life of a budding trader is full of troubles:
trouble 1: did not have a method, so kept losing.
trouble 2: had a method but did not follow it, so kept losing
trouble 3: followed the method but interpreted situation wrongly
trouble 4: interpreted situation right, but trade still went the wrong way!
--
trouble 1 is a training issue.
trouble 2 is a discipline issue
trouble 3 is a practice issue
trouble 4 is not your problem. it is an operator issue which you can do nothing about!
majority traders on the way to immortality think
that if they learn and practice enough
soon there will be a time when they will be expert enough
to be able to interpret any chart absolutely correctly!
this doesn't happen
and will never happen
till the market waters have crocodiles called
operators!
(and the day there are no operators, there will be no market!)
this means
that trouble 4 will always be there!
so, how do we safeguard against this one?
stop loss?
not a bad option!
but when the stoploss bell rings
it is not musical at all!
and sometimes
the adverse movement is so fast and big
that by the time loss is stopped
it is already big enough to hurt!
is there a better option?
fortunately there is one!
i recently came across this while surfing net
and it is amusingly (but aptly called)
"phantom rules"
by art simpson
there are two phantom rules
rule 1 :
WE ARE WRONG UNTIL PROVEN CORRECT!
what this means in simple words is
= if your trade doesn't go your way within a few hours, square-off!
keep a position for three hours unless they have proven to be correct by that time. otherwise, something is happening underground which you don't know or have not taken into account! put in yet another way, assume to be wrong if you are not proven right "soon enough". don't ever let the market tell you you're wrong. because by the time market proves you wrong, it might be quite costly!
this way, you may be missing out on some trades where things went your way albeit late, but you will always bleed negligibly when things did go wrong! besides, who stops u from re-entering once the position is prove right again?
according to art simpson
".....trading is a loser's game. he who loses best will win in the end!"
keep your losses quick and small.
in trading, i have experienced that possibilities are high when probabilities are low. indicators tell us probabilities and hence act as the unintentional agents of the operators.
in art simpson's words
"the correct way to control positions is to only hold them once they prove to be correct. most trader do the opposite of what is correct by removing positions only when proven wrong................in rule 1 it is important to understand we are saying the one criteria for removing a position is because it has not been proven correct. if the market does not prove the position correct, it is still possible that the market has not proven the position wrong. if you wait until the market proves the position wrong you are wasting time, money and effort in continuing to hope it is correct when it isn't. so, remove the position early if it doesn't prove correct. By waiting until a position is proved wrong you are asking for more slippage...............you don't go buy clothes, take them home and wear them until they prove to be wrong for you. instead you try them on and make sure the have a proper fit and look before you buy them...........we must remove the emotional elements, fear and greed, as quickly as possible in trading. If you can do it before you put a position on, you have a good start.
and here is the rule 2:
PRESS YOUR WINNERS CORRECTLY WITHOUT EXCEPTION.
in art simpson's words
".......without a correct method to press your correct positions you will never recover much beyond your losses. you need rule two to ensure you have a larger position when you are correct. you always want a larger position when you get a great move or trending market than when your position isn't correct..................rule 2 does not mean just because you have a position in your favor that you must now add to that position. you must have a qualified plan of adding to your position once a trend has established itself."
i have found one such way : whether 5min chart or 30min chart, once a trend (whether small or big) is established, the best time to add to the position is when william%r touches "opposite" extreme while rsi hasn't.
and these positions can be carried till price cuts sma 34 from above or till rsi failure-swing-point, etc.
being in the right trade is important, but equally important is staying in the right trade for sufficient duration.
in simpson's words
"trend traders will get larger when they are correct but day traders will start larger and get smaller when they are wrong. day traders can be large when they are wrong but trend traders will never be large when they are wrong. this is due to the nature of a loser's game for day traders.........rule 2 must be used if you expect to make money in the long run........"
(for further understanding
http://www.webtrading.com/phantom/preface.htm)
Sunday, March 27, 2011
Tuesday, March 22, 2011
the instant technical indicator
if the ratio of
the turnover of
the top traded 2 put-options for the day
to
the turnover of
the top traded 2 call-options for the day
is between 0.80 to 0.99
or more than 1.30
the market is likely to remain buoyant!
if this ratio
is below 0.8
or between 1.00 to 1.30
the market is likely to slip!
(where to get live nifty call put values
http://nifty50options.blogspot.com/
to get call put values
http://nseindia.com/content/fo/foquote.htm
whereever turnover data is not available
u can use no. of traded contracts)
the turnover of
the top traded 2 put-options for the day
to
the turnover of
the top traded 2 call-options for the day
is between 0.80 to 0.99
or more than 1.30
the market is likely to remain buoyant!
if this ratio
is below 0.8
or between 1.00 to 1.30
the market is likely to slip!
(where to get live nifty call put values
http://nifty50options.blogspot.com/
to get call put values
http://nseindia.com/content/fo/foquote.htm
whereever turnover data is not available
u can use no. of traded contracts)
Monday, March 21, 2011
my open trade diary
*********************self talk: for busy positional/swing traders, end-of-the-day (EoD) and mid-of-the-day (MoD) 10 minute analyses is ok.
*********************self talk: take care of the loss and method, profit will take care of itself. rather, if choking loss and sticking to the method becomes the primary objective of the trading game, it can wonderfully rewarding and satisfying.
*********************self talk : there is no time-table for a revenge of the loss. the humiliation of an incidental or accidental defeat or loss has to be absorbed. rather, a loss can and should never be considered as a lost-territory to be won back by equal or bigger gain. a loss should be framed and kept as a reminder-trophy. gains will come. but they will come on their own merit.
*********************lesson: when things go wrong embrace method even tighter;
*********************self talk: those who are not full time traders (can't sit in front of terminal all the time) must not day trade. rather, they should also not attempt positional or swing trading if their method is not well advanced. even a small delay in squaring-off the wrong position when u r away from the terminal, or, even a small error in judgement, or, even a small loophole in a system, can hit hard. trading is either a full time job or a part-time precision hobby with well developed and practiced method. hone the method with low risk options rather than futures.
*********************self talk: stick to options, the hit in options is much lesser than futures in case of a mistake.
*********************self talk: absorb the punch, step back, take a break, fight back with technique and not emotions. recovery with the right technique is as swift as any loss!
*********************lesson: use 5min chart instead of 30min chart for swing trading for better timing.
trade 8:
24 march 9.18am
sold nifty futures march series at 5515
positional
squared at 5645
loss= 130 per lot
trade 7:
23 march 10:11 am
bought 5300 PE march series at 16.95
positional
trade 6:
22 march 2.56pm
bought 5300 PE march series at 36.7
positional
trade 5:
21march 11:31am
bought 5300 PE march series at 54.9
positional
**********lesson: avoid buying anti-trend options.
**********lesson: opportunity is like spirit.more u let it age, the better it becomes. don't be too eager and early to latch on to opportunity.
**********lesson: to avoid booking profit too early and to avoid terminating winners too early, instead of squaring off the position and going reverse at indicator signal, just take the reverse option and let it run concurrently!
trade 4:
18 march 11:13am
bought 5500CE march series at 65.5
positional
squared at 46.90
loss = 18.6 per lot
==================================
trade 3:
17 march 12:24pm
bought 5400PE march series at 70.8
positional
--
squared at 98.55 at 10.28am 18mar
profit = 27.75 per lot
==================================
trade 2:
16 march 10:15am
bought 5600CE march series at 68.8
positional
--
squared at 55.9 at 12:49pm 17march
loss = 12.9 points per lot
==================================
trade 1:
14 Mar 11:18am
bought 5400 PE march series at 77.5
positional
--
sold at 119.3 on 15mar
profit = 41.8 points per lot
==================================
*********************self talk: take care of the loss and method, profit will take care of itself. rather, if choking loss and sticking to the method becomes the primary objective of the trading game, it can wonderfully rewarding and satisfying.
*********************self talk : there is no time-table for a revenge of the loss. the humiliation of an incidental or accidental defeat or loss has to be absorbed. rather, a loss can and should never be considered as a lost-territory to be won back by equal or bigger gain. a loss should be framed and kept as a reminder-trophy. gains will come. but they will come on their own merit.
*********************lesson: when things go wrong embrace method even tighter;
*********************self talk: those who are not full time traders (can't sit in front of terminal all the time) must not day trade. rather, they should also not attempt positional or swing trading if their method is not well advanced. even a small delay in squaring-off the wrong position when u r away from the terminal, or, even a small error in judgement, or, even a small loophole in a system, can hit hard. trading is either a full time job or a part-time precision hobby with well developed and practiced method. hone the method with low risk options rather than futures.
*********************self talk: stick to options, the hit in options is much lesser than futures in case of a mistake.
*********************self talk: absorb the punch, step back, take a break, fight back with technique and not emotions. recovery with the right technique is as swift as any loss!
*********************lesson: use 5min chart instead of 30min chart for swing trading for better timing.
trade 8:
24 march 9.18am
sold nifty futures march series at 5515
positional
squared at 5645
loss= 130 per lot
trade 7:
23 march 10:11 am
bought 5300 PE march series at 16.95
positional
trade 6:
22 march 2.56pm
bought 5300 PE march series at 36.7
positional
trade 5:
21march 11:31am
bought 5300 PE march series at 54.9
positional
**********lesson: avoid buying anti-trend options.
**********lesson: opportunity is like spirit.more u let it age, the better it becomes. don't be too eager and early to latch on to opportunity.
**********lesson: to avoid booking profit too early and to avoid terminating winners too early, instead of squaring off the position and going reverse at indicator signal, just take the reverse option and let it run concurrently!
trade 4:
18 march 11:13am
bought 5500CE march series at 65.5
positional
squared at 46.90
loss = 18.6 per lot
==================================
trade 3:
17 march 12:24pm
bought 5400PE march series at 70.8
positional
--
squared at 98.55 at 10.28am 18mar
profit = 27.75 per lot
==================================
trade 2:
16 march 10:15am
bought 5600CE march series at 68.8
positional
--
squared at 55.9 at 12:49pm 17march
loss = 12.9 points per lot
==================================
trade 1:
14 Mar 11:18am
bought 5400 PE march series at 77.5
positional
--
sold at 119.3 on 15mar
profit = 41.8 points per lot
==================================
Sunday, March 20, 2011
how to go broke despite talent!
"amateurs go broke
by taking large losses,
professionals go broke
by taking small profits....
The problem in a nutshell is that
human nature does not operate to maximize gain
but rather to maximize the chance of gain.
The desire to maximize the number of winning trades
(or minimize the number of losing trades)
works against the trader.
The success rate of trades is the least important performance statistic
and may even be inversely related to performance."
- william eckhardt
by taking large losses,
professionals go broke
by taking small profits....
The problem in a nutshell is that
human nature does not operate to maximize gain
but rather to maximize the chance of gain.
The desire to maximize the number of winning trades
(or minimize the number of losing trades)
works against the trader.
The success rate of trades is the least important performance statistic
and may even be inversely related to performance."
- william eckhardt
labels on the jars!
many years ago
when i first learnt cooking
to help my working wife
one of the initial difficulties was
identifying different ingredients
in the jars!
--
i often mistook one ingredient
with an identical one
like "besan" (gram flour) with "makki aata" (maize flour)
or sugar powder with baking soda
...and so on!
--
my wife
determined to teach me the art
helped me
by labeling all the jars!
--
all went right for some days
till one day
a terrible mistake happened!
that day
my daughter
had replenished
the empty jars
with fresh supplies
but accidentally filled some jars
without looking at the labels!
that evening
in my hurry to quickly complete
my bit of responsibility
i prepared the two dishes
using the "labelled" ingredients!
it is anybody's guess
as to what happened
at the dining table!
--
that day
i got a lesson
which helped me
in the cooking
as well as
stock trading...
"labels on the jars
are just to indicate.
smell or taste the ingredient
before putting in the dish!"
and
"indicators below the charts
are just to indicate.
smell or taste the trend
before putting in the money!"
when i first learnt cooking
to help my working wife
one of the initial difficulties was
identifying different ingredients
in the jars!
--
i often mistook one ingredient
with an identical one
like "besan" (gram flour) with "makki aata" (maize flour)
or sugar powder with baking soda
...and so on!
--
my wife
determined to teach me the art
helped me
by labeling all the jars!
--
all went right for some days
till one day
a terrible mistake happened!
that day
my daughter
had replenished
the empty jars
with fresh supplies
but accidentally filled some jars
without looking at the labels!
that evening
in my hurry to quickly complete
my bit of responsibility
i prepared the two dishes
using the "labelled" ingredients!
it is anybody's guess
as to what happened
at the dining table!
--
that day
i got a lesson
which helped me
in the cooking
as well as
stock trading...
"labels on the jars
are just to indicate.
smell or taste the ingredient
before putting in the dish!"
and
"indicators below the charts
are just to indicate.
smell or taste the trend
before putting in the money!"
is trading an art or a science?
well,
a new entrant in the market
takes up trading as a magic
and hence
an art.
--
all is well
till the first
whip on the back!
this is when
the trader drops the art aspect
and takes up the science side
(if ofcourse, he doesn't quit the market).
--
as he learns the basics of this science
and does the practical
he soon realises
that while the market movements
show reasonable obedience
to measurability, predictability and repeatability
to be called a science
they also show
an unmistakable "creativity"
in "surprising" the experimenters!
--
the trader
now starts calling trading
an artistic science!
--
gradually
he realises
that the art proportion in trading
is much bigger
than the scientific aspect.
he also experiences that
while the scientific aspect of trading is only the backbone
the real contours and beauty of trading
is because of the talent
of the resourceful picasso's and vinci's.....
in the market!
--
from artistic science!
trading now becomes
scientific art!
--
and on this road
there comes a time
when nothing but the art is left
.....pure music.
by now,
the trader becomes
an accomplished artist
a fine musician!
a new entrant in the market
takes up trading as a magic
and hence
an art.
--
all is well
till the first
whip on the back!
this is when
the trader drops the art aspect
and takes up the science side
(if ofcourse, he doesn't quit the market).
--
as he learns the basics of this science
and does the practical
he soon realises
that while the market movements
show reasonable obedience
to measurability, predictability and repeatability
to be called a science
they also show
an unmistakable "creativity"
in "surprising" the experimenters!
--
the trader
now starts calling trading
an artistic science!
--
gradually
he realises
that the art proportion in trading
is much bigger
than the scientific aspect.
he also experiences that
while the scientific aspect of trading is only the backbone
the real contours and beauty of trading
is because of the talent
of the resourceful picasso's and vinci's.....
in the market!
--
from artistic science!
trading now becomes
scientific art!
--
and on this road
there comes a time
when nothing but the art is left
.....pure music.
by now,
the trader becomes
an accomplished artist
a fine musician!
Friday, March 18, 2011
understanding open-interest and put-call ratio
imagine there are 100 traders in a hall
a game is played
the referee asks all of them
"those who believe the market is going to go up tomorrow
pl come to my left.
and those who believe the market is going to go down tomorrow
pl come to my right."
--
out of 100
12 go to left
they are having bullish view about the market
and prepared to buy call options!
--
and 8 go to right
they are having bearish view about the market
and prepared to buy put options!
--
rest 80
are neutral
and want to stay out of trade.
--
so, we can say
that the open interest is 20
and the put/call ratio is
8/12 = 0.66
--
next day
the market closes way up.
the meeting of 100 traders
is called again.
the referee says the same thing
"those who believe the market is going to go up tomorrow
pl come to my left.
and those who believe the market is going to go down tomorrow
pl come to my right."
all 12 who were bullish yesterday
are incidentally
still bullish
and come to the referee's left!
rather 6 more join them
after seeing the market sentiments!
so, now
there are 18 traders on the bullish side
who are willing to buy calls.
on the opposite side
instead of 8
only 4 turn up
who are still bearish
and willing to buy puts!
so, today
the open interest is 18+4=22
up 2 from yesterday's 20!
and the put/call ratio today is
4/18 = 0.22!
so, while the open interest has gone up
the put-call ratio has gone down!
a game is played
the referee asks all of them
"those who believe the market is going to go up tomorrow
pl come to my left.
and those who believe the market is going to go down tomorrow
pl come to my right."
--
out of 100
12 go to left
they are having bullish view about the market
and prepared to buy call options!
--
and 8 go to right
they are having bearish view about the market
and prepared to buy put options!
--
rest 80
are neutral
and want to stay out of trade.
--
so, we can say
that the open interest is 20
and the put/call ratio is
8/12 = 0.66
--
next day
the market closes way up.
the meeting of 100 traders
is called again.
the referee says the same thing
"those who believe the market is going to go up tomorrow
pl come to my left.
and those who believe the market is going to go down tomorrow
pl come to my right."
all 12 who were bullish yesterday
are incidentally
still bullish
and come to the referee's left!
rather 6 more join them
after seeing the market sentiments!
so, now
there are 18 traders on the bullish side
who are willing to buy calls.
on the opposite side
instead of 8
only 4 turn up
who are still bearish
and willing to buy puts!
so, today
the open interest is 18+4=22
up 2 from yesterday's 20!
and the put/call ratio today is
4/18 = 0.22!
so, while the open interest has gone up
the put-call ratio has gone down!
understanding short selling, again
here is another example
to understand short selling!
a rich man
puts his 100 abc shares
in the locker
locks it
gives the keys to his servant
and takes the next flight
to germany
for a vacation of 1 month.
while he is away
his servant
who had fair bit of knowledge
of shares
realised from his chart reading
that the abc share
is going to drop
from current 2,000
to 1,000
in 1month!
he has the key
and has the guts!
he picks the key
opens the locker
picks the 100 abc shares
sells them for 100x2,000=2,00,000
keeps the account
waits for 1 month
sees the share price
drop from 2,000 to 1,000
then buys back
100 shares
for 100 x 1,000=1,00,000 bucks out of 2,00,000 he is having
puts them back in the locker
hands over the keys
to his master who returns the next morning.
the master is happy to find the 100 shares intact!
and the servant has made cool 1,00,000
by using the
stagnant shares
for encashing an opportunity!
that's short selling or shorting!
--
now, lets see the other side of the trade!
this time
the rich man
doesn't have abc shares
but cash!
he puts in
1,00,000 bucks
in the locker
locks it
gives the keys to his servant
and takes the next flight
to germany
for a vacation of 1 month.
while he is away
his servant
realises from his chart reading
that the abc share
is going to rise
from current 1,000
to 2,000
in 1month!
he has the key
and has the guts!
he picks the key
opens the locker
picks 1,00,000 bucks
buys 1,00,000/1,000 = 100 shares of abc
waits for 1 month
sees the share price
rise from 1,000 to 2,000
then sells back
100 shares
for 100 x 2,000=2,00,000 bucks
keeps 1,00,000 for himself
and puts the 1,00,000
back in the locker
hands over the keys
to his master who returns the next morning.
the master is happy to find 1,00,000 bucks intact!
and the servant has made cool 1,00,000
by using the
stagnant money
for encashing an opportunity!
--
in the above example
it is assumed
that the servant had the master's permission
to use his valuables
with the sole condition
that the servant will return
the money or the shares
when the master asks for it
or
on the date of his return
whichever is earlier
irrespective
of whether
the servant is making money or losing money
by that time!
to understand short selling!
a rich man
puts his 100 abc shares
in the locker
locks it
gives the keys to his servant
and takes the next flight
to germany
for a vacation of 1 month.
while he is away
his servant
who had fair bit of knowledge
of shares
realised from his chart reading
that the abc share
is going to drop
from current 2,000
to 1,000
in 1month!
he has the key
and has the guts!
he picks the key
opens the locker
picks the 100 abc shares
sells them for 100x2,000=2,00,000
keeps the account
waits for 1 month
sees the share price
drop from 2,000 to 1,000
then buys back
100 shares
for 100 x 1,000=1,00,000 bucks out of 2,00,000 he is having
puts them back in the locker
hands over the keys
to his master who returns the next morning.
the master is happy to find the 100 shares intact!
and the servant has made cool 1,00,000
by using the
stagnant shares
for encashing an opportunity!
that's short selling or shorting!
--
now, lets see the other side of the trade!
this time
the rich man
doesn't have abc shares
but cash!
he puts in
1,00,000 bucks
in the locker
locks it
gives the keys to his servant
and takes the next flight
to germany
for a vacation of 1 month.
while he is away
his servant
realises from his chart reading
that the abc share
is going to rise
from current 1,000
to 2,000
in 1month!
he has the key
and has the guts!
he picks the key
opens the locker
picks 1,00,000 bucks
buys 1,00,000/1,000 = 100 shares of abc
waits for 1 month
sees the share price
rise from 1,000 to 2,000
then sells back
100 shares
for 100 x 2,000=2,00,000 bucks
keeps 1,00,000 for himself
and puts the 1,00,000
back in the locker
hands over the keys
to his master who returns the next morning.
the master is happy to find 1,00,000 bucks intact!
and the servant has made cool 1,00,000
by using the
stagnant money
for encashing an opportunity!
--
in the above example
it is assumed
that the servant had the master's permission
to use his valuables
with the sole condition
that the servant will return
the money or the shares
when the master asks for it
or
on the date of his return
whichever is earlier
irrespective
of whether
the servant is making money or losing money
by that time!
overcoming fear of shorting
my friend
madhu
shared with me his
discomfort with shorting!
--
i had heard this dilemma
numerous times before
besides experiencing it myself!
--
because of sheer habit
everyone is used to
only buying
and not selling!
you might have bought
100000 things in your lifetime
and sold only a few!
so selling, obviously,
is out of your comfort zone!
so,
when i heard him utter those words
it was natural
that something in me
wanted to help!
--
given below are two tricks
that i shared with him
which should help
rather anyone
to strike peace
with shorting!
--
1) trade in options -
that way
you need to only buy
even when
you think the price is going to go down!
when bullish, buy call option
when bearish, buy put option!
(see, no selling)
--
2) turn the vertical graph by 90 degrees
to horizontal!
this way
there is no up and down
only
left or right!
so, there is no pschological fear of shorting!
--
here is a bonus method
which didn't strike me
when i was talking to madhu!
i recalled this
when i was pondering later
as to how i had managed to overcome
my fear of shorting!
i overcame my fear of
going short
by learning the indicators
deep and thorough!
broad movement of the market
is logic
not magic!
when the markets fall
they are not going nuts!
they are just flowing
like the river
trying to find further path of movement!
light
of technical knowledge
just dispels
the dark shadows
of fear of shorting!
madhu
shared with me his
discomfort with shorting!
--
i had heard this dilemma
numerous times before
besides experiencing it myself!
--
because of sheer habit
everyone is used to
only buying
and not selling!
you might have bought
100000 things in your lifetime
and sold only a few!
so selling, obviously,
is out of your comfort zone!
so,
when i heard him utter those words
it was natural
that something in me
wanted to help!
--
given below are two tricks
that i shared with him
which should help
rather anyone
to strike peace
with shorting!
--
1) trade in options -
that way
you need to only buy
even when
you think the price is going to go down!
when bullish, buy call option
when bearish, buy put option!
(see, no selling)
--
2) turn the vertical graph by 90 degrees
to horizontal!
this way
there is no up and down
only
left or right!
so, there is no pschological fear of shorting!
--
here is a bonus method
which didn't strike me
when i was talking to madhu!
i recalled this
when i was pondering later
as to how i had managed to overcome
my fear of shorting!
i overcame my fear of
going short
by learning the indicators
deep and thorough!
broad movement of the market
is logic
not magic!
when the markets fall
they are not going nuts!
they are just flowing
like the river
trying to find further path of movement!
light
of technical knowledge
just dispels
the dark shadows
of fear of shorting!
trading with grace!
the fly
sitting on the bolt
of the panel
of the wing
of the aircraft
thinks
that
she is flying the jet!
-
neither the passengers
nor the turbines
mind her repeated buzzing
till
she doesn't shriek
about her trading abilities!
sitting on the bolt
of the panel
of the wing
of the aircraft
thinks
that
she is flying the jet!
-
neither the passengers
nor the turbines
mind her repeated buzzing
till
she doesn't shriek
about her trading abilities!
Thursday, March 17, 2011
can stockmarket movements be predicted?
when i read statements like
"trading is the one area of life
where there's no guarantee
that hard work will ever pay off"
or when i come across a brilliant observation
from someone as brilliant as jesse livermore
like
"the family of trading mistakes is infinitely large"
i am forced to ask myself again and agsin
are stock market movements
based on some logic
or are these illogical?
if these are based on some clear cut logic
then these can definitely be tamed with a method.
if these movements are beyond logic
then there is little hope
not only for retail traders
but also for sophisticated expensive trading software!
also,
are stock market movements
predictable
or are these unpredictable?
if these are predictable
then these can be anticipated!
otherwise
all this is only witch-hunting!
so, what is the reality?
--
it is my experience
and my understanding
that
the reality is somewhere
in the middle!
not just that
the reality is kept
constantly swinging
like a pendulum
between the two edges
to suit the games being played!
--
till the operators intervene
the market price movements
are both logical and predictable,
but a little nasty helping "nudge"
of these tactful operators
is enough
to prick all balloons
of logic and expectations!
--
so, what can and should
a trader do about this?
simple,
do the logical
skip the illogical
and learn to know the difference!
"trading is the one area of life
where there's no guarantee
that hard work will ever pay off"
or when i come across a brilliant observation
from someone as brilliant as jesse livermore
like
"the family of trading mistakes is infinitely large"
i am forced to ask myself again and agsin
are stock market movements
based on some logic
or are these illogical?
if these are based on some clear cut logic
then these can definitely be tamed with a method.
if these movements are beyond logic
then there is little hope
not only for retail traders
but also for sophisticated expensive trading software!
also,
are stock market movements
predictable
or are these unpredictable?
if these are predictable
then these can be anticipated!
otherwise
all this is only witch-hunting!
so, what is the reality?
--
it is my experience
and my understanding
that
the reality is somewhere
in the middle!
not just that
the reality is kept
constantly swinging
like a pendulum
between the two edges
to suit the games being played!
--
till the operators intervene
the market price movements
are both logical and predictable,
but a little nasty helping "nudge"
of these tactful operators
is enough
to prick all balloons
of logic and expectations!
--
so, what can and should
a trader do about this?
simple,
do the logical
skip the illogical
and learn to know the difference!
snake on the highway!
as i had shared earlier also
one of the most profound discoveries
a trader needs to make is
that the price in stock market
doesn't move in straight line like a missile
it moves like a snake in desert -
it wriggles in zig-zag sideways waves
to go forward!
the zig zag move is either because of
the pull-push between
the uninformed buyers or sellers
or the handiwork of "big-pocket" operators
whose aim is to confuse and scare-off
retail investors
to submission!
--
just look at the chart below
you will find every price chart
somewhat like this!
the price moves zig zag
but within a highway!
so, whenever price fluctuates
never get scared
just fasten the seatbelt
and enjoy the ride!
(assuming, ofcourse, you have double checked
from your "gps" trading method
where the highway is headed!)
Uploaded with ImageShack.us
one of the most profound discoveries
a trader needs to make is
that the price in stock market
doesn't move in straight line like a missile
it moves like a snake in desert -
it wriggles in zig-zag sideways waves
to go forward!
the zig zag move is either because of
the pull-push between
the uninformed buyers or sellers
or the handiwork of "big-pocket" operators
whose aim is to confuse and scare-off
retail investors
to submission!
--
just look at the chart below
you will find every price chart
somewhat like this!
the price moves zig zag
but within a highway!
so, whenever price fluctuates
never get scared
just fasten the seatbelt
and enjoy the ride!
(assuming, ofcourse, you have double checked
from your "gps" trading method
where the highway is headed!)
Uploaded with ImageShack.us
Wednesday, March 16, 2011
the shifts
day before yesterday
i was long
in the market.
so, at night
while watching news on TV
i wished
gaddafi announced his resignation,
the saudis gave up
anti-government protests
and the japanese authorities
successfully brought the radiation
from the threatened nuclear reactors
under control!
yesterday
i went short
and suddenly
by the evening
i mysteriously lost
my sympathies for
the protestors in the arab world
besides turning pessimist
for the battling island of the rising sun!
i am again long today
and feel shameful
of a techtonic shifts of
loyalty plates
deep beneath me
threatening to trigger
a tsunami
of unprecedented moral waves!
i was long
in the market.
so, at night
while watching news on TV
i wished
gaddafi announced his resignation,
the saudis gave up
anti-government protests
and the japanese authorities
successfully brought the radiation
from the threatened nuclear reactors
under control!
yesterday
i went short
and suddenly
by the evening
i mysteriously lost
my sympathies for
the protestors in the arab world
besides turning pessimist
for the battling island of the rising sun!
i am again long today
and feel shameful
of a techtonic shifts of
loyalty plates
deep beneath me
threatening to trigger
a tsunami
of unprecedented moral waves!
inflation!
when the petrol
crossed 50 bucks per litre
superman decided to
stop using his car
and bought a motorcycle!
--
but when petrol soared
beyond 60
he sold off his motorcycle
went to tohana
and bought
a fine horse!
--
next morning
he went to office
riding horse!
--
he got much more attention
than he had attracted
when he had moved across the city
on his brand new hero honda karizma!
--
he was happy with the ride
as well as the "horse-power"!
there were no pollution worries
no registration costs
no insurance expenses
no service overheads
.....easy to park
.....easy to "drive"!
and above all
no fuel cost!
--
every evening
he started leaving the fine horse
in the open ground in front of the house
to graze on the unlimited free supply of grass!
he even didn't have to worry about water
as there was a pool in the middle of the ground!
--
all went ok for a week
when one day
the horse refused to move!
the trader tried hard to push him
but failed!
he took it to a vet.
the vet checked thoroughly
and asked about the horse's diet!
and when the shrewd comic hero
proudly revealed it all
the vet gave him a sound snubbing
"if you don't provide him what he loves
he won't move!" the vet ordered!
--
the hero left the horse home
went to the market
to buy the right food for "horse-power"
hey, oats, carrots, apples....
he got it all packed
but when he was handed over the bill
his own "horse-power" tanked!
--
he dropped it all
rushed home
took the horse back to the studd farm
returned it at half the price
went to the mall
and bought himself
a brand new
iron horse
with two wheels
and a paddle
powered by his
"superpower"!
crossed 50 bucks per litre
superman decided to
stop using his car
and bought a motorcycle!
--
but when petrol soared
beyond 60
he sold off his motorcycle
went to tohana
and bought
a fine horse!
--
next morning
he went to office
riding horse!
--
he got much more attention
than he had attracted
when he had moved across the city
on his brand new hero honda karizma!
--
he was happy with the ride
as well as the "horse-power"!
there were no pollution worries
no registration costs
no insurance expenses
no service overheads
.....easy to park
.....easy to "drive"!
and above all
no fuel cost!
--
every evening
he started leaving the fine horse
in the open ground in front of the house
to graze on the unlimited free supply of grass!
he even didn't have to worry about water
as there was a pool in the middle of the ground!
--
all went ok for a week
when one day
the horse refused to move!
the trader tried hard to push him
but failed!
he took it to a vet.
the vet checked thoroughly
and asked about the horse's diet!
and when the shrewd comic hero
proudly revealed it all
the vet gave him a sound snubbing
"if you don't provide him what he loves
he won't move!" the vet ordered!
--
the hero left the horse home
went to the market
to buy the right food for "horse-power"
hey, oats, carrots, apples....
he got it all packed
but when he was handed over the bill
his own "horse-power" tanked!
--
he dropped it all
rushed home
took the horse back to the studd farm
returned it at half the price
went to the mall
and bought himself
a brand new
iron horse
with two wheels
and a paddle
powered by his
"superpower"!
stock market
"what is a stock market, papa!"
"it is a market for trading, son."
"trading what, papa!"
"trading of retail traders!"
"it is a market for trading, son."
"trading what, papa!"
"trading of retail traders!"
gambling and trading are so different!
gambling
and
trading
are so different!
in gambling
the winner
is not allowed
by the losing gang
to leave for the day
till he loses back everything!
and in trading
the lucky winner
refuses to go away for the day
till he loses back everything
to the unaware gang!
and
trading
are so different!
in gambling
the winner
is not allowed
by the losing gang
to leave for the day
till he loses back everything!
and in trading
the lucky winner
refuses to go away for the day
till he loses back everything
to the unaware gang!
conspiracy!
after years
of
tears
sweat
and blood
just when
i had become
somewhat proficient
in trading
they are now saying
that the world is about to end
in dec 2012......
that is unfair
very unfair
a "universal" conspiracy!
of
tears
sweat
and blood
just when
i had become
somewhat proficient
in trading
they are now saying
that the world is about to end
in dec 2012......
that is unfair
very unfair
a "universal" conspiracy!
Tuesday, March 15, 2011
every invitation is not an opportunity!
have you ever played
minesweeper game
in windows?
the moment you open the game interface
81 tiny windows will pop up in a frame!
just like stock trading
where
the moment you open the trading screen
an array of opportunities will pop up in front of you!
inviting you
enticing you
luring you
to click
the "trade" button!
but just like in the minesweeper game
you shouldn't click the "trade" button
without applying your mind!
because many "windows" of opportunity
are actually
"window dressed" mines
waiting to be
"clicked" and "stepped on to"!
whether trading opportunities
or mine sweeper clicks
there are sufficient hints around
to sniff the danger
and pick and choose
profitable ones!
every invitation on the screen to trade
is not an opportunity!!!
minesweeper game
in windows?
the moment you open the game interface
81 tiny windows will pop up in a frame!
just like stock trading
where
the moment you open the trading screen
an array of opportunities will pop up in front of you!
inviting you
enticing you
luring you
to click
the "trade" button!
but just like in the minesweeper game
you shouldn't click the "trade" button
without applying your mind!
because many "windows" of opportunity
are actually
"window dressed" mines
waiting to be
"clicked" and "stepped on to"!
whether trading opportunities
or mine sweeper clicks
there are sufficient hints around
to sniff the danger
and pick and choose
profitable ones!
every invitation on the screen to trade
is not an opportunity!!!
mini winters and mini summers
winters are winters
they are cold.
summers are summers
they are hot.
--
simple fact.
nothing important in it, right!
well, not really
till you look at it
a bit closely
and differently.
--
every winter day
also has a hot afternoon
which is as good as experiencing summer warmth
and can make you forget about the winter chill
for some time!
--
similarly
every blistering summer day
has cool breezy morning,evening and night
which can make anyone
forget about the harsh summer reality!
--
this is what exactly happens in stock markets too!
within a span of one month
you can see
price going from
succession of
winter bear phases
and summer bull phases
each ranging from 1-5 days
within the larger
bull or bear runs
of a few weeks!
--
and in-between these
"cusp"
mini seasons
lie small periods
(1 or 2 days)
of rangebound movements.
--
and mercifully
these small periods
are like much needed
sundays in-between hectic working days
or
like breaks or time-outs
during successive fast paced tennis games.
here
the trend either pauses
or changes!
--
also these are the times
when
indicators indicate accurately!
--
if you missed the trend
you can catch it now!
or if you missed the last trend
you can ride the next one from beginning
from here!
--
this "cusp" mini season
is so crucial!
--
how to identify these "islands"?
--
just open one month chart
plot sma 34
and sma 100 lines
simultaneously.
the "eye"
in-between the crossovers of both sma's
is "it"!
--
read the movement of price w.r.t.
this "eye"
alongwith rsi and william%r
and you will see magic!
they are cold.
summers are summers
they are hot.
--
simple fact.
nothing important in it, right!
well, not really
till you look at it
a bit closely
and differently.
--
every winter day
also has a hot afternoon
which is as good as experiencing summer warmth
and can make you forget about the winter chill
for some time!
--
similarly
every blistering summer day
has cool breezy morning,evening and night
which can make anyone
forget about the harsh summer reality!
--
this is what exactly happens in stock markets too!
within a span of one month
you can see
price going from
succession of
winter bear phases
and summer bull phases
each ranging from 1-5 days
within the larger
bull or bear runs
of a few weeks!
--
and in-between these
"cusp"
mini seasons
lie small periods
(1 or 2 days)
of rangebound movements.
--
and mercifully
these small periods
are like much needed
sundays in-between hectic working days
or
like breaks or time-outs
during successive fast paced tennis games.
here
the trend either pauses
or changes!
--
also these are the times
when
indicators indicate accurately!
--
if you missed the trend
you can catch it now!
or if you missed the last trend
you can ride the next one from beginning
from here!
--
this "cusp" mini season
is so crucial!
--
how to identify these "islands"?
--
just open one month chart
plot sma 34
and sma 100 lines
simultaneously.
the "eye"
in-between the crossovers of both sma's
is "it"!
--
read the movement of price w.r.t.
this "eye"
alongwith rsi and william%r
and you will see magic!
Thursday, March 10, 2011
a suitable boy!
the girl
picked up the newspaper
opened the matrimony page
and started searching
for "a suitable boy"
--
she stopped at one
and read
"wanted bride
for a handsome boy
age 27
5'10"
fair
M.A.
teetotaller
vegetarian
early simple marriage....."
--
she was not impressed.
she abandoned the ad midway
and was about to skip to the next one
when her eyes stumbled at the last line of that ad
"preparing for IAS"
this line changed the entire scenario
she talked to her parents
they fixed the marriage
and
the two tied the knot!
--
after 6 months
the boy failed at the IAS exam.
the girl divorced him!
--
after another 6 months
the girl decided to marry again.
she picked up the newspaper again
went to the matrimony page
and started searching
for mr.right!
--
her eyes stopped at the following ad
"wanted
divorcee bride
for a handsome boy
age 32
5'9"
wheatish complexion
M.Sc.
non-vegetarian
early marriage....."
the girl was again not impressed
dropped the ad midway
and was about to move to the next ad
when her eyes
noticed the last line
"opened a demat account
started stock trading"
she again talked to her parents
they arranged the marriage
and
both
"entered the holy trade"
--
within 3 months
the young "trader"
went bankrupt....
the girl divorced him!
--
(moral of the story =
you don't become a trader
just because you have started trading)
picked up the newspaper
opened the matrimony page
and started searching
for "a suitable boy"
--
she stopped at one
and read
"wanted bride
for a handsome boy
age 27
5'10"
fair
M.A.
teetotaller
vegetarian
early simple marriage....."
--
she was not impressed.
she abandoned the ad midway
and was about to skip to the next one
when her eyes stumbled at the last line of that ad
"preparing for IAS"
this line changed the entire scenario
she talked to her parents
they fixed the marriage
and
the two tied the knot!
--
after 6 months
the boy failed at the IAS exam.
the girl divorced him!
--
after another 6 months
the girl decided to marry again.
she picked up the newspaper again
went to the matrimony page
and started searching
for mr.right!
--
her eyes stopped at the following ad
"wanted
divorcee bride
for a handsome boy
age 32
5'9"
wheatish complexion
M.Sc.
non-vegetarian
early marriage....."
the girl was again not impressed
dropped the ad midway
and was about to move to the next ad
when her eyes
noticed the last line
"opened a demat account
started stock trading"
she again talked to her parents
they arranged the marriage
and
both
"entered the holy trade"
--
within 3 months
the young "trader"
went bankrupt....
the girl divorced him!
--
(moral of the story =
you don't become a trader
just because you have started trading)
prepaid trading - V
if you don't know driving
what would you learn first?
a small car?
a truck?
a bull-dozer?
where would you test drive it?
open ground?
in the himalayas?
crowded chandni chowk?
--
ok.
now if you don't know trading
what amount would you test trade with?
1,000?
3,00,000?
30,000,00?
--
i know u said 1,000.
but i also know u traded
3,00,000
or 30,00,000
no wonder, the result was obvious!
--
below
i share with all new traders
a method
that one of my fellow trader friend uses!
every month
he sets aside 3000 bucks to trade!
"even if i lose all of this
i don't mind!
but i will neither add a penny
nor take out a penny
from this amount
for this month!"
what he does is simple.
using his method
he studies the graph
waits for the opportunity
and once he spots one
he buys a call or put option
(as the case may be)
worth 3000!
e.g. taking today's value
if he were to take a short position
he would have bought
5300 put (march series)
(52.5 x 50 = 2625 + 113 brokerage = 2738)
now suppose
the market were to go up
and he loses 1100 bucks
he would
be left with approx 1800.
he will learn his lesson
look for the net opportunity
and enter the next trade.
but with what amount?
1800!
taking today's rates
he would have bought one lot of
put 5200 (march series)
(34.9 x 50)
for the sake of example
suppose he again loses 700
he would be left with around 900
(after brokerage etc.)
now he would again search for an opportunity
to learn and hone his skills
and enter a trade!
but with how much money?
900!
taking today's rates
he would buy
a 5000 put
(13.75 x 50)
i took just the losing scenario.
if he were to profit,
he would buy the higher priced option.
this process would continue
till expiry!
next month
he would trade
with the opening account for that month
which would be the closing amount of last month
plus fresh fund infusion of 3000!!!
--
this way
he is learning
plus he is not afraid of losing too much
plus he is assured of a long stay in the market
plus he has a chance of making it big as well!
he knows what are his expense boundaries
he is trading prepaid!
what would you learn first?
a small car?
a truck?
a bull-dozer?
where would you test drive it?
open ground?
in the himalayas?
crowded chandni chowk?
--
ok.
now if you don't know trading
what amount would you test trade with?
1,000?
3,00,000?
30,000,00?
--
i know u said 1,000.
but i also know u traded
3,00,000
or 30,00,000
no wonder, the result was obvious!
--
below
i share with all new traders
a method
that one of my fellow trader friend uses!
every month
he sets aside 3000 bucks to trade!
"even if i lose all of this
i don't mind!
but i will neither add a penny
nor take out a penny
from this amount
for this month!"
what he does is simple.
using his method
he studies the graph
waits for the opportunity
and once he spots one
he buys a call or put option
(as the case may be)
worth 3000!
e.g. taking today's value
if he were to take a short position
he would have bought
5300 put (march series)
(52.5 x 50 = 2625 + 113 brokerage = 2738)
now suppose
the market were to go up
and he loses 1100 bucks
he would
be left with approx 1800.
he will learn his lesson
look for the net opportunity
and enter the next trade.
but with what amount?
1800!
taking today's rates
he would have bought one lot of
put 5200 (march series)
(34.9 x 50)
for the sake of example
suppose he again loses 700
he would be left with around 900
(after brokerage etc.)
now he would again search for an opportunity
to learn and hone his skills
and enter a trade!
but with how much money?
900!
taking today's rates
he would buy
a 5000 put
(13.75 x 50)
i took just the losing scenario.
if he were to profit,
he would buy the higher priced option.
this process would continue
till expiry!
next month
he would trade
with the opening account for that month
which would be the closing amount of last month
plus fresh fund infusion of 3000!!!
--
this way
he is learning
plus he is not afraid of losing too much
plus he is assured of a long stay in the market
plus he has a chance of making it big as well!
he knows what are his expense boundaries
he is trading prepaid!
1,2,3,4,5,6,7,8,9
a trader goes thru the following 9 emotional stages
on the road to becoming successful
provided he doesn't stop on the way!
--
stage 1 : shringar
trader is so happy when he enters the magical world of trading!
his body language is loaded with loud expressions of hollow and premature ecstacy!
becoming a trader is considered an achievement in itself!
--
stage 2 : hasya
trader takes things lightly.
laughs at his stupid moves.
laughs-off the bad trades.
--
stage 3 : veer
trader can no longer laugh at the repeated losses
he puts up a brave front
tries to be a hero
often like don quixote
--
stage 4 : raudra
when his
unwarranted
ill-informed
bravery
results in mounting losses
his ego gets triggered
he gets furious
and angrily clasps the ill-fated ride even tighter
--
stage 5 : vibhatsa
by now
the things get ugly.
the trader has come too far to turn back
without some permanent damage.
by now
'shingar' has melted
'hasya' has vanished
'veerta' has evaporated
'raudra' has turned ugly.
--
stage 6: bhayanak
the reality and the trader are standing face to face
reality smiles like a devil
trader stares like an injured,humiliated and helpless lion!
repents why he became a trader, why he took the trader and why he didn't see this all the way!
--
stage 7 : karuna
trader has booked huge losses
his bank balance is gone
sense of sorry, helplessness, pity and self-consolation dawns
trader licks his wounds and cries!
--
stage 8 : adbhut
trader either quits the line
or undergoes unbelievable transformation!
he can't believe that
he had been so stupid in his trades.
finally, he decides to learn
--
stage 9 : shaant
all emotions are gone by now
peace, tranquility and silence prevails
trading is no more a show-off (even to self)
method and discipline take over
the epic journey starts!
on the road to becoming successful
provided he doesn't stop on the way!
--
stage 1 : shringar
trader is so happy when he enters the magical world of trading!
his body language is loaded with loud expressions of hollow and premature ecstacy!
becoming a trader is considered an achievement in itself!
--
stage 2 : hasya
trader takes things lightly.
laughs at his stupid moves.
laughs-off the bad trades.
--
stage 3 : veer
trader can no longer laugh at the repeated losses
he puts up a brave front
tries to be a hero
often like don quixote
--
stage 4 : raudra
when his
unwarranted
ill-informed
bravery
results in mounting losses
his ego gets triggered
he gets furious
and angrily clasps the ill-fated ride even tighter
--
stage 5 : vibhatsa
by now
the things get ugly.
the trader has come too far to turn back
without some permanent damage.
by now
'shingar' has melted
'hasya' has vanished
'veerta' has evaporated
'raudra' has turned ugly.
--
stage 6: bhayanak
the reality and the trader are standing face to face
reality smiles like a devil
trader stares like an injured,humiliated and helpless lion!
repents why he became a trader, why he took the trader and why he didn't see this all the way!
--
stage 7 : karuna
trader has booked huge losses
his bank balance is gone
sense of sorry, helplessness, pity and self-consolation dawns
trader licks his wounds and cries!
--
stage 8 : adbhut
trader either quits the line
or undergoes unbelievable transformation!
he can't believe that
he had been so stupid in his trades.
finally, he decides to learn
--
stage 9 : shaant
all emotions are gone by now
peace, tranquility and silence prevails
trading is no more a show-off (even to self)
method and discipline take over
the epic journey starts!
Wednesday, March 9, 2011
engineers, doctors, traders!!!
6 years ago
i went to capital book shop
in sector 17 in chandigarh
looking for some good books
on trading.
i was directed to a section
which contained
the books related to stock trading.
i was a newbee in the market
and was looking for a lean crisp book
to help me learn trading.
and when i reached the section
i was shocked to see
the range of trading books on offering.
they had hundreds of
big, fat and intimidating books
on trading.
on one side of the trading section
was the engineering section for the upcoming engineers
and on the other side
was the medicine section for budding doctors.
the shocking thing was
the trading section
was as big
and it had as many monsterous books
than both other sections!
for once
i even decided to forget about learning trading.
after having completed engineering
i was left with little capacity
to sink more into books!
--
last week
i again went to the same book store
arguably one of the best in chandigarh
and found
that the section on trading
had swelled
and eaten
and claimed
the "real estate"
allocated to the engineering and medicine section!
almost half of the floor
was full of books and videos etc.
on trading!
the thought flashed my mind
"how much have these guys
complicated trading?
they made it more difficult
than engineering and medicine degree!
there are more
technical indicators
and patterns
and theories
and methods
and laws
and do's and don'ts
and lessons
and facts
and figures
and graphs
in trading
than are there in engineering
and medicine!
there are more courses
and seminars
and workshops
and refresher trainings
in trading
than are there
for existing doctors
and engineers!
great to be trader!
building trade bridges that collapse every other day!
treating mental trauma patients - we ourselves!
i went to capital book shop
in sector 17 in chandigarh
looking for some good books
on trading.
i was directed to a section
which contained
the books related to stock trading.
i was a newbee in the market
and was looking for a lean crisp book
to help me learn trading.
and when i reached the section
i was shocked to see
the range of trading books on offering.
they had hundreds of
big, fat and intimidating books
on trading.
on one side of the trading section
was the engineering section for the upcoming engineers
and on the other side
was the medicine section for budding doctors.
the shocking thing was
the trading section
was as big
and it had as many monsterous books
than both other sections!
for once
i even decided to forget about learning trading.
after having completed engineering
i was left with little capacity
to sink more into books!
--
last week
i again went to the same book store
arguably one of the best in chandigarh
and found
that the section on trading
had swelled
and eaten
and claimed
the "real estate"
allocated to the engineering and medicine section!
almost half of the floor
was full of books and videos etc.
on trading!
the thought flashed my mind
"how much have these guys
complicated trading?
they made it more difficult
than engineering and medicine degree!
there are more
technical indicators
and patterns
and theories
and methods
and laws
and do's and don'ts
and lessons
and facts
and figures
and graphs
in trading
than are there in engineering
and medicine!
there are more courses
and seminars
and workshops
and refresher trainings
in trading
than are there
for existing doctors
and engineers!
great to be trader!
building trade bridges that collapse every other day!
treating mental trauma patients - we ourselves!
eyepiece, trigger,shoulder and head - II
every morning, late afternoon, evening
and every half an hour in-between
i keep checking
the high-probability turning points
on the 1-month and 6-day chart,
get ready
and wait for
the "trigger" indication
on the 1-day chart.
if the final "execution" signal comes
i pull the trigger
otherwise
i let my photo memory
of what i saw in the "eyepiece"
of medium-term charts
fade away!
and every half an hour in-between
i keep checking
the high-probability turning points
on the 1-month and 6-day chart,
get ready
and wait for
the "trigger" indication
on the 1-day chart.
if the final "execution" signal comes
i pull the trigger
otherwise
i let my photo memory
of what i saw in the "eyepiece"
of medium-term charts
fade away!
Tuesday, March 8, 2011
thank god!
a trader
always felt like
thanking
"almighty"
for the profitable trades
till he was scolded
by
the man in the mirror
"look who is doing what?
and to whom?"
"i didn't get you" the trader asked his image.
"i am amused to see
god
thanking god
for
his own
godly act!"
always felt like
thanking
"almighty"
for the profitable trades
till he was scolded
by
the man in the mirror
"look who is doing what?
and to whom?"
"i didn't get you" the trader asked his image.
"i am amused to see
god
thanking god
for
his own
godly act!"
stars in the eyes!!!
the trader was so happy!
after a long time
he had profited 20000
in a single trade
in a single day
and that too in a matter of minutes!
as he stepped out of the
broker's chamber
into the busy bazaar
his head was held high
and
his feet had the speed
of a springing antelope!
--
he tried hard
to look normal
and hide every sign of his excitement
but he still couldn't cover
his 20000 watt smile
of well-being!
--
he looked around
but no one around
seemed even a fraction happy
than him!
--
at the turn of the street
he stumbled on to a sitting
elderly beggar
with an extended arm for alms.
--
the tinge of fear
of losing the run of good luck
and the greed of having more of it
prompted the trader to let spill
20 rupee note
from his brimming ocean of 20000
into the open mouth
of the expecting bowl
of the man on the road!
--
the loss of 20
out of 20000
didn't dim the brilliance
of the trader's smile
till he accidently
looked into the
eyes of the beggar
looking at the
unexpected
unbelievable
treasure
of 20 rupees
and that too
in a single day
and that too in a matter of seconds!
--
the blinding glare of the twinkle
in the oldman's thankful eyes
extinguished the 20000 l.e.d.'s
of the trader's smile!
after a long time
he had profited 20000
in a single trade
in a single day
and that too in a matter of minutes!
as he stepped out of the
broker's chamber
into the busy bazaar
his head was held high
and
his feet had the speed
of a springing antelope!
--
he tried hard
to look normal
and hide every sign of his excitement
but he still couldn't cover
his 20000 watt smile
of well-being!
--
he looked around
but no one around
seemed even a fraction happy
than him!
--
at the turn of the street
he stumbled on to a sitting
elderly beggar
with an extended arm for alms.
--
the tinge of fear
of losing the run of good luck
and the greed of having more of it
prompted the trader to let spill
20 rupee note
from his brimming ocean of 20000
into the open mouth
of the expecting bowl
of the man on the road!
--
the loss of 20
out of 20000
didn't dim the brilliance
of the trader's smile
till he accidently
looked into the
eyes of the beggar
looking at the
unexpected
unbelievable
treasure
of 20 rupees
and that too
in a single day
and that too in a matter of seconds!
--
the blinding glare of the twinkle
in the oldman's thankful eyes
extinguished the 20000 l.e.d.'s
of the trader's smile!
Monday, March 7, 2011
eyepiece, trigger, shoulder and head
"use eyepiece on the gun to aim
use the trigger to shoot
stabilize the gun with your shoulder
keep your head cool and calm"
the shooting trainer told the cadets!
--
the above message
after translation
is equally valid
for a trading cadet
"use 1-month chart to aim
use 1-day chart to shoot
stabilize the trade with the shoulder of method
keep your head cool and calm"
use the trigger to shoot
stabilize the gun with your shoulder
keep your head cool and calm"
the shooting trainer told the cadets!
--
the above message
after translation
is equally valid
for a trading cadet
"use 1-month chart to aim
use 1-day chart to shoot
stabilize the trade with the shoulder of method
keep your head cool and calm"
trade without goggles
i was damn busy
working on my laptop
when
i asked my son
to hand me the apple
lying on the table in front of him.
--
he picked it up
and handed it to me.
i was about to bite the apple
when my lips felt
that something was wrong with the apple!
i took my eyes
off the laptop
and looked at the adam's fruit
only to find
that it was an orange!
--
i looked at my son
and immediately came
to know
the reason behind
the mixup!
--
my son was reading
his 3D book of dinosaurs
with
the 3D goggles on his eyes
with one red
and one green see thru paper!
he looked at the orange orange
and his left red 'eyepiece'
took it as a red apple!
he was too busy immersed in his book
to realise the mistake!
--
i smiled
while he was still confused as to
why i turned towards him and why i was smiling!
--
this is exactly what happens
in stock markets
everyday!
we see
what we want to see.
our preconceived notions
and opinions
and expectations
hijack
what is in front of us!
--
if we want an apple
we look at every orange, banana, grapes on the chart
as a bullish red apple
just because
our eyes of the mind
are covered with
coloured goggles!
what we see
when we look at somthing
is heavily
influenced by
what we see thru!
--
trading with your goggles
is dangerous!
working on my laptop
when
i asked my son
to hand me the apple
lying on the table in front of him.
--
he picked it up
and handed it to me.
i was about to bite the apple
when my lips felt
that something was wrong with the apple!
i took my eyes
off the laptop
and looked at the adam's fruit
only to find
that it was an orange!
--
i looked at my son
and immediately came
to know
the reason behind
the mixup!
--
my son was reading
his 3D book of dinosaurs
with
the 3D goggles on his eyes
with one red
and one green see thru paper!
he looked at the orange orange
and his left red 'eyepiece'
took it as a red apple!
he was too busy immersed in his book
to realise the mistake!
--
i smiled
while he was still confused as to
why i turned towards him and why i was smiling!
--
this is exactly what happens
in stock markets
everyday!
we see
what we want to see.
our preconceived notions
and opinions
and expectations
hijack
what is in front of us!
--
if we want an apple
we look at every orange, banana, grapes on the chart
as a bullish red apple
just because
our eyes of the mind
are covered with
coloured goggles!
what we see
when we look at somthing
is heavily
influenced by
what we see thru!
--
trading with your goggles
is dangerous!
Saturday, March 5, 2011
they never rock the boat near the bank!
i checked the nifty graph of last one year
from feb 2010 to jan 2011
and confirmed the following.
the operators
(option writers)
never rocked the boat
in the last week
before expiry!
not even once in last 12 months!
this fact has massive repercussions!
use this to play options!
(to be continued....)
from feb 2010 to jan 2011
and confirmed the following.
the operators
(option writers)
never rocked the boat
in the last week
before expiry!
not even once in last 12 months!
this fact has massive repercussions!
use this to play options!
(to be continued....)
Friday, March 4, 2011
how to use the operators!
indicators
and fundamentals
are good
but
only in the waters
where there are no operator crocodiles to rock the boat!
--
since there are no such waters
abandon your plans
to trade blindly with indicators
and
trading all the time!
--
stop trading proactively
and learn to trade
reactively!
--
prepare
to trade
on the basis of
the moves of the operators!
--
will you get any chances this way?
you bet!!!
operators can't stay out of the market!
nor can they desist from bluffing!
because that is the only way they can dodge the small traders
and take their money!
..........this is the exact oppotunity you should wait for!
--
always remember,
any bluff move of the operator is unsustainable!
it has to reverse
in the direction of the fundamentals
sooner or later
depending upon the fuel in the tank of the operator's bulldozer!
--
while the bluff move of the operators
is difficult to be answered
within the tight boundary
of day trading
it is definitely possible to do that
in a space of a few days or more
when bluffs are easily visible
and there is sufficient time for you to take position!
--
so
instead of predicting the market
on the basis of fundamentals or technicals
wait for the unnatural aberration moves
the bluff moves of the operators.
--
while
you can't catch their bluff
before the bluff!
you can definitely catch the bluff
after the bluff!
--
how to identify a bluff?
how to spot the operator's hand?
well,
any anti-logic unexplained move
any overdone move
any unexpected move
any anti-indicator anti-fundamental move
any unobvious move
any news driven sharp move
has a clear hint
of the hand in the glove!
--
but when you spot it
don't make a noise!
just keep your mouth shut
and eyes wide open
and
wait for the excess limit to be touched!
--
this way
while you will never be able to hunt the operators
you will definitely not become their prey
and instead profit
from their efforts!
and fundamentals
are good
but
only in the waters
where there are no operator crocodiles to rock the boat!
--
since there are no such waters
abandon your plans
to trade blindly with indicators
and
trading all the time!
--
stop trading proactively
and learn to trade
reactively!
--
prepare
to trade
on the basis of
the moves of the operators!
--
will you get any chances this way?
you bet!!!
operators can't stay out of the market!
nor can they desist from bluffing!
because that is the only way they can dodge the small traders
and take their money!
..........this is the exact oppotunity you should wait for!
--
always remember,
any bluff move of the operator is unsustainable!
it has to reverse
in the direction of the fundamentals
sooner or later
depending upon the fuel in the tank of the operator's bulldozer!
--
while the bluff move of the operators
is difficult to be answered
within the tight boundary
of day trading
it is definitely possible to do that
in a space of a few days or more
when bluffs are easily visible
and there is sufficient time for you to take position!
--
so
instead of predicting the market
on the basis of fundamentals or technicals
wait for the unnatural aberration moves
the bluff moves of the operators.
--
while
you can't catch their bluff
before the bluff!
you can definitely catch the bluff
after the bluff!
--
how to identify a bluff?
how to spot the operator's hand?
well,
any anti-logic unexplained move
any overdone move
any unexpected move
any anti-indicator anti-fundamental move
any unobvious move
any news driven sharp move
has a clear hint
of the hand in the glove!
--
but when you spot it
don't make a noise!
just keep your mouth shut
and eyes wide open
and
wait for the excess limit to be touched!
--
this way
while you will never be able to hunt the operators
you will definitely not become their prey
and instead profit
from their efforts!
the best place to call a bluff !
if you hide a small bluff in a small place
others will obviously catch it.
so, there is little incentive in that.
if you hide a small bluff in big place
it is likely to go unnoticed!
besides, why tell a small bluff when you can bluff big?
--
you surely can't hide a big bluff in small place
but you can definitely hide a big bluff in big place!
--
though it is likely to get noticed
it still makes a big trading sense
especially when you are an operator
and the scared
and un-resourceful small traders
are failing to notice
even the big bluff
in the big place!
--
let's come to the point.
operators love day-trading setup
because their bluff is big
while the place
(the time limit for the small traders to catch and respond to it)
is too small
thereby allowing the operators to make a killing.
this is the reason
why day trading is not a safe ground for small traders.
--
but operators are also very fond of bluffing big on big places
they defy fundamentals to dodge the swing players
on the time scale of a week to months!
--
fortunately
this larger playground
also gives sufficient maneuvering space
to the experienced and trained trader
and hence
is strategically the best bet for him!
--
others will obviously catch it.
so, there is little incentive in that.
if you hide a small bluff in big place
it is likely to go unnoticed!
besides, why tell a small bluff when you can bluff big?
--
you surely can't hide a big bluff in small place
but you can definitely hide a big bluff in big place!
--
though it is likely to get noticed
it still makes a big trading sense
especially when you are an operator
and the scared
and un-resourceful small traders
are failing to notice
even the big bluff
in the big place!
--
let's come to the point.
operators love day-trading setup
because their bluff is big
while the place
(the time limit for the small traders to catch and respond to it)
is too small
thereby allowing the operators to make a killing.
this is the reason
why day trading is not a safe ground for small traders.
--
but operators are also very fond of bluffing big on big places
they defy fundamentals to dodge the swing players
on the time scale of a week to months!
--
fortunately
this larger playground
also gives sufficient maneuvering space
to the experienced and trained trader
and hence
is strategically the best bet for him!
--
semifinal words on day trading
here are the
semifinal words on day trading!
--
why not the final words?
because there can't be any final words
in trading.
then why the semi-final?
because these words are very important
and deserve to be treated atleast next best to the final words!
--
so what are the words :
"day trading is all about
who takes whose money.......and how!"
period.
--
if you believe this
i bet, you are making money in the market or can make!
and if you don't believe this,
you are the one bleeding most of the time!
--
over the period of time
rules have been made to
help ordinary trader
to be able to day trade!
pity, that these very rules
are being used to trap
these very traders!
--
those who have big money
or big stockpile
can fail any rule of this game at their will!
--
i once again repeat the words :
"day trading is all about
who takes whose money.......and how!"
the "how" in the above statement
is the heart of this
gand con-game!
--
everyone new trader in the town
is madly running after rules
little does he know
that the rules he sees
are dummies!
these are the baits to trap!!
for small traders
day trading as per rules
is the surest way of losing!
--
the unsuspecting traders
don't know
that day trading is the only
"free-floating" game in the world
which has no fixed rules!
--
if at all, the only rule is
to find a way
to take the other man's money
--
for this one rule
you are supposed to break any and every rule to confuse and dodge others!
--
having said that,
let me make it clear
that small time retail traders
neither have the money
nor the stock pile
to confuse or trap anyone!
mouse can't trap the cat
in this tom and jerry series!
only big players
can confuse, dodge and trap!
so what can small traders do?
small traders can only
hope to devise a method
or trick
or trading style
to avoid getting trapped!
the fact is that operators can't trap all of the traders simultaneously in every trade!
just like a broom can't move all of the dirt simultaneously in every sweep!
the operators trap the majority
while the minorty, by default
lands on the side of the operator
and thus sharing the kill with them!
another hope for the retail traders
is to
learn
wait for
and call the bluff
of the big players!
(will share about this in my next articles!)
semifinal words on day trading!
--
why not the final words?
because there can't be any final words
in trading.
then why the semi-final?
because these words are very important
and deserve to be treated atleast next best to the final words!
--
so what are the words :
"day trading is all about
who takes whose money.......and how!"
period.
--
if you believe this
i bet, you are making money in the market or can make!
and if you don't believe this,
you are the one bleeding most of the time!
--
over the period of time
rules have been made to
help ordinary trader
to be able to day trade!
pity, that these very rules
are being used to trap
these very traders!
--
those who have big money
or big stockpile
can fail any rule of this game at their will!
--
i once again repeat the words :
"day trading is all about
who takes whose money.......and how!"
the "how" in the above statement
is the heart of this
gand con-game!
--
everyone new trader in the town
is madly running after rules
little does he know
that the rules he sees
are dummies!
these are the baits to trap!!
for small traders
day trading as per rules
is the surest way of losing!
--
the unsuspecting traders
don't know
that day trading is the only
"free-floating" game in the world
which has no fixed rules!
--
if at all, the only rule is
to find a way
to take the other man's money
--
for this one rule
you are supposed to break any and every rule to confuse and dodge others!
--
having said that,
let me make it clear
that small time retail traders
neither have the money
nor the stock pile
to confuse or trap anyone!
mouse can't trap the cat
in this tom and jerry series!
only big players
can confuse, dodge and trap!
so what can small traders do?
small traders can only
hope to devise a method
or trick
or trading style
to avoid getting trapped!
the fact is that operators can't trap all of the traders simultaneously in every trade!
just like a broom can't move all of the dirt simultaneously in every sweep!
the operators trap the majority
while the minorty, by default
lands on the side of the operator
and thus sharing the kill with them!
another hope for the retail traders
is to
learn
wait for
and call the bluff
of the big players!
(will share about this in my next articles!)
Wednesday, March 2, 2011
a must read research paper for all day traders
detailed excerpts from research paper submitted by
Brad M. Barber (University of California) &
Yi-Tsung Lee & Yu-Jane Liu (National Chengchi University Taipei)
--------------------------------------------------------------------
Most day traders, especially heavy day traders, lose money trading.
Why do investors engage in such a wealth reducing activity?
One possibility is that investors simply find day trading entertaining.
Undoubtedly some investors do find day trading entertaining, but can entertainment account for the extent of day trading that we observe?
Do day traders knowingly and willingly accept such large expected losses for fun?
For all but the wealthiest investors, this would be a very expensive form of entertainment indeed.
--
Another reason why day trading might entice investors would be if it provided an appealing distribution of returns.
People often display an attraction to highly skewed investments, such as lotteries, that have negative expected returns but a small probability of a large payoff.
However, the day trading profits that we document are similar in magnitude to, and far less prevalent than, losses.
Unlike lottery winners, day traders must succeed on repeated gambles in order to achieve overall success.
Such repeated gambles do not tend to generate highly skewed distributions.
--
A final potential explanation for the prevalence of day trading is that most day traders are overconfident about their own chances of success.
Several papers argue that overconfidence causes investors to trade more than is in their own best interest.
Overconfident day traders may simply be bearing losses that they did not anticipate.
--
While day traders undoubtedly realize that other day traders lose money, stories of successful day traders may circulate in non-representative proportions, thus giving the impression that success is more frequent that it is.
Heavy day traders, who earn gross profits but net losses, may not fully consider trading costs when assessing their own ability.
And, individual day traders may believe themselves more likely to succeed than the average day trader.
We are unable to explicitly test whether day traders are motivated by overconfidence rather than the desire for entertainment.
Our opinion is that the average losses incurred by day traders are more than most would willingly accept as the cost of entertainment and that, by and large, day traders must hold unrealistic beliefs about their chances of success.
We find that the trades of heavy day traders are profitable before deducting transactions costs and that the trades of previously successful traders are profitable even after accounting for costs.
--
Conclusion
About one percent of individual investors account for half of day trading and one fourth of total individual investor trading volume. Our analysis of performance indicates day trading is treacherous, but not entirely a fool’s game.
Over the typical six month horizon, using lower range assumptions regarding transaction costs, less than 20 percent of day traders earn profits net of transaction costs.
These results paint a rather dim portrait of day traders. However, we do document a select few are able to consistently earn profits sufficient to cover transaction costs.
We identify day traders who earn substantial profits over a six-month period and analyze the performance of their subsequent trades. These profitable day traders continue to earn stellar returns.
There is strong evidence of persistence in the ability of day traders. Our analysis makes clear the need for comprehensive risk disclosure. Prospective day traders should be apprised of their likelihood of success: only two out of ten make money; fewer do so consistently.
Brad M. Barber (University of California) &
Yi-Tsung Lee & Yu-Jane Liu (National Chengchi University Taipei)
--------------------------------------------------------------------
Most day traders, especially heavy day traders, lose money trading.
Why do investors engage in such a wealth reducing activity?
One possibility is that investors simply find day trading entertaining.
Undoubtedly some investors do find day trading entertaining, but can entertainment account for the extent of day trading that we observe?
Do day traders knowingly and willingly accept such large expected losses for fun?
For all but the wealthiest investors, this would be a very expensive form of entertainment indeed.
--
Another reason why day trading might entice investors would be if it provided an appealing distribution of returns.
People often display an attraction to highly skewed investments, such as lotteries, that have negative expected returns but a small probability of a large payoff.
However, the day trading profits that we document are similar in magnitude to, and far less prevalent than, losses.
Unlike lottery winners, day traders must succeed on repeated gambles in order to achieve overall success.
Such repeated gambles do not tend to generate highly skewed distributions.
--
A final potential explanation for the prevalence of day trading is that most day traders are overconfident about their own chances of success.
Several papers argue that overconfidence causes investors to trade more than is in their own best interest.
Overconfident day traders may simply be bearing losses that they did not anticipate.
--
While day traders undoubtedly realize that other day traders lose money, stories of successful day traders may circulate in non-representative proportions, thus giving the impression that success is more frequent that it is.
Heavy day traders, who earn gross profits but net losses, may not fully consider trading costs when assessing their own ability.
And, individual day traders may believe themselves more likely to succeed than the average day trader.
We are unable to explicitly test whether day traders are motivated by overconfidence rather than the desire for entertainment.
Our opinion is that the average losses incurred by day traders are more than most would willingly accept as the cost of entertainment and that, by and large, day traders must hold unrealistic beliefs about their chances of success.
We find that the trades of heavy day traders are profitable before deducting transactions costs and that the trades of previously successful traders are profitable even after accounting for costs.
--
Conclusion
About one percent of individual investors account for half of day trading and one fourth of total individual investor trading volume. Our analysis of performance indicates day trading is treacherous, but not entirely a fool’s game.
Over the typical six month horizon, using lower range assumptions regarding transaction costs, less than 20 percent of day traders earn profits net of transaction costs.
These results paint a rather dim portrait of day traders. However, we do document a select few are able to consistently earn profits sufficient to cover transaction costs.
We identify day traders who earn substantial profits over a six-month period and analyze the performance of their subsequent trades. These profitable day traders continue to earn stellar returns.
There is strong evidence of persistence in the ability of day traders. Our analysis makes clear the need for comprehensive risk disclosure. Prospective day traders should be apprised of their likelihood of success: only two out of ten make money; fewer do so consistently.
right time to shoot
the 107 year old
96km long
serpentile
narrow gauge toy-train railway line
from kalka
to shimla
passes thru 103 tunnels
(only 102 are in actual use now).
the longest being 1.14km long.
--
the journey in this toy-train
is like travelling to heavens
while still alive!
--
over the clouds
under the clouds
over the bridges
under the bridges
into the tunnels
and out of them!
--
it is as much pleasure travelling in this train
as is there
in shooting it
with a powerful
camera
like a nikon d7000!
--
but obviously
you can't normally shoot it
inside the tunnel!
you've got to shoot it
only when it out of the tunnel!
(just like you can't take an aim at the market
inside the "overnight" tunnel!
you have to wait till it "comes out"
in the morning at the opening bell!)
--
to shoot the heavenly train
(with a camera)
you have to wait till it comes out of
one of the 103 tunnels!
even then
it is not easy to shoot it!
some times
it is behind mountains
while at other times
it gets hidden behind
cluster of deodars and pines.
at times
it vanishes in the folds of the valley!
--
you have to wait for
the suitable opportunity
to shoot
that great photo!
just like
you have to wait
for that correct opportunity
to shoot
that trade!
otherwise
while wasted photo in a digital slr
costs nothing more than a sigh,
a wasted trade in the market
costs something
even to professional
shooters!
96km long
serpentile
narrow gauge toy-train railway line
from kalka
to shimla
passes thru 103 tunnels
(only 102 are in actual use now).
the longest being 1.14km long.
--
the journey in this toy-train
is like travelling to heavens
while still alive!
--
over the clouds
under the clouds
over the bridges
under the bridges
into the tunnels
and out of them!
--
it is as much pleasure travelling in this train
as is there
in shooting it
with a powerful
camera
like a nikon d7000!
--
but obviously
you can't normally shoot it
inside the tunnel!
you've got to shoot it
only when it out of the tunnel!
(just like you can't take an aim at the market
inside the "overnight" tunnel!
you have to wait till it "comes out"
in the morning at the opening bell!)
--
to shoot the heavenly train
(with a camera)
you have to wait till it comes out of
one of the 103 tunnels!
even then
it is not easy to shoot it!
some times
it is behind mountains
while at other times
it gets hidden behind
cluster of deodars and pines.
at times
it vanishes in the folds of the valley!
--
you have to wait for
the suitable opportunity
to shoot
that great photo!
just like
you have to wait
for that correct opportunity
to shoot
that trade!
otherwise
while wasted photo in a digital slr
costs nothing more than a sigh,
a wasted trade in the market
costs something
even to professional
shooters!
software vs operators!
10 top software programmers of the world
joined hands
to develop
a super
trading software
which could magically
predict
the next move of the price!
--
they hired
the best testing agency in the world
to test the software!
it passed every test!!
--
they deployed it in the market
and started minting money.
--
one day
their servant leaked
the next bullish move
of a stock
to a big operator
for $500!
--
the operator
dumped 1 lac shares of the company
in less than 10 minutes!
--
the software
rendered its 20000 clients
bankrupt!!!
--
the software company collapsed
--
the operator
bought it!!!
joined hands
to develop
a super
trading software
which could magically
predict
the next move of the price!
--
they hired
the best testing agency in the world
to test the software!
it passed every test!!
--
they deployed it in the market
and started minting money.
--
one day
their servant leaked
the next bullish move
of a stock
to a big operator
for $500!
--
the operator
dumped 1 lac shares of the company
in less than 10 minutes!
--
the software
rendered its 20000 clients
bankrupt!!!
--
the software company collapsed
--
the operator
bought it!!!
jogging is good for trading but....
ever since the markets started opening
at 9 instead of 9.45
the trader habits changed a lot
almost overnight.
--
one such trader
who had a die hard habit of
jogging
started waking up at 5
instead of 6.
--
one such day
he woke up
freshened up
got into his track suite and joggers
and went out for a 5 km routine jog!
--
the city was still sleeping
except an occasional enthusiast!
--
he kept circling the empty lanes
in his locality
and enjoying the light music
on his mp3 player.
after a few rounds
he stopped,
took out the cake he had brought with him
and took a bite!
--
cake was his weakness
besides the market.
too much of both were
not good for health
but were damn tasty!
--
the short feast was going on nicely
till suddenly
he
was whizzed past
by a street dog
with bread in his mouth!
--
hardly had the trader recovered from the disturbance
that
he heard the loud barking
from behind!
he turned around
and saw coming
a furious hound!
--
the hound was obviously after the street dog
running with the loafs of bread.
--
the trader panicked.
he stopped eating
held his cake tightly
and started running
behind the street dog
away from the hound!
--
the hound got perplexed to see
the trader running!
he was very annoyed to see the trader
cross his path.
just then
he noticed
the cake in the intruder's hand!
enough incentive for the hound
to leave the street dog
and get after the trader!
--
now the hound was after the trader
instead of the street dog!
he followed the trader street after street
and soon trapped him in a corner!
--
the poor trader now had 3 choices
run with the cake
run without the cake
eat the cake!
--
the third possibility was only theoretical
considering the tension in the air.
the first possibility was not possible
so, the trader opted for the middle choice
handed over the cake
and said
"here, have it! i have more in the kitchen!"
--
the hound leaped at the cake
and turned without thanking
the "generous" trader!
--
far from the street corner
the stray street dog
thanked the trader
for taking it all on himself
and giving him enough time
to eat his bread loafs!
--
the trader walked home
and got ready for the trading day
took out his currency cake
but swore
never to cross the path
of the operator hounds
running after the stray street traders
and mind his own
method!!!
at 9 instead of 9.45
the trader habits changed a lot
almost overnight.
--
one such trader
who had a die hard habit of
jogging
started waking up at 5
instead of 6.
--
one such day
he woke up
freshened up
got into his track suite and joggers
and went out for a 5 km routine jog!
--
the city was still sleeping
except an occasional enthusiast!
--
he kept circling the empty lanes
in his locality
and enjoying the light music
on his mp3 player.
after a few rounds
he stopped,
took out the cake he had brought with him
and took a bite!
--
cake was his weakness
besides the market.
too much of both were
not good for health
but were damn tasty!
--
the short feast was going on nicely
till suddenly
he
was whizzed past
by a street dog
with bread in his mouth!
--
hardly had the trader recovered from the disturbance
that
he heard the loud barking
from behind!
he turned around
and saw coming
a furious hound!
--
the hound was obviously after the street dog
running with the loafs of bread.
--
the trader panicked.
he stopped eating
held his cake tightly
and started running
behind the street dog
away from the hound!
--
the hound got perplexed to see
the trader running!
he was very annoyed to see the trader
cross his path.
just then
he noticed
the cake in the intruder's hand!
enough incentive for the hound
to leave the street dog
and get after the trader!
--
now the hound was after the trader
instead of the street dog!
he followed the trader street after street
and soon trapped him in a corner!
--
the poor trader now had 3 choices
run with the cake
run without the cake
eat the cake!
--
the third possibility was only theoretical
considering the tension in the air.
the first possibility was not possible
so, the trader opted for the middle choice
handed over the cake
and said
"here, have it! i have more in the kitchen!"
--
the hound leaped at the cake
and turned without thanking
the "generous" trader!
--
far from the street corner
the stray street dog
thanked the trader
for taking it all on himself
and giving him enough time
to eat his bread loafs!
--
the trader walked home
and got ready for the trading day
took out his currency cake
but swore
never to cross the path
of the operator hounds
running after the stray street traders
and mind his own
method!!!
Tuesday, March 1, 2011
no.2 myth of a trader!
i
don't
need
a
method!
--
operators reply : yes, you are right, buddy! absolutely right!!!
don't
need
a
method!
--
operators reply : yes, you are right, buddy! absolutely right!!!
no.1 myth of a trader!
market
operators
are
after
me!!!
thus always booking profit prematurely (before signal)
quitting at slight volatility (while there is no square-off signal)
fear entering midway the missed rally
the reality : your fear gets you in THEIR way!!!
operators
are
after
me!!!
thus always booking profit prematurely (before signal)
quitting at slight volatility (while there is no square-off signal)
fear entering midway the missed rally
the reality : your fear gets you in THEIR way!!!
not a joke any more!
"why do traders miss the train every time???"
"because they can't afford to lose stop loss amount!"
"because they can't afford to lose stop loss amount!"
dear day traders, pl meet your opponent!
there are sufficient evidences
on every chart
to confirm
that
retail traders
(atleast in india)
are trading against
computer programs (of big players)
with
intermittent "mischievous" human intervention!
on every chart
to confirm
that
retail traders
(atleast in india)
are trading against
computer programs (of big players)
with
intermittent "mischievous" human intervention!
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