a distance!
horse keeps grazing
but with heightened awareness,
while simultaneously keeping a watch on
and interpreting signals from
lion's behaviour.
finally he sees that the threat is real!
his stress response gets activated.
now
his head will
either ask him to fight
or fly away
to safety!
this is known as the fight-or-flight response
a third dimension is also there
the horse may neither fight
nor "fly away"
but freeze out of fear!
the fight-or-flight response now becomes
the fight-or-flight-or-freeze response!
this interesting phenomenon was first recognised and explained
by the american physiologist walter bradford cannon.
when faced with danger
the prey experiences
accelerated heartbeat, erect hair, pupil dilation, etc.
all typical signs
noticed in traders
when a trade goes wrong!
but even walter cannon would have agreed
that stock market is a place
where
neither fight, nor flight nor freeze works!
when you fight
you are against the trend
and are dragged mercilessly!
when you fly away
you have already booked the loss!
when you freeze
your account melts!
almost always
and inevitably
during trading
a trader's fight-or-flight-or freeze response system gets triggered!
to be a successful trader
one must learn to switch it off immediately
by force!
and opt instead
for
follow-response!
is grazing
in the woods.
suddenly he notices a lion at a distance!
horse keeps grazing
but with heightened awareness,
while simultaneously keeping a watch on
and interpreting signals from
lion's behaviour.
finally he sees that the threat is real!
his stress response gets activated.
now
his head will
either ask him to fight
or fly away
to safety!
this is known as the fight-or-flight response
a third dimension is also there
the horse may neither fight
nor "fly away"
but freeze out of fear!
the fight-or-flight response now becomes
the fight-or-flight-or-freeze response!
this interesting phenomenon was first recognised and explained
by the american physiologist walter bradford cannon.
when faced with danger
the prey experiences
accelerated heartbeat, erect hair, pupil dilation, etc.
all typical signs
noticed in traders
when a trade goes wrong!
but even walter cannon would have agreed
that stock market is a place
where
neither fight, nor flight nor freeze works!
when you fight
you are against the trend
and are dragged mercilessly!
when you fly away
you have already booked the loss!
when you freeze
your account melts!
almost always
and inevitably
during trading
a trader's fight-or-flight-or freeze response system gets triggered!
to be a successful trader
one must learn to switch it off immediately
by force!
and opt instead
for
follow-response!
Thursday, February 17, 2011
just sell!
a trader
went into a jewellery shop
to buy a diamond necklace
for his wife
an evening before the valentine day!
--
he selected a dazzling one
paid 1.2 lacs
put the necklace in the bag
came out of the showroom
and was about to get into his car
when suddenly
he noticed four
well-built guys
staring
at him
from across the street!
--
first he thought
they were looking casually
but then his gut told him
that something was wrong about
the way they were looking at him!
--
he hurried to locate car-keys in his jacket
the guys leaped towards him
on seeing them coming
he abandoned his car
and started running fast
into the adjacent street!
--
the guys followed him
he started running faster
much faster
street after street
the guys kept running behind him!
--
he
then
suddenly
slipped into a very narrow street
and reached
a small time
jewellery shop!
--
an idea struck him.
he entered this shop
and offered to sell the jewellery
after showing the receipt
he had just got
from the previous jewellery showroom!
--
"i can pay 75000 for this!"
said the man across the counter.
"but i just paid 1.2 lacs for this!"
protested the trader!
"sorry!"
replied the busy salesman!
--
the trader refused to sell
the jewellery
at a loss!
he stood up
turned
and
saw outside
the four gentlemen
waiting for him!
--
the trader called the police
from his cell!
the policeman on the other side
was also into trading
part-time!
--
"i will be late! just sell!"
the trader in the uniform advised.
"never worry about the purchase rate
when the trade has gone wrong!"
went into a jewellery shop
to buy a diamond necklace
for his wife
an evening before the valentine day!
--
he selected a dazzling one
paid 1.2 lacs
put the necklace in the bag
came out of the showroom
and was about to get into his car
when suddenly
he noticed four
well-built guys
staring
at him
from across the street!
--
first he thought
they were looking casually
but then his gut told him
that something was wrong about
the way they were looking at him!
--
he hurried to locate car-keys in his jacket
the guys leaped towards him
on seeing them coming
he abandoned his car
and started running fast
into the adjacent street!
--
the guys followed him
he started running faster
much faster
street after street
the guys kept running behind him!
--
he
then
suddenly
slipped into a very narrow street
and reached
a small time
jewellery shop!
--
an idea struck him.
he entered this shop
and offered to sell the jewellery
after showing the receipt
he had just got
from the previous jewellery showroom!
--
"i can pay 75000 for this!"
said the man across the counter.
"but i just paid 1.2 lacs for this!"
protested the trader!
"sorry!"
replied the busy salesman!
--
the trader refused to sell
the jewellery
at a loss!
he stood up
turned
and
saw outside
the four gentlemen
waiting for him!
--
the trader called the police
from his cell!
the policeman on the other side
was also into trading
part-time!
--
"i will be late! just sell!"
the trader in the uniform advised.
"never worry about the purchase rate
when the trade has gone wrong!"
full-time
some tasks
which demand full-time attention
otherwise
they are likely to
backfire!
piloting (especially a fighter jet)
fire-fighting
praying
burglary
dying
thinking
performing surgery
cooking
war-front
and
day trading!
which demand full-time attention
otherwise
they are likely to
backfire!
piloting (especially a fighter jet)
fire-fighting
praying
burglary
dying
thinking
performing surgery
cooking
war-front
and
day trading!
it is never too late!
it is never too late
to say "sorry"
--
it is never to late
to return home
--
it is never too late
to learn
--
it is never too late
to start living
--
it is never too late
to take care of health
--
it is never too late
to admit your mistake
--
it is never too late
to befriend an enemy
--
it is never too late
to join a rally
--
if things still don't work
you always have the option
of
"stop loss"
--
this act of
unilateral courage
will be the one
u will never regret!
besides giving u a consolation
that atleast u tried!
and who knows.......
all great achievements
including your birth
were once
a grave risk!!!
to say "sorry"
--
it is never to late
to return home
--
it is never too late
to learn
--
it is never too late
to start living
--
it is never too late
to take care of health
--
it is never too late
to admit your mistake
--
it is never too late
to befriend an enemy
--
it is never too late
to join a rally
--
if things still don't work
you always have the option
of
"stop loss"
--
this act of
unilateral courage
will be the one
u will never regret!
besides giving u a consolation
that atleast u tried!
and who knows.......
all great achievements
including your birth
were once
a grave risk!!!
why otherwise successful people struggle in market?
because
they have high IQ (intelligent quotient)
and even higher EQ (emotional quotient)
but very low TQ (trading quotient)
the more intelligent u r
the more u try to do
"your thing".
the more intelligent u r
the more u use logic.
the more emotional u r
the more u react
to the stimulant
of big pocket operators.
the more emotional u r
the more ur ego inflates
and stronger u cling
to bad positions.
so,
if u r struggling in the market
congratulations!
it reconfirms
that u r
intelligent
and highly emotional.
but if u r a successful trader
it doesn't mean that u r
unintelligent or an emotionless rock.
it only means
that
u have successfully tamed ur
emotions
and
locked ur intelligence.
u have a developed
TQ (trader quotient)
which is synonymous with
trend quotient
TQ
is not what we are born with
it is not available off-the-shelf
it is earned by
learning, followed by
hard experience
freezed method
dogged practice
and
ruthless discipline.
so if u have high IQ
and high EQ
u don't have to bring them down
just leave them outside the trading room
and wear ur TQ.
they have high IQ (intelligent quotient)
and even higher EQ (emotional quotient)
but very low TQ (trading quotient)
the more intelligent u r
the more u try to do
"your thing".
the more intelligent u r
the more u use logic.
the more emotional u r
the more u react
to the stimulant
of big pocket operators.
the more emotional u r
the more ur ego inflates
and stronger u cling
to bad positions.
so,
if u r struggling in the market
congratulations!
it reconfirms
that u r
intelligent
and highly emotional.
but if u r a successful trader
it doesn't mean that u r
unintelligent or an emotionless rock.
it only means
that
u have successfully tamed ur
emotions
and
locked ur intelligence.
u have a developed
TQ (trader quotient)
which is synonymous with
trend quotient
TQ
is not what we are born with
it is not available off-the-shelf
it is earned by
learning, followed by
hard experience
freezed method
dogged practice
and
ruthless discipline.
so if u have high IQ
and high EQ
u don't have to bring them down
just leave them outside the trading room
and wear ur TQ.
3 ways stocks and indices can move
stock or indices
can move in the following three ways only
1. gap opening (overnight movement) only
2. intraday movement only
3. gap opening + intraday movement
the second type can be managed by the ways mentioned in my post
"high probability entry/exit points"
the first type is slightly difficult to catch except with btst/stbt
positions (not easy to predict - trying to crack the code and will
share with you)
another way to catch the first type of movement is thru swing trading
the third type of movement can be further divided into 4 sub-types
a) small gap opening, big intraday movement
b) small gap opening, small intraday movement
c) big gap openinig, big intraday movement
d) big gap opening, small intraday movement
can't do much about b) and d)
c) is rare but profitable
a) can be most profitable
how
with the ways mentioned in
"high probability entry/exit points"
remember 80% of the gain happens from 20% of the opportunities
meaning thereby,
that we should not trade like a salaried trader
but like a businessman trader
and trade only opportunity.
we have no boss to answer except
ourselves
and wife!
happy trading!
can move in the following three ways only
1. gap opening (overnight movement) only
2. intraday movement only
3. gap opening + intraday movement
the second type can be managed by the ways mentioned in my post
"high probability entry/exit points"
the first type is slightly difficult to catch except with btst/stbt
positions (not easy to predict - trying to crack the code and will
share with you)
another way to catch the first type of movement is thru swing trading
the third type of movement can be further divided into 4 sub-types
a) small gap opening, big intraday movement
b) small gap opening, small intraday movement
c) big gap openinig, big intraday movement
d) big gap opening, small intraday movement
can't do much about b) and d)
c) is rare but profitable
a) can be most profitable
how
with the ways mentioned in
"high probability entry/exit points"
remember 80% of the gain happens from 20% of the opportunities
meaning thereby,
that we should not trade like a salaried trader
but like a businessman trader
and trade only opportunity.
we have no boss to answer except
ourselves
and wife!
happy trading!
high probability entry exit points in day & swing trading
support-resistance breakout/down and reflect-back
change of direction of price zig-zag
step-up step-down support base points
fibonacci points (stop loss hook support)
trend resume points at extreme william%r
(extended outer) spikes
first pullback
change of direction of price zig-zag
step-up step-down support base points
fibonacci points (stop loss hook support)
trend resume points at extreme william%r
(extended outer) spikes
first pullback
Wednesday, February 16, 2011
are u an optimist or pessimist trader?
optimist trading students
survive difficulties
longer, better and easier
and
have better chance
of succeeding
than
pessimists.
are you an optimist
or a pessimist?
take the following test by Dr. Martin Seligman
in the link below and find out.
http://www.stanford.edu/class/msande271/onlinetools/LearnedOpt.html
survive difficulties
longer, better and easier
and
have better chance
of succeeding
than
pessimists.
are you an optimist
or a pessimist?
take the following test by Dr. Martin Seligman
in the link below and find out.
http://www.stanford.edu/class/msande271/onlinetools/LearnedOpt.html
Tuesday, February 15, 2011
yes boss!
market
is like a strict boss
who rarely appreciates your good work
but leaves no opportunity
to reprimand you
and put you on the mat
for any mistake
you commit
even innocently!
==
however,
in the market
if you accept and acknowledge
every mistake honestly and promptly
and silently self-admire
every correct thing you do,
it can turn out to be
the best training for you!
---
is like a strict boss
who rarely appreciates your good work
but leaves no opportunity
to reprimand you
and put you on the mat
for any mistake
you commit
even innocently!
==
however,
in the market
if you accept and acknowledge
every mistake honestly and promptly
and silently self-admire
every correct thing you do,
it can turn out to be
the best training for you!
---
champions sitting behind your shoulder (words from masters)
"Imagine a training program for traders
in which there is daily observation
of leading traders making decisions,
frequent interaction with those traders
to understand what they are doing and why,
and supervision of students' trading decisions by those traders.
It would be like having world-class poker champions
sitting behind your shoulder as you play,
offering immediate observations and coaching.
Expertise development that normally might require many years of effort
could now occur in a fraction of that time.
That is the vision.
The key is recognizing that
it is the structure--and not just the content--of a learning experience
that accounts for its success.
Most learning efforts fail
because there are too few cycles of performance-feedback-goal setting-corrective effort per unit of time
and no clear curricular progression guiding the content of those cycles.
The core concept is that,
whether you are a poker player, trader, or something else,
you can become much better at what you do
by creating more and better learning cycles.
For the real champions, nothing less will suffice."
- Dr.Brett Steenbarger
in which there is daily observation
of leading traders making decisions,
frequent interaction with those traders
to understand what they are doing and why,
and supervision of students' trading decisions by those traders.
It would be like having world-class poker champions
sitting behind your shoulder as you play,
offering immediate observations and coaching.
Expertise development that normally might require many years of effort
could now occur in a fraction of that time.
That is the vision.
The key is recognizing that
it is the structure--and not just the content--of a learning experience
that accounts for its success.
Most learning efforts fail
because there are too few cycles of performance-feedback-goal setting-corrective effort per unit of time
and no clear curricular progression guiding the content of those cycles.
The core concept is that,
whether you are a poker player, trader, or something else,
you can become much better at what you do
by creating more and better learning cycles.
For the real champions, nothing less will suffice."
- Dr.Brett Steenbarger
thank you, my anonymous friend
my dear friend ( i don't know ur name, i am putting across ur healthy criticism and therefore, atleast have the right to know ur name),
ur views are not really surprising for the following reasons
1) in our country teachers are not being respected since quite some time. they are paid peanuts as compared to the packages they prepare their students for.
2) in our country intellectual property right is a joke. piracy is unabated. this results into poor investment in r&d (it costs)!
3) i understand ur pov considering the number of crooks and demi-experts around.
4) i understand that we are a country of freebies who have scant respect for the effort and cost one incurs to find something knew. not surprising that our gdp despite being a 1.2 billion army is lesser than countries one tenth the population and 1 hundredth the size!
5) if u think i am not an achiever in the markets and just want to preach , pl wait and watch. but by that time it might be too late for many. anyhow, being a teacher is not an abuse!
6) if u think only those who can't do are the ones which teach, i think u r severely mistaken.
i am into a well-paid job. i would have to take leave of more than a fortnight to prepare for this workshop. i will be hiring techies to handle some issues, i am arranging for rare and highly valuable training material and videos, i will be hiring conference hall for a week with projector and lease line, besides other expenses.
regards
Jagmohan
ur views are not really surprising for the following reasons
1) in our country teachers are not being respected since quite some time. they are paid peanuts as compared to the packages they prepare their students for.
2) in our country intellectual property right is a joke. piracy is unabated. this results into poor investment in r&d (it costs)!
3) i understand ur pov considering the number of crooks and demi-experts around.
4) i understand that we are a country of freebies who have scant respect for the effort and cost one incurs to find something knew. not surprising that our gdp despite being a 1.2 billion army is lesser than countries one tenth the population and 1 hundredth the size!
5) if u think i am not an achiever in the markets and just want to preach , pl wait and watch. but by that time it might be too late for many. anyhow, being a teacher is not an abuse!
6) if u think only those who can't do are the ones which teach, i think u r severely mistaken.
i am into a well-paid job. i would have to take leave of more than a fortnight to prepare for this workshop. i will be hiring techies to handle some issues, i am arranging for rare and highly valuable training material and videos, i will be hiring conference hall for a week with projector and lease line, besides other expenses.
regards
Jagmohan
price is what u pay, value is what u get (workshop)
dear bijen / anonymous,
1) the fee for the workshop includes boarding lodging for 7 days
2) i will be on-leave from my current well-paid assignment for atleast over a fortnight for preparing and conducting the workshop.
3) i am hiring best team to help me in the workshop besides other expenses of conference hall, projectors etc.
4) the training material i will be sharing is one of the best available in the world!
5) it will be one of the best workshops of its kind in the country. it will be recorded and preserved.
6) the net fee is an investment easily recoverable in a few sessions by the willing student
7) and last but not the least, i will be sharing the digest of years of hardwork and insights. attendees will get jet thrust in their learning curve especially those who are finding stuckup in a groove since months and years.
1) the fee for the workshop includes boarding lodging for 7 days
2) i will be on-leave from my current well-paid assignment for atleast over a fortnight for preparing and conducting the workshop.
3) i am hiring best team to help me in the workshop besides other expenses of conference hall, projectors etc.
4) the training material i will be sharing is one of the best available in the world!
5) it will be one of the best workshops of its kind in the country. it will be recorded and preserved.
6) the net fee is an investment easily recoverable in a few sessions by the willing student
7) and last but not the least, i will be sharing the digest of years of hardwork and insights. attendees will get jet thrust in their learning curve especially those who are finding stuckup in a groove since months and years.
agenda for the 6-day training workshop
proprietary day trading methods
identification of trend, trend change and trend reversal
step-up step-down theory
spike, climb and shift theory
structure theory
using trained gut to scalp
outer circle theory
btst
how to trade gap openings
how to trade first 30minutes
TIR method for rangebound movements
hundreds of practical examples
live trading for 6 days
mental toughness
millionaire mindset
what all to see in a graph
intensive q & a sessions
using support and resistance
setting & using stop loss
advance rsi
advance william%r
advance SAR
identifying and avoiding pitfalls of trading
leveraging investments safely
identification of trend, trend change and trend reversal
step-up step-down theory
spike, climb and shift theory
structure theory
using trained gut to scalp
outer circle theory
btst
how to trade gap openings
how to trade first 30minutes
TIR method for rangebound movements
hundreds of practical examples
live trading for 6 days
mental toughness
millionaire mindset
what all to see in a graph
intensive q & a sessions
using support and resistance
setting & using stop loss
advance rsi
advance william%r
advance SAR
identifying and avoiding pitfalls of trading
leveraging investments safely
Monday, February 14, 2011
6-day training workshop in shimla
i am planning to conduct
a 6-day training workshop
on day trading
with my proprietary methods
in shimla
in april 2011
--
participation fee
INR 35000/-
(including applicable taxes, hotel accomodation on twin sharing for 6 nights with meals, training material)
those interested to
be a part
may reach me
at
jagmohanshan@gmail.com
a 6-day training workshop
on day trading
with my proprietary methods
in shimla
in april 2011
--
participation fee
INR 35000/-
(including applicable taxes, hotel accomodation on twin sharing for 6 nights with meals, training material)
those interested to
be a part
may reach me
at
jagmohanshan@gmail.com
Sunday, February 13, 2011
goodbye technicals!
i seem to have come full circle.
first, i didn't know technicals.
second, i learnt technicals.
third, they got me profit.
fourth, i saw their limitations.
fifth, i saw their severe shortcomings.
sixth, i saw thru their pathetic record.
seventh, my infatuation with tehnicals was over!
i kept them aside
and started looking for "something else"!
--
to find that "something else"
other than fundamentals
and technicals
i thought it apt to understand
"who or what made me take up technicals?"
--
soon
i realised that
initially
the stock market started with "investing"
then came the mad race of transfer of ownership of investments
resulting in the birth of "trading"!
this was followed by mass participation in trading
and then came "speculation"
and the game changed forever!!!
--
gradually
more and more people started getting attracted
towards the "wonder business" called trading!
--
but till that time
trading was based on knowledge of business prospects.
since many couldn't judge the business prospects right
they got frustrated.
this made many smart people think hard.
some bold souls came up with the theory
that the price fluctuation could be predicted.
--
as this theory gained ground
many more started finding ways to predict.
they came out with their own methods!
many methods seemed to work (atleast for the time being)!
the thirsty mob over-estimated the abilities of these methods
ignored theor shortcomings
and over-reacted!
thus, were born
the technical indicators!
--
while the inventors of the indicators
were obviously proud of their inventions,
they got unexpected support
from suspected quarters...
the new breed of unsuccessful traders
the experts!
--
a whole generation of experts and trainers popped up!
books, articles, software and seminars....!
a whole industry got erected almost overnight!!
--
and guess who came up with solid support
to this industry?
--
you got it right
....the brokerage houses!
they spared no efforts to make you believe
that
stock market was the answer to all our financial worries
and that
technical indicators
were the sure-shot answers
"the secret"
to decode the market!
--
and who supported the brokerage houses?
you again got it right
...the banks!
--
and who supported the banks?
obviously
...the governments (who wanted to sell the prosperity story!!!)
--
as they say in china
"repeat a lie ten times and it becomes the truth"
what about the lie that was being repeated a million times!!?
that
"if you know technicals, you can predict the market movement!!!
--
this resulted into mass hypnotism
mass hysteria resulting into mad rush
to learn "enough" technical analyses!
--
every single success story
buried
ten bitter failures!
--
the mass exodus into markets
resulted into
the entry of sharks
the ones who had
mountains of cheap (low interest) money
who could make any rubbish stock zoom up
and after having collected enough
could crash it at will
by sudden flood of supply!
-
--
---
----
the saga continued!
the saga continues!!
--
today it is mcuh bigger
and stronger
and deeper rooted!
a multi-trillion industry
attracting millions of
innocent souls
bringing in pocketful of money
from their savings
to lose it all in "the pit".
--
...and the beauty is
none blames the technicals
everyone blames his level of knowledge of technicals.
such is the depth of the myth
that nobody dares to challenge the authenticity of the technicals!
--
it is one of the biggest ongoing daylight heist in the history of mankind!
by the "men-in-white"
who preach indicators
like a holy religion
beyond doubt
beyond question!
--
isn't it amusing
that
the operators ask everyone to follow technicals
and they themselves use raw brutal money power
to hunt us all!
--
the fact is
indicators are poor chaps!
they see the robber running
and tell you
(rather shriek at the top of their voice)
but themselves get tricked!
innocent traders believe the honest technicals
not knowing that even the indicators have been taken for a ride!
technicals are the last and only
footrest for ordinary masses
to have a foothold
in the market
....so nobody dare lose them!
this way
technicals
are being used
for mass genocide
in the market chambers!
--
indicators either predict wrong
or too early
or too late
or too less
and too infrequently!
--
indicators pre-dict
indicators post-dict
but none
present-dicts!!!
--
and that is the flaw
the critical
fatal flaw!!!
--
big pockets
use this flaw
to trap everyone.
they make the price fluctuate
in zig zag
knowing very well
that every small trader
has small pocket
and big fear!
big pockets know
that small traders are like sparrows
ever ready to fly away
at the gunshot of an empty cartridge!
--
i have just one simple straight question
"if technicals worked that great
and there are many technical experts in the world
who are already super Ph.D.'s in technicals
why aren't there just a handful of
buffets and goldmanns?
why are tech geniouses busy selling their knowledge
and not making money by trading?"
--
because
it is all makeover!
a big hollow artificial setup!!
a global casino!!!
where only those call the shot and win
who either have mega money
or power to influence!
those
who can drag technicals mercilessly
for miles!!!
--
so?
what is the truth?
--
the truth is
don't predict
don't post-dict
just present-dict!
--
why predict
when the result is
always
instantly
available before our eyes!
--
a bird in hand
is definitely worth
ten in the (am)bush!!!
--forget about technicals
(just learn them for curiosity)
trade, not by technicals
but by directions
of the zig-zag!
--
learn the language of zig zag movement of price
practice identifying the change in direction of price despite zig-zag
and practice identifying the continuity of direction despite zig-zag!
--
the biggest secret of the market is
it can't move from a lower point to higher
or higher to lower
without taking a direction!
if you can spot a definite direction
of the price on 1 month chart
great!
go for the swing trade.
and stay in the trade
till the direction is intact
despite the fluctuations!
if you can't spot a direction on 1 month chart
try 1 day chart!
in intraday charts
every price changes direction 0 to 2 times
giving enough opportunity to make profit!
--
forget about technicals.
train your eye
to spot the entry of the price
into a direction
wrapped in the disguise of
zig-zag!
--
believe me!
trading is much easier than you think
provided
you don't insist to complicate it!
====================
my journey without technicals can be traced thru the following recent posts
http://www.mudraa.com/singlepost.php?messid=79263
http://www.mudraa.com/singlepost.php?messid=78472
http://www.mudraa.com/singlepost.php?messid=78138
http://www.mudraa.com/singlepost.php?messid=77886
http://www.mudraa.com/singlepost.php?messid=77576
http://www.mudraa.com/singlepost.php?messid=77502
http://www.mudraa.com/singlepost.php?messid=77098
http://www.mudraa.com/singlepost.php?messid=77226
http://www.mudraa.com/singlepost.php?messid=77006
http://www.mudraa.com/singlepost.php?messid=77005
http://www.mudraa.com/singlepost.php?messid=74621
http://www.mudraa.com/singlepost.php?messid=74561
http://www.mudraa.com/singlepost.php?messid=74251
http://www.mudraa.com/singlepost.php?messid=74366
http://www.mudraa.com/singlepost.php?messid=74000
http://www.mudraa.com/singlepost.php?messid=76233
first, i didn't know technicals.
second, i learnt technicals.
third, they got me profit.
fourth, i saw their limitations.
fifth, i saw their severe shortcomings.
sixth, i saw thru their pathetic record.
seventh, my infatuation with tehnicals was over!
i kept them aside
and started looking for "something else"!
--
to find that "something else"
other than fundamentals
and technicals
i thought it apt to understand
"who or what made me take up technicals?"
--
soon
i realised that
initially
the stock market started with "investing"
then came the mad race of transfer of ownership of investments
resulting in the birth of "trading"!
this was followed by mass participation in trading
and then came "speculation"
and the game changed forever!!!
--
gradually
more and more people started getting attracted
towards the "wonder business" called trading!
--
but till that time
trading was based on knowledge of business prospects.
since many couldn't judge the business prospects right
they got frustrated.
this made many smart people think hard.
some bold souls came up with the theory
that the price fluctuation could be predicted.
--
as this theory gained ground
many more started finding ways to predict.
they came out with their own methods!
many methods seemed to work (atleast for the time being)!
the thirsty mob over-estimated the abilities of these methods
ignored theor shortcomings
and over-reacted!
thus, were born
the technical indicators!
--
while the inventors of the indicators
were obviously proud of their inventions,
they got unexpected support
from suspected quarters...
the new breed of unsuccessful traders
the experts!
--
a whole generation of experts and trainers popped up!
books, articles, software and seminars....!
a whole industry got erected almost overnight!!
--
and guess who came up with solid support
to this industry?
--
you got it right
....the brokerage houses!
they spared no efforts to make you believe
that
stock market was the answer to all our financial worries
and that
technical indicators
were the sure-shot answers
"the secret"
to decode the market!
--
and who supported the brokerage houses?
you again got it right
...the banks!
--
and who supported the banks?
obviously
...the governments (who wanted to sell the prosperity story!!!)
--
as they say in china
"repeat a lie ten times and it becomes the truth"
what about the lie that was being repeated a million times!!?
that
"if you know technicals, you can predict the market movement!!!
--
this resulted into mass hypnotism
mass hysteria resulting into mad rush
to learn "enough" technical analyses!
--
every single success story
buried
ten bitter failures!
--
the mass exodus into markets
resulted into
the entry of sharks
the ones who had
mountains of cheap (low interest) money
who could make any rubbish stock zoom up
and after having collected enough
could crash it at will
by sudden flood of supply!
-
--
---
----
the saga continued!
the saga continues!!
--
today it is mcuh bigger
and stronger
and deeper rooted!
a multi-trillion industry
attracting millions of
innocent souls
bringing in pocketful of money
from their savings
to lose it all in "the pit".
--
...and the beauty is
none blames the technicals
everyone blames his level of knowledge of technicals.
such is the depth of the myth
that nobody dares to challenge the authenticity of the technicals!
--
it is one of the biggest ongoing daylight heist in the history of mankind!
by the "men-in-white"
who preach indicators
like a holy religion
beyond doubt
beyond question!
--
isn't it amusing
that
the operators ask everyone to follow technicals
and they themselves use raw brutal money power
to hunt us all!
--
the fact is
indicators are poor chaps!
they see the robber running
and tell you
(rather shriek at the top of their voice)
but themselves get tricked!
innocent traders believe the honest technicals
not knowing that even the indicators have been taken for a ride!
technicals are the last and only
footrest for ordinary masses
to have a foothold
in the market
....so nobody dare lose them!
this way
technicals
are being used
for mass genocide
in the market chambers!
--
indicators either predict wrong
or too early
or too late
or too less
and too infrequently!
--
indicators pre-dict
indicators post-dict
but none
present-dicts!!!
--
and that is the flaw
the critical
fatal flaw!!!
--
big pockets
use this flaw
to trap everyone.
they make the price fluctuate
in zig zag
knowing very well
that every small trader
has small pocket
and big fear!
big pockets know
that small traders are like sparrows
ever ready to fly away
at the gunshot of an empty cartridge!
--
i have just one simple straight question
"if technicals worked that great
and there are many technical experts in the world
who are already super Ph.D.'s in technicals
why aren't there just a handful of
buffets and goldmanns?
why are tech geniouses busy selling their knowledge
and not making money by trading?"
--
because
it is all makeover!
a big hollow artificial setup!!
a global casino!!!
where only those call the shot and win
who either have mega money
or power to influence!
those
who can drag technicals mercilessly
for miles!!!
--
so?
what is the truth?
--
the truth is
don't predict
don't post-dict
just present-dict!
--
why predict
when the result is
always
instantly
available before our eyes!
--
a bird in hand
is definitely worth
ten in the (am)bush!!!
--forget about technicals
(just learn them for curiosity)
trade, not by technicals
but by directions
of the zig-zag!
--
learn the language of zig zag movement of price
practice identifying the change in direction of price despite zig-zag
and practice identifying the continuity of direction despite zig-zag!
--
the biggest secret of the market is
it can't move from a lower point to higher
or higher to lower
without taking a direction!
if you can spot a definite direction
of the price on 1 month chart
great!
go for the swing trade.
and stay in the trade
till the direction is intact
despite the fluctuations!
if you can't spot a direction on 1 month chart
try 1 day chart!
in intraday charts
every price changes direction 0 to 2 times
giving enough opportunity to make profit!
--
forget about technicals.
train your eye
to spot the entry of the price
into a direction
wrapped in the disguise of
zig-zag!
--
believe me!
trading is much easier than you think
provided
you don't insist to complicate it!
====================
my journey without technicals can be traced thru the following recent posts
http://www.mudraa.com/singlepost.php?messid=79263
http://www.mudraa.com/singlepost.php?messid=78472
http://www.mudraa.com/singlepost.php?messid=78138
http://www.mudraa.com/singlepost.php?messid=77886
http://www.mudraa.com/singlepost.php?messid=77576
http://www.mudraa.com/singlepost.php?messid=77502
http://www.mudraa.com/singlepost.php?messid=77098
http://www.mudraa.com/singlepost.php?messid=77226
http://www.mudraa.com/singlepost.php?messid=77006
http://www.mudraa.com/singlepost.php?messid=77005
http://www.mudraa.com/singlepost.php?messid=74621
http://www.mudraa.com/singlepost.php?messid=74561
http://www.mudraa.com/singlepost.php?messid=74251
http://www.mudraa.com/singlepost.php?messid=74366
http://www.mudraa.com/singlepost.php?messid=74000
http://www.mudraa.com/singlepost.php?messid=76233
Saturday, February 12, 2011
true investors are like farmers
it is said
'for investing use fundamentals
and for trading use technicals'
these two statements are true lies.
they are grossly mischievous
and universal myths!
--
the first line about investing
is targetted towards those
who are not 'investors' in true real sense.
they are the 'leftovers'
who don't have the know-how and the sense of "investing"
nor do they have the time and sense of trading.
--
they take 'investing using fundamentals' as an alibi.
they superficially check the "fundamentals"
and buy a cheap mask of "investor".
what they take as "fundamentals"
are nothing but clever cookies targetted at their heads
by "hackers"!
fundamentals are not just numbers
fundamentals are foundations!
--
the confidence in the investment is absent
the hearty self-assurance and excitement of having "invested in a promising business"
is missing.
consequently,
expectation or fear of short-term gain or loss
reveals the true colours
of the real "investor" under the garb!
the "investor" absconds!
--
true investors are like farmers
....seeking the potential and promise
of a seed or sapling turning into a tree
or a full grown tree continuing to yield
juicy fruits
season after season!
'for investing use fundamentals
and for trading use technicals'
these two statements are true lies.
they are grossly mischievous
and universal myths!
--
the first line about investing
is targetted towards those
who are not 'investors' in true real sense.
they are the 'leftovers'
who don't have the know-how and the sense of "investing"
nor do they have the time and sense of trading.
--
they take 'investing using fundamentals' as an alibi.
they superficially check the "fundamentals"
and buy a cheap mask of "investor".
what they take as "fundamentals"
are nothing but clever cookies targetted at their heads
by "hackers"!
fundamentals are not just numbers
fundamentals are foundations!
--
the confidence in the investment is absent
the hearty self-assurance and excitement of having "invested in a promising business"
is missing.
consequently,
expectation or fear of short-term gain or loss
reveals the true colours
of the real "investor" under the garb!
the "investor" absconds!
--
true investors are like farmers
....seeking the potential and promise
of a seed or sapling turning into a tree
or a full grown tree continuing to yield
juicy fruits
season after season!
Friday, February 11, 2011
popcorns!
a farmer
put his bumper maize produce
in the tractor trolley
went straight to the market
sold it all
and returned home
with bagfull
of cash.
--
he put the bag of fortune
on the table
opened it
and gave a bunch of currency notes
to his freshly graduated son
"this is for you, enjoy!!!"
--
he, then
picked up the bag
locked it in the almirah locker
and went straight to the store room.
there
he saw
one last big bag full of maize corns
he had kept back.
he emptied the bag
on the floor
and divided it
into two heaps.
--
"what are you doing, dad!"
his son asked
who had followed him into the store room.
--
"this heap, son
is for making popcorns
for all of us
for the rest of the year.
and that heap
i will sow back
as seeds
into the field
for next season's harvest!!!"
son heard this
and went out.
--
the farmer put the two heaps
in separate bags
put them aside
and came out!
--
and there he saw
his son
re-counting the money
he had just got!
"now what are you doing?" the father asked
"this bunch, dad
is for my luxury popcorns
and this one
is for investing!"
put his bumper maize produce
in the tractor trolley
went straight to the market
sold it all
and returned home
with bagfull
of cash.
--
he put the bag of fortune
on the table
opened it
and gave a bunch of currency notes
to his freshly graduated son
"this is for you, enjoy!!!"
--
he, then
picked up the bag
locked it in the almirah locker
and went straight to the store room.
there
he saw
one last big bag full of maize corns
he had kept back.
he emptied the bag
on the floor
and divided it
into two heaps.
--
"what are you doing, dad!"
his son asked
who had followed him into the store room.
--
"this heap, son
is for making popcorns
for all of us
for the rest of the year.
and that heap
i will sow back
as seeds
into the field
for next season's harvest!!!"
son heard this
and went out.
--
the farmer put the two heaps
in separate bags
put them aside
and came out!
--
and there he saw
his son
re-counting the money
he had just got!
"now what are you doing?" the father asked
"this bunch, dad
is for my luxury popcorns
and this one
is for investing!"
nobody goes home......
often
i stumble across guys
who passionately tell me
that they too
have been in the "share market"
"once upon a time"
and
they left it
after failing
repeatedly
and big!
--
i am yet to find
a single person
who said
"i quit after losing once!"
--
warren buffet
must be a genious
for having figured it out
at the age of 14
that
"nobody ever goes home after the first race!"
--
it is trader psychology
to keep trying
again and again
if they are losing!!!
alas, if only
they tried differently everytime
and with improved method!
if only,
they sensed
what they missed
in their very first defeat!!!
i stumble across guys
who passionately tell me
that they too
have been in the "share market"
"once upon a time"
and
they left it
after failing
repeatedly
and big!
--
i am yet to find
a single person
who said
"i quit after losing once!"
--
warren buffet
must be a genious
for having figured it out
at the age of 14
that
"nobody ever goes home after the first race!"
--
it is trader psychology
to keep trying
again and again
if they are losing!!!
alas, if only
they tried differently everytime
and with improved method!
if only,
they sensed
what they missed
in their very first defeat!!!
Wednesday, February 9, 2011
if FIIs were not selling...
experts say
that since the market has been falling
day after day on low volumes
(number of pilgrims that went uphill
were much more than the numbers returning downhill)
it clearly means
that some sellers are behind this
continuous slide,
FIIs are not selling!
--
if FIIs were not selling
and have not sold much
since last 1000 point slide,
they (the FIIs)
must be sitting on loss!!!
and if that is the case
and assuming they are not dumb
the FIIs are not worried about the loss
neither about the double dip
......a big bull run is going to resume!
if FIIs are not selling
they are expecting much bigger wave!
they must be buying
or waiting to buy
at low levels!
that since the market has been falling
day after day on low volumes
(number of pilgrims that went uphill
were much more than the numbers returning downhill)
it clearly means
that some sellers are behind this
continuous slide,
FIIs are not selling!
--
if FIIs were not selling
and have not sold much
since last 1000 point slide,
they (the FIIs)
must be sitting on loss!!!
and if that is the case
and assuming they are not dumb
the FIIs are not worried about the loss
neither about the double dip
......a big bull run is going to resume!
if FIIs are not selling
they are expecting much bigger wave!
they must be buying
or waiting to buy
at low levels!
Sunday, February 6, 2011
who will bear the cost?
66 years ago
a 14 year boy
filed an income tax
of $7 !
not just that,
he had deducted
the cost of his wrist watch
and bicycle
as
business expenses!!!
even this boy
knew
that in job
first you pay income tax
and then bear all the expenses
whereas
in self-employment
you deduct all expenses
from gross profit
and pay tax
on the leftover!
--
the boy?
warren buffet!
a 14 year boy
filed an income tax
of $7 !
not just that,
he had deducted
the cost of his wrist watch
and bicycle
as
business expenses!!!
even this boy
knew
that in job
first you pay income tax
and then bear all the expenses
whereas
in self-employment
you deduct all expenses
from gross profit
and pay tax
on the leftover!
--
the boy?
warren buffet!
revenge and forgiveness
have you ever taken revenge?
do u believe in revenge?
or do u believe in forgiving?
--
if u have ever taken revenge
do u remember the end result?
didn't it make u feel even worse?
--
and do u remember
how u felt
when u forgave
and moved ahead
to spot the lesson
only to take
your kind of sweet revenge
differently
and
very effectively!
--
then why do we get bitter
why do we go after the market
to take revenge of the loss
then and there?
and in the process
expose ourselves further
losing bigger
and bleeding more!
--
instead
why don't we acknowledge
the defeat of the moment
take the lesson
forgive
and retreat
with a resolve
to improve
to take our own sweet revenge
our way
on our day!!!
--
in the words of
warren buffet
"you don't have to make it back the way you lost it!"
do u believe in revenge?
or do u believe in forgiving?
--
if u have ever taken revenge
do u remember the end result?
didn't it make u feel even worse?
--
and do u remember
how u felt
when u forgave
and moved ahead
to spot the lesson
only to take
your kind of sweet revenge
differently
and
very effectively!
--
then why do we get bitter
why do we go after the market
to take revenge of the loss
then and there?
and in the process
expose ourselves further
losing bigger
and bleeding more!
--
instead
why don't we acknowledge
the defeat of the moment
take the lesson
forgive
and retreat
with a resolve
to improve
to take our own sweet revenge
our way
on our day!!!
--
in the words of
warren buffet
"you don't have to make it back the way you lost it!"
you don't buy a bournville in stock market too!
they say
you don't buy a bournville
you earn it!
but what do people actually do?
out of sheer temptation
they are already decided
to enjoy a bournville!
do they stop
and double check
whether they have earned it?
no!!!
they know they have the bucks in the pocket
they go forward
buy it
peel the wrapper
and slip it onto the wet tongue!
result?
pterodactyl,
the flying reptile
comes out of nowhere
takes them away
only to return them
sans
life!
same things happens in stock markets!
amateur
unsuspecting traders
"decide" to buy a stock
out of sheer temptation
without double checking
whether they have really "earned" the trade
thru method and patience!
result?
the flying reptiles of stock market
appear out of nowhere
and take them away
only to return them
lifeless
and
sans
money!
you don't buy a bournville
you earn it!
but what do people actually do?
out of sheer temptation
they are already decided
to enjoy a bournville!
do they stop
and double check
whether they have earned it?
no!!!
they know they have the bucks in the pocket
they go forward
buy it
peel the wrapper
and slip it onto the wet tongue!
result?
pterodactyl,
the flying reptile
comes out of nowhere
takes them away
only to return them
sans
life!
same things happens in stock markets!
amateur
unsuspecting traders
"decide" to buy a stock
out of sheer temptation
without double checking
whether they have really "earned" the trade
thru method and patience!
result?
the flying reptiles of stock market
appear out of nowhere
and take them away
only to return them
lifeless
and
sans
money!
SWOT
you must have heard about
the SWOT.
S=strengths
W=weaknesses
O=opportunities
T=threats
stock market
probably
is the only place
where
even the threats are opportunities!
and
trading weaknesses
are
the real threats
the SWOT.
S=strengths
W=weaknesses
O=opportunities
T=threats
stock market
probably
is the only place
where
even the threats are opportunities!
and
trading weaknesses
are
the real threats
who became rich by trading?
the fearing didn't
the unmethodical couldn't
the gambler wouldn't
the broker shouldn't
--
the honour
went
to an underdog
'the obedient'
who just followed
the trend!
the unmethodical couldn't
the gambler wouldn't
the broker shouldn't
--
the honour
went
to an underdog
'the obedient'
who just followed
the trend!
Saturday, February 5, 2011
verbal mis-programming
in his masterpiece "the secrets of the millionaire mind" t.harv.eker has underlined that our lifelong verbal programming is one of the biggest roadblocks towards developing a millionaire mind! he has pointed out some typical examples. lets see what effect verbal programming can have on us.
--
verbal programming : money is the root of all evil
what effect it has on our minds : we don't want evil, so it is good thing to have less money
--
verbal programming : save your money for a rainy day
what effect it has on our minds : lets not spend it, lets postpone the enjoyment, since we have to desist from spending on joy, we need less money..........let's also wait for the rainy day!
--
verbal programming : rich people are greedy
what effect it has on our minds : we don't want to be called "greedy", so it is not a bad thing not to be rich. also, since we are not that greedy, it is obvious that we are not that rich. (we wouldn't mind being greedy to get rich but don't know how to be!!!)
--
verbal programming : rich people are criminals
what effect it has on our minds : we don't want to be seen as "criminals" so it is not a bad thing not to be rich! also, since we can't be criminals, it is obvious that we can't be rich
--
verbal programming : you have to work hard to make money
what effect it has on our minds : since we are not rich we must not have worked hard enough. since we can't work harder so we can't be rich. we don't know any other way, so we have no other option to keep trying harder!
--
verbal programming : money doesn’t grow on trees
what effect it has on our minds : any money growing as if on trees is not real and sustainable. also, we must not look for trees on which money grows!
--
verbal programming : you can’t be rich and spiritual together
what effect it has on our minds : since we prefer spirituality it is ok not be rich. also, since to be rich we would have to lose spirituality, it is ok that we stay that way! besides, since we don't think we can be rich, we better have an alibi in spirituality!
--
verbal programming : money doesn’t buy happiness,
what effect it has on our minds : if money can't buy happiness, why have it! also, if having money after all the pains is not going to make us happy why bear the pain!! besides, all sorrow in our lives is not because of lack of money, so why blame money and go after it! and, if at all,we do admit that money can buy happiness, we would be left with no excuse to dress-up our inability to make money! on the contrary, whenever we are unhappy with money we better shed some to be happy!
--
verbal programming : the rich get richer and the poor get poorer,
what effect it has on our minds : if we are not getting richer, we should be getting poorer. we suspect and look forward to events to prove this! also, if we are not getting richer, we can't be held responsible for making the poor poorer!
--
verbal programming : that’s not for people like us, we can't afford it!
what effect it has on our minds : so we must not waste too much energy bothering about it! besides, if we can afford it, it might be a mistake and needs to be corrected!
--
verbal programming : money is the root of all evil
what effect it has on our minds : we don't want evil, so it is good thing to have less money
--
verbal programming : save your money for a rainy day
what effect it has on our minds : lets not spend it, lets postpone the enjoyment, since we have to desist from spending on joy, we need less money..........let's also wait for the rainy day!
--
verbal programming : rich people are greedy
what effect it has on our minds : we don't want to be called "greedy", so it is not a bad thing not to be rich. also, since we are not that greedy, it is obvious that we are not that rich. (we wouldn't mind being greedy to get rich but don't know how to be!!!)
--
verbal programming : rich people are criminals
what effect it has on our minds : we don't want to be seen as "criminals" so it is not a bad thing not to be rich! also, since we can't be criminals, it is obvious that we can't be rich
--
verbal programming : you have to work hard to make money
what effect it has on our minds : since we are not rich we must not have worked hard enough. since we can't work harder so we can't be rich. we don't know any other way, so we have no other option to keep trying harder!
--
verbal programming : money doesn’t grow on trees
what effect it has on our minds : any money growing as if on trees is not real and sustainable. also, we must not look for trees on which money grows!
--
verbal programming : you can’t be rich and spiritual together
what effect it has on our minds : since we prefer spirituality it is ok not be rich. also, since to be rich we would have to lose spirituality, it is ok that we stay that way! besides, since we don't think we can be rich, we better have an alibi in spirituality!
--
verbal programming : money doesn’t buy happiness,
what effect it has on our minds : if money can't buy happiness, why have it! also, if having money after all the pains is not going to make us happy why bear the pain!! besides, all sorrow in our lives is not because of lack of money, so why blame money and go after it! and, if at all,we do admit that money can buy happiness, we would be left with no excuse to dress-up our inability to make money! on the contrary, whenever we are unhappy with money we better shed some to be happy!
--
verbal programming : the rich get richer and the poor get poorer,
what effect it has on our minds : if we are not getting richer, we should be getting poorer. we suspect and look forward to events to prove this! also, if we are not getting richer, we can't be held responsible for making the poor poorer!
--
verbal programming : that’s not for people like us, we can't afford it!
what effect it has on our minds : so we must not waste too much energy bothering about it! besides, if we can afford it, it might be a mistake and needs to be corrected!
ATM
stock market
is like
an
ATM
which is open
5 days a week,
forever,
can be assessed from anywhere,
can dispense money
even without
depositing!
--
all....
provided
you know the PIN.....
the method!
--
as dr.phil mcgraw
says in his masterpiece
'life strategies'
"crack the code
otherwise your fate is sealed!"
--
is like
an
ATM
which is open
5 days a week,
forever,
can be assessed from anywhere,
can dispense money
even without
depositing!
--
all....
provided
you know the PIN.....
the method!
--
as dr.phil mcgraw
says in his masterpiece
'life strategies'
"crack the code
otherwise your fate is sealed!"
--
Friday, February 4, 2011
noise
does warren buffet watch business tv channels?
yes and no!
yes
because he is fond of watching
cnbc.
no
because he keeps the sound muted!
the scrolling strip at the bottom
keeps feeding him
"news"
on a conveyor belt
from which
he picks
what he chooses
uninfluenced by
noise!
yes and no!
yes
because he is fond of watching
cnbc.
no
because he keeps the sound muted!
the scrolling strip at the bottom
keeps feeding him
"news"
on a conveyor belt
from which
he picks
what he chooses
uninfluenced by
noise!
fortune
great french novelist balzac
had written
"behind every great fortune, there is a crime!"
--
how true
about the majority rich!
how true
for the majority
big bulls
and strong bears
of stock market!
--
how untrue
about the unsuspecting masses
in every avenue
including
the dalaal street!
had written
"behind every great fortune, there is a crime!"
--
how true
about the majority rich!
how true
for the majority
big bulls
and strong bears
of stock market!
--
how untrue
about the unsuspecting masses
in every avenue
including
the dalaal street!
my day trading notes
my day trading notes
- price can't take more than 3 directions in a single trading day
- book profit at sharp big spike but don't take reverse position
- don't enter premature while approaching a direction change
- breaching of yesterday or tody high-low is a clear signal of the start of first direction
- if market over-retraces its rebound after its very first sharp opening move it has taken its first direction
- change in direction is to be verified with step-up step-down theory
- play a direction to the full except in case of a sharp big spike
- re-enter trade on every fresh breakdown or breakout albeit with strict stop loss
- with ruthless stop-loss, any risk with acceptable risk-reward ratio can be taken
- can't afford to miss gap-up openings (2/3rd times), btst is a must
- bite (trade size) what you can chew.
- every visual support and resistance should be respected. reverse trade at these will benefit often.
- beware of rsi divergence (especially bullish divergence)
- beware of the collapse or suck points
- william % r touching extreme before rsi touching the extreme is a sign of trend resumption
- rsi retreat (while price remaining flat) is also a sign of strong resumption of trend
- always turn-down anti-trend positions till direction is intact
- i take the first trade only when the price has taken clear first direction. thereafter, i change direction only when there is clear change in the direction. alternatively, i book profit in case of a sharp big spike. thereafter, i re-enter the trade if there is a change in direction or fresh breakdown or breakout off yesterday high-low or today's high-low.
- i always have a permanent long position. all i have to do is defend that long position whenever the price direction turns down. all i have to do is to find opportunities to drag down the price without incurring any loss. this way i inject value into my holdings. going up is natural and inevitable. this reduces my stress and trading by half as i have to look for and take only short positions.
- i have sufficient buffer funds to meet any unforeseen eventuality
- price can't take more than 3 directions in a single trading day
- book profit at sharp big spike but don't take reverse position
- don't enter premature while approaching a direction change
- breaching of yesterday or tody high-low is a clear signal of the start of first direction
- if market over-retraces its rebound after its very first sharp opening move it has taken its first direction
- change in direction is to be verified with step-up step-down theory
- play a direction to the full except in case of a sharp big spike
- re-enter trade on every fresh breakdown or breakout albeit with strict stop loss
- with ruthless stop-loss, any risk with acceptable risk-reward ratio can be taken
- can't afford to miss gap-up openings (2/3rd times), btst is a must
- bite (trade size) what you can chew.
- every visual support and resistance should be respected. reverse trade at these will benefit often.
- beware of rsi divergence (especially bullish divergence)
- beware of the collapse or suck points
- william % r touching extreme before rsi touching the extreme is a sign of trend resumption
- rsi retreat (while price remaining flat) is also a sign of strong resumption of trend
- always turn-down anti-trend positions till direction is intact
- i take the first trade only when the price has taken clear first direction. thereafter, i change direction only when there is clear change in the direction. alternatively, i book profit in case of a sharp big spike. thereafter, i re-enter the trade if there is a change in direction or fresh breakdown or breakout off yesterday high-low or today's high-low.
- i always have a permanent long position. all i have to do is defend that long position whenever the price direction turns down. all i have to do is to find opportunities to drag down the price without incurring any loss. this way i inject value into my holdings. going up is natural and inevitable. this reduces my stress and trading by half as i have to look for and take only short positions.
- i have sufficient buffer funds to meet any unforeseen eventuality
Wednesday, February 2, 2011
signals of collapse and suck-up!
when does a range-bound price finally collapse?
when does a range-bound price finally shoot up?
is there any signal?
fortunately, there is one!
when price is rising slowly
but rsi rises considerably
almost from below-20 to 70plus
many times
it is about to be sucked up sharp!
when price is sliding slowly
but rsi slides quite a bit
almost from 80-plus down into 30s
many times
it is about to collapse!
remember the only condition : the price must have been range-bound before this condition.
when does a range-bound price finally shoot up?
is there any signal?
fortunately, there is one!
when price is rising slowly
but rsi rises considerably
almost from below-20 to 70plus
many times
it is about to be sucked up sharp!
when price is sliding slowly
but rsi slides quite a bit
almost from 80-plus down into 30s
many times
it is about to collapse!
remember the only condition : the price must have been range-bound before this condition.
Tuesday, February 1, 2011
3 levels of trader training
there are three levels of a trader's training.
--
at first level
a budding trader is supposed to
learn the technique of
(1) trading
(2) consistently / repeatedly
(3) with tamed fear
(4) with control over the trade
(5) with cool head
and
(6) profitably
(7) with surety to a reasonable degree!
--
only
after this
the trader reaches
level two of training.
--
in this second (advance) level
he needs to find
safe and effective ways
to leverage
his
proven technique
to build his networth!
--
in the third level
the trader
has to learn to manage
his millions
to keep gliding
like an eagle high in the sky
without much fluttering of wings!
--
--
at first level
a budding trader is supposed to
learn the technique of
(1) trading
(2) consistently / repeatedly
(3) with tamed fear
(4) with control over the trade
(5) with cool head
and
(6) profitably
(7) with surety to a reasonable degree!
--
only
after this
the trader reaches
level two of training.
--
in this second (advance) level
he needs to find
safe and effective ways
to leverage
his
proven technique
to build his networth!
--
in the third level
the trader
has to learn to manage
his millions
to keep gliding
like an eagle high in the sky
without much fluttering of wings!
--
the big worry of a trader!
the entire family of a trader
was watching the movie
"2012"
together
on a sunday afternoon
on their 32 inch
new plasma tv!
--
by the end of the movie
the entire family
was
dead frightened!
the very fact
that the world would end
(as per the prediction of the maya calender)
on december 23, 2012
and the visuals of the likely disaster
in the movie,
had sucked the life out of the whole family!
--
everyone was
tense
and
speechless
TILL
the trader
uttered innocently
"if the world ends on 23rd december 2012
which is a sunday
what will happen to
the open positions
in the stock market
on monday!!!"
was watching the movie
"2012"
together
on a sunday afternoon
on their 32 inch
new plasma tv!
--
by the end of the movie
the entire family
was
dead frightened!
the very fact
that the world would end
(as per the prediction of the maya calender)
on december 23, 2012
and the visuals of the likely disaster
in the movie,
had sucked the life out of the whole family!
--
everyone was
tense
and
speechless
TILL
the trader
uttered innocently
"if the world ends on 23rd december 2012
which is a sunday
what will happen to
the open positions
in the stock market
on monday!!!"
cost of training
do u have any idea
how much does it cost to do MBBS these days?
how much does it cost to do B.Tech. from a good engineering college?
what does it cost to do an MBA from a top management institute?
how much does it cost to get a pilot's license from a flying school?
any idea how much you need to shell out
to become a trained
"qualified"
experienced
professional
stock trader?
it is, in my opinion
one of the best
and yet
the cheapest
professions on earth!
provided you are willing to learn
at the cost of
every drop of sweat
and blood!
how much does it cost to do MBBS these days?
how much does it cost to do B.Tech. from a good engineering college?
what does it cost to do an MBA from a top management institute?
how much does it cost to get a pilot's license from a flying school?
any idea how much you need to shell out
to become a trained
"qualified"
experienced
professional
stock trader?
it is, in my opinion
one of the best
and yet
the cheapest
professions on earth!
provided you are willing to learn
at the cost of
every drop of sweat
and blood!
Subscribe to:
Posts (Atom)