my (near) final verdict on the trading game

# markets are not random. they are made to look like one but they aren't.

# the game is all about disguised accumulation and distribution.

# operators are ghosts but not myths. they are the driving force while the masses are the fuel. overwhelming cash or stock muscle weight is balanced by volatility momentum in this great flywheel mechanism.

# fundamentals are scapegoats, excuses, and script around which all movie is shot.

# the only way a trader can play this game is by not panicking. you panic and you become a victim. and for that, you need understanding and money management. and when i say understanding, i mean cracking the code.

(will keep adding as and when i recall more)

the class of '87

stocks are like the class 10th bunch. all are together during 10th/matriculation (index). but over time, they all go their way, different from each other and that of the class/index.

so no need to worry about stock price movement wrt the index if the stock selection is right. fluctuations in good stocks on the way up is just a mark of respect to the hiccups of their alma mater.

a portfolio gets torn apart and scattered in different directions like the coagulation of colloidal solutions like milk and blood. that's the formation process of cheese in investing. a balanced portfolio takes care of any churning.

what after the pandemic?

 (Mid May 2021)

one thing is for sure.

all this will pass sooner or later. whatever is the end cost, it will pass. we are in the most pessimistic scenario and this is when we need to think about what is impossible to think.

it may be next month, few months or next year...but this night will not last forever. it is not the end of the world moment.

howsoever it may appear at this time, imagine for a moment that it all is going to end.

what will happen then?

i mean what will people do?

well, well, well...

it seems the masses all over the world will go broncos and there will be a big fat mad rush for the freedom and survival party.

there will be a stampede to fulfill dreams and desires...to feel good....you know what happens when one is depressed or sad....he/she goes out, eats and shops...

following is expected when the corona pandemic subsides. and mind you, it will eventually NOT subside gradually but in a sudden unexpected sharp downturn, an unbelievable crash-like development...because of combinations of factors.

people will go on vacation and eat out and shop out and enjoy

- expect a boom in the hotel/hospitality industry (Hotels, Airlines, Holiday Packages, Taxis, Restaurants, etc)

- expect a boom in consumption in consumer durables (Consumer Goods)

- to fund all this there will be a boom in the credit card business and general lending (Banks and NBFCs)

- those who can afford will madly start buying cars (Auto 2wheeler/4 wheeler and Auto components)

- Transportation and Online consumption will boom (Logistics, Retail, Commercial Vehicles)

- There will be a mass reverse exodus to places (back to old and new places) (Logistics, Transport)

- People will throng malls and cinemas. Advertisement mad rush will be there as everyone tries to corner consumer attention. (Media, Food and Beverages)

all this will lead to a complex chain reaction boom in other dependent and related sectors. a big investment and capex cycle will kick start which will take years to cool.

to meet this big bang demand, all this will eventually lead to the rehiring of manpower....leading to a boom in employment/hiring and related services.

you can go on and on...the only question is....will you be there as a part of it?

make sure you are a part of the biggest boom the economy has seen in recent decades.

....The catapult of demand is stretched. get ready and position yourself for the boom!!! 

the game we shouldn't play, at least that way...

nobody will buy options if there were no leverage and only premium....who would need it then?

these were cleverly created to make profit form those who were otherwise not getting trapped and were otherwise difficult to beat. this way, through options they would potentially stand to lose via premium erosion even if they were not in the wrong trade direction.

and guess who gets naturally lured into buying options? those who have less money and/or want to get "rich" fast. options trading is a legal drug.

....small traders...millions of them...in herds....pan continents

the operators tried giving tickets of futures also, at small margins as an alternative to options (in fact, if i am not wrong, futures came earlier than options), but they have now started folding up the scale of the spread of the futures products as it lured lesser people than the genius options, scared more besides being constantly under the government and watchdog eyes for being politically and economically too risky for the returns

the game is overwhelmingly tilted towards option writers. and, mind you, not everyone can or should write options. just because you have the money to sell one or more option lots doesn't mean it is for you. if it is not for you, going the writing way is like being 100 times bigger fool and prey than an option buyer.

only "they" can and should write....

when f&o were not there, only way to beat the masses (though the numbers of traders then were far lower than those today) was in pure price volatility, on real and imaginary pretexts. as economic prosperity became more and more luring and desirable but less achievable, masses got started getting attracted towards stock markets. the invention of f&o made this possible. infact, these were created in first place to tap that potential casino market.

the best way to avoid this fatal slow poison trap is not only not to write options but also not to buy these. even if you are right in getting the direction right, you will eventually lose. i bet and i can prove it. because premium erosion is not the only trap. there are more traps lined behind it. including illogical surprise moves or lack of any.

not just f&o, every kind of leverage is poison including intraday margin. all are traps masked with mouthwatering "opportunity" promise to make a fortune with so less...

if you still want to do options you stand no chance if you don't have a very solid trading system which can fairly accurately predict portion or pattern of price movement with amazing dependable repeatability. many may think that they have got such a system but more often they are tragically betrayed by it.

besides such a "really loyal" system, you need immense patience to accept the unending delay in your becoming a millionaire (or billionaire) from the debt ridden tie-wearing failed masked mortal with injured ego you are (oops...sorry)

not that people are not getting their market calls right. in fact, many are....more and more traders in the world are beginning to crack  a part of the puzzle (though the overall %age is till miniscule). but despite getting it right they book profit too soon for fear of losing because of guaranteed unexpected surprise moves, or booking loss too late. this may sound like a cliche' but this is true with everyone. it is bot stupid and therein lies the tragedy of success of this trap.

this is the single biggest factor of masses being on continuous losing side despite their knowledge and skill.

so what's the message here?

1. i am not asking you to stop trading. half of the world is into trading...incl. potatoes, mobiles, souls, bodies and what not. trading is essential and good. but stop trading leverage. trade with what you have. earn, beg, borrow, steal the principal from somewhere (pardon the slang) but don't trade leverage. atleast, for heaven's sake, reduce it.

2. avoid the cake laced with the cream or honey poison of "premium". premium is the sign to look for. minor premium is ok. but anything more than a "small" premium is shady.

3. trade only clear cut opportunities. otherwise stay out, till you identify one. spend a lots of time in the jungle to identify the real non-fake opportunities. real opportunities don't look like one, except to a very trained seasoned eye. go the long route.

(decide what is "small" for you)

4. once you know that you have taken the right trade, hold onto the trade and don't get bluffed or ejected even if you were to lose big. that's why i say everything depends on the accuracy of your trading method and that's why i say trade only that big which is perfectly ok for you to lose all.

5. ignore the short term volatility, try to figure out (though system) what they are trying to achieve in the medium to long term. where are they taking the market. i know 99% still won't get it. if 99% get it, the operators will change the game to make sure only 1% get the ne version. but atleast, here's your and our chance to try to be in that 1%.

in the end i would say two lines....trade like you were a potato trader....play the trading game, don't trade the trade.

no free lunch in the pit as well

every trader who manages to go beyond the initial wall of challenges must have faced the questions and dilemmas you have mentioned, besides other ones. while buddy traders who jointly learn and progress, others who bang their head against the great walls and manage to get some way after blood tears and sweat generally don't share their "IPR" unless they again need some buddies to surmount next walls which keep on coming like a video game

and there is nothing wrong if you don't come across such buddies. because there are very few after the first 1 or 2 gates. i find myself so lonely too many times. i fight my advanced challenges only mine to face and overcome. nobody has or seems to be finding the vaccine for my trading covid situations. i am suffering and researching for my viruses myself. i'm sure many more ahead or near my stage must be feeling the same or would have felt the same.

the trading arena tests everyone. not everyone is permitted by the market to enter beyond the first or second gate. one has to "pay" (with honest sincerity and thirst) to get it. not everyone wants to learn fishing. not everyone wants to be a buddy. i remember a very high profile person...v high profile indeed....who used to talk to me with a mask of a buddy but never used to show up after he got some "formula" from me. but strange are the ways of the justice of the market. he had to return when he was stopped by the next wall...but he was stupid enough to repeat his behaviour and more stupid to think that i am not getting what he is up to.

there is no free lunch out there in the pit....

it is not that people are not looking for answers for advanced questions. it is not that people are not succeeding answers to advance questions. only, that nobody is stupid to share except for un corruptible honest companionship with an unquenchable thirst for the answer.

There are 1000s of books, videos....study materials...which tell about money mgt...drawdowns, profit booking  SL, etc....etc...But the newbies, want to have a holy grail....till the time they understand there is no holy grail...either they have lost money or lost confidence.... The remaining 1%...march on in profits

the sleepless trader

 looking at sgx-nifty (after market closure, late evenings, overnight, early morning) so restlessly, anxiously, and obsessively indicates that

- we don't have a method or are not relaxed with it

- we don't have a strategy and a backup plan

- we don't trade probabilities with a system

- we don't have money management

- we are in a hurry

- we don't have the appetite for loss

- we are fearful and hence won't have the appetite for profit also

it's ok!

Even operators can't book profits at every corner just because they can't fold up and end the market at all points, at all corners, and go home. 

In fact they can't fold up the market at any given time. 

All profits are notional for the market operators as well. 

They miss all the profits they miss because of their inability to book.  

Therefore, the retail traders shouldn't mind if they are unable to take out more than a bucket from the ocean. 

...it's okay.

heavenly chat with a guru

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

Trading is a game of cycles and trends.

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

Krish: This means human nature is always predictable?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Js: o yes...bullseye

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

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

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

absolutely

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

markets are mini-universe

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

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

Js: yes

greed too is the vengeance of the fear

a fearless man can be rarely greedy

a greedy man will often be fearful

somebody isn't thinking

a trader will go bankrupt without a system and mad without following it.

u have some base to start working

operators can hide their stealth bombers but not it's magnetic fields as visible in many indicators

the more and longer you observe and record, more secrets you stumble upon

throw ancient rules of Elliott waves out of window. majority don't work. those were primitive. modern market behavior respects basic psychological and accumulation distribution principles those were being the original Elliott Wave theory but the rules are no more valid. market dynamics have changed. strong hands have had to evolve in trapping the majority money. i wasted a lot of time sticking to classical Elliott rules. those are perhaps perfect ploy to befool the masses.

if you believe everything available on net, books or media, you'll never be able to liberate yourself to success. majority of those are recycled outdated untested glamorized hyped fad stuff. some are expired medicine.

fatal

when thieves know that all their tricks are available in the market for everyone to read study or train, won't they have migrated to newer ones?

and I'm yet to know see meet anyone consistently big time beating or surviving operators, all noise notwithstanding...

the biggest of names around in India fall flat on their face consistently...

successful ones are hidden

they never reveal their codes

old trader values are still and shall always be valid, not old tricks especially without adapting to contemporary market realities.

any trading room is neither a pub, nor a club, nor a casino.... it is business chamber.

--

There are two times when people forget their principles: at the top of the market and at the bottom.
- Phillip A. Lowe

and they are not sure of the top as well as the bottom

--

If everyone is thinking alike, then somebody isn't thinking. ~ George S. Patton

Pressure tested trading systems

Trading system pipes are pressure tested in adverse moves and volatile ranges. They start leaking or burst from their invisible cracks or weak points. Pressure tested trading systems should be appreciated and treasured by traders.

No trading system is perfect till pressure tested for every condition.

Pressure tested trading systems are not the fastest or the most productive but they are surely optimum yielding in the long run.

Stomachs of Sparrows

 In "The Secret of Letting Go", Guy Finley says that though we want not to drown in adversity, our habits are exactly opposite. We cling to the thing which exactly is drowning us.

A trader has to continuously keep tracking his thoughts to ensure that he himself is not blocking his own path.

Our success is delayed not without any reason

Osho says freedom is nearer to us than we think. We can get liberated the moment we truly decide to. But our comfort with failure makes us nervous about uncharted success where all excuses evaluate. We want profit but not mind boggling. We want thodaa thodaa 😊

We have stomachs of sparrows but hate to be hawks and vultures we are out to emulate and beat.

To be successful at trading we need to sign the contract of getting changed in the head. 

Fortunately there is a second way. Understanding the vultures instead of becoming one

the bad ATM dilemma

I am once again amused by the unwillingness of overwhelming number of traders to accept the long rally in the market. they are repeatedly taking anti trend positions and being bleeded.

This reminds me of a very interesting psychological phenomenon...

Suppose you are standing in front of an atm machine late evening and swipe card for 1000rs. Now let's consider a scenario that the atm machine goes bad and keeps vending currency note after note after note and doesn't stop. It counts 1000 and throws them out. Then again counts 1000 more and throws out...

What will be your reaction? What will you do?

Chances are you'll soon call someone and point it out to authorities instead of just collecting all and vanishing. Because that's the way you are groomed. Both fear of punishment and moral hand brakes will keep you in check. 

Same mindset and habit spills over to trading. When market whipsaws and beats you, you accept it like a victim accepts his torment. But when a trending market gives you profit and keeps giving you profit with insanity of a bad atm machine, you feel guilty in your subconscious and don't believe it. You feel so uncomfortable that in hearts of hearts wish that it ends.

mind frozen in strategy

whatever it does, market tires you. that is it's objective. and that exactly should be a trader's objective....to duck that.

it is a mind game to snatch each other's money.....even make others surrender theirs.....dirty mind game....that's all it is...

so, never trade with mind

trade with system

a trading system is a mind frozen in a strategy.

-

those who say timing is not important mean to say that they are finding it difficult to time. timing is important. and wherever, timing is difficult, approximate timing is the next important thing.

you can't buy anything anytime without consequences.

(sweet) poisoned by fundamentals

as a technical trader, i am not bothered by the why's and how's. though i am amused and intrigued, frankly.

finding the why's and how's actually is none of my business as a technical trader. i make sure that my analysis or thoughts or systems are not polluted or adulterated or (sweet) poisoned by fundamentals. i love to trade with ears and mind shut tight.

everything is built in the chart (not in the price : which is a different and mere instantaneous thing) with shadows in the technicals.....as they say, technicals know that the news is coming (or not coming).

--

I can't be an expert in difficult anti trend cheeky guerilla snatch trades if I'm not v good first at pro trend no brainer one.

to be or not to be fearful (& greedy)

Absence of fear and greed indicates that you don't qualify to be a trader as yet. Presence of fear and greed indicates that you don't have a system yet or are not sticking to it.

Fear and greed should become non players for anyone to be a professional trader.

market is a host who will drink a whole barrel/drum of wine right in front of your eyes, asking you to join but never making you comfortable enough to say yes and take more than a few sips...that too from his left overs in the glass.

being shameless and fearless is the only option.

paper trader, paper tiger

i have always been of the opinion that a trader should not hesitate to share his views about trading opportunities and sides. in fact, this is v important. one must share his market views openly. i have written about this once or twice.

the benefit is huge...

once you have announced what u feel u have taken a public stance. this puts a hell lots of pressure on you to think twice thrice....do all the homework, stick to system.

people say paper trading is good practice. i agree. but i go one step ahead and recommend that an aspiring trader should share his trade opinion or trade. in paper trading you have no money to lose, thereby the pressure being v low except small ego hurt in hearts of heart. but when u announce it, although u don't have any money to lose, you have a reputation and ego at stake. that gives you as much practice as betting your money would have.

to be a champion athlete or trader or anything, we don't need to relieve pressure, we need to get used to it and perform because of it...

nothing propels you more than your injured ego...

paper traders who remain anonymous or unannounced don't gain much confidence from paper trading imho

the best person to announce your trade is to the one who doesn't want you to trade...eg wife, father, mother

nothing tests your system, resolve and readiness than a crisis. the strategy which survives the crisis is a good one.

pressure is god's blessing....provided we accept it

temporary pleasure, occasional profit

Since market are up 85% of the time it is basically all about buying, buying at the right time, the right amount. Selling gives only momentary, temporary pleasure, occasional profit.

--

Never average shorts on rises of bulk runs, always average longs in falls of bull runs.

Once your direction is fixed, timing and size is all that's left to decide.

Trends never end soon after starting. So never hurry in taking or unwinding positions in a jiffy. You'll get plenty of time. Wait for confirmations. That's why they are called trends

If there is no trend your position anyways can't be wrong except a bit and temporarily

And if you choose the trend wrong you can see it loud and clear and turn around

Over excitement is poison for traders...Enthusiasm is ok