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

how to paper trade?

do u play chess?

if yes, has it ever happened that u made a move only to forcefully request your opponent to let u retract the move?

what if ur opponent refuses to let u?

chances are that u might have quit the  / surrendered / scrambled up the game!

why do u do that?

possibly because of frustration.....knowing the sheer hopelessness of the situation u find urself in courtesy that one wrong move.

but, if ur partner lets u withdraw the move, he/she is doing harm to u by programming u with the habit of always being careless with the moves knowing that u will be allowed to take it back.

on the contrary, if ur partner doesn't let u do that, he/she is doing u a world of good to u.

u will soon be free off the habit and start making right well thought of moves. u will act slow and own the responsibility for ur moves.

paper trading is like such a game of chess.

budding trader should do paper trading before he/she commits hard earned money to the market black hole.

just like a trainee pilot who initially is allowed to fly a jumbo in a  simulator!

but how to paper trade.

if u paper trade in the way that chess player was playing knowing that u can always take back the move, the purpose behind that paper trade is deafeated.

ur ego is intact. u r emotionally not involved. nothing is at stake.

so, how to make paper trade real like? how to involve almost real emotions which u r likely to encounter in the trading war time?

one good way is to announce ur paper trade. this way, though ur money is not at stake, ur pride is.

ultimately pride or face loss is as painful as the money loss.

u can announce that paper trade to urself (as by writing/noting in a diary whose page u would not tear), or to ur peers in a forum (like mudraa.com) etc.

once u have announced it, u have taken the plunge, bitten it. u would now have to chew it!

now, u can't disown it. u would have to face "the consequences"

u r "in" the trade....."in the real learning"

keep a record of 5 such trades and look in the mirror............u will see something real!

after the pride, get ready to pawn ur sweat, tears and blood....money can wait for the safe shores!

paper trading

college annual fest date was approaching.

arts second year students were to perform

a play!

they chose "the hangman's guilt"

by Priesta Pretta.

sanjeev was playing the hangman

and pal was playing the youngman facing the gallows!

One day prior to the staging

a dress rehersal was conducted

in the auditorium.

a veteran from the city's famous dramatics club was invited

to give his last minute tips!

when he saw the last scene

when pal's neck was firmly in the hanging rope's grip

the acting veteran interrupted

"pal, are you about to be hanged till death

or are you there to try out a necktie!!?"

everyone was shocked!

but everyone knew the veteran's views carried weight!

"where is the terror on the face?"

"i am sorry, sir. let me do it again!" pal apologised.

the whole scene was enacted again

but the veteran was not impressed.

they did it again

again to the same effect!

finally, pal gave up

"i simply don't know how it feels up there in reality, sir. i can't give that expression. i am simply not getting that feeling!"

"never mind, pal. just re-read the novel and come back a bit early tomorrow! i assure you that
everything will be fine!" the veteran suggested.

everybody was worried about this last minute glitch

but they held their nerves

assured by the presence of veteran by their side!

--

pal went home

dejected

but determined to do his bit.

he picked up the play after dinner

and started reading it!

it was a long play

but so interesting that

he couldn't put it down even for a minute.

it was well past midnight when he finished reading the play!

he was overwhelmed by the emotions

of the man being hanged!

he pressed the bed-switch

and instantly slipped into deep sleep.

--

3am

at dead dark hour

pal's dad heard a strange noise in pal's room

he quickly picked the torch

put on his slippers

climbed down the stairs

knocked at the door of pal's room

but when he got no reply except strange noises from inside

he went inside straight!

inside

what he saw

dropped his jaw!!!

he saw pal

totally drenched in sweat

from head to toe!

wriggling in the bed

like a body under poison!

he saw pal struggling to break free

he saw pal trying to shout

but his voice stuck in the throat

he saw his limbs shaking violently

...the shell shocked father

switched on the light in a flash

held pal with both hands

shouted his name aloud

and shook him up violently

out of

his nightmare!

pal was still breathless

but half back into consciousness!

by that time

pal's younger brother had also reached.

he gave him a glass of water

but pal could barely hold the glass

pal's dad supported the glass

but pal's lips were refusing to open!

pal's dad embraced him close to his chest

"what happened pal?"

pal didn't reply

for what it seemed ages,

and then mustered his breath to say

"thank's dad for waking me up.

i was about to be hanged!"

---

the next day

pal got the first prize

for his portrayal

of the man being hanged!

========

i hope this answers

the following question

from one of my mudraa.com friends

--

From : Ranjit Chakraborty at 11:08 AM - Jan 13, 2011 (3 days ago)
"during paper trading, 90% of my assumptions, conclusions and analytical view points gets right.
considering all factors and mainly 'trend is friend'.
but whenever did real trading, my capital got eroded 90%.........
How will u explain this Sir ?"

4 steps to become a legendary trader!

While reading Gurcharan Das's masterpiece

"The Difficulty of Being Good" (Penguin Books)

I have been reminded of a beautiful life philosophy we read in school only to forget on reaching the college!

This may sound old-fashioned

but is a fine life-technology

written by a great mind,

sage Manu

in 100AD

in his immortal treatise, Manu-Smriti.

As prescribed by the great sage, the human life span is divided into four stages known as ‘ashrams’ (shelter).

The Vedas define a specific purpose for each ashram and offer specific instructions to be followed in each ashram.

I. The first ashram, Brahmacharya, is the student phase of life when the person is supposed to immerse himself or herself to learn the art of life and that of making a living.

II. The second ashram, Grahasta (meaning householder) ashram is the stage of family life. It constitutes raising a family, earning a living through the skills acquired during Brahmacharya ashram. It encourages the enjoyment of material life.

III. The third ashram, Vanaprastha (Retreat to Forest) indicates living in a withdrawn manner. People in this ashram play the role of mentors.

IV. The final stage is Sanyasa or renunciation. The person wthdraws from society to spend the remaining part of his or her life in meditation and solitude.

----------

I found it interesting as well as scary!

Scary because of seeming impossible implementation of ashrams in today's social setup.

Interestingly, i found it very useful for anyone who wants to prepare for trading.

Stage I:

Brahmacharya = Student phase to learn trading and technical analyses, refraining from trading!

True to expectations - this "Brahmacharya" is impossible for the debonair traders!

Stage II:

Grahasta = Making-a-living-by-trading phase

True to anticipation, ill-trained traders (who skipped the first ashram) fail in this stage except 'enjoying the material life' at the expense of the principal amount!

Stage III:

Vanaprastha = Retreat to forest (of investing)

This stage never comes! One can't be a good mentor if he hasn't been a good student!

Stage IV:

Sanyasa = True to the Inevitability, the dejected and rejected non-trader gets ejected from the market to spend his or her remaining life in meditation and solitude.

Strangely, this lost trader takes up the Brahmacharya (student phase) after the pain and humiliation of the Sanyasa!

In this second innings, Grahasta phase (making a living and enjoying the worldly pleasures) comes but with the spirit of Vanaprastha, courtesy the bitter experience of the first innings!

---

Hard boiled !

Which came first, the chicken or the egg?

Although we still don't have a definitive answer to this dilemma

one thing is for sure

there is always an egg before the chicken and always an egg after the chicken!

The first one produces the chicken

then the chicken produces the second egg!

While the first egg is the principal amount

the second one is the profit!

This second egg acts as the principal amount for the next chicken!

This way an entire poultry farm gets created!

---------------

What if the very first egg gets broken?

There will be no chicken and no second egg?

Rather, there will be no further unending chain of chickens and eggs!!

So, it is not as important to know which came first - the chicken or the egg!

What's really important is whether the first egg remains safe.

And since every egg produced by the chicken in the chain is a principal amount for the subsequent chain of chickens and eggs, all the eggs need to be safe-guarded.

--------------

Majority of the new traders in the market are reckless with the egg(s) in their hand!

They underestimate the market

overestimate their skills

and start trading big bets without getting seasoned in the markets.

This is like juggling with the eggs in the dark while running backwards on a slippery floor with eyes closed !!!

Inevitably they end up with eggs on their face!!

hopes on the floor

and the future out of the window!

--------------

Trade small till your practice eggs are hard boiled in the market!

Another way to practice trading without money

One of my close friends Madhusudan, who is a top shot IT professional looking for an entry into trading unverse, asked me a better way to practice trading than paper trading.

"Paper trading is not giving me the real-time stress that trading with money would have given! And I don't want to risk my bucks as yet" he said.

He was right.

"There is one more way you can practice trading without money and yet feel all the pressure and emotional roller-coaster ride of realtime trading!" I said.

"Imagine you are a stocks consultant to me.

Imagine I will be investing good amount on just your recommendation....blindly.

Just start emailing or smsing me your recommendation.

I will hold you answerable for your calls.

I will keeptrack of your every call. I will not let you forget the success ratio of your calls to me.

Your reputation, self-confidence, ego.....all will be at stake.

In actual, I will not buy or sell on the basis of your recommendation. It will all be a game. A dummy exercise.

But since your recommendations will be always under my scanner, you will feel the pressure of going right or wrong!

Your ego will be at the stake in place of your money.

I will prick you when your recommendation goes bust.

I will congratulate you when your recommendation comes good.

Playing a stocks-consultant will train you better and faster than solo practice.

Just like a pilot of commercial airliner where 500 lives are in his hands versus when he is flying solo.

You will be under tremendous pressure before pressing that 'Enter' button on your laptop before you send that recommendation email to me.

If your call goes right, I will book profit only when you ask me to. Otherwise, I will hold you responsible if the stock were to dip again.

If your call goes wrong, I will trigger stop loss only when you ask me to. Otherwise, I will let my account keep bleeding.

I will make sure that this dummy game makes you sweat like hell!"

"I take it!" was his reply with sparks in his eyes!