which strikeprice option to buy?

- very far out of the money, like 5-10 value = for thrill, not trading

- far out of money like 30-35 value = for aggressive betting on profit from earlier trades

- out of the money like 70-100 value = normal trade position

- in the money like 100-150 = when you are confident 

- deep in the money like 250-400 = alternate to buying futures

- deeper in the money = not much extra benefit though risk increases

Once the value of the option enters the next, higher level, you may skim the option to lower/earlier category and take some profit/money off the table.

Caution : Never put 5% (at worst 10%) of your trading capital in single trade.

except aggressive betting of profits of one trade. eg you turn 10 to 12 lac....and want to bet aggressively with that 2 lac profit, provided you have an evolved dependable tested plan. several traders have made big sums with that approach.

should we buy or sell options? my take

Selling options only if you have backup funds to withstand big adverse moves and still have a plan. And when you have that much, it is better to buy stocks the investor way. Almost all big professionals do that. I mean those beyond 10-20cr funds.

I know some traders who made crores, lost crores multiple times selling options. They falter tragically in trending and volatile markets. 

They failed to go beyond a level because they didn’t know how to know the trend, which is the same reason they switched from buying to selling.

IMHO a disciplined, successful options buyer has all it takes to become an investor ultimately. The %cagr on a big corpus makes them financially free without anxiety and still grow their net worth.

--

Traders think that they need more money to buy 100 lots instead of 10 lots. Actually, they need a mindset.

Money comes easily. Mindset doesn’t

--

Mental maturity and stability are required. Not money. Money comes.

Until our thinking changes, our financial standing doesn’t change.

If trading doesn’t change you, you are not progressing

--

Option buying is gear one and two. Not required after 15 km/h and 25 km/h. Option selling is the third gear. Investing is 4th gear and overdrive,

--

Option buying is like buying futures with a premium as interest of borrowing or hafta. People don’t buy options except for the reason that they don’t have larger money. 

Those who have money to short options have either inherited or are blowing their savings OR are geniuses.

--

Both buying and selling are good tools. Nothing wrong with both. Both are different tools for different situations and stages imho.

--

Both shouldn’t be looked down upon. These are not show-off concepts.

I mean buying and selling options

DIIs FIIs use all tools at their disposal as per the situation. They also buy options.

--

saying NO to trades

trading is like a property dealer or used car sale/purchase business. 

you often get only 1-2 clients in a day...sometimes in a week. most of those opportunities are not juicy, there isn't enough risk reward in your favour. you have to say "no" to most of them. if you say "yes" to every trade that comes your way, you are not a trader, someone has "traded" with you. 

but every now and then you come across a genuine trade that has risk reward ratio tilted in your favour. that trade should be taken and remaining left. boredom is the cost of safety from loss.....self talk

you have to bet

 in trading you can never sure of the outcome of the trade. never. there is always some uncertainty. 

but you can't be indecisive and shaky.... fearing, vibrating, panicking all the time, fiddling with the trade direction.

you have to bet. and have guts to stick to it. 

you have to be ok with losing. only that will give you the guts to be worthy claimant of profit, handsome profit.

and since you have to be ok with loss, you have to manage the risk. can't be foolish gambler.

never swim or trade naked

never swim naked.

atleast never trade naked.

if you are long, instead of buying 2 or 20 lots buy 3ce:1pe pr 30ce:10pe (or in that ratio). always trade hedged. that way, you use more funds, ofcourse, and a bit more in premium decay, but that is the insurance against trades gone wrong or adverse bluff moves.

always trade with a hedge...same instrument is advisable for amateurs. professionals have more sharp options. 

don't hesitate to skim or book adverse moves, if and when they come.

however, this strategy is only if you have a trading system, you know when and why to enter or exit, in which direction is the high probability. if you don't know that or don't know what to do in case of an adverse move, then hedging won't save you much. you have to find ways to recover cost of the hedging insurance.

i, per se, never trade naked. swimming i'm learning. bathing naked is ok.

when can you consider yourself as a pro in trading?

the day you make trading a system based mechanized assembly line 

and you are making consistent profit, both sides, 

and are free from any anxiety, 

you have turned a pro...priod

trading blind

 can you fly a plane in zero visibility?

yes, if you have instruments with the technology.

can u trade without seeing price?

yes, if you have "technicals" technology.

i know some traders who keep price view "off" and trade only by seeing technicals. what they check for is of another level. 

emotionless trading based on instruments.

forget about profit

forget about profit or loss of money

is your system prediction in profit or loss, that's the point

who wins if system is wrong

and who loses if system is right

if you are happy at profit, you will be sad at loss. 

if you are in indifferent or nonchalant about profit, you will be understanding of the loss.

being conscious of profit makes you fearful of losing it

being conscious of loss makes you more fearful of losing more.

being conscious of the process is important

look at the mental stability of the shooters in olympics... calm and stable...

standard advisory : trade 3 times less than what u can afford to lose.

simple way to book profit without closing trade

 one way to book profit without coming out of the position (eg when trend is likely to continue but you want to take some profit off the table to feel comfortable and secure)

replace the costlier option with cheaper one.... 

eg assume you bought a BN call of 500 points...it becomes 800 or 900 or 1000.... it would be wise to book it and replace it with current BN call around 500 points. 

no doubt, current 500 point call may rise slower than 1000 point call but profits will still keep trickling in if trend continues. the slight reduction in profit may be considered as the cost of insurance for peace and profit booking. 

this tactic is like climbing a mountain cliff with progressively hooking oneself to higher harness.

this tactic has 2 more advantages

1. you now have money (out of thin air) to buy more positions if market steps back before resuming the trend.

2. if at all market reverses, you have your initial deployment safe.

of course, this tactic is valid for options only. which i anyways consider best for amateur traders because it is affordable for them and has inbuilt stop loss unlike futures. 

also, to add that standard advise, trade with 3 times smaller trade size than you can easily afford. if you trade with small quantity (3 times less than what you can easily afford), you can become fearless trader who doesn't chicken out amid volatility, and who can trade the method till the end of trade's logic.

if your method is right even small trade size will make you rich, sooner than you think. and if your method is wrong, even larger bet size won't help. that will make you poor, that too, sooner than you think....

i know most old traders knew this, even better than this....just thought i should share for new traders. besides, when i write it  down, it helps in revision.

stop loss vs stop profit

if we have the habit of not having Stop Losses (SL), why do we  have habit of taking Stop Profits (SP)....we should be indisciplined both sides...

that's one of the key reasons why even traders with 50% success rate end up losing 90% money

unfortunately, fear works both side....instead of fear on the loss side, and greed on the long side....

ironically, traders have fear on profit side and greed on loss side...

trading is 90% psychology and risk control

risk control = the warrior who knows he can't die can fight much better and win more frequently....self talk

before letting go

nobody likes bad experiences. nobody wants to remember painful memories.

we are often told all our lives that when you fall down, get up, dust your knees and get going.

but, so often in life, including trading, there is something different or more that cries to be done.

it is noticed that so many irritating and painful events have a tendency of repeating. one of the key reasons is that the root cause of their happening remains intact.

therefore, when anything happens that shouldn't have happened, though it is so important for you to overcome it and move forward, while you are dusting your knees and consoling yourself to move forward, you must pause for a second and do the following.

look straight into the eyes of what went wrong even though that is the thing you would like to forget and not recall. just for one last time. purposefully, deliberately and courageously dive into the details of what happened. lay it threadbare and understand it.

and don't leave till you have understood why it happened.

it hurt you by happening and now you hurt it back by understanding it. this way two benefits will happen. one, its spell would be broken and you wouldn't have to carry the mental scar of it all your life. its fear will be gone as its emotions would have burnt to the ashes in the heat of pure ruthless logic. second, you would know why it happened. you will, chances are, smile, slap yourself, shake your head in disbelief and move on with lighter feet. in the process, you would get automatically programmed to not doing that mistake again.

mistakes and pains avoided are the ones that don't go away and become cables and monsters.

the classic James-Lenge principle also underlines that - "you don't run because you fear, you fear because you run."

so, next time your trade goes wrong, before you forget it, understand it. and then, let it go.

once there was a pigeon...

like many budding struggling traders, i used to be a pigeon who would flutter away at every and any small anti-trend clap.

all kind of brave talk used to fail miserably despite my best efforts.

over a period of time a series of chance system adjustments revealed how the bluff moves of price can be spotted/segregated.

till then i always used to book too soon out of fear of losing the illusive profit.

i can't explain how frustrated i was when i was unable to run long distance trends whenever there was one.

the fact that i, like majority struggling traders, was booking loss too late in the trades gone wrong, was adding salt to my wounds.

i can't express my satisfaction (wouldn't mind calling it happiness if it were not already not-a-big-thing-anymore) having crossed that choking waterfall of a challenge.

i'm on the other side now.

it was a small step of improvement but with giant consequences.

if u look at the corollary of this, u'll notice that this improvement in system also helped me dropping the wrong side fast enough and thus cutting losing trades sooner than later.

with passing time and practice, even the remaining fear will be gone (i am, like a typical "doodh ka jala", still looking for the ways my system will fail some day in a new way!!!).

but i'm reasonably sure that while the newer situations will keep arising, leading to sneezes and hiccups in my system, the hits will be smaller hopefully and i'll use even those instances to further improve my trading system.

taming the fear is at fairly advanced level.

the skin of my trading mind is quite thick by now.

=====

my next challenge was/is....scaling up.

i have said and written at various places in the last many years that i had decided not to trade REAL BIG size till i had developed the system fairly well...... till the system was fairly stabilized and had proved itself respectfully in various conditions and seasons.

my view always has been that jacking up the stakes and getting big returns never takes too much of time. but it doesn't happen till the "multiplication factor" system is in place.

otherwise, the buggy system is equally good in bleeding u real fast.

so, after having fairly stabilized the trading system, my next aim is to jack up the stakes. easier said than done.

it is like venturing into a new territory with many unknowns.

gradually working on this in steps these days. and at no point, without safety harness......

zen and art of stock trading

chest thumping ability to say that i was wrong is a critical ability u must possess to have any chance to be a successful trader in a v difficult treacherous arena like stock market.

u must trample ur own ego under ur own hard shoes.

your views about a particular trading situation may not be right, but it does give u a point of reference to remain emotionally stable a bit longer.

and a point of reference to improve upon.....

trading is a mind game played online by worldwide grown up children!!!

controlled by a few grown up adults....

u have to repeatedly attempt to try and understand something in the hope that one day u will learn to survive the abuse.

u may still be often beaten by the operator even after years of cuts and bruises, but u r no more the same person....unless u unfortunately are....

in trading, u must have a view about every situation....that is free but priceless practice. provided u keep pushing wedge base under it slice by slice.

what if your perspective, out of 10 times, is first right 3 times, then 5, then 6,7...

fearing to take a position (even if in one's own mind) just out of fear being wrong is strengthening those chains of fear making oneself more emotionally tender and increasingly unfit to be a trader.

the problem is we start measuring our growth too early and too much in terms of money we make. the focus is too much on the results right from day one instead of on the process......like a parent expecting paycheques from his/her new born.

stock trading is the most rewarding self-MBA where-in u should willingly invest time effort money blood seat and tears!!! the joy it gives is the purest and the best!!!

Interview of a self made ace day trader

[3:59PM, 19/02/2015] R: intraday trading is different animal.It requires different skill sets and guerrilla ware fare approach. some stocks which look innocent if you see daily chart have done a lot in intraday. few examples are ntps , icicibank ibrealest, hdfcbank, jp associates etc
[4:05PM, 19/02/2015] J: V true.....
[4:06PM, 19/02/2015] J: Intraday traders need different skill set and mind set and money set than swing traders
[4:08PM, 19/02/2015] J: One should specialize in one art.....
[4:11PM, 19/02/2015] J: You said it rightly.....innocent in the end, mischievous all day...
[4:11PM, 19/02/2015] J: So these were great buying opportunities in the pits....
[4:12PM, 19/02/2015] J: Intraday
[4:15PM, 19/02/2015] R: yes but i play along the trend( intraday
[4:17PM, 19/02/2015] J: if u could elaborate a bit, will help us all....
[4:17PM, 19/02/2015] J: u r closest to a pro day trader i have seen.....seriously
[4:17PM, 19/02/2015] R: as you know i play levels
[4:18PM, 19/02/2015] J: in nifty or stocks?
[4:18PM, 19/02/2015] R: which are clearly marked on chart
[4:18PM, 19/02/2015] J: hmm
[4:19PM, 19/02/2015] J: so u enter in one shot at signals and exit part by part at levels
[4:19PM, 19/02/2015] R: once my sell/buy level is taken out it will 85 % go to target tart 1
[4:19PM, 19/02/2015] R: target1
[4:19PM, 19/02/2015] R: yes
[4:19PM, 19/02/2015] R: where i try to book 50 %
[4:19PM, 19/02/2015] J: and ur entry signals are as per the software programming u have tweaked/set
[4:20PM, 19/02/2015] R: if the strength of trend is very strong i do not book
[4:20PM, 19/02/2015] R: eg jindal steel today
[4:20PM, 19/02/2015] R: i have made my own system
[4:20PM, 19/02/2015] R: yes
[4:20PM, 19/02/2015] J: hmmm
[4:20PM, 19/02/2015] J: ur strength therefore lies in the merit of ur trading software set by u....
[4:21PM, 19/02/2015] J: which indicators u use?
[4:21PM, 19/02/2015] J: the heart/brain of ur set-up
[4:21PM, 19/02/2015] R: software only does what i want from it'
[4:21PM, 19/02/2015] R: garbage in garbade out
[4:21PM, 19/02/2015] J: true true.....that's what i meant
[4:21PM, 19/02/2015] R: garbage
[4:22PM, 19/02/2015] J: that's why i said "ur setup"
[4:22PM, 19/02/2015] J: so which indicators u bank upon
[4:22PM, 19/02/2015] J: i will not ask for specific settings or signals....just indicator namess.....curious
[4:23PM, 19/02/2015] R: Market profile( volume based) , Range ( atr 10 days), TSI( true strength indicator)
[4:23PM, 19/02/2015] J: marvellous....
[4:24PM, 19/02/2015] J: so the program u have developed pops out volume based candidates for buying or shorting and filtered further with atr and tsi.....brilliant
[4:24PM, 19/02/2015] J: and u must have shortlisted these parameters with experience....hmmmm
[4:25PM, 19/02/2015] R: see volume determines the level for a particular stcok
[4:25PM, 19/02/2015] R: stock
[4:25PM, 19/02/2015] R: nothing to do with high or low vol
[4:25PM, 19/02/2015] R: we should know where the max trades have taken place
[4:28PM, 19/02/2015] R: http://www.trading-naked.com/MarketProfileILLUSTRATIONS.htm
[4:29PM, 19/02/2015] J: very interesting concept.....
[4:29PM, 19/02/2015] J: hmmm
[4:31PM, 19/02/2015] J: i personally feel that a good trading method has 2 or 3 leading indicators or factors.....like u have volumes+atr+tsi, like jp has a combination of key fundamental factors etc......
[4:32PM, 19/02/2015] J: like a good king who has 2 to 3 top ministers and many adviser specialists to take views/opinion from
[4:33PM, 19/02/2015] J: like modi has amit, jetley and rajnath.......in the inner circle and many iin the outer one
[4:33PM, 19/02/2015] R: MP tells me which way to trade, i.e long or short , TSI tell me whther to take the trade or not and range tells me where to book
[4:34PM, 19/02/2015] J: i have rsi-william combination+options+patterns
[4:34PM, 19/02/2015] J: mind-blowingly simple.....kudos rajanji
[4:35PM, 19/02/2015] J: this is a brilliant example for everyone......
[4:35PM, 19/02/2015] J: this is what i call a system....this is what i have been advocating since months and years to everyone....
[4:36PM, 19/02/2015] J: no surprise that u r that settled and comfortable and clear in ur trades.......
[4:36PM, 19/02/2015] R: i also tell every one to learn
[4:36PM, 19/02/2015] J: trading success is logic......not accidental but incidental.....not by chance, by choice
[4:37PM, 19/02/2015] J: learning just 2-3-4 or 5 set of complementary but totally independent indicators or parameters is enough to be a pro-trader....
[4:37PM, 19/02/2015] R: learning is far simpler than it is made out to be
[4:37PM, 19/02/2015] J: i wish everyone would believe that.....i do
[4:38PM, 19/02/2015] R: these things may sound complex to a newbie but are very simple
[4:38PM, 19/02/2015] R: more over we have all site which allow you to tweak you indicators
[4:38PM, 19/02/2015] R: and experiment with them
[4:39PM, 19/02/2015] J: the very fact these are coming from u should be enough of proof about the authenticity of this claim....
[4:39PM, 19/02/2015] J: yes experimenting to fine tune and experience is the next step after learning the basics....before one is ready to take the plunge.....
[4:40PM, 19/02/2015] J: will convert this conversation into 1046th article in my blog....for the benefit of everyone.....

How to start learning trading

[4:23PM, 27/01/2015] mudraa gowtham kumar: What are the basic necessary parameters required from your point of view ?
[4:23PM, 27/01/2015] Jagmohan Singh: money doesn't marry those who will not be willing to do anything for her!!!
[4:23PM, 27/01/2015] Jagmohan Singh: parameters bole to.....technical indicators
[4:23PM, 27/01/2015] Jagmohan Singh: lemme outline a few good candidates....
[4:24PM, 27/01/2015] Jagmohan Singh: 1. sma
[4:24PM, 27/01/2015] mudraa gowtham kumar: Please
[4:24PM, 27/01/2015] Jagmohan Singh: best one
[4:24PM, 27/01/2015] Jagmohan Singh: 2. rsi
[4:24PM, 27/01/2015] Jagmohan Singh: 3. options data
[4:24PM, 27/01/2015] Jagmohan Singh: 4. volumes (for stocks), fii/dii data (for indices)
[4:25PM, 27/01/2015] Jagmohan Singh: 5. patterns (like rising triangle, wedges, continuation triangles
[4:25PM, 27/01/2015] Jagmohan Singh: 6. supports and resistances
[4:25PM, 27/01/2015] mudraa gowtham kumar: What time period of sma is required? 5 or 14 day
[4:25PM, 27/01/2015] Jagmohan Singh: 7. trendlines
[4:26PM, 27/01/2015] Jagmohan Singh: all period combinations are good....methods are woven reverse....based on specific period....
[4:26PM, 27/01/2015] Jagmohan Singh: however, it is the tick size (the least count) of the chart which is crucial
[4:26PM, 27/01/2015] Jagmohan Singh: smaller ticksize for shorter period trading....
[4:27PM, 27/01/2015] Jagmohan Singh: eg, i take 30 minnute ticksize chart fr positional and 5 min tick chart for short term
[4:28PM, 27/01/2015] Jagmohan Singh: and ofcourse.....when u r out there sweating the practice, u will come across bonus diamonds which no book or software can or will tell u and those will be ur copyright / trademark gems!!!
[4:29PM, 27/01/2015] Jagmohan Singh: u have to work hard to deserve those "lucky" finds....."the harder i work, the luckier i get" (quote)
[4:30PM, 27/01/2015] Jagmohan Singh: 90%, if not 99%, of the traders are trading casually......and have no future!!!
[4:30PM, 27/01/2015] mudraa gowtham kumar: 👍📝RSI below 30 and above 80?
[4:31PM, 27/01/2015] mudraa gowtham kumar: What's the range?
[4:33PM, 27/01/2015] Jagmohan Singh: what a pity that those 90% think that learning trading the above way is "difficult"
[4:33PM, 27/01/2015] Jagmohan Singh: if u love something, it is no more difficult
[4:33PM, 27/01/2015] Jagmohan Singh: never just see rsi value.....
[4:34PM, 27/01/2015] Jagmohan Singh: i have said this in dozens of rsi articles iu have written in all these years....all are archived in my blog or mudraa.....
[4:34PM, 27/01/2015] Jagmohan Singh: everyone looks at the rsi value and tries to trade according to those only....and gets trapped....
[4:36PM, 27/01/2015] Jagmohan Singh: i have jotted down rsi protocols and rules in my articles (not possible to reproduce here all of them) which should be used instead of plain rsi values
[4:37PM, 27/01/2015] mudraa gowtham kumar: In bestbusinessintheworld.blogspot. com
[4:37PM, 27/01/2015] Mudraa jeneel shah surendranagar gujarat: And as per ur views js sir all indicates bullish.  Right??    What if sudden gap down ??   Like if today usa falls down heavily and tomorrow if we get gap down 100points. Than all parameters changes in few minutes??
[4:38PM, 27/01/2015] Jagmohan Singh: i have done some original work on rsi and william which i bet are not available anywhere in the world....print or web.....to the extent that even the inventor welles wilder doesn;t know them either....i have read him extensively.....he did the all important basic work but somehow didn't go beyond a level.....i gues he is still alive
[4:38PM, 27/01/2015] Jagmohan Singh: yes, that;s the blog
[4:38PM, 27/01/2015] Jagmohan Singh: thebestbusinessintheworld.blogspot.in
[4:39PM, 27/01/2015] mudraa gowtham kumar: 👍will search there
[4:39PM, 27/01/2015] Jagmohan Singh: @jeneel superb question....
[4:40PM, 27/01/2015] Jagmohan Singh: 8/8 bullish signals doesn't mean there will and can't be volatility or fluctuations.........just because obama decided to kill osama doesn't mean that it will be as simple as taking appointment and visiting him to shoot
[4:40PM, 27/01/2015] Mudraa jeneel shah surendranagar gujarat: I asked because you experienced twice last month.  I think. ...but you recoverd double
[4:41PM, 27/01/2015] Jagmohan Singh: after the parameters have revealed that storng bullish winds are there, now, operators will try and create trading situations where very fwew will be able to actually get or remain onboard
[4:42PM, 27/01/2015] Jagmohan Singh: see jeneel, i got off because there were some holes in my method for such a situation....which i have since plugged......
[4:42PM, 27/01/2015] Jagmohan Singh: i don't rule out more holes, but the detected ones stand plugged
[4:43PM, 27/01/2015] Jagmohan Singh: and
[4:44PM, 27/01/2015] Jagmohan Singh: if there is an unforeseen (for operators) development in the world overnight, operators may change their plan and that will show up in changing parameters......
[4:44PM, 27/01/2015] Jagmohan Singh: but we will get time
[4:44PM, 27/01/2015] Jagmohan Singh: if we lose 100 points till we get signal, it will mean that the subsequesnt rally will atleast be 500 points....
[4:44PM, 27/01/2015] Mudraa jeneel shah surendranagar gujarat: No words for u😷😷😷
[4:45PM, 27/01/2015] Jagmohan Singh: later the signal, longer the rally....and vice versa
[4:45PM, 27/01/2015] Mudraa jeneel shah surendranagar gujarat: Exactly😄👍👍👍
[4:45PM, 27/01/2015] Jagmohan Singh: but
[4:45PM, 27/01/2015] Jagmohan Singh: as of now.....8/8
[4:45PM, 27/01/2015] Jagmohan Singh: how can i say something else when this is what i see
[4:45PM, 27/01/2015] Jagmohan Singh: i can't be apologetic for the mischiefs operators play......
[4:46PM, 27/01/2015] Mudraa jeneel shah surendranagar gujarat: Yes correct I agree sirji
[4:48PM, 27/01/2015] mudraa gowtham kumar: 👍 good lesson learnt for me Js ji.  Let This learning will be a continuous process for me.
[4:49PM, 27/01/2015] mudraa gowtham kumar: Will read your blogs on RSI and will come back with more questions.
[4:50PM, 27/01/2015] Jagmohan Singh: i don't have any "vibhuuti" for turning into super traders......only heat, dust sweats, tears, blood....my dear friends....
[4:50PM, 27/01/2015] Jagmohan Singh: but one thing i can assure...all this turns into the gold dust....
[4:52PM, 27/01/2015] Mudraa jeneel shah surendranagar gujarat: 👍👌
[4:52PM, 27/01/2015] Jagmohan Singh: i used to be very very jittery in revealing my "secrets" in blog......but i still used to do it for 2 reasons.....1. it was my duty to preserve them.......2. i read a japanese proverb "they won't do it"
[4:52PM, 27/01/2015] Jagmohan Singh: the latest one i have revealed is regarding the options spread......
[4:53PM, 27/01/2015] Jagmohan Singh: some half a dozen mindblowing revelations i will one day jot down when i have got more or when i am sure nobody will take them seriously
[4:54PM, 27/01/2015] Jagmohan Singh: those who will take my sharings seriously are assured of results
[4:54PM, 27/01/2015] Jagmohan Singh: i am not ashamed of these self talk because i respect the technology........technology has no shame
[4:55PM, 27/01/2015] Mudraa Jammu Rupinder S Raina: We will and are taking it very seriously as a part of learning from you
[4:55PM, 27/01/2015] Mudraa Jammu Rupinder S Raina: Sir
[4:56PM, 27/01/2015] Jagmohan Singh: i can't disrespect or desbelief or doubt my learning just because there is fear that these may be proved wrong!!! these might not be....ever.......self doubt is the greates impediment to freedom

trading light

"travel light"....thus goes a maxim

this aptly should be translated as "trade light" in trading!

eg. lets say u short nifty at 8150 and it falls all the way down to 8000! u r sitting on a profit of 150 points. u start fearing the loss of the accumulated profit. so, how does this effect ur trading behavior? u start bearing the burden of this fear, magnified if their is volatility and chicken out of the trade even if u know that there was no need to do that, on the basis of the technical indicators.

had u not been carrying the weight of those 150 points, u would have probably checked and obeyed the technicals without any pre-conception, without any influence, without any stress. u might have taken a fresh short position happily!

the beauty of the situation is that the market doesn't know whether u r carrying a profit or loss and how much! it is you yourself who is conscious of the "profit" you have stolen!!!

drop that burden and trade light!!!

ejecting from trades.....lessons from fighter pilots

pro traders and fighter pilots are not supposed to eject till the very last moment.

murliji's poser has made me delve deeper into this off-the-cuff remark which i strongly believe in. let me think the why and how of it aloud here.

operators' (and for that matter every serious trader, big or small) primary, if not sole, aim is to get others' money. (it might sound devilish and hawkish and unethical, but that's what it is, trading being largely a zero sum game unlike investing).

since operators are the controllers of the market (they controlling overwhelming majority of the capital) they have to do that by ensuring that they catch the majority on the wrong foot.

and to do that, unpredictability/stealth/dodge/surprise/shock et al are their chief tactics. they will do even the most obvious in the most unobvious way.otherwise what's so difficult about the bet which has 50% assured chance of winning? (market can only go up or down, can't come out of the screen or go in deeper!)

now look at the other side of this predator-prey ground......the mass herd of traders!

while operators have tonnes of confidence and iota of fear, small traders have tonnes of fear and ounce of confidence! they are pre-paid failures!!! retails traders are doves ever ready to flutter and fly (eject) away, with or without their capital!

this fear is exactly what the operators want to keep the trader's in the losing majority! and mind you, greed is fear, inside out!!! both fear and greed are, hence, traps.

so, what does a trader have to do to be a Pro and not be an Am so that he ejects not a second too soon?

first, have a method. learn to fly the jet to the hilt of perfection. crash the simulator a thousand times. ten thousand times....literally! cry, sweat, quit and return....a hundred times! know everything that is on offer in the market. be there, do that. don't be afraid of any thread of experience. that can take from a few months to some years. depends on your resolve. the more u keep urself safe from bruises and cuts and heat and dust and pain, the weaker ur mental bones remain.

i recently watched a ted video wherein the speaker said that it has been proved that one can learn anything in 10 hours and master anything in 10000 hours. 10000 hrs, at a rate of 5 hrs a day will take 2000 days (roughly 7 years, give and take)......but remember.....10 hrs takes 2 days! so after the second day, u r on ur way and it gets better and better.....u start enjoying the pain after just a few weeks!

practice so much that every damn bluff and tactic of the operator becomes a "seen that tantrum a dozen times" stuff for u.

this is the stage when u are no longer a dove.....but a fellow hawk. u hear all the fairytale story of the operator and say "i am not impressed!"

u develop thick skin and develop of habit of seeing beyond what is being projected. that way, u don't fear any longer......u find it much easier to hold on....a few seconds, a few minutes, a few hours, a few days more! u hang on....u master ur fear and keep looking at the opportunities......ur fear becomes dwarfer than ur self-confidence....u start to test the operator rather than the other way round.....

confusion fog will still and always be there....but u will get the infra-red, x-ray....eyes to look thru....

u bear the pain of the wait and keep urself ready for any eventuality.....u become a sharp shooter marine who can shoot the coin-sized eye of the enemy from a hundred yards between narrow valley of two heads of friends!

u become so expert that u r able to spot right and wrong with amazing accuracy and at amazing speeds!

but u have to have a method....and then, u have to practice it like a possessed soul......tapasya!!!

in the words of one of my ex-bosses in my career....."nothing is magic, everything is logic". practice makes seemingly impossible things appear like magic!

i and they and you.....all are as good as our methods....and our practice.

this kind of practice on the method......ensures that operators can't easily "surpise/shock/dodge/confuse/frustrate/unsettle" you!!!

while a good fighter pilot or trader is courageous and bold enough to risk his life and capital, with technique and practice he has tamed his fears to the extent that he can take the right uninfluenced decisions.

"hone ko to bahut kuchh ho sakta hai?"

"hone ko to bahut kuchh ho sakta hai?"
(as it is, anything can happen)

market can rise unexpectedly, market can collapse.....

that u can come to know only once it has happened! u can ofcourse wait to see what happens and then come in the trade. but then what's use? what was to happen has happened? u were not in the contention for the possible rewards.

trading and fishing are rarely meant for those who intend to keep sitting at the shore waiting for the absolutely calm sea......which anyhow, as they say, never makes a skillful sailor!

"hone ko to kuchh bhi ho sakta hai!"

but u can't make a living out of trading like that! u can't realise ur dreams like that!

here, probability comes into play.

trading, as i always say, is probabilistic and not deterministic.

there are times when the market's move in a particular direction high probability and then there are times when the said probability is low.

a good trading method + trading judgement is the one which can segregate the low prob opportunities from high prob ones.

a trade can never be assured. otherwise, all trader universe will jump in that direction and there will be no buyers for sellers or sellers for buyers! market will vanish!

probability is the sister of opportunity.
sensing the probability is like spotting the opportunity.

with time, practice, experience and learning, probability picking skills can be astonishingly honed!

and the beauty of the probability going wrong (mostly initially, rarely later) is that a trader anyhow always has the brakes and steering in his/her hands.....isn't it?

u can always stop and turn!!!

indecision is dangerous in trading. doubt freezes ur ability to act.

it is the indecision which causes loss in trading.

a yogi can be a better trader!

do u ever feel the same chill down the spine when u watch a horror movie without sound?

then why trade without muting the sound of business channels!

or swallowing every bit or opinion being thrown about in every article or discussion or group! experts have explanations, extrapolations and expectations but not predictions. otherwise, they would be trading themselves.

and consensus of amateurs means nothing except the bait for the operators do exactly the opposite

stay silent, stay studied, stay disciplined

opportunity won't come just because u r ready

it will, rather, come when u r not!

only practice of discipline can make u be successful in market.

a yogi can be a better trader!

3 possible strategies for the trader who gets stuck

there are 3 possible strategies for the trader who gets stuck in a bad situation:

1. i am gonna win everything even if i have to risk losing everything
2. i am gonna save my capital substantially even if i have to forego quite a bit of profits which become subsequently possible
3. i am gonna save every penny of my caiptal even if if have to forego all the profit which subsequently appears quite possible.

the first one u can afford if u r an advanceed player and what u risk is much much less than ur total kingdom

the second one is a wise but defensive approach somehow hinting that either ur money management or ur method hasn't yet come of age

the third one is the best remedy for the trader who has got it all wrong

depending upon which one u choose, u need to build ur gameplan around it.

remember, the market doesn't know what ur position is, what ur size is. markets are like politicians. a poor individual doesn't matter or interest them. they are interested in the masses.

market will do what it has to.

so, u do what is in front of u. bat technically correct. trade ruthlessly unemotionally, like an intelligent algo.