To Be A Trader-20yrs

Thread Title
29 June 2015
12:38 PM
To be a trader - 20 years' journey from novice to pro novice
To be a Trader-20yrs Page 1
P A R T -- 1 Introduction
02 July 2015
02:42 PM
THE THREAD WILL BE COLLECTION ON VARIOUS THREAD -IDEA - REFLECTION AS I HAVE SEEN IN INDIAN MARKET.
1ST PART: SOLILOQUY-here i express my past in the context of trading
2ND PART : AS I SEE IMPORTANCE FROM OTHERS' VIEW WHICH HELP ME TO BECOME A BETTER TRADER - here i express from good traders of Traderji
3RD PART : SYSTEM BUILD UP & APPLICATION- its really enjoyable.
SOLILOQUY-here i express my past in the context of trading

04 July 2015
10:28 AM
CAN ONE LEARN TRADE ?

YES, journey path is difficult..
you reqd aim...solo journey...many a comes, many goes out....u must continue
..
HOW?
AIM FIRST...
TIME MANAGEMENT...
DESIRE TO LEARN
PATIENCE
OBSERVATION..
PRACTICE THE PHILOSOPHY..WHAT I LEARN THIS WEEK
CAN U ELABORATE??
EASY MAN!!........journey path is painful...l with more than10yr experience knew it
yes..min time reqd 10 yr..[ask any PRO with consistent 50% return for 5yr.if u have doubt]
long drawn goal .. business visualisation concept..
desire to learn...
never aim money...[greed will definitely ruin you]
a balance speed of 2hr a day..+3hr weekly analysis .what i learn this week
discipline not only imp.. but to be followed..
you have to read..
you have to practice..
you have to analyse
yes its a game of hard work..
lucky if u get a good teacher../mentor..
it definitely save time of 5yr...
but he should not be an well wisher.., instead a hardcore pro..
teaching trading../ analysis of situation must be his job..
can evaluate u.. must suggest real medicine not crocin..
so r u ready to learn further?

[i definitely would not have tried , if i know still i have to continue..alas.. i am a chess veteran. and do project in real job..urcertainity..
opponents move variation part of my life]
trading must be treated as business ..not hobby
its the dream .. supplier of new fool..
all mf r waiting../.
you must know how to handle business venture...dream vs. REALITY
MUST KNOW A/C...
PROFIT/LOSS..
WHAT MAKES A BUSINESS CLICK?
BREAK EVEN ANALYSIS
A-B-C ANALYSIS..
SWOT...[FOR YOU]
DETERMINATION & PERSEVERENCE..come back next day attitude
till i remember my start of trading..
1990..91 invest .. good company ..REASON after iran-iraq. war market must move up..PREMISES..threat perception over..money flow
in..[iwas 3yr served govt..officer in ministry+ seen father do business..2yr past experience as works manager.... i laugh at myself..seeing
the audacity..
yes i made money..not knowing but simply being lucky..
luck of monmohan singh giving exellent budget..
luck of A BUBBLE called harsad mehta...
i made 5 times then .. cashing ..let another..5times drained..
by continue holding....
so far public euphoria contd you can make..MONEY
any body ...
no invest ...again 1997..attempt made ..lost 40000/
now the gambler...2000..again see..bottom fishing...

hoho..all u know..i shot my own leg..
NOW COME THE GREAT CHANGE OF MY TRADE CAREER...in a discussion
my friends confide.. a game called DAY TRADE..DABBA]..
THEY LOST.. 3PETI .7 PETI EACH..
AFTER ALL I PLAY CHESS & BRIDGE [PLAYER..of B grade]....
shall i not join to show my intellect..my fighting spirit..
to outwit broker...
LITTLE.. DID I KNOW I AM ACCEPTING challange of life time..
step 1..study financial statementof friend's a/c...
reason of loss..
step 2... a game plan preparation..
a simple high volaility stock play plan..
contrarian.....study yesterday high /low..actual market hr[ i dont have computer then]...NEXT DAY .. SELL AROUND YESTERDAY
HIGH...
PROFIT TARGET...1%..
OR.. BUY AROUND LOW OF YESTRDAY...PROFIT TARGET 1% UP...
IT IS NOT EASY...
so dabba owners is unhappy.. chap is young.. the new boy is earning...
yes,,,HIS DAY SHALLCOME...
THIS COCKY FOOL[i am]...OPENS A POSITION ON INFOSYS...
DT..AFGAN WAR STARTS,...A SHORT POSION ON INFO..300
...AND I ,MR FOOL WENT TO PLAY CHESS TOURNAMENT AT AHMEDABAD...
RESULT OUT I TELEPHONE...2HR. AFTERWINNING MATCH..
BUER CERCUIT....
SO HOPE AND PRAY GOD..
...ALOSS OF 400X300= 120000..
AFTR ALL DABBA...APPEAL TO HIM 1LAH.. SETTLED..
my 60000 profit gone ...40000paid..
ok
to start again to play...i shall deposit 1 lakh...
this time i [a bigger fool]...i rule only to play before screen..
no going out...
only on night shift/ off day...
no loss/profit holding
psychologically it takes 2months to come out...
but watch tv patty..price quote.....

seen on off day..wipro and dr reddy....
2x5.5hr...2months...
no play...
analysis....how day after day....
plan to move ...vs ACTUAL
yes ...real life note...
i am lucky ....family gone home....
weekly profit target...5000/...
lucky to be market...IN RANGE BOUND WHERE THIS STRATEGY WORKED..
COURSEY...WIPRO..I GOT BACK45 000 IN A MONTH
SO I AM HOOKED
SO FAMILY CAME BACK ...ALSO MY RATIONALITY...
A 40000..SALARY..TRY TO GET 50000...RISK TO LOSE..30000..THAT MY LOSS LIMIT...BETTER PLAN...

DO SERVICE...
PLAN RETURN OF 20000/MONTH...DEFINITELY I MAY GET 10000/
STYLE SHORT TERM TRADE...
DIRECTION BUY ..
STOP 6%
PROFIT TARGET...10%...OTHER HALF 20.25%
YES...BY FOLLOWING THIS SIMPLE TECHNIQUE..
I RUN FAMILY..AV.20000/MONTH..
no i am not good trader,,,simply..market.. favours me..i am simply lucky

so further.. i plan to learn...
magazine..capital market..
site . angel
www. moneycontrol.com
member equitymaster.com
they for info...
any spl. course...cbot..
trading market...
trend-dynamics..
i attend...no i dont spend money a single...i UTILISE
MY PROFIT GENERATION IN IMPROVING MY SKILL...
nobody suits trading..its not natural...its WAR,..MUST KNOW ART OF SURVIVAL first..
best single book to learn ..phantom of pit...
you have to be a learning m/c..
have to digest... then only u can trade
a journey path....
GO IN A BROKER'S OFFICE...SEE WINNING TRADER..
SEE FOOLS ARE BEHAVING..WHO CAN HOLD WINNING TRADE..
observer makes a speculator...
timing..
i laugh one ...you r wrong...
i laugh again..
cotd..8 trade loss..IT PROVE BREAK OUT NO MORE WORKING...
I HAVE SWITCHED TO BUY AT DOUBLE PULLBACK...
YES IT WORKING IN PRESENT MARKET..
do fundamental analysiswork?
yes its the FATHER..GIVES US NAME..
moneyflow...companys vision...balance sheet..
its postmortem of fundamental...
ORDER BOOK..IS KEY..
DO TA WORK??
YES DEFINITELY..ITS MOTHER...WITHOUT TA NO TRADER CAN BORN...
YES IN THE AGE TEST.TUBE...inside info trader r test tube baby..
company director buy in dummy reletive....
a financier may back him...
SO A BABY TRADER IS BORN AFTER CONCEIVE[ TA+FA]

BABY'S GROWTH DEPENDS ON ENVIRONMENT[mastery over investment psychology...
money management is SCHOOLING'....
PROFIT'LOSS.... IN BOARD EXAM...IS SCORE..
let us join class..
a]fundamental
b]ta
c] trading psychology..
other extra curriculum...
software knowledge
time mangement
survival skill
view to stay neutral..
risk taking capacity
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,,,,,,,,,,,,,
my trading fulcrum..Investment........... trading..............gambling
accuracy . 30...50%..................... . 60%
my feed : boring.. enjoystressful
return 100%................... 20% .30%
money breakup 20 %.................... 70% .10%
stop 30%................... 8% .3%
this system works for me....
av after tax annual return 18%..very poor..
but i dont loss much..
profit30-drawdown12=18
profit30-drawdown12=18
while day trade..max 2position
short term... max 3 position
long term trade... 12max...50% of short profit book . residue bconvert to long hold...
mostly emotional trade are wrong..80% wrong. holding stop me good return
cool brain risky trade r however 70% right..
now i am planning to switch low risk trade
Investment trade gambling[day play]
read 3 value...
pl CLEARLY DISTINGUISH 3 ROLE
SELF SABOTAGE .. CAN HAPPEN ANY TIME...
further i start my journey...
TRADE ELEMENT...
1] STUDY MARKET...CONSIDER GLOBAL VILLAGE CONCEPT...
WHERE INDIA IS SUPERIOR...
EXPORT..OF SERVICE.. SOME CHEAP MEDICINE...AUTO ANCILLIARY
JEWELLARY EXPORT
U IDENTIFY ..BEFORE..OTHERS...DEFINITELY MAKE MONEY...
2]MONEY FLOW CONCEPT..
WHETHER FURTHER MONEY SHALL COME INDIAN STOCK MARKET..
PRESENTLY YES..
can indian product its cheapness..be maintained..
do fii money shall continue to pour....
failure of PREMISE must be checked,,FROM INFO ONLY...
4]uncertain factor
global and local
IMPACT STUDY MUST BE READY ATLEAST IN MIND
this is i call visualisation..
so that u can act when it happen...
5]MICRO VIEW...
INDIVIDUAL STORY OF ANY COMPANY..
6] WHAT MAY HAPPEN TO MARKET...AS PER BIG ANALYSIST
MIND IT ITS AN OPENION , NEVER TRUE ...
A FAILED TRADER.. ANALYST IS BORN...
7] CHECK PRICE...ITS SUPREME...ALL IFS & BUTS COME LATER...
so ta is helpful isnt???
forget pattern , follow what price is telling...
it shall move up or down..
use ma..ma.x as hints..
depending upon.. your time frame.. uplimit...price target
down limit .. loss pt...
now observe PRICE...WHO IS WILLING BULL OR BEAR...
join the winner..
trend is nothing but strengh in direction..
[ i am lucky, my wife is helpful to teach .i know mood swing..]
yes the REVERSE CAN HAPPEN ANY TIME..
[ I AM LUCKY..MY BOSS Mr Berma knew share,,trade..understand time management..single direction minded..go and get it..always
ready for worst case scenario..a man who executed and guide 20 projects..
flexibility..calmness. puzzlesolving..direction orientation..natural]
7]now comes entry..here the puzzle starts..
breakout..
pullback
retracement..
oversold condition..
as per me...all of them given SUCCESS to me..at partcular time..
definitely failed in different market condition..
YES THE VARIABLE.. MARKET..CONDITION..STRATEGY CHANGE ACCORDINGLY..
STUDY NEWS FLOW,,ITS REACTION ..DEFINITELY ..U CAN TELL HOW
PRICE SHALL BEHAVE..
if wrong ..stoploss is there to safe guard..
8] my strength..academic knowledge of statistics..+ operation research
study and play chess..as amateur32yr..
work as driller..project executor..
9] nonfinance background..poor knowledge.in basic computer..
THIS 2 R MY WEAKNESS..
DIARY WRITING A MUST FOR ANY TRADER..HERE I LAG.
DIARY WRITING A MUST FOR ANY TRADER..HERE I LAG.

I CAN NOT..[HI I WORK 12HR ADAY..5 DAYS WEEK..]
+ PERSUE..TRADING HOBBY..
so i suggest weekly once writing,..
but ,u pro write daily..my advise to all ..newbees..
now u must experiment..as amateur.. min. 3 entry and exit style...
as pro as much as u can...
more than 30 stock system i personally tested..
std software../ can do it...
for conceptual development bill william MUST...
LISTEN TO RAKESH JUNJUNWALA...
ANY PRO CAN TEACH U..,provided u honestly know your strength and weakness..
hard part is TO MODIFY ..YOU..YOUR HABIT..
earlier u start is better..
trading plan..
recently.. many a teach it..
money management..u can learn it..
when to pyramid ..when to fold..
PRACTICE THEM IN REAL TIME IS DIFFICULT..
I CONFESS INTRADAY I NEVER DO IT RIGHTLY..
IN WEEKLY SIGNAL BASE ENTRY..I DO OCCATIONAL RIGHT
NEWS STUDY..
by far capitalmarket.com..best..
opinion and info use .. moneycontrol.com
equitymaster ok..
i am told motilal excellent..by i dont know..
ask any fund manager..
learn how they make opinion..its not the opinion BUT PROCESS OF MAKING IT..HERE LIES KEY..
last but not the least..
never feel stress..[in profit or loss live as stoic]
SO NOW U R ATRADER..
-----------------some good reference
...............................
indian industrial growth..2002-12
finacial relation..bond &market..
business-standard enews letter..
capitalideasonline.com.
any fund manager talk show..
read.. their view not their prediction on MARKET..
I TELL YOU ... DONT follow ... THEIR ACCURACY LEVEL OF HARDLY 30%
LESS THAN HEAD /TAIL TOSS
YES I MEET THEM PERSONALLY...AROUND 6 OF THEM..
VERY SMALL SAMPLE..BUT CONCLUSIVE[atleast for me]
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,,,,,,,,
those who enjoy trading/ hobby pl read...
=========================================
FINANCIAL RISK/ TRADING

04 July 2015
10:31 AM
FINANCIAL RISK/ TRADING

AN INTRODUCTION TO THE PSYCHOLOGY OF TRADING AND BEHAVIORIAL FINANCE
author..mike elvin...
Trading on the stock exchange is all about playing against the mind of the masses. The big guys and operators successfully wi ll beat your mind
by making you think, think and think. Is the right time to get in, will the market fall, and so many times people have asked me when the BIG
correction is going to come?
Many people have gone short in this Bull Run and felt the heat. 'Go short' that is what your mind will tell you when the NIFT Y makes 3% over
2-4 days.
There are many traders who suffer from this mental gridlock. Chances are that you are one of them. Human beings excel at patt ern recognition
but when coupled with risking money, they fail miserably. Fear or greed gets in their way of thinking. It is your ability to recognize charts,
without needing conviction from another trader or CNBC that will separate you from the rest.
Predicting is a curse that is thrust on a trader, because normal thinking tells you that to make money you have to be able to predict a movement in
a certain direction.
..
This is where you take out the emotion and thinking from trading. Use the best charting software and setup a tri -state signaling system that
should tell you when to long, short or be out of the markets. It doesnt matter if you following a trend trading system or a breakout system. You
will be probably fit into one of these categories of a trend trader or a breakout trader. It is for you to choose. U can mast er both. Once the
decision-making is handled by emotionless software, which work tirelessly for you, most of your time you can spend on money and risk
management. Stop thinking about whether the buy/sell signal is valid or not. Just make sure that the difference between entry point and the stop
loss is acceptable by your risk management system. Focus most of your on capital management. Things will become easier for yo u. Stick with
your system and dont keep changing it. Do as many as a test you would like before applying it to your trading style.
You will still not be successful if you dont develop a good profit taking mechanism. You or your system be may be very good at generating
70% perfect buy or sell signals, but unless a good stop loss and profit taking strategy is not is place you will be out of th e game maybe not soon
enough but later. A sloppy stop loss is all that is needed to make things go against you accumulation. On the other hand your impatience will not
let your ride the full Monty. There is no way to tell if this is a top or a bottom if you have made it on the right side of t he trend. The best way is to
change the stop loss of your first lot above your or below your entry point using time as a parameter. The rest you can exit when your decision
system tell you to. The more time you allow your trade to flow more are the chances that it makes you a good bundle.
You will perfect your system by surviving in the market. Taking a small hit today is the best strategy. Learn and device your risk and money
management techniques and leave alone making entry decisions, because there is no perfect signaling system and there will not be one. There are
plenty of tools available out there that can do better than you. Making money in our markets or for that in any conventional market is the art of
capital and risk management.
Remember -Neal Hughes is basically daytrader trading 60minute and 5 minute time frames etc. Now What about using his tactics on a long term
basis specially when you trade long term on darvas box theory momentum trading?
The concept can still be applied. but you need to look at breakouts on weekly charts of the stock in question and then drop d own to daily chart to
implement pullback buying as delineated in the examples.
------------------------------------------------------------------If you want perfect trades, perfect your trading plan. Neal Hughes -"FibMaster

ANY TRADER MUST SEE THESE Q ..ANSWERED..
How to know where to put your stop loss and when to move it
Learn the key to understanding & applying volume
How really understanding volume can deliver larger profits
Which indicators work best
How to properly combine indicators for outstanding reliability
Charting mistakes that can cause you to miss some of the best trades
Advanced support and resistance techniques
How to keep from getting whipsawed out of a trade
Stocks you should avoid like the plague
How to profit no matter which direction the market is going
The best way to stay in a profitable trade (swings & trends)
The logistics of opening and closing trades
The Achilles Heel of traders, "Money Management" including;
How improper capitalization can sink your ship
Proper position sizing
Proper position sizing

How to get the most out of your brokerage account
How record keeping can increase your profits
Demonstrates how simple successful trading can be
How the understanding of an indicator can produce superior profits
..
Expected or unexpected eventualities though unpleasant happen at times even with all the forces trying to prevent it. With in creasing stress
between Left and UPA, a trouble in the government cannot be ruled out entirely at the present time. This probability led me t o put this thread
here. Market reacts to this kind of stuff sharply and then recover in a short timeframe (according to a study on rediff.com w hich I could not
locate now, average time of recovery to previous levels in US market is around 4 days... hope my memory is not very bad). Now when it
happens, this, though unfortunate an event, gives opportunity to capitalize intraday or in short term. That was the good part of a bad thing. Now
the bad part of the same bad thing is that just at that right moment, our emotions take control and decision -making capability is smashed. We are
confused and in yo-yo situation, shall we sell, shall we buy. If we can develop a rule (intraday as well as delivery) for these eventualities, t hen
that would make up for our decreased insight during such time.
I would request readers to put their valuable opinion and share experiences, especially senior members who have huge collecti on of such
experiences.
BOULDER, Colo. (CBS.MW) -- Most traders experience a rite of passage and baptism by fire during the first few months after opening up a
trading account; emotional mismanagement combined with a general sense of complete and utter confusion as a stock appears to trade in a
manner opposite of what they would think in light of the fundamental research.
A perfect example: Taser International (TASR: news, chart, profile).
Even if you are completely new to the world of trading or investing, there is a good chance that this developer and manufactu rer of less-lethal
self-defense devices has entered your trading universe. The real question is, "How can a trader effectively filter out the noise a nd look at TASR
shares objectively?"
Do not buy TASR! Why? Well, for one, prisoner-rights group Amnesty International said stun guns are needlessly deadly and more testing is
needed. A red flag. Moreover, many articles and reports have surfaced, especially in the New York Times, raising questions ab out safety and
adding to the specter of debilitating lawsuits in the future.
In addition, it has been said that corporate insiders have sold 1.3 million shares, worth roughly $68.4 million, and this cou pled with over 50
deaths associated with these "less-lethal" guns must have bullish traders running to the hills. Additionally, quarter -to-quarter sales growth has
fallen from 24 percent to 16 percent in the third quarter. Do not buy!
If these reasons were not enough, consider that as of November 15th there were over 15.9 million shares short; thus making it clear many traders
are in fact betting prices will fall. How can they be wrong?
This should be a proverbial slam dunk for bears; however, I feel it only makes prudent sense to explore another angle on TASR before coming to
a decision. In fact, most true trading professionals only look at an objective, pragmatic analysis of the market, by studying supply and demand on
a chart -- Technical Analysis (TA). Almost all the aforementioned information was simply subjective "news" that elicits emotions that ru n
contrary to profitable thought. Do you remember when the bad news about Enron hit the marketplace? Trust me, it wasn't near t he top and only a
clear knowledge of charts patterns would have given a trader a "real" read of emotions.
Technical analysis paints the psychological picture from A to Z, and if a stock is in an uptrend in spite of a negatively spu n fundamental story,
technicians can easily look past the fundamental theme because they are comfortable with certain chart patterns that they hav e seen over time
that allow them to define risk vs. reward and make clear what the path of least resistance is.
In the short-term, which is less influenced by the fundamental company performance, money flow and psychology are the underlying factors t hat
technicians can use to get a sense where the money is going and what current psychology is. They may soon become more favorab le to accepting
the risk of an upside move vs. a downside slide. With that said, before we submit orders to go short TASR, let's explore the technicals.
As of this writing TASR is currently trading above its 10-, 20-, 50-,100- and 200-day moving averages (DMA). With the 50 DMA rising, a
technician can conclude that shares have been traversing higher and that the path of least resistance is higher. Additionally , these moving
averages are all pointed higher and they are aligned in such a way that the 10 DMA is above the 20 DMA and the 20 DMA is abov e the 50
DMA, and the 50 above the 100, and so on. Alignment in this fashion is bullish and reinforces the objectiveness of the trend -- bullish. What is
more relevant to a trader, a bad news story or price action? Emotional traders generally follow the former.
Continuing on, there was a failed attempt in early November to take out the yearly highs of $32.08 and during the last month shares have been
creating a symmetrical triangle and appear poised to breakout higher. Of course, who will fuel the demand? Well, for one, tra ders that have been
selling TASR short (borrowing shares with an obligation to deliver shares back to the brokerage house, and a trader is forced to cover -- "called
away" -- if the lender wants the shares back) may all rush in to cover at once if the primary trend continues.
Simplicity is the market's greatest disguise. Traders turn on the TV, gulp five cups of espresso, and then sometimes trade ba sed upon information
that most traders have fully dissected hours, sometimes days, ago. I have found that taking the subjectiveness out of the equ ation and using
technical analysis can turn the opaque into the transparent. As the saying goes, "Trade what you observe, not what you believ e." I observe price
action in TASR as bullish and giving an antithesis reaction to recent fundamental negativity. And the best part of all is tha t, as a trader, I can
limit my bullish risk via stop loss order and, if triggered, listen to the market. Of course, odds are I am right. Buy TASR.
DAVID NASAR
There is nothing better than the experience and knowledge one can gain from real trading with one's own money
Well, I am a daytrader and daytrader by choice as well as compulsion.Though I have yet to achieve significant profits in this arena, I could not
resist myself from writing over here.
Well, day-trading is certainly not a lottery, it involves an armour of skills, tools and most importantly their application. Indicators --Yes, they do
work but you need to keep your stop-loss pretty tight. One always need to trade in multiple time frames. Following a stock --Good till it's giving
you profits, but till the time daytrading comes handy to you --it's better to avoid changing directions, may hit you hard. One should only change
direction when the trend has reversed completely.
Again, in day-trading, if the trader has failed to catch a break-out in the very early stage, he should stay away otherwise he may end up
buying/selling in overbought/oversold territory.
News is one area, a day-trader has to be very alert about. But one caveat is--Don't take action on TV/website news--They flash only when the
action has taken place, One must watch the technical indicators after hearing the news and act. Rather one classical wisdom i s--" Buy on Rumor
action has taken place, One must watch the technical indicators after hearing the news and act. Rather one classical wisdom i s--" Buy on Rumor
and sell on News".
Yes, the traditional methods do fail in day-trading or sometimes one is never able to catch the moving fishes. The charting softwares need to be
replaced by or assisted by some new breed of softwares which alert the users on parameters like volume break -outs, market makers' moves,
Range-bound moves,etc. I am compling a list of items I would like in my software and perhaps 5 yrs down the line, my friends on the forum can
use it. :-)
And finally, yes there are traders who are well-off after being fully engaged in day-trading.
Regarding, the brokers making money from jobbing and day-trading ---- They have a methodology which works for them only is doing what
they have been doing for ages--- Playing the spreads. They are still applying the art learned during the historical period of Pit -trading to their
benefit. However, it can't work for a trader 'coz of brokerage cost involved. Even the brokers are finding it difficult to su stain the spread play due
to increasing transaction costs like stamp duty and STT. And yes, they do overtrade -- A broker will do 400 transactions per day playing the
spread but he will never wait for technicals to tell him that the trend is still intact, resistance is at so -n-so level, till the time, market is above so
and so level, it's just a correction. He will book loss (a small one), will ride the pullback (make some money over there) an d will jump the wagon
once again, the trend resumes. And when it comes to returns, if transaction costs are met while playing the spread game, Retu rn on
Investment(ROI) is more than what all the other kind of traders/investors can dream about only.
Generally most of the people jump the gun, before they can dump the gun. I mean, we just rush ourselves into trading, hardly few people resolve
why they are entering into this market and for what purpose.
1. We need to make sure whether we are an investor, trader or a mix of both
2. Based on what we decide, we need to make a strategy.
3. I say, banks give you 10% interest, even at the end of the year you make 20 -30% profit in the market it is much more than that. for ex: last
year august i bought Infosys @ 1450 and now the C.M.P is around 2600. A cool appreciation of close to 45%. No Technicals here , just invest in
sound companies(Blue Chips) and forget, they will reap you profits in lots over a period of time. Unfortunately, to cover my lossess in day
trading, I have to close my positions @ 2000 itself.
4. Day trading is very risky and so too F&O. Its not a child's play and often if caught on a wrong side, you are out of busin ess.
5. For a peaceful trading, i feel positioning trading is the best, but be alert all the time.
6. I have sufferred sleepless nights because of the lossess i incurred in day trading and F&O. I have the confidence to recov er, as any bad things
just take a minute but for a good thing whole life is not sufficient.
7.Its upto a person to decide, whether to sit and watch or commit a suicide.
At present I am developing the right attitude for Trading and evolving my strategy of how to remain in the business.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Hi friends,
When we discuss position trading versus day trading let us not forget they are 2 sides of the same coin. The only difference is the risk/reward.
The basics of the game remain the same. What do we need to have a trade?
1) Entry point
2) Stop loss
3) Exit
In other words a trading system. If we have the above we have a trade.
Further markets cannot be predicted in any time frame and we should not even attempt to do so.
Markets can only do 3 things namely:go up, go down, and remain where they are, and since what the markets do is beyond our co ntrol we can
only control our reaction to what the markets do?
If you are ready with your reaction to the above you are ready to trade.
I would sum it all up to say "A good trader is a good trader in any time frame" and the vice versa also holds true.
One of the biggest mistakes most traders make is that they are too concerned with what the market might do.
To be successful in trading you need only be concerned with what the market is doing!
__________________Knowing how to approach and play the game of trading well will only take you part way to ultimate success.
I have always wondered why there are no graphs for FIIS/mutualfunds investments since they are reputed to drive the markets. If volume
precedes price, they precede volume,do't they? There has to be a graph plot on them to enable us to know what they are plotti ng in the market:Swami Vivekanand, He who is overcautious falls into dangers at every step; he who is afraid of losing honor and respect get s only disgrace; he
who is always afraid of loss always loses
This is an extract from the speaking tree of the spiritual columns of the times of India(4/4/2004). It further elaborates on how India lost the
Bangalore test because of an overcautious approach.
Applied to the stockmarket, this is the paralysis due to analysis syndrome. Whether it is technical or fundamental analysis, the stockmarket
presents a mass of information to deal with and unless one learns to be lean and mean and takes quick decisive action, succes s is not possible.
Over information is bound to be a liability. Swami Vivekanands last line in the para above also literally applies to the sto ck market. Why be
afraid of loss when we have strict stop losses
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For selecting any stock, there must have been a premise as to why the stock was purchased. This premise varies from person to person and from
time to time.
My premise for holding this stock may differ from your premise and hence, a conclusion cannot be reached.
Since you are a newbie to trading, allow me to make 1 fact clear. You will hear a lot of noise on buy this and buy that...sel l this and sell that but
very few of these call givers actually disclose why they are giving the call to buy or sell. People who make money do it sile ntly.
It's your money which is at stake and do you not think you should have a clear picture of your objectives and constraints tha n allowing others to
do the same? It is only homework which matters a lot. Make the purpose of your trading clear and also put down in writing the maximum loss
you can bear in worse case situations for each security...stick to it in case of adversities... use a stop loss.
hope you understand that some traders in this forum are system followers.
I'm no expert but I do wish to disclose my viewpoint.
There is a difference between the following:
1) Losing, and losing on a consistent basis
2) Building your own trading system and choosing other's systems
3) Using a trend follower and a zig zag indicator.
-->The trades disappeared because the trading system you used had a zig zag indicator.
-->The trades disappeared because the trading system you used had a zig zag indicator.
--> Why don't you stick onto a few selected securities? The chances of losing in a consistent basis is relatively low...if not, impossible. You can
diversify this list as you become more experienced.
--> No one likes to disclose their trading system/trades. It isn't nice to ask them that.
Your feelings have an immediate impact on your account equity. You may have a brilliant trading system, but if you feel frigh tened, arrogant, or
upset, your account is sure to suffer. When you recognize that a gamblers high or fears is clouding your mind, stop trading. Your success or
failure as a trader depends on controlling your emotions.
When you trade, you compete against the sharpest minds in the world. The field on which you compete has been slanted to ensur e your failure. If
you allow your emotions to interfere with your trading, the battle is over.
You are responsible for every trade that you make. A trade begins when you decide to enter the market and ends only when you decide to take
your self out. Having a good trading system is not enough. Most traders with good systems wash out of the markets because psy chologically they
are not prepared to win.
.
Trading Tips-Remember that there is always another trader on the other side of the trade doing the exact opposite that you are doing. Only one of you can be
right.
- Waiting around for the perfect trade or the perfect opportunity will guarantee that you never trade stocks.
- Trading stocks is about probabilities, NEVER certainties. You are not smart enough to predict, with consistency, what will co me next.
- Conventional wisdom is usually wrong. Trade against the crowd, not with them.
- Money, trade, and self management has always been and will always be the holy grail to trading stocks.
hmmmm.........the question you need to find the answer to is:Can it be done?If Everest has been scaled before,even once,one c annot say that it
cannot be done......one can surely say that he/she cannot do it,but not the other way around.If even one person can make mone y from the markets
using TA,if even one person could consistently pull money out of the markets,then it can be done.
So,my friend,if you really wish to succeed at this(that's step no 1 actually,do you really have that burning desire to succee d and make the
necessary sacrifices)........if you therefore wish to succeed,you have to take all the blame for it.Every time you lose becau se you didn't adhere to
your rules,the blame is not the market's,not this forum's,not your wife's,not TA's or FA's.......yours and yours alone.Go bac k to your methods,your
money management disciplines,your entry and exit criteria,your mind,your health......somewhere,there's a problem that you nee d to look into and
rectify.
Been there,done that,my friend........ I can understand the frustration and agony.But don't allow your mind to settle for pet ty excuses.......take all
the blame and look into what needs to be rectified.
And,as for people successfully making money out of TA.......There are many in this forum itself who are doing it.And as said before,if one
person can do it,it can be done.
Whether you want to make the necessary sacrifices and undergo all the pain required is another question.

There are old traders and there are bold traders, but no old and bold traders.(Old is gold here, it seems)
Failed Traders know the price of everything and value of nothing,
Short term transactions frequently act as invisible foot, kicking society in the shin.
Timing is vital. It is much more important to buy cheap than to sell dear.
Behave according to what is rational rather than what is fashionable.
People tend to overreact to bad news and react slowly to good news.
Nobody gets market timing right even half the time.
When the gap between perception and reality is maximum, price is the best.
Stock will move above or below its business value depending more on emotions than economics.
When the degree of consensus was the greatest, the extent of error was the most pronounced.
One of the hardest things to imagine is that you are not smarter than average.
Group consensus can be so powerful that it erases critical past experience and common sense.
Passion is more powerful than brain power.
Disregard majority opinion; it is probably wrong.
THIS R QUOTE FROM MOTILAL ABOUT TRADING
ON INVESTING
Be greedy when others are fearful and be fearful, when others are greedy.
Four most dangerous words in investing- It is different this time
Great (Idea+Manager+Price)= Great investment results.
True investors realize that get rich quick usually means get poor quicker
Savings will not make you rich, only canny investments do that.
Wealth creation is the art of buying a rupee for 40 paise.
Own not the most, but the best.
Investing without research is like playing pocker without looking at the cards.
It is optimism that is the enemy of the rational buyer.
It is optimism that is the enemy of the rational buyer.

The definition of a great company is one that will remain great for many, many years.
Focus on return on equity, not on earning per share.
Business growth per se tells little about value.
The secret of long-term investment success is benign neglect. Dont try too hard. Much success can be attributed in inactivity.
Value of analysis diminishes, as element of chance increases.
The time to get interested in a stock is when no one else is.
An investors worst enemy is not the stock market but his own emotions.
There is no formula to figure out the intrinsic value of a stock. You have to know the business.
Temperament costs investors more than ignorance
In Investment, understanding is more important than information
MOTILAL
Managing risks is in many ways the foundation of the entire process. Managing risk comes down to two things. First is how you are going to
place your stops. That goes back to cutting your losses short. Consider trading as a business venture. Managing risk means re cognizing what the
costs of trading are. Make a comprehensive plan. Winning traders always treat their trading like a game, but they also look a t the whole thing as
a money-making business. GLEN RING
Most aspiring traders underestimate the time, work, and money required to become successful. To succeed as a trader, one need s complete
commitment. Just as in any entrepreneurial venture, you must have a solid business plan, adequate financing, and a willingnes s to work long
hours. Those seeking shortcuts are doomed to failure. And even if you do everything right, you should still expect to, lose m oney during the first
five years losses that I view as tuition payments to be made to the school of trading. These are cold, hard facts that many would -be traders
prefer not to hear or believe, but ignoring them doesnt change the reality. MARK D COOK
Consistent success is difficult to achieve because the trading environment differs in almost every way from the environment i n which we live our
everyday lives. For example, in our everyday lives our fears help us avoid unpleasant or painful experiences. In the trading environment, fear
colors our perception of market information thereby influencing our actions. As incredible it may sound, fear of making a mis take, losing money
or missing an opportunity, will actually cause us to create the very experiences we are trying to avoid. Consistency as a tra der does not depend
upon your knowledge of market behaviour, but rather upon a very unique mind -set. MARK DOUGLAS
We know that the random element in the market represents at least 40 to 60 percent activity. Therefore, its not logical to l ook at every tick or to
think that every tick or every chart formation has meaning. They dont. There are too many traders trying to look at the mark ets from too
stringent an analytical viewpoint. Most of what happens in the markets is meaningless. Why try to interpret every little move ment, every little
reversal, every little tick? In trying to do too much, theyre actually paying too much attention to the market. You have to keep a distance from
the market. Only then will you have the psychological resources to let your profits ride. You wont be looking at every tick and interpreting it in
a fearful way. JAKE BERNSTEIN
The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of p ouring milk
into your mouth.
The markets offer many opportunities to self destruct without a safety net. Every trader tries to hit others. Every trader g ets hit by others. The
trading highway is littered with wrecks. Trading is the most dangerous human endeavour, short of war .
Trading is a minus sum game. Winners receive less than the losers lose because the industry drains money from the market. Be tter than average
is not good enough. You have to be head and shoulders above the crowd to win a minus sum game
All losers knocked out of the game by a string of losses or a singly abysmally made trade. No matter how a good his system i s, a streak of bad
trades is sure to put the loser out of business.
A professional trader cannot afford illusions.
Some people have been critical of my criticizing seminars in the earlier post. Well, in my view seminar may be good to finetu ne if you already
have good professional trading experience or you are an engineer with good spatial intelligence and programming background. A s can be seen
above one cannot afford not being thorough.Now I want to mention a constructive alternative in a new software I discovered.
It would not be out of place to mention here that Ashish who despite all his intelligence and all those promotions had to be trained in practical
accounts both by me and the accountant since he had no exposure to that. Some of the mistakes he was making were in the natur e of A small
spark catches a big fire A small leak can sink a big ship and could have cost him his job. So no matter what the qualific ations and
intelligence, there are some things only practical experience under the right mentor can teach.
The Stocks and commodities people sent me a sample( their August2004) issue. In that issue, one MBA from Harvard who gave up his real
estate business to become a very successful options trader says, If someone wants to be successful, they should follow someb ody else who has
done the same thing. If I am trading, I must find somebody who is good at it. If I want to become a restaurant manager, I nee d to find somebody
whos done it before and done it well. . This new software is very effective for that. It seems like a pygmy compared to Me tastock/
Tradestation but from learning and economics point of view is a giant which I why I had to give so many examples above.
The Seminar people are competent and knowledgeable but to transfer that knowledge to a rookie is a different ballgame altoget her. I seem to
The Seminar people are competent and knowledgeable but to transfer that knowledge to a rookie is a different ballgame altoget her. I seem to
have bumped into a good alternative.
Before I mention it, I would like to say that when you learn to know how to drive a car, all you have to know is the basic fu nctions of what
clutch, accelerator, brake, gear etc is and start driving. Otherwise with something like free knowledge on the internet avail able, if you get too lost
into theory and start reading about cars, you may end up more confused. Technical analysis is very dangerous that way with th e multiplicity of
websites and indicators available which do not always indicate what they are supposed to indicate .
Market Facilitation Index comes pretty close.It was developed by Bill Williams of trading chaos.Along with the paint bar stud ies of fake,squat
etc they actually make a very good indicator though not a perfect one.A few of the useful one I find[cv]
All indicators have their own weakness and strength. Generally a complete trading system compromises of a set of indicators.
As I like to trade trends and in the direction of trends I think the single most robust and important indicator for me is the "moving average"! It
helps me to visually identify trends at a single glance.
-traderji
THE TAPE READER
The Tape Reader, on the other hand, from his perch at the ticker, enjoys a bird's eye view of the whole field. When serious w eakness develops in
any quarter, he is quick to note, weigh and act.
Another advantage in favor of the Tape Reader: The tape tells the news minutes, hours and days before the news tickers, or ne wspapers, and
before it can become gossip. Everything, from a foreign war to the passing of a dividend; from a Supreme Court decision to th e ravages of the
boll-weevil is reflected primarily upon the tape.
The insider who knows a dividend is to be jumped from 6 percent to 10 percent shows his hand on the tape when he starts to ac cumulate the
stock, and the investor with 100 shares to sell makes his fractional impress upon the market price.
The market is like a slowly revolving wheel: Whether the wheel will continue to revolve in the same direction, stand still or reverse depends
entirely upon the forces which come in contact with its hub and tread. Even when the contact is broken, and nothing remains t o affect its course,
the wheel retains a certain impulse from the most recent dominating force, and revolves until it comes to a standstill or is subjected to other
influences.
The element of manipulation need not discourage any one. Manipulators are giant traders, wearing seven -leagued boots. The trained ear can
detect the steady "clump, clump," as they progress, and the footprints are recognized in the fluctuations and the quantities of stock appearing on
the tape. Little fellows are at liberty to tiptoe wherever the footprints lead, but they must be careful that the giants do n ot turn quickly.
The Tape Reader has many advantages over the long swing operator. He never ventures far from the shore; that is, he plays wit h a close stop,
never laying himself open to a large loss. Accidents or catastrophes cannot seriously injure him because he can reverse his p osition in an instant,
and follow the newly-formed stream from source to mouth. As his position on either the long or short side is confirmed and emphasized, he
increases his line, thus following up the advantage gained."
This is the objective of the Tape Reader - to make an average profit. In a month's operations he may make $4,000 and lose $3,000 - a net profit of
$1,000 to show for his work. If he can keep this average up, trading in 100 -share lots, throughout a year, he has only to increase his unit to 200,
300, and 500 shares or more, and the results will be tremendous.
The amount of capital or the size of the order is of secondary importance to this question: Can you trade in and out of all k inds of markets and
show an average profit over losses, commissions, etc.? If so, you are proficient in the art. If you can trade with only a sma ll average loss per day,
or come out even, you are rapidly getting there.
A Tape Reader abhors information and follows a definite and thoroughly tested plan, which, after months and years of practice , becomes second
nature to him. His mind forms habits which operate automatically in guiding his market ventures.
Long practice will make the Tape Reader just as proficient in forecasting stock market events, but his intuition will be rein forced by logic,
reason, and analysis.
Here we find the characteristics which distinguish the Tape Reader from the Scalper. The latter is essentially one who tries to grab a point or two
profit "without rhyme or reason" - he don't care how, so long as he gets it. A Scalper will trade on a tip, a look, a guess, a hearsay, on what he
thinks or what a friend of a friend of Morgan's says.
The Tape Reader evolves himself into an automaton which takes note of a situation, weighs it, decides upon a course and gives an order. There is
no quickening of the pulse, no nerves, no hopes or fears. The result produces neither.
He must study the various swings and know where the market and the various stocks stand: must recognize the inherent weakness or strength in
prices; understand the basis or logic of movements. He should recognize the turning points of the market; see in his mind's e ye what is happening
on the floor. He must have the nerve to stand a series of losses: persistence to keep him at the work during adverse periods; self-control to avoid
overtrading; a phlegmatic disposition to ballast and balance him at all times.
For perfect concentration as a protection from the tips, gossip and other influences which abound in a broker's office, he sh ould, if possible,
seclude himself. A small room with a ticker, a desk and private telephone connection with his broker's office are all the fac ilities required. The
work requires such delicate balance of the faculties that the slightest influence either way may throw the result against the trader. He may say:
"Nothing influences me," but unconsciously it does affect his judgment to know that another man is bearish at a point when he thinks stocks
should be bought. The mere thought, "He may be right," has a deterrent influence upon him; he hesitates; the opportunity is l ost. No matter how
the market goes from that point, he has missed a cog and his mental machinery is thrown out of gear."
Having thus described our ideal Tape Reader in a general way, let us inquire into some of the requisite qualifications.
First, he must be absolutely self-reliant. A dependent person, whose judgment hangs upon that of others, will find himself swayed by a thousand
outside influences. At critical points his judgment will be useless. He must be able to say: "The facts are these; the result ing indications are these;
therefore I will do thus and so."
therefore I will do thus and so."

Next, he must be familiar with the technicalities of the market, so that every little incident affecting prices will be given due weight. He should
know the history, earnings and financial condition of the companies in whose stock he is trading; the ways of the manipulator s; the different
kinds of markets; be able to measure the effect of news and rumors; know when and in what stocks it is best to trade; measure the forces behind
them; know when to cut a loss and take a profit. Silence, therefore, is a much -needed lubricant to the Tape Readers mind.
The advisability of having even a news ticker in the room is a subject for discussion. The tape tells the present and future of the market. On the
other hand, the news ticker records what has happened. It announces the cause for the effect which has already been more or l ess felt in the
market.
Money is made in Tape Reading by anticipating what is coming - not by waiting till it happens and going with the crowd.
The effect of news is an entirely different proposition. Considerable light is thrown on the technical strength or weakness o f the market and
special stocks by their action in the face of important news. For the moment it seems to us that a news ticker might be admit ted to the sanctum,
provided its whispering are given only the weight to which they are entitled.
To evolve a practical method - one which any trader may use in his daily operations and which those with varying proficiency in the art of Tape
Reading will find of value of assistance - such is the task we have set before us in this series.--Clif Droke
Strictly defined, tape reading is the practice of interpreting price -to-volume configurations of listed securities on the various stock exchanges.
Since trading volume is an extremely important (and frequently overlooked) element of stock trading, a major premise of tape reading is that
buying and selling interest can most readily be identified and measured by looking at a stock's volume at any given time in r elation to its trading
range. In classical tape reading, price and volume are given equal weighting and each element can never be analyzed without t he other.
An old Wall Street axiom, which you are no doubt familiar with, is that "the tape tells all." It simply means that any availa ble information that
will have an impact on the outlook for stocks, and for the economy as a whole, will be reflected in advance in the tape. This is because the people
who have the greatest insight into "inside events" are sure to try to profit from their advanced knowledge by buying or selli ng stocks before such
information trickles down to the public. By the time news of an important financial or political event reaches the trading pu blic, the insiders who
are savvy to the ways of the market, have already taken their profits, leaving the public holding the "bag." Most of us will never have the
advantage of being insiders; however, with a firm knowledge of tape reading this isn't necessary to profit from the market. I n fact, being able to
read the tape means that you can trade right along with the insiders and participate in big moves before the trading public c atches wind of what is
going on. In order to provide you with a better idea of the basics of tape reading, we have excerpted below several paragraph s from the all-time
classic book on tape reading, "Studies in Tape Reading," written in 1910 by Richard D. Wyckoff. Don't let the date discourage you from reading
it - it is just as timely today as it was nearly 100 years ago:
The science of determining from the tape the immediate trend of prices.
It is a method of forecasting, from what appears on the tape now, what is likely to appear in the future.
Tape Reading is rapid-fire horse sense. Its object is to determine whether stocks are being accumulated or distributed, marked up or down, or
whether they are neglected by the large interests. The Tape Reader aims to make deductions from each succeeding transaction - every shift of the
market kaleidoscope to grasp a new situation, force it, lightning-like, through the weighing machine of the brain, and to reach a decision which
can be acted with coolness and precision.
It is gauging the momentary supply and demand in particular stocks and in the whole market, comparing the forces behind each and their
relationship, each to the other and to all.
The Tape Reader is like the manager of a department store; into his office are poured hundreds of reports of sales made by th e various
departments. He notes the general trend of business, whether demand is heavy or light throughout the store, but lends special attention to the
lines in which demand is abnormally strong or weak. When he finds difficulty in keeping his shelves full in a certain departm ent, he instructs his
buyers, and they increase their buying orders; when certain goods do not move he knows there is little demand (market) for th em; therefore, he
lowers his prices as an inducement to possible purchases.
A floor trader who stands in one crowd all day is like the buyer for one department - he sees more quickly than anyone else the demand for that
class of goods, but has no way of comparing it to that prevailing in other parts of the store.
He may be trading on the long side of Union Pacific, which has a strong upward trend, when suddenly a break in another stock will demoralize
the market in Union Pacific, and he will be forced to compete with others who have stocks to sell.
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Five minute bar charts are used by day traders, hourly or daily by swing traders, weekly charts by investors."
How exactly does the investor use the weekly chart? Should he see that the price is above the 30 week moving average or great er than 200DMA
in the daily chart? What else should he see? Any oscillator? Looking at it one way, investing is nothing but trading on prima ry, isn't it?
"Monthly and weekly charts are chiefly used for determining important support and resistance levels and making long -term trends" How exactly
does one use them?
During intra-day trading, I learnt that one is supposed to use end of day charts to mark support and resistance and see whether or not the y are
penetrated during the day.
Simmilarly are the supports and resistances marked on weekly charts monitored non a daily basis for end of day trading -whether they are
penetrated or not?
Monthly charts are strictly for primary trend I suppose but they seem quite useless for end of day trading.
The significance of the weekly and/or monthly charts are important when one wants to trade in the direction of the primary tr end.
You can read more on Multiple Time Frame
__________________The same idea applies if you are trading any security on a daily basis, in which case, the weekly bars will be the basis for
the trend as well as the important support and resistance points
the trend as well as the important support and resistance points

What does the word daily imply here- end of day or intraday. I would presume end of day. In Intra day I was taught to use end of day resistances
and supports and see whether the intra day priced crossed them or not?
How does Technical analysis help an investor when one says that "fundamentals tell you what to buy and technicals when to buy .and sell? I
know about the price being greater or less than the 200 moving average.Can you add to that ? If one had a delivery of a few s tocks, what all one
should see?
TREND is the single most important factor to watch out for. If the trend is UP one can go long or hold on to their long posit ions. Once the trend
turns down one should be out of their long positions and go short.
Trading with the trend is hard to do because a logical give-up exit point will be farther away, potentially causing a larger loss if you are wrong.
This is a good example of why so few traders are successful. They can't bring themselves to trade in a psychologically diffic ult way.
When you trade in the direction of a trend, you are truly following the markets rather than predicting them. Most unsuccessfu l traders spend their
entire careers looking for better ways to predict the markets.
Basically you see a higher market time frame( say end of day supports and resistances) and see whether they are penetrated or not in intra-day,
isn't it? Similarly weekly Supports and resistances are penetrated end of day or not?
Please be specific on how an investor can use Technical analysis
It is much easier to see the major trend using weekly data, find the short -term direction on daily data, and time your entry using hourly bar
When the weekly trend is up, daily declines point to buying opportunities. When weekly trend is down, daily rallies point to shorting
opportunities.
The problem with daily charts if u r trading intraday is that u get to look too far back.With weekly one it gets prehistoric i feel.
Lets look at an example
If say I have a system for daily bars and i use a trailing stop to lock in the profits after say 3% of opposite move.If the m arket moves higher then
our trailing stop moves higher.This sounds good theoretically but this stop mechanism needs to know what occurred first the high or the low of
the day; did the market open and then move higher and pull our trailing stop up and then move down and stop us out? Or did th e market first
move down and stop us out and then move up and make new highs? This type of information cannot be discerned from a daily bar.
The point i am trying to make is that daily and weekly charts give u a very unrealistic feel while trading intraday.Ofcourse they r useful to
determine long term trend and key levels but they have serious limitations.
Also many people overlook the importance of intraday historical data.Fibonacci traders know this well while drawing retraceme nt levels.The
retracement levels are completely different when drawn on different time frames.
I figured out a year ago that systems backtested,optimized and curve fitted on daily bars look very rosy and show excellent p erformance but
when they are tested on intraday bars which is when u actually trade the performance deteriorates considerably.It was very pa inful to watch all
the work go down the drain.
Weekly charts are useful and u will also see that many indicators actually show good performance in them but for intraday tra ders like me they
dont offer much.If u r a investor then weekly charts are definitely for u but not otherwise .So what is the right time frame for you? Well, it all
depends on your personality.
You have to feel comfortable with the time frame you are trading in. You have to feel at home with that time frame. There is always a degree of
pressure when you trade because there is the real potential for loss or gain and that will effect you to some degree. You sho uld however not feel
that the reason you are feeling pressure or frustration is because things are happening so fast that you find it difficult to make decisions or so
slowly that you get frustrated.
The question is if you could make the same amount of money trading any time frame which time frame would you choose. You will of course
have to take into consideration that the time frame you choose does generate enough trading opportunities for you to be happy with the results.
It is also worth noting that if your trading is going well and you are profitable then don't even think about changing time f rames. As the saying
goes ''if it ain't broke don't fix it.''
When you do eventually find the time frame you are happy with you can then start looking at multiple time frames to help your analysis of the
market.
It is much easier to see the major trend using daily data, find the short -term direction on hourly data, and time your entry using five or ten minute
bar. Hope this is corrrect. I have not done much day trading.
When the daily trend is up, hourly declines point to buying opportunities. When daily trend is down, hourly rallies point to shorting
opportunities.
What about position trading. Monthly charts are too long term? Isn't swing trading a kind of postion trading only although th ere are three main
categories-day,swing and position.
normally i operate based on trend positions. s1, s2, previous closing, current opening, r1,r2. I found the first one hour eit her the graph zooms up
and comes down or declines and rises. around 12.30 or so the real trend starts. by1.45 the picture becomes clear. definitely by 2.50pm you can
see what is going to happen. either r2 is crossed or s2 is over. this is the time to make quick money. for example yesterday (16th nov) around
2.50pm i noticed hsbc moving up and up and up. around 3.20 fell a little bit.
When deciding on a trade or investment, be it short, intermediate or long term, multiple time frame analysis can help clear t he noise and offer a
balanced view. Multiple time frame analysis!?! It sounds complicated and fancy, but it simply refers to the same chart with m ore than one time
compression (e.g. daily or weekly). When both the weekly and the daily charts are in harmony, the chances of success can be g reatly enhanced.
The essence of the strategy is easy: Use the higher time frame price activity to define the tradable trend as well as potenti al support and resistance
levels.
Markets exist in several time frames simultaneously. They exist on a 10 minute chart, an hourly chart, a daily chart, a weekl y chart, and any other
chart. Traders often feel confused when they look at charts in different time frames and they see the markets going in severa l directions at once.
The market may look for a buy on a daily chart and a sell on the weekly chart, and vice versa. The signals in different time frames of the same
market often contradict one another. Which of them will you follow? Most traders pick one time frame and close their eyes to others until a
sudden move outside of their time frame hits them.
Daily charts are great, but participants can get caught up in the move of the moment. Even though daily charts can contain ra ndom movements,
they do have their strengths. Once an underlying trend is identified, daily charts can be useful to pick entry and exit point s. On the other hand,
weekly charts filter out the random movements and can help identify the stronger under currents that are driving the price.
The same idea applies if you are trading any security on a daily basis, in which case, the weekly bars will be the basis for the trend as well as the
important support and resistance points. That is the foundation of multiple time frame trading. Besides the effectiveness of using a method based
on a multiple time frame approach, another advantage is the method need not be complicated. A trader can make his or her meth od as simple or
on a multiple time frame approach, another advantage is the method need not be complicated. A trader can make his or her meth od as simple or
as complicated as desired. For me, though, the simpler the application, the better the results.
The proper way to analyze any market is to analyze it in at least two or three time frames. If you analyze daily charts, you must first examine the
weekly charts and so on. This search for greater perspective is one of the key principles of the Traders Edge Trading System.
Look at the daily chart of HFCL below. What does it tell you. Most traders would say that it is just the beginning of another uptrend. Well, most
traders are not successful! To be successful in trading any market, one has to first examine the trend on a higher time frame .
.
RECENTLY I FACE TRADING CATASTROPHY...not by trading BUT by holding losers..buy and is hold dead man....so like phoenix..i sh all
comeback.
Reason ..cockiness...[as usual play of bridge & chess]...ya.. i can not handle...so the ship ruins with captain...STOP IS FOR SISSIES...any
rational individual must stop self sabotage first,....before..he thinks to be a trader
so i open my material ...start copy paste...

Before you make any commitment to begin or even to continue trading , we believe you must
honestly ask yourself; "Is stock trading for me?"
Many programs will tell you any one can make money on thebstock market and I guess technically they are right. But the realit y is, for most,
failure is inevitable.
You see, the major limits to your success are placed there by you. As we have pointed out, trading is a mindgame. So to a lar ge extent your
success is controlled by your beliefs and actions.
We want to examine this issue in some detail because,
although at the moment you may be skeptical, it really is the key to your success or failure.
Apart from inadequate capital and poor money management,
novice traders usually fail DUE TO
1]lack of commitment
2]lack of knowledge
3]self-limiting beliefs
4]ego
5]poor state of mind
6]lack of focus
7]undisciplined
8]no strategy
9]failure to accept responsibility
10]lack of perseverance.
Traders who don't address these issues will not survive.
And the statistics show this to be true
Many novice traders get frustrated when they don't havebinstant success. Without real commitment they will not do what is nec essary to achieve
success.
Lack of knowledge, which is a major cause of failure, is a result of an individual's attitude. How
anyone thinks they can enter the stock market without training amazes us. Yet it happens all the time. People who accept that golf lessons are
necessary before they head
out onto the course will start trading with little or no knowledge
Most novice traders fail to appreciate the level of skill needed to trade successfully. They have no system and resort to gue ssing or the use of tips
from friends. They are effectively gambling, not trading.
At the same time, too much information can lead to overload and inaction. It is far better to narrow your focus and concentra te on just a portion
of the market.
Beliefs -Traders who do not have a positive belief system or cannot reconcile their beliefs to the actions of the market do not surviv e.Self-doubt
will destroy you as a trader. In particular,
it is critical that you do not tie your self-worth to your actions in the market. Despite the emotional attachment that you might feel, you must
accept that whether one of your trades proves to be profitable or not, it is not a reflection of your value as a person.
Your success or failure in the market depends on your thoughts and feelings.
Don't tie your self-worth to any individual trade
Remember that you always have a choice in the stock market.
Ego- Ego is one of the greatest enemies to stock market success.
Your ego needs to win all the time and wants to win now,
if not sooner. It can't stand being wrong. And so it rationalizes events and denies reality.
You must be able to perceive the market how it is, not how you want to believe it is. But it is difficult to clearly see pric e action if your ego is in
the way.
Ego makes us take small profits but large losses. It argues that even a small profit is a win. But a loss hurts and instead o f accepting a small loss
we try and get it back.
Men in particular are prone to say, "I'm going to make
back that 10000/- loss, no matter how long it takes!"
Ego makes us sell stocks that go up and keep the ones that go down. If a stock price increases there is immediate gratificati on in being right so
taking quick profits feels good. And we won't sell the bad ones because we have then made a loss
Do you see the logic here?
We tell ourselves that we haven't made a loss until we sell. So if we don't sell, we can't make a loss!
State of Mind- The stock market is an unusual environment.
It is a pressure cooker type atmosphere for those unfamiliar with it and it can generate emotional and
irrational behavior.
The market is a large group of people trading their perceptions. Throw lots of money into the equation and it is not surprisi ng how emotionally
charged an environment it can be. The power of group psychology and the mob mentality ensures that irrational action is commo nplace.
charged an environment it can be. The power of group psychology and the mob mentality ensures that irrational action is commo nplace.
At a personal level, fear and greed are the primary emotions at work. And stress and anxiety are common issues that need to b e dealt with.
Probably the strongest mindset with novice traders (and many who have traded for a long time) is the fear of failure - the fear of loss
Fear blinds us to opportunity. Greed blinds us to danger.
Have a healthy regard for the market but don't be intimidated or fearful. Find a balance between confidence and respect.
Everyone is afraid. It is how you respond to that fear that determines whether you succeed.
If there was one topic that we would stress above most others it is focus.
The ability to concentrate on the present moment to the exclusion of other distractions is vital when you are trading. And on e of the great things
about focus is that fear and anxiety actually disappear when you are concentrating on the task at hand.
Traders who don't learn how to focus will be continually distracted and will find it hard to make decisions. To trade well yo u must learn to stay
in the present moment.
Focus eliminates fear.
Discipline is so important in trading. You need it to do the things that you have to do, even when you
might not want to. Such things as analysis; risk control;money management and record keeping. All are critical and all requir e discipline.
Discipline is also necessary to maintain focus and to follow your trading system. Most importantly, it is critical when you s uffer a string of
losses. As it is discipline that will get you back on the horse
The vast majority of traders lose money not because of their trading strategy but because of their lack
of discipline. There are no rules in the market.
You have to develop your own. And then follow them.
Strategy- You need to find a trading system that works but,
more importantly, one that you trust and are comfortable with. You then have to apply it and this is where discipline comes i n.
But the truth is that most novice traders concentrate on this subject and particularly entry signals, far too much.
The reality is that good risk and money management backed by a supportive belief system is far more important.
Don't get us wrong. Having a valid trading system is critical to your success. Just don't fall into the common trap of thinki ng that it is all you
need.
Your state of mind is more important to your success than your trading system
It is you, not your system that will determine your success.
Responsibility -Your trading success is in your hands. It is your responsibility, no-one else's.
Traders who don't accept this will fail. Because they will always be blaming someone or something for their mistakes and neve r learning from
them
You are responsible for your success. No one else.
Perseverance Without action, knowledge is useless. Massive action is the key to real success.
Many traders begin with great enthusiasm but become easily
disillusioned. Perseverance is required to get beyond this stage and to start to reap the rewards.
---------------------------------------------------------------------------------------------------------------------------please understand, owning stock is risky. Holding onto a stock can be a very risky strategy.
Stock prices can move quickly and substantially to the downside and can catch you out if you're not careful.
In fact the value of a stock can drop to zero! For example, remember Enron?
And whilst stop losses can help protect you, they are not foolproof. So the only way to really limit your risk is to buy a ve ry cheap stock (so that it can't fall very
far).
But these are generally poor trading candidates because they are erratic and have low liquidity.
So if you don't buy cheap stock, owning shares is also quite expensive. You have to outlay lakhs of rupees to hold a reasonab le amount. And so your
involvement in the market may be quite limited.
In addition, stock often doesn't move all that much. A good trade might give you a 20% return. And this might take several mo nths. Given that some trades are
going to
go against you, this doesn't provide
...............................
And finally, trading stock is limited. Most people are only happy to trade stocks that are moving up. Short selling (selling stocks that you expect to go down) is a
risky strategy and is a bit cumbersome. And sideways markets cannot be traded.
So is there a better way?
Leverage - you can profit from a large amount of stock for only small outlay.
2. Limited Risk - When you buy an option you know exactly
how much you are risking and it is only a fraction of the cost of the actual share price. Great news I'm sure you will agree?
Entry Doesn't Matter.
Trade entry is not the most critical step in your trading plan.
Studies have indicated that random selection of trades matched with strict money management can be quite successful.
Now, this is not to suggest that you shouldn't stack the odds further in your favor by careful trade selection. Just realize that it is not the most important step.
So choose a system or a combination of systems that appeals to you and that you are comfortable with. And refine it over time as you gain experience.
We have a strong preference, based on our experience. So we would
suggest that you give it consideration. But then add to it or substitute with your own preference.
Market Cycles- Markets tend to move in cycles. The problem is identifying clearly what the time frame for these is and at what stage the mar ket is in the shortterm.
W D Gann and Elliot Wave are the two main examples of cycle predicting systems. You can find many proponents of both together with books and software in a
quick search of the internet.
Many traders are obsessive about market time cycles. We don't have the patience for this. Whilst we are sure cycles exist and there have been some significant
predictions over the years, from a day to day trading perspective, we believe they are pretty worthless.
We have looked at the work of WD Gann but could never get interested in the complexity of his theories. He divided trends and time into eighths,
with special importance placed on three-eighths (38%); 50% and five-eighths (62%).
He also used various angles on charts and the squaring of price and time
to predict future price levels. Many of his theories are intricate and open to interpretation.
Wave theory stems from the work of RN Elliot who in turn was influenced by the Dow Theory.
Elliot believed that markets had well-defined waves that can be used to predict price movement.
It is based on repetitive wave patterns and the Fibonacci ratio. This approach permits traders to assess where the market is currently in comparison to the
overall predicted market movement.
For example, retracement levels are set at 38% and 62%. They can also be
used as target levels for potential reversals. Interestingly these percentages match Gann's analysis. And for that reason alo ne they are worthy of consideration.
But whilst this is a fascinating area, our suggestion to the novice trader is to forget about them for the moment. Just conce ntrate on understanding price action
But whilst this is a fascinating area, our suggestion to the novice trader is to forget about them for the moment. Just conce ntrate on understanding price action
until you feel the need to expand your
Focus.Market cycles are very complex and of little value as a predictive tool.
Novice traders should ignore them
News -Some traders rely on news events to select stocks. They look for significant announcements that they believe will affect eith er the whole market or a
particular sector or stock.
The basic problem with this approach is that the market generally anticipates rather than reacts to news. By this we mean tha t the stock market is always
looking forward and trying to predict what is going to happen. And so the market has already factored the news into the curre nt price of the stock.
By the time the news is released the smart money has already moved on.
The other fact to realize is that news usually causes only one movement of price. If this occurs before the actual news annou ncement, as a result of rumors and
expectations, then it is unlikely to be repeated after the announcement.
Stated in another way, the actual news event is of little importance.
It is how the market anticipates or reacts to the event that matters and that we can't know.
We therefore have no way of determining what influence news might have or whether it is already priced into the stock. In add ition, news is not detailed enough
for short term trading.
SO Never make a trading decision based solely on news.
But there are some instances when news can have a significant and
immediate impact on the stock market. This is because the news events were not anticipated.
Catastrophic news events are significant because they are unpredictable and they affect sentiment.
Because these sort of news events cannot be anticipated, the market has
an immediate reaction. And whilst the direction of the move can often
be predicted, the extent of the move is very difficult to estimate.
So they are not particularly useful as a trading tool. But if you are in a trade they are important signals for you to take a ppropriate action.
But if cycles and news are not of much use, what can we use to narrow down our trading selections? Traders generally use one of the techniques
known as fundamental or technical analysis or a combination of the two
Fundamental analysis is a method of analyzing a stock through primary economic data.
The analysis includes the study of the general economy; the industry - sector in question and information about the company itself. It requires an assessment of
the financial and physical factors that may affect a company's performance.
This information is analyzed and compared with the sectors performance
and then a decision is made about whether the company's stock price indicates it is over or undervalued.If this sounds like a convoluted process it is.
And whilst computer programs can simplify the analysis process, it is still a subjective analysis in many ways. And the selec tion of criteria is in many ways quite
arbitrary.
But more importantly, it is not a particularly accurate measure of a stocks price movement, particularly in the short term. T he implication is that price reflects
the fundamental value of a company. This is simply not true! Stock prices often have no relationship to a
company's fundamental economic data.
And the best example of this is the dot.com boom. During this time many company's stock price bore no resemblance to the fund amental value of the stock or
to its future earning potential.
And the reason for this is that stock prices reflect sentiment not economic theory. Traders don't always act rationally and i t is people that cause prices to move,
not theoretical models.
So whilst fundamental analysis may provide a theoretical stock value

it is the sentiment of the market participants that sets the actual price
So even though a fundamental analysis of prices may prove accurate in
the long term, the current price is a reflection of the current view of all the people trading the stock. They may or may not change their minds over time to more
closely match the theoretical price. But at
the moment their view is different.
We don't know if the markets view will ever match the theoretical price.
And guess what it doesn't matter because all we can do is trade the actual, current price.
The truth is that the stock market does not respond to news or economic factors in a predictable manner. If fundamental analy sis were able to predict price
movements then every piece of news or information about a company would be reflected in it stock price.
The reality is that economic news announced in any one week hardly ever
changes the long-term trend and it seldom helps toward knowing what to
buy or sell or when to do it.
A use for fundamental analysis.
Despite its limitations, you should not ignore fundamentals completely.
Some fundamental data does have a direct impact on the market. For
example, an interest rate increase will usually have a negative impact
whilst an increase in the rate of employment will typically cause the
market to rally, at least for the short term.
It is also important to realize that fundamental analysis is still
relied on by most institutional investors and brokers. You can therefore
gain a better understanding of how the market may react by reviewing fundamental data.
But from our perspective, the most useful application of fundamental analysis is as a filtering device.
We use it to narrow down the stocks that we consider for further Consideration.
Fundamental analysis is of limited use to a trader and should never be used for timing trades.
Technical analysis is the interpretation of price action through the use of charts and indicators calculated from the base st ock price information.
Whilst fundamental analysis seeks to understand the reasons for
stock prices going up or down, technical analysis doesn't care why
price is moving. It just wants to understand the actual movement.
So rather than using a filter of financial analysis to review a
company's stock price, technical analysis studies a stock's price
movement directly.
We believe that virtually all you need to know is in the price action and represented on the price chart. Technical analysis operates on the theory that price
reflects all known factors
affecting supply and demand at that time.
affecting supply and demand at that time.

We have made the point before that people make and move markets,
not balance sheets. So the price action of a particular stock reflects the combined view of all those trading it.
Charting price action tells us what has happened in the past and
as the past tends to repeat itself it can give us an indication of what might happen in the future
In fact, we find that technical analysis is the most powerful tool in our trading plan. And because of this, technical analys is provides the framework for a
systematic approach to trading.
More importantly, it gives us the confidence to make our trading decisions. And both these aspects are critical for success.A nd as distinct from fundamental
analysis, technical analysis
provides precise mechanisms for trade entry and exit. So we want to suggest to you that the best strategy for determining the timing of your trades is technical
analysis.
The only technique for timing trading decisions is technical analysis
In summary, of the four analysis techniques, our strongly preferred strategy is technical analysis.
Whilst certainly not foolproof, technical analysis is a valuable
tool in our trading and is particularly useful over the short -term.
But also learn how stocks react to news events and understand
some of their fundamentals. You will then be way ahead of
those traders who limit themselves to only one method.
.
If u cant find a suitable trade now, either your strategy is not right or u r in the wrong instrument..or something is happen ing in the mkt that u cannot
comprehend.
--------------------------------------------------------------------------------------------------------------
Books/Areas to Study
04 July 2015
10:33 AM
trading psychology
........................
1. van tharp
2. dr elder
3. ari kiev
4. phantom of pit
trading phiosophy
they are works of trader
....................................
1. gann
2. linda
3. larry williams
4. bill williams
5. levermore
6. niederhoffer victor
7. soros
8. j ross
some technical related writing/context
1.
2.
3.
4.
candlestick
elliot wave
momentum theory
profit magic of stock transaction timing
system design
....................
1. way to trade
2. tusher chande
3. p. kaufman
4. j katz
applied theme
.......................
1. contrarian thinking
2. fibonacci
3. a-b-c pattern
4. stop loss
5. daytraders bible
6. trading on probability
7. portfolio management
subjective trading
.........................
swing trading ...landry
bary rudd
encyclopedia of chart pattern
tony crabel works
4 biggest mistake
trading in the zone

.as analysis of my trade/success and failure clearly of shows thought process r
right......also sanguinity of price analysis.+ imp of money flow factor.......+ marketing
style of broking house
style of broking house

Conviction of a trader.....is a two way sword.
swot + trade diary[reason behind a trade both entry and exit]....develops a trader.
Trend and trend termination r most imp concept.....for applying ta.
in random trade.....survival skill must get highest priority
.....personally for f&o.....i have - return
swing style ..av +;position trade......++; as i have strong oilfield background....
so its market proven me right[lucky i should say]
so i decide to improve my fundamental ....go back to advance financial
management....so to learn the technique of my enemy trade warriors[fund
manager].....may take 2yr
.....so things go alright as a pro in market in 2010
-----------------------------------------------------------------------------------
Trade Element - SOFTWARE

04 July 2015
10:34 AM
I CHOOSE..METASTOCK...OLD PRO KNOW..IT CAME .. 1993..DALAL ST. ADVERTISE

SUGGEST THAT...
IN 2002...I TOOK IT...in understanding it atleast levelbasic..
1yr..then the data vendor...
in2003..i went to play some tournament..SEE AD..
MEET VIRATECH...THOSE DAYS.. MR MOHINDER..ALSO
GIVE SOME GUEST LECTURE...@IIM-C....SO UNDERSTOOD
.. ANOTHER AD....ALBATROSOFTINDIA.COM...PREPARE DATA..
FOR CALCUTTA STOCK EXCHANGE..CHARGE.. 5000/....
SO I TOOK FROM THEM...MAINLY..AS HE GAVE ME XEROX
OF META..7... 500PAGE BOOK..
SO AS THE TIME ..I GOT AV 20000/ MONTH..RETURN..
I AM FOOL.. AS SIGNAL GENERATE..I ENTRY . NEXT DAY..
USING SOME COMMON SENSE...MARKET IS SILLY
SO FAR GREATER FOOL PRESENT I ALWAYS CAN MAKE MONEY..
ACTUALLY..MARKET..IN BULL MODE..BUY AND HOLD SOME..
LUCK IS CORRECT WORD..
DONALD CASSIDY VIEW. BASIC ON CHART PATTERN..
AND IT IS SELL THAT COUNTS..
THIS ARE... HELPFUL.. ATLEAST TO ME...
EQUIS.COM..READ METASTOCK TUTORIAL & FORMULA..JOURNEY
TO NEXT STEP....THOSE WHO HAVE..TRY HIS HAND ON META PROGRAMME...THE
STAGE I HAVE GONE..
THOSE WHO R INTERESTED...PL. REFER...META-FORMULA.COM
THEIR VIDEO IS GOOD..PRIMER HELPS...
IN METASTOCK SITE...SOME PROGRAMMING R REALLY GOOD I CHECKED..
BUT THIS JOY FULL JOURNEY..I ENJOY..[I CREATE IT PHENOMENA]..
THEN COMES.. MY FIRST..DEBACLE..MINOR FALL . PRESSURE HIGH...HEAD
INJURY. .DEC'2003..AFTER..SCAN..AMNESIA..YES I AM BED RESTED..15DAY..
I KNEW I HAVE TO GIVE UP DREAM RUN .. PROFIT MAKING VENTURES../CHESS ..
BRIDGE..
STILL I HATE..HATE..THAT DAY..[i cry .. tear comes now, hey..i am an emotional fool..
in actual life..]
50% sell in one go of holding...9/10...january'04..
signal is coming...[ask any metastock trader..he has seen it]..
so by 14th january.. i seat on cash...
AGAIN MAY BE LUCKY....BY MEDICAL ADVICE..I CAN NOT TAKE LOAD..
SO I START SELLING..LEARN WHEN TO GET OUT..
RATIONAL BLOCKADE..OF MARKET MOVE UP.NOT WITH ME..
ATLEAST NOT THEN ..NOT NOW...
IF PRICE MOVE I HAVE TO ENTER..IF ITS TOPPING I HAVE TO GO HOME..
PLAY IS OVER...FORGET IF & BUT.. TAKE REST..
I READ NEWS PAPER...BUT I STRICTLY FOLLOW..NO TRADE.,no invest
.. ya.. i predict...i talk ..just nostalgia..no chess..no bridge..no stock..
election result..2004 May.. all trade veteran know..its an oppurtunity..
july budget.. another oppurtunity..all gone.. [ yes i am not to give stress to
brain..only..learn my job...transfer to Newbombay...in may..phone connection coming
only.. 27.11.04...discipline by accident..]
so comes phone .internet..my data still life..on holiday i go to internet cafe to see..
December takes time to study..to recollect..some useful thing.....
target plan ..30000/ month.. entry.. exit..21days swing..
stop.. 6%...style small-term position play..
ya,,i achieved..art of being lucky..[coursey fii money flow..cram concept]
so i bought data again ..chart guru..29.1.05..1yr..5000/...again short term
play.. but profitability coming down...[actually market condition changing]
my job is complex..new place..new idea..i have to..learn..OFFICE WORK FIRST..

IN GEN. SHIFT YOU CANT SEEN SCREEN ..HOW I VISUALISE TRADE THEN..SO I HAVE
GIVE UP THE SKILL OF READING ORDER..BULL/ BEAR WHO..
IS WINNING..ITS IPKF..IN SRILANKA FIGHTING AGAINST LTTE..STRICT RESTRICTED
SHOOTING ONLY ALLOWED..
office rule ..trade site forbidden[i use pib]...
i sort out..in angel i have an a/c...i activate ..deposit 5lak..
[that help to get better status..]..talk to their branch..twice i come in
and talk with..bm...+ bala..[dealing hand]..BALA.. NICE FELLOW..LEFT AFTER ,I TELL
SIMPLY FOLLOW PRICE..GAVE ME 1ST CUSTOMER PRIVILEDGE
..ATTEND MY PHONE AND ORDER IMMIDIATELY..
VOLUME STUDY TECHNIQUE..BUY ORDER/ SELL ORDER..
WHICH SIDE NEW ORDER IS COMING...
IN RETURN I TEACH HIM ITS VALUE ..VALUE OF PRICE BALANCE..
[naturally he is a call giver in kotak{last known whereabout}]
he helped again to day trade..i study eod ..know potential..
enter early..he considers 'RISKY'..BUT MAINTAINS..ROLE OF EXECUTION..
sell value zone...given ...and i have to tell 80% of time he execute in higher zone...
so far so good..i enter 5 call max..in his good faith...
alas he left.. angel.. so also my luck...
luckily..internet offer has come..18/5/05/..i have mtnl 399 broadband with me..i
activate...pib..branchmanager is very help ful...activate..give...call trade ..as wish...
smooth..... lucklady smile..
crookedly...power generation stop 8..10-30am..navimumbaikar knows..
.[ recently i bought.apc...to solve this ragging]
draconian rule of indiabulls..from march'o6...voice mail system..no trade...
new recruted.. foolest..data entry operator..
no day trading is possible..at least for me...
u require..good rm..[not a profit generator.but LOGICALLY WHO CAN THINK ,
MATURE..UNDERSTAND RISK..NOT A RUMOR SPREAD..unfortunately
its rare breed now..]
a good dealer..like bala..[understanding..of price..skill to execute.calling back
customer..telling what he wants.. matter of fact...]
may be new breed..moth -investor..wants an opinion even from..
rm/dealer...high demand pull up dealer..to rm..rm to bm...
vaccum should be filled up ..new entrant...i say just in capable..
callcenter. boys...not suit trading arena..nse exam pass must be made compulsory..[its
my personal openion.nobody has to agree]
SOFTWARE.../
i have seen omnitrader...its good..so for those who have emotional problem..
its a computer gen .. signal low risk idea..work metastock data format..
around 20 predefined.. callgen . are there..computor does every thing..
i use eod...albatrosoftware.com..calcutta..nirvana system originator..ed
its game mode is excellent...you move 1day price & play..
on actual price..it plays...show your euity curve..
takes atleast 6month to understand it..those who believe in control
emotinal entry/ exit..is must...
for game go iitm.com..it preach money management..
bill williams software..also.genarate..good chaos theory..
will discontinue soon[ based on chaos..i dont recommend]
but u can plug in with meta..
those who believe in pattern..its repeatative occurance..pattern plug-in murphy..ok...
but before you use..actual failure of pattern 52%..
CONTEXT..IS MORE IMP...
THIS SOFTWARE.EXPLORE & TELL ..STD TRIANGLE..DOUBLE TOP/BOTTOM
HEAD &SHOULDER...OUT OF NSE SCAN AND TELL U IN 2MIN..
in actual trading failure of pattern gives me more money...
wedge play and buy at pull back is safer.
those who firmly believe in pattern..i remind pattern smasher..introduced india..by
those who firmly believe in pattern..i remind pattern smasher..introduced india..by

viratechindia..how many r actually sold..they still may have copy...
its function is based on some bull pattern..
some bear pattern.. SCAN TOTAL FOLDER..
GIVE U RESULT & ITS STATISTICAL SIGNIFICANCE
FORWARD TESTING FACILITY...AS IF PREDICTING WHAT MAY HAPPEN IF
SAME CONDITION EXISTS...
nice for an experimental trader...
now comes dt dynamic trading cncept...
yes i like..price-time-event..concept..
presently i am working....at least it shall take 6 months
it uses concept of elliot..+reversal..+ gann swing..
more over it has some buildin set up...scan report...
no other software..ad jet.../ ami broker...i have not seen them...
MT-PREDICTOR...
IT HAS DIRECT RISK REWARD ANALYSIS TOOL...i am asking if any body
seen it.. only software i hear ..may be..useful in india...
Using Fundamental Analysis

04 July 2015
10:34 AM
Using fundamental analysis,,,

.............................
many excellent research report r available...
et.. research report good...
motilal excellent...
share khan..angel...ok
indiainfo...good..
hdfc/ilf&s..ok..
equitymaster..good...
MUST REMEMBER...ANALYST HAS LONG TERM VIEW..
MANY FUND HAS OWN REPORT..THEY R EXCELLENT..I AM NOT SEEN THEM
WITHIN 1MONTH OF PUBLICATION..
THEY BUY FIRST..THEN PUT BUY CALL..PUBLISH...
SAFE ...you doubt me...check fund buy report..
dt of publish of REPORT
dt of report..publish to newspaper..
public buying ..
ref use..nseindia.com..volume study of those day..
delivery%..
VISUALISE..A BLIND EVEN CAN SEE...
READ NEWS PAPER..PARTICULARLY..ORDER POSITION..
News Play
....................
Result Session...
See Last 1yr..4 Qu...compare..what Is Expected... Now Get Some One What Is
Background...20%..av,..already Discounted..
Unexpected Good..buy...
Very Bad Result..but Price Not Falling
Buy Slowly...
All Other Case..use Result Publication To Get Out...
OTHER NEWS
...................
MUMBAI FLOOD..MARKETNOT FALLING...I BUY..
TRAIN BLAST...NO PANIC FALL..., AGAIN I BUY
MARKET TELLING ME NOT TO FALL..I SELL HALF...
HEY,,50% pofit booking i feel..ok..less risk..
some more thought

........................
mark crisp..swing plug in ..very cheap
backtested...but actual market.. not clicked in india...
ECONOMICTIMES..HIGH VOLUME..LIST..
FOR DAY TRADE ONLY..PLAY AGRESSIVELY IN MARKET ..1/2% PROFIT..
ONLY SUITABLE FOR DEALER..
FOR RM ONLY...AFTER RESULT OUT..PLAY IN DIRCTION OF PRICE,,
PROVIDED NEW ORDERS [VOLUME]..R COMING..
YOU PLAY MARKET..ITS AMOMENTUM PLAY..
XXX NOT SUITABLE FOR AMATEUR...
CAN I BE AN INVESTOR
................................
ONLY INSIDENT...I TELL..AKSHARDHAM BLAST...ITS JUST AFTER BUDGET...
I SEE VOLATILITY...I WAS @MADRAS..CHESS TOURNAMENT..
... I RETURN HOME...[GUJARAT]...1 WEEK STUDY PANICK...
MY REPORT...LAST 6MONTH..TOUR..MUMBAI..SOME PEOPLE INTEREST
ONLY..GUJARAT..30-40% STILL PLAY STOCK..NO OLD CRAZY..
CALCUTTA..LEAST BOTHER..
DELHI STOCK EXCHANGE..BROKING SHOP THOUGHT ..NO FUTURE..
DEHRADOON..AM I MAD??I ASK STOCK..
I ASK A SHOP OWNER..[ SUBBROKER..HE USING HALF SHOP FOR ..XEROX...]..'NO
HOPE'..
I TALK MY SENIOR..HE SAID ITS BEST TIME..contrarian..
no more..people listen his tips...
haha...yes....i bought 10lak..holding L&T..RELIANCE..SATYAM..
SBI..NATH SEED..PENTA..POLARIS...MODERN DARLING
ANSAL PROPERTY..BILT..CENTURY..
GAIL ..
YES I DOUBLED..ANY OF YOU COULD MADE 10 TIMES....
by the way i buy...simple reason...
if so less interest in india...when money...comes..
market...must move up...
this time i am not lucky...my conviction ...
yes a fellow traveller knows better..
though he dont know RULES OF GAME...
ANOTHER REMINISCENSE
.....................................
JULY2005..I GOT A CALL TO PLAY...
I REACH DERHADOON.. I REACHED11PM..
GOT A PARTNER....
LUCKY A FORCED BACHELOR...
WE PLAY DIFFER IN EVERY RESPECT...
BUT HE ACCOMODATE ME..HE WANTS WIN...
THATS THE EASIEST THING ..I PLAY BRIDGE...
A KNOWN CARD ADDICT...
IN COLLEGE JOKES IN DEATH BED I PLAY CARD..
EVEN AFTER SEVERE BRAIN PROBLEM . I DONT COUNT CARD..
I SIMPLY PLAY TO WIN..WE SELECT...
NEXT A TOURNAMENT...IN UP...
AGAIN WE WON AN EVENT...
IN ANOTHER EVENT...I CUT ..NO COMMENTS...
SOME GOOD PLAYERS COMMENTED..I HAVE TALENT...
i say NO...i learn it in 1970..stay with it astime passes..
played state.. selection in 1984..[ofcourse lost..but no tournament fear..]...so a 30 yr
veteren not make silly mistake..
this gave me joy..in critical moment.. subconscously i play well
it is the tuning..around 20 trophy in bridge career...
i feel the void again in mind again...in january'06..i dare..
to sit in an i q. test.....yes no more..intelligent...135 .ok...
what it tells
.........................
1] experience counts..
2] have patience...
3] in effort if no gap exists..[strong base]......success must come back..
4]u have some +pt..use killing instinct...
5]no ifs & but in competition..
5]no ifs & but in competition..

transfer one field success to another..
..
FOR making money
............................
know who u r...
how much time u can spend on u..
can u learn to write to u...practice...
your short term plan your long view...they must not foul...
[here i see many failure]..
any pro who can help..search him/her..
or believe single solo journey like this fool
DONT give money to mutual fund/ if big amount give pms..
if finance line/ a half pro..
follow journey path..
yes, 1990...8000.....experiment...
1991.........20000/. further.. i add
1992.........20000/..
1993.......i encash..........2 lakh...
1994.54......holding value 2 lakh ....vanishes...
never in life i believe i buy & hold..
1997 experiment...fail
2000 experiment fail
2001-02 come back as day trader..

make money...shear luck
2002..03 trade...diciplined to earn..
2003.... encash investment[ now i understand value of holding]
run family from trading@20000/month
2004 i stay out on medical advice...
2005 i play...any fool. provided dont short'..can earn
2006 win some..loss some.. fig wise nomore..small investor..
%wise.. return..18..
learning volatility..
practice mm
2007.. i found too risky...occational entry & quick exit..
recent play..cmc..eil...bel agro dutch..ongc
present play...arvind..dlink bpcl
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Here I am writing
.
Trade element.
1] you..swot ..time to learn..your natural patiencetime u have..
BELIVE IN REALITY ,NO WISHFUL THINKING
2] marketyour believe on market
your ta tool mastery
your fa tool mastery
info network
3] fund to learn and experiment..
play less analysis more..use diary..
many help available @traderji.com

4] PSYCHOLOGY
readbook of dr elder..
market wizard series
mark doglous
ari kiev
Livermore
5] personality& trade analysis

dr van tharp
dr bill William
larry William
Linda
Mark boucher
Dave landy
RAKESH JUNJUNWALA
6] trade system design
..
Bernstein
Kaufman
Tusher chande..
Martin pring
Technical trade system
Instant profit
7] individual choice
bird watching in lions country
phantom of pit
personal softwaremetastock & omnitrader
8] trading styleits an individual choice
9] recent experiment.
Dynamic trading..and trend dynamics
10] encyclopedia of chart pattern
candle stick chart study
11] most useful concept
..
money management
risk control
12] yet to learn
volatility
optimum stop.
FUTURE DREAM
..
A PROFESSIONAL TRADER AFTER 3 YR
EXPERIMENTAL TA..
1] TREND AND NON TREND BOTH EXIST IN MARKET

2] RANDOM NESS HAS ITS ROLE
ITS AFTER BREAKING OF RANDOMNESS TREND STARTS
WHEN TREND TERMINATESITS DIFFICULT TO PREDICT
3] PRICE PREDICTION AND STOP GIVES OBJECTIVITY
HOWEVER.. BASED ON WHAT PRICE TELLING U MUST EXECUTE
CONTROL OVER MIND MOST IMP.
4] SCANNING TOOLPORTFOLIO CONCEPT HELPFUL
hope u enjoy this view..
this view r personal and suits me
--------------------------------------------------------------------------------------
What may work in indian stock market

04 July 2015
10:35 AM
What may work in indian stock market

.................................................. ...
1] tipstars days r over..stock stars DAYS r coming
2] definitely VOLATILITY play [prepare a tool/plan to use it...i try to learn now,till date failed]
3] result play...try to know estimate before hand....compare its surprise factor
4] rumor play...who is sponsoring...operator..behind any game...
mind is its RUMOR..
5]buy at pullback
6]longterm contrarian view...what goes up must come down..
7]fund flow...fii..rbi policy
8]YOUR CONFIDENCE..FLEXIBILITY..EXECUTION SKILL
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
While surfing the net, i found this interesting article .
1. Trade for success, not for money.
Your motivation should be first and foremost to make a well-executed trade. If money alone is your motivation you will severely limit your chance of
success. Why? Because focusing on money will raise all kinds of emotional issues, from fear to greed. It will make you afraid of losses to the point that you
will abandon your discipline. It will tempt you to trade too often, too large and with too much risk. Whereas if you focus on making solid, well-executed
trades - even if the result is a losing trade that you exit quickly - you will reinforce your discipline and increase your trading potential.
2. Discipline is the one quality that all traders must possess above all others.
The ability to master your mind, your body and your emotions is the key to trading. The disciplined trader - regardless of profit or loss - comes back to
trade another day. A great intellect, the ability to take on risk, or even a sense that you're somehow 'lucky' mean nothing without discipline. For a trader,
discipline means the ability to devise a trading plan, execute according to that plan, and to never deviate from that plan.
3. Know yourself.
Do you break out in a cold sweat at the mere thought of risking something - such as your own capital? Do you think of trading like 'gambling,' a long shot
to make a million? Or can you handle risk in a disciplined fashion, knowing how much is 'too much' for both your capital and your constitution?
Trading is not for everyone. If risk makes you ill, on the one hand, or if taking a risk brings out the recklessness in you, then trading is probably not for
you. But if you can handle risk with discipline, then perhaps you can find a vocation or avocation as a trader. Only you can answer that question.
4. Lose your ego.

No matter how much success you enjoy as a trader, you'll never outsmart the market. If you think you can, you're in for a very humbling experience. The
market rules, always, and for everyone.
You need to silence your ego in order to listen to the market, to follow what your technical analysis is indicating - and not what your intellect (and your ego)
think should happen. To trade effectively, you need to put yourself aside. At the same time, you cannot be so emotionally fragile that unprofitable trades
shatter your confidence. Don't be crushed by the market, but don't ever think you've mastered it, either.
5. There's no such thing as hoping, wishing or praying.
I've seen too many traders staring panic-stricken at the computer screen and begging the market to move their way. Why? Because they have lost their
discipline and allowed what was a small loss to turn into a much bigger one. They keep hanging on, hoping, wishing and praying for things to turn around.
The reality is on the screen. When the market hits your stop-loss level (the price at which you'll cut your losses at a pre-determined level), get out.
6. Let your profits run and cut your losses quickly.
When the market goes against you and you hit your pre-determined stop, exit the trade. Period. Exit when the loss is a small one. Then reevaluate your
strategy and execute a new trade. Keeping your losses small will keep you in the game. Profits take care of themselves, as long as you execute according
to your plan. When you place a trade, know in advance where you'll exit for a profit. When the market reaches that level, exit the position. If your technical
analysis tells you the market still has some room to move, then scale out of the position. But execute according to your plan. Remember, you'll never go
broke taking a profit.
7. Know when to trade and when to wait.
Trade when your analysis, your system and your strategy say that you have a buy or sell to execute. If the market doesn't have a clear direction, then wait
on the sidelines until it does. Keep your mind on the market, but keep your money out of it.
. Love your losers like you love your winners.
Losing trades will be your best teachers. When you have a losing trade, it's because of some flaw in your analysis or your judgment. Or perhaps the market
simply didn't do what you thought it would. When you have a losing trade, something is out of sync with the market. Examine what went wrong objectively - then adjust your thinking, if necessary, and enter the trade again.
9. After three losing trades in a row, take a break.
This is not the time to take on more risk, but rather to become extremely disciplined. Sit on the sidelines for a while. Watch the market. Clear your head.
Re-evaluate your strategy, and then put on another trade. Losses can shake your confidence and tempt you to become emotional (fear/greed) But if you
take a break, you can gather your wits and regain your composure more quickly than if you become very emotional and angry at yourself and the market.
10. The unbreakable rule.
You can break a rule and get away with it once in a while. But one day, the rules will break you. If you continually violate these 'commandments' of trading,
you will eventually pay for it with your profits. That's the unbreakable rule. If you have trouble with any of them, come back and read this one. Then read it
again.
,,,,,,,,,,,,,,,,,,,,,,,,,,,
1. Loss of opportunity is preferable to loss of capital.
1. Loss of opportunity is preferable to loss of capital.

There was a time when I felt it was my duty to be personally involved in every wrinkle of the S&P. I've traded this market since it's inception in 82. It took
quite a while for me to realise that picking safe, readable, and high probability winning trades was the way to go.
2. Use Logical Profit Objectives for all positions.
The concept of using and executing LPOs is one of the most important I know of. It keeps your percentage of winning trades high and gets you back to the
computer the next day. Everyone enjoys a pay day. With the correct concepts this is something you can do.
3. Place your Logical Profit Objectives in the market ahead of time. Markets are squirrelly animals. If you know how to calculate your profit objectives, get
them in the market ahead of market action. If you wait for the alert to go off, hoping to capture more, it's likely the market will move away from your exit
before you have time to execute your order.
4. Enter markets on retracements.
Don't buy new highs or sell new lows. Wait for themarket to come to you. Precalculate your entries and be patient. If you miss the move another bus will
come by shortly.
5. Above all, follow your trading plan
Having a clearly defined trading plan is the single most important aspect of profitable speculation. Never trade without one and once you have it, following
it is more important than any single profit or loss.
6. Trade quietly.
With the exception of a mentor, tell no one about your positions, profits, or losses. Especially those close to you, like your wife, husband, or friends. This
self-gratification process or sharing process puts you under psychological pressure to win on every trade and can be a primary reason for failure to follow
your plan.
7. Don't carry a sizeable position while traveling.
It will catch you!! The laptop won't work. The hotel internet connection will break. The cell phone battery will run out. The plane won't land! I know you'll
try it anyway. It's good for the markets, we need to spread the money around a bit.
8. 'You are only one trade away from humility.'

For over 15 years this tattered hand-written sign, scrawled with bold black strokes with a magic marker, has hung over my trading table. A swelled head
does not belong on a trader's shoulders.
9. Add to your knowledge before attempting to add to your wallet.
this is good rule,
a person if plans to come to stock market...
must decide first...what to choose...a pro's path..
an amateur's approach of part time...
NONE OF THEM ARE EASY...........
after development of your interest in market..u must check whether u suit here or not.....
pentagonal peg and 5sided hole...an easy ? quick check up pt...
1]your risk profile...market risk concept
2]your fund...your plan increase it ..proper utilisation of fund,when to sit idle....when to play aggressive
3]your knowledge bank...steadily u have to increase..judicious use of it
4] understanding market shalloffer oppurtunity...patience and discipline your two weapon
5] a stable analysis power , when to play PREDICTABILITY when to use RANDOMNESS.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
SO SKELITON IS FORMED....
now other thing r easy...[patience man , still u reqd. some yr]
next step...
open your past trade report........
on what condition u trade right..
on what time u have best profit utilisation
day...high low range..
week ..5 day high low
3week 15 day high low..
2month 40day high low....
.....................this way it can go on.
BASIC IDEA IS YOUR PROFIT/ HIGH..LOW..OF THAT TIME FRAME
THIS IS YOUR EFFICIENCY....[ SHOULD BE >30%]
IF BELOW 30, ENJOY AMATEUR STATUS..NEVER DREAM BIG...

now check wrong part of trade...
how far its for silly reason...
i]like believing infallibility..of an indicator...
ii] sudden lack of concentration on OTHER PRIORITY of life
can u eliminate? Create condition of when NOT TO TRADE...
SO u r developing an approach..
stick with your winning habit...
throwing out..unproductive one...
NOW COME OPTIMISATION OF YOUR APPROACH
AT WHAT PREMISES U TRADE BETTER...
AT WHAT STOP LOSS STYLE...STOP % ..YOUR OVERALL RETURN IS GOOD
AT WHAT STOP LOSS STYLE...STOP % ..YOUR OVERALL RETURN IS GOOD

SIMPLY STICK ON IT....
this process take atleast 1yr
now comes imp aspect of trading
...............................................
its not trading but timemanagement..and stress control
your daily routine...
how far u r discipline ..in personal life..
how far u can take stress...know your elasticity band
your time management skill...alotted time for study
study market...
analysis for trade...
scanning of idea. based on news...
stock scanning based on chart..
plan of action what other trader may plan ..how far they follow u after entry..
what r DANGER ALERM signal?
here actually pro beats amateur easily

pro sees reality..amateur eyes mostly with spec of greed/fear/hope..
pro study 3-4 hr... amateur hardly 2hr
pro watches market, improving would have,could have..for 6hr a day..
amateur..some phone call, others version..some momentary snap decision...
no man its one sided Brasil-india football match ...only watchable when..foolish young pro vs..exprienced visionary amateur..
back to time...for an amateur..two hr per day+ 3hr on holiday...
time utilisation of 2hr...
what your favourite indicator telling
what close price indicating..
any particular sector has any new fundamental improvement..
sudden volume surge why??
so 2 hr is over....
but pro... he studies -NOW CREATE A SUITABLE PLAN TO EARN MONEY..
A WINNING STRATEGY...AND ITS TACTICAL IMPLEMENTATION
DURING MARKET HR FOR NEXT DAY....
for amateur...week end study..must...
to study new implementable idea..
bill analysis..why u enter and exit a particular trade...
how u would have used your money management technique..to make more profit...
i definitely suggest NEVER TO USE MARGIN in 1st 3 yr of trading..
a simple idea..use 50% money idle..add aggressively on winner only.
Stock Scan Model

04 July 2015
10:36 AM
stock scan model

.........................
volume + price increment...definitely good model
for momentum player..aggressive style..
for swing trader.. swing indicator better..
keep an eye on nifty..and fii money flow..
rbi policy..
result out play plan must be planned in detail before it comes..
so that u can execute..as and when necessary depending upon your risk appetite..
all of us know..exit is imp ......
i personally feel implementation of exit must be studied in detail..
its just like postmortem...atleast 1month..after..day trade...
3month after swing trade
in a cool brain no distorted vision...u can judge your trade strength
REGARDING INVESTMENT CONCEPT..
..................................................
CNBC-TV18..HAVE DONE EXCELLENT CD COMPILATION..
JUST FOLOW IT..[U MUST BUY]
SYUDYING YOUR MISTAKE

........................................
its another imp place for self improvement...
FORTUNATELY..MANY CLASSICS R AVAILABLE
JUST READ THEM....
SEARCH HOW MANY MISTAKE U FOLLOW now...
just try LEVEL BEST to eliminate them...ONE AT A TIME...
IF ITS MORE THAN 5, SIMPLY TURN BACK FROM INVEST & TRADE ARENA...
consider GRAPES R SOUR...
BELIEVE ME IT SHALL SAVE YOUR TIME & LIFE...
in personal journey i have seen around 300 old experimental veteran
ask any failed attempt..ias candidate...if he ever open his/her heart..
...........u shall understand[ i have my part]
Element of trading
............................
background: trading must be treated as business. risk capital +time +attitude
to learn and do necessary behavior modification
1. risk management and survival first..since trading works in unpredictive arena ..how u handle loss is very imp.Small loss should never allowed to
turn big..however price fluctuation zone should be taken care of ..so optimum stop
2.right attitude...let profit run..benign neglect ..book partial profit
sar..if market turns opposite
3. add winners ..is most difficult to implement..not possible in daytrade or short term
4. advance concept..play aggressive with winner ..higher fund allocation..hence keep fund idle for suitable oppurtunity..
modified view..contrarian buy at temporary low of market
5. since most of things r subjective..emotional control is supreme priority..
development of entry / exit ..a system is a method to do so..
purpose of it to stop emotional burning and +expectency..hence if u prepare it ..follow it strictly..
6.system may have subjective part..lower the time , more mechanical it should be ..for day / short term price study governs.
indicator / backtesting help suitable confidence..to implement..
7. stock selection and timing other 2 critical element.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
as trading game is search of oppurtunity/ against risk of ruin..balance plays the pivot..balance in life..balance with low risk with high reward ..
time management..as well as write own trade performance..
u must know what works in market...
unfortunately it different time frame criteria changes.
ime element...
it takes time to understand..realisation of capability ..dream vs. reality
patience to bloom oppurtunity[let profit run]
time to observe[search mode] and right time to implement[execution]

but we forget TIME TO LEARN..
DIFFICULT ONE.. time to check own performance[what i am]
Time Frame
04 July 2015
10:36 AM
TIME FRAME
..............
tree must be seen before branch...bigger picture must be taken first.
economy/world view/political position ..ofcourse..fii cash flow at present
...understand my view..its not bullish/bearish ..nor goal..
upbeat on economy..
funding
stability or continuity...this 3 element only....
for fii cash flow...a comparative base 10 days ago[2week]
this is only tool i use for fundamental element.
what way they r related with timeframe?
..............
they decide whether to continue or quit .
act aggressively or play defensively..without this, time element can not exist.
if all of them r favourable .. then take trade .
in cross current. .for shorter time frame..be ultra cautious.
If it is unfathomable..hold cash.
all negative, play short on nifty..
.
so time to act has been decided..
only timeframe that suits u. where u can think/visualise .
visualise what may happen .....that is happening later..
can u execute ?another critical question!
if not, place order on phone..allow others to place order..
let other may see the screen.
but decision making process should not be fought with internal dilemma.
its a known fact in chess..half hr chess is better than 5min..1 hr rapid is better .2hr is further better..classic chess brings out of a champ...
definitely time to think improve quality...quality of selection and timing...
and see the ploy/decoy..so called news trap and marketing/gimic...

foolish greedy bull trap...
fortunately u , trader has another weapon..time out....stop loss
we chess player fight ..fight to save ..hope for opponent mistake...
better is quit...accept loss.. no hope..use TIME....time to find oppurtunity
write lesson learnt...
time to search opportunity plays heavily in trading...however for exit more mechanical approach is helpful.
in chess u write . then u play on board...
same way u write a plan ...see price confirmation then place order.
hence choice of a higher time frame necessary to act...

for daytrade..eod data ..decision making + hr signal good...
for intraday...software..higher high break on smaller time [ 3min/5min] +increment in momentum / volume surge..with small target execution is key
for short term trader eod + week base signal ...
position trader [ cold blooder murderer to rob ur money]..plays with subjective judgement..allows profit run..use break out/ pull back as necessary
..applies suitable tactics as when necessary...simply get out when wrong[infact they use time stop from hara-kiri]...experience...chain to get info..
professional friend and leverage..all tools r used...
yet sometimes they lose..when they are NOT ready change...with blockade
market directional view
hence depending upon actual you...can choose any time frame ..with greater accuracy level...another higher time frame for clarity of thought..
however check performance..take membership..a performer in that time frame...to minimise scanning time...performance analysis..execution idea must
if u know math/ computer/ have time ..software...day trade is best..
av with experience...short term...as oppurtunity exists
good knowledge/part time ..view on life..ready to work hard..wait for oppurtunity...try to be a position trader...use weekly chart..10day cycle...
Basic Psychology
04 July 2015
10:37 AM
BASIC PSYCHOLOGY
There are 3 most factors that effect a Investor or a Trader in the Markets.
Of them are Greed, Fear and Hope. I will list a brief description of each of the below.
Greed: taking the meaning from Webster's (noun)
1. Excessive desire to acquire or possess more (esp material wealth) than one needs or deserves.
2. Reprehensible acquisitiveness; insatiable desire for wealth (personified as one of the deadly sins).
Greed always says, wait a little more so that the holding will rise and can make more Money.
Fear: taking the meaning from Webster's (verb, felt more appropriate)
1. Be afraid or feel anxious or apprehensive about a possible or probable situation or event (example: If I dont enter this stock now, I will loose on it).
Hope: from Webste'rs (verb, best suited for Markets)
1. Be optimistic; be full of hope; have hopes; "I am still hoping that all will turn out well".
2. Intend with some possibility of fulfilment; "I hope to have finished this work by tomorrow evening".
Well holding a loosing position even if it down to 20-30% ? This is Hope, that make you feel that the stock will go up and you can recover your losses.
No one can shy away or exempted from these 3 factors when involved in the Markets. Let it be those FII's, Fund Managers or our new breed of Tech Savvy
Brokers, Professional Traders or the Retail Investors.
When this thought comes that, which breed of Traders/Investors get killed or maimed in a Steep Correction? The answer was simple, 90% of the time, the
retail investors followed by Professional Traders, Mutual Funds (unless, they have a really Bad Manager like me ) and very minismal are the FII's.
Why so the retail investors get killed, when the same GFH Factor governs one and all? Well, the answer is simple, if you understand the markets very well
and for the laymen it goes this way.
The simple difference between Life and Death in the Stock Market is controlling the GHF Factor. The less the GFH Factor, the more the Survival here.
That is the reason, why the FII's, Mutual Fund Manager and Professional Traders survive here more than retail investors. Since they know how to control
their GFH Factors.
Variably or Invariably why others can control their GFH factor and why not the retail? at the end all are human beings! The thing is there are checks and
balances in terms of methodologies to control the GFH for the Big Guys, there is no one to control a retail as he his a Boss for himself. Thats how the self
destruction starts.
The 3'Ms: The 3'M ( Mind, Money & Methodologies) will help you control the GFH Factor. I am lifting this straight way from Alexander Elder's book (Trading
for A Living & Welcome Into My Trading Room).
1. Control the Mind and overcoming the emtions ( GFH Factor).
2. Protect your Money( maximize profits and cut losses by Proper Entry and Exit Plans)
3. using Methodologies ( Pyramiding, Reverse-Scale Techniques, Stop Losses)
Also, these days Trading Systems are available for dirt cheap. If you want to make money, be ready to spend money to get your proper setup.
Like
1. For a swing or short-term trader, a EOD Charting Software is more than Enough
2. For a Day-Trader, access to Real-Time data is crucial, even a 5 min delay can kill you.
I may have presented this not in a orderly fashion, but most of them I learnt some myself, some reading books and some from the Traderji forum.
Step One: Unconscious Incompetence.
This is the first step you take when starting to look into trading. you know that its a good way of making money cos you've heard so many things about it
and heard of so many millionaires.Unfortunately, just like when you first desire to drive a car you think it will be easy - after all, how hard can it be?? - price
either moves up or down - what's the big secret to that then - lets get cracking!
unfortunately, just as when you first take your place in front of a steering wheel you find very quickly that you haven't got the first clue about what you're
trying to do. you take lots of trades and lots of risks. when you enter a trade it turns against you so you reverse and it turns again .. and again, and again.
you try to turn around your losses by doubling up every time you trade - sometimes you'll get away with it but more often than not you will come away
scathed and bruised
Well this is stage one - you are totally oblivious to your incompetence at trading.Stage one can last for a week or two of trading but the market is usually
swift and you move onto stage two.
Stage Two - Conscious Incompetence
Stage two is where you realise that there is more work involved in this and that you might actually have to work a few things out.
you consciously realise that you are an incompetent trader - you don't have the skills or the insight to turn a regular profit.
During this phase you will buy systems and e-books galore, read websites based everywhere from Russia to the Ukraine. and begin your search for the holy
grail.
During this time you will be a system whore - you will flick from method to method day by day and week by week never sticking with one long enough to
actually see if it does work. every time you came upon a new indicator you'll be ecstatic that this is the one that will make all the difference.
actually see if it does work. every time you came upon a new indicator you'll be ecstatic that this is the one that will make all the difference.
you will test out automated systems on Autotraders, you'll play with moving averages, Fibonacci lines, support & resistance, Pivots, Fractals, Divergence,
DMI, ADX, and a hundred other things all in the vein hope that your 'magic system' starts today.
you'll be a top and bottom picker, trying to find the exact point of reversal with your indicators and you'll find yourself chasing losing trades and even
adding to them cos you are so sure you are right.
You'll go into the live chat room and see other traders making pips and you want to know why it's not you - you'll ask a million questions, some of which are
so dumb that looking back you feel a bit silly. You'll then reach the point where you think all the ones who are calling pips after pips are liars - they cant be
making that amount cos you've studied and you don't make that, you know as much as they do and they must be lying. but they're in there day after day
and their account just grows whilst yours falls.
You will be like a teenager - the traders that make money will freely give you advice but you're stubborn and think that you know best - you take no notice
and over leverage your account even though everyone says you are mad to - but you know better.
you'll consider following the calls that others make but even then it wont work so you try paying for signals from someone else - they don't work for you
either.
This phase can last ages and ages - in fact in reality it can last well over a year - My own period lasted about 18 months.
Eventually you do begin to come out of this phase. You've probably committed more time and money than you ever thought you would, lost 2 or 3 loaded
accounts and all but given up maybe 3 or 4 times.
Then comes stage 3
Stage 3 - The Eureka Moment
Towards the end of stage two you begin to realise that it's not the system that is making the difference.
you realise that its actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right
You start to read books on the psychology of trading and identify with the characters portrayed in those books.
Finally comes the eureka moment.
The eureka moment causes a new connection to be made in your brain.

you suddenly realise that neither you, nor anyone else can accurately predict what the market will do in the next ten seconds
and you define your risk threshold.
You start to take every trade that your 'edge' shows has a good probability of winning with.
when the trade turns bad you don't get angry or even because you know in your head that as you couldn't possibly predict it it isn't your fault - as soon as
you realise that the trade is bad you close it . The next trade will have higher odds of success cos you know your simple system works.
You have realised in an instant that the trading game is about one thing - consistency of your 'edge' and your discipline to take all the trades no matter
what.
You learn about proper money management and leverage - risk of account etc etc - and this time it actually soaks in and you think back to those who
advised the same thing a year ago with a smile
you weren't ready then, but you are now.
The eureka moment came the moment that you truly accepted that you cannot predict the market.
Then comes stage four

Stage 4 - Conscious Competence
Ok, now you are making trades whenever your system tells you to.
you take losses just as easily as you take wins
you now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it loses and when you're on
a loser you close it swiftly with little pain to your account
You are now at a point where you break even most of the time - day in day out, you will have weeks where you make 100 pips and weeks where you lose
100 pips - generally you are breaking even and not losing money.
you are now conscious of the fact that you are making calls that are generally good and you are getting respect from other traders as you chat the day
away.
You still have to work at it and think about your trades but as this continues you begin to make more money than you lose consistently.
you'll start the day on a 20 pip win, take a 35 pip loss and have no feelings that you've given those pips back because you know that it will come back
again.
you will now begin to make consistent pips week in and week out 25 pips one week, 50 the next and so on.
this lasts about 6 months
then comes Stage Five
Stage Five - Unconscious Competence

Now were cooking - just like driving a car, every day you get in your seat and trade - you do everything now on an unconscious level.
you are running on autopilot. You start to pick the really big trades and getting 100 pips in a day is becoming quite normal to you.
This is trading utopia - you have mastered your emotions and you are now a trader with a rapidly growing account.
you're a star in the trading chat room and people listen to what you say. you recognise yourself in their questions from about two years ago.
you pass on your advice but you know most of it is futile cos they're teenagers - some of them will get to where you are - some will do it fast and others will
be slower - literally dozens and dozens will never get past stage two but a few will.
Trading is no longer exciting - in fact it's probably boring you to bits - like everything in life when you get good at it or do it for your job - it gets boring you're doing your job and that's that.
You can now say with your head held high "I'm a trader"
Take Control
04 July 2015
10:37 AM
"Take control! Make money quickly and safely by doing what others don't.
Ever tried using the 'buy and hold' strategy? You have!
Are you a millionaire yet? Perhaps not!Why Buy and Hold Doesn't Work.
At this point we need to make a clear distinction.
In this course we are talking about stock market trading not stock market investing. The fundamental difference is the time frame and the degree of active
involvement.
The investor's approach is generally long term and they are prepared to hold onto stock despite short-term reversals.
A trader on the other hand is someone who buys and sells stocks and derivatives on a regular basis with the aim of profiting from short-term price
movements.
Their perspective is short to medium term and they are concerned about the opportunity cost involved in having their funds tied up in stocks that aren't
performing.
They also use different types of strategies so have greater flexibility. Both approaches can be successful.
Our point of view is that trading provides greater opportunity for profit and ironically greater risk control. One aspect of a typical investor's approach is the
strategy -known as buy and hold.
Essentially this involves holding onto stocks through thick and thin on the basis that over the long haul they are expected to increase in value.
This approach has two fundamental problems.
The first is that stocks move both up and down.
If you simply buy stocks you can only profit if they increase in value.
Successful traders have strategies to trade both sides
of the market. So whether prices rise or fall, they can make a profit.
More fundamentally, if you simply hold onto stocks,
there is no guarantee they will increase in value.
No matter how long you hold onto them. Even if you
choose so called good stocks this is no promise of
success. Indeed, this approach can be very dangerous,
even devastating.
Lots of investors lost an awful lot of money on these
stocks and others like them. You can see that simply
holding onto stocks can be very risky.
But we will show you how, if you know what you are
doing, trading can be a relatively low risk approach.
So how did buy and hold become such an unquestioned
piece of received wisdom? Like just about any strategy,
it worked when the market was going up.
Stocks rose for such a long time that the buy and hold
concept seemed flawless. But Stock prices can and do drop suddenly.
Buy and hold is really just buy and hope.
So stock market trading is our preferred strategy and
the one we will explain in this course.
But there are two key issues you need to appreciate

about this approach.
The first one is time.
Trading is more active than investing and so requires a
greater time commitment.
Depending on your style of trading this can vary from
a few hours a week to several hours a day. And some
strategies require you to be involved in the market
when it is open, whilst other methods can be managed
out of hours.
Our course covers a range of trading systems that can
suit your time frame.
The other issue is your mental attitude.
Trading requires a different mindset to investing.
It is not a set and forget approach.

You need to actively manage your trades and be
prepared to act quickly when the situation changes.
there
are only four analysis techniques for selecting stock to trade.
1]Market Cycles
2]News
3]Fundamental Analysis
4]Technical Analysis
And you may also remember that of these four techniques we prefer technical analysis.
As distinct from fundamental analysis, technical analysis
provides precise mechanisms for trade entry and exit.
And the critical decision we need to make on daily basis
is which stocks do we choose to trade and when is the
right time to get in.
So we want to suggest to you that the best strategy for
determining the timing of your trades is technical analysis.
What do we use in our technical analysis that works so
well for us?
Our trading system can be defined as simply:
Three Simple Strategies
Three Simple Setups
Three Simple Triggers.
These things help you to do the following activities which
will be the core of your system.
1. select the stock

2. time the entry
3. manage the trade
4. time the exit.
Selecting the stock involves the following criteria:
1.
2.
3.
4.
5.
mid-cap or blue chip stocks only

optionable stocks only
price between $10 and $60 ($10 to $35 in Australia)
daily volume above one million
medium to high volatility (preferably high)
This last point regarding volatility is crucial.

We love volatility...for being on the right side of
moving markets is what makes us money.
A stagnant market means there's no opportunity for us
to make money.
[this is an australian guide]NOT RIGHT IN INDIAN CONTEXT..
we will outline in clear simple
terms exactly what strategies you need to use to
get started making profits for yourself.
We then show you exactly what Setups you need to look
for to decide what to trade.
We then give you the exact triggers you need to
use to time your entry and exit in order to protect your
capital and make profits.
That is what people have found so useful with our system.
They can protect that crucial capital that we all work
so hard to accumulate and yet still be in a winning
position
to capitalise on winning trades.
Here just a few of our rules you must follow to be
successful.
Only trade with money you can afford to lose.
Never trade with borrowed money.
Only trade when you are in the right physical and mental
state.
Only place a trade if you are at least 80% confident.
Do not trade without a stop loss.
Place your stop loss at the same time you place your trade.
Don't enter the market until you get a clear signal.
You need at least three setups and three triggers before
entering a trade
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,
never ever introduction to get highest priority..hence openion always comes last....this order should never be broken[if u want to money out of market]
bullish view.....how far market can go up ..at what time limit..
an analyst writes tcs price target 1650..it means 1sigma.66% chance of reaching tcs 1650 within a yr of time..if present condition [linear interpolation]
prevails
if he writes conservative target 1600...itmeans 95%[2sigma]
chance of achieving that target within a yr
now again on new quarterly result out/review of company this may be edited depending on prevailing market condition
however conviction is rare in analyst ..to put big money...WHY?
HE KNOWS THE RISK/ASSUMPTION..which rarely get published..
the trick of management ...promotion sell
sentiment change..alternate scenario..how far market can fall?
at what duration it shall continue...nobody knows..but fibonacci definitely helps the trader..where is support...commit little money..commit and see
price reversing ..hey u get it right..buy more now!
hence market movement offers enough oppurtunity to active observer
methodical man can make money out of it
The 24 Most Important Rules Of Trading

04 July 2015
10:38 AM
1.
2.
3.
4.
5.
6.
7.
Always Cut your losses and let your profits run. Take small losses and large wins.
Once you have defined the trend, trade only in that direction.
Always have a game plane. Never enter a trade unless you know where you should get in and where you should get out.
Always use a protective stop to limit your losses.
Be patient. Wait for the right opportunities. Don't just trade for the sake of trading.
If the reason you entered the trade is no longer there, get out.
Do your homework. By the time you enter a trade you should already know what you are going to do and what you expect from the trade. Placing a
trade should be the easiest part of trading. If you are still trying to work things out when you enter the trade you are not ready for that trade.
8. If your method of trading is working, don't change it.
9. The market is never too high to buy or to low to sell.
10. Every trader has losses, don't let your losses get to you psychologically.
11. There is no such thing as an indicator that is a 100% right all the time. Use common sense along with your method of trading. If your indicators are
telling you one thing but the market is obviously doing something else, listen to the market.
12. The market is always right.
13. Use money management in your trading.
14. Only trade markets you are sufficiently capitalized for.
15. Never trade with money you cannot afford to lose.
16. Be disciplined.
17. If you hit your target profit, take it. Don't get greedy and hope that you will make more.
18. Don't try and regain all your losses in one trade.
19. Don't blindly follow someone else's recommendations. Do your own homework.
20. If it's not going well, take a break for a few days or weeks. Make sure you are in the right psychological frame of mind before you start trading again.
21. Don't trade to many markets. It's better to be an expert in one market than a novice in many.
22. Never meet a margin call. If you have a margin call it means something went wrong with your trade.
23. By the time everyone knows it's a bull or bear market, it's probably to late.
24. Loses in trading have no bearing on you as a person
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,
after this test u have to ...say yes,to ALL
....OR MODIFY YOU...
GIVE TIME IT MAY BE SOME YR, or simply quit...
indian defence dont take THOSE who not fit their criteria
so now comes your journey as trading cadet
u r lucky, if u r in trading industry.., U can make all experiment in others money
sharpening your skill without self injury. commited money here and there
a good senior . can help you a lot......
or join a correspondence course. like me test your idea on market.
..
market shall teach u by PROFIT /loss ..how far u learnt.
EVALUATE IN YOUR DIARY AND YOUR FEELING /HOW FAR u have modify your poor habit..
some exceptional HELP U MAY GET....OTHERS FROM TOP ,READILY GIVE ADVISE, if they think u have capability...in a puzzle..[i do ubt after reading this 90%
loss of episode in traderji forum..an MP CHAP STORY].
I want you to clearly realize one thing:
In all my years of performance consulting, I have NEVER seen a person in any field (athletic or business) who had a negative attitude AND ended up being
successful.
We Have Choices
Everything we do involves making choices. As human beings, we have the freedom and ability to choose. Some things are easier to choose than others
because they involve less effort, energy or resources; but easy choices are rarely the right choices. For example, if you wan t to get yourself into better
physical shape then when your alarm goes off at 5:00am, you have a choice:
* Get up and go to the gym or
* Hit the snooze button and stay in bed for another 45 minutes
Hmm, which is the "easier" choice? And which do think is the right choice? Exactly!
Now, as traders, you sometimes make good trades or trading decisions and end up with a bad P & L. Once again, you have a choi ce:
* Lose your focus by getting mad at the market, ruminating, beating yourself up or
* Shift your attention to the PROCESS (things you CAN control) and re-establish your belief in your skills/talent/data points
Which is "easier" and which is the right choice?

What We Can Control
Elements outside of our control, are just that - OUTSIDE of our control and therefore, there is little point in wasting emotional capital on them. Trust me, I
know how "easy" it is to get caught up in the noise - especially when times get tough - but you have to understand that it serves no positive value to you or
you or your trading.
If the referee makes a bad call you can be angry for a few seconds, but GET OVER IT and MOVE ON. Why? Because the ref's call is OUT OF YOUR CONTROL.
Moving forward, I challenge you to start making the harder, right choices and use your emotional capital to focus on the PROC ESS and things that are WITHIN
your control.
Keep your eye on the ball and your head in the game!
Trading for a living requires a lot of discipline. It also requires a lot of streets smart if you trade discretionarily. One thing that many beginners missed is a
basic concept of having multiple setups learned and practiced correctly.
Many beginners misunderstand that they can master a single setup and then can trade for a living. That is not likely the case . For each specific setup, you
need to spend time to understand its reasoning behind, learn the chart pattern available in historical charts, and then pract ice in real-time or at least using
simulation so that you know how to handle the setup in all possible situations.
stop loss is where u stop before losses stop u from trading ever (not a wise crack, think about it)...now modify this...
stop loss is at a % loss of my capital (on one trade or out of your total capital) where I stop before losses stop me from tr ading ever (becomes so big that it
takes away a big chunk of your capital).
elder says 2% max on individual trade and 6% of ur capital in a month...there is a beautiful thread here on stop loss...searc h it
elder says 2% max on individual trade and 6% of ur capital in a month...there is a beautiful thread here on stop loss...searc h it
-- coursey : many a good trader OF TRADERJI.COM
Check Usefulness
04 July 2015
10:40 AM
Here is copy paste -check usefulness of them

.................................................. .................................
1. Never risk more than 10% of your trading capital in a single trade.
2. Always use stop loss orders.( Here you should know your loss you can give in a situation where the trade starts going against you.)
3. Never do overtrading.
4. Never let a profit run into a loss.
5. Don't enter a trade if you are unsure of the trend.
6. When in doubt, get out, and don't get in when in doubt.
7. Never limit your orders. Trade at the markets.
8. Extra monies from successful trades should be placed in a separate account.
9. Never trade to scalp a profit.
10. Never average
11. Never get out of the market because you have lost patience, or get in because you are anxiously waiting.
12. Avoid taking small profits and large losses.
13. Never cancel a stop loss after you have placed it.
14. Avoid getting in and out of the market too soon.
15. Be willing to make money from both sides of the market.
16. Never buy or sell just because the price is low or high.
17. Never hedge a losing position.
18. Never change your position without a good reason.
19. Avoid trading after long periods of success or failure.
20. Don't try to guess tops or bottoms.
21. Don't follow a blind man's advice.
22. Avoid getting in wrong and out wrong; or getting in right and out wrong. This is making a double mistake.
23. When you lose don't blame it on luck.
24. One of the primary reasons individual traders fail is an inability to act freely and decisively.
25. Freedom in action comes about when fear has been minimized. Trading small and diversifying neutralizes fear . Decisiveness in action
comes from clarity.
26. Clarity is achieved through an understanding of natural laws and the resulting probabilities.
TRADE theme...DAYTRADE VS SWINGTRADE VS POSITION

TRADE
04 July 2015
10:42 AM
DAYTRADE..i treat as gambling..
totally unsuitable for amateur...
pro...can do..suits DEALER..RM..as its their job to watch
call helps..provided u understand reason of call
personally u should know call giver....u execute ...
as per luck and survival skill u make money...
DAYTRADERS BIBLE..
DAY TRADING UNIVERSITY... HELP FUL
INVIDUAL SENSE .. OF BULLPOWER ..BEAR POWER..MUST..

PIVOT PT CALCULATION ..
ANOTHER IMP CONCEPT..JUDGE THE DAY..
UPDAY BUY FIRST,SELL LATER
DOWNDAY SELL FIRST, BUY LATER
NO TREND DAY OBSERVE..
VOLATILE DAY USE YESTERDAY MEDIAN VALUE..
BUY 2% BELOW
SELL 2% ABOVE..
STUDY NIFTY AND NIFTY FUTURE....ORDER POSITION
TO JUDGE WHAT WHAT DAY IT IS...
SWING TRADE.......
nobody join in this type of trade...
with 3yr trade experience...guidance by ..senior u can...
its not at all a trade...basically judicious use of day trade and position trade...
book loss early being ..daytrader..
hold the winner...like position trader...
y have to face highest level of stress during this style..as its discretionary.
computerised signal helps..
min 2 time frame concept..useful
conflicting signal exists ..study them ...
use..1hr breakout as entry...
any momentum tool ...helpful
position trading
................................
its possible to learn ..if u have done investment before...
holding period is key..
stop..for save from rainy day..
trend concept...very useful//
fundamental idea help..
ma x..dual or band..sector strength useful..
weekly chart..good..
concept learning for free...www.ino.com
part time play..possible..
in metastock aroon helps..
for pro scan tool must...
by the way if u enjoy WINNING TRADE IN MIND...
AGGRESSIVELY DREAMER...
DONT JOIN IN all 3 VENTURE......observe other in brokers office.

some testing idea..........Some idea of trade science.
you have to work on them to use effectively.
1]market model is like river.trend model+ cycle mode
mabasically lagging. Ema improves
MOMENTUM. ..it helps to define turning pt with divergence study
I] continues.rare..
Ii]step up may seen
Iii] jerk element.normally seen in volatile Indian market..
5 bar momentum. Has shown some predictiveness
COMPLEX VARIABLE
..
measuring cycle period..phase..
NOISE[RANDOMNESS]
sinewave
trendline [instantaneous ]
remember market mode = trend + cycle
DESIGN AUTO SYSTEM [MECHANICAL ]

1]MONEY MANAGEMENT STOP
2] GROSS PROFIT { COMMISION + TAX} = NET PROFIT
3]LARGEST LOSS.AV. LOSS
4]LARGEST PROFIT AV PROFIT..
5] NO OF WINNING CALL
THIS U HAVE TO TAKE FROM PAST
NEXT ELEMENTS
LOGIC OR PREMISES
FILTER [ FINITE CONCEPT]WORK IN A RESTRICTION
Improvement from lagging indicatorTO ZERO LAG INDICATOR
ZEMA = EMA + MOMENTUM
ADAPTIVE MAWORKS IN NOISY MARKET
MESA + ADAPTIVE MA = MAMA
Simple signalema up as filter..
15 ema/ 18 emagood
CONCEPT OF MARKET SPECTRA/MESA
..
trend
detrend
Reverse trend
Phase change.forward shiftoptimization of this develop predictive mode

Detrend +45 degree
It Help advance study
Dema ,smoothening ema..throw out error of ma..
Visualization by technical indicator helps
Or u may study independently TREND MODECYCLE MODE..
AT WHAT LEVEL MARKET/INDIVIDUAL STOCK @ PRESENT
RSI..STOCKASTIC.HELPS TO INTERPRET FURTHER[ provided u know how to use them on case basis]
Refsystem element and modern ta..
As traders, we not only have to develop technical trading skills but also the emotional skills to trade successfully.
Emotional skills help the trader get through equity draw-down periods and multiple, consecutive trading losses that ALL trading systems experience if
traded long enough. These tough events in trading will test the emotional fortitude of any trader.
This is where confidence in your tested trading system and trading with money you can afford to risk will play an important role. If the trader did not test
his or her trading system, how do you think that trader will feel after four consecutive losses totaling approximately 8 percent of the trading accounts
equity?
Now, compound this with the fact that it is not money this trader can afford to lose. And, compound this again if the person is day trading and losing 8
percent in one day! And, the 8 percent assumes that you are controlling your risk so that each loss is only a net maximum of 2 percent per loss.
Now, after all this, do you think the trader will feel anxiety and stress? I think so! Do you think that stress will create a good environment for successful
trading? I think not! Do you think the trader will be afraid of taking another trade for fear of another possible loss? Perhaps it might because this kind of
stress can cause the trader to -second guess him or herself and the trading system, whatever it is. Traders who trade with confidence will keep trading
and not -second guess themselves OR their trading system.
As a trader you want to eliminate any and all emotions while trading. This even includes emotions generated by having too many market opinions.
Emotions never help the trader! Keep emotions in your personal life and away from your trading life.
The best way to keep emotions in check is by creating a stress-free trading environment where you accept equity draw-down periods and can keep
trading through them in a stress-free state. You do this by testing your trading system or approach.
In my opinion, the best testing method is to -paper trade for a long enough time that you come to know the best, and the worst, that your trading
system produces. Paper trading (again, in my opinion) is better than computer back testing because it represents how YOU are actually trading the
system or approach. Yet, it is in a stress-free environment because no real money is being used.
I always tell traders, that, if they are not profitable in paper trading, they will not be profitable trading with real money. In other words, they are not
ready to actually trade! It is far better to know that you are not yet ready then to jump in head first and lose your shirt!
So, the first step in getting a handle on your emotions is to create a stress-free trading environment that provides a solid foundation for you to apply your
trading skills and, then, access how you are doing. If youre the one creating your stressful trading environment, you are short-changing yourself before
you ever even start actually trading
About Volume and Stock Markets

04 July 2015
10:42 AM
About Volume and Stock Markets

Stock Volume is the daily number of shares of a security that change hands between a buyer and a seller.
It is simply the amount of shares that trade hands from sellers to buyers as a measure of activity. If a buyer of a stock purchases 100 shares from a seller
then the volume for that period increases by 100 shares based on that transaction.
Volume is an important indicator in technical analysis as it used to measure the worth of a market move. If the markets have made strong price move either
up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant
the move.
Volume is a trader's best friend. Few technical indicators give the experienced trader a better feel for the minds of his fellow traders and investors. The
heights of their greed, the depths of their fear, the loudness of their panic, and quietude of their ambivalence. All of these emotional states are seen with
volume.
Volume also shows us the footprints of big money, and unlike footprints in the sand, these footprints are there for all to see...and long after the fact. More
immediate and less ambiguous than any complex indicator, volume pinpoints extreme tops and bottoms -or the areas of them- with amazing accuracy.
Additionally, unlike many indicators, volume is applicable to every timeframe. How can this be? Simple. Volume is simply a measure of sentiment, of human
nature. And fortunately for us, human nature is the one ever-present constant of the stock market. Never forget that fact. Once you have your own emotions
under control as a trader, knowledge of this profound fact will guide you ever after as reliably as the Northern Star guides a lone sailor across a vast sea.
Why is volume a trader's best friend ?
Volume offers a complete picture of the market.
Volume can help determine the health of an existing trend.
Specialty volume for indexes and volume-based technical analysis are very good indicators for predicting index shifts.
Volume is the indication of supply and demand. It's defined as the number of units traded during a time period. This number is significant in that it supports
the prevailing price trend.
The technical analysis of volume is a basic yet very important element of market timing strategy. Volume provides clues as to the intensity of a given price
movement.
Minute-by-minute trading volume shows the reversal points of the market, and therefore when to buy and sell!
Currently when a change in sentiment occurs in the market, most people dont find out until it is too late. This can be costly to an investor. Trading volume
offers investors an invaluable tool to know when and where a change in sentiment is going to occur, and act accordingly.
Intraday volume helps you see where a stock is being repeatedly bought as it dips. Likewise, towards the end of a rally, a wide volume spike often signals
that the move is at an end, at least short-term. If you weren't aware of it before, you should be starting to see why volume is a trader's best friend.
1ST STEP WHEN U START

04 July 2015
10:43 AM
1ST STEP WHEN U START

......................................
.
All the knowledge in the world will not amount to anything without action.
And unless and until you take action you will also never know whether you can do something
The first step is critical.
You may know everything there is to know about parachuting but unless you take that first step, you will never experience what it means to
be a parachutist.
In the same way you could read every book and attend every course on trading and paper trade for years, but until you step into the market
you will never become a trader.
And until you take that step you will never make a dime.Knowledge alone is not enough. Massive action is necessary for success.
One of the most significant dangers for novice traders is procrastination.
The stock market is an endless source of information.
And there are huge numbers of people offering conflicting advice.
It is easy to fall into the trap of too much thinking and too much analysis that just leads to confusion. Or of wanting everything to be
absolutely perfect before placing a trade.
The only way to learn how to trade is to do it.
The reality in the market, as in most areas of life, is that you can never know all there is to know. You
just have to take educated action. And then see what results you get. Fine tune and try again.
If you wait until all conditions are perfect before you trade, you'll never trade
Do not wait; the time will never be "just right".
you have analysed the trade according to our easy to follow rules and it fits the criteria, then you have
already done all the hard stuff.
It's time to place the order.But What if I Lose on My First Trade? "
If this happens to you, and let's face it, it is quite possible, what do you do?
Well, we would never tell you what to do with your money.
But we can however share with you what we do when we lose.
When we have a losing trade, we go back to the Rules and almost always there is something there we missed or did wrong.
Other times, it is just the market and there really is nothing we can do.
Losing is part of trading. And you must learn to accept it as just an aspect of the game. Because trading is just probabilities.
Like us, you will lose. No question about it.
But what matters is that when you win you win more than when you lose.
The proportion of wins is not what is important. It is the size of your wins compared to your losses.
However, if we lose three trades in a row we stop and take a break from trading for a few days.
Some common mistakes that you might be making if you have a losing trade are listed below.
Avoid the 10 Most Common Mistakes!
You can avoid the most common option trading mistakes if you follow these guidelines:
1. don't limit your strategy to calls - buy puts also and overcome the bullish bias
2. correctly determine the trend - up for calls, down for puts; sideways for covered calls from stocks.
3. buy enough time - at least 3- 4weeks, exit with 1 weeks to expiration
4. don't underestimate the effect of volatility
5. don't over commit your funds - you can lose 100%, so limit your exposure.
6. don't put all your eggs in one basket - diversify over several stocks and use both calls and puts never try and strike it rich from one
trade
7. don't trade without first determining a target profit and exit point
8. don't use market orders and don't trade at opening or closing time
9. consider the next expiration month if you can't find a suitable trade in the current month.
10. Underwrite call / put when u understand , in present scenario move is unsustainable ie. NO WAY further strength is no more ,
divergence exists and becoming strong.
It is wise to remember the following issues when trading options.
1. they have their own risk/reward
2. time depleting asset
3. higher leverage
4. less liquidity
5. can have wide bid/ask spread
6. slippage in fast markets
6. slippage in fast markets

Options Benefits
1. they are cheap to buy
2. flexibility - can trade both up and down trends
3. versatile strategies
4. limited risk - can't lose more than you have put in
5. leverage
6. can use them to hedge
7. limits number of stocks to review
8. can generate good cashflow
9. puts have less risk than short selling.
With covered calls there are a couple of particular problems to avoid:
1] don't become overextended on margin
2] if the stock price drops beyond your stop loss, exit your position and sell the stock.
Placing the order is the easy bit, you've already done the hard work in selecting the options and analysing the trade, now place yourself in a
position to reap the reward. Place the order.
If you only paper trade, you won't experience the emotional ups and downs that you will go through once you have REAL money at stake.
It is only then, that YOU begin to see how you trade.
It is only then, that YOU begin to handle stress to make money.
We are all different and you need to see how you react when you're winning and losing to see what sort of trader you are and where you can
improve on how much money you can take from the market.
These are insights gained as a trader and we are happy to share them with you. Some of the topics that will be covered are:
Picking your indicators
Trading psychology
Achieving maximum leverage
How we learn new trading skills
Recognizing a trading "Bubble"
Using probabilities to maximize your return
How to use multiple time frames
Pre and Post Trading Checklists
Pulling the trigger on your trades
Using Support and Resistance
How to evaluate a trading system
Psychological Keys to Success
Mass Psychology moves the market:

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10:43 AM
Mass Psychology moves the market: Life is 90% mental and 10% physical.
Financial markets are the same, driven totally by human emotion. To be a successful trader, it is necessary to have a fundame ntal understanding that mass
psychology of fear and greed is the biggest single factor you must understand if you expect to trade profitably on a consiste nt basis.
This emotional and psychological ingredient has absolutely nothing to do with the state of the economy, but it does have an o verwhelming effect on the
movement of the market.
The first rule is that rumors are the prime movers of the market. It's important to realize how quickly speculation of upcomi ng events can change the
character of the current trend. Just the mention of inflation causes investors to rush for the exits in order to dump their h oldings.
This fear causes a general market decline long before the economy changes. The market anticipates the movement of the economy and shows us in advance
what we can expect with regard to corporate health, unemployment, interest rates and other financial trends. A crash in the m arket is usually caused by
psychological, not economic factors.
One of the biggest problems most traders have is expecting too much from themselves initially. Setting outrageous goals is mo re harmfull than anything you
can do. Trying to make $1 million on a $10,000 account in a year does nothing more that show you are in the clutches of greed and denial.
We recommend you start out trading 1 contract until you have confidence in your rules based system. You should develop the se lf discipline to trade until
you reach a net two points for the day then stop. This approach will develop confidence in your system, give you some profit every day and teach you how to
recognize your signals. Later you can trade larger, but initially you must learn the discipline and patience to only take the high probability signals outlined in
our course.
The problems you face when not being realistic include:
Not believing you can lose

Over trading
Taking too much risk for your account size

Expecting every trade to be a winner .
Things that can help you become realistic include:

04 July 2015
10:44 AM
Things that can help you become realistic include:

Look for small consistent returns. Our goal is to hit singles and doubles not home runs.
Know you market and the average point per each move.
Practice with a Sim-broker against the real market for three weeks and keep a detailed log and chart of each trade
Treat your trading like a business and include all the income and expenses so you can evaluate the true potential of your app roach
Want to be a Millionaire Quickly? Use Maximum Leverage
Do you want to be a millionaire but don"t know how to get there? One thing all successful and profitable entrepreneurs, real estate investors and traders
use is Leverage! Maximum Leverage is the key to all great fortunes. With leverage, you can move toward your goals many times faster than without
leverage.
Futures trading allows you take advantage of positive leverage, but it's important to protect yourself against negative lever age at the same time.
How many of these leverage principles are you using?
Other people's money
Other people's experience
Other people's ideas
Other people's time
Other people's work
There are five methods to gain leverage
1]Find a Mentor who can provide Perspective, Patience and Proficiency

2]Maximize the use of tools and new skills provided by experts
3]Systematize your approach to everything by using checklists
4]Develop a Mastermind Team of like minded people who can contribute new ideas and optimize your approach.
5]Build a Support Network that will help maintain your positive attitude and support your goals.
If you are not using the five leverage principals listed above, the first thing to do is take a full personal inventory. Afte r you have set your goals in the area
that you intend to pursue, begin by eliminating everything that does not materially or psychologically contribute to the achi evement of that goal. This will
give you additional time and "clean out your closet" so you have eliminated most major distractions.
Next, add all five methods for gaining leverage. Finding a mentor will be the most challenging, and the most rewarding. You m ay find one by attending
seminars or taking courses from experts in your field. Remember that this has to be a two way street so that the mentor recei ves equal value in return for
helping you. Your Mastermind group may provide the support that your require.
Finally, setting up a systematic approach to increasing your knowledge base, daily schedule and practice sessions will reap b enefits far beyond the time you
invest.
Most importantly, you must start immediately.
DO IT NOW! DO IT REGULARLY! AND DO IT WITH INTENSITY!
How We Learn New Skills ?
The problem for most people who have traded for any period of time is that the losses they took learning to trade are a huge mental handicap to their future
success. If you could erase memories of these losses from your subconscious and act on what you have learned since beginning a study program, trading
would be much easier.
One of the most important concepts we have ever come across is the concept of "How We Learn New Skills".
Learning can be described as a four step process that will be covered here in a systematic approach. You can think of the pro cess as a ladder and may want
to invert the following explanations so you can visualize the process (Stage 1 is the first step of the ladder).
Unconscious Incompetence: You Don't Know What You Don't Know! Your first attempts at trading fail. It looked so easy!
Conscious Incompetence: You Know That You Don't Know! The search for the Holy Grail of Trading begins. That mechanical system that looked too good to
be true failed. So did the newsletter and the chat room. Then you begin to learn for yourself.
Conscious Competence: You Know That You Know! You finally learn an approach well enough to make some money.
Unconscious Competence: You Don't Know That You Know! You are "trading in the zone" and do it automatically and effortlessly.
Clearly your goal is to create the shortcuts you need to get to stages three and four as quickly as possible. Here are severa l tips that helped us solidify our
"vision" in how to execute our trading approach.
Your mind can be programmed to "hard wire" action patterns through repetition, if that repetition is consistent. For example, if you keep your charting
program set constantly to the same colors, same indicators and same setup, you will have much more consistent success than if you change things
constantly (the programming has to start over)
It may take up to 50,000 repetitions to totally automate a response. Think this is a lot? Don't be discouraged. Think of prof essional athletes and their
practice routine. You can also look at other routines in your own life to see how you made the transition to step four in any of your competencies.
Using a SimBroker and monitoring your progress on win -loss ratios, profitability and consistency is one way to solidify recognition and action using your
signals.
signals.
Practicing good money management in this practice session will help you automate your own system. When you do finally trade w ith your own funds, you
will have mastered and automated two thirds of the equation. Your final goal will be to master your emotions.
How to Recognize a Bubble

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10:44 AM
How to Recognize a Bubble

"Bubbles are invisible to those inside the bubbles" and we have been through one of the biggest economic bubble in history, but none of us saw it because we
were inside that bubble. After the "Tech Wreck" of 2000 and other chaotic events, it's important to be aware of "Bubbles" and the "Stage of the Bubble" in
order to get on the right side of the equation and to profit.
Previous Bubbles have included:
The Japanese "Take Over the World" Bubble of the late 1980's
The Asian Currency Bubble of the mid 1990's
The Internet/High Tech Bubble of the late 1990's
The Residential Real Estate Bubble of 2000-2004
The coming Inflationary Bubble caused by the U.S. Government's attempt to mitigate the effects of the crash of these Bubbles and 9/11.
How Bubbles Grow: 12 Easy Steps
A believable concept offers a revolutionary and unlimited path to growth.

Surplus of funds and lack of opportunities lead to buying or investing in anything available.
An idea is complex and cannot be totally explained or related to an investor.

The crowd imitates the leader. All Aboard! Even the gardener has a tip!?
Prices fluctuate from traditional level to overvalued level, THEN to all new ground and all time highs.
New levels are sanctioned by experts. "We are in a new Paradigm!"
Fear of missing the boat takes over. Cloning of the idea occurs as many new overvalued competitors enter the market.
Lending practices are eased. Money flows like water to anything or anyone with a new idea.
Cult figures emerge for the new paradigm. The media promotes lifestyles, not substance.
The Bubble lasts longer than expected. Critics are dismissed. The last suckers are sucked in.
Fraud emerges as partly responsible for the bubble as the first cracks show in the bubble
Finally, everyone has a reason why it cannot continue. But nobody dumps, and all hold onto their profits. No new buyers. Market stalls.
How a Bubble Bursts
A continued new supply of lower priced offerings occurs from rising prices. New IPO"s get bigger and bigger .
There is a rise in interest costs. The Government declares "Excessive Exuberance" and tightens credit too quickly.
Prices collapse and everyone heads for the exits at the same time. With no more buyers, prices hit free fall.
Fraud is uncovered in many diverse industries, and in monitoring and auditing agencies. This leads to more selling.
Governments intervene and give investors time to get out before the real decline.
Rules to Live By to be a master

Do not extrapolate the future from the present.
Trends continue for a long time (2-5 years) and then suddenly reverse chaotically. Witness the Tech Bubble.
Intermittent secondary corrections occur at Fibonacci Levels of 38%, 50% and 62% that result in classic Bull or Bear Traps.
Bottom picking begins several different times, trying to restart the Bubble, but to no avail. Massive losses occur to professionals trying to manipulate the
markets.
Finally, everyone recognizes that "Trends go further than you expect, and last longer than expected." Everyone gives up and sells.
As the volume of the decline decreases, a slow recovery begins.
How to Use this Information
Whenever you are involved in owning, investing or trading anything, review these macro-economic lessons. They may save you TONS of money and make you
a TON of money in the long run.
All stocks, commodities, technologies, currencies and real estate are subject to local, national and international Bubble Behavior. Whenever you hear the
phrase "you can"t lose on this...." Remember to start running the other direction.
Probability of Success
The probability of your success in any particular trade or series of trades is dependent on how you use your charting program and technical indicators.
Understanding what your indicators are telling you is another key point. Study the formulas and compare the differences between MACD, CCI and a Stochastic
indicators of the same length. Look at them visually as well as mathematically. Visually look at the differences between a normal, exponential, smoothed and
weighted indicator.
Study until you know what each indicator is telling you.
One interesting concept is to actually calculate a few bars of these indicators from actual data in order to really understand what the indicator is doing and how
it reacts to gaps, low volatility and regular price swings. Be sure to run the calculation until you lose a big bar as well. This skewing factor will let you know
why many people distrust indicators. They do not understand the limitations of indicators in certain volatile market conditio ns.
Indicators are derivatives or second tiered smoothing of price action. Inherently, all indicators are lagging in one way or another. It is important to understand
how they relate to price, potential future movement of price and how they are affected by past price spikes.
We tend to trade by watching only our indicators. Watching price only,(if u r new) you can become hypnotized by the noise and miss the real moves. We
consider the following four points whenever we are about to make a trade.
The number of indicators moving or about to move in your direction.
The angle and rate of change of these indicators.
The position of the indicators above or below 50% or the 20/80% level for oscillators.
The likelihood of continuation based on approaching Support and Resistance, length of previous move and the time of day.
If we see three indicators moving in our direction, we just say to ourselves "1, 2, 3, Go". It is as simple as that
Pre and Post Trading Checklists

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11:41 AM
One of the most important things you can do to improve your trading is to develop specific patterns of behavior. If you have ever watched a
professional golfer get ready to hit a shot or pro basketball player take a free throw, you will see they have a very defined ritual or pattern they follow
each and every time.
Since your goal is to be successful on every trade, profitable every day, month and year, you will need to develop routines used by professionals to
ensure maximum consistency and success.
Develop Pre Trading Checklists, a Daily Schedule and System Setup (including disaster plans) and Post Trading Day review checklists.
Also snap pictures of your charts at the time of your trades for both entries and exits. You can then review and annotate the m with how and why you
took the trade and the exit. This is an excellent learning tool that will significantly improve our trading.
Once we decided to get serious about trading we established these rituals and keep them religiously. We measure our success on how well we follow our
system and our trading signals. You will need a programmed Excel spreadsheet for a trading logs to help you monitor your progress as well as some
way to compare various trading approaches for profitability, win-loss ratios, draw-downs and stop loss comparisons.
Note: You can use our measuring tools or develop your own. We provide bonus spread sheets to assist you in developing your own expectancy ratio
Are You Having Trouble Pulling the Trigger?
If so, ask yourself: How Do You Handle Fear and Greed?
When you've conquered fear and greed, you can "pull the trigger" with confidence.
Four things about fear.
First, a definition. Fear is the unreasonable assumption that an outcome of any action will be negative. And greed is just the flip side of the same coin.
It is fear of success, not failure!
You can overcome fear and greed by becoming familiar and confident with just the understanding of what is causing you this fe ar. Analyze all the issues
and see how you feel before, during and after an event.
Fear can be overcome by understanding the basis of the fear, but better yet the lack of understanding is caused by your lack of confidence in your
system. You get confused. That is easy to do because all trading programs, gurus, time frames, etc. will give you conflicting signals. Until your
conscious mind and your subconscious mind agree on your approach, you will not trust the signals you see, and either hesitate, jump to soon, or freeze
totally. This is caused by the uncertainty you feel.
No one can predict the future. You can only intelligently guess with some level of probability that a certain outcome will occur. Since trading the eMini is
really trading the psychology of thousands of traders from around the world, it's important to understand that that psychology goes through fairly
predictable patterns.
Patterns
Patterns such as Fibonacci retracements occur very often because of fear and greed. Smart people know that and fade those retracements, which is why
the Pesavento Patterns we talk about work. After trading and reevaluating certain patterns, we have discovered two very high probability trades and we
have developed the patience and discipline to trade them.
We compare trading signals from four different trading system approaches to show you how similar they are to one another. We prove that the key to
any trading success is based more on mental control and money management than trading signals
you can literally walk by the computer, see whether to be long, short or out. Take a trade, if appropriate, and exit on the next signal with a 2.3 point
average profit Finally, when you begin to get results with 70% win loss ratios on the real charts but are still not using you r own money, it is time to go
for it with real money on a small account. As you get more confidence, you can grow both your trade size and your accounts by using Dual time frame
trading system.
Best time for buy..or sell

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11:41 AM
Best time for buy..or sell

first half hr of day opposite.. to gen market sentiment...as published in news paper...u can always..since u can view..how fool/ greedy can REACT....
and last hr..for swingstyle...BTST
but not applicable to novice...
..
Price only...to trade....is the best form of trade...its formless trading
normally..few can follow ..with discipline...
price roc...crossing an price 10dayma ROC ..derivative is good...
however...aroon continuation..validity of strength helps...
.
Reason #1: Lack of a clear cut Trading Plan
Along with under-capitalization this probably ranks as the
#1 reason traders fail. Beginning (and some more experienced) traders will frequently be swayed by intraday news and price action.
They may have started the day with a clear plan for the day, but when the bell rings and the market starts they lose focus and become mesmerized by the
next tick as the price action unfolds, alternately looking to buy or sell every couple of ticks/minutes and getting whipped all over the place.
A trading plan should give one criteria to measure trend against and determine a direction to trade. Once the direction has been decided the picture is
significantly clearer as one side of the market has been taken out of consideration and one is free to focus on locating low risk opportunities to enter in the
direction of the trend.
The plan should address such things as:
- Criteria for Trend determination
- Criteria for recognizing Entry opportunities
- Risk Management / Stop placement
- Trade Management (i.e. how to determine when a trade isn't working
- Profit objectives
- Exit strategies
Reason #2: Overtrading - Trading round the clock
__________________________________________________ ________
The aforementioned lack of a trading plan coupled with Todays lightning fast executions available through electronic trading as well as the extended opening
hours for electronic trading get a number of traders in trouble.
When they see all the price movement and translate it into rupee terms it is very easy to become impatient waiting for good trading opportunities.
One may get caught up in the minute to minute fluctuations to the point where he loses sight of the overall picture and starts buying and selling every couple
of minutes
(yes I do it occasionally & extremely exhausting) to grab a couple of ticks, just because the
trading software is so responsive and the fills so fast that he thinks he can get away with it.
We are so used to getting paid for our time in the real world (i.e by the hour) that it is difficult to sit in
front of the screen patiently waiting for a trading opportunity (that may or may not present itself for
another hour or two).
Seeing all this fluctuation the trader is tempted to "hurry up and make some money" and take a couple of quick trades to get paid for his time while waiting
for the next trade that qualifies under his trading plan, however illogical that may sound.
Clearly, if the trader knew this type of trading to be profitable, based on his research, he should
incorporate it into his trading plan.
BUT The very fact that it is not part of the plan should eliminate such trades from consideration, as it is easy to get bored and impatient and hard to resist
forcing things when the next trade is but a mouseclick .
NOW we will explore how certain limiting beliefs can affect your trading results and development as
a trader.
Limiting Belief #1: Belief in Mechanical Systems
(THE best system, best hardware,best software, best data etc).
__________________________________________________ ________
It never ceases to amaze us how people believe the process
of trading can be automated and all they have to do is
find a system that works - then they can kick back on the
beach with a pina colada in hand, call their trades in on
the cellphone and sit back to collect the cheques.
To these individuals life becomes a never-ending search for the "holy grail" of trading. They burn the midnight oil looking for the ultimate oscillator that will
make them rich, sweating over the cleanest source of data, which type of data is better, continuous or back-adjusted,
looking for the best trading execution platform, the best charting software etc
In our observation these people are so wrapped up in the mechanics and intellectual exercise of trading that they never learn how markets actually work, i.e.
that markets
are driven by fear and greed and emotional crowd behavior and that price behavior cannot be reduced to a mathematical algorithm.
These individuals might have been around the markets for a long time and claim several years experience, but in fact they've only had the same 1 year of
experience several
times over, because they never learned from their experience and kept on making the same mistakes.
While there are a handful of commercially available
mechanical systems that have decent track records and show
profitability over time the reality is that those systems
are what we call -psychologically untradable'.
What we mean by that is that they frequently have large
drawdowns and those drawdowns may last for months. Most
people are not prepared to stick with such a system
through the drawdown and will usually abandon it near the
bottom of the equity curve before the system "gets back in
sync" with the market and moves to new equity highs
The thing most people miss when evaluating these systems
is that they underestimate how hard it is to stick with a
system through a drawdown period.
system through a drawdown period.

It is easy when looking at a track record, one will
"experience" the drawdown in a matter of minutes intellectually acknowledging that there is a significant drawdown, but then the system invariably pulls out of it and winds up being profitable for the year.
There is a world of difference between accepting a
drawdown on an intellectual level and then experiencing
that drawdown daily over a period of several weeks or even
months on an emotional level, wondering every day whether
this time the system has finally had it and may never pull
out of the "nosedive".
__________________________________________________ ________
Limiting Belief #2: Belief that Losses can be Avoided .
__________________________________________________ _______
Refusal to accept the fact that losses are an integral part of the game and a belief that they can be avoided leads to strange behaviors. This belief leads to
-paralysis by analysis' and problems pulling the trigger.
Trading is a game of probabilities. At any point in time there is an X % chance that a move will take place as anticipated, this means that conversely there is a
(100%- X%) probability that it won't!
When implementing a trading strategy one should be cognizant of this fact and plan accordingly, i.e. not risk more than Y% of capital on any trading
idea/opportunity,
as there is always a certain probability that one is wrong.
Regardless of how good your method is, even if it can be demonstrated to have 99% winners, you will still lose ALL your capital IF you risk it all on every
single trade.(TNSN thread)
Another fact to keep in mind is that wins and losses are not evenly distributed and nicely packaged in a tidy series (for the previously mentioned 80% winning
system
that would mean a series of 80 wins, 20loss, 8win-2loss etc.). Even a 90% winning system will occasionally have several losses in a row.
This brings us back to the differences between accepting/understanding things on an intellectual level
vs. an emotional level.
While traders may understand intellectually that losses are a part of the game, they still want the particular trade they are in at any given point in time to be
a winner and are prepared to add to their position, move their stop as the market moves against them, or cancel it
altogether to help secure a positive outcome.
This behavior and belief leads to traders being forced to eventually take losses that are significantly bigger than allowed for in their trading plan.
LIMITING BELIEF #3: BELIEF THAT EVERY MOVE CAN BE PREDICTED / BELIEF IN MISSED OPPORTUNITIES
__________________________________________________ ________
Starting traders (and a number of experience ones :-)
spend a lot of time fretting over missed opportunities.
They play the "would'a, could'a, should'a, wish I had'a" game, kicking themselves over missing opportunities they believe they could have taken advantage of.
Aside from being demoralizing and damaging to the psyche this practice is an unproductive waste of time.
Frequently traders will also introduce as a reason for taking a trade, information that wasn't known at the time the move took place.
The fact of the matter is that trading is a game of probabilities and at any given point in time a move may happen out of nowhere that was totally
unforeseeable.
Some people have estimated that there are 10 no 50pt decent swings in NIFTYs in a week and that you are trading like a pro if you catch 3-4 of them.
In this respect trading is u may catch actual 5 move with 20 pt ie. Equivalent to 5x20=100 pt in week.
LIMITING BELIEF #4: BELIEF THAT MORE INFORMATION IS BETTER (ACTUALLY LEADS TO INFORMATION OVERLOAD / 'PARALYSIS BY ANALYSIS')
__________________________________________________ ________
Traders are inundated with confusing information and trading tips. It is everywhere, from the talking heads on CNBC, to the news headlines flashing across
the trading screen to the online chatrooms, newsletters, hotlines etc.
How does one go about making sense of it all? The short answer is: You don't need to make sense of it all to make money from price fluctuations in the
market!
All that is required is an understanding of crowd psychology and probabilities.
A number of traders believe they need to gather ALL the information AND understand it, because that's what we do in the real world when faced with a
decision.
Once the information is mastered the secret to successful trading will somehow be magically revealed.
Nothing could be further from the truth! No matter how much information you accumulate and go through you will NEVER have ALL the pieces to the puzzle
if you are waiting for that you will never make a trade.
What is needed therefore is to develop skills for decisionmaking under uncertainty, i.e.
a keen understanding of probabilities and the ability to assess
the risk involved and reward associated with different trade outcomes.
A losing trade does not mean the decision to enter it was wrong, it may have been, but it may also be a case of what is referred to in statistics as: "Good
decision, bad outcome", i.e the odds favored a particular move, but the move failed to materialize as expected.
The best advice for beginning traders is: Forget all the conflicting information being disseminated out there. All that is needed is a price chart.
Leave it to someone else to worry about all the news etc.
The market's collective assessment of that information is reflected in the price action.
The fact of the matter is that everyone has the same set of information to trade off of when it comes to prices and the individual trader will never have the
resources to secure better information faster than the large brokerage and proprietary trading houses.
All one needs to is to learn to recognize their "footprints" on the charts, as evidenced by chart patterns.
Conclusion : to succeed as a trader you must be willing to accept the following facts
and observations:
- You must learn to understand how markets work and what drives them. Trusting your hard-earned capital to a mechanical system is a recipe for disaster as
most traders do not possess the intestinal fortitude to stick with such systems through inevitable drawdown periods.
- You are never going to have all the information and will be forced to act on incomplete information
- Not every move can be predicted. There will be situations where your best laid plans are adversely
affected by random unforeseeable events. As a result losses are an unavoidable, integral part of trading.
Getting stopped out of a trade with a loss, contrary to popular belief, is a good thing (assuming you have a winning approach and solid trading plan) - It tells
you that your trade is not working and conserves your capital for later use when another (hopefully better) trading opportunity presents itself.
Am I committing any of these errors in my trading?
- just answer to U.
Misconception
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11:58 AM
Misconception #1: Under-Capitalization and Unrealistic Expectations

__________________________________________________ ________
Some of the most damaging misconceptions and limiting
beliefs are planted in would-be-traders heads to entice
them to enter the industry, before they ever execute their
first trade.
The biggest one, by far, is that trading is easy and that
people can make obscene amounts of money within days of
starting out on the tiniest amount of trading capital.
While it is certainly true that the markets offer
unlimited potential and everyone has heard stories of
traders borrowing a couple of grand on a credit card to
get started, who subsequently went on to parlay that
into a small fortune.
The reality is that trading requires time, preparation
and sufficient start-up capital.
Starting out with too little capital and unrealistic
expectations sets would-be-traders up for failure
and is damaging in a number of ways, for example:
a) People who start on a shoestring are forced to take

on too much risk, and have a significantly greater
risk of ruin than better capitalized traders.
Someone starting out with $3,000 in the E-mini S&P?s
will have to risk $150 to $600 pr. trade, or 5-20% of
their equity on each individual trade. As a result
they will be ?wiped out? if they have a handful of
losing trades in a row.
Contrast this with someone trading the same approach
on a $10,000 account. Each loss will represent a
significantly smaller percentage of equity and they
will be able to weather the inevitable drawdowns that
occur from time to time.
Regardless of the approach employed, one should have
sufficient capital to be able to withstand at least
10 losing trades in a row and still continue trading.
The smaller the percentage of equity risked pr. trade,

the smaller the risk of ruin will be.
Research has shown that ideally one should not risk
more than 1%-4% of equity pr. trade.
b) Unrealistic expectations cause traders to discount
the progress they are making and lead them to ?force?
things to bring about the desired result.
As an example:
If you believe you 'should' be making $1,000 pr. day
pr. contract in the S&P?s when daytrading and find
that you are ?only? up $300-$500 by Wednesday after
trading for 3 days you will be unhappy with your
results.
Instead of continuing to do what got you to that point
in the first place and winding up with perhaps
$800-$1,000 for the week you will start pressing,
pushing for trades, trying to make things happen,
taking questionable trades and giving back in the
process what you?d made to that point and wind up
maybe -$1,000 or more in the hole for the week!
maybe -$1,000 or more in the hole for the week!

In trading, as in any profession, it takes time to gain
sufficient proficiency and one must learn to crawl before
they can walk.
By being adequately capitalized and budgeting several
months to a year at a minimum to learn the basics of
this profession beginning traders give themselves the
best chance of succeeding.
__________________________________________________ ________
Misconception #2: Confusing Margin Requirements with
Capital Requirements
__________________________________________________ _______
One frequently hears starting traders talk about the
minimum margin requirements set by the futures exchanges
as sufficient capital needed to trade a particular
contract.
Beginning traders will also look to the margin
requirements as a way to determine which market to
trade, saying things such as "My account is so small I
can only ?afford? to trade Soybeans and Wheat, because
they are the only contracts with a small enough margin
requirement".
The fact is you can?t ?afford? to trade ANY market unless you have a winning approach!
If you don?t, you might as well hand over your money to

the nearest charity and save yourself the aggravation,
because you will lose it anyway!
Margin requirements are set to protect the integrity of
the marketplace, they are intended to make sure that
traders have sufficient capital on hand to meet their
obligations should the market move against their position.
They are calculated based on a specific formula that
takes into account the volatility of the market in
question.
Generally speaking, as a rule of thumb, they are approximately equivalent to the average 3 -day true
range of that market.
Margin requirements should NEVER be used to determine
the market, or number of contracts, to trade. Doing so leads one to risk too great a percentage of equity on any given positi on.
PROBLEM: A close cousin of un-realistic expectations is unwarranted over-confidence, inspired by a series of successes in trading.
This is something that frequently affects experienced traders after they have had a
good run in the markets.
They start feeling 'invincible', think they've got the 'market figured out' and
have a tendency to take greater risks than they should as a result (given their account size).
The market will invariably humble the overconfident trader and hand him devastating
losses, as he gets called on the excessive risk he has assumed through greater trading
size or the use of bigger stops (or even worse - the use of no stops).
Trading Tool
04 July 2015
11:59 AM
Trading tool...momentum
stock select...nse..scan by explorer...ready to move ..
pattern triangle ...continuation....i have bullish bias..
2nd one...at particular retrace...bullish engulf...
so this two condition...gives me candidate..ready to move up
..now @9-55...ready to enter.../max no 3 trade...
if any news +flash..enter aggressively...if published recommendation..
whether its a trap to book profit...[its normal]
trading amount 3 lakh..1each...
if after 15min price..1% up..enter...profit pt...3%....
always keep eye on nifty future...if sell order more...today is NOT YOUR DAY
.....this system has 70% success rate atleast for me..
i believe search of candidate..very imp...it takes me @2hr..after scan how it shall
behave next day...
various alternate scenario...entry / exit...
so now u all understand why it suit rm/dealer...they can unemotionally..
watch..ofcourse execute.. as confidently ...
if condition not suit to trade...they dont trade
..
on short term trade...
its basically retracement buy...on a paticular stock..whether present value justified ? i use fundamental input...if analyst has conflict..i consider
candidate is good one...
ma value 20 i use..also how stock behaved last 6month....
what ma x ..3/10 suggesting...i enter...
here i use good money management...trade amount 5 lakh...half idle
max put 50000, in a trade stop 4%...unfortunately accuracy..35-30% only..

so in a winning trade...i put 2lakh...after 5-8% price up..play for another..
4-5% profit...
i get out..from loser at stop...unfortunately ...recent switch down ward..
cost me good loss..as a part timer...gap down put me in puzzle...
result BIGGER LOSS
since..accuracy mine is poor..;.. i think to discard this...
as i am not master in volatility...present market condition...
.
fact is i am poor as short term trader...
why?...may be long days fundamental faith...
but worst one . holding loser..[use of hope]...
entry is definitely my strength...
but exit is poor...judgemental error comes from other commitment....
and its law of TRADE....ONLY WITH 100% COMMITMENT U HAVE CHANCE
To Trade Right
04 July 2015
12:00 PM
TO TRADE RIGHT..
.................................................. ................................................
SO AGAIN I COMMENT ON DAY TRADE....
why i guess successfully...natural flair of 30yr of chess play..alternate situation to act, use of survival instinct.....
but its stressful, i am older now,...may be new guys r faster,
good candidate for next day is my strength....
metastock explorer i use...
also omnitrader..which suggest some candidates....
so i use pib, ...entry technique .. x of buy at break out on particular pivot...
if volume..is good...so i commit bigger...
i dont mind to lose, as loss r less in number..so it has +expectancy..
if market condition unpredictive simply i dont trade...
it helps to me...as noise trading i understand...so break of pivot , moving
to higher zone ...easier and suit me in past...
as i believe daytrade is gambling,..so luck of right or wrong is always there
so i am ready for wrong, it prevents me let loss run...
as screening is done..i know what i am expected to do..
filter..+ bias of nifty...
any news publish creates criticality of trade...sudden surge of greedy fool
can send stock price any where..., last 6month behavior thats why i study on hourly chart..on particular surgeday..
its readyness to act..basically given me lots of right trade consistently

...............
i give more hints..x of 7 ema with closing price..
trigger... 8day ..william%r std signal
5day rsi strength increasing...
i assure u it gives money...those who doubt can back test it..
atleast condition fulfilled , given +move within next 2days
psychologically i find it very useful, as i am ready to lose ..i am nothing to loss..[hey i bet on bangladesh,against india..pun intended..]
i can avoid my weakzone..volatility
Investment vs trading
04 July 2015
12:00 PM
Investment vs trading
...................................
this is a controversial topic...still i decide to touch..investing..is putting money
for long term..strategic thought process is imp...consider any managing director..plans for expansion of his company..money arrangement and plan to
plough back.
..implementation of dream into reality..
constant watch to maintain target as per plan...is key...
Same thing , if u invest u have to check...
TRADING
.............
its a concept to buy low and sell high..
where the demand is EXPECTED TO build, buying candidate..
where further demand realisation is not possible ...SELL
SINCE expected materialisation is not possible[ on some cases]..
get out before other traders dump..
whichever path u look none is easy...
fortunately some torch bearer help in writing their journey in distinctive style
many a great name all of us can utter.., but its IMPOSSIBLE to follow them
why?..2 individual r not same...copying is not possible
can u be any of them?..no i assure u ..its an impossible event
CONDITION AND CONSTRAINT...CAN NOT BE REPEATED SAMEWAY..WITH SIMILAR VIEW AND LOGIC...
so what is your path and alternate view?
Amalgamate...
a basic std rate of return is possible...

money managers view is easy to implement...
investment view..PUT MONEY IN SUNRISE INDUSTRY. in india for indian company
Trading view.....based on some value analysis buy at oversold zone..and hope mean reversion shall bring u quick profit[ holding period 3-6month]
many traders may disagree...i say to them ..;'u r right, u do the same thing
in smaller timeframe..based on your superiority..so is ur RETURN'
NOW LOOK AT ALL GREAT DAY TRADER...they r mostly engineer..strong math logic...understand linear relationship..
with own developed one/ intraday plan ..with good signal generated..cont..
they can make money...regular basis...discipline and strict stop loss is mantra
experienced one with fund available...can do PLAY LEVERAGE
next..i say those who work in this field...they simply copy cat a winner ,
depending upon experience ..do a little, lose a little'
now..COMES THE FOOL, DREAMER...THEY NEVER UNDERSTAND HOW TOUGH ITS REALLY..[van tharp never made money by trading..though he trains
many
best of the best traders]
so first..check..do have the ELEMENT IN YOU..time to invest and learn
right attitude....TORTOISE WINS HERE..
TRADING ON PRICE HAS 3ELEMENT...
NOISE...TREND..SHOCK/EVENT
Noise..a price within +/- 3%[arbitary..as per my experience ]
its the time u should watch..
soon some big fund /syndicate starts buy or sell..with price change +/-change..defining an up or down trend accordingly...
its when more volume joins ..media writes..oppurtunity to make money for early entrants..when trend is no more moving up..[ p ut hope triangle pattern
shall show CONTINUATION]..ANOTHER RISKY ATTEMPT CAN BE MADE..
BUT WITH STRICT STOP...
hopelessly i dont know when profit book starts and price shall fall
many signal is used by many as per confidence level and experience..
but none can handle SHOCK/EVENT...
SINCE IT CHANGES INVESTORS SENTIMENT BY NEWCOMING OF BUY AND SELL ORDER...hence price study..aswell as order flow must be the tools in
your trading arsenal
2nd aim is study what others trader shall do ..on an event...

CAN U CREATE MONEY MAKING OPPURTUNITY OUT OF IT?
3rd factor...global money flow to india...
3rd factor...global money flow to india...

if fii is selling, YOU HAVE TO..
nobody can withstand flood, ...sell and go to hill station...
INDIAN STOCK MARKET

04 July 2015
12:01 PM
topic.. INDIAN STOCK MARKET

.................................................
1. FUNDAMENTAL
..........................
GROUP A AND SOME B1 ONLY...
LITERATURE..INDIAN INDUSTRY GROWTH 2002..2012
COMPANY ANALYSIS .. TOP DOWN AND BOTTOM UP APPROACH
SECTOR ANALYSIS
CAPITAL MARKET 500 COMPODIUM
LATEST RESULT..COMPARE QUARTERLY GROWTH
COMPANY .GOOD MANAGEMENT..ORDER POSITION
..................SUNRISE INDUSTRY..
GOVT FAVORISM..STORY FOR LONG RUN
MONOPOLISTIC VIEW
TECHNICAL
................
METASTOCK STUDY
INDICATOR STUDY
RESISTANCE SUPPORT .. PATTERN STUDY
GAP AND VOLUME SPIKE
TRADING MARKETS ...TOOLS
WHEN REVERSAL IS IMMINENT.. SIT ON CASH
MOMENTUM PLAY
DELIVERY IDEA
.....................
3.PSYCHOLOGICAL APPROACH
SUBJECTIVE BIAS..WHY MARKET WILL GO UP? WHEN IT WILL FALL?
FII FACTOR..GLOBAL FACTOR..OTHER WORLD STOCK EXCHANGE FACTOR
RESULT FACTOR... FEEL GOOD AND MEDIA HYPE
WHAT IS ACTUALLY STATE OF MARKET..WHAT TO BE IN NEAR FUTURE
4. TRADING
......................
DAY TRADE STYLE...SWING STYLE.. INTERMEDIATE TRADE STYLE
TRADE RULE 1 2 3
WHAT NOT
TO DO 1 2 3
HOW TO
TAKE ENTRY 1 2 3
PROFIT BOOKING
& STOP LOSS GUIDANCE 1 2 3
HOW TO ADD POSITION 1 2
CHECKING
RISK/ REWARD 1 2 3
DIARY
............
1. WRITE ANALYSIS OF ALL PAST TRADE
2. WHY PLANNING TO ENTER 'NEW' STOCK ...WRITTEN RULE
3. BEFORE BUY X CHECK ...DONT ALLOW TO BIG LOSS
..........................as i am novice in computer..

column name is given ..pl prepare suitable sheet..in excel .
trade sheet : create column
Heading
1 dt
2 name of stock
3 type of trade..buy/sell
4. trade set up condition..gap/ volume spike/support pt
result out/ commodity price up
5. entry condition ..pull back/ break out/ continuation
6. money alloted ..no of stock x price
7. style of trade ..day/ short term / inter mediate
8. present value of nifty
9. any hype at present...
10. stop loss
11. profit booking strategy ....1.................2
12. profit target.. p1............p2
13. additional buy strategy/ with reason
14. sell dt and NIFTY VALUE
15.
16.
17.
18.
19.
20.
21.
22.
sell quantity x sell price..

whether trade is profit...howmuch
whether trade is loss.. howmuch
have u followed stop and SAR. IF NOT WHY
reason of sell
cost of trade[ comission+ tax]
your net profit
your monthly rate of return..
2nd sheet ..monthly performance sheet

.................................................. ...
column description
1 month
2 total no of trade in month
3. no of winning trade
4. total amount of winning
5. no of lossing trade
6. total amount of losing
7. net profit/ loss in a month
8. is losing trade shown some pattern failure/
wrong assumption
9. av. win amount per trade per lakh
10. increase of your equity value..
11. percentage of wrong trade
12. risk amount in each trade. value ..in %
13. drawdown condition to quit
14. monthly yield compare to nifty yield in month
A STORY TO READ
04 July 2015
12:01 PM
A STORY TO READ
.........................
Whenever anyone comes to me for help in starting a trading career, one of the first things I recommend is organizing a busine ss plan. It provides direction
and helps novice traders start off with a systematic approach.
I suggest that new traders put their costs, their goals, and how they intend to achieve those goals, in writing. It's the sam e approach you'd follow for any
other business. They usually come back with a reasonable plan.
Say, for instance, you have $10,000 a month in expenses. To earn that amount you would need to net around 50 cents a day, tra ding 1,000 shares. So you
would start off learning an appropriate trading strategy and build up to that goal. It sounds simple enough, but the problem people quickly run into is that
this isn't exactly like any other business, is it?
Trading Without Goals
We live in a very goal-oriented society. Aristotle once said, "Man is a goal-seeking animal. His life only has meaning if he is reaching out and striving for his
goals." And I believe it's very important to have goals. They help keep us focused and motivated, giving us a sense of purpos e and direction.
But trading is a funny occupation. Many of the same things that create success in other endeavors will cause problems in your trading. And so it is with
goals. Trading goals can put you in a mindset that may very well act as a negative force on your trading.
.
One of the problems with setting trading goals is that too often, the goal is all we can think of. Albert Einstein once said, "The American lives even more for
his goals, for the future, than the European. Life for him is always becoming, never being." A lot of people look at this occ upation in terms of making money
and enjoying the freedom that trading affords, and they don't really have a love of trading for trading's sake. If you fail t o enjoy the process of striving
toward the goal, it will be difficult to reach that goal.
Another problem is that people always seem to set their trading goals too high. Your goal has to be reasonable for your skill level. Otherwise, you are setting
yourself up for a lot of frustration. Trading goals automatically add pressure -- and the higher the goal, the more pressure there is. The more pressure there
is, the more emotion you add to your trading. The more emotion you have, the more mistakes you will make.
There is an innate problem with setting up daily trading quotas as a goal. You can't force good trading setups. They either c ome to you or they don't. We are
entirely dependent on what the market offers us. That means some days you will meet your goal, and some days you will not. It is hoped that the good days
make up for the bad ones, but you have to come to terms with the inconsistency. If you try to force trades, you will invariab ly suffer an increase in stops
Slow and Steady
One thing that helps is making your hero the turtle instead of the hare. I see this time and time again in my trading room. W henever anyone makes a big,
impressive gain, that trader becomes the hero. Everyone tries to then emulate that trader's moves. Meanwhile, someone else wh o has been steadily racking
up one small gain after another goes almost unnoticed, when in reality, the steady, small, consistent trades are adding up to a lot more than the occasional
whopper.
Another thing that helps is breaking your goal up into steps. Rather than focusing on achieving that goal of 50 cents a day w ith 1,000 shares, start with 10
cents, then 20 cents, and build up gradually. Trade small shares to control your risk. Start with 100 shares, build up to 200 , then 500, increasing shares
only after you have achieved consistent profits. Take it one step at a time, and it might surprise you what you can achieve.
Last year, I took a backpacking trip into a wilderness area in Northern California. I am used to horse -packing, but I had offered to take my contractor on a
nice bow-hunting excursion for record class mule deer, so I decided to act as guide and backpack in. I tried my best to keep my pack l ight, but the gear we
needed that time of year during colder weather meant I had to haul 40 pounds.
Now I hadn't been backpacking in almost 40 years. So when I got out of the truck and looked up at the 3,000 -foot peak we intended to climb, all I could say
was, wow. Looking at our goal up there really put me in a state of despair. I kept looking up at the peak, then at my 40 -pound pack, then over at the happy
45-year-old "kid" next to me.
put the pack on and started off. About 50 feet down the trail, my legs and back started hurting. I must have grunted or somet hing because my friend asked,
"Ken, you OK?"
I said, "Sure. I am fine." But what I was really thinking was, "What have I done? I am not going to make this!" It reminded m e of what many new traders
say to me after two weeks of trying to learn.
So I decided I wasn't going to look at the peak. I resolved to simply look at the trail and take one step at a time. The trip wound up being a "one step at a
time" proposition. I was convinced I couldn't climb to the peak, but I could take one more step. And the funny thing is, I ma de it 12 miles! In fact, I could
have kept going, but my friend was pooped out.
So take your eyes off the peak. If you want to reach your trading goals, learn to enjoy the process and simply take your trad ing one step at a time.
TO BECOME A TRADER
04 July 2015
12:02 PM
following register/file u should open and write....this will definitely make u a trader..
sufficiently real earning potential..only patience reqd..
1.trading as a business
2.trading psychology
3.your psychology and you[real one]
4.your trading rule
5.different type of trade..swing..intermediate term ..day trade
[its not u have to do, but must know on what conditional fulfillment others r
trading.enter and exit]
6.longterm trade or investment
7.indian stock
8. factors which move price
9.fundamental analysis
10.market study
11.ta..indicator analysis..
12.chart pattern
13.money management/risk analysis
14.trade preparation..volume study..trade management..
15. software..metastock[u may prefer other]
16.short sell
17.diary ..trade analysis..
..................yes i have this 17 register till with me since last 13yr of successful trading
SIGNAL
04 July 2015
12:03 PM
topic : SIGNAL
.......................
WHAT IS SIGNAL?
AN APPROACH TO ACT BASED ON SOMETHING...
BEST ' SOMETHING' IS PRICE...
WORST ' SOMETHING' IS WHIMPS...
NEWS IS BASICALLY POOR GRADE...
SOMETHING JUDGEMENT ON LONG TERM EFFECT ..ALWAYS GOOD.
ONLY AFTER A LONG TIME STAYING IN MARKET DEVELOP 'FEEL'
OTHER WISE.. emotional decision r mostly promise -return
increament of eps is good...more is new order..
top or bottom guessing is dream...however they can be seen in left side of chart...in
coolhead..in a near by top..if price starts falling ..sell and get out
...justify later[ afterall u r trading with real money...not an analyst for tv-channel]...
same way watch for short term bottom..[ 3650..nifty future on 3/4/07 i dont miss...and
book profit today 3970]...
when no further fallnot coming . be ready for buy..
buy on first oppurtunity ..new order is coming nifty future..3rd april..next..
just watch..today dream run ended ..so i book profit...
do u think its a good trade ? no shear luck!..i simply can not put hope...
afterall i allow big drawdown 30% feb/march ..breaking all common sense
signalled i followed in this trade
1. media hype..market shall fall[ contrarian]
2. fii putting real money..
3. william% R starts moving up
stop if any,, 3600 or time stop 3day
.
......................
preview...before an insident u r taking a view..what may happen.
review....after an insident u analise.
proview..while insident is happening ..u r taking decision[pick among best
alternative]..acting in your best interest.
this PROVIEW is the aim of a successful trader.use preview.do review later...
follow proview to get money...avoid danger
do u find difficulty ? think of childhood..writing essay...introduction...
body[proview]...
conclusion[review]..
leading indicator must be used for preview..idea..fundamental estimate..
a trade plan...but on actual market ..only proview..lagging indicator on intraday chart
basis...observe and act....at 17-30hr.review of trade..
if u r like me..review in end of week.
hence as a complete trader..u must know range trading..trend trading
..also volatilityzone play [ i confess i dont know]
..also volatilityzone play [ i confess i dont know]

condition of market,.........
min 2 style..day / short term
swing/ positon
position/investment
min 2 style of entry...break out/ support buy/ pullback buy
exit in detail
..................
profitable exit/ target profit book/ 50% and let other half run
exit in loss..bulk sell/ stop execution/ time stop
observe in uncertainity...say today..bearish strength is high..but bulls small individual
traders give good fight..sufficient enough to come out of days low
definitely professionalbears can not rollon street smart bull. unless media prints bad
picture..[this dalal write/say anything for personal motive..just like publishing foetus
photo in 1st page.times of india..for publishity's sake]
ofcourse basic idea of company/sector u deal..fundamental conderation why price may
change?
a test of reasoning ..your logical trade..your write up.
Advance-decline
04 July 2015
12:04 PM
Advance-decline line is a good way to understand market sentiment.Refer www.icharts.in
No of stock to watch
.............................
4-5 min each chart...if u have 2 hr..20-25 stock
alternatively scanner helps to find particular conditional filter.
then watch them thoroughly for next day..hence more candidate for prelim.scan list..however nifty must be studied..
compare nifty with that stock..better strength in last 2day must
pl prepare the condition of filter carefully..u shall hit or miss because of this.
since result is imp.particularly this season..its a high risk style[i dont do now]..
...inside knowledge..a good analyst's prediction helps..but see call history..
rarely i see an accurate callgiver..check his assumption
capitalmarket.com is ok but too costly
can any house / broker give 70% rate success ..i doubt.. at present market.
rbi policy is imp now..economy/rain prediction shall show its headline..
personally price i like ..its naked truth..but in india so many funda-hype trader...i must see their view and conviction..its the subjective judgement when to
follow trend and when to be contrarian
however live with uncertainity. position management and risk control..can make u a trader..[do it in natural rythm]...i dont know ..i thought i can ..fact is
still i have to fine tune..to shy away...i believe in curse of GOD..WHO OPENS ARENA ..GREAT SECRET ..to those who dont deserve .
btw CHECK your ..ICANT GO WRONG ATTITUDE..otherwise big fall comes
conclusion :
1. trading is solo journey
2. lucky..if u get mentor, similar attitude friend.
3. journey path is difficult..and long..it takes time.
4. grail exists....its after long experiment u understand with ur natural rythm
of choosen trade style ..continueusly get money out of market/ other trader.
5. catastrophy may hit u. if u r cocky.[ always have stop]
6. uncertainity element exists in market.
7. learn from own experience....also from other successful one, but assimilate
8. use some system. lower the timeframe .more mechanical it should be.
9. for position trading ..alittle discreaton is must.
10. for long term ..economic view....contrarian thought process helps
11. for day trade..break out trade style+momentum works best
12. for swing..up........support buy attempt is better.
13. for short play..experience counts..how high is too high!on first oppurtunity of reversal ..sell short..when buying momentum again seen cover it.
14.its not market, its u. create trouble and loss for u. stop self sabotage
15.directional view u may have ,but price is supreme.
16. when u dont know, sit idle..watch ..learn.
17. for a good trader...flexible mind,discipline, execution skill is most imp
18. entry technique..any thing which u can do comfortably.
19. exit....at profit ..at small loss...2 case rules r different..mechanical approach is better.
20. holding..on profit..give more time....on small loss ..get out early
21. some fundamental concept..knowledge on sector..key element to affect on price ..u must have...it is life jacket.
22. fii moneyflow must be seen .so is political view.
23. ta is mother for a trader..so learn ..not to predict but to act.
24. money management is key..apply it.
25. read paper to see info ..see chart to check oppurtunity..u have to beat
other traders..no value to trade with odd against u
26.trend element gives money to trader. no body knows when it shall end.
27. live on reality. mastery over ..TIME.. very imp
28. trade analysis.is must and learn from post mortem..what not to do.
29. many a good ref. r given. for site and books.,try to be a thinking TRADER
RISK /REWARD BASIC

04 July 2015
12:04 PM
Most traders ignore reward/risk ratios, hoping that luck will save them when things start to go bad.
This is probably the main reason so many of them are destined to fail. It's really dumb when you think about it, because reward/risk is the easiest way to
get a definable edge on the market house.
The reward/risk equation builds a safety net around your open positions. It's designed to tell you how much can be won, or lost, on each trade you take.
The secondary purpose is to remove emotion so you can focus squarely on the cold, hard numbers.
Let's look at 15 ways that reward/risk will improve your trading performance.
1. Every setup carries a directional probability that reflects a specific pattern. Always execute positions in the highest-odds direction. Exit your trades when
a price fails to respond according to your expectations.
2. Every setup has a price level that violates the pattern. Only take trades where price needs to move a short distance to hit this "risk target." Look the
other way and find the "reward target" at the next support or resistance level. Trade positions with the highest reward target to risk target ratios.
3. Markets move in trend and countertrend waves. Many traders panic during countertrends and exit good positions out of fear. After every trend in your
favor, decide how much you're willing to give back when things turn against you.
4. What you don't see will hurt you. Back up and look for past highs and lows your trade must pass through to get to the reward target. Each price level will
present an obstacle that must be overcome.
5. Time impacts reward/risk as efficiently as price. Choose a holding period based on the distance from your entry to the reward target. Then use price and
time for stop-loss management. Also use time to exit trades even when price stops haven't been hit.
6. Forgo marginal positions and wait for the best opportunities. Prepare to experience long periods of boredom between frantic surges of concentration.
Expect to stand aside, wait and watch when the markets have nothing to offer.
7. Good setups come in various shades of gray. Analyze conflicting information and jump in when enough ducks line up in a row. Often the best thing to do
is calculate how much you'll lose if you're wrong, and then take the trade.
8. Careful stock selection controls risk better than any stop-loss system. Realize that standing aside requires as much deliberation as an entry or an exit,
and must be considered on every setup.
9. Every trader has a different risk tolerance. Follow your natural tendencies rather than chasing the crowd. If you can't sleep at night, you're trading over
your head and need to cut your risk.
10. Never enter a position without knowing the exit. Trading is never a buy-and-hold exercise. Define your exit price in advance, and then stick to it when
the stock gets there.
11. Information doesn't equal profit. Charts evolve slowly from one setup to the next. In between, they emit noise in which elements of risk and reward
conflict with each other.
12. Don't be fooled by beginner's luck. Trading longevity requires strict self-discipline. It's easy to make money for short periods of time. The markets will
take back every penny until you develop a sound risk-management plan.
13. Enter positions at low risk and exit them at high risk. This often parallels to buying at support and selling at resistance, but it can also be used to trade
momentum with safety and precision.
14. Look to exit in wild times in order to increase your reward. Wait for price acceleration and feed your position into the hungry hands of other traders just
as the price pushes into a high-risk zone.
15. Manage risk on both sides of the trade. Focus on optimizing entry and exit points and specialize in single, direct price waves. Remember that the
execution of low-risk entries into bad positions allows more flexibility than high-risk entries into good positions.
Do some research on the basis of EPS, PE and their competitors in the sector also company future plans and past growth. You will get fair idea about your
query.
MY SOLILOQUY - on trading system

04 July 2015
12:05 PM
So the topic starts

..........................
since after experiment , boys and men r apart..we can move further.
to see where we stand as a trader ..can we improve our trading ?
min 50 trading have been taken ..min 20 correct trade .
so the persons can understand trading is a search for oppurtunity.
losing trade may appear any time.
understand hot topic black swan.
concept of hunter and the hunted.
the basic of reward/ risk...when situation is out of hand
when trading is within comfort level.
hopefully have seen one 1bull-bear cycle..or as a pro 100% retracement and comeback.
philosophy of trade : market is war arena..ruthless fighter can only survive
: trading offers great no of oppurtunity to pick.A position
may be oppurtunity or a trouble[loss]...nobody knows
while picking,what it shall be.TIME will unfold..whether
it is profit making one or take money out of you.
corollary :do i know how to trade?if yes, how to do effectively
[trading performance]
specific method to be followed again and again[system]
system vs. individual psychology ----- TUNING
element : experience
market research and put data for validity
testing [ ofcourse u must have ability to test]
position management
if no system : poor trade result occurs with emotional trading.

when personal psychology not match with particular style
loss of oppurtunity[ missing oppurtunity due to fear]
wrong expectation
hence a system of timing must have 1. set up condition
2. entry
3. exit...profit target
4. risk analysis
5. exit ..contingency plan

1st principle
..................ABC
A ACTIVATION ...TRADE ENTRY
B BELIEF .. if trade continue as wishes ok.
C CONSEQUENCE , If price turn opposite get out
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,
2nd principle
....................SMART
S SPECIFIC GOAL
M MEASURABLE GOAL
A ATTAINABLE
R REALISTIC
T TIME TO REACH DEADLINE
SYSTEM :
..............
MECHANICAL TRADE SYSTEM MTS
DISCREATIONARY TRADE SYSTEM DTS

HYBRID SYSTEM...HTS
DIFFERENT CONDITION OF MARKET
..................................................
1. RANGE BOUND MARKET PLAY PLAN
2. TREND MARKET PLAY PLAN
3. MOMENTUM BASED BREAK OUT PLAY PLAN
4. -MOMENTUM / AT TOP QUICK SHORT PLAN
SYSTEM DESIGN
.....................
beginners bias : buy only ..one directional trade
condition : if nifty showing +bias..buy xyz stock

say today gtl ...@ 172...its moving further ++target175.
go back last week chart..it has given sufficient hints to move today / tomorrow...1130 move starts[ hope intraday players see it]
thursday and friday price hold ...fulfil my condition of trade
as a day trader 170 stop...target 175 achieved..
as a short term trader 165 stop...with 182..target...
so u understand why i a poor short term trader...before reaching of target more often than not it reaches my stop..so the los s in a/c
condition of short term entry is different than my momentum style..
so the confusion ...thats why i loss.
Fact is in short term with proper risk/reward no trade exist in gtl..
time extension linearly does not quantify a trade. it is a trap..hope factor
so for short term reversal at bottom or at 50% fibonacci level better alternative.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,
system design
....................
day trading , short term , position trade and investment..4 r different scenario . condition for success in each ..has some p eculiarity.
value investment [ works if u fit there.not suitable in present market]

...buy good stock with av p/e+ when price starts rising in weekly chart.
but for trading another concept..which shall give more score..consistent single
/2run by bangladesh against india..or wait and hit 4/6 run by bangladesh against south africa[ both match won by this novices ..against superior pro]
u
2
4
6
have to choose...1run day trade

run swing trade
run position trade
run multi bagger..nomore exists
[ if u r master trader,not a beginner like me,...try some portion of day winner to HOLD..SCORE 2RUN............another greedy [balanced greed ]
view...BOOK 50% PROFIT IN SWING TRADE..LET OTHER 50% TO RUN FOR FURTHER PROFIT
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,
day trading system
..........................
to quote cv ' master ur craft.practice and practice...ignore all others'
understand simplicity and toughness...in it.u have to understand how price reflect everything..suitable indicator..derivative from price ..to study and
maintain strength...and eye for order flow....
thats all...alas! one is sufficiently difficult...3 is awesome in real time.
thats why salute to cv!
u must have some method to understand price increament shall continue
and then another when price dilution coming.
[objectively a programmer can do,i am ignorant]3min/10min ma x...also 15min rsi has some use...big order coming in sell side has its impact.
whatever it may be , real time execution is key.alert helps.
High Probable Trade

04 July 2015
12:07 PM
high probable trade

............................
its the directional bias...where most waiting watchers r ready to join..
market buying r coming...big volume r increasing
concept is use momentum ...act now.
another concept a trend started yesterday 3pm..hence further steam left.
scan at night for candidate.
without any news. on real time..sudden volume surge..price is also moving up.
ACT NOW ..NO TIME TO THINK make money
note: this works i saw and made some lakhs.......... work in present market.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,
shortterm trade/ swing trade
............................................
here u must reqd eod . a software ..preferably some risk reward analysis
some low risk entry tactics and stop-umbrella to save from rain.
u have to define entry characteristic .
1. entry after break out over longterm resistance zone
2. after twice bounce in support ..price just starts moving up.
3. sector starts moving up..stock has good rel strength comparison within sector.
stop
......below 5% of last week low
if not 4% up move occurs within 5 trade days..use time stop
profit target 8-10% from entry..however after 5-6% price is NOT HOLDING
....get out with small profit...than turn profit into loss
for momentum base swing trade..refer david landry and crabel works
for system study see beyond ta..by tusher chande
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
next position trading
..............................
personally i decide only some shortterm winner to be extended for long.
and today bpcl, hpcl ,visual have given position buy signal.
its basically chart ..after trend change suggested entry at predetermined pt
for me some% up with volume increase...in metastock RSC EXPLORER candidate must be in upperside.
yes i use eye ball technique and pattern failure[ in h&s when instead of fall price starts move up and w.pattern price slowly starts moving..acceptance
of price]
my idea given money in past..i dont know whether shall it work now.
but i put real money
some other low risk idea r predefined omnitrader eod study.
support base has to be created..have u seen strong base support of rolta@78 -82 ..2 yr back...after crossing 100..it never look back.
another criteria...when nifty starts moving up again after retracement
enter good candidate[GAIL ]
third unexpected good result published and buy volume shows high demand.
most imp part of position trade is stock list...here u know from back ground move shall continue..further..as u try for bigge r profit ,failure rate is high.
hence u must have inbuild mmsystem to get out with small loss and addon winner....mark boucher course is very helpful.
say being in known field i must track some news on company..
also result out of infy ..how + affect midcap computer company..
as position trade is a judgement game..hit of the moment decision should NEVER be taken..infact temporary fall is a great buy oppurtunity
strength indicator on 2week chart basis [ ie converting data on 10day high -low-close basis available in metastock] is good way to see.
In Range bound market

04 July 2015
12:07 PM
in rangebound market...william%r at oversold zone good indicator

in trend market , i use aroon .
after long fall, weekly chart engulfing bull i use for entry+ bill williams chaos entry signal
.......for stop simple sar as available in metastock...apart form subjective pattern stop and time stop.
profit booking ...50% quick booking
if however quickly price moving up .instead of sell i buy double as its low risk trade[ in the language of traderji confirmat ion by price]
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,
-momentum short plan
.............................
this condition to be created by media..rumor of market shall goup ..vs pro have already sold..now some -divergence can be seen ...price slowly starts
falling..now tv must speak again and again ..threat percept...more sell order coming in nifty future...NOW ONLY THE TIME for short...hence its a short term
quick execution ..a bull market top trade ..with propaganda from media
otherwise harsh bad news....when most participant prefer to sit on cash[bulls r running away]
with hold ing stock its a conflicting trade..better sell holding first.
-----------------------------------------------for further study understand extended bullmarket and volatility condition
and see after quarterly result out how price is behaving
. assumption .....condition of trade....if it does not exist no trade

2. entry..particular signal
3. holding profit one...give time.
4. exit..with profit target
with loss.
5. contingency plan..to save skin.
6. write after complete..of trade what i learn ..implementation vs. reaction of me based on fact.
this all elements r clearly written ..what actually works.
OTHER ELEMENT
........................
u factor..how to be neutralised so that i can think right.before taking position i must have an openion but PRICE must confir m my openion otherwise i must
use stop and book loss to throw away openion.
.MARKET HAS TRENDINESS AND ALSO UNPREDICTABILITY ELEMENT. NEWS AFFECT MARKET [UNKNOWN EVENT]....MAJORITY TRIES TO GUESS WHAT
MAJORITY MAY DO , TAKING RISK OF PREDICTION BY PUTTING MONEY BUT READY TO RETREAT IF WRONG........PUT MORE MONEY WHEN RIGHT.
since u have asked i place my personal opinioned model
.................................................. ...........................
u have to work on prediction model in which chance of RIGHT/BEING WRONG has to evaluated.
a. company result..good business../..20% weightage
b. macro economy + moneyflow....40% weightage
c.sector business ..priority 20% weightage
d. other factor..operators game/random factor ..20% weightage
total 100%
ALWAYS TAKE CHANCE OF BEING WRONG 40%...SO THAT IF WRONG ...MUST BE PREPARED
by the chart , i SEE how others r viewing..ready with my move ..tv news guide me how fools shall behave,..many a time i am wr ong ..but i stick to it.
as trading is not a game of perfection , 50%accuracy sufficient.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,
here i write about a system..developed by jeff.
5 day momentum method
...................................
background : strong trending market
principle : pullback for fewdays and then again resume move
1-2-3-4 pattern [3day pullback]
pullback near 20dma and again moving up.
why? with this pullback ..mf and hni plan to enter.hence new moneyflow..
high momentum,high probability trade
scan.; 1.strong trending candidate
2. use oscillator ...watch pullback
3.trend reverse...now u enter.
indicator: adx..strength of direction
rel. strength ..ok
filter ; adx>30..+di>-di..di=demand index
rel strength..compare to other stock /nifty ..BETTER.
stokastic..%k<40 oversold indicator
set up
.......... BUY DAY. 1.TICK ABOVE YESTERDAYS HIGH.
2. OR NEXT DAY BUY ABOVE 3%UP
CONDITION : %K MUST BE MOVING UP
STOP : 1% BELOW LOW OF LAST DAY
OR 1.5 ATR BELOW FROM LOW OF TODAY
PATTERN LOOKS...1-2-3-4 ...4 IS INITIATING PT ABOVE 2.
PROFIT TARGET : 7% IN 3DAY
MAXM TIME 5DAY..OTHERWISE TIME STOP.
IF PROFIT OCCURS EARLIER THAN EXPECTED..ALLOW 50% HOLD TO RUN FOR TOTAL 10% PROFIT
strength of the system is % k must be allowed to move up..to be applied to bull market.
strength of the system is % k must be allowed to move up..to be applied to bull market.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
so it is trade universe.3terms i introduce...exhausive, exclusive and intersection ie. interrelation between 2 element.
EXHAUSIVE..U HAVE TO GO INTO DETAIL
EXCLUSIVE..NO RELATION EXISTS..INDEPENDENT ELEMENT
INRERSECTION;INTERRELATION BETWEEN 2 ELEMENT...INTERRELATIONSHIP BETN MARKET...INTERRELATIONSHIP BETN MANY COMPANY IN A
PARTICULAR SECTOR.
exhausive gives micro view.
so before reaching to become a master...one goes through various way to question and answer this 3 element...[may be in diffe rent name].he knows how
far he understands...his limit..so now practice on regular basis[system]
and follow it diligently[discipline]
so i use 3 statistical term....
now u see all good thread ..search mode..nothing but ..can be expansion of 3 idea.
any other idea....yes EXECUTION.I DONT UNDERSTAND AS SLIPPAGE A BAD ELEMENT..BUT CV OPENS MY EYE,...i miss 3trades for slippa ge in intraday.
also some profit booking idea in real sense...so the difference with beginner and pro clearer to me..its IMPLEMENTATION.
HENCE THIS KEY WORDS U THINK IN THE LIGHT OF IMPLEMENTATION BY U.

EVERYTHING U CAN VISUALISE...
----------------------------------------------------------
QUESTION TO PRO
04 July 2015
12:08 PM
1.
2.
3.
4.
5.
6.
7.
8.
why they r superior ?

what time frame they trade?
how far they r subjective in trading ?
what r the reason for their actual consistency ?
on what condition they dont trade ?
what is their contingency plan[enough is enough..now i am booking loss]
what self sabotage u find most difficult to overcome..yet how u have done it ?
do u think beginner trader[4yr amateur] can be like u oneday ?if yes. HOW!
Answer : Yes definetly

1. Understand maths behind indicators before u apply it to charts
2. Design a system and optimized it over instruments u prefer to trade and back test with tick data if possible
3. Foward test it for atleast 6 mo with vast range of instrument and compare with backtested performance
4. Dont belive any idiots who says market is predictable
5. Stick to system even if you see consecutive loosing trades but check you in range of expected drag down limits
6. Apply money managment principles
..
1. why they r superior ?
cos they dont follow others, dont believe what others say, but listen to everything and takes what matters (test, test, test. researching and testing is not the
holy grail, but if there is any path, this is it). do you know what will be the performance of a random entry system with different money management on any
instrument?
2. what time frame they trade?

anything that you can think of...
3. how far they r subjective in trading ?
cannot answer
4. what r the reason for their actual consistency ?

the same that goes for McGrath, tiger woods and federer.
5. on what condition they don't trade ?
many reasons...but how can i know all? got some from market wizard series.
6. what is their contingency plan[enough is enough..now i am booking loss]
depends on each trader, but they HAVE ONE and FOLLOW IT DILIGENTLY.
7. what self sabotage u find most difficult to overcome..yet how u have done it ?
predicting the market....mechanical system.
8. do u think beginner trader[4yr amateur] can be like u oneday ?if yes. HOW!
why do you want to be like me? then you will have to follow my style, which may not suit you. get what works for you. keep an open mind, but don't take
anything on face value. Read - Practice - Practice - Read. btw, no of years has nothing to do with success...or else all 15 yr traders will be millionaires
today...this is not time based promotion. u can be a very successful pro in 4 yrs too.
Trader2 : PROs would consider this as exposing their war chest... may reveal their stengths.... as well as the weakness.
In their view all others are enemies ( as CV had put it) because the money one makes from trading is the money somebody else will be losing.
This is a game where the losers play an important role.
Afterall this is their bread and butter .... so the human survival instinct comes into picture.... Though the fact may be a few hundreds in the forum knowing
your system would not make anybody a loser...there are millions playing te market.... Also knowing a system does not make a winner... the person executing
the system has a large role to play..
Also will a PRO really talk about the losses?? I doubt...I remember somebody telling us in the chat room that he has 90% winners !! 90% winners and he was
still working as a sub broker.... mmm... sub broker business was more profitable than trading with 90% success...
I myself am not a PRO. I have a good, satisfying and well paying job. But of course TA is a passion... almost bordering on obsession...
I do lot of study and experiment with lot of indicators ...but my positional trades are mainly based a few simple momentum based cranked up stuff
Ofcourse I do have my losers but overall it has been good. Also the absence of complusion to make money from trading has helped me to become better in
my trading .. I suppose..
TRADER 3

ans. they are superior by experience and rationality.THEY JUST HAVE BETTER CONTROL OVER THEIR EMOTIONS AND ARE DISCIPLINES.they have better
execution skill .
ans. as they found which suit them with comfort and making money.
ans. no subjectvity.as per system ..entry -exit condition r predefined.however
some sentimental condition r checked.
4. what r the reason for their actual consistency ?
ans.right plan and implementation.improving success rate.
5. on what condition they dont trade ?
ans. condition not suiting their plan. when r/r ratio not favourable.
6. what is their contingency plan[enough is enough..now i am booking loss]?
ans. inbuild in the system.[hence nothing to worry]
ans.not following the plan.distract by others openion...soln . follow price in a disciplined way.
ans. yes . discipline and a solid implemention plan including slippage.understand market and good money management.[ignore media]
so we clearly see some difference betn pro and serious amateur.

no1. level of comfort and serenity.
no2. least subjective.
no3.worst scenario is already planned and mastery over implemention.
key word is discipline and practicing their tool.
so from beginner u r moving on top...here u atleast know how to survive..irrespective of market u can run ur family by winning against other traders.
........................
so u r developing trading philosophy...plan new arsenal...to fight better.
so in is trade universe.3terms i introduce...exhausive, exclusive and intersection ie. interrelation between 2 element.
INRERSECTION;INTERRELATION BETWEEN 2 ELEMENT...INTERRELATIONSHIP BETN MARKET...INTERRELATIONSHIP BETN MANY COMPANY IN A PARTICULAR
SECTOR.
so before reaching to become a master...one goes through various way to question and answer this 3 element...[may be in different name].he knows how far
he understands...his limit..so now practice on regular basis[system]
so i use 3 statistical term....
now u see all good thread ..search mode..nothing but ..can be expansion of 3 idea.
any other idea....yes EXECUTION.I DONT UNDERSTAND AS SLIPPAGE A BAD ELEMENT..BUT CV OPENS MY EYE,...i miss 3trades for slippage in intraday.
also some profit booking idea in real sense...so the difference with beginner and pro clearer to me..its IMPLEMENTATION.
HENCE THIS KEY WORDS U THINK IN THE LIGHT OF IMPLEMENTATION BY U.

urther elaborating the tools
..............................................
for intraday..its nothing but orderflow....price higher high break out concept.
for eod....predefined scanner.[u have to decide what u want]
for shortterm...support buy..
oversold condition...now price just starts to reverse.
[ suitable indicator signal which u rely]
for position play...some news impact not yet discounted in price.
continuty of trend in price[ma based]
something to check strength.
IMP: MINIMISING SUBJECTIVITY AND MEDIA HULLABULLA..IS UR JOB.
NEVER BELIEVE IN VALUE BUY AS A TRADER.NEVER FORGET STOPLOSS
.
i dont know,whether i am right to write here....forbidden art of trading will be exposed here.many a pro r available here in this great forum...i request them to
make comments.
There is nobody superior or inferior as far as markets are concerned.......and the time you do feel that you are superior,that will be when the market cuts you
down to size.
Quote:
Intradays and position trading.......love playing the weekly as well as the 5min charts.
Quote:
Used to love words like "subjective","mystical","intuition" once upon a time.......nowadays,the attitude is more to objectification of the whole process.Do
whatever it takes,an automated system,or set points of entry,exit and the discipline to always follow the rules of your trading plan.Whatever........but one
cannot beat all this fear and greed and hope,by joining the crowd.One therefore stands aside,follows the rules,practically robotic,day after day.
Quote:
4. what r the reasons for their actual consistency ?
A trading plan of attack,and then the discipline to follow it to the tee.
Quote:
5. on what condition they dont trade ?
There are many,like achieving the targets and more for the month.Also not trading if taking a hit and a predefined percentage point is hit.Or if there is some
sort of family emergency......etc etc.
Of course,importantly,when I have a rip roaring,rollicking bullish 60min,I do NOT trade the 5min and stupidly go short.There is enough profits to be made just
following the trend of the 60min and trading the 5.
Quote:
6. what is their contingency plan[enough is enough..now i am booking loss
Hmm.......stop loss for every trade.Position sizing appropriately.Set Risk percent per trade.Monitoring average wins,losses,drawdowns......blah blahblah,think
that what everybody here already knows.
Quote:
Anticipating a move before it happens,trying to get in even before your trading strategy says so.........got licked many times doing that.But not too much of a
problem these days .........now in only when the move happens.
Quote:
Any fool can be a trader,every beginner trader can one day become an experienced one.Every trader with a plan and strategy that works can make money off
the markets.Why then are 99% people failing at the markets?They go by what a newsletter,a self proclaimed guru,their broker,etc tells them to do.They go by
their gut feel,or their neighbour's gut feel.They believe that making money is an evil act.They believe that trading the markets is for spare change .They have
yet to educate themselves.They have no plan,no modus operandi,no strategy,no plan of attack...............
Approach trading like a business,have a business plan,a trading plan.We are in this to make money and lots of it,as in any business.But strangely,to make lots
of money,you have to shift the mind's focus from making money to putting in that perfect trade.Although it's one and the same,you have to maintain focus on
the trades.
Everything is cold,calculated strategy and then a disciplined implementation.We are in this to capitalise on other people's fear and other people's
greed.......and for that,your own mind cannot work in the process of fear and greed.It has to be quiet.In the present moment.Practically like meditation.
Can anybody and everybody do it?Of course,provided you do all what it takes to be a trader.But sadly,that will never be the case........99% will always
lose,not because it's difficult,but because these 99% will not approach it with a plan,with the required discipline.........That stat will always remain.
Can you be that 1%?Surely and definitely,provided you are willing to pay time and energy and focus to making yourself a great trader.
Trading Edge
04 July 2015
12:10 PM
shall i show a tool?let us come to the point.

In order to succeed at trading, you must have an edge. Your edge begins with the knowledge you gain through your research and testing that a particular price
pattern or market behavior offers a level of predictability and a risk to reward ratio that provides a consistently profitable outcome over time. Without it, one is
just "playing" the market in order to have something to talk about on message boards. To get it, you have to know exactly what you're looking for and what to
do with it once you've found it. This process is what the journal is all about.
The journal goes through several stages depending on where you are. Once you've decided where you want to concentrate your efforts (at this level, the
journal may resemble a diary), then you begin the process of developing a system (or method, strategy, procedure, whatever you want to call it). Here the
journal takes on a different character. Once you've developed a tentative/preliminary system, you begin testing/trading it, and the journal adopts a still
different character.
The first step is to decide what kind of trader you want to be.
* What do you want to accomplish with your trading? Is it recreational? Supplementary income? A part-time job? Do you want to make a living at it? Even the
greenest of the green knows whether or not he wants to make a living at it, trade only part time, trade for recreation, trade for the action, trade to have
something to talk about with other traders (for whatever reason), trade only long enough to earn money to do or buy X.
* Do you have any idea what sort of trading is most comfortable? Long or intermediate-term trading? Short-term trading? Day-trading? Trend-trading?
Scalping? (Note here that a short-term trader, for example, does not become a long-term trader just because his stop was hit and he didn't sell; a long-term
trader doesn't become a short-term trader because he chickened out and sold too soon. Each of these approaches are selected deliberately and for thoroughlyconsidered reasons.) How patient are you? How adventurous? Are you a leader or a follower (most people think they're leaders)?
The second step is to decide what you're going to trade and when you're going to trade it.
* Have you found an instrument -- futures, stocks, ETFs, bonds, options -- that provides you with the range and volatility you require but also the safety that
enables you to relax and trade in an objective and rational manner?
* Have you yet found a time (5m, hourly, weekly) or tick (1t, 200t) or volume (1K, 100K) interval that gives you enough trading opportunities but also gives
you enough time to think about what you're doing? If you want to limit your trading to the "morning", are you physically and psychologically prepared to trade
all day? If not, can you shrug off whatever opportunities you may miss by limiting the amount of time you spend trading?
The third step is to develop your system*.

A system consists of (a) a set of rules that you use to select profitable positions and (b) a set of rules that you use to manage the trade once you're in it.
(*Note: again, whether you call it a system, a method, a strategy, a plan, a scheme, an approach, a procedure, or a modus operandi is not as important as
sitting down and doing it.)
* Developing a system begins with deciding just what it is you're looking for. Therefore, begin by studying price movement in real time (or at the end of the
day through "replay", if your charting program offers it). By "study", I mean to observe it with intent, not just read about it or listen to somebody talk about it.
Note the conditions under which price rises, falls, drifts. Make every effort to avoid imposing your biases onto what you observe. You may see trading as a war,
a competition, a game, or a puzzle. You may think you're out to kill somebody, outwit somebody, or are out only to detect the flow and slip into it, riding the
waves as if you were sailing. None of this should be allowed to affect what you observe.
* Develop a set of preliminary hypotheses which exploit the profit opportunities presented by these movements, e.g. price began trending "here". Price broke
out "there". Price reversed "there". What can I do to take advantage of that? What do I have to look for?
* Decide what strategy will best take advantage of what you think you've found. Are you looking to catch a reversal in the hopes that it will become a trend? Or
are you looking to trade series of reversals within the day's or week's range? Or do you prefer to wait for a breakout and trade what may become a trend? Or
would you rather wait for a retracement in what may be shaping up to be a trend? Limit yourself to only one strategy at the beginning.
Carefully define the setup which implements this strategy, preferably using old charts (attempting to define the setup by studying realtime charts is inefficient
since you don't yet know what it is that you're looking for). This is called "backtesting". All else flows from this. Unless you know what you're looking for, you
cannot test it, much less screen for it. If you have not tested it, you have no idea of the probability of its success. With no idea of the probability of success, any
trades made are essentially guesses.
Therefore, focus on the setup. One setup. Determine its characteristics. Define it so specifically and so thoroughly that you can recognize it without any doubt
whatsoever in real time. Decide provisionally where best to enter, what the target ought to be, where the stop should be placed, and so on. Only after the setup
is defined and tested (and it can't, ipso facto, be tested until it's been defined) can one even begin to think about trading it with real money, much less trading
multiple setups. Attempting to shortcut this process merely expands the amount of time it will take to develop the necessary skills. Nothing is gained by
painting the house before scraping it, cleaning it, and priming it since you'll have to do it all over again sooner rather than later.
* Forward-test what you have so far, again using old charts, preferably replaying them (if replay is not available to you, then scroll through them, bar by bar).
In other words, "pre-test" the setup. Make whatever modifications are necessary to the setup, i.e., re-examine and re-define your strategy. Address risk
management, trade management, money management in further detail. Determine the ratio of winning trades to losing trades (you will, of course, have to
define "winner" and "loser", which is where risk management and trade management come in). Determine the ratio of profit to loss. Determine the maximum
loss. Determine the maximum number of consecutive losers.
Note that beginners often use "win/loss" to combine two separate considerations into one, and failing to keep them separate can create problems. One is
win:lose. The other is profit:loss. Between the two, the "lose" and the "loss" have two distinct meanings. Win:lose refers to the ratio of winning trades to losing
trades. Profit:loss means, expectedly, the ratio of profit to loss.
You'll read that the % of winners can be less than the % of losers as long as the winners are sufficiently profitable, one's management is superior, etc. And,
yes, theoretically, one can "win" less than 50% of the time if his profits sufficiently outweigh his losses. But if your real-time real-money test begins with a
string of the losses anticipated by your backtest, you'll be out of the game almost before it begins. In fact, one can be left high and dry even if his % of wins
outnumber his % of losses, as mentioned above, if there is insufficient control of the amount of loss OR if the losses occur in sufficiently high numbers at the
beginning of the trial.Then there are commissions and assorted trading costs to take into account, which is why traders who actually trade find that, without
size, all the postulations about percentage don't mean much in practice.
* Paper-trade this plan, in a simulated environment, as a semi-final test, until you are satisfied that it performs at least as well as it did during the previous
testing phase. This may take several months or more depending on how many trials you perform. If your plan is not consistently profitable, go back however
many steps are necessary to arrive at a potential solution. (See also Making High Probability Trades.)
* Trade the plan using real money in real time, spending only what is absolutely necessary on "tools" and trading the minimum number of shares, contracts,
etc., allowable. If your plan is not consistently profitable, go back .however many steps are necessary to arrive at a potential solution. Recalculate your win rate
and profit:loss ratio on a continuing basis.
and profit:loss ratio on a continuing basis.

* If your plan is consistently profitable in practice, increase your size to what is a comfortable level, maintaining a continuous loop of re-appraisal and reevaluation. When things come unglued, back up as far as necessary to regain your footing.
Novices rarely do any of this. They borrow something from somebody or somewhere and perhaps modify it somewhat, but they rarely go through the defining
and testing process themselves. Some just try whatever seems like a good idea and hope for the best.
If one has absolutely no idea where to begin, there is nothing wrong with using a canned strategy IF it is used only as a point of departure. In other words, the
canned strategy, regardless of what it is or what claims are made for it, still has to be tested, which often entails taking what is unexpectedly vague to begin
with and defining it to a level of specificity that enables the testing to take place (it should come as no surprise that those who do go through the process
succeed and those who don't, struggle, often to the point of being driven out of the market). Examples of canned strategies that are reasonably well-defined
include the Darvas Box, the Ross Hook, the Opening Range Breakout, O'Neil's Cup With Handle, Dunnigan's One-Way Formula. Some of these are more vague
than others and will require considerable work on definition before they can be tested. But they serve as points of departure
A journal should be more than just a trading log bought here, sold there, made this, lost that. It should be a record of your journey (that's why it's called a
"journal"). If done correctly, a journal will reveal patterns. Patterns of what you're doing right and what you're doing wrong and when and how often and under
what circumstances. Patterns of the behaviors of those who are trading your stock (bond, fund, option, whatever). Patterns of the market you're trading, of its
cycles, of its stages, of what works at some stages and in some cycles and not in others. It will reveal much regarding your trading. It will also reveal much
regarding your self.
Addressing the questions asked in Part One and defining and testing the setup are only the preliminaries. Eventually, one starts trading, if only on paper, and
that is where the journal can make the difference between success and failure.
A journal is not just a record. It is also a plan. Before the first trade is ever made, even if only on paper, prepare for the day. Note any events that you should
be aware of (reports, press releases, meetings, speeches, testimony, nuclear explosions, approaching meteors, etc). Write down reminders of any elements of
the trading plan that you're having trouble with and what you intend to do about them, e.g., dont take any trades anywhere but at support or resistance or
be wary of wide-range bars (this may be necessary as early as the afternoon of the first day).
Above all, record your justification for each and every trade. Record your thoughts before, during, and after the trade, written in real time* (your perception of
what looks to you like a potential setup will change substantially after the setup resolves itself, and when you ask, later, what the hell was I thinking?, your
record of your thoughts -- your "self-talk" -- will tell you, so that the next time, in real time, youll have a deeper and more rational perspective). This is more
than just the reason for the trade (It looked like it was going to go up). It is more than the rationalization (It was time for it to go up). It is more than the
mystic prompt ("I felt it was going to go up"). Its the justification for it, the explanation that one would provide to ones boss or client if he were trading for
someone else. If everyone wrote down the reasons behind and justifications for every trade, their learning curves would be accelerated dramatically.
*
At the end of the day, review your decisions. Did you make good trading decisions, i.e., did you follow your rules or not? If you followed your rules but made
one or more losing trades anyway, do any of your rules need to be re-examined? If you didnt follow one or more rules, which do you most often fail to follow?
Whats the problem? What did you say to yourself at the time? What do you need to work on the following day? Always, what could you have done differently to
improve the outcome? Can it be tested to find out if it's only an occasional anomaly or worth incorporating into the system?
And then you write down your detailed plan for the next day . . .
Everywhere there are people telling us that this path or that path is the one we should take. How are we to decide? Most of us end up stumbling along through
a trial and error exploration of various systems, methods, techniques, and whatnot. Some of us find something that works. A great many do not, and quit in
frustration, or broke. (John Forman)
Make journals a part of the daily routine Even if you dont trade on a particular day, it is valuable to review the days setups and behavior at key price levels.
Reviewing patterns on different time frames can also help traders internalize the context of the markets they are trading, as well as the interrelationships
among those markets. The French scientist Louis Pasteur observed that, in matters of observation, chance only favors prepared minds. Replaying market
days, reviewing your own performance, and identifying missed opportunities prepares you for future performance, as your increasing familiarity with trading
patterns sensitizes you to them in real time.
Incorporate specifics in your journals If I had to identify the single most common shortcoming among trading journals, it would be their absence of detail.
Entries such as, I lost my discipline; I have to be more patient, might be nice as post-it reminders, but are inadequate as journal entries. Journals need to
clearly state what happened, your assessment of why it happened, and the specific steps you intend to take to deal with the situation in the future. A good rule
is that anyone reading your journal should be able to identify and follow the exact same steps that you intend to take in the future. Your journal should be a
planning document, not a statement of intentions.
Wherever possible, review your journal entries with a valued colleague or mentor When I established a training program for new traders, one of my first steps
was to insist upon daily review of trading journals. This required me to create a trusting and constructive environment, so that traders would be honest in their
entries. Once that openness developed, the daily reviews became proactive planning sessions (usually shortly before the start of the trading day) that
addressed issues before they could damage the profit/loss statement. Even more important, the daily review created expectations of accountability, as traders
knew that my inevitable question would be, How did you do with your goals for the day
Use journals to review positive trading performance, as well as problems The number two shortcoming among journals is their focus on problems to the
exclusion of solutions. If journals become a mere recounting of ones flaws and inadequacies, traders will inevitably lose interest in them. Traders can learn as
much from what they do right as from their errors. My favorite instruction to new traders is to highlight in their journals one thing that they did right the
previous day that they want to replicate today and one thing that they could improve upon in todays trading. This forces traders to stay in touch with their
strengths, as well as their failings.
Each journal entry should include material about the markets and material about the trader It is not unusual for traders to emphasize one at the expense of
the other. The core concept I stress with traders is that of pattern recognition. Traders display patterns in their behaviors: some of these are positive; others
interfere with profitability. Markets enact their patterns as well; it is the trader who can see these as they emerge and act quickly that has the best chance of
long-term success. Including material about trading patterns and traders patterns makes the journal a learning tool about oneself and the markets.
Price ,displays a value perception in human mind,these individual perception translated in buy or sell orders ,exerts an inertia to price , to move
kinetically.Hence at SAME PRICE a buy & sell is simultaneously generated in 2 human mind .
yesits a two way percept..unfortunately various timeframe viewing by others with biased openion made it complex. next the fear if i wrong..dilemma
create situation an abrakidabra........ur vision /sense/price direction guidance
............with the help of experience can keep u in right track....analyst does the thing after..only a trader can move through by balance,indicator is nothing but
an approach to rationalise it.
Wrong Traders
04 July 2015
12:10 PM
wrong traders
....................
Poor money management
Trading against the trend
Over reliance on discretion for entries and exits
Failure to confirm trends and setups on longer timeframes
Poor use of stop loss orders (too close, or too far away) - placing them for the wrong
reasons
Overtrading
.............................
SOLUTION:Identify the trend, and trade with the trend
Confirm setups with multiple timeframes (5min, 30min, and daily for intra-day trading)
Keep a full record trades taken, MONEY won/lost, reasons for entering and exiting, and
thoughts
Keep small stakes for the time being, until consistent profits can be achieved
Avoidance of "gamble entries" and high risk trades
....................................
FOR HIGHER LEVEL
1. DEVELOPMENT OF A TRADING PHILOSOPHY
2.DEFENSIVE TRADING STYLE
3.DEFINE RISK AND YOUR RISK TOLERANCE LEVEL AND TIME FRAME U NORMALLY
TRADE RIGHT
4.PRINCIPLE VS ACTUAL TRADING RESULT
5.LOOK FOR THE SIGNIFICANT FACTOR ..HOW TO DO NEWS TRADING
6. CAN U LEVERAGE IN REAL SENSE? CONCEPT OF USE MORE MONEY TO
WINNER.......CONCEPT TO USE TIME BY TAKING PAID CALL...CONCEPT OF BACKTEST
TO USE TO WHAT WORKS IN PAST FOR CONFIDENCE BUILD UP
7. BELIEVE IN PROBALISTIC THEORY , YET A FEEL FOR PRICE...BUT CONTINUE TO
TRADE AND HOLD ONLY IN THE DIRECTION OF TRADE...KEEP FAITH AS PRICE IS
SUPREME.
.................
SO THE TOOL IS NOTHING BUT HIMSELF BY WHICH PLAYING IN HIS STRONG ZONE HE
CONSISTENTLY MAKES MONEY OUT OF MARKET [ANY INDICATOR OR INDICATORS
WHICH SIGNAL CONFIDENT RATIONALISED BUY AND SELL]HE KNOWS HOW TO
HANDLE SUBJECTIVITY..RUMOR...LOSS AND PROFIT...
PS. i have professional operational research background...presently given a complex risk
analysis for a project...so i have to move out before inauguration of my present
project.[ i believe in hard work philosophy....so the load comes to me ...its 14 month
project...real swot and actual implementation.i traded @2002-03 with earning 50000pmsalary cut 30000=20000pm...hence only swing trading possible.Offerred job 1yrback @
60000, but i decline.my long association with chess reflected .in last 4 yr of testing and
trading with real money...many a system checked based on metastock
/omnitrader....only some useful one in beginners term ...i write it in trading system of
beginner'
without mathematical jargon[ GOD knows how difficult to control my mathematical
inclination....regularly abused by GM[ a qualified engineer with versatile project depth,of
course an MBA...'who can follow this 3vector nonsense risk analysis and
profitability.......make it simple so CA can sanction
...give him only bep....+3month pert [OR term]...............i can take credit..
my boss never believes...i can write in plain and simple english.
traderji.com...an excellent forum for budding trader ....these are my 3 gold coins..
HOWEVER 1 HAS TO READ TO FIT JIGSAW PUZZLE...another hints read /use dynamic
trading ...use price , volume and time element.
LEARN FROM ANALOGY

04 July 2015
12:11 PM
Stock market chess

1.there is always a seller for a buyer.see otherside of story,..only one can be
right2.evaluate only what matter,nothing more3.chess in totality contain perfect info,
unfortunately market is not.4.decifer price, if nothing visible go with intuition[an
intellectual skill developed based on pattern study & problem solving skill5.play market
with a plan ,longterm or shortterm6.review constantly in eod and adjust accordingly.
Look at markets last day activity and last hr7. dont waste money[dont allow loss to
run]8.press winner when u have them9.winning reqd not only perfection from u,also
mistakes from others.10.when u have got early signal, buy.11.always give high priority
with nifty12.development of knowledge , time is money.13.dont try leverage if u cant
handle,use resource wisely14.trade studynever ignore mistake15. stay in your own
zone,stock selection16. fundamental contrarian, high level of vision Chess tells u to think
/not impulsiveCheck opponents pt of view.2.tactics is very imp[dont only
read]4.always see sacrifical trap and positional strategy5.3move attack vs. attack on
king .6.refer to move at hand and opponents last move7.never allow unnecessary pc
loss.8.know how to win wongame.9.play well also watch,opponent may give u
opportunity.10.take initiative.11.its the center.12.development of pc, it needs
purpose13.premature attack is costly.14.chess study..admit blunder and reason of
loss15.dont be flashy to win16.grand master break the rule as he sees better, others
understand it later.
Here i am trying to write a great discussion with arun k...it was 2003. [his father was
manager of indian bridge team]have u played bridge ?'...i asked. he smiled. he had
given a good lecture on indian economy..effect on suppose pn r banned..he was a part of
india shining slogun,....so i told him 'trading is nothing but a bridge competition. cards
come ..u have to play.partner is ur system ..u have to tune.play 2/3 yr of practice
deal..so with all/various conditions how to react ....is ready for u.opponents r other
participants in market...never allow to win.so at best..u can defend ..not to give extra
tricks.
but sometimes they overbid ..your hand suggest..something wrong..u got
oppurtunity..now double..and ;'score high'....BUY IN OVERSOLD MARKET..OR BOOK
PROFIT ..IN OVERVALUED MARKET.
u got a good hand..u have to play as declarer...thats the oppurtunity u must buy..but
ready for bad colour brake..by defender.try to score as best as possible with limiting
risk.
bidding system...a general trade governing rule by which u decide 'whether to play..or
its better to defend'
competitive selection trial..pairs event'...the game played with same card with
directional opponent..your score shall be 'comparatively better with others'.............IT IS
THE DAYTRADING..UR ULTIMATE SKILL WILL BE TESTED
UNLESS EXECUTION MASTER..AND GREAT SURVIVAL SKILL'DONT COME'...however its a
reality checking m/c to know where u stand in trading arena.
Ninety-nine percent of the people in the business are followers. Theyre not creative and
theyre not willing to rely upon themselves to make decisions, so they rely upon other
people. When the decision is right they take credit for it, and when its wrong they point
fingers at other people. And out of that one percent who do make their own decisions
and create their own tools, 99 percent of them are going to be wrong, so youve got
about one-tenth of one percent that are going to be right.The market is [full of
lemmings] :everyone feeding off one another, following the media, and following a
trend.
TRUE STENGTH...SEE THE BIGGER WAVE ..BEFORE ITS FORMING...
THE PROBABLE PT WHERE IT CAN FORM...
READY WITH MONEY TO TAKE POSITION..
ALTERNATE SCENARIO...[AS SUGGESTED BY GREAT CV]...KEEP EYE..JOIN WHERE AND
WHEN BIG WAVE IS FORMING...OTHERWISE SIT IDLE.
..
..
Why it is happening
when it is going to happen.
2)Exiting when you are not supposed to exit and entering when you are not required to
enter in a particular stock.
3)Counting on blessings and prayers if you are in this category believe me you trying to
jump from a hill without any safety rope
( Just imagine a million people entering into a trade and half of them praying for market
to go down a lil bit so that the short positions they have created they can exit in profit
and half of them praying to market to go up because of a long position they have
created they can exit. Imagine what God gonna think of these situation. He may say
you all gone crazy on the other place he might ask who the hell has told you to catch
the tail of a running elephant Don't put God in a confusion beacuse it was your mistake.
4) He calls this mistake illusion judgment: Spell bound with an imagination this stock is
bound to go up and it will go up and one still wait and wait suddenly the stock enters
into the red territory and one just stands there spell bound not believing not ready to
accept and still waiting . Thats a deadly mistake.
5)Not doing the homework and entering into the danger zone on some dump shot
recommendation and tips out of 10 dump shot 2 or 3 works and when rest 7 shots go
wrong on a particular day it takes out the entire effort of the previous week how sad.!!
I still remember there was ones a person called Jai Reddy this guy I saw him trading
daily one or two trades everyday and profit 10 to 20 K take home I said wow!! What a
man I once asked him he used to sit at brokers terminal all day.
How do you do it,
he said to me u trade I said yeah!! From where 'I said" online "he said: well dear
"internet I dont know" how to place a trade "I have a habit of coming everyday to this
dealer I just love the terminal you Know"..I said how he does it .well just ignored me
but I was after him everyday so one Saturday I caught him near a tea stall so requested
him and he gave me 5 rules to follow I just gave above
His words I still remember he used to say: Your mind is a chart and your memory is a
terminal and your strategy is your dealer who will push the target through
You can take those numbers home all you have to do is be quick and leave the greed
Every knew day has its own advantage after all its the eagle who grabs the pray even in
the blowing wind it keeps on flying eyes constant and focused thats what you need he
said. If your eyes are focused on a scrip everyday each passing day have patience
believe me It will give you the opportunity to grab itJust try it.
TRADING PERFORMANCE
.................................
VISUALISE..A chess player analyzing the board for the next move...
Trading as a Performance Activity.Humans choose when to take action and when to
refrain; they can select various courses of action on different occasions and can invent
new strategies when needed. performance is a function of the chosen actions of
performers, the correctness of those choices, and the skill with which the actions are
carried out. Activities that are performed well on a consistent basis require a high degree
of skill. A lucky outcome is exception.There are individuals who can be identified as
expert performers. With very rare exception, expert performers are ones who have
developed their talents over time. Most expert performers undergo specialized training
to cultivate their talents.
They require a specialized knowledge base. To perform well in a field, a person must
master the information and skills specific to that field.
Trading, as a performance activity, has much in common with chess. It is competitive,
Trading, as a performance activity, has much in common with chess. It is competitive,

requiring a high degree of concentration and strategy. It also features a limited number
of actions that, in combination, create a large array of possible strategies and actions.
This makes both activities easy to learn, but difficult to master. Chess can be played in
lightning fashion, with very little time between moves, or it can allow players many
minutes to plan movesor even days (postal chess). Trading can also be conducted on a
very short-term basis or can be planned and executed over hours or days. These
similarities make chess an excellent starting point for examining the performance
dynamics of trading, especially since chess is one of the performance fields most studied
by researchers.A well-replicated finding in chess research is that the memory processes
of experts are different from those of non-experts. One intriguing set of studies took
chessboard arrangements from a past tournament games and briefly showed them to
expert players and novices. Afterward, the expert chess players were able to recall the
positions of many more pieces than the novices. When the two groups were shown
chessboards with randomly arranged pieces, however, their recall of the positions of the
pieces was quite limited. The researchers conclusion was that experts do not have
better memories than non-experts; rather, they have better memories for meaningful
relationships among chess pieces. Instead of remembering where each individual piece
was on the board, the experts viewed the board as clusters of pieces and remembered
these. When the board was randomly arranged, there were no meaningful clusters of
pieces and the experts had no effective means for encoding their information.
How do expert chess players gain this ability to perceive meaningful patterns among
pieces? Because chess players are given ratings based upon their tournament play, it is
relatively easy to compare experts (masters and grandmasters) with less accomplished
players. When a variety of factors are incorporated into multiple regression equations to
predict chess ratings, two stand out as highly significant:The number of books owned
and The cumulative number of hours spent in practice correlation between the amount of
time spent in practice and current performance ratings was .60
it is necessary to understand what chess books are and how they are used. These texts
typically break the game down into components (opening, endgame, defenses, etc.) and
present historical games from tournaments, along with annotation from an expert
author. Readers do not merely skim over these games; they learn specific opening or
defensive sequences and then see how these were utilized in actual games. They
recreate those games on their own boards and carefully play through the positions, so
that they can see what the expert players saw. They also play through alternate
sequences to observe where these might lead.
Interestingly, chess experts do not have significantly more chess-playing experience
than non-experts. Rather, a higher percentage of the experience of experts is spent in
the systematic practice of various facets of the game. Non-experts tend to spend a
higher proportion of their time in games against similarly-skilled opponents. This
experience neither exposes the learner to the moves of experts, nor does it provide time
for a careful review of moves, exploration of alternate lines, etc. In the Charness work,
the correlation between solitary practice and chess ratings is almost twice as high as the
correlation between practice with others and ratings. This is because solitary practice
with chess books allows learners to obtain chess knowledge in context. Instead of
focusing on the moves of an opponent, learners encounteragain and againthose
meaningful configurations of pieces that appear in the games of experts
Because of this, chess students can create and play through almost any challenging
situation imaginable, drawing upon the accumulated wisdom of experts. Trading
possesses no such database. Trading books, unlike chess texts, are not annotated
compilations of the trading decisions of objectively rated experts. One cannot use trading
books to recreate trading sessions or to systematically explore trading decisions and
their alternatives.As a result, traders tend to spend little time in the systematic practice
that is the single greatest predictor of chess expertise.REMEMBER...In every
performance field, the development and maintenance of expertise requires a high ratio
of time spent in practice relative to time spent in actual performance.Athletes spend far
more time working out, practicing, and scrimmaging than actually playing in competitive
events.Only significant time spent in absorbing winning and losing chess enables players
to internalize the patterns of play that distinguish experts from non-experts. The trader
who spends more time to learn,observe and practice..definitely is superior.The expert
trader needs to be able to review and re-experience markets and systematically
trader needs to be able to review and re-experience markets and systematically

rehearse facets of trading performance: entering, managing, and exiting positions.Think
of each trading session as a chess game, and each game as a contest between two
expert players named Bull and Bear. Every short-term swing in the market is a move
by Bull or Bear that ultimately leads either to a victory for one of them or a draw. In
tracking the moves of Bull and Bear, we can pause the match at any point and observe
how each player exploits the weak moves of the other. With the aid of an electronic
database that collates similar trading sessions, we can even explore how alternate
moves by each side produce different outcomes. Moreover, we can play and replay the
games (and their similar variants), seeing if our simulated trading decisions accurately
reflect our reading of the strengths and weaknesses of the players positions.
How could we practice this?Programs that allow users to save and replay tick data are
especially valuable, as this creates a library of trading sessions akin to the collections of
chess games found in books... general rules and advice do not turn chess novices into
experts, and there is no reason to believe they will advance the performance curve for
traders. Knowledge and practiceand especially the direct experience of knowledge-inpracticeare the keys to the acquisition of expertise.so now we know why most socalled
traders fail.. they have failed to structure their learning to facilitate expertise.
they fail to put systematic work into performance....HENCE LEARN DYNAMIC TRADING
CONCEPT..AND IMPLEMENT IT.
u have played enough chess trap ..opponent understand your original intention later...so
u win by winning in thinking...planning..better than in higher time frame.
only idea to play to make money...wherever u buy u have to sell higher.
so when we buy ...hoping now it shall move up.suppose i play 10min. chess against u
[ur time limit 1hr]...still i shall win..as i have practiced it more than 6yr....so amateur
shall lose unless unless ..within 1st ten of a state..with rating higher than 2200.same
case in trade...i novice must lose against good pro SS ...as i fumble before entry...where
as u know actual move ....
bookish idea has given clearly by dr elder.BUT I BELIEVE ALL BIG MOVE MUST START
WITH SMALL ONE.....AFTER X...3-5% VALUE IT HAS SOME TENDENCY TO
CONTINUE...MANY A FAIL...THATS RANDOM MOVE...
so predictive resistance is a profit booking idea for support buyer...and x pt is nothing
but oppurtunity for break out player..
as a pro since u play both ...u know ...i am right...
however monumental works done by j m hurst........
also at www.ino.com....regarding which time frame to choose....for formless trading
Q.'when somebody goes against the trend on Daily charts, ie let us say the trend is up,
and you sell, will it not be a blunder? Remember, you are initiating a trade in the wrong
direction in the first place and then you hope to cover!?
ANSWER 'on purity basis against primary wave..intermediate term ..short move occurs
which utilise wisely by pro like u.so the person knows bothside of story...when to
feed ...when to ride.SIGNAL MUST LITTLE DIFFICULT TO EMPLOY...HOWEVER..those
who have seen enough[by staying in mumbai..nearby sea and financial capital can react
quickly enough to earn..
for fool like us ..its a losing game...winning little,lose more...out of frustation missing the
big oppurtunity.
basis of profit is how many fools r after u...the story of catching bear before it catches
u..suddenly gun found locked...its ur turn to run...hoping u run faster...and bear catch ur
friend who is not so expert in flying away...i see this analogy on regular basis on
tv...telling to HOLD..BY SUITED BOOTED PRO...SO THAT THEY CAN GET OUT...OR
SHORT WELL...

THE PROBABLE PT WHERE IT CAN FORM...
READY WITH MONEY TO TAKE POSITION..
ALTERNATE SCENARIO...[AS SUGGESTED BY GREAT CV]...KEEP EYE..JOIN WHERE AND
WHEN BIG WAVE IS FORMING...OTHERWISE SIT IDLE.
note: on a trade basically u r trading an openion [bullish or bearish] with
money......always ready to be wrong[being humbled by market]and occasionally u shall
be correct...but when right bet big,..BIG ENOUGH to run your family expediture on a
single trade. price confirmation is the only condition for holding a trade.
MENTORING
04 July 2015
12:11 PM
it is a process by which a more skilled /experienced person teaches/encourages/counsels

a less skilled /experienced one for promoting latters professional and personal
development in a friendly environment.
1]first understand what is going on
2]discussion is the method
3]relevency
4]learning a job/skill development
5]ready to change but how?
mission and strategic statement ....aim....strategy..to reach it.
strive for excellent concept
6] concept of VALUING.
.................
MENTEE'S AIM: SUPPORTIVE SELF DEVELOPMENT
relation depends on degree of trust and mutual regard
MENTOR HELPS TO MENTEE TO REALISE HIS POTENTIAL[ ACTUAL]
first aspire...then aspire to ACHIEVEMENT
PLAN:
GET A WHOLE PICTURE AND LEARNING ATTITUDE[ i know little , i must work hard to
learn & change myself]
....................
IDENTIFY MENTOR[confidene build up measure]
1] who shall take interest in my welfare and development
2] can he be role model?
3] can he be helpful to uncover my talent or ability, resolve difficult situation
4] aim to acquire new vision.
...........
some concept r useful
........................
concept of a manager....suppose to manage the situation both man and material to the
best of interest of organisation & situation
...
discussion type..open and close......
open ...ready to discuss anything
close..ready to discuss to sp. related topic ..as agreed
AFTER LEARNING MENTEE gets a new vision what is possible
then practice to apply
benefit to a mentor
.......................
something monitorily....but actually of trust/more fulfilled ..concept of purposeful
.....................
COACHING...SP. TIGHT FOCUSSED GOAL
TRAINING.......A REPEATATIVE CONCERN TO FOLLOW AFTER UNDERSTANDING....TO
DEVELOP SKILL
.....................
APPRAISAL......ITS A PAST OF FORMAL SYSTEM/INDIVIDUAL..TO EXPRESS ONE'S
STRENGTH AND WEAKNESS, MAY BE PERFORMANCE RELATED ,TO PROMOTE
OPPURTUNITY[ if wrong penalty]
it is also knowing 'matter of fact' ....regarding ones +/- pt
to improve performance
....................
notes taking is a good way to learn.......
progress and development
.....................................
step 1: getting started ................talk to other mentor/ talk to who has gone through it
reflect upon 'own experiment'
reflect upon 'own experiment'

step2:relevent job relaterd experience and skill[u have]
. interpersonel skill to learn and to deliver
a DESIRE ...
AN OPEN MIND FLEXIBLE ATTITUDE
..RECOGNISATION OF WHAT U WANT TO IMPROVE
..TIME AND WILLINGNESS TO CONTINUE
...DEVELOPMENT OF U VS. DEVELOPMENT OF OTHERS
..VALUE OF EXPERIENCE AND COOPERATION
.......................
STEP 3] AREAS OF DEVELOPMENT.
........A] UNDERRSTAND SYSTEM [MARKET]..HOW IT WORK
B] HOW CAN I BE FIT THERE
C]ACQUIRE OPEN FLEXIBLE ATTITUDE TO LEARNING/GOING THROUGH DIFFERENT
EXPERIENCE
D] UNDERSTAND DIFFERENT AND CONFLICTING IDEAS/ SITUATIONS
E] BE AWARE OF VESTED INTEREST
F] OVERCOME PERSONAL SETBACK HOW TO WIN OVER OBSTACLE
G]ACQUIRING SP SKILL
H]GAINING OF KNOWLEDGE AND CHECKING ITS RELEVENCY
I] PREPARE YOURSELF AS EXPERT[EXPERTISE IN ANYTHING]
J]ADJUST TO CHANGE
K] UNDERSTANDING VALUE IN THE CONTEXT OF SITUATION ...[VARIABLE TIMEFRAME
BY VARIOUS ONLOOKER...IN SHARE MARKET]
SOME GROUND RULE AND A MODEL
.................................................
1]ALWAYS ASSESS FIRST
2]A SCHEDULE TO WORK
3] A 'GROUND' TO WORK[ON WHICH] ...AND WHICH NEEDS FURTHER ATTENTION
4] RELATIONSHIP STUDY FOR EFFECTIVENESS.....ENHANCE ONES
KNOWLEDGE ....UNDERSTAND FILTRATION IN LEARNING/MATURING
.........FEEDBACK LOOP CHECK
..................I PROPOSE A 3 STEP MODEL
.................................................. ...........
1]EXPLORATION OF NEW IDEA
2]NEW UNDERSTANDING
3] PLANING UR ACTION
...........
this model pt i expand later
first step ...exploration of new idea
................................................
clarify what to learn
.............................
create a discussion mode friendly enough to encourage further exploration
.................................
be patient
...............
realise with time ...own answer..[resist temptation to tell others]
second step...new understanding
................................................
1.LISTEN....yet check and check any new idea if right
2. ask open question and discussion pl.
3.recognise individual strength/weakness
4.ESTABLISH PRIORITY
5. SHARE EXPERIENCE..[CASE STUDY METHOD]
6 BE FLEXIBLE..LEARN TO SEE FROM BACK..AS WELL AS FROM FUTURE
.......ENCOURAGE TO 'SEE' DIFFERENTLY...BUT QUICKLY LEARN WHAT IS
RELEVENT[WHAT ONLY CAN HAPPEN..SO THAT IRRELEVENT LOOSE PRIORITY]
7.REMEMBER AN WORD 'COMFORT'...LEARN AT OWN PACE
8. KEY WORD IS CONSOLIDATION...REFLECT BACK AND CLARIFY
9.NEED...GOAL AND ASPIRATION........WHAT IS TO LEARN FURTHER?
...........
NOTE..NEVER ALLOW POOR UNDERSTANDING...TAKE UR TIME...BUT UNDERSTAND
NOTE..NEVER ALLOW POOR UNDERSTANDING...TAKE UR TIME...BUT UNDERSTAND

THOROUGHLY....AS ACTION OUT OF WRONG/POOR UNDERSTANDING...SHALL BE VERY
COSTLY LATER
.........................
Third Step...action Plan
.........................................
1.examine Alternate Action And Its Consequence [risk/reward Analysis]
2.choose One Or Two Proper Action Plan...monitor Progress Of Event[price].....evaluate
Outcome[later..in Cool Brain]
3. Commitment Factor....[expect Many A Time U R Wrong]
4.evaluation Of Oppurtunity....believe/faith Factor How Far Helpful In This Particular
Occation
5.learning Cycle...think Of Experience.....what U Can Generalise From Experience? Apply
It........experience Loop
hope all those reading it , find enjoyable and thought provoking.....
but first question is why u need a mentor?.
..........................................
the answer is as mentee needs a support /trust...stress relieve mechanism
as trading is always an uncertain event....
who can be mentor?
....................
who has knowledge , experience and skill in related field............who has vast
experience of facing difficulty and yet to run smoothly[what to do now].ie. calibre to face
stress
HE MUST HAVE SKILL ...TO BE OPENMIND.+IVE OUTLOOK..GOOD LISTENER...to think
and feel how others plan to behave..
.................
hence check the fitting mentor and mentee...a concept i find useful ...
'pentagonal peg and 5sided hole'....a basic job fitting criteria used by professional
interview board
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Being A Mentee
........................
Accept Challenge ...ready To Learn Willingly And Highly Committed
...believe In Balanced Risk Approach...must Believe Learning Is A Continous
Process....achieving Progress Is Always Possible With Time
.............................
Expectation Of Mentee
...............
1.proper Guidance Yet Challenge To Perform
2. Enjoy Friendship And Support
3. Learn From Example
4. Learn From Mistake
5.take Wise Counsel/know To Listen
6. Self Aware
7.share Critical Knowledge
......................................
Wrong Mentee
..................
.believe In Gossip[enjoy Loose Talk]
..expect Immidiate Soln[answer To Problem..not Capable To Handle]
................................................
Conclusion
....................
A Mentee Require[need]........
1.a Critical Friend
2. A Confidant[some Sort Of Emotional Support]
3. A Source Of Knowledge
..................................
Matching Of Mentor And Mentee...
Matching Of Mentor And Mentee...

Learning And Development....do I Need Training?
............................
Time Management Issue [which I Dont Write Considering Boring To Readers]
.............recording Of What I Learn
..............priority Issue...seriousness
.................................................. ..
Tips For Learning To Trade
.........................................
1.avoid Being Judgemental.
2. Dont Expect To Get All Answer...be Clear About Expectation Vs. Bourdary[concept Of
Out Of Bounds For U]
3.stand Back From Issue[over Anxiety]..and See From Back [long Term View]
4.accept Challenge To Learn
5. Always Take A +ive View ...have Faith
6. Discuss Issue Openly And Monitor Own Progress.
.................................................. ..................................
market behaves as its suppose to behave. in india i find very poor knowledge on
trading...particularly to teach trading in real sense...hence i try to do a school concept
and later college one...as i am amateur...college course i can not guide nor write...hope
some good professional soul help shall come
waiting for a reply
collectively some great heart may also contribute...hey u have to give time -effort-for a
cause.
ok i am starting now.
school is of upto class 12...10 +2
...classes can be not a year in a sense,...may be 3month to someone...may be 3 yr to
other
class 1,2......10,...may be some of which u already know
...only structure wise differently represented
.................................................. ......................
individual ...student who is ready to learn
teacher...trade mentor.
they r many...successful trader...learned from hard knock from market...like me and still
learning...bookidea of some great trader
library...ur soft copy and hard copy
study and learning at own pace.
exam centre...market
pass and grade...money earning
performance evolution..trade journal
requirement : some other book ,reference, software, printing m/c.other dealer
most imp drawback ...time availability and hard work
plus pt/:crystal clear view
...............................
year...does not mean a course can not be learned within a month.
class 1
.............
what is stock market....financial system of a country....economy,business environment
of a country,moneyflow in a country
stability ..in political sense,..war ...flood/earthquake...acts of god...how behavior shown
in past
class 2
............
why one is trading in market?
stock trading system
f&o
...
loss aversion.
willingness to learn and test idea.....where i stand.
class3
...........
my plus pt.....my minus pt
how i become a trader?

what r the quality of a successful trader?
...........which i want to......how i shall myself to achieve it.....discipline and behavior
modification.
class 4
...........
order entry system,market order..stop order..limit order
margin
money management
probability of a direction
low risk trade.
concept of leverage
stop concept
derisk model
scan concept
.............................
class 5
..........
market condition,trade entry condition
style of trade,matching of trade style and money earning oppurtunity
importance of progressive stop ie. winning trade must not go to trade loss...worst case it
is no profit no loss
class 6
.........
loss due to miss , so miss factor must be considered in the part of trade...ie. efficiency of
execution
all bad situation and phenomena ...how to react in each of them
so confusion of deer..paralysis by shock ...is solved....so u can act now
NO MORE WHAT SHALL I DO NOW...AS U KNOW WHAT HAS TO BE DONE
class 7
...........
oppurtunity search..utilise oppurtunity[after grading it]...and encash as per situation
availability.
1st case...low risk trade
2nd case...short term trend trade
3rd case... small amount leverage high risk break out trade
last case... random trade
....
exit system
3different case...
1.for swing trade
2. for position trade
3.random trade
...remember all 3 r different.
class8
.........
fundamental of a stock
why a stock shall move up
why a sector will move up
relation of a business and profit
earning potential..and growth
what starts a business fullmoon ...glowing...now slow decay
...prepare this for every stock in ur list
class9
...........
technical analysis....
gap strategy
reversal strategy...oscillator play plan,divergence strategy
channel trade concept
channel trade concept

trend trade concept..ma,aroon...strength of a trend, directional biasness or continuation
class 10
...........
learning of software for trading
scanning system
risk reward analysis
advanced money management
which stock not to trade even after signal...and when not to trade
volatility tool analysis
volume price analysis
since u read so much now time to give exam....mind it its board exam ...check how
much u can apply in real market....time 6month...money 10% increase on a fixed
amount,say 2lakh..
so u pass..
all trade result to be analysed why taken and in writing...both entry and exit reason and
of position size..why not more or less?
how far luck helped u in that trade
how far trend strength is utilised?
do u believe in reversal...while holding trade
after hr analysis of ur mind on actual trade
.............................
so all trade r analized...balance after 6month suggest 10% increament in a/c..u pass
.................................................. ............................................
if failed, reason of failure....and in which zone
reread entire course and amalgamation
so u r in class xi....now
decide to study further in school[u may prefer to..go to earn from market....still i
suggest to study further ...knowledge helps
11thyear
...........
system design....where i have done better than other sucessful traders?
...prediction on market
...execution skill
...implementation of system[whatever u think]
...stoploss following...both protective and sar style
...mind control
note..here system design means tuning of system for actual profitability again to score
high[earn more]
class12
..........
which type of trade u r master??
alternatives r......
a. investment...contrarian call
b. investment by value approach
c.day trade
d. short term trade.....swing style momentum
e. swing style...reversal
f. position trade...support buy ...consolidation
g.position trade ..break out
...............
now only one out of this 7....to be choosen to trade/invest in life ....others r simply to be
erase out[forget]...the best one..u have now,...to conquer world
......create a boundary .........
a discipline..discipline..discipline[here i fail ]
.........only on that condition following /ocurring in market...i shall trade...otherwise no...
and a trade shall be taken...if it occurs...without fault
...this is my class 12..exam..light to see otherside of world.................tuning and more
return ...compare good with better trader...logically improve further..
...i try to learn from market...
...i try to learn from market...
Personal View
04 July 2015
12:13 PM
this is my personal view...i find useful...loose links r assemled to give some idea....
...........
1. MARKET...I VIEW IT WAR ARENA..RUTHLESS FIGHTER CAN ONLY SURVIVE.
MY SKILL...WEAPON...BROAD BASE KNOWLEDGE + ANALYSIS POWER
...MY WEAK PT..POOR EXECUTION SKILL & EMOTIONAL DOLDDRUM
SOLN..USE COMPUTER BASED SIGNAL
MERCYLESS STOP
WATCH MARKET BEFORE ENTRY.
2. CONDITION OF MARKET
.....................................
UP...DOWN ...VOLATILE...3DIFFERENT STRATEGIC PLAN ..THIS CASES...
4TH CASE IS UNPREDICTABLE...HERE I MUST NOT PARTICIPATE...WAIT AND WATCH
3. MONEYFLOW CONCEPT.......
FII AND MF...WHAT THEY R DOING...AFTERALL THEY R SMART MONEY
UNDERSTAND RISK INHERENT IN TRADING
GLOBAL VILLAGE CONCEPT..AND GLOBAL FUND PERSPECTIVE ABOUT INDIA
4. INDIA CONCEPT
........................
FINANCE MINISTRY...RBI POLICY...BUDGETARY ALLOCATION...WHERE AND WHAT GOVT...OFFICIALLY VS. ACTUALLY ENCOURAGING[NOT LIP SERVICE]
INTEREST RATE...AND ITS SIMPLE IMPLICATION..REFLECTION OF IT IN STOCK MARKET
5.QUARTERLY RESULT STUDY
..............................
GROWTH UP ..PROFITABILITY AND VISION OF MANAGEMENT
6...SECTOR CONCEPT STUDY...VERY USEFUL..
THOSE WHO KNOW METASTOCK...CAN STUDY RELATIVE SECTOR STRENGTH..TOOL TO EARN WITH EDGE...PARTICULARLY SECTOR LAGGARD R NOT TO
BE TRADED FOR SHORT TERM
.....WHILE LONG TIME INVESTMENT STYLE 9MONTH...HOLDING...THEY R WORTH TO BUY.
U SEE THE SAME SECTOR BAD FOR SHORT TERM IS GOOD FOR LONG..PROVIDED FUNDAMENTAL NOT BIG CHANGE...FOR MOMENTUM PLAYER ITS STRICT
NONO
ON THE CONTRARY...SHORT TERM MOMENTUM PLAYER...USE THIS REL STRENGTH COMPARING HOW BETTER STOCK IS FAIRING RELATIVE TO NIFTY.
another imp. list i find interlink of stock...sector
i find..vehicle..auto ancilliary..bearing
construction..cement/steel price..profitability of builder company[i do this activity,and rarely i good correct...market humbles me]
tourism;hotel..current laggard
computer growth..internet..peripherial sale...computer business model
pharma''..medicine research..hope to click
commodity based stock....with commodity price move up..profitability also..so shall stock price...here again i am a fool, metastock..and viratechindia..good
chart..rarely predictable.
.................................................. .........................
7. lists of good company...what i know...what they do...on what condition company profitability move up...its a key arsenal
company based risk...business risk of a company...those who dont know...use www.equitymaster.com
check company's and industry's business model
8.CONTRARIAN THOUGHT PROCESS...MORE A GUT FEEL...A SENSE...IT REQD LOT OF EXPERIENCE TO DEVELOP IT
9PSYCHOLOGICAL FACTOR ON MARKET
.................................................. ...
MARKET HAS TRENDINESS AND ALSO UNPREDICTABILITY ELEMENT. NEWS AFFECT MARKET[UNKNOWN EVENT]........MAJORITY TRY TO GUESS WHAT
MAJORITY MAY DO. I TAKE RISK OF PREDICTION BY PUTTING MONEY BUT READY TO RETREAT IF WRONG...WHICH HAPPENS MORE...AND PUT MORE
MONEY WHEN RIGHT...[AND GET A GOOD KICK NOW FROM MARKET..WITH 2000SIZE OF ONGC, DIRECTIONAL BIAS..950..BREAK OUT...A GREAT BULL
TRAP...A RETIRE HURT CONDITION FOR ME...MY 6TRADING PROFIT..TAKEN BY SINGLE LOSS]
............................
I HAVE TO WORK HARD AGAIN TO RECHECK MY PREDICTIVE MODEL....CHANCE OF BEING WRONG HAS TO BE EVALUATED
........COMPANY RESULT.....20
MACRO ECONOMY 20
MONEY FLOW 20
SECTOR BUSINESS/MONOPOLY ..20
OTHER FACTOR/RANDOM/OPERATORS GAME...20
..................TOTAL 100
CHANCE OF BEING WRONG....40%...WHAT TO DO IF WRONG...IMPLEMENTATION MUST
...............NOW THE TOUGHEST PART' I..' FACTOR...EMOTIONAL DECISION.BEFORE TAKING AN ENTRY I HAVE AN OPENION...BUT PRICE MUST CONFIRM
MY OPENION THEN ONLY I SHALL BUY....EVEN AFTER BUY ...WHILE HOLDING..IF ITS NOT BEHAVING AS EXPECTED...I MUST USE [TIME STOP]...BOOK
LOSS AND THROW AWAY OPENION...
THIS ESSENCE OF TRADING I FIND TOUGHEST TO IMPLEMENT...WHILE CONVERTING FROM INVESTOR TO A TRADER.
......SO I DO A LITTLE MODIFICATION...REENTRY AT LOWER PRICE[AN IMP SUPPORT LEVEL AND AGAIN TEST PRICE]
Some Finer Points

05 July 2015
10:37 AM
.....................
bill checking is must...on sevaral occation yearly 2/3...i find discrepency....as i find trading stressful...i must try level based to minimise it.FAMILY, OFFICE AND
MUST BE GIVEN DUE PRIORITY since i pick fundamental scanlist..hence ta is must for my buy and sell.
if psychological set up is bullish i do aggressive entry...and paid dearly many a times...
PATIENCE AND THOUGHTFULLNESS...EASIER TO SAY.....SO CONTINGENCY PLAN FOR WORST CASE SCENARIO....IS THE SURVIVAL PLAN
..........................
Find Support Based Buy In Normal Market...and Momentum Based Pullback Buy In Bullish Market Useful Entry Technique....ma X..identifying Pattern...r My Edge
......stop Loss ...execution Still Lot To Learn
Next Is What Maxm Help I Can Get From Others....and Leverage Skill
....another Typical Thing...i See Tv To Get Result Flash/news...never For Openion...hence I Alone Responsible For My Failure'....
n 9th august'2007...its a copy book case of down day...market open gap up...within 2 hr heavy sell coming...see nifty future intraday...then short is only
way...[get out first...if u r firm believer of bull]....ftse 14hr...opening and moving down...bad days ahead[atleast for tommorrow]..so those who short on good
low risk trade..get an oppurtunity of gap down today
.........ideal upday is just opposite...from opening down quick recovery comes...and then come short covering...close is >50 up nifty.....it has seen....many a time
in april..july this year
....idea is trade with bias...directional trade . bias from price...and money flow
-------------------------------------------------some scan list...which has shown higher strength...rsc type scanner.
if market move up...which one to move faster up...just compare...they r successful
....this is a good trade style to earn in this indian market.
on metastock based scanner...work on rsc...1week..up with base of nifty..u get the scan list
..hints..go to www.meta-formula.com
....hitendra vasudev...of stockmechanics.com recently advocating this technique.
also our www.tradersedgeindia.com publish a list regularly to trade on it...
it basically ...showing strength ...buy high ..sell higher...trade technique...with good +expectency...a short term trade style
...but unsuitable for timid heart.,support buyer
recent comment by saint...many a system exists...but u have to find what suits u
...is most appropriate
my recent talk with cv...proves to me why he is a gifted day trader...a total dedication..master in his craft....and Zero subjectivity.......high accuracy and
implementation technque...derisking in his way..a legendary day trader.
note:never try to copycat him...u have to a highly rated programmer first,an excellent system designer then for a couple of yr......later digest volatility..
to learn better trading joe ross idea r important......also famed writer dr. elder.
..................yes define a timeframe first...which one u like to trade...to derisk ie. set up condition...
and in which u sense risk..ur time to react..ie when u understand its time...i am right,now i am wrong.
tripple screen is a good idea to follow.
but stick only to a single timeframe...let me explain.
u think next week market shall move up?
why....what shall the rationality....the buy is coming.
so short term biasness is up.
now go to eod...shift to weekly data...very -/also monthly..negative.
so at every rise stiff resistance shall be faced.
now who shall win....bull or bear...i dont know....but creeping commitment i may start.
why because my defined bottom ...14300 is approaching
where i see top a linear top...16500 can possible .
so this r biasness...it means i shall take to good position on some predefined stock.
and then watch......at some particular price level 15700...how market shall behave...if i smell rat ,get out...coursey hints given by ss[sunil]....+ i have my exit
criteria.
but if on rare occasion it easily....x 15800.........i invest ......as sky may look clearer to me.
.........
why not daytrade then ?
...................................
because it takes my time...my time to earn,.....to ask or analyse easy...without in front of screen its difficult to trade.....more over shortterm volatility ...giving
conflicting signal.
................
why not swing trade then?
my accuracy is poor...no amount of knowlege...equity curve suggests poor return.
......
THATS WHY I AM RETURNING TO MY STRONG ZONE....POSITION TRADE.
I KNOW I HAVE OCCATIONAL DRAWDOWN...BUT MONEY MANAGEMENT GIVES BETTER RETURN.
SUPPORT BUY...BREAK OUT WITH MOMENTUM ...BOTH IS EASIER TO SEE.
MOST IMPORTANTLY I KNOW WHAT I AM DOING.
........
WILLIAM'S ACCUMULATION/DISTRIBUTION...AND MONEY FLOW...CLEARLY SHOW ON WEEKLY CHART WHAT MAY HAPPEN...
SO MY WEEKLY HOLIDAY CUT OF.....FOR A STUDENT OF MARKET.
......EXPERIMENT ON STRENGTH BY RSC TO BE SEEN....ALSO SWING PT @DYNAMIC TRADING SOFTWARE.
he always know what he is doing..........what market may do now
----------------------------------------------------------------------Resources
..................
Beyond Technical Analysis (Tushar S. Chande, PHD}
Bill Williams - Lit (New Trading Dimensions}
Book - Tom Williams Volume Spread Analysis
DYNAMIC TRADER GUIDE
Encyclopedia of Trading Strategies
Kuhn - Marder Intermediate-Term Momentum Trading Course
Momentum Investing By Ken Wolff
OmniTrader (Systems Manual)
Steve Nison Japanesse Candlestick Charting Techniques
The Daytraders Bible by Richard D. Wyckofff
The Four Biggest Mistakes in Futures Trading by Jay Kaeppel Book
Trading as a business
Willam J O'Neils How to Make Money in Stocks
.............................................
hope this will help in journey path of a discreationary trader
...........................
this every book has some uniqueness in it.for simplicity i write 2lines.
Beyond Technical Analysis (Tushar S. Chande, PHD}...a bible to understand system

Bill Williams - Lit (New Trading Dimensions}... it gives new light on market and randomness
Book - Tom Williams Volume Spread Analysis..read it..u see..use of volume ..why?
DYNAMIC TRADER GUIDE ..understand judgement ..price time analysis
Encyclopedia of Trading Strategies ..idea what may suit u
Kuhn - Marder Intermediate-Term Momentum Trading Course ..a technique to trade
Momentum Investing By Ken Wolff ...same in depth..key theme of modern trade
OmniTrader (Systems Manual) ...background of comp.based trade with low risk
Steve Nison Japanesse Candlestick Charting Techniques ..a must
The Daytraders Bible by Richard D. Wyckofff ..how a real trader succeed in market
The Four Biggest Mistakes in Futures Trading by Jay Kaeppel Book ..teaches to keep a foot on brake always
Trading as a business ..a basic but imp concept..for all dreamer
Willam J O'Neils How to Make Money in Stocks ..why buy high,sell higher works..the useful concept of fundamental,stop,cup and handle
-----------------------------------------------------1. be an observer first
2. learn from own mistake and other mistake......imprint this in mind
3.correct knowledge and behavior modification.
4. preparation yourself thoroughly for entry and exit.....with some superlative idea....what goes up must come down[mean reversion]...it takes time to rise but
fall rate is quicker....
clock ..stands for timing....diary ..to write opinion and mistake study
5. behavior modification.....this unlearning process is key.......what works for u.
correct behave is....what to do under unexpected event......not emotional reaction.
6.share market is a loser's game....u must know to survive first.then learn probabilistic approach on right trade vs. learning trade[assuming loss]............add
position to winner immidiately...and cut loser earliest whole @ a chop ..
7.design everything to all unforseen scenario....so that u can act while they occur..as its a journey on unknown.....be ready where to exit and when....on what
condition........understand...rush problem of public.....in fear and in greed...always act before them.........must get out @ redoubtable top..........same
way.....wait for a minor confirmation @ intermediate bottom...then enter.but act swiftly
8. always say.....i am only responsible for my behavior modification,proper observation to trade and correct reaction[execute] to market.i must adapt with
market...not vice versa..otherwise sit idle...... i must understand bull trap...and check for it
i must think before i act/i execute a trade......[punch list]
9.sometimes i must look for reverse image[in chess terms look from otherside of board].....and plan for reversing the trade.[this is the toughest psychological
hurdle i find to overcome]
10.Initially i should take a small position.........must be swift to liquidate that one if sense....
market proves u wrong.
11. always use own signal only for entry..........but use market guidance to continue/exit/addition ......or even reverse position.
this slow behavior modification is to be practiced unless it became ur 2nd nature......this is right way to trade for intermediate term.
12.when u hold a position ,within a reasonable time [as per ur chosen validity period]....it is not confirming to prove correct........better get out.
.........................
this is for intermediate term future trade
------------------------------------------------------------------let me demystify a software .....adget for beginner
.................................................. ...................
software helps to enter/exit a trade based on some propriety tools.
1.elliot wave.......4level entry......defining presently..wave3.......so another uplevel exist
2.oscillator...ma x trend continuation....its divergence study
3. pti.....validity of a trade.........its a probabilistic tool.
4.displaced ma.....confirmation of a direction.......actual entry
regression channel .....another confirmation
5.fib.....a gen concept......retracement/profit target pt
6.xtl....basic price pattern biasedness
mob......support/resistance tool
ellipse ..when and where.....high probability of correction completing
...................
validity condition very simple ......implementable.
.for all trade learners,......read levermore and gann.....u shall learn speculation....
more imp....when not to speculate
---------------------------------------------------------------------those who have read......livermore and gann......can read joe ross....and way to trade'...by piper.
after proper swot[strength,weakness,oppurtunity,threat]
....................
hey if u r old guy like me........keep a fundamental hand.........
.'after i watch a chart.....and can not understand....what state it is...i should not trade...what is the value of studying ta then?price reflects everything.......
YES SEE THE CHART....SLEEP WITH IT
.......next learn software........here most of us lagging
ur idea can be implementable by trade signal.......not vice versa
concept of signal/entry /exit automised.
....personally here i defer....as i believe trend is random event
the software......one should take sufficient time to learn
.......learn scanner........% of accuracy......here computer help.
...........
now experiment.....which style and time frame u trade better........ur actual result.
stick to it.......with a defined stock list.......
......thats all my friend
btw.....avoid trap of call giver
-----------------------------------------------------------------------
Trade preparation.......psychology
05 July 2015
10:39 AM
its the toughest aspect of trading......not because of trade..but due to wrong understanding
....trading is not that tough ......if u have learned right step......but next to impossible....if u r av joe.....in life ..and follow crowd mentality....whether live in
urban/protected trade atmosphere.
.....let me clarify.
remember.....dancer's story ...of telegraph trade......he is cut off......so he gets what he wants to know.........and when he comes near by......lost all his
touches.....a rooky trader
.....again get out......atleast his break out style and quick loss booking and reentry has good follower.......in golden age.....in upcoming bullmarket
.................
so fact remains.......u have to independent........trial and tested method to fit u.....which must have +ive expectency
.....for day trading....i personally feel its easy......as u should trade based on software[most suicidal nature......you....is nomore available to damage u......
still u think u r the genius , know better than .....then go give patent of programming.....earn by selling it.
best of best......use some signal.....a biased directional play.....a validity of continuation...in big volume.....and earn by accuracy.
to reach that level trader practices day in day out .....system implementation/back testing
and..simple mm........definitely execution is highest
only part of psychology is ......stress within limit ......no more
..............
but when we move from day to shortterm.....we have a dilemma.....rationality of who can think/decide better.......computer or i.......with eod /weekly
signal....news flow money flow.....derisking.....and pet indicator......we create a hotchpotch.....dream with greed....
take a trade....if right....happy , superior ego.......if wrong .....frustration[blame game]....
forgetting....result is a probabilistic event..........a good trader knows this....so after trade handle trade better by watching it.......getting out with small
loss/run the profit one....
and a time[patience]..to resolve conflict on market...to be watched for,
.....to understand this......greed /fear/hope....must be replaced with....risk analysis and mm
if possible......chance of being right /wrong......here those who like us study probability/statistics......has some edge......but expectation trap......is quicksand
trouble in real scenario.
......so u vs. ur knowledge vs software vs indicator trap vs news trap vs ur decisionmaking skill............a psychological whirlpool is created.
here ta comes..helpful.....diary is a good tool.....case basis.....from past analysis study..how many times why u r right......how better u can fight on uncertain
terms
so u understand when u change from day to short term ......impact on psychological front
......now suppose u believe in core trading......
1] break out style
2] trend style ..continuation concept
........psychologically from study of past.......on what condition they have higher probability
......this likely event scenario......is mostly misunderstood by normal trader ,forget common mass....
luckily.....saint/traderji....try level best to teach core trading
.....the ground rule ta based/pattern .....must be followed with discipline
...................
3rd concept......reversal pt intermediate pivot .....i personally think ad get may help...also other software like dt/mtpredictor has same principle.......
basic is at 4....u buy......at 5 u sale.....but......subjectivity....part one must have that much experience to handle reversal/contrarian thought process
candle revesal @bottom and top ....definitely helpful.
......
but core of trading.......how much more u play......when u r right......a skill .....not yet to be taught.......as its self realisation[may be a mentor may help]
sucessful traders has 2 distinctive superiority

05 July 2015
10:40 AM
1]a particular time frame in which he shall play......and a definite style

2]predictive mode or reactive mode
.......
first thing......intraday......day.......short term.......intermediate......r known to everyone
also the style......break out.....pull back ...short at top.....bottom fishing....continuation with momentum.......r spl mention not reqd.......as already
systemised.....many a trader play
.....with definite.....derisk model which suits him
so timeframe.....style....derisk......this 3......creates a set....now compatibility
.....the word successful.......clearly tells........its already done....nofurther experiment pl
.......................................
2] predictive mode vs. reactive.......
elliot or wave.....count....it suggests........but price confirmation must.....otherwise...its russian roulette
in reactive case.....trader develops.......a mental state.....in which he follows....the event of market ....direction and st rength[trade what u see]
....all whipsaws r not to be attended........problem is nobody knows change is normally abrupt
....so some theory develops to watch one higher/one lower time frame.
..still randomness is a governing factor
......only with exceptional mental stability[example cv].....a person can be flexible like clay
....can react most of the time RIGHT
......for others.....a jone has to be created......on certain conditional fulfilment accept a trade......otherwise....REJECT THE OPPURTUNITY[considering
uncertainty]
.....THIS ATTUNEMENT I CALL PSYCHOLOGY OF SUCCESSFUL TRADER
stock scanning is a method to learn

05 July 2015
10:40 AM
stock scanning is a method to learn .....as software can help u[time management]
here again programmer r hundred step ahead
use any software.........to the best of its ability
...so now i start study on it......and volatility predictive model
.................................................. ......
amateur vs pro.......we start normally as foolest of them......with an aim to journey to be the best of them......so various level we cross.......with realisation is
our motto.
here....to become prudent ....we must minimise ....cost of learning.....learning by self mistake
the lucky one learns from reading books...and trading others money[fund manager].....so fine tuning is easier......so far they r adaptable,a nondisturbance
atmosphere.......and ready to learn from mistake.it normally takes 3yr to learn ....what he or she is doing..........rational ly on reasoning whether i earn by call
or by tips.....how far market helps me[luck factor].......predictable mode......or a successful reactionary trader.
the concept of ta/fa/psychology........how far his market reading is accurate........game of marketing in this field.
the game of common sense........uncanny ability to sense danger.......as well as oppurtunity
.....is he aim for.
next is execution.......it is the art[learn by practice.].......slippage factor.....missing oppurtunity or to chase price.... confirmation by price/trade volume.......as
well as keeping oneself under control while trading......a rational entry/exit technique......and apply it on case to case ba sis.......or like a robot....mechanical
trade.
third and last thing......@ which time frame ......he or she does better.....with proper temperament........for which one mus t experiment a lot with small
fund.....then compare....which mode best suited him for life......fitting
........another factor......market variable.......prepare for rainy day.....development of knowledge......another continuous evolutionary process.....shall hold him
for long term.
...................
so from where they start.......a college grad[mba].....a theory on business...implementation
money flow + what lures mass.
normally a strong fundaa background......supported by.....technical inquisitive mind/learners attitude......understanding of ta aspect of market produce them a
good trader.
.................................
otherside of story......dealer.....rm.....bm/subbroker....analyst...broker
dealer....entry person who make entry/sit backoffice
rm/bm...have experience of dealer.....now handle them.....intimate.client....to tell oppurtunity/danger....basically to trade generation for his broker
analyst.....have seen all .....a readyencyclopedia on market....can tell what if....but rarely make money out of it....better through.commission/call selling
broker.....trade commission....+ game play....cornering stock.....maintain min risk but arbitrage.......as well as trade trad e on large bulk......low risk
one....with big fall pt...buy and sell at top......believe in strength of inside info.
since they r senior most.......can understand a potential candidate.....both stock and a dealer/rm........to utilise it better.
.................................................. ...
normal aspirant must watch them......follow them.....to take this quality....use money management......+ info game.....with r esponsibility......to earn when
oppurtunity comes.
......otherwise be disciplined......to wait.
to sum up this thread
.................................................. .
1]mentor concept.......exploration of new idea/new understanding /action plan
2]why u need a mentor
3]stop self sabotage........implementation of stop...must
4]school concept to learn trade.....class 12 model
5]where i stand......a personal view given
1. MARKET...I VIEW IT WAR ARENA..RUTHLESS FIGHTER CAN ONLY SURVIVE.
MY SKILL...WEAPON...BROAD BASE KNOWLEDGE + ANALYSIS POWER
...MY WEAK PT..POOR EXECUTION SKILL & EMOTIONAL DOLDDRUM
SOLN..USE COMPUTER BASED SIGNAL
MERCYLESS STOP
WATCH MARKET BEFORE ENTRY.
2. CONDITION OF MARKET
.....................................
UP...DOWN ...VOLATILE...3DIFFERENT STRATEGIC PLAN ..THIS CASES...
3. MONEYFLOW CONCEPT.......
FII AND MF...WHAT THEY R DOING...AFTERALL THEY R SMART MONEY
UNDERSTAND RISK INHERENT IN TRADING
GLOBAL VILLAGE CONCEPT..AND GLOBAL FUND PERSPECTIVE ABOUT INDIA
4. INDIA CONCEPT
........................
FINANCE MINISTRY...RBI POLICY...BUDGETARY ALLOCATION...WHERE AND WHAT GOVT...OFFICIALLY VS. ACTUALLY ENCOURAGING[NOT LIP SERVICE]
INTEREST RATE...AND ITS SIMPLE IMPLICATION..REFLECTION OF IT IN STOCK MARKET
5.QUARTERLY RESULT STUDY
..............................
GROWTH UP ..PROFITABILITY AND VISION OF MANAGEMENT
6...SECTOR CONCEPT STUDY...VERY USEFUL..
THOSE WHO KNOW METASTOCK...CAN STUDY RELATIVE SECTOR STRENGTH..TOOL TO EARN WITH EDGE...PARTICULARLY SECTOR LAGGARD R NOT TO BE
TRADED FOR SHORT TERM
.....WHILE LONG TIME INVESTMENT STYLE 9MONTH...HOLDING...THEY R WORTH TO BUY.
U SEE THE SAME SECTOR BAD FOR SHORT TERM IS GOOD FOR LONG..PROVIDED FUNDAMENTAL NOT BIG CHANGE...FOR MOMENTUM PLAYER ITS STRICT
NONO
ON THE CONTRARY...SHORT TERM MOMENTUM PLAYER...USE THIS REL STRENGTH COMPARING HOW BETTER STOCK IS FAIRING RELATIVE TO NIFTY
another imp. list i find interlink of stock...sector
i find..vehicle..auto ancilliary..bearing
construction..cement/steel price..profitability of builder company[i do this activity,and rarely i good correct...market humb les me]
tourism;hotel..current laggard
computer growth..internet..peripherial sale...computer business model
pharma''..medicine research..hope to click
commodity based stock....with commodity price move up..profitability also..so shall stock price...here again i am a fool, metastock..and viratechindia..good
chart..rarely predictable.
.................................................. .........................
7. lists of good company...what i know...what they do...on what condition company profitability move up...its a key arsenal
company based risk...business risk of a company...those who dont know...use www.equitymaster.com
check company's and industry's business model
8.CONTRARIAN THOUGHT PROCESS...MORE A GUT FEEL...A SENSE...IT REQD LOT OF EXPERIENCE TO DEVELOP IT
9PSYCHOLOGICAL FACTOR ON MARKET
.................................................. ...
.................................................. ...
MAJORITY MAY DO. I TAKE RISK OF PREDICTION BY PUTTING MONEY BUT READY TO RETREAT IF WRONG...WHICH HAPPENS MORE...AND PUT MORE MONEY
WHEN RIGHT...[AND GET A GOOD KICK NOW FROM MARKET..WITH 2000SIZE OF ONGC, DIRECTIONAL BIAS..950..BREAK OUT...A GREAT BULL TRAP...A
RETIRE HURT CONDITION FOR ME...MY 6TRADING PROFIT..TAKEN BY SINGLE LOSS]
............................
I HAVE TO WORK HARD AGAIN TO RECHECK MY PREDICTIVE MODEL....CHANCE OF BEING WRONG HAS TO BE EVALUATED
........COMPANY RESULT.....20
MACRO ECONOMY 20
MONEY FLOW 20
SECTOR BUSINESS/MONOPOLY ..20
OTHER FACTOR/RANDOM/OPERATORS GAME...20
..................TOTAL 100
CHANCE OF BEING WRONG....40%...WHAT TO DO IF WRONG...IMPLEMENTATION MUST
...............NOW THE TOUGHEST PART' I..' FACTOR...EMOTIONAL DECISION.BEFORE TAKING AN ENTRY I HAVE AN OPENION...BUT PRICE MUST CONFIRM MY
OPENION THEN ONLY I SHALL BUY....EVEN AFTER BUY ...WHILE HOLDING..IF ITS NOT BEHAVING AS EXPECTED...I MUST USE [TIME STOP]...BOOK LOSS
AND THROW AWAY OPENION...
THIS ESSENCE OF TRADING I FIND TOUGHEST TO IMPLEMENT...WHILE CONVERTING FROM INVESTOR TO A TRADER.
......SO I DO A LITTLE MODIFICATION...REENTRY AT LOWER PRICE[AN IMP SUPPORT LEVEL AND AGAIN TEST PRICE]
SOME FINER PT
.....................
bill checking is must...on sevaral occation yearly 2/3...i find discrepency....as i find trading stressful...i must try level based to minimise it.FAMILY, OFFICE
AND MUST BE GIVEN DUE PRIORITY since i pick fundamental scanlist..hence ta is must for my buy and sell.
if psychological set up is bullish i do aggressive entry...and paid dearly many a times...
PATIENCE AND THOUGHTFULLNESS...EASIER TO SAY.....SO CONTINGENCY PLAN FOR WORST CASE SCENARIO....IS THE SURVIVAL PLAN
I Find Support Based Buy In Normal Market...and Momentum Based Pullback Buy In Bullish Market Useful Entry Technique....ma X..identifying Pattern...r My
Edge
....another Typical Thing...i See Tv To Get Result Flash/news...never For Openion...hence I Alone Responsible For My Failure' ....
yes define a timeframe first...which one u like to trade...to derisk ie. set up condition...
and in which u sense risk..ur time to react..ie when u understand its time...i am right,now i am wrong.
tripple screen is a good idea to follow.
but stick only to a single timeframe...let me explain.
u think next week market shall move up?
why....what shall the rationality....the buy is coming.
so short term biasness is up.
now go to eod...shift to weekly data...very -/also monthly..negative.
so at every rise stiff resistance shall be faced.
now who shall win....bull or bear...i dont know....but creeping commitment i may start.
why because my defined bottom ...14300 is approaching
where i see top a linear top...16500 can possible .
so this r biasness...it means i shall take to good position on some predefined stock.
and then watch......at some particular price level 15700...how market shall behave...if i smell rat ,get out...coursey hints given by ss[sunil]....+ i have my exit
criteria.
but if on rare occasion it easily....x 15800.........i invest ......as sky may look clearer to me.
.........[published on 11th august,post 38 0f this thread]
WILLIAM'S ACCUMULATION/DISTRIBUTION...AND MONEY FLOW...CLEARLY SHOW ON WEEKLY CHART WHAT MAY HAPPEN...
SO MY WEEKLY HOLIDAY CUT OF.....FOR A STUDENT OF MARKET.
......EXPERIMENT ON STRENGTH BY RSC TO BE SEEN....ALSO SWING PT @DYNAMIC TRADING SOFTWARE.
................
6] various trade learning reference for one's growth as trader and a hints on adjet
7]avoid trap of callgiver
8]a conceptual view on fundamental and psychology.....trade preparation
sucessful traders has 2 distinctive superiority
1]a particular time frame in which he shall play......and a definite style
2]predictive mode or reactive mode
.......
first thing......intraday......day.......short term.......intermediate......r known to everyone
also the style......break out.....pull back ...short at top.....bottom fishing....continuation with momentum.......r spl ment ion not reqd.......as already
systemised.....many a trader play
.....with definite.....derisk model which suits him
so timeframe.....style....derisk......this 3......creates a set....now compatibility
.....the word successful.......clearly tells........its already done....nofurther experiment pl
.......................................
2] predictive mode vs. reactive.......
elliot or wave.....count....it suggests........but price confirmation must.....otherwise...its russian roulette
in reactive case.....trader develops.......a mental state.....in which he follows....the event of market ....direction and st rength[trade what u see]
....all whipsaws r not to be attended........problem is nobody knows change is normally abrupt
....so some theory develops to watch one higher/one lower time frame.
..still randomness is a governing factor
......only with exceptional mental stability[example cv].....a person can be flexible like clay
......for others.....a jone has to be created......on certain conditional fulfilment accept a trade......otherwise....REJECT THE OPPURTUNITY[considering
uncertainity]
still i suggest diary writing.....take a print on entry and exit of chart....for future analysis of learning curve
.............
MY SOLILOQUY-AS STOCK TRADER

05 July 2015
10:45 AM
stock trading is a supplier of fool..to professional trader[to cut their pocket and earn]
this art can be studied......
this art can be practiced
...........
to become a successful trader ......u have to be like trader[pro].
understand few ..in real sense can do it
.................
one characteristic of good trader...they all learn in bear market...practice skill in upmove/gestation period.........and mak e money in bull market
............................
ofcourse there are specialist[superstar].....option trader/bear master/computered programmed scalp trader.
........let me explain it....superstar
.......option trader......study direction bias...at right moment take position
bear master...rarely trade,..but deadly accurate
computered programmed scalper...master to flow with direction validity[o.5hr ]
..............this 3superstar...r born out of successful trader...with lot of polish.
most fool try to learn or experiment in so called late phase of bull ..so they lose...
only some of them ready to study....reason of their failure.........
and some mad[like me].......consider market as a puzzle ......try to solve ......they know illusion...but they love them..get more and more
involved.....occasional money..occasional loss ..keep them in path.
suddenly they get twilight.......so they become earner to learn from market....on consistent basis.
they have openion..they have system.......but most importantly they interwin self and market
......they find out on a particular time frame they can guess better..with or without ta/with or without fa..but definitely u se some form of market
sentiment.....
now..when another element position size they master.......normally they earn well until ego catch them....mind it ..their sys tem not betray......its the self
sabotage,breaking own rule.....cause of fall.
a trader MUST DEFINE first......whether market is presently in trend......or tradezone.
..........
how to define it...........let us assume indian market......daily chart....for monday volatile.....
hourly chart...up bias.....but weekly chart ..negative .
.....hence.....2approach.....for safety watch only
for me......buy @low ..and sell @top...based on my tool william%r.....in14..hrly chart
..on those 2stock..which i consider candidate for monday.
remember play plan of tradezone......and in trend r entirely different
......even in down trend........restraint to aggressive trade.
.......think control of greed......and all precaution ......chance of wrong assumption..to be eliminated.....[ur trade can be wrong..but not ur assumption]
trend termination is an imp concept to learn.....
with poor experience......first time loser ......normally hold and while market fall....lose more...
with frustration learn value of stop....
in next short term bull cycle..play...and book profit early.....only to see great bull run..
later curse oneself for missing oppurtunity
....this is normal phenomena...[great mechanical traders must excuse me...because for them gamerule a little bit different]
.......so for all others future self development is necessary.
ie. how to put stop...and how to run profit trade....this concept for simplicity many a trader use...by using % stop..some by atr........i prefer sar...because of
limited time
though pattern break pt...and stop below that ......i find another good approach.
---------------------------------------------------------------------------------------
normally norms of 4quarter result.....help me to understand with fluctuation in 55ema..

particularly on result week.....expectation vs..realisation .....reflection of them on price...i find a main strength in stoc k trading.
yes i believe in news trading ...as it gives me money....i dont teach it as its too much subjective......still i provide 2hin ts[basically money making oppurtunity i
am supposed to give ]
all knows bell weather info result ....given good .....then price is not reacting properly....
so dont put much money in this sector
...if infy good/tcs good...also price moving up....buy immediate 2nd grade polaris / gtl...a short term low risk speculation style.
.........another case i mention....order book......recent publish[may be some month back..@220 -230 zone psl is getting good order.......from oilcompanies for
pipeline.....which definitely improve bottomline..stock at nearly yr high.......so buy ...at at near top..by understanding ne w accumulation is going on ......u
have to take entry to make money.
....if u watch minutely with volume spread/order flow/ money flow technique...[any one is sufficient]...u shall see price upw ards bias was shown then...220230....psl.
............................................
why i can not be a pure technical trader...?
because...fundamental value of a stock ...i believe is always reflected in price...
but if something hidden..........that gives me a low risk trade to earn money
.......by missing lot of oppurtunity...making mistake on regular basis av 8 -10 every yr...
i can say definitely the 'value'..is dynamic....never use concept of eyes of beholder'...that is fundamental reason of my wro ng trade.
....what is value...in simple term...the reflected marketsentiment...+ business model with company profitability as shown in price...which normally oscilate in
a band.
...here i put a simple model ....say price fluctuation within..+/ - 2.5% is random
crossing 3% above..>5%..definitely a trend......that is biasness towards a direction which can be traded profitably.
.......................
trend factor..random factor..newsflow[new event].....definitely coexist in market
..........depending upon u as market observer...consider which one is oppurtunity for u
...and when and risk....not suit u........so avoid
.............................
smaller timeframe u trade u have to be more mechanical.......
larger timeframe[at least 3month view]...improve accuracy[directional bias]
..............................
without trade management never trade.......otherwise u enjoy thrill on market..paying money
....winner trade..allow more time to run.
............with uncertainity watch.........never trade on call[ u can use call to find candidate..to save time...but due dil igence must]
......analyse past trade.
For Intra day- define the day first ........upday..down day ..uncertain day ..volatile day
expected range of the day
.....uncertain day i dont trade..only watch.
all other 3day i have technique......entry and exit technique
......eod study gives me strength list
so strong strength buy candidate for up day........
exhausted candidate for volatile day..
exhausted candidate for volatile day..

and poor strength for down day......
................
normally with good order flow i enter in stock......so radar ..air help me to boat smoothly
........................
for short term technique is entirely different...a support swing pt buy..
.ta helps timing. works on probabilistic model ....with experience one can learn.i start to learn in 1991...d.cassidy ....bas ic ta book.....use of volume/some
pattern it take me 2 yr to learn basic-some theory.
.....only paper cutting ......and capital market ta mag[long time stop publication]....r available in indian market......
only 2001.....computerised trade......availability of nse and pc........brought me again to old art.....mean while i face 2 q uack......who consider they know...i
part some money....only to know they r quack........this is the fact u face now......thats why u insist to learn from qualifi ed .
as bse...../nse use data in meta format.....this software..was in india from 1995......so i study this one....in my learning curve........again i repeat it takes
time [ afterall i am a parttime learner......not even a sharp college student]
....i face dilemma like u .......lucky to learn from www.tradingmarkets.com...and cbot
in 2002......but i try to learn trading.....useful part of ta.
concept of break out is imp......
concept of support buy r useful........
most imp is predict market danger zone
.............................
since u ask for hard core ta.......i shall stick to it.......which i learn later
....for qualification,......learn trend first......
defn of up/down......volatile.......
next distribution /accumulation
........this must be applied on nifty
........then study,..........fibonacci
then study pattern .....psychology behind each pattern
....imp one for actual trading.......triangle /flag./1-2-3
.......in bullish market ..cup and handle
...then learn bearish one.....h&s..2t/3t.........and what condition they fail
learn shorting,imminent reversal......oneday/ 2day sp. pattern bullish/bearish reversal based on candlestick
next solve.......gap up and gap down.......use it to judge strength of market....no other purpose.....till u grasp it fully.
...............................
after this u should u can look through indicator.....
use ma........dual ma.....experiment with many alternatve.......remember just basic......
smaller one cutting and move up.....shows upward bias.
take a suitable indicator....to gauge strength of market
........
when u know more study indicator, one overbought/oversold one .....i prefer william%r
use it in tradezone.......
next level .......is to define and predict........trend or non trend.........which as per me a trader must learn first......2 /3 tools available choose any one
....spend time on it........patience pays
..........now come developing a system based on technical.....ha ha..its ur job
btw....without divergence study do nothing
.........................
u think u know......but.....study another 2tool ...advance decline and new high/low data......
and raw moneyflow data...particularly fii/mf
..... next i try to throw some light on rsc......rel strength comparative.....
its a good tool ...first extensively advocated by mark boucher in his course....
its momentum tool.....strength of index vs a share.......a stock in a particular sector rank..
....i use it scanner..as suggested in www.meta-formula.com
.....it helps to find where the action is .......this is only ta......better use stop/mm.....otherwise...money comes and goes .
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
volatility........
to understand volatilty we start first range of a day......and gap concept.
reversal concept in price at top and at bottom.......
....yes i work on it......but predictively i am not sure.
....but i can say before reversal some ...peculiar phenomena observed...but that is case to case basis[on stock.....i can not generalise it]
....historical volatility.......and comparison of it in metasock......is a good tool....
as i firmly.......BELIEVE.....THIS SHALL WORK IN INDIAN MARKET FOR NEXT ATLEAST 5YR.
Read toby crabel and larry connors[tradingmarkets.com fame]
..
FOR BTST swing-use intraday strong reversal as entry........those who entered market and hold on friday..2 -3pm know......what i mean
......
how u can learn to do that...........observation......i have dt3/metastock.....with viratech eod.....so when i see 2005 -06.....and march'2007.......i
know ......how price behave before bottoming out in indian market ........so no doubt its a risky trade.....but worth to be t aken.
concept of copy book....buyday..hold....sell [today i shall].
......so hrly....chart has given clear signal......i only have follow it
...........................................
lot of backtesting gimmick i hear.......let me present a real one......simple but effective for short term/intermediate.
.......just see last 2yr data.....when the result out.....how it affect price,........for individual bse gr a stock......if f uture earning guidance given........how it
behaved...that week,....
if nothing given.......how it behaved.....price behavior with expectation.......
shock in both +/- direction.......later bounce back or distribution
.....its the real tool .....which gives predictive way to earn ......not very math oriented[alas i betray math enthuastic /OR STUDENT........no my friend........my
operation research knowledge no way helps me........infact it helps to lose money.....by creating a blockade of being right ' / a know better trap'........and still i
do my level best to unlearn it,......but in professional service game theory.....and PERT ...HELPS ME LOT..]
.......
THOSE WHO R CORE TA BELIEVER...... i suggest...use omnitrader in game mode. change 1bar @a time..see prediction........on any stock which u want to
play.....next bar to right comes...predict...again come next one......enjoy this paper trade/ur guessing.
for stock trading learner........i believe patience to learn ....spend time is very imp.
restraint has to be practiced. a concept of treating trade as business to put....by checking bill and fund flow.....how u can do more right trade,......
.......the concept of risk mangement and responsibility taking.
......then come knowledge ...ta/fa/psychology amalgamated
....after doing swot for self......study market reality
....and market is future oriented......moneyflow and volatility r two key factor......next 5yr atleast in indian market.....d o research on it[self study]
........how result vs expectation affects price.......
on what postulate u investrading...........if scenario change......get out first,think later.
if possible,learn market sentiment..........so that in a particular time frame.....u can enter near bottom....and exit near t op
......study past trade.
develop a derisk method if u want to earn from market in long term.......erase ur mistake pattern
.............
uncertain
........... more like distribution day......pro r slowly selling......we amateur r accumulating with bias of up trend may occ ur after some day.
........... more like distribution day......pro r slowly selling......we amateur r accumulating with bias of up trend may occ ur after some day.
basically low volatility on weekly chart......by atr or by comparison of volatility[historical] define it mathematically.
........volatile day......atr value is high......aprox....5stock [10% of nifty.....dance like any way.......intraday......wil liam%r....good....pivot buy of low .....sell @
resistance higher pivot excellently works.....example 1.10.o7......nifty
linda has done pioneer work on it........also volatility based day trader use them.
a trader must define what time frame........he shall trade.........a hints given regarding matching though i know my comments r controversial.
1] intraday..........a cool computer man with high speed calculation /software to use in analysis.......and high lebel adapta bility......preference to volatile stock
with break out
NO TO ALL NORMAL INVESTOR
2]one or two trade a day.......eod scanner biased guide....based on reversal.....with price confirmation.....suitable for exp erienced parttime trader.......with
strict stop.
UNSUITABLE WHO CAN NOT CALCULATE RISK FIRST
3]SHORT TIME TRADER........MOMENTUM BASED BREAKOUT PLAY....HOPING CONTINUITY FOR 1 -2 DAY.......APPLICABLE IN CURRENT MARKET[EUPHORIA
STATE IN MARKET]
4]swing......buy at bottom swing.......and hold.....saucer pattern in weekly chart
5]intermediate position player........when a stock is ready to move after consolidation
add position when proven winner..........suitable 10 yr experienced trader[saint,traderji]
.................
the comments r based on my all type of first hand trading with min 6month experiment in each case with a/c size of 1lakh to 5 lakh.......
with result based/run away/volatile/ bearish market.
so in trading, if for day......premarket analysis is biased to trade........now only if market opens and trade as expected .. ........then take position, otherwise no
trade.
which software u use , and signal on realtime basis is far superior way, provided u stick to discipline.
personally i trade what i know.my scan consist of known share [fundamentally i get/interpret info before others].
and 10%money i trade for experiment.
risk management idea i use.
regarding feel of pattern i consider myself lucky .......its complex .
for intraday........i dont see pattern .........only order flow at high price.
biasness of eod chart , for swing trading ........i am good at
.............
i am discreationary ........performance study on return i use .......stock ...gr.A.....i prefer.
omnitrader scanner saves my time
fundamental info ....by equitymaster/capitalmarket i use.
callgiver..........i dont trust
----------------------------------pro.mean while, what i earn from trading i spend 10 -20%consistently to learn better trading
and purchase books.........some of my notes i already write conclusively.recently i try again to learn fa.......by joining fi nancial mba.
however i find many a professional course taken .........r more helpful as a trader.......infact
my highest return days r.........1991-92.....a fool's paradise.presently i plan an experiment of 25 -30%return from market..on annual basis.
some course idea[not the free bees available].......i shall mention which may be helpful for different level learner
yr2002.........cbot course.......concept of market profile....trend non trend
yr2002-03.......tradingmarkets.com......swing trading and positional trading
2005...angel ta seminar
2005 ..swing trade...
2005...trend trade
2005...picking top and bottom
2005..metastock programming dvd
2005...dvd on day trading
2005....cd on swing by landry
2005..steve nison dvd on candlestick
2005....intraday tactics....jeff cooper
2005...trend-dynamics course 5 volume.......[best one i believe]
2005......cd from moneycontrol
2006.........ta cd and system design
2006....comment by larry williams
2006.....pattern trading plug in for metastock
2006.........mark boucher .....10week course
2007.......power trading concept......logical trade
2007 .......trading academy ...course for pro
2007......swing trading bill paolo
2007.......developing a trading strategy.......van tharp[old]
2007.......vasudev......trademechanics on relative strength
......................
apart from this many a free lecture........trade analysis
............
the last one i give .......today afternoon brief.i am commenting on them as i find personally useful.........yr wise when i h ave taken mentioned..............apart
from them numerous trial and error ......i go through .........r useless
.............some observation .....
i am a poor option/future trader..........-return
a developed sense on turning pt........
i someway follow rel strength comparison........though psychologically find dificulty in entering days high.......due to nume rous previous loss.
at swing pt reversal i can enter in known stock.
.......an entry of 5lakh value affect me........upto 3lakh good judgement observe.......
around 1lakh.........its easy to handle multi position
i hate leverage,also when stoploss hit........angry about me.
some of the books/free course/idea i find useful in someway or other........i shall mention
.................................................. .................................................. ......................
1. trend trading
2.4trading mistake in future market
3.chess and its concept
4.nlp concept
5.trading system
6.auction idea
7. strategy of a trade
8. turtle
9. jeff cooper
10. demark
11.linda
12.joe ross
13.ari kiev
14.gann
15.pristine.com
15.pristine.com
16.mentoring
17.core trading
18.effective day trading
19.short term trade
20.swing trade
21.ta
22.speculation
23.pattern
24.tony oz
25.learn flawless trading execution
26.dr bill william and chaos
27.probability
28.wyckoff
29.trading as a business
30.demand/supply
31.financial risk study
32. metastock
33.advance get
34.dynamic trading
35.omnitrader
36.fibonacci
37.candlestick
38.van tharp
39.valueline
40.trade plan
41.problem in trading
42.dr elder
43. way to trade..........a good one
44.toby crabel
45.volatility
46.mm[money management]
47.momentum
48.trading on volume
49.jessi livermore
50.sector trading
51.bear market course
52.break out
53.j. hurst
54. mechanical trade system
55.mark doglous
56. trade journal
57. bird watching in lion's country
58.emotion free trading
59.wave concept
60.bernstein
61.bollinger band
62.farley on swing
63. fa
64. turning pt concept
65. divergence study
66.float analysis
67.contrarian investment
68. news play
..................................................
all of them have some contribution .........to me as a trader
conclusion:stock picking is an art...an experience hand can do it.
fundamental data gives the potential of future betterment.for a different industry ballgame is different...futuristic busines s up has to be seen in light of
profitability.
so some idea...on a sector.
hospitality and tourism ....on hotel.
theme of cram...export
banking...rate of interest...npa
............
next comes ta...its the reflection of price......what present traders r doing..
how far they r bullish?
here most traders make mistake........they presuppose to guess..[hoping accurately...forgetting its a probalistic model]
its only DIRECTION CAN BE PREDICTED. not the target...
judgement must be for continuation[trend]..or reversal[mean reversion]
various tool r used to do same...some of them has superior guessing value.
hence for target...sar is better.
initial plan must be based on low risk strategy...and what works on present market condition.
risk analysis must be done...before entry.
ur news letter ...tradersedgeindia very helpful...
as a trader ur plan is short with trend bias ...hence relative strength plays imp role in stock scanning...
as price reflects all known event....we should spend money to get unknown news...which may affect price
or otherway...we must study reflection of news on price......example.ongc result bad..price holding 910..its moving up rs5/ - on monday...opens rs 7/- up on
tuesday..holding..by 1300hr..it crosses days open...hence promise higher up...soon break imp weekly pivot 923..and hold 928 -929...hence a promising up
play,...for all good trader.
.........next factor...how u close a trade...and what u learnt from a trade.
its those analysis makes u a mature trader
-------------------------------------------some pt i think useful as suggested by pitbull
.................................................. ...................
1.routine
2.checklist........70stock
3.prepare for tomorrow.........big picture,inflection pt.channel zone and spotting trend
............
his theory on natural /acquired quality
1.gambling feeling
2. good with number
2. good with number

3.how to think and what to think about
4. how to perform under fire
5.money management
....................
trading methodology to suit personality
ur strength............................
.dedication and hard work
hate to lose attitude
.........................ur weak pt
fear of loss
constant praise is reqd
mentally someone must give comfort
..................................................
accuracy factor in guessing
understand to make money learn to cut loss quickly
exactly know u shall fight in own terms
market analysis........how price try to move
10ema as a trend
feel on support /resistance and oscillator base signal
gap play
imp of cash in hand
money flow of fii,mf
3day rule........1..2..3 day up then reverse play
how market react to news.............-news,shrugged off by market..........bullish ...............take position
new high
probability calculation ........trading signal on half hr basis
nontrade day..............watch top for reverse
..................................
ego is worst enemy,divorce from trade decision..........trade only to make money
CONCEPT
.................
1.TRADE OR FADE
2. PLAN IN DETAIL
3. HONOUR STOP
4. WHEN TO PLAY BIG
5.HAVE A MENTOR........HAVE SOMEONE..TO SOOTHE NERVE
6.DEVELOP A METHODOLOGY THAT FIT U.......TRADE FIRST TO PROVE UR ABILITY.
TO BE WINNER............FIRST BE IN LINE OF FIRE AND PULL THE TRIGGER RIGHT
PREPARATION PAYS......ITS ESSENTIAL TO KNOW MORE THAN OTHERS
7.WHERE U R GOING THAT COUNTS..........ie. what u shall be
8.never gamble for large amount........never gamble if u have other priority.....never lack selfdiscipline.......stick to ur money earning plan,good gambler not
only keep bet low,but led a rational life also[stressfree within limit]
9.ASSUMPTION OF PRICE RISE IMP.NOTHING CAN BEAT KNOWING WHAT MAY HAPPEN,BEFORE IT HAPPEN .........EXCEPT WHEN IT IS WRONG.
10.KEEP UR PRIORITY STRAIGHT,MANAGE UR MONEY........CHANGE U.
11. TRADER MUST UNDERSTAND GAMEPLAN VS. GAMBLING........WITHOUT IT NOTHING POSSIBLE,DIVORCE EGO FROM TRADING.......FIND UR ED GE AND
STICK TO IT
12. value of info..............[inside one]
13.u must change direction of bad trading by first.....neutral.......must stop.......then reevaluate.....where and why wrong
14.dont go for killing trade,........u shall be killed first then,instead learn to take small profit
15.exiting a losing trade cleans head and bring back objectivity
16.trading is a full time commitment,personality fitment........plan first with worst case scenario...then improve at what co ndition with alternate scenario,go
detail....in problem get out.........fight another day attitude.auction game .....helps
17. fibonacci,wave theory helpful. read uncertainity well.......it may be oppurtunity
18.never let.......friendship,family relationship get into way of sound decision making about money.......follow written rule , be ready for all eventuality
......................
a view of market wizard...champ
------------------------------------------------------know market........its dynamics.........with more EXPERIENCE ,u learn more.....it offers oppurtunity.........where u read wro ngly the price.......its
threat...survived first then....
2nd level..........where u stand up better than others in this arena?
learn debriefhow much info u can handle ?.......can u represent them objectively,........preferably mathematically......u have to be cryst al clear....so apply as oppurtunity
comes.
.......develop a harmony in u.........a trading personality.
here some ideas r given for trade learning

pl evaluate them as per ur level and pocket+zeal
.............................
take one month membership of traderji paid site.........copy the idea of traderji.
............
download from 4shared .......key word 'technical analysis'
read them at least 1yr
similar key word........'trading'........read again 1 yr
.......
read any financial newspaper........see market reaction of it. dont trade......just see the impact of news.
......
take any software......go detail into it.......dont take my mistake like half knowledge.
learn in deep ....ms/ag/omni/mt........any one is good.........i dont have amibroker.... ...particularly understand scan/expl oring.
listen to any pro teacher.... provided they trade in own a/c profitably atleast 5yr........otherwise he is a learner .......a snake oil vendor.
they can tell u a vague idea , mostly not implementable.
learn to think and implementation of stop.
................
take backoffice operation seriously.....more money i have lost by fraud/theft ....by broker.......trade jounal; is must.
...........
...........
develop an iron solid psychology to have faith in u ,not tipstar.
........
understand basic fundamental moneymarket/interest rate/inflation......and what drives a sector........this is imp.
.....for daytrader........neutral mind most imp.
swing trader.........experience
position trader.............understanding how other players shall behave.
....what type of ur personality.............suitability /matching counts in long run
..........
market will always provide oppurtunity..........but without...proper knowledge/survival skill it can kill u.
.....prepare a list of weak pt ........must to develop plan to overcome them.......a cunning investor can buy bharati @25.... ..10000...........add on 20000 @
38.........50000......@72
............sell half @380...............others @760..............is not my cup of tea......i salute that investor..........h e knows how to invest.
btw......he never try in daytrading.........in bengali ......one phrase...'jole kumir danwa baagh'..........be a crocodile in water or a tiger in forestland,.........respect ur zone also of opponent.............simple saying .......bulls make money,also bears.........pigs r to be killed,..........remember always.
..........................................
many a pro guide how to trade..........provided u have element......they r not snake oil seller[nor a failed trader/ an opera tor]
....for beginning understand www.trend-dynamics.com and tradingmarkets.com
--------------------------------------------------------------------------------------------
Let us start from basic

05 July 2015
10:46 AM
imp. element
1]why u want to trade ?
2]what u want to trade?..stock..f&o,commodity,forex..
...for every game rules r different..though certain generalisation possible.
3]u must understand reason behind market move...
4] a broadbased price direction idea.
5]what present price direction tells u.
6]the observer with money will join in which side...bull or bear
7]ur risk analysis skill
8] a theoritical trade plan...condition of entry...
entry..
holding condition..
exit policy..
9]an actual practice of execution to do so
10]why u miss the cup? after trade analysis
11]behavior modification to improve...
12] learn money management..
13] where u use leverage..
14] a network of info.
15] a thorough knowledge on a particular software
16] a balanced life to handle allthing carefully
.............many good member has given their view ...for developing one.......
...first check how much u can digest?
ur execution skill...methodical approach for time management
for fa..read value analysis..report of a good broking house.
...then after..u do what u like
then learn money management...
it takes nearly 2yr to answer this basic
if u can afford..take course from safety in the market..they teach trading
GAP
05 July 2015
10:47 AM
GAP :
I guess there are 2 reasons, the first one is during the market hours all the news/new data/info that hits the wires will be digested by the investors and
priced into the tape slowly when they understand what the data means, but after the market close the market will not will not open till the next day, all the
news about the companies then tries to get priced into the stock at once, (just like opening the dam gates),
the second reason is, there is a saying that the "markets are opened by amateurs and closed by the professionals", if there i s a good news the stock jumps
up 20% and slowly comes down to come down to 5% gain and if there is bad news about a company the -20% down then corrects to -5%, amateurs wants
to buy at any price and sell at any price depending on news ,if there is buying or selling at market open the market may go a gainst that during the day, but
when you see heavy selling during the end of a day or heavy buying during the end of the day generally the next day will foll ow suit, "buy with the
professionals and sell to amateurs......
fortunately.....gap up/down.. fade trading r very useful .
normally amateurs get shock....as they have no plan to trade with it......instead they must write what to ..if gap up .....th is particular value....again another
set......if gap up another value......always .....watch by price and flow of market.........whether its diminishing or increa sing........this is essence of strategic
day trading
Support and Resistance are dynamic

05 July 2015
10:47 AM
support and resistance r dynamic....

moreover...depending on variation on chart...timeframe...it varies
...static idea...as if similarity with daily pivot...reason of most loss .
...instead follow idea of cluster of price zone...
..this is one of right approach...
..alternative..openioned idea...but not conviction...key is make more money when right,less loss when wrong
A good trader will always make a good analyst,not true for the reverse.
Analysis may be technical,as in levels,stoploss etc or fundamental as in inflation,growth etc.Always hindsight and foresight required
Decision making is instantaneous,in realtime.

.........................Find Support Based Buy In Normal Market...and Momentum Based Pullback Buy In Bullish Market Useful Entry Technique....ma
X..identifying Pattern...r My Edge
....another Typical Thing...i See Tv To Get Result Flash/news...never For Openion...hence I Alone Responsible For My Failure'....
--------------------------------------------------------------------------------the market has upwards bias intact.thursday friday......money release by selling class 1 stock.....to create +movement......in midcap/low float stock
proves ......stem is left
...
hence entry on a normal correction after result is out.
alternately....with better than expected particular result......a better entry is possible based on momentum play
...........
pl study bse ....sector strength......and compare with last quarter..........u dont reqd call giver to earn
however a defined strategy.....suiting u......is must.
,,,,,,,,,,,,,,,,,,,,,,,,
.i meet a rm......an av earner of 40000/50000 per week.......an mba with 3yr dealer experience +be[mech]
he shows me .....why he earns....a la linda style short @ future.....on well publisized [media]
.....as market is losing strength....on individal high volume counter he does fade trading....
professional dealers r doing now that[ unless u have trained eye dont experiment it]
..........so what i mean to say
1. he has a trading skill
2. its suit him[high risk taking young individual , dont predict market....just follow order flow....when its bearish, a particular pivot bias ....where
resistance may act based on dynamic condition.
3.news checking.....what media wants to fade today
4.understanding of market as extended bull run
5.implementing strategy
-------------------------------------------------------------------------------------here i give hint of a word called .....proactive....in the context of trading.
we start trading from family/own interest/others talk[peer syndrome]....and related job
soon we learn how much water actually we r in.
we may have earn /loss......it creates inquisitive mind to learn further....atleast to know what to learn........yes with self realisation.....an ordinary why
'search person.....think what is called oppurtunity......in a defined way
the class called what to do now........is below......as they have not understand word ....REALISATION
it may be call taking/greed drive......or fear driven thrown out of market'lot......who knows /smells again......turn TRADER.
so predictive mode start with search of literature/article....qualified analyst.
few who survive .....understand .....imp of solo journey......continuation concept of work
in the word of cv......a master craftsman.
so price or economypredictive road........2 distinctive journey path evolve in market place.
learn and learn is motto then
we all know now.......money main driving force........show where money is business and flourish.....like old days of ancestors........nomad to stay near
good river.
so now all know why......fii came in india
so think like them where they put money[before putting it actually]
......yes i have read a book on indian industry ....economic development 2002..12.
a costly one 9500/- @ 2002......direct prospect upto ..2007.....and interpolative predictive target....on 2012
..........so when money flow starts .......u should see .....from price .....in flow....predictive mode........just take proper action.
----------------------------------------------------------------------------------
let me present another known tips followed by present aggressive pro.

its regarding future.....though can be applied in high volume cash....basic idea momentum.
the runaway market [bullish upbias,continuity].....attracts trader more....also joes in later on.
candidates shows extra strength.....concept hint also given meta-formula.com
basically...capital good market showing strength on 2004......is great from excellent trading prospect...as we all know now....however few could re-enter
it.so this high risk-high reward ratio trade style....based on market +bias,....then strong sector..then leader/....for short ....
weak sector /then laggard.
so market bias.......and sector strength r criteria......basically scanner is used in metastock to find relative strength comparison......or relative
performance high one
then sort by strength......as we normally can follow max 3trade at a time.....so CANDIDATE FOR NEXT DAY/WEEK r prepared ....what can be done.....to
execute .....to grab oppurtunity
.......its basically....in rightside of chart showing oppurtunity bias.
so trade is taken as per ur criteria..of entry/exit.......when price starts move up.....and stall.
a recent entry.....of mrpl @54........or ongc @860....clarify trade logic.
even as per Mr Mark Boucher .....is the no 1 tool......2nd one is.......where the growth is.,which......i express in last posting......by a single word
[proactive].....though another word REALISATION calls on.
............some pro .....broad market analysis.....and leading sector ....la canslim style...USE SAME THING.
---------------------------------------------------------------------------------------
Key Concepts
05 July 2015
10:48 AM
1.key concept is u have to build a base

2. price and you .......reading price movement rightly
3.direction of trade
4.a system and how aggressively to trade
5.a trade is based on mistakes of others[ploy in chess terms]
6.bma--broad market analysis
go where the strength is
direction and strength of present market
7.location of obstruction which can affect price
8.when i have an edge and where.....how aggressive i shall put money
9.some high probability pattern
10.effective trade management
11.leverage strategy
12.when not to trade......%age of random trade failure idea
RDS Course
05 July 2015
11:11 AM
chapter1
...........
learn entry/exit pt.........what drives a trader to act.......fa.
create a strategy that suits u......firm grasp on mm.get organised......visualisation is necessary.
fa is anticipated expectation of supply/demand based on some news flow.if demand increase price shall have tendency to move u p.interest rate declaration
and employment rate r 2value.......past trend,last data vs market reaction and current expectation........3thing u must study .......with probable case scenario.
note....a nominal rate hike may execute to hold inflation.a rate hike is detrimental to index.
......pl study gap to understand when reports come out
chapter 2
...............
know ur opponent if u want to survive in market.use patience and when to fold.a pro knows throw away loser.......search for w inner..again.understand risk
reward.study market daily.ta helps for timing.develop a particular timeframe playplan where ur guessing and execution is supe rior.trade evaluation is
must,..its is key.if u play breakout.......chance of failure ...very high.......never forget it.std pattern of reversal...... ......a good tool.........to guess how others
r seeing market.
build ur confidence in exit as per signal.........simply execute , dont hold......here novice and pro differs.
chapter3
.............
football analogy and mometum..........bull bear character can change any moment,.......a match is exciting as anybody can win ,......but as spectator,a
pro/gambler...bet on who can win......not whom u like.its ur experience to watch........over many match.....ur cool judgement ,personal idea as
player.......develop a sense to bet rightly after seeing fast few min of match,......understand momentum and reserve strength [spring coil action in price]....be
a cool calculative head.
understand realistic profit target.pl see how momentum is fed in a stock......if its fading.........get out.
chapter4
.............
one of the interesting pt..........after reading lot of ta literature....what they have in common?.......study of close price ....its bias.......yesterday high
low........can they help to predict tommorow.......NO.......BUT THEY SUGGEST IF PRICE X SMOOTHLY LOW......AND WITH MOMENTUM,. .....-IVE BIAS IS MORE
ACTIVE,......SIMILARLY IF HIGH IS BROKEN ,MOMENTUM BUILT UP CAN BE SEEN.......NEW BUY ORDER IS COMING,........DEFINITELY U SH OULD JOIN AS
BULL
...
fibonacci is good tool.........both for retracement and price projection.
basically as watcher of price wave............ur duty is judge how easily it break some resistance,.......or how smoothly pri ce falls before bouncing.
chapter5
............
when price begins to fall from trending high,.........u must get out.......earliest u sure by confirmation.
similarly be ready to enter when downfall stops.......only after confirmation by price......u must have some systematic appro ach,pref mechanical to do it.
......its the essence of execution
hapter6
................
for break out play use strong momentum candidate...in overbought zone........only break out possible ,.......mind high risk,l ow probability
recent example...........thomas cook
........always have a check list before trade,.........if u feel uncomfortable just reduce trade size
use macd as exit signal.
chapter8
..............use ma.
chapter9
..............
rsi as an indicator...........
learn when to use as contrarian tool
chapter10
.............
chart pattern recognisation.........
it helps to pull the trigger easily........however no method is infalliable
.......bullish pattern
bearish pattern......
continuation vs reversal pattern
...use pattern recognisation software.........for throwing away subjectivity....and scanner.
last chapter
..................
weekly support resistance .........another good tool.
...........
market profile useful as a trader
For Development of New Trader

05 July 2015
11:28 AM
1.routine
2.checklist........70stock
3.prepare for tomorrow.........big picture,inflection pt.channel zone and spotting trend
............
he believes in routine,70 stock....watchlist.inflection pt.......probable swing pt.
.........................
next 5pt......must he believes......to be a trader
1.gambling feeling
2. good with number
3.how to think and what to think about
4. how to perform under fire
5.money management
....................
how he gave up his 9yr+ fundamental background........
and way he transforms
.........................ur weak pt
fear of loss
constant praise is reqd
mentally someone must give comfort
..................................................
accuracy factor in guessing
understand to make money learn to cut loss quickly
exactly know u shall fight in own terms
market analysis........how price try to move
10ema as a trend
feel on support /resistance and oscillator base signal
gap play
imp of cash in hand
money flow of fii,mf
3day rule........1..2..3 day up then reverse play
how market react to news.............-news,shrugged off by market..........bullish ...............take position
new high
probability calculation ........trading signal on half hr basis
nontrade day..............watch top for reverse
..................................
ego is worst enemy,divorce from trade decision..........trade only to make money
CONCEPT
.........................
next his direct suggestion and between line concept .....expressed as pt........
1.TRADE OR FADE
2. PLAN IN DETAIL
3. HONOUR STOP
4. WHEN TO PLAY BIG
5.HAVE A MENTOR........HAVE SOMEONE..TO SOOTHE NERVE
6.DEVELOP A METHODOLOGY THAT FIT U.......TRADE FIRST TO PROVE UR ABILITY.
TO BE WINNER............FIRST BE IN LINE OF FIRE AND PULL THE TRIGGER RIGHT
PREPARATION PAYS......ITS ESSENTIAL TO KNOW MORE THAN OTHERS
7.WHERE U R GOING THAT COUNTS..........ie. what u shall be
8.never gamble for large amount........never gamble if u have other priority.....never lack selfdiscipline.......stick to ur money earning plan,good gambler
not only keep bet low,but led a rational life also[stressfree within limit]
9.ASSUMPTION OF PRICE RISE IMP.NOTHING CAN BEAT KNOWING WHAT MAY HAPPEN,BEFORE IT HAPPEN .........EXCEPT WHEN IT IS WRONG.
10.KEEP UR PRIORITY STRAIGHT,MANAGE UR MONEY........CHANGE U.
11. TRADER MUST UNDERSTAND GAMEPLAN VS. GAMBLING........WITHOUT IT NOTHING POSSIBLE,DIVORCE EGO FROM TRADING.......FIND UR ED GE
AND STICK TO IT
12. value of info..............[inside one]
13.u must change direction of bad trading by first.....neutral.......must stop.......then reevaluate.....where and why wrong
14.dont go for killing trade,........u shall be killed first then,instead learn to take small profit
16.trading is a full time commitment,personality fitment........plan first with worst case scenario...then improve at what co ndition with alternate
scenario,go detail....in problem get out.........fight another day attitude.auction game .....helps
17. fibonacci,wave theory helpful. read uncertainity well.......it may be oppurtunity
18.never let.......friendship,family relationship get into way of sound decision making about money.......follow written rule , be ready for all eventuality
......................
note....he is known best scalper.
since people loves easy money.......no hard work....not even ready to read good books,forget to buy and learn.i try to gist.. ...........of that 'pitbull'
personally i believe..............all thing u want to become a successful trader........
r expressed in 5 thread........i have writen.
journey....
quality....
maturity...
method.......
system....
adept and adapt.......
..................................
fitting of jigsaw and u into system .....thats ur job.
Trade Elements
05 July 2015
11:28 AM
Remember, We can always make money. But, never make adjustments on how We do business. What I mean is, never move stops. If
we do and lose money, we are not just losing money. we will lose confidence. This will affect the outcome of decisions on other
positions.
Here I am writing
.
Trade element.
1] you..swot ..time to learn..your natural patiencetime u have..

2] marketyour believe on market
your ta tool mastery
your fa tool mastery
info network
3] fund to learn and experiment..
play less analysis more..use diary..
4] PSYCHOLOGY
readbook of dr elder..
market wizard series
mark doglous
ari kiev
Livermore
5] personality& trade analysis
dr van tharp
dr bill William
larry William
Linda
Mark boucher
Dave landy
RAKESH JUNJUNWALA
6] trade system design
..
Bernstein
Kaufman
Tusher chande..
Martin pring
Technical trade system
Instant profit
7] individual choice
bird watching in lions country
phantom of pit
personal softwaremetastock & omnitrader
8] trading styleits an individual choice
9] recent experiment.
Dynamic trading..and trend dynamics
10] encyclopedia of chart pattern
candle stick chart study
11] most useful concept
..
money management
risk control
Cycle
05 July 2015
11:29 AM
a layman term i try to explain...........CYCLE

shm........simple hormonic motion .........repeating cycle.
in human ..........born grow......maturity..........death
in company..........start.........growth .........expotential growth.......other competitor try
to expand...........a stable position........decay
in ECONOMY BOOM BUST CYCLE
at low of gnp, recession .........bank interest cut........create idea generator. to do
business........easy margin ....confidence..........make business click,now further money
creates expansion ........creates boom.........growth rate improve........ultimately
expansion r parabollic.........fools try to make without knowing what to make........paper
business tiger.......unnecessary expansion,excessive supply of creates demand
down....further rate rise by bank.......add the balloon ready to bust......inflation show its
ugly head.prudent sells share........take cash.......suddenly based on a rumour , panick
reaction .........make bubble busts.........slowly recession moves up,....economic growth
rate comes down............this CYCLE occurs again again.in stock market we call it bullbear cycle,trough -peak analysis.
just see indian market.........guess what state it is now
.....................
EXPERIMENTAL TA..
2] RANDOM NESS HAS ITS ROLE
ITS AFTER BREAKING OF RANDOMNESS TREND STARTS
WHEN TREND TERMINATESITS DIFFICULT TO PREDICT
3] PRICE PREDICTION AND STOP GIVES OBJECTIVITY
HOWEVER.. BASED ON WHAT PRICE TELLING U MUST EXECUTE
CONTROL OVER MIND MOST IMP.
4] SCANNING TOOLPORTFOLIO CONCEPT HELPFUL
THESE R HARD CORE FACT BASED ON OBSERVATION OF

MARKET FOR LAST 12YR
05 July 2015
11:29 AM
AUCTION CONCEPT IS VERY IMP FOR TRADING, NEGOTION OF BUYER AND SELLER ..A VALUE ZONE,HIGHER UNJUSTIFIED A SELL PT,....LOWER A GAIN
UNJUSTIFIED BUY PT.
...FOR A DAYTRADER LAST 0.5HR..TIME TO CLOSE TRADE[IRRESPECTIVE OF PROFIT/LOSS]
PROFESSIONAL MONEY MANAGER WHO BELIEVES IN TA LOOK FROM LONGER TIME WEEK/MONTH.....START BUY THEN AS THEY HAVE MONEYPOWER.
normally we all @ lower price ....use for buy oppurtunity and use higher price zone for profit booking oppurtunity.
in normal condition market stay at top or bottom a little .and stabilise at price equilibrium pt
IF WE LOOK FROM LONGER TIMEFRAME WE HAVE BETTER ANALYSIS TO TRADE
IMBALANCE OF PRICE IS OPPURTUNITY
HENCE PRICE TRY TO REACH QUICKLY TO BALANCE.
NOW TIME TO REACH THAT...IS OPPURTUNITY
WE must study behavior of market to understand it.
define ;RANGE DEVELOPMENT
NORMAL DAY
TREND DAY.....UP AND DOWN [nothing told consider UP - to put specific idea]
VOLATILE DAY
................
RANGE -HELPS TO DEFINE DAY IN TIME
...............
CONCEPT OF CONTROL ; BUYER VS. SELLER
................
PRICE NORMALLY GREED DRIVEN IS UP
PRICE UNDER CONTROL OF FEAR...DOWN TREND
MARKET MOVES FROM IMBALANCE TO BALANCE
THROUGH PRICE EXTREME/RANGE EXPANSION OR VALUE AREA..SLOW MOVE
LONGTERM TRADER WATCH FOR OPPURTUNITY, SEARCH FOR A PRINT[REPEATATIVE TENDENCY OF EDGE- 'GIANT FOOTPRINT'
WHEN LARGE BUYERS COME PRICE MOVE UP AND WHEN BIG SELLORDER COMES PRICE FALL DOWN.
IN UPMOVES LIKE RESPONSES COME FROM GREED DRIVEN OBSERVER
..................
HENCE MARKET BEHAVIOR STUDY FURTHER BREAK UP 2SUBTLE ISSUE
1]IMBALANCED DIRECTIONAL MOVE
2]BALANCED ROTATION OF MONEY IN CYCLE /FOR SECTOR ALSO DUE TO CONSTANT CHANGE OF PARTICIPANTS PSYCHOLOGY[GREED AND FEAR]
OPNION...Longterm opinion of price reflects true value of stock
current value=todays value[all known and unknown openion hidden in price]
its imbalance we search for.....in weekly chart we see value shifting higher to see oppurtunity of longterm buy
range extension[predictive] shows biasness of close,normally in a range day DAYTRADER do active participation[whether earn or lose] at day top and at day
bottom(some at top believe in break out, some at same price SEE reversal)
now continuity of price at extension towards end of session provide biasness of watcher[better skilled trader] to put money f or future oppurtunity to earn with
trend[continuation]
AT CLOSE TIME HIGHER PRICE BUYING ACTIVITY SUGGEST LONG TIME STRONG HAND BUYER ACTIVE [OPPURTUNITY EXISTS TO EARN]
HENCE STUDY FOR OPPURTUNITY TO CONTINUATION OF IMBALANCE IS IMP WITH THE HELP OF 3 TOOL......PRICE,VALUE AND MARKET ACTIVITY.
................
wide expansion is good for daytrade.....from range to wider range ...to be watched for
now narrow range suggests 'side ways market'.....
INITIATION OF TRADE
.............................
1.WATCH[OBSERVATION]
2.RESPONSE- i]extreme......STOP
ii] favourable[ continue to hold or add]
other factor....problem of hope
3.now study specific case[with past data ,if ieod very good
4. failed expansion....too much too soon
5.trend termination...........trend of opposite....if professional fading coming with volume
..........................
always ask current condition , value with mean [open high low close=mean] vs close price
HOW LONG TERM PLAY TRADER R THINKING ? R THEY UNCERTAIN ??
IF YES , DONT PUT MONEY......OBSERVE, LET OPPURTUNITY SLIP BUT DERISK
.....so now u test idea
check imbalance & direction of price move.......to reach a value in time and rupee from imbalance to balance.
IF FAILED EXPANSION CAN GIVE FADE....OPPOSITE DIRECTION TRADE[VICIOUS MOMENTUM
NEXT COMES STRENGTH OF BUYER AND HOLDING POWER....VS MARKETING STRATEGY ADOPTED BY MEDIA.....TO LURE THE WEAK MIND IN FORMING A
CROWD RUN/CHASE
.....same way at bottom imbalance occur .........if new directional trend fail ? study....
oppurtunity or risk!!!
Study- neutral day and volatile day
...........................day 1,day 2, day 3, day 4, day 5.......@TOP ZONE AND BOTTOM ZONE
.R U GETTING THE SIMILARITY ......HOPE NOW USE IT FOR STOCK SP. CASE
now we actually watch this constantly- unfortunately positional holding [blocked opinion of direction] CRIPPLE OUR READING[ANALYSIS CAPACITY]
IMP OF LONGTERM TRADER,- ACTIVE PARTICIPATION CREATES BULLISH BIAS . ON THE CONTRARY AGGRESSIVE SELL BY THEM CAUSE DOWNFALL.
WHEN THEY R UNDECIDED , WATCHING.....market stays in sideways.
Another imp observation ,....once first move fail[neutralise by counter selling] THEN AGAIN MOVE ...........THIS NORMALLY HEL PFUL, ACTUALLY 3RD MOVE
HAS MORE STATISTICAL UPBIAS .
MIND IT ALWAYS.......PERCEPTION OF VALUE ITSELF IS VARIABLE
U MUST STUDY RELATIONSHIP WITH PREVIOUS DAY/WEEK......WHAT IS HAPPENING NOW?IN MARKET ,IN THIS SESSION ..TODAY....THIS HR??
STUDY BALANCED DISTRIBUTION WHICH NORMALLY HAPPENS BUT AWARE OF POTENTIAL LIQUIDATION PT
A bull is ready to liquidate for profit .......but where??
adding of new info [+ive dimention].....no risk....hence hold further for bigger profit.
but opposite direction move starts.....bull must liquidate to book money profit.
hence excess of profit[desire].....act a new dimention to an existing trade
VOLUME TO STUDY....BIG MEANS MORE ATTRACTIVE BUYER OR SELLER
HENCE STUDY AFTER OPENING WITH RESPECT TO YESTERDAY CLOSE .......HOW MARKET IS BEHAVING TODAY [1/2 HR]...CRUCIAL .UNDERSTAND WHAT IS
A TREND IN CONTINUITY.
WHETHER IT EXISTS AND FURTHER CHANCE OF CONTINUITY , ON THE CONTRARY imbalance and move to extreme or mean reversion balancin g move[no
trade oppurtunity exist then]
ON THIS CONDITION ON ACTUAL MARKET CORRECT TRADE EXIST.....AND THIS IMBALANCE AND MOVE TO EXTREME FACILITATE A TRADE[ CONTINU ATION
TYPE BUY SYNDROME TRADE WITH TREND]
HOWEVER ANOTHER DIFFERENT BALL GAME IS CHOSEN BY A FEW PRO.
HOWEVER ANOTHER DIFFERENT BALL GAME IS CHOSEN BY A FEW PRO.

LOGIC..change can happen rapidly .observe[perception change of participants]
Normally its dificult to understand change of trend due to bias[ so being minority these pro r in right side of trade -,unexpected event duly taken care of]
study session 1 hr chart bias & gap fill..session 2 ...session 3...session 4 session 5
similarly in day 1 day 2 day 3 day4 ....day5......WHEN OPPSITE FORCE ATTACK ?
HOW IT ATTACK ........INDIVIDUALS PERCEPTION OF VALUE......MOMENTARILY WEEK HAND GO IN UNCERTAINITY MODE AND ACT FOR SELF
SABOTAGE.....THROW AWAY IDEA [IF AT ALL] IN PANIC.......AND supply money to this cold blooded pro......as if natural loser[be ing weak disciplined person]
HOWEVER STRONG HAND ALWAYS PROVEN RIGHT DUE TO CONFIDENCE[JUST LIKE RECENT ENTRY ]STICK TO AND READY TO BUY , ABSORB AT FALLI NG
PRICE CONSIDERING IT AS FURTHER BUYING OPPURTUNITY
hence perception of same event has 2fold outcome/influence.......weak hand seller and strong hand as buyer
.......as a normal person we r fearful of uncertainity , so any event which has financial implication we watch, and try to de rive its influence in short term and
those who can think for long term,......size and visionity.....a cluster zone can be created considering upper boundary price tag[target]....and lower zone value
[entry pt]
All we know condition affects price.......so plan should be ,
1]change of price up...sell oppurtunity
2]low zone...considerably buy idea....provided new percept not so bad
........dynamics of each case- stock specific is different
....hence another idea ....i].surprise event.
Ii]unlikely event
Iii]expected event ......has to be added
.................
in expected event normally mean reversion towards value equilibrium occur
another 2 factor.....fundamental impact of an event and understanding time frame r imp.
normally higher time frame ,say weekly......has more bias...
however in case an unlikely event ,occurs as a shock, price and its value both move together towards a directional bias until stability
hence give priority to surprise event as it act as oppurtunity
on the contrary if u r in wrong side , book loss early if possible reverse position
......remember for expected event after announcement normally price reacts to opposite direction
THIS INSIGHT HELP TO UNDERSTAND RISK BETTER IN TRADING
buyers /sellers confidence and uncertainity r imp factor
actually buyers' dominance /sellers big volume attack....this 2 greatly influence price and so called direction into 'oppurtu nity' [threat to a fool]
wild move suggests thrust, when participant transfer from hesitent to aggressive ...wide range occurs.where as openion based participation without rigid
parameter and future uncertainiy cause wide fluctuation [volatility]
hence a feel for value is vital
oppurtunity=price away from actual value
normally price fluctuate above and below value
execute=how quick u can act
depends on how much clearly u can visualise with certainity
always study from long term prospective,..what chance is there from present balance to go to quickly imbalance and stabilise higher[new] balance zone
.....now ask ....will sombody buy at higher,if yes....ok..buy now.
for shorting , if u see big seller may come or not.
hence mean reversion is a good theory to apply in market
..........................
hence u check if at present
1] current market is undervalued or not [strategy]
2]study of imbalance in buyer'side
3]continuity factor
..................
hence reaction to news is an imp study to understand internal strength of market
confident trader[longterm mature buyer] vs. novice day to day [trouble lover]
...........................
remember current perception of value r always reflected in price
............................
be ready for atleast 2 different event 1]unlikely.....2]expected one
play plan for both r entirely different
for unlikely event,if u r in otherside ,damage is very costly,hence prepare for it,..as then price and value both quickly goe s against u,shockingly bigger loss
hence be ready in mental level for it[worst case scenario]
experience helps to understand this price/value/event relationship and expectation of people vs. news and its reflection in p rice
this i call market dynamics of watchers
hence confidence and uncertainity of watchers[potential buyer/seller] gives only directional bias.with uncertainity more rota tion occurs ie. distribution phase
PRICE DISTRIBUTION STUDY
........................... study of ask vs. bid
1]915..9-45first half hr
2]13-1330 lunch hr
volume or order flow study based on
3]15-1530 close hr tick data
.................................................. ..............................
this study of tpo...time price oppurtunity concept u have to do for u [own research]
mine shall not validate ur plan....however i suggest to distinguish to understand
up day
down day
volatile day
.................
first half hr ..opening initial balance with yesterday close
lunch hr...observation of biasness development
closing hr...time to take action
................
most imp is long term holder[strong money] r participating or they r sensing danger...hence selling delivery [distributing] t o sit on cash and/or taking money
out
.............
normally all buyers want to buy low and sell at profit[high]
so categorise buyers......short term and long term in trading percept.
long term trader search for unfair low price with bigger view with higher holding period
shortterm player search and book profit with quick imbalance
hence when break out style is visible ,ranging is moving up with interesting higher pivot break pt, with perception of imbala nce to continue.......long term
player put big chunk of money near day end with high bias of continuity
so short term day trade type player ,skillful in execution take its advantage ..with their computer generated signal [an edge to take !%profit] continuously
take profit with him as per his comfort level ......he is happy , as his scanner suggest oppurtunity every now and then.....b ased on %up list/volume up signal
/a quick pivot break up.
however for long term buyer its not that easy........he has to search continuity of directional bias , ruthlessly buy out vol ume at top with money power to
prove break out.
prove break out.

hence study on eod /weekly chart of impulse[main direction] and distribution [reaction]..
where this phenomena is going to happen now
-------------------------------------------------------------------------------hence i repeat again ,good 1-2 day mometum players use to play to trade in the side of big money player.
some other skillful player trade ..buy and sell in small targeted zone.
however when other players-,new players vs. strong money players maintain equilibrium ....
hence plan of small profit with sector rotation occur as equilibrium tradezone facilitates buy low at support and fade at wee kly resistance pt.
so long term fund is out and watching as imbalance creation is aim for strong hand......with watch when they found without ne ws some strong resistance zone
is touching again and again ,they test with good money power ..can they break it? ,if yes, put it....and pull price price out of that resistance to new imbalance
with a hope of continuity ,luckily greedy buyer or fearful short seller, sometimes media with news help them to fulfil target .
this balance area of around resistance line is test ground .....against new buyer by other pro seller or experiment field for short term players,
however ...continuity or holding several days over this new acquired land [from bear]....severity of opponent comes down ...a s a true pro they leave to win
against bull in other stock where high price on top may attract short seller.
corolliary: market moves directionally unless opposite [reaction against impulse]...strong orderflow comes[attack by big sell ].
CONCEPT OF WHOLE [MARKET] VS. PART[INDIVIDUAL STOCK]
..................
nifty component imp one r to be checked .....similarly for summation of total effect ie. play plan of nifty.
similarly for intraday........first playplan
i]range is defined ....high/low in first 10min...[for av trader 1/2 hr]
balancing of flow in it.....when and where it showing range expansion.....show direction defined
ii]so verifying continuity of imbalance in mental level
[i do it,u can use suitable software for it]
enter the trade.....as strong order flow is coming inyour direction ,while breaking predefined pivot ........
yes its the real intraday trade.
[however unless u know control of mind /experience.....hit of moment its not possible
.
top,high
I 1UPPER ZONE
I_
I 2MID ZONE,EQUILIBRIUM VALUE
I_
I
I_3 LOWER ZONE ,BEARISH BIAS
..............LET US STUDY THIS FIGURE, KEEP STRONGLY IN MIND
FOR OUR SIMPLICITY WE SEE AS A DAY BAR, HIGH.MIDDLE,LOW
middle maintain balance,some body called mean value....with a random +/- small value
a zone of equilibrium ,trade will try to facilitate near to it.
now total day bar.....dissect in 3 part, 1part top
2 part middle
3 part bottom
hence a daily range divide in 3 sect.......further study of a day activity.
imp thing is close, by defn end of day close defines....after fight by full day among bull vs. bear....final score.....where they maintain equilibrium
some body use crude 1/3 each, somebody modify total range 0-20 top
20-80 middle
80- 100 low
its in percentage of total day range, for deep study of close
i prefer for indian market , top 15%upbias
15-85%middle equilibrium range where fluctuation normal,mean reversion works
85- 100% bottom value for -bias
somebody prefers to calculate with pivot idea,someone with mean range ...top..bottom,
whatever may be chosen ...structure is same .........a top bias ,an mean equilibrium,a bottom bearish bias
.................we have to think now where is close, that way the biasness.
closing on top........strong upward bias
middle zone....any thing can happen
bottom....suggest bearish bias
now after day close.....all news info,new development...money extra available to put market
reflect quickly with next day opening.
as to facilitate trade day trader search for balance ,longterm player search for imbalance....entry idea and exit plan for bo th of them r different[in longterm
we search for continuity]
now this similar concept can be put in hr bar range and weekly bar
normally higher time frame has more influence
however for simplicity we study hr bar here to understand impact on day trade from microlevel,
now on that particular range closing on top suggest we r interested
next hr bar more wide...moving with higher price zone decides to enter bullside..with big order flow coming in same direction
continuity 5-6bar creates a total day picture......with further strong bias
hints....friday close bar study ,close at bottom .....has given me computer generated short signal in my simple 10hr dema,clo se cut down]
.............role of observant and vigilant
..................................................
all we know ftse market of opening .....affects around 14hr in trading......and opening bias of nasdaq in tech shares.
now beginning must be observed carefully[in fluctuation as well as orderflow]
price must be treated as supreme ............holding of price over a particular value ...in a particular duration suggest lot of things
yes its the secret of trading
hence study of imbalance and test trade r imp.
...now after new price discovery it has a typical tendency to reach new balance , old resistance bounce .....idea of test val idity of new price strength
somebody puts in oldway of impulse......and distribution [reaction]....upto a particular retracement value,
however next flow is all imp .......as it gives all important continuity of imbalance.....as seen in pennant and flag pattern
in other words orderflow or new money is vital.
imp oppurtunity occurs if continuiity can be seen,......VISUALISE for higher time frame .
the delivery trade by close........drying the float uplift price normally further up.
some of us in this field of trade experiment put this mean value +/- 2sigma.....a balanced zone with typical past data calculation for 'sigma' value...in this
days of statistics,for them monthly once new value based on 20 trade day better.......however i warn too much math make tradi ng less profit worthy....as its
the execution and sense of survival that counts after stoping self sabotage,...holding the profitable trade sufficiently take care of u and ur family.dream big
should not be motto,learn big and live in reality
.................
normally high value order occuring in the stable zone slowly seen....as all r ready to watch for volume play.market moves as perception of value[fundamental]
changes.as all [different time ,different style players participate in market simultaneously view and analysis is not so easy [in fact very difficult time consuming
process for me six year to learn and i am putting this hypothesis].......thats why an organized analytical view help.
key component r 1]interest of shortterm buyer[intraday]
key component r 1]interest of shortterm buyer[intraday]

2]interest from weekly chart[view from intermediate term]
3]interest of swing style [eod study followed by av
hence organize trade from this 3 element[put 3 different power spec. to see different view
and now give weightage]..........VISUALISATION IS KEY TRADE TOOL, IT ONLY HELPS TO ACT WHEN OPPURTUNITY/THREAT COMES ........ .otherwise
fear/greed put u wrong trade..
put u in info paralysis,courage not to act.......u can be an analyst but not a trader.
larger time player has thats why better judgement,as considering temp fall they can buy in strong bull run.
report publication and its impact change in near term value.......later when bruice die down they enter slowly if long term v iew is that really good.in all time
frame balancing occur through movement of price from quick imbalance[impulsive] to reach next probable balanced zone. volume suggests aggressiveness of
participant
study of std 1-2-3 pattern[a-b-c named by others] is always helpful to understand change in value perception
successive session continue ie. biasness of trend.uncertain buyer/seller can not hold trade
linda has suggested first this simple break up of a range bar in 3sect......higher as 1, middle equilibrium and 3 low as down bias......now close gives more
mathematical judgement than foolish openion style trade,.....see at close where more activity is ,in tick chart volume by mor e activity suggest buy by short
term moody buyer or deep pocket longterm player .....
study of time and distance move by price clears it......
time when it breaks and move up very imp.
influence of current pice[close of last] also to be seen.close shows final sentiment of that particular time frame ..balance pt of bull/bear.now come
influence ........if influence of price towards back[rationality].....price goes back to mean reversion.
if confirmity of irrational by price........up and up or by gap up ......concept of greed or trend fulfils.now most market pa rticipant believe [mean of total ie.
market majority] it shallmove up....really it will move up.
this is the forward move of price......confirmity.
........................
normally most of time market maintain balance[equilibrium].
short term break of balance shown in long term chart[weekly]...gives oppurtunity when strong money players[biased] participat e in trade with a vbiew to
hold.
imbalance strength can be studed by volume , price roc also imp.....also study distribution [price relationship]
-------------------------------------------------------------------------------Majority time after new value discovery price move quickly occurs by impulsive move to reach new stable zone. a forward price driveness occurs in market,
based on earlier close and feed by media.among all timeframe player higher time frame has max influence [dominance]
.......................recognisation of trend..............
to define a trend ,a ref pt has to taken..it may be yesterday close ...mean pt. or opening stabilise
another factor,.....market needs time to develop trend [continuation]..ie. market must show some move , then opposite directi on force has to be neutralised,
then only new direction strong trend move possible .
step 1; study in 'balance area'
so which direction imbalance is building up
step 2; now in relation to bigger picture ...how a trend may form
so fairly low..fairly high] ...which one is breaking with thrust ....govern..move in future
REMINISCENCE OF A TRADE-LEARNER
05 July 2015
12:13 PM

first is what u r ?be honest to answer it...........say mr dhakkan.........an exceptional knowledgable fellow loses in market .........where as sgm earns from
market regular basis.
...........answer is right initiation.
u must have zeal to learn..........not zeal for trading.
.................................................. .....................
personal adaptibility..............another key theme.
.................................................. ........
in ur personal life .........u play different role, though u feel trader in u, can surpass other
................fact may be its incoherent with ur service life,family life.so u have to put trader in u..........in spl nurs ery.............to grow it up........under best
care by u
IT TAKES TIME.
.........................................
aim to be a professional trader...........who gets 100% annual return from market........that is only job.normally it takes 4 yr after initiation to become a pro.
since middleclass and concept of earn and learn imp...........it reqd some time before initiation..........from amateur to pr o.
so this amateur state to be defined...............approx. 3yr........gather knowledge......
take trade here and there..........some profit some loss..........many profits......then some big loss .......back to square one[ludo]............journey to take
tips.......with mixed experience.....reading ta books /internet /message board/tv watch/fundamental of business..and economy. ............lucky to be get
mentor........or learn by hard knock from market.
one thing is sure..................he knows whether trading is for him...........so his next attempt is serious[if not perish ed already]
so amateur now knows value of knowledge, danger of half knowledge ......imp of risk analysis.........value of probability
can he be governed by price or by opinion....................will decide his fate.
.................................................. ......................
if opinion comeback to fa..........learn to be an analyst[an mba in finance or cfa in india]
study and investigate............talk and talk.......sell product[to client name of share.....a dream].............ofcourse b uy it in name of relatives[to avoid insider
trap]........yes its a way........workable...........big names do in india
so called fund managers..........+aggressive propaganda/marketting in tv channels
.................................................. ...............................................
problem of opinion is...........u can not use stop.basically amateur trades based on emotion...........forgetting its a game of maturity.worst is..........a trade
loss not booked
...........converted to an investment.............a bigger loss[i have enough in this trap]
If U BELIEVE IN FUNDAMENTAL, an enormous amount of information u have to gather and assimilate...........then understand game of hype.
instead if u understand chart.....................chance of success av joe is higher.so now
perceive.....a method is reqd,discipline is reqd.............commitment is reqd..........only on those condition i shall trad e.............otherwise shall pass on.
so ..........trade-learner..........must never be an investrader.
must not believe in gossip/tips
a routine to learn...........a habit of self evaluation ........take practice trade ........and evalute why he is right/when wrong why?.........that is practicing of
right side of chart......a software called omnitrader'......has this game playing mode.......excellent for trade learner..... ....as its choose stock.........one yr
back.......now allow u guess right.....bar by bar ......game goes on...pattern will be developed before ur eye.
chart is nothing but reflection of market participants........interpretation.........what is ur perception?
........what on earth is ur superiority to predict right side........RIGHT ......most of the time.
yes only by watching u can learn how to watch...........do it......learn swimming only by swim
,learn driving only by driving..........yes u reqd zeal...........zeal not to trade but to watch....
how beautifully its telling .........untold story of market.......u can check accuracy later..........by reading newspaper/wa tching TV channel
have u heard word 'volatility'..........its nothing but when, predictive power is poor.....at random in statistical term.
o conceptually u have to kill ur investment attitude..........develop a feel for price....be indifferent to habit of listen t o news[media hype].
so u know what u r doing...................
let us come to game of caution ............speculation.self question how far u r right by yourself?........so far no help com es..........can u survive on own?if
yes.......how is ur ESP?..........just shuffle a deck of cards............draw 1........can u guess?draw another......2nd gue ss.......r u right this
time?..........ok .....let us make this simple......
distribute......52 cards in 4hands.........now see 1 hand[13cards].........can u guess other cards?.........so in other hands what is there.............can u see by
observing other 13 cards................just check ur accuracy level and perception..........now by seeing 3rd hand, anybody can tell.......other 13[52-13-13-13=
13]
...............if u dont like cards......simply take a dice ...1 -2-3-4-5-6.let it be rolled.........
but u guess......beforehand........outcome......50 observation........,say sl no ur chosen no,actual observation...........ho w many times both r
right...............just see.
if u r less than 40% correct.............throw away............just understand speculation is a loser's game.
THEN HOW U SHALL TRY?
be reactionary............follow trend.........when random ,simply sit out.
understand trend........then trend continuity...........at what condition u shall enter.......how u shall know .......U R WRO NG THIS TIME..............simply get
out.
definitely trader in u,..........will get good oxygen to live long.
then learn to question ......idea behind those trade.........can u assimilate.......read dr elder..........its stimulant for a trader.
..
knowledge is over........however LEARNER does not know how market works............this he has to learn by self. i just put s ome facts
1.MARKET IS NOT PREDICTABLE,PATIENCE PAYS
2.BASED ON OPPURTUNITY AS DEFINED ,EFFICIENT MARKET OBSERVER CAN MAKE MONEY OUT OF MARKET.
3.MANY A TIME U R WRONG,JUST LOSE LESS.......SOMETIMES U R RIGHT.........USE BETTER MONEY MANAGEMENT TO EARN OUT OF IT.
4.TREND PLAN IS EASIER TO FOLLOW
5.TRADEZONE IS EASIER TO DEFINE...........DIFFICULT TO MAKE MONEY OUT OF IT.
6.KILL UR INVESTMENT AND GAMBLING ATTITUDE ..........BEFORE THEY RUIN U.
7.WITH TIME U CAN LEARN..........WITHOUT A DEFINED SYSTEM......ITS ALMOST IMPOSSIBLE TO SURVIVE IN MARKET
8.UNDERSTAND TREND TERMINATION.
9.RISK ANALYSIS IS MUST,THROW AWAY....HOPE,FEAR,GREED
10.DEFINE A TIME FRAME IN WHICH U CAN OUTGUESS OTHER TRADER ON REGULAR BASIS[UR EARNING STATEMENT ,DRAWDOWN ANALYSIS TELLS
U].......JUST STICK TO IT
.................................................. .....................
so what r the factors trade-learner should see?
1. self modification.........throwing out investment attitude /gambling tendency........replace with defined risk strategy
2.understand that price is always balanced..............but may have a biased in longer time frame.........say last week char t suggests -bias for nifty...........so
on monday by confirmation by price.......around 11-1130..........u r supposed to short ...........allowing profit book on thursday.........1030 hr.if u can not
see..........bearish scenario.......u r yet to learn it................profit from price......is not that easy.somewhere..... .u have some
opinion......fear/hope...........which is self destructive.
3. so a system is called for.........3way price can move........up down nowhere.
be ready .........for all three.........i.e. strategic planning.............now based on your signal trigger.............u en ter.get out..........when continuity in that
direction nomore high probability.
Let us see some successful Traders

05 July 2015
12:13 PM
let us see some successful traders .........i have seen them.

trader A............a scalper......a future player......a trade vetaren,believes in some condition of market shall make a directional move possible,......based on
extensive backtesting, develop programme code.......real time explorer signal ,enter trade....
book profit/loss after some minute.naturally its need not to say %accuracy very high .
trader B..........another scalper.......future player,screen addict,programmer.....believe in no psychological issue.........follow dynamic strength/weakness
zone .......take reversal trade........accuracy level very high,also have discreation of position size,based on signal strength.
traderC............half hr signal based trader.....comes to tv,believe in pattern....buy on low,reverse penetration of half size candle,stop at1stick below lower
candle......no programme.....just eyeball,watch multi chart in iris,16@a time two screen=32 stock,..around 70%accuracy level,has a pro friend to save his
skin other 30%by flashing call.
trader D........an exceptional knowledgable person,a mature of market,use hrly chart,calmly trade based on trend........study mostly at night.......another
future/call-put player...........use trade continuity concept+mm.
trader E........a nervous trader.......guides his boys to take now....dont click himself,break out........principle..........tells them where stop zone........add
them to 5times on right trade,ask them@3-30 what happened,.......mean while dont see same position again in intraday. i ask him?........his
suggestion.......since he knows him, its 2nd observation on price will affect his objectivity, instead he search for other oppurtunity....
moreover this 15000/-pm boys can handle better execution and observe scenario after entry.
trader F........eod player,news study.........whether its for dumping/may create euphoria.
cool enough to get out if wrong.
................
trader G.......amateur trader like me[different profession...loser in day trade]has a list of around 80 stock in different sector,all he knows of
fundamentals.......at what condition they shall move up.....track result and order flow,also macro economy.so when big fall comes he sees how far big fall
possible,when pro starts accumulation........from chart he see just accumulation.......and big volume charning at top to get out. no he dont use
stop.........but definitely sell total portfolio.......yes this amateur earn 100%return in all last 5 yr,including this yr....40%........trade only on those stock
where he knows,has a notebook......on which fundamental change offer an oppurtunity for which stock[groupA and midcap.....member of
equitymaster,nothing else....through ***** base see free data
....definitely give 2hr a day in study...and weekend portfolio analysis.....definitely buy after big fall .......a contrarian character.
.................................................. ...........
yes i have seen them........not while they bloom,after in their maturity.......though 6 of them r different........deadly accurate in their craft......no
hotchpotch.common theme......to reach there they evolve.......and stick to it.another thing.......they r honest
[though trader E hides to his staff,trader C braggs regarding market opinion as profession.trader F....regarding his job success]...........commitment
exceptionally high.
----------------------------------------------------------------------------------------Recently i have a meet of a group of 15, so called trade dreamers.........i told them ...'none of u r suitable for trading'.........come to reality...dreaming is
good to start new business....hard work pays there..........here u reqd some typical knack and do alone attitude. u have to do habit of interpretation...go
with the flow.......unfortunately most people r blocked by own trap......clean slate is reqd.even a great SAINT can not produce another saint...[Trading is
not everybody's cup of tea]
those who try to understand what i mean pl read......theme behind new high/advance decline/vix.....broad market analysis]
EXPRESSION is another place...where learners lag............clear thought process ,..........why there is only one boss thats YOU?
Can u see the versality of saint?......so smoothly he can travel for oppurtunity from one time frame to another..........because of his ta depth and
calmness.
................................
i know many of trade learner......who often come and go....study a lot but clumsy in thought process..
...go back to tips-giver.....saab a le lo'...or a tip....breakfast analyst....just like kitty party..discussion
[ladies excuse me i dont like to hurt].......useless talk no progress..........max development for them to be a call giver.
in stead they should contact to learn/see trader......who analyse system give free call with radical judgement ,ofcourse implementable.
EXAMPLE............ say last week chart suggests -bias for nifty...........so on monday by confirmation by price.......around 11-1130..........u r supposed to
short ...........allowing profit book on thursday...
....1030 hr.if u can not see.......bearish scenario.......u r yet to learn it.
.................................................. ................
i am asked on telephone on thursday ..........after u could predict it ....how before?
......yes telling on monday.........confirmation by price.......I HAVE NO ANSWER.
Pl remember-.NO DOUBT THOSE WHO PLAY 3MIN CHART......PREDICT 15-18MIN.similarly studying in hr /eod chart ............prediction is possible.but THE
CALLER ARGUED 8HR BEFORE I AM TELLING.
............i have to say ...its hunch........afterall many years before........i practiced by seeing 13 cards.........what may be others 13 cards in other three
hands, with av accuracy of 6/7 cards right reading.
...................................
for critics its nothing but dart throw..........[btw i have shown many a time this shall move up now. .....accurately..in front of screen , idea is new order
position add +quick calculation]..
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
after u become pro.........just stop slippage from there..........basically to follow a checklist,follow ur system diligently.........dont be extra smart to self
sabotage.
................
u must have some relaxation which is noway relate to trading to stop burn out of u.
some follow outing...........some help fellow trader......some does backtest........some reads book.
.............
but when they comeback again............all r extra committed.
. have u seen some trader-scalper?
..........basically they r good at computer signal based trading,easily implement stop,stick to strong zone intraday......normally have zero opinion.mostly
stick to specialist.
................................
short term trader...........primarily trade based on momentum,.5/1hr chart ......signal validity........10..15hr,study eod to find out candidate.....in market hr
use predefined confirmation for entry /exit.
position trader.......he knows what he is doing.........experience taught him when to enter and exit. at dynamic support..........enter considering little fall is
possible, or take high probability break out trade.........mostly they use eyeball/direct price study .
there is another neobuddist/intellect persuation...........currently developing in indian hype..........trading best on expected result/after result move.here
they sought with news how price shall react ........prescribed continuity ,some time try to outguess market........mostly lose money.on the
contrary.........safe buy like fm when market falls r safer method[contrarian].
Mkt moves in a fashion of it's own,we do not try to predict it but follow it,say it went upto a certain price & the next candle / bar could not sustain & falls
below the earlier few bars ,established gradient (the gradient eastablished by the earlier candle),that is a SMS by the Mkt,now we are to watch carefully
whether this was a one off & see the next ongoing bar.
Now we can see the start of a temporary down move.
Remember Mkt ,in most of the time it will always make a second attempt towards the earlier Up move.We are now ready to take a Short Entry hence wait
for Mkt to make a small upmove ,there with a Wide Eye we make a Short Entry ,though our eyes are wide we shrewdly calculate the Stop Price BEFORE
initiating the Trade if within our Money Mgmt. discipline ,we simply pull the trigger ,no hesitation no 2nd thought & after the trade instantly put the Stop
order,becoz Mkt has told us the LIMIT area of it's Upmove.
Never do we trade Indicator / Osscillators / Pattern / etc.We should have this Mind-Set that we should never try or Dream of trading with Indicators.
(Any Indicator even a conventional MACD is just good enough to Trade Mkt.)
We trade Price & Price have a PERSPECTIVE ,that is the Bigger picture.If you cant see the bigger picture in one cursory glance to a chart then be assured
We trade Price & Price have a PERSPECTIVE ,that is the Bigger picture.If you cant see the bigger picture in one cursory glance to a chart then be assured
you have to have more 100 hrs of Screen time,under your belt,otherwise use a Longer period MA to guide you about the bigger trend.
Here to determine the Perspective ,i have seen many old traders of my age use simple Pivot only to determine the Bigger picture ,there analogy if the
Price is below a pivot ,then bigger picture (-)ve & they will trade towards S1.
Now 2nd stage is identifying the Trend ,how ? by Saint's method,HH HL or LH LL ,simple no damn indicator only Price action Nothing else.
We now have the Bigger picture we also have the Present Ongoing Trend in Wave forms.
Now we are to initiate the Trade TOWARDS the Bigger picture in the Ongoing waves reversal zone.Say we intend to Long & Mkt moving Down wait & wait
until you get HH & HL .Remember we do not trade whenever Close above ,.. but we wait to get our HH & HL .Then ONLY after you get the Ongoing
Wave also Conforming TOWARDS the Bigger picture you may need a TOOL to trigger your Entry Point ,at that point even a conventional MACD if gives Buy
signal we take it becoz the EDGE is already there ,the Chances of Win are more,hence any Tom Dick & Harry indicator osscillator pattern will Do,will suffice
our need of a Trigger.
In many of my chart u may have seen a Money Management tool,if above that Stop then my Longs will be more if below my Shorts will be more,if below
Stop i intend Long then normal qty,if above Stop i initiate Short Qty would be normal.That also helps me to see the Bigger picture the Perspective the Back
drop
Remember even when we get HH / HL & the Bigger picture is for Short ,we do not LONG but Wait for the Short,to get the Edge in our favour ,both
PERSPECTIVE & Ongoing Wave are to be in SAME direction.
---------------------------------------------------------------------------------------------------------------
So what we learned so far?

05 July 2015
12:14 PM
trading is an intellectual persuit with greed driven mechanism,not suitable for all.
..........honesty zeal to learn,stoicism........be in present,visualisation......action,cool nerve.
....................
bma........broad market analysis........long drawn interrelated idea
concept of fad..........sense of smelling danger.
........................
after this comes ta........to know how other trader shall behave+price confirmation concept.
...............
next come data +software...........synchronisation........signal development /backtesting
............implementation
after that polishing what works for u and unlearning all other things.last thing is very difficult.....indians have tendency of garbage in..........though cv
relentlessly suggests to check utility first and sharpen own tool.
btw...........nowadays forex concept , from viratech data all currency pair and chart study of world index.............suggest..........money is moving out from
which country and entering where.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Hope now all have a fair idea about the capital mkt & the Risk involved.
Intraday....in any chart in one axis is Time,hence if now we compress the charts say from weekly figs to monthly or even to yrly,we will find a clear Trend
or a bias to (+)ve or (-)ve.
If that be so then WHY we expand the time frame to intraday,where the volatility is more or noise is more ?
I am RISKING more ,for what gains ,brokerage,margin,thrill,working from home.
Before indulging in this More Risky aspect ,plz ask what do i gain.
And on what LOGIC this seems very easier task.
ANSWER:
Day trading is to have complete control on your every emotion & 1 slip = 1 or more loss & remember few good trades are always what lures people to daytrade & that's when trouble starts, then they dont give up even in losses & its a battle of ego.
.................Nobody can disagree that this is Risky,if so then the Outcome is UNCERTAIN.
What is the PROBABILITY of the outcome.So TEST on past incedents to find out.
How do we know that all those past performances where not RANDOM.
Was Big Bang a Random ,a evolutionary ? a scientific process ? Can those be measured to find out or based on BELIEF ? What should we do ?
Gosh i thought day-trading was an easier job ."Shrewd, Sharp, Silent" are only few traits one needed to experiment for trading, just my obeservation
though.
I want to learn as much as I can and keep learning in future at the same time start very small and make it big later.
I am willing to risk a small amount of my hard earned money for it
.............. Capital Mkt is a place where people always trade with "Calculated Risk".
There are people who MAY not know the extent of this Risk & trade profitably upto some time & there may be people who knows & trade un-profitably.
Before plunging 1 should know.Even the Risk Appetite varies from people to people
.............1. use a certain limit for day trading (as of now its 10-20lakh will increase gradually to 40lakh no more)
2. enter every trade with stoploss. thus limiting my losses
3. as gain occurs increase stoploss to seal it.
4. each day transfer my gain to account and start with same amount of money. enter only known scripts and control emotions. If i lost a good entry point,
will wait for later time ..............................Is it necessary that you HAVE to day-trade ? Plz trade based on EoD data .Many a people term it as Swing
Trading.
I was at that catogory only,just been promoted to next category recently.

"By swing trading do u mean buying at EOD and sell tomorrow morning or 2-3 day later at around 5% gain or less..... ???"
With 3-5% Gain (after adjusting brokerages) can be next day or few days until Stop Loss Hit.
Precaution?
You think? that means you DONT KNOW. What makes you think?
Stoploss limiting losses? How much? And how accurately?
Transfer gains? Great! And as loss occurs? where do you replenish it from?
How would you control emotions? And how do you know that YOU WOULD control emotions?
........................UNDERSTAND THE DEPTH IN QUESTIONING!!!Imagine somebody thinking that F&O means High Leverage hence my Wins can give me
double/triple returns on Equity !! are we aware about the Probability part.
We all trade in F&O ,but where Risk is visible & manageable,No room for wish full thinking,few Winning trades under my belt & i become the Black Belt .
PERSPECTIVE OF A POSITIONAL TRADER IN RESPONSE

TO LAST POST
05 July 2015
12:15 PM
Last Post:
so what we learned so far?
trading is an intellectual persuit with greed driven mechanism,not suitable for all.
..........honesty zeal to learn,stoicism........be in present,visualisation......action,cool nerve.
....................
bma........broad market analysis........long drawn interrelated idea
concept of fad..........sense of smelling danger.
........................
after this comes ta........to know how other trader shall behave+price confirmation concept.
...............
next come data +software...........synchronisation........signal development /backtesting
............implementation
after that polishing what works for u and unlearning all other things.last thing is very difficult.....indians have tendency of garbage in..........though cv relentlessly suggests to check utility first and
sharpen own tool.
btw...........nowadays forex concept , from viratech data all currency pair and chart study of world index.............sugges t..........money is moving out from which country and entering where.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Hope now all have a fair idea about the capital mkt & the Risk involved.
Intraday....in any chart in one axis is Time,hence if now we compress the charts say from weekly figs to monthly or even to y rly,we will find a clear Trend or a bias to (+)ve or (-)ve.
If that be so then WHY we expand the time frame to intraday,where the volatility is more or noise is more ?
I am RISKING more ,for what gains ,brokerage,margin,thrill,working from home.
Before indulging in this More Risky aspect ,plz ask what do i gain.
And on what LOGIC this seems very easier task.
ANSWER:
Day trading is to have complete control on your every emotion & 1 slip = 1 or more loss & remember few good trades are always what lures people to day-trade & that's when trouble starts, then
they dont give up even in losses & its a battle of ego.
.................Nobody can disagree that this is Risky,if so then the Outcome is UNCERTAIN.
What is the PROBABILITY of the outcome.So TEST on past incedents to find out.
How do we know that all those past performances where not RANDOM.
Was Big Bang a Random ,a evolutionary ? a scientific process ? Can those be measured to find out or based on BELIEF ? What sh ould we do ?
Gosh i thought day-trading was an easier job ."Shrewd, Sharp, Silent" are only few traits one needed to experiment for trading, just my obeserva tion though.
I want to learn as much as I can and keep learning in future at the same time start very small and make it big later.
I am willing to risk a small amount of my hard earned money for it
.............. Capital Mkt is a place where people always trade with "Calculated Risk".
There are people who MAY not know the extent of this Risk & trade profitably upto some time & there may be people who knows & trade un-profitably.
Before plunging 1 should know.Even the Risk Appetite varies from people to people
.............1. use a certain limit for day trading (as of now its 10 -20lakh will increase gradually to 40lakh no more)
2. enter every trade with stoploss. thus limiting my losses
3. as gain occurs increase stoploss to seal it.
4. each day transfer my gain to account and start with same amount of money. enter only known scripts and control emotions. I f i lost a good entry point, will wait for later
time ..............................Is it necessary that you HAVE to day -trade ? Plz trade based on EoD data .Many a people term it as Swing Trading.
I was at that catogory only,just been promoted to next category recently.

"By swing trading do u mean buying at EOD and sell tomorrow morning or 2 -3 day later at around 5% gain or less..... ???"
With 3-5% Gain (after adjusting brokerages) can be next day or few days until Stop Loss Hit.
Precaution?
You think? that means you DONT KNOW. What makes you think?
Stoploss limiting losses? How much? And how accurately?

Transfer gains? Great! And as loss occurs? where do you replenish it from?
How would you control emotions? And how do you know that YOU WOULD control emotions?
........................UNDERSTAND THE DEPTH IN QUESTIONING!!!Imagine somebody thinking that F&O means High Leverage hence my Wins can give me double/triple returns on Equity !! are we
aware about the Probability part.
We all trade in F&O ,but where Risk is visible & manageable,No room for wish full thinking,few Winning trades under my belt & i become the Black Belt .
-------------------------------
What you are referring to is intra-day noise. This effects short term or intra-day traders. Mid to long term traders generally avoid this intra -day noise to ride
the trends.
When you look at the performance of the stock market at the end of a trading day it can be hard to work out why shares have e ither risen or fallen in value.
Broadly speaking, share prices are influenced by news or information: new data on employment, manufacturing, directors deali ngs, political events or even
the weather, all kinds of news can influence the way shares move.
The health of the economy has a fundamental influence on share prices because it is ultimately responsible for driving compan y profits. Broadly speaking, if
the economy is growing, company profits improve and shares will become more highly valued. If the economy is weakening, compa ny profits will fall and
share prices will go down.
Investors look at a vast amount of data to try and work out what is going to happen to the economy and shift their portfolios before the events occur. This is
why you will often see markets move well ahead of an actual event occurring. You may, for example, get little reaction from t he stock market when interest
rates rise. This is because investors have already anticipated the shift months in advance and adjusted their portfolios befo rehand.
You can usually assume that the stock market will anticipate moves in the economy by around six to nine months. So if you wan t to stay ahead of the game
you will need to follow price data as closely as the professionals.
Investor sentiment can lead to irrational buying or selling of shares and result in bull and bear markets. A bull market is w hen share prices rise while a bear
market is when they fall. In the technology boom of the late 1990s, for example, investors paid extremely high prices for sha res and ignored traditional
valuation measures, such as P/E ratios. This carried on until 2000 when investors belatedly realised these shares has risen t oo far and resulted in a three year
bear market in shares.
.....................................
.when with maturity at what condition u enter, hold and exit,.......all other r void from mind .....[if u programme it ,very best].......u r a SUCCESSFUL
TRADER.
------------------------------------------------------------------------------------------------------------------
FORMATION OF STRATEGIC PLAN- INTERMEDIATE TERM

05 July 2015
12:17 PM
Stocks can be bought by using this plan only at early stages of an intermediate upward
trend
When markets crash and then bottom out and then again start an intermediate uptrend
Buy stock that belong to the strongest sectors and have a high Relative strength.
some other factors also count like,
Quality of management is important. example - you can always bet on reliance
Need to understand general economic environment. example - IT companies who were
earnings 40+ % margin are bound to be hit hard by rupee appreciation so avoid IT
mass consumption theme is playing the round - get into sector like telecom
big plans of govt for power sector - buy power equipment/utility provider
after filtering the stock through numerous such criteria, BUY the Stock future
keep a SL at the lowest point the stock had hit during the preceding downtrend
trail the position with wider SL to catch the maximum trend.
Strictly no MID CAP position in this plan. Only Large Cap.
limitation of this plan is that you need to have a deep pocket.
...........
1.Observe the relative performance of various sectorial indices for couple
of trading sessions
2.Stocks that fall the least ,during correction tend to bounce back fast,
so keep an eye on those stocks and the sectors to which they belong
3.If you watch cnbc for 1/2-1 hour everyday before market opens, they
generally discuss stocks/sectors gaining momentum
4.keep a watch on list of gainers everyday, that gives you a feel
of the winners
if you observe last 2-3 years, it is always the telecom/capital goods stocks
that outperform, so good growth sectors stay for a while, so it does not
change very often, only some structural change changes the fortune of
a sector.
........inflow of money in a particular stock generally push price up
2]in balanced area[sideways market] play within range .....buy at lower pt
3]a forward price influence occur with trend
4] normally balance exist in trade ,however its tilt that to be studied
5]play in upper zone is bullish , study it in higher time context
6] failed to brake suggest top fall
7]volume thrust .....reversal in trend
8]considering trend .....buy/sell ....action must be at top /bottom......not inbetween
9]range expansion suggest biasness
10]time-price-oppurtunity study
11]unlike event must be seen in context,if hints r it may continue .....danger
12]understand value.......fairprice
maket activity is nonrandom,it can be deciphered with strong judgement,at top of price
when nomore buyer available price shall come down.same ay after market fall ,no more
seller available ......price shall start to move up.
13]we search for continuation or change[reversal]
14]its the imbalance make trend
15]last 45 min is time to trade with break out on delivery......its the long term player's
buy style we shall follow.
...................................
concept of under value buying
........................................
identify volume with selling and buying ........is entirely different , and wrong assumption
/analysis will be costly for volume analysis
.......................ask question?
1]what was the activity in this session
2]how does this activity in larger move
note: higher volume at topmost pt,with price maintaining strength suggest actually
strong hand buying
strong hand buying

total volume[say 5hr adding a day]suggests further activity required to continuity of
direction
new event + development at that time .also to be checked in this context.
price vs. volume .....activity occuring where ?
top
middle
bottom
.......
at top its ok,at lower also ok
but if at middle ,it does not have any directional bias ,simply mean area efficient market
condition.......random trade zone,profit by luck......a losers game
infact good news to upmove suggest ......be ready for show,
low volume with up price suggest buyers r nervous[normally individual stock presedence
is different actually].........price fall is soon expected .
.....so take very small position and see....on individual stock basis on real time test and
analysis.
tick data higher volume play at top value suggest strong hand play plan
delivery % at day trade......
new mf/fii buy,
hence higher price tick volume at closing hr, suggests strength/interest by player
....let u try to correlate with news ,....study whether break out shall fail or confirm?
volume confirms liquidity and price distribution, actually used for confirmation of price
strength.it may help in your decision making tree.
1]trend is going to continue??purpose is react early
ask question ...to clarify ...what market imp.participant r doing ?buying or selling..or in
distribution [watching]
in trade zone ....again see as per range in middle no participation , near top.....high
volume participation with good % delivery.......take risky entry
near bottom low volume participation ...again take entry....support buy.
...........
can we distinguish buy volume vs. sell volume?in higher range with price up,volume up
phenomena is good .
in lower range , higher volume suggest sell volume.
........
next question is at lower volume at down day who is buying it?....definitely long term
informed buyer r buying with good idea on company /near future.remember long term
buy is done at comparative lower price ......with different play plan of sleeping money.
cash flow up
...............
higher volume near top suggest interest by strong hand .....a short term aggressive play
plan.
total volume tool
.................
creating momentum more than double volume ,compare to 10day av. is good.observe
when down volume brings strong buy .....quick up move [not allowing to stay in
bottom].......it suggests whenever good news flow comes , probability of strong upmove.
similarly if low price brings more activity ,price shall have to go down .....to stabilise
first.decrease in volume in low price ......stock has no more interest,however bottom is
near.
if low no trade @top,.....buyers seem to be not confident .......hence fall is imminent
in general volume pick up suggests more participation of public in direction of price.
advertisement of commercial when marketing.....play to lure participant is natural....
so it can be a tool for oppurtunist trader ........
more activity [normal type distribution ] @ av zone.......is balancing action......watch
only.
ultimate shift to topside or bottom zone has some utility.hence expected behavior in
trade zone .........buy at lower value and sell @higher value [channel play]
but who is behind to change it........to create a new trend?
hence sudden sell by pro at lower value means they expect bottom further, similarly buy
hence sudden sell by pro at lower value means they expect bottom further, similarly buy
by them at top.......means they have reason to be greedy[unexpected event ]
,,,,,,,,,,,,,,,,,,,,,,,,,,
....Three main criteria to pinpoint potential Stock Picks
A history of consistently strong sales and earnings growth
A reasonable price
Strong price action relative to the market

.........................
As long as the stock shows consistently strong sales and earnings growth you can
continue to hold it. This of course is fundamentally. However since we trade price and
profit from price trend I would suggest you get out of your holdings as soon as the stock
you are holding begins a decline/downtrend is prices.
stock picking is an art...an experience hand can do it.
fundamental data gives the potential of future betterment.for a different industry
ballgame is different...futuristic business up has to be seen in light of profitability.
so some idea...on a sector.
hospitality and tourism ....on hotel.
theme of cram...export
banking...rate of interest...npa
............
next comes ta...its the reflection of price......what present traders r doing..
how far they r bullish?
here most traders make mistake........they presuppose to guess..[hoping
accurately...forgetting its a probalistic model]
its only DIRECTION CAN BE PREDICTED. not the target...
judgement must be for continuation[trend]..or reversal[mean reversion]
various tool r used to do same...some of them has superior guessing value.
hence for target...sar is better.
initial plan must be based on low risk strategy...and what works on present market
condition.
risk analysis must be done...before entry.
as a trader ur plan is short with trend bias ...hence relative strength plays imp role in
stock scanning...
as price reflects all known event....we should spend money to get unknown news...which
may affect price
or otherway...we must study reflection of news on price......example.XXX company
result bad..price holding 910..its moving up rs5/- on monday...opens rs 7/- up on
tuesday..holding..by 1300hr..it crosses days open...hence promise higher up...soon
break imp weekly pivot 923..and hold 928-929...hence a promising up play,...for all
good trader.
.........next factor...how u close a trade...and what u learnt from a trade.
---------------------------------------------------------------------------------------------------------------------
Do you understand the Cost?

05 July 2015
12:18 PM
do u understand cost?......this very question ........help u.

cost of learning
cost of not putting stoploss.
cost of leverage[interest vs blow out risk]
cost of foolish greed
cost of following tips
cost of not writing trade mistake
cost of not doing behavior modification
cost of faith in brokerage house
cost of distracting thought and destructive mind
.................
just calculate........u move up lot of step ahead
On Trade Learning
05 July 2015
12:18 PM
ON TRADE LEARNING:
assumption 12pass with 60% marks.....lets start
.................................................. ...
statistics.........basic concept of probability, regression analysis, sd.....and qc
ECONOMICS.....stock market as lead indicator, demand/supply.cycle concept
business..........enterprenaur what makes him click,why a business fail,concept of monopoly and market share
MARKETING.........NEW PRODUCT aggressively develop market share, old product how to cut competition.......game of advertising
macro economy.......budgetary policy,rbi monetary and credit policy,la.repo...reverse repo........rate of interest .......inflation and its impact
INTERNATIONAL FINANCE..........forex,global village,cheap product ,political risk ,stable govt,fdi ,import export gatt,ppp and swap,money flow and money
squeeze
BEHAVIORIAL FINANCE.........how crowd behave,how greed /fear affect individual and when in group.dream vs reality,wish hope,study on fallacy.........when
one quits
VALUE OF MONEY.............time value discounting concept,cash in hand ,oppurtunty
TIME MANAGEMENT........priority,get organised,abc analysis,delegation,imp learn to plan then act.
self development.........SWOT ANALYSIS.pogress review
company.........product development,market niche,ir ,distribution channel,vision,fund management ,integrity
accountancy..........debit/credit,3statement..balance sheet,profit loss,cash flow,financial ratio analysis its implication

corporate finance..........budget and forecasting,debt/equity ratio, how to fund
costing.......of a product,value vs. perception,time value ,break even ,overhead, profitability
VALUATION..........discounted cash flow,firm valuation,relative valuation technique,dividend model,book value vs replacement value
basic financial planning..........ur personal balance sheet.....asset vs liability,derisking and insurance concept, asset allocation , ur suitability as risk taker
BOND MARKET.........yield curve analysis,interest rate implication
COMMODITY MARKET.......CYCLE , WHERE LIES OPPURTUNITY
STOCK MARKET..........WHY , for whom no, neat/bolt function........concept of software
OPTION /FUTURE.........leverage tool, derisk vs speculation,pricing model like black scoles/binomial..........danger associated in trading
RISK RETURN STUDY.........risk premium,expected return ,variance, beta,capm
PORTFOLIO THEORY........efficient market, portfolio diversification,markowiz model ,indexing,sharpe ratio,portfolio performance ,arbitrage
FUNDAMENTAL..............INDUSTRY ANALYSIS,govt policy,burgain power of buyer,substitute product,PORTAR MODEL
STOCK PICKING..........MANAGEMENT QUALITY,LIFE CYCLE OF A STOCK,operation profit/operating asset,analyzing non financial aspect of company,leadership
in sector,emerging blue chip,cyclic turnaround defensive stock
SECTOR AND ITS LEADER..........banking, hotel, power,pharma, metal, fmcg, refinery, cement , auto, software..................[idea i learn from
equitymaster.com]
SCENARIO ANALYSIS
.................................................. .........
BEHAVIORAL FINANCE ............aspect of repeatative mistake
ta...............which indicator suit u...........learn to read volume , overbought oversold market,mometum and stoploss,leverage to winner / cut loss early
YOUR CHECKLIST...............SCREENING CRITERIA, WATCHLIST,SYNCRONISATION technique.
TRADING IS MORE WITH PSYCHOLOGY,BUSINESS ,WAR
FIRST decide why trading?what u want to after 3yr......after 5yr/8yr?
study ur personal life.........ur strength , what u do when u find something wrong?
your skill development attitude...........commitment level
...........ur comfort level
...............................................
life is oneway............trading another way......NONO
HOW TO COPE FINANCIAL LOSS
AVOID ROAD OF SELF DESTRUCTION.........CONSCIOUSLY STOP IT
BEHAVIOR MODIFICATION TO IMPROVE.......TAKE ego pride out of u..........they r main hindrance in trading
AVOID COMPULISIVE BEHAVIOR
......................
PREPARE STRONG FOUNDATION............MAKE U A BETTER TRADER AFTER 3YR,STRATEGIC PLAN............STEADY DETERMINATION
UNDERSTAND AND FACE REALITY
..............FOLLOW MOMENTUM AND INERTIA..........
UNDERSTAND PRICE...........WHEN IT TAKES UP SPEED
CHANGE IS LAW............IN TRADING/IN MARKET /IN U
COMMIT TO CHANGE FOR +,IF THINGS OK........DISCIPLINE NOT TO CHANGE FROM IT
COMMITMENT TO CHECK A/C URSELF
...................
REASON OF UR DOWNFALL..........AVOID OVERTRADING
ENVIRONMENT TO SUCCESS .........IMP
HAVE A PUNCHLIST.............TIME AND PRIORITY CONCEPT
UNDERSTAND MONEY MANAGEMENT...........READ RYAN JONES
Prediction
05 July 2015
12:19 PM
All rational people will agree that there is uncertainty in the stock market, that predicting where prices will go is foolish .In Science we know how cloud is
being formed but can you guess that the most scientificallydeveloped nations CANT get their Weather Forecast right upto 65 % time.
Govt. of each Republic we see in a political map has a Weather Forecast deptt ,think about the combined Billion Dollars World spend each month !! and
through decades of experience;Data; pool of
Statelites;these Guys cant get the Forecast RIGHT.
Then we with a computer & Data & some knowledge have the audacity to think we can Predict
Price ,where it involves millions of trades with million different emotion & intention.
Atleast in case of Weather we have 100 % scientific knowledge how & what of Weather.
We think that we can predict where stocks will go, that is the reason we trade the market,
to make money from our predictions.
But no one can predict the market with absolute certainty. Therefore, you have to stop
looking at trading ONE trade at a time. Imagine what would happen to the Matka owner
who looked at their gambling business one bet at a time. The Matka can not predict who
will win the Super Lotto or what the next 'Patta' drawn in a game of zero to nine will be.
It can be Ekka or Panja -the Operator does not bother ,they don't try.
Becoz in the Long Haul Probability is going to play in their Favour this Simple fact is
known from the Casino owners of Las Vegas to the 'Matka' operators of Gujrat.The Gambler
plays AGAINST the House,the House wins by Long Haul as probability is stacked in their
favour.
What the casino does, and what we as a trader should be doing, is trading the probability
of what will happen. The casino makes money because they know what will happen over the
next 1000 hands of blackjack.They have an edge.
The question is, do you have an edge in the market?
Are you trading a strategy that assures you a profit over a large number of trades?
If you are serious about making money in the market, you should be able to define the expected
out come of your trading strategy in the same way that a casino can predict their profitability from millions of dollars wage red in the pursuit of 21.
How do you calculate your edge? Simply:
((Profit of a successful trade times the probability of a successful trade)
- (loss of an unsuccessful trade time the probability of an unsuccessful trade
As an example, a trade that has a 30% chance of making Rs 5000 and a 70% chance of losing
Rs 1000 has an expected profitability of Rs 800.
Here we see how even a trade that has the odds stacked against it is worth taking because
it has a positive expected outcome. If you make this trade enough times, you will average
Rs 800 in profit per trade.
This means we need to set out on a study to determine the probabilities of profit and loss
for a trading strategy. Establish a set of rules and then test them over a large sample of
trades to determine the expected value of the trade.
But, if we find a trading strategy that has a profitable expected value, are we assured of
success in the same way a casino is assured a profit hosting games of blackjack?
No. In blackjack, there are rules enforced by the casino. The player must give the casino
their money if they go over 21. They must give their money if they have a hand that is
lower than the dealer.
In trading, there is no one to enforce our well tested trading rules except WE.
In the heat of the trading moment, when WE must decide whether to exit the trade at the stop loss
point or hold out for a turnaround, it is only up to US. When we have the choice of
selling for a profit or continuing to hold until we get the sell signal ;though our strategy was
tested for, it is only up to US.
And we, assuming we are a normal human being, are likely to break our own trading rules.Why?
Because we avoid pain and pursue pleasure. We lack confidence in our strategy because
of our recent experience. We think we can use our better judgment based on what we
are seeing NOW in the Price. We lose focus.
These are the things that turn the relatively simple pursuit of making money in the market
in to a frustrating, mind numbing and stressful process. Who is at fault?
Only us.
We Trade Price,hence 1st of all we have to find the Greater Trend ,there a Longer
term say 144 period Weighted MA to find What is the Slope (-)ve or (+)ve.
Then say EoD pivots to find the General Trend.After we get the GT (Greater Trend)
by WMA slope & EoD Pivots we then look at current on going Trend.
Current Trend is strictly only by Saint's HH HL OR LH LL.
Here when we get the GT & CT ,we trade only towards the GT means whenever CT ,in its
wave form is towards GT we take only those trades.
Here we must also keep in mind the
Reaction areas ,that is EoD's R3 R2 R1 P S1 S2 S3 & EoD's Fib levels,becoz our trades
flow may get stalled or reversed on those reaction areas.
Say we get a workable few points EMPTY SPACE FOR EASY MOVE ,between these reaction points,where both GT & CT in same direction we take those
trades.
Maybe in FULL DAY there may be only 2-3 trades but we take only those trades no other trades.
For consistence we look for High probability trades only.
These trades have greater probability of Wins.
KMI INDICATOR can work as a visual aid to identify the current trend of PRICE (HH HL LH LL)
Change of slope green/red will define Wave Highs and Lows .
Here pl be clear the Indicator change in color is not Waves High Lows but the Price action,
prior to that has influenced the indicator to change it's color hence High Low is in PRICE.
You dont gain a lot but you can have nice quick visual reference of the current direction.
You may reduce whipsaws on sudden price spikes that can point to false
You may reduce whipsaws on sudden price spikes that can point to false
lows/highs especially in fast timeframes or less liquid instruments.
COMMENTS ON INDICATOR
.
Indicator is to be used only as a visual aid .Dont misinterpret its price predictive and take a trade based only on the indi cator .Trade only to be taken on
price analysis + confidence ( ur reliable indicator bias)
What is the Trade Off ?
You introduce an indicator to improve efficiency of trend direction prediction but you end up losing consistency. There are h undreds cases that what
INDICATOR SUGGESTS,the opposite will happen;
BEST take price HH/LL .
the key issue here is to avoid CONFLICT, suitable MA indicates a direction bias, Use this in your trading plan. On a daily ch art where waves are naturally
smoother but look at the potential implication of introducing a 2oMA ,- 2 or 3 indicators you may decide to use, BUT may end up in conflicting signals that
will certainly create bad trading decisions/ failure to activate trade.
After all my job is to find Room between reaction points , we still have to pull the trigger,put the trade.Any delay will red uce my risk/reward,hence we
need TIMING the Entry.
It can be above last bar high or below last bar low or crossing 50 % level of last bar.
This we will have to work out which suits me best in PRESENT MARKET CONTEXT.
Here the indicator may help,close above/below a value, as a trigger or you can wait
for a conservative change of slope green/red for confirmation.
Remember: we do not trade Indicators we trade Price- it is just a trigger.
WHAT IS THE GOOD OF IT?:
It can give you an objective entry point, reduce drawdowns and identify warnings that
the trade MAY go bad and/or clear exit signals.
.
NOISE :The first and foremost thing to have is to practice absorbing the NOISE.
Practically speaking the NOISE is nothing but what is happening in the security's price above or below certain % value, it is the entry levels before either the
stop is hit or the target is hit. So anything between the entry and stop or entry and target is noise.
This noise varies according to the chart periodicity. The noise for a person who trades using Daily charts might not be the n oise for the Trader who uses 30
min. charts. Hope it is not confusing.
So, first we have to understand what time frame we are using in charts to initiate the trades. And then the entry, stop and e xit. Anything in between is a
noise. So while practicing, just go least bothered what ever happens to the security in between. Wait to get stopped out or t o reach the target.
If we start paying heed to the movement of the asset price in between, then we will start changing the trade plan and spoil t he trade. This changing the
trade plan might help us once or twice, but finally it makes us losers in the market.
So, once the trade is initiated with a good trade plan, never change it. To go that rigid, before initiating the trade itself - try visualising the scenarios with
"what if" thought in the mind. "What if this doesn't go like I planned", then we will start thinking in the other way and und erstand one more route
for the security's price movement. Like this if we are ready while designing the trade - with the Road Map of the price move - then the price behavior won't
surprise us and it further helps un in going stable and absorbing the noise.
I remember one incident He initiated trade in Infosys. And booked a huge profit in it. But this was done out of trade plan. The trade was initiated keeping
Daily charts in the mind but exit took place just for the reason the security was tracked intraday. ..it was a profitable tra de. that member must have taken
one more entry into it at a good price and must be running it still- as he is wise in practicing technicals. nobody is foolproof when dealing with the markets.
So time and again we should protect ourselves.
It is better to make a record for the trade plan and track it. We should look into it whenever we try to do something with th at security in which we are
already in, to understand the original trade plan- which should preferably be with the Security's Price Road Map. Then we will get reminded of the trade
plan. And this helps us in sticking to it. It will work wonders my friend.
This definition on noise helped me a lot in building a position sizing strategy
Ok, so we are talking DSP here.Talking abt filters, MAs are low pass filters while derivatives of SMA etc like MACD are hi -pass filters.But before we get into
all that, lets talk about the time-series itself.
Ok, so a stationary series is one whose statistical properties are constant along its length. Its quite well documented that financial time-series are heavytailed and not stationary.Volatility clustering is another important topic, i.e tendency of autocorrelation in volatility.Giv en all these different conditions, I
think its absolutely treacherous to try and detect signals within all this noise. Theres just too much randomness to deal wit h here than most people think
and most are 'getting' fooled by it.
Normally no effort was made into understanding the data itself. For me INDICATOR the buy -sell signal part hardly is the important issue, the key thing is to
beat randomness.I have attached a map of my development process, the 'Analysis & Mining' is the primary area of my developmen t. Another thing it does is
to help with 'intuitive' understanding of markets. Ofcourse people are not interested in such undertakings, everyone wants to quickly get to the 'buy-sell'
stage. Again, as I have said before, its not bad at all , as Napoleon once said - " Never interrupt an enemy when he is making a mistake". Ofcourse I am
talking generally and not about superior guys like U, but this is not the way to go about system design.
How to Employ the most sophisticated and effective risk

management rules used by professional traders
05 July 2015
12:20 PM
How to employ the most sophisticated and effective risk management

rules used by professional traders
..................................................
with their focus solely on capital preservation the pros use risk management to prevent big loss.
I think that especially with beginners, risk management is not understood very
well and people dont understand that you can greatly increase your returns by
having some definite risk management rules .
Just by having a stop loss in place, youre limiting your downside risk before you
do anything else.
Once youve conditioned yourself to accept that you must use a stop loss as a
trader, the next step is to fashion a methodology for setting that level which is
the most appropriate level for either the kind of trading youre doing or the
instrument that youre trading or the approach that youre taking in the market,
and so on.
For example, if you put your stop loss too tight, you will continually get stopped
out of profitable trades where the stocks have just pulled back to pause or rest
for a couple of days and hit your stop loss level before it subsequently moved
back up.
It is very, very important to establish these levels where they will:
a) Do the job in terms of preserving your capital,
b) Will not be so tight as to see you disadvantaged, being stopped out early
of trades that have the potential to run on for even greater profits.
While some of the simple rules that we talk about are very simple, getting them
to be a habit and actually applying them with discipline every time you trade is
tough to implement.
As You are battling against human nature. That fact only reinforces
why you have to manage your emotion out of trading in order to accurately and
diligently use your stop losses.
One of the first levels that we put stop at might be below holding support.
If you have a stock that has been falling down, say its consolidated around about
100/- and it started to move up and youre deciding to buy into the stock at say
102/-. Having your stop loss, below that 97/- level is really quite sensible
because 100/- being support several times, your expectation is the stock may
then come down and touch that 100/- level again.
If you put your stop right at 100/- above you are invariably going to get
stopped out. So instead of having at100/- just have it slightly below, maybe
97/- just to give you a little bit of comfort and less likelihood of
getting accidentally stopped out.
Of course, the other way to look at this is if the stock does break down through
the holding support at 100/- consolidation has failed and the down trend is
continuing, in which case youd want to get out. Thats just one methodology.
When youre trading stocks that are perhaps a little bit more volatile or have
moved away from a level of support... one of the things I like to use is the ATR .
Look at the last 10 or so trading days of price action. Once Ive had a look at those last ten or so days, I identify the most volatile day anywhere there
was the largest trading range. Once Ive identified that, I then take an arbitrary amount which say for argument is 80% of that trading range. If you had
a day where the biggest trading range the stock traded in was 5/- 80% of that will be 4/-, so Id put my stop loss 4/- below my entry.
Now whether use 80% of the trading range, 100% of the trading range, maybe
120% of the trading range or only 50% of it is almost irrelevant. The key thing is
to arrive at a level for your stop loss in a structured way where you have a
process. When the process is consistent. Then youre going to get consistent
results.
So its not just a question of 80% of the biggest trading range of the last 10 days
you could use 60% of the biggest trading range over the last 20 days, it
matters not. What matters is the process used to get there is consistent. Once
you have consistent , at least youve got a degree of consistency from which you can then start to work on and improve.
Once you start to work on that, you can then fine tune
and improve the model and thus get increasingly better results.
One of the other rules for stop losses is what we call the 2% rule.
Traders universally regard the 2% rule as the golden rule.
You never risk more than 2% of your overall trading capital on any one trade. Lets say you have 500,000/- to trade with, the most youll be prepared to
lose on any one trade
would be 10,000/- (being 2% of 500,000).
When you start to look at three or four approaches to determining your stop loss
combined, you can then start to choose which level suits you best. You might
just use a fixed percentage stop loss, which a lot of people do when theyre first
starting out.
So to give an example, you might use a 5% stop loss, youre not going to risk
any more than 5% on your trade, so if youre buying into it, a 100/- stock that
means if the share price falls to 95/-, thats where youre going to be getting out
- thats 5% less than your entry price no emotion or doubt, just an exit out of
the trade.
Again, youre arriving at that process in a fairly structured way, and that fixed
percentage rule is one of the more basic ways of approaching the market but it
still gives you a very good degree of consistency because youre doing the same
thing every time you trade.
.................................................. ................................................
Some other strategies include the use of leverage.
When you talk to people about leverage they often see it as quite scary and risky.
I counter that by saying not knowing what youre trading is just as risky because
youre going to get smashed in the market anyway.
By learning and having a fairly robust trading plan, all were doing then is
leveraging off our ability to pick stocks correctly.
Lets just say for arguments sake, 6 times out of 10, you know youre going to
pick a winning trade thats going to make you 15%. And 4 times out of 10,
pick a winning trade thats going to make you 15%. And 4 times out of 10,
youre going to pick a bad trade thats going to enable you to lose 5%.
On the basis that youve got good risk management on your downside with your
stop loss constraining any loss to 5%. But when you make money, youre letting
your profits run quite hard. So why wouldnt you introduce a factor of gearing?
Gearing with a margin loan,futures, option etc.
All youre really doing is amplifying your upside, your downside you are
constraining to 5% still. So if youre confident in taking the trade, why not gear
up and actually leverage off picking the right idea and really making some serious
money out of it.
Rather than make a 10,000/- out of the trade, if youve got ten times gearing, why
not make 100,000/- out of it. And then on the downside, okay, you could say that
your losses are also augmented but if they are preserved at 5% and your upside
is 15%, youre going to come out ahead.
Again, it makes perfect sense if you have a process and if the process is objective
And constrains your risk and enables you to let your profits run.
And herein lies a problem. When you talk about trading, everybody says show
me the leverage.. racy stuff that looks really interesting and theres big zeroes on the end of everything and yeah, the percentage numbers are big.
But the work seems to be on learning how to pick the stocks and more
importantly, not just pick the stocks, but actually manage those positions through
good money management skills. Thats the area thats not as rosy. Its not as
exciting but it is an area where the hard work needs to be done.
But what people fail to realize is without the work being done all youre ready for a fall. And if youre using leverage, an even bigger fall.
So first take the baby steps in terms of learning and to understand and read the charts
properly, how to overlay your fundamentals, how to pull that information together
into a robust, proven, unemotional, simple checklist, process orientated trading
plan that really anybody can follow.
If you can make money using that trading plan. Once youve got a comfort level whereby you actually have a belief level that the plan is working for you,
then you can start to apply the leverage and thats really where the reward comes in for the efforts that you put in.
Up trending bullish market: Long equities

Up trending bullish market: with price rise Long equities with leverage
Down trending bearish market: sell stock and Short futures.
Sideways trending market: use swing strategy
So now we are approaching slowly towards reality

05 July 2015
12:21 PM
So now we are approaching slowly towards reality

.................................................. ............................
First a learner should be guided by inquisitiveness , not by greed.
if greed is driving force to look at market, pl throw away that wrong notion first.
2nd
..... It takes time to learn . patience is a virtue.
if u dont have it , develop and practice it.
3rd
.......Do u understand the value of discipline and reading and syncronizing in life ?
if not spend some yr to do this.
here i find the root cause of failed trader,........they failed here.
4th
......
r u an independent personality ? Most learner may differ, its not an wish, but necesity .
BY simple term , u can consider/calculate other's contribution to your daily life monitorily and pay back it .
So u r +ive , not a liability.this concept i found exceptionally useful in trading ,all sorts of business and understand strategic thought process .
A leverage personality on the otherhand lives on mercy of others. ....good for service work , but a total NONO trade learner.
NOW we see,why novices lives on confusion and novices cant solve/overcome this 4steps
......before seeing the blue print of trade learning ...this principle r to be in your heart.
So a novice understands (a)inquisitiveness
(b)time to learn . patience is a virtue
(c) discipline and reading and syncronizing in life
(d)independent personality
........So many novices without understanding this are making a hard knock on market-wall ,forgetting workdone principle ........force x distance. so their
effective effort o.
..................
Instead they should understand what is reqd............if its not with him/her , he has to cultivate it,....thats why behavior modification.
Soon other 2 factors......mother of any venture,......time management and knowledge comes
Another exceptional quality PERSISTENCE......its unique in trading field, insistence to comeback to fight for another day.
.............
Pros know when not to come back, when to accept challenge.......but av joe never understand that Pro is superior , also know flexibility.
As a new learner ...... u reqd balance confidence . To create this balance confidence...... we normally follow some back testing, what works in past.....those in
advanced stage of learning , plan for FUTURE market condition,
Some prepares with action guideline , with hypothetical WHAT IF scenario .IN any case ur own personal trade experience....r also to be correlated , a good
trader adds also EQUITY CURVE analysis.[ some person calls it draw down /without money simulation test]
now we shall go in knowledge aspect.
.......................................
Theoritically a successful trader/broking community passes essence to close relatives/ favourite students of market...........but actually change of market
condition always keep on toes,even experience traders, ........here a master trader fights against 3,
1.self /
2.other master traders
3.and market...........no novices r never his challenger, maximum a distractor of time,.....
(worst case if master is blocked to superiority feelings if he is surrounded by crowd of av joe,hence developing the ego of i am the best syndrome, )
...........................................
Market is reflection of human mind,.........so chart should primarily be used to understand that,then shift to highertime side,......whether trend continuation
possible...if WHY.
if not reversal possibility ......why ???
similarly at bottom of cycle .......question what u see , can it be a money making oppurunity for me?
MEDIA hype has to be neutralised in your mind.......so see price volume....delivery
3elements r always present in market ,,,,,,,normal trading, speculation and big money flow.....
u should have a method to segregate them......this is my aim for objective analysis.....
I see fundamental......to get forward looking view of management .......and to understand new price discovery if further money chases the particular
stock/sector/market..........same way,,,,,,,in danger which share be dumped first even by OWN management.(candidate for short).
...............................
SYSTEM DEVELOPMENT HINT

......................................
market condition trend UP or DOWN........use simple 2 MA cut ,5/20 very good
market condition TRADEZONE........use stockastic/%r
market condition volatile......USE EOD break out/ momentum scanner...... play for intra day.........dont worry on confirmed direction bias ..If u r not earning ,
then simply this market volatility/unpredictiveness DONT SUIT U.GET OUT FROM MARKET,join only at low volatility directional break.(i have studied/prepared
about 2yr for this condition , in other market actual simulated past data , in a software OMNITRADER, where u can hIde data of right side/predict bar by bar &
can see /compare vs. price actual blossoming)
CAUTIONARY NOTE:
any personal disturbance /other priority .......dont trade.
do u ask anyone for market condition,what to do now..............DONT TRADE
basic clarity of a trader............a model for job fitment......pentagonal peg and 5sided hole..........
next comes psychology .Any novice when comes in market ,basically a donor to market, so collectively good pro try to save him by giving him free knowledge.
Problem starts......when av joe thinks.............he is capable , defended by wellwisher , a la ABHIMANYU style ......forgetting he has to die,.......as he dont
know survival /nor forward prediction.
the basic SWOT........must be done.........so if u have emotional urge , plus many a goody goody values /other priority..........pl dont try to come.
yes actually 99% above failure rate is here.Just understand why iimc fresh boys r taken on as buddy trader with av 40lakh salary.......to teach them in 3-4 yr,
with may give return of 25-30% later by the FI.AND 10% of them only get success. JUST understand filtering of them through JEE-CAT. u understand
requirement.
a good trader is speedy -good analyst-forward looking-calm-objective + checks himself.
.........understand this is pre-requeste.
WAR is not a computer game,....u bleed here.......only blood is money.
KNOWLEDGE ...behavior modification........fitting what works for me......fine tuning comes last.
u know probably......IIM produce good investor , as their professors r failed trader.
..............................................
understand difference of predictabiliy vs. speculative.......
for me anything of happening chance upto 59% ........is speculation.so NONO
for me anything of happening chance upto 59% ........is speculation.so NONO

upto 65%.....i can not distinguish.
but 65% and above.....it may happen...........a zone suitable for set up/candidate for trade........price confirmation .......follows actual trade.
many a speculative idea r winner.........but a missed trade also......many a trade candidate move southward............that is part of my system.....to hit stop.
probilistic analysis suggest ..........i have to live on reality
................................
another imp thing to backtest on indicator based signal............its better in any particular timeframe with around 70 % accuracy level..........so find that
holygrail .
no i have any.........but.........some r having , as they consistently earn out of market........i am aged now........can not afford search.......have to happy with
my 60% tool...with complex understanding.......and book loss in other 40 % of time.
So when i cant understand ,have to be out of market .....to save from draw down. Understand reality........street fighting......only be learnt at street , by
fighting only
........................................
why i trade stock ? because that is what i little bit understand ......moreover some fundamental scenario change i can understand better,atleast better than
young fund manager.......so i have survival bias here , so i trade stock.
WITH around 100 stock list.........thats all, but plan to comedown to 60 ,as i cant handle properly .
............
for understanding trend aroon is very useful
for understanding range atr + price band is useful
for understanding thrust......volume accln/momentum very good.
for understanding reversal .......excessive + reversal candle like engulfing is sufficient.
........................................
for random style.......weekly pivot
for volatility play.........volatility comparison tool ..........pioneer work is done by director of tradingmarkets.......father of VIX tool
.............................
this is the right way to use ,........i am not talking of indicator specialist/ they know their tools and limitation........and have +ive expectency to earn from
market by his system.
[+ive expectency= no of right trade x profit per trade - no of losing trade x lose per trade]
My personal bias on stock
...................................
i have to choose stock based on what i know better.......
in India .......certain sector behave differently with so called biasedness........as i am not from finance.........i dont play in bank share........[hey here opponent
know better]
i definitely.........play in oilsector...since i worked in power ministry.........i have basic understanding.......so its upstream and user.
as i have some knowledge on spl engg product....naturally on some engg equipment/ its supply chain.
since i work in project........naturally cement and steel comes........so comes project execution and consultant.
naturally ......gas / oil pipeline producers
some pharma and computer co...........basically CRAM concept
i like tourism and hotel......as its concept easy to understand.
since i trade , naturally stock broking company r my watchlist
Apart from that some monopolistic company,which i have seen some years .
.............
i have poor understanding on export/import......here i lost in past,also in media sector........so i avoid them.
some commodity related cyclic stock i am studying..........may be after 1 yr i may add.
Good Trader
05 July 2015
12:23 PM
1]We trade only price. We do not trade information. We do not trade knowledge (of the asset being traded). Nor do we trade computing power
or expertise. We do not trade anything at all other than price: ie: the number. Therefore since the only factor that counts in this game is the price,
it is only smart to focus all, or almost all, our attention on this number on the price and its movement; in other words, what the price has done in
the past and is doing in the present. Approach the game/business of trading in this manner - an up down number game where the focus is on
what the price does and not why - and you will be on the right path to succeed as a trader
You are trading against the wealthiest and most knowledgeable people and organizations in the world. Do not delude yourself, you cannot
compete on their terms: information, knowledge, experience, staying power, and so on. Do not spend time and energy trying to figure out why a
price moves. Focus all your attention and energy solely on what the price is doing. You are a trader. A trader does not get paid to understand or
explain why something has happened. The question "why?" deals with the past. The question "what?" deals with the present and provides the
best clues to the future. And never forget that you are trading "futures," not "pasts." Discovering the supposed "why" of a price move will
provide you with little more than temporary intellectual comfort. Whereas observing and focusing on what the price has done and is doing will
help you anticipate what the price will do in the future. Leave the intellectualizing to those paid for their words not their deeds, i.e., journalists
and brokerage house analysts
Predictions tend to lock you into a preconceived scenario of the future making it more difficult for you to adapt to unforeseen events.Futures
trading is not like betting on a horse race. In futures trading you can change your bet as the race progresses. In trading, as soon as you make a
specific prediction about where a market is going, you sacrifice your freedom. A trader must always feel free to change trading positions on very
short notice. And most importantly, you do not need to be good at predicting to do well at trading. If making predictions can be quite harmful
and you do not need to be good at predicting in order to be successful, why bother with predicting at all?
The average trader focuses too much on big payoffs. This is a stock market mentality, i.e., buy it and ride it to the sky, or sell it before the crash.
Trading is not about predicting and catching the "big" moves. This is "fantasy" trading. It is the "lottery" approach to trading which, in the end,
pays off only for a very, very few. Trading is about "seeing" momentum and positioning with it, "seeing" trend and following it.
The average trader relies too much on feel, on intuition. The possibility that any one of us is a natural market genius is realistically somewhere
between zero and none. Accept that you will never be a world class athlete, sing a perfect musical note, or find a theory beyond relativity; and
neither will you ever reliably predict the future. But be aware that you can know the past and see the present.
If you're going to trade futures, you might as well do it correctly; and doing it correctly means doing it intelligently. Look at reality. Futures
trading is a competition. It is financial warfare. You are trading against thousands of smart, aggressive, extremely well-informed, very well
financed, extensively experienced professionals. Look at the facts! Over eighty percent lose; so by definition the average trader (even the well
above average trader) is going to lose--eventually.
- Chick Goslin
2]Most traders and potential traders are looking for rules-based trading systems or approaches. Using rules to make money is, of course,
incredibly appealing; however, such cut-and-dried rules are seldom accompanied by the most important rule - a rule to connect, manage, and
harmonize all the other rules.
Every trader will be tested emotionally, mentally and monetarily to varying degrees in his career. Most times, itll be extremely unpleasant and
youd most likely want to quit right there and then. Only those who can endure this kind of hardship, learn from their mistakes and persevere on
will make it.
Trading with confidence has to do with having a method which you have proved yourself, and which you know will win over time if you follow
it consistently. That means being able to recognize the conditions which allow you to trade, and only trading when they are all present. This is
comparatively easy with hindsight: when we're actually there, we can see when all the pieces fit. But beforehand, we don't know that all the
pieces are going to fit
3] The study of charts is not as some people claim, the mere identification of certain labeled patterns made by the actions of stocks. That sort of
thing borders on the mechanical and does little to aid in the development of one's judgment. But when a student undertakes to read from his
charts the purposes and objective of those who are responsible for a stock's action in the market, he is beginning to see, in a true light, the
meaning of scientific stock speculation.
The market always tells you what to do. It tells you: Get in. Get out. Move your stop. Close out. Stay neutral. Wait for a better chance. All these
things the market is continually impressing upon you, and you must get into the frame of mind where you are in reality taking your orders from
the action of the market itself from the tape. -- Richard Wyckoff
As traders, we cannot afford the luxury of wishing and hoping because it puts us in a passive relationship with the markets. When we wish and
hope, we are shifting responsibility on to the markets for making something happen instead of confronting the conditions and doing something
about it ourselves. If we find ourselves wishing and hoping, it is an excellent indication that we don't know what is going on and as a result need
to get out of the markets. - Mark Douglas
4]....... the problem with amateurs, they only have half a plan, the easy half. They know how much of a profit they're willing to take, but they
don't have the foggiest idea how much they're willing to lose. They're like deer in the headlights, they just freeze and wait to get run over. Their
plan for a position that goes south is, "Please God, let me out of this and I'll never do it again, but that's bullshit, because if by chance the
position turns around, they'll soon forget about God. They'll go back to thinking that they're geniuses, and they'll always do it again, which
means that they're sure to get caught, and get caught bad.
What most people fail to understand is that while you're losing your money, you're also losing your objectivity. It's like being at the craps table
in Vegas, and the fat bleached blonde in the sequined dress is rolling the dice, and you're losing, and you're determined that you're not going to
let her beat you. What you've forgotten is that she doesn't care about you, she's just rolling the dice.
Whenever you have jealousy as an emotion, or greed, or envy, it distorts your judgment. The market's like the bleached blonde in Vegas, it
doesn't care about you. That's why you have to put aside your ego and get out. If you have trouble doing that, as most people do, be like
Odysseus: tie yourself to the mast with an automatic stop and take your emotions out of play. - Marty Schwartz.
a story to understand a RIGHT trader................
there was one old chap who was not like the others. To begin with, he was a much older man. Another thing was that he never volunteered
there was one old chap who was not like the others. To begin with, he was a much older man. Another thing was that he never volunteered
advice and never bragged of his winnings. He was a great hand for listening very attentively to the others.He did not seem very keen to get
tips -- that is, he never asked the talkers what they'd heard or what they knew. But when somebody gave him one he always thanked the tipster
very politely. Sometimes he thanked the tipster again -- when the tip turned out O.K. But if it went wrong he never whined, so that nobody could
tell whether he followed it or let it slide by. It was a legend of the office that the old jigger was rich and could swing quite a line. But he wasn't
donating much to the firm in the way of commissions; at least not that anyone could see. His name was Partridge, but they nicknamed him
Turkey behind his back, because he was so thick-chested and had a habit of strutting about the various rooms, with the point of his chin resting
on his breast.
The customers, who were all eager to be shoved and forced into doing things so as to lay the blame for failure on others, used to go to old
Partridge and tell him what some friend of a friend of an insider had advised them to do in a certain stock. They would tell him what they had
not done with the tip so he would tell them what they ought to do. But whether the tip they had was to buy or to sell, the old chap's answer was
always the same.The customer would finish the tale of his perplexity and then ask: "What do you think I ought to do?"
Old Turkey would cock his head to one side, contemplate his fellow customer with a fatherly smile, and finally he would say very impressively,
"You know, it's a bull market!"
One day a fellow named Elmer Harwood rushed into the office, wrote out an order and gave it to the clerk. Then he rushed over to where Mr.
Partridge was listening politely to John Fanning's story of the time he overheard Keene give an order to one of his brokers and all that John made
was a measly three points on a hundred shares and of course the stock had to go up twenty-four points in three days right after John sold out. It
was at least the fourth time that John had told him that tale of woe, but old Turkey was smiling as sympathetically as if it was the first time he
heard it.
Well, Elmer made for the old man and, without a word of apology to John Fanning, told Turkey, "Mr. Partridge, I have just sold my Climax
Motors. My people say the market is entitled to a reaction and that I'll be able to buy it back cheaper. So you'd better do likewise. That is, if
you've still got yours."
Elmer looked suspiciously at the man to whom he had given the original tip to buy. The amateur, or gratuitous, tipster always thinks he owns the
receiver of his tip body and soul, even before he knows how the tip is going to turn out.
"Yes, Mr. Harwood, I still have it. Of course!" said Turkey gratefully. It was nice of Elmer to think of the old chap.
"Well, now is the time to take your profit and get in again on the next dip," said Elmer, as if he had just made out the deposit slip for the old
man. Failing to perceive enthusiastic gratitude in the beneficiary's face Elmer went on: "I have just sold every share I owned!"
From his voice and manner you would have conservatively estimated it at ten thousand shares. But Mr. Partridge shook his head regretfully and
whined, "No!No! I can't do that!"
"What?" yelled Elmer.
"I simply can't!" said Mr. Partridge. He was in great trouble.
"Didn't I give you the tip to buy it?"
"You did, Mr. Harwood, and I am very grateful to you.Indeed, I am, sir. But --"
"Hold on! Let me talk! And didn't that stock go up seven points in ten days? Didn't it?"
"It did, and I am much obliged to you, my dear boy. But I couldn't think of selling that stock."
"You couldn't?" asked Elmer, beginning to look doubtful himself. It is a habit with most tip givers to be tip takers.
"No, I couldn't."
"Why not?" And Elmer drew nearer.
"Why, this is a bull market!" The old fellow said it as though he had given a long and detailed explanation.
"That's all right," said Elmer, looking angry because of his disappointment. "I know this is a bull market as well as you do. But you'd better slip
them that stock of yours and buy it back on the reaction. You might as well reduce the cost to yourself."
"My dear boy," said old Partridge, in great distress "my dear boy, if I sold that stock now I'd lose my position; and then where would I be?"
Elmer Harwood threw up his hands, shook his head and walked over to me to get sympathy: "Can you beat it?" he asked me in a stage whisper.
"I ask you!".I didn't say anything. So he went on: "I give him a tip on Climax Motors. He buys five hundred shares. He's got seven points' profit
and I advise him to get out and buy 'em back on the reaction that's overdue even now. And what does he say when I tell him?
"I beg your pardon, Mr. Harwood; I didn't say I'd lose my job," cut in old Turkey. "I said I'd lose my position. And when you are as old as I am
and you've been through as many booms and panics as I have, you'll know that to lose your position is something nobody can afford; not even
John D. Rockefeller. I hope the stock reacts and that you will be able to repurchase your line at a substantial concession, sir. But I myself can
only trade in accordance with the experience of many years. I paid a high price for it and I don't feel like throwing away a second tuition fee. But
I am as much obliged to you as if I had the money in the bank. It's a bull market, you know." And he strutted away.............
Without the stabilizing effect of a theoretical framework of how the markets function - whether intuitive or logical built upon the trader's
fascination with the inner workings and price movement - research, trading-plan development and trade execution will remain volatile. - Joseph
Hart
A characteristic of a good trader is to be realistic and understand what comes from noise versus what comes from true data. Another is to
understand whether you have done something stupid, or if you were too quick at judging yourself. Another characteristic of a good trader is
being able to find an effective way to deal with his emotions, to set them aside. - Taleb
"The art of contrary thinking consists in training your mind to ruminate in directions opposite to general public opinions; but weigh your
conclusions in the light of current events and current manifestation of human behavior."
"It may appear to some readers as though the theory of contrary opinion, or the art of contrary thinking, is a cynical one. I do not think it is at all.
I believe it is merely a matter of getting into the habit of looking at both sides of all questions and then determining from your two-sided
thinking which is the more likely to be the correct vision - which in turn leads to the correct conclusion." Humphrey B. Neill
"It is very important to visualize the many ways in which the market may unfold, rather than trying to forcast or predict how it will unfold. With
a market understanding, you can begin to visualize each possibility, and what each would indicate to you about the market and your position."
I'm sure there are highly profitable pros somewhere who trade wave patterns, moving averages, chart formations, and the like. In several years of
working hands on with such traders, however, I have yet to meet one who uses these methods. The pros do, on the other hand, care very much
working hands on with such traders, however, I have yet to meet one who uses these methods. The pros do, on the other hand, care very much
about who is in the markets and why markets are moving. The principles provide a framework for making sense of market behavior, which then
can be used to filter the setups provided by charts, cycles, and the like. The really good traders understand markets; they don't just predict
them. - Brett Steenbarger
"For every style of trading there is a "perfect" market environment. When the market is aligned to your style, everything you touch will turn to
gold. Your patterns will set up and run without stress to your target zones, your excitement and confidence will soar as your win cluster grows.
But these glorious periods seldom last long. Stops will begin to appear again, and then perhaps a loss cluster. This constant cycle from "zero" to
"hero" and back again is why trading is the manic depressive business it is. This constant shift from in alignment to out of alignment is what I
call the payout/payback cycle."-Bo Yoder
"If the market or individual stock does not act according to one's primary analysis, the market itself is trying to tell the trader to change that
analysis, or at least cut losses short and get out.
Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is
to recognize the trend whose premise is false, ride that trend, and step off before it is discredited - Soros
Trading is 'teachable' but its definitely not something you can teach through seminar/lectures, there are just too many subtleties involved....CV
"The main goal of each trade is to minimize risk rather than maximize profit. Positions are managed according to the market's behavior after
we've made our trade. We can't really predict the outcome. For example, if we are trading on a test, we don't know if it will lead to a true
reversal or just a consolidation pattern before further continuation of the preceding move. We are trying to achieve a "headstart" in the right
direction together with a chance to put in a tight stop."
Al Simpson: I would like to ask you a question that I have wondered over the past couple of decades: When you take a position, do you feel you
have taken a good position?
Phantom: Never! Do you understand my NO? If a trader thinks at any time they have a very good trade, they are going to get removed from
trading very quickly. I make the best trade on my trade probabilities program, but who is to say my guess is better than someone else's? Never
do I know it is a good trade until it proves to be.
To feel you are making a good trade is signing your death warrant in trading. The majority of traders do certainly feel they have a good handle
on a trade and are only putting on good trades.- Phantom of the pits
And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you
this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right
on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at
exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their
experience invariably matched mine that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. .....Jesse
Livermore
in this business if you're good, you're right 6 times out of 10. You're never going to be right 9 times out of 10. .........Peter Lynch.
let us clarify ..........both basic of investment and trading not told to free forum
INVESTMENT starts with concept of business. So enterpreneur comes first.HE has a zeal, supported by knowledge and money. Now requires
adventurism , marketing click and ofcourse flow of fund.....all this make HIM sustainable and capable .THEN fund raise ..by equity or through
bank loan , if HE can maintain ROA + growth , business succeeds. So durability is to be checked ,continuity is to be confirmed and business
acumen of CEO makes a company click,WHICH CREATES A CANDIDATE FOR AN ANALYST/FUND MANAGER TO MAKE MONEY
out of a name.
SO u as investor has to be shrewd ,well informed + understand hype in market.
NORMALLY to follow buy comparatively low and
sell later with better realization.BUT if he dont understand business/sector /business viability ..DONT EVER TRY TO INVEST DIRECTLY IN
MARKET ,better come through MF.
So as a trader, first clarify who u r...............means ur time , knowldge on psychology , peoples behavior ,understanding of behaviorial
finance,profit and loss,objectivity in mind, extra money availability.
WHY u can forecast , market shall follow, ur confidence, at what condition u understand u r wrong, necessary corrective action .......again
comeback attitude, knowledge on ta,money management , habit of diary writing.
MOST imp is change of self , when market condition changes
there r few secrets in trading but difficult to implement , because our intellect tells us to sabotage ,so we use software for objectivity
TRADE SECRET
1] ALL INDIVIDUAL R NOT SUITABLE FOR TRADING ,IT REQD DIFFERENT MENTALITY/DISCIPLINE
2] MUST UNDERSTAND BUSINESS /PROFIT-LOSS/RISK AVOIDANCE FIRST.
3]OPPURTUNITY COMES TO U, IF U UNDERSTAND MARKET....IT TAKES TIME TO LEARN.
4] FIRST DISCIPLINE,THEN MONEY MANAGEMENT THEN SEARCHING OPPURTUNITY AND FOLLOW UP AFTER TRADE
ANALYSIS.
5] TRADE FROM HIGHER BACK UP TIME FRAME.IF POTENTIAL OPPURTUNITY RS20.CASH ON Rs 10/-........KNOW WHEN NOT
TO TRADE.
6] WIN OVER TRADE EXCITEMENT ,MAKE IT A BORING -REPEATATIVE ATTITUDE, TRADELIFE AND PERSONAL LIFE R 2
DIFFERENT THING
7] BE A SPECIALIST ON SOME STOCK/SOME SECTOR/PARTICULAR TIME FRAME
8] DEVELOP HABIT OF TELLING LOSS/WRONG TRADE.......IT MAINTAINS HUMILITY, a preventive doze...A SO CALLED
SUCCESSFUL TRADER ONLY DIE BY SELF ARROGANCE.
Phantom of Pit
05 July 2015
12:25 PM
best single book to learn ..phantom of pit.

gist of the book is here : 1. be an observer first
2. learn from own mistake and other mistake......imprint this in mind
3.correct knowledge and behavior modification.
4. preparation yourself thoroughly for entry and exit.....with some superlative idea....what goes up must come down[mean reversion]...it takes
time to rise but fall rate is quicker....
clock ..stands for timing....diary ..to write opinion and mistake study
5. behavior modification.....this unlearning process is key.......what works for u.
correct behave is....what to do under unexpected event......not emotional reaction.
6.share market is a loser's game....u must know to survive first.then learn probabilistic approach on right trade vs. learnin g trade[assuming
loss]............add position to winner immidiately...and cut loser earliest whole @ a chop ..
7.design everything to all unforseen scenario....so that u can act while they occur..as its a journey on unknown.....be ready where to exit and
when....on what condition........understand...rush problem of public.....in fear and in greed...always act before them.........must get out @
redoubtable top..........same way.....wait for a minor confirmation @ intermediate bottom...then enter.but act swiftly
8. always say.....i am only responsible for my behavior modification,proper observation to trade and correct reaction[execute ] to market.i must
adapt with market...not vice versa..otherwise sit idle...... i must understand bull trap...and check for it
i must think before i act/i execute a trade......[punch list]
9.sometimes i must look for reverse image[in chess terms look from otherside of board].....and plan for reversing the trade.[ this is the toughest
psychological hurdle i find to overcome]
10.Initially i should take a small position.........must be swift to liquidate that one if sense....
market proves u wrong.
11. always use own signal only for entry..........but use market guidance to continue/exit/addition ......or even reverse pos ition.
this slow behavior modification is to be practiced unless it became ur 2nd nature......this is right way to trade for interme diate term.
12.when u hold a position ,within a reasonable time [as per ur chosen validity period]....it is not confirming to prove corre ct........better get out.
RULE 1:
In a losing game such as trading, assume you are wrong until the market proves you are right. Positions established must be r educed and
removed until or unless the market proves the position correct. Why is rule one so hard to implement? The answer is that 98 p er cent of all
traders trade to be right. The rest trade the markets to make money. The fear of being wrong is more often than not a greater motivator than the
fear of losing money. Be conscious of it when you are trading.
RULE 2:
Press your winners without exception. By incorporating rule two in your game plan from the start, you will be eliminating the desire to be
proud when the market moves in your direction, and to take profits to show you are right. Traders love to be right. This is your enemy to love
to be right. Your motivation must be to love to do the right thing. When you think you are right in the market, this is just the beginning of your
trade not the time to take your profits to say to the world, See, I was right! Who really cares if you were right? You will becom e the best
trader you can be by being wrong small, not right small! Get that in your mind now. You are going to have to press your winne rs if you really
consider yourself to have the ability to make a living or extra income from trading. Otherwise, face the truth that you are o nly playing to break
even. The money will follow the correct action.
Some truth to novice

05 July 2015
12:26 PM
1] knowledge is very powerful thing, RIGHT knowlege with experience are more.U reqd inbuilt discipline, right knowledge and p atience ,even before starting
career as trader.within 3yr, if u can not break even, its better to quit.
2] Turning pt trade gives big money, learn it.(ANTICIPATORY TREND CHANGE PT,
say elliot target, is an anticipatory value).Making money by following trend is myth.
When trend change starts earliest, is actually counter trend , money lies here, because so called TA, practisioners understan d after6-7% move is over, thats
time i derisk by selling half, in volatile market ,fully i sell as i dont know ,what may happen tomorrow.
Higher frame is nothing but weekly chart in trend,............so when pull back occurs to std support zone/fib value take pos ition with day trade.
Pullback another technique, its validity in higher timeframe,.......may allow u trade in lower time frame.
3] Big money is not by entry,nor by exit, but from excellent money management & position size.news is a trap in india, use it .
moneyflow anticipation for future, there r various clue, where FII actually buy/sell.....normally its against media publicati on,........most cool trader knows
it,after good result ........price normally reacts as FI books profit.
If u see , in detail , quarterly result publication VISAVIS........delivery volume at NSE , u can see urself ,relation of act ually buying or DISTRIBUTION.
4]orderflow concept is very imp for intraday trader-- hidden order u want to see.
Its the real money ,when it shall come or get out................before others ,u have to know and act.
5] Unless u mastered art of survival (stop management, not to enter trade when greedy,to enter trade when fearful)...u should not play BIG.Pl
understand...........play small & master them, then play big bet
6] TA /FA useful.........if u know to use it, but not in conventional way
Example..........at imp upmarket , use good news/result to book profit.
Use 15min break out for trade entry for 1 day hold trade, with 1-2% target
7] Never learn from finance industry , how to trade,......learn finance/marketing from them.Learn ta from ta practicioner,lea rn FA from fund manager,how to
value a stock from IB(investment banker)............but never, i repeat NEVER LEARN trading from them,.......they r all faile d trader.
Here even some good trader in personal level helps/teaches approach them.Trading can be learnt from only professional /succes sful trader,yes.......u reqd
mentor........a must for trade learner/just like driving school( self knock can teach ,but that is hard way to learn).....a p opular writer from Pune, teach TA,FA
combination..........but not even himself a daytrader(just u dont go to doctor for shoe repair)........some of socalled TA pr eacher r snake charmers.......avoid
them,
8] use FA for big picture clarity,normally mentality of contrarian helps in trading.Discipline to write trade journal,....... ..using software to query ,conditions you
to objectivity
(my biased view it takes normally 10yr to become a trader-------mentor may reduce time)
TOUGHEST THING IN TRADING IS NOT RETURN BUT CONDITIONING YOURSELF WHEN MARKET CHANGES
IN reality........ trading is at its core a self development exercise
..................................
In 1st 5yr,.......its novice game(assuming 5yr a bull bear cycle)
2nd 5yr.........seeing market , another casual+ cautious approach
3rd cycle......here actually u make money, its different for others, but repeatation for u.
4th cycle.....its catwalk , ur presence gives money, its taking laddooo from child
..............Trade as & when oppurtunity comes, dont force trade
self analysis to be a trader
1] do u believe in prediction? ur success rate
2] if u dont do prediction, how u create directional bias, what is strike rate of that tool?
3] if wrong , how quickly get out, to save money on table
4] how well u understand & have skill in any field of life
5] your ACUMEN
A simple analysis
..............................
Most of us watch CRICKET,listen to commentary,..............we think just like a batsman we can play, actually we are NOVICE, commentator r ex player, no
more can play.n Test players r real pro.
Actually we dont have the capacity to play in real arena.
spectator can never be a pro. They spend money to see the match, PRO earns. Novice gives money to learn what real trading is all about.
In imagination ,we think like we r commentor, .......i would not DO that mistake in batting.
Actually there is lot of gap between , chosen player/commentator vs spectator.\
Even to get a call to select in PROBABLE...........u have to PERFORM a lot.
Reality vs illusion..............understand .
, 90 % people r not suitable for trade learning.But other 10% can learn it,simply earn to run family - 90% its dog's tail,for those 10% .........they become
within short time like others, become emotional and lose.However under proper mentor , they can make sufficient moey to run 2 generation.
Trading is always uncertainity, good trader r master risk manager.
A man called,BERT at singapore,ota ........shows the imp of skill, it takes him 20yr to learn/earn from trading.so he's now m illionere trader in forex.
i saw ,not to trade for 3days, then on a flash quickly earn about 10000$ in forex, as he found high probable /low risk set up .
yes for av joe ,trade learning is not possible.
..................here is a professional approach to learn
Level 1
.......................
1] introduction to trading & trading foundation
here u shall understand pro vs novice,basic thinking/action difference.
2] ta- demand/supply ,candle- trend........thats all
3] trading strategy, buy low/sell high.......counter trend/break out
4] understanding pattern for long term bias, reversal /continuation & volume relation
5] Ta tools- indicator, remember they help /supporting tool
ma/macd
rsi-divergence
stockastics
atr- for stop & intraday
adx- for strngth of trend
bollinger band
...............................how create ur system
level2
................
1] fundamental analysis -economic scenario
2] future trading /short
3] FIB tool
4] evaluating a potential trade- odd enhancer
5] risk & position management
6] laws of trading
7] trader's mind -psychology
8] be a pro-pre -post market analysis
PLAN
PLAN
TYPE OF TRADER
A-B-C PATTERN
APPLICATION OF TRADE PLAN ON U BASIS
.................................................. .............
A] successful traders trait
B] ur plan /routine -execution
c] game/book u play/read to IMPROVE TRADE SKILL
........................most people dream & lose money in market.

1] pro makes money -because they lose less.Novice lose because of HOPIUM
2] pro knows market prediction not possible,only high probability turning pt,he can pin point.they take position,but get out early if wrong.Novice fears ,and
buy after upmove ,actually when pro r ready to book profit
3] PRO study risk/reward relationship in chart.Novice search with his greedy eye,biased to win/money........react emotionally
4] Pro get out/get in EARLY,before media hype.......novice listen to TV,act late to lose
5] pro creates a plan,then execute as per plan,with if.........then ACTION...........
NOVICE ask/think then trade,never proactive.
as a new learner,answer first why u will make money,........others shall lose against as a trader. Being a BULL u have to pre dict fall of BEAR,as well as
CHARGE early to take credit from OTHER bulls.
Understanding SUPPORT/resistance dynamism and money flow in terms of GREED/fear ,only a baby step. then follow economic event s predictives & its
reaction of price in stocks/commodity.
Next learn ,higher time frame bias
If u want to technical trader/........understand which ta tool u shall master, what condition of market ,u bet in market.
Write the trade...........reason behind winner/loser,this analysis helps
let us understand a scenario.............probable RBI meet to cut interest.............
if no cut,......market drift slowly
if 25bps cut,......market move quick up, novice in BUY ,pro in sell mode.......as market reaches a strong resistance now
if 50 bps cut,.......morethan expected cut,,,,,,,,,,, so it will be decisive up ,with bottom at nifty 6000.
this way if u have to prepare scenario .so action guideline before others give money.
Which Stock?.....ofcourse the banking sector.
.............................................
From 4-5 yr regular earning from to switch to PRO level, u reqd to evaluate.........ur decision making system(how robust they r..... .how good ur discipline
habit)
why u make money against others (ur edge)..........ur skill to play BIG on winners
................
can u predict,market in bull trend or in exhaustion mode..........if YES, big money awaits for u
Pl learn to play contrarian against news.
A big move in ONGC,brings to longterm resistance to 350, .........so short and take money in market.
remember......good news give u---------selling oppurtunity
Let us question ,very critical for a trader.........where u suit?
1] longterm player-investment type
2] aggressive trader in position
3] short term swing play
4] intra day player
..............................all have strong success , in proper market condition
........1] think long contrarian ,in big stock on big fall ,comes to enter once in 4yr cycle
2] here u play on fundamental understanding, in price chart -break out.
suit large-mid cap.
MA is good tool ,but technical stop must,use atr as sar.
3] play in counter-trend or pull back in direction of main trend with small stop,entry total position in single go,avoid news/result here.
4] intraday- based on momentum or continuation , stop .1ATR,profit 1/2 atr.........play in volatile stock ,where u know how that particula r stock behave
...............ur guessing or analysis is good at market,by proven return on market...........so switch to future. On big -ive scenario ,short at resistance,with stop
on 1/2 atr.
Similarly ,u strongly know imp support,ready to risk some amount..........so buy support value(call).......if expiry is atlea st 10 days.when right get 6-8%,if not
lose .......2% call money. If call value about 3% underwrite call.
----------------------------------------------------------------------------------------------------------------------------- ---------------------------------------major thing for trading is TRADE PLAN.
YOU HAVE TO TRADE ,AS PER WRITTEN PLAN.
1] what type of personality.......suits for trading or not.
2] what type of market
3] understanding uncertainity & your action guideline against it.
4] momentum plan
5] swing plan
6] exit rule
7] money management strategy
8] how U define , market shall move up
9] your guideline to keep u neutral
10] strategy of learning from ur personal trade history.
Price doesn't lie. Price doesn't alibi. Price never complains and never explains. It is what it is - Bhav Bhagwan che! ...........this truth from
EAGLEONE......always to be respected .
.................................................. ........................................
Quick thought process,flexibility ,experience r my edge;,,,,,,,,,,,,so pl get more. shall try to give CLARITY .
U can see trading zig-saw puzzle solved and elements will be shown , may not be elaborate.No knowledge gap....Order may be as perceived /at random,
but all has its relevence.
So i start NOW
INDEX
1] trading,investment vs gambling
2] why novices/ameteur fails and shall fail yr after yr ?
3] what is successful trading model
4] most imp factor YOU
5] what is market
6] what price is telling
7] Do u really know
8] a plan vs Method
9] Role of media
10] understanding financial model
11] Time and its element
12] flexibility a key tool
13] why we r born to fail /but u can convert urself successful trader
14] Commitment
15] confidence
16] Mentor vs mentee
16] Mentor vs mentee

17] value of regularity vs discipline
18] Patience
19] whether Discreationary or Mechanical
20] Problem of self sabotage
21] Envirornment
22] Economics..........the backyard for trading field
23] Equity curve.............INSA ALLAH of stoploss
24] DO i STRESSFREE ?
25] understanding EIC model
26] understanding sector model
27] Usefulness of TA
28] Creating TA model
29] A mode for searching oppurtunity
30] how to use software
31] Risk mitigation theory
32] Fitting the zig-saw puzzle
.................................................. .....
most of this is already mentioned, still some may be clarified.
----------------------------------------------------------------------------------------------------------------------------- -------------
Trading, Investment vs Gambling

05 July 2015
12:27 PM
1]trading ,investment vs gambling

..............................................
TRADING : its nothing but trade off with potential risk vs. profit dream , most novice can not visualise actual risk , so they could not a plan
potential risk mitigation , and fumble before actual risk losing money. Honestly they should make only on condition understood by them, which
has higher chance of happening ,at nearby support base ie. at least risk potential ,Theoritically u should plan a 15/- profit on 5/- risk. Since we can
not see future ,we have to forecast ,always prudent being wrong what to be done.Uncertainity of the event , not uncertain in ACTION.
OrderFlow is to be understood to predict what comes next. Its a skill on future reading, by seeing ENOUGH past.Alternately by seeing what
happening in higher time mode, similar happening on smaller timezone(BIAS). A quick study of weekly price in detail.........how it may give big
picture.
IT is imp to understand least risk ,and high probability.Then understand MOMENTUM or flow.
INVESTMENT : when u have excess money,u keep in BANK,the institution lends MONEY to big houses/enterprenaurs against flow of
interest.So they have to check the party ,whether business in proper shape or not(not investment apprisal report,nor broking house analyst
visit).........these shrewd finance practitoners can tell/smell danger and oppurtunity, suggest some remadial to enterprenaur , .......so understand
technically if they create a TRUST, floating mutual fund, complying regualations,........now utilising that info before others ..........they can take
postion and sell later at tight time.Pl understand bank works on principle of interest ,paying u 7% ,taking from industry >10%............so by least
risk ,if they could get higher return ........mutual fund ,backed by Banking r born.Its inside INFO (sensitive info + interpretation skill + jardon to
decept others)........sole purpose to create higher return for fund.
So where is investment? ITS the inside info. One of best house .......TATA 2001-02 write off TELCO/TISCO certain loss and other financial
headeque ......keeping price below 100/-.........yes creeping acquisition by none other than TATA investement and TATA sons..............only after
3-4 yr u know the fact. Again who bought TELCO 2008-9 at 250-280,and later selling around 1000/-..........yes its the big man TATA.
Have u seen the game of RELIANCE .........2 brother split drama,............and later rise of stock price some yr back? YES Reliance cap/fund
manager Mr Kela........ they r buying ,when public are feeling panic.YES another great negotiator.......icici fame also dealng. Mr Kamath ,the
famed officer 30/35 yr back hog limelight by giving fund to Mr D A.........yes this time its not info..........but a planned game to make money out of
market.
HAVE u seen how money made..........price rigging before after buyback ?
DO u know how investment banker get the deal ...........
Yes actually Investment is nothing but a scheme of making money, mostly by some persons with contact.............sometimes understanding
/visualising a situation before it happens , sometime creating it.......mostly on INSIDE info. YES if u understand macro-economics/holding some
higher govt post on policy matters .......then u know before others what may happen .But ur PA made more , by dealing with cartel called
OPERATOR . Yes principle is money works. SECTOR deregulation pays ,economic cycle move up/down........consumer sentiment
changes .............but bet on shrewd /practical enterprenaur........his stock........u will make big money..........La Mittal.........story..........in telecom
sector.
...................by the way..........theory of valuation.........all r job searchers tool, just like marketing guys' smile.
IF u doubt,..........just see where modern VC r putting money, small/medium scale industry enterprenaurs.
Again past monologue .............long days back ,a lady put a research firm in VC .........icici,..........later in 2002........ipo 440 band.............VC put it
20/-............slowly at/after ipo ........make money..........yes now its BIOCON.
Everybody knows............reliance power story of.......2008/money minting by ANIL ( if u dont, sell all share.........all holdings/u cannot live with
shark............with poor knowledge..............keep money for saving a/c)
..............................
So any other HOPE ? understand BUSINESS,.........when market with big fall/ which sector r actually doing better. Simply buy big name and
some growth story..............await for around 2-3 yr..................U WILL MAKE MONEY BY INVESTMENT
so understand rule and characteristic of contrarian, alternate scenario creation,media hype.
In the say of a big trainer,...............u reqd just one story/one company..........a big bet with patience , understand why u r betting...........money is
yours in long run
Gambling : its nothing but what av investrader do actually:.........holding the loser. We dream /put hope after purchase .........share price shall move
up,but..........so we block money and pray, yes its gambling.
I dont know, i have not read............yet i make experiment with hard earned money..........again gambling.
Trading is my passion(actually clicking /watching price move)............again gambling.
I have to ask some done .........what to do presently............gambling .
I decided to loose max 1lakh, but betting 5 lakh..........another gambling.
Selling early the winner........to get thrill of wmoney..............its also gambling
Without a plan/risk management tool/proper education coming to market/indiscipline attitude.............all r manifestation of gamble.
Pl understand here u r betting against not only shrewdest.............but against INSTITUTION , who had practised and developed the
art.............atleast 50yr.
yes i gamble to satisfy my that instinct.........to get thrill/ but i know i shall lose money,..........and for making money which shall be discussed
later,..........i have to invest or TRADE , never to gamble.Never fighter a fully loaded gunfighter from 25m with a bare knife in hand.
.................................................. ........
so before u become a successful player in market............pl understand the concept with clarity..........investment-trading vs gambling .Throw away
gambling instinct from u,...........choose any one Trader or investor............lady luck may smile.
2.why novices/ameteur fails and shall fail yr after yr ?
Answer : they have not Requistee /prerequistee.
why i can not live in water ? i dont have gill.
TRADE LEARNING .........reqd balanced mind..........patience to learn, may be 8-10yr of journey.
Confidence in u,but doubter at heart over situation can whirl,
Slowly you become believer in price .NO to gambling attitude
Love to adherence to discipline
Stoicism in mind........so that fear /greed has min effect
Objectivity development:
Understanding of business/economics/public sentiment
So novices start without map to reach somewhere where few people have reached.So they all r naturally absorbed in quick sand. Yes ALL. THEN
So novices start without map to reach somewhere where few people have reached.So they all r naturally absorbed in quick sand. Yes ALL. THEN
some of them may reach.................no its illusion,first they have to learn TO SURVIVE.
then preferably from successful MENTOR
,always from mother of all teachers........MARKET.
Read history on how to reach treasure island'............so u reqd good navigator ,good tools to handle directional problem,dedication & confidence ,a
group of searcher who shall not BETRAY U,...........yes in trading ur minds' chance of betrayal is very high.
Yes at start you are not understanding- WHAT is reqd, poor control over mind,not inbuild patient and insurmountable combination of
oppurtunity/danger same time.
Variability of market condition............they can not visualise in their weirdest DREAM.
So they fail and shall fail again. IN good words of Levermore..................market shall remain as always............supplier of fools.
.................................................. .........
So u dont to be like them...........
.pl see .........1]your toolkit.
2]Understand structure of market
3] get a mentor if possible or learn from market (without repeating mistake)
4]Have a healthy optimistic view on life
(3)what is successful trading model
.................................................. .
A little bit detail may require here.
Generallisation: Some gen element
Specialization : some sp element to suit one
Simplest example : army officer selection .......pentagonal peg & 5sided hole
Requirement : sp intelligence iq 110-120
patriotism & objectivity.......good or above
Complaining attitude : nil
Execution skill ; higher , the better
Delegation : specific , not over /nor under
Have u understood i what mean to say .........clearing with written under upsc NDA/CDS and strict physical fitness (also clearing medical
board).........is nothing but generalisation.But ur innert attitude as tested by SSB will decide psychologically whether u FIT in permanent
commission .If intelligence high , u may get bore with ROUTINE/discipline.Complaining attitude must be NIL, otherwise u may be the trouble to
the system,Delegation specific .........u must do task as a TEAM ,also to be resourceful,master leadership may create COUP, .............
Fortunately ENOUGH study and TIME spent on to find out successful trading model and its available
Core question is whether u like to be.Let us understand inherent constraint of Individual.
(Dr tharp ,Elder, Doglus ,Kiev have done good amount of RESEACH).
Jist is as under
........................
U require some inherent characteristic , and some acquired one,.........normally available with successful businessman
Some extremely balanced character.......which apparently look PARADOX ,DISCIPLINE to write and evaluate self,exceptional ability to face
HUMILATION ,yet comeback attitude.
Where is the MODEL ?
Pl follow who is already successful............. 3 different characterics ........psychology -ta-fa tool may be suggested
1]must know 10+math
basic finance
balanced life
discipline
confidence (not high nor less)
perseverence
patience
writing/reading habit
indifferent to media report
self sufficient attitude
FROM MARKET
2)Whether exist trend or non trend
momentum of present move
expected reversal pt
present sentiment of bull/bear
BASIC MACRO IDEA-FA
3)Where from moneyflow is coming
CAGR of a company
understanding forward growth/future of sector
Risk from competitor
Govt uncertainity factor
Macro economy of country
consumers choice and expense power
.................................................. ..........
yes this much is reqd
..... Acquired :
Money management principle and position size
How much risk u can take without losing sleep
Network creation to get info.
De-stressing mechanism
De-stressing mechanism
Visualisation technique(with alternate scenario)
.................................................. .........
Apart from this believing in philosophy ....PRACTICE MAKES A MAN PERFECT
pL UNDERSTAND this 5 r to suit one ie. case specific
Many may not agree on my model theory,.........may say only ta or fa is sufficient.........i can say in my 20 yr on market.....i have seen successful
trader in counting by finger..........100% return ........comes back to -30%.Even Mr R D of turtle trade-trainer fame........got out of market due to
only TA model,........though acquired ALL acquired qualities.Many may use different kind of filter.........to achieve this,.........but optimum model
is based on generalised + specific(acquired to suit one)
......................Only one thing presently hidden .........weightage to each of them.
u can break them first as prerequistee ..........and 2nd as REQUISTEE (to be practiced while the journey started) as per your convenience.
yes without all those characteristics also i have successful trading(in money terms with less return).
Only by seeing orderflow , quickly studying momentum of price directional move , on a known list of stock watch.........specialist jobbers made
his punch on own a/c to get 0.5 % return, yes he made twice/thrice a week that right punch.....with his patience/momentum reading /first hand
study year after yr before screen his edge.
I have practiced master swing with higher probability from a portfolio.......
...to bounceback play from 2nd support..........with >75% of directional accuracy.
Have seen 0 stop investor.........to get 40%av return for uncanny ability to play turnaround stock..........no it does not suit me.
A lone player with good card reader without a degree may come in market av once in 4yr cycle,...........buy index stock............and sell based on
market hype........yes he was right in 1994-1999-2004- 2007.
A PROJECT MANAGER ,in market since 1984-85 has earned a lot in playing tata -reliance brothers story[as mentioned in investment].........he
understood business acumen,..........so working on his forte.
yes all of these common theme..............working on own edge.
most imp factor YOU
4] most imp factor YOU
.....................................
know who u r...
how much time u can spend on u..
Ability to give up a chance even though you know you can make money is a trait you need when trading. You want to do that if the winning trade
is against your methodology. Even though in short span, you might make money on a trade or two of this sort, but, overall you stand to lose more.
Do you break out in a cold at the mere thought of risking something - such as your own capital? Do you think of trading like 'gambling,' a long
shot to make a million? Or can you handle risk in a disciplined fashion, knowing how much is 'too much' for both your capital and your
constitution?
Trading is not for everyone. If risk makes you ill, on the one hand, or if taking a risk brings out the recklessness in you, then trading is probably
not for you. But if you can handle risk with discipline, then perhaps you can find a vocation or avocation as a trader. Only you can answer that
question.
After development of your interest in market..u must check whether u suit here or not.....
pentagonal peg and 5sided hole...an easy ? quick check up pt...
1]your risk profile...market risk concept
2]your fund...your plan increase it ..proper utilisation of fund,when to sit idle....when to play aggressive
3]your knowledge bank...steadily u have to increase..judicious use of it
4] understanding market shalloffer oppurtunity...patience and discipline your two weapon
5] a stable analysis power , when to play PREDICTABILITY when to
use RANDOMNESS .
after this test u have to ...say yes,to ALL....OR MODIFY YOU...
GIVE TIME IT MAY BE SOME YR, or simply quit...
indian defence dont take who not fit their criteria
So now comes your journey as trading cadet
u r lucky, if u r in trading industry.., U can make all experiment in others money
sharpening your skill without self injury. committed money here and there.
its not trading but timemanagement..and stress control
your daily routine...
how far u r discipline ..in personal life..
how far u can take stress...know your elasticity band
Your time management skill...alotted time for study
study market...
analysis for trade...
scanning of idea. based on news...
stock scanning based on chart..
plan of action what other trader may plan ..how far they follow u after entry..
what r DANGER ALERM signal.
One of the primary reasons individual traders fail is an inability to act freely and decisively.
Temperament costs investors more than ignorance
In Investment, understanding is more important than information.
Trading is a mindgame. So to a large extent your success is controlled by your beliefs and actions.
The stock market is an unusual environment.It is a pressure cooker type atmosphere, for those unfamiliar with it and it shall generate emotional
and irrational behavior.
At a personal level, fear and greed are the primary emotions at work. And stress and anxiety are common issues that need to be dealt with.
Discipline is so important in trading. You need it to do the things that you have to do, even when you might not want to. Such things as analysis;
risk control; money management and record keeping. All are critical and all require discipline
So fact remains.......u have to be independent........trial and tested method to fit u.....which must have +ive expectency.
5] what is market
.................................................. ................
Market is a place where buyers and sellers exchange their opinion and change the ownership of stock/derivatives.
So among many a players, brokers....as a community ,insist on trading,Govt to play role of regulators /specialised body like SEBI,RBI -central
bank agency to handle monetory policy ,ofcourse Financial institute...MF industry/if from outside FII ;.........HNI and retailers(piggs)
3types or style is imp to understand.....
1]speculator
2] Arbitrage player
3] hedger
If one understand basic concept of financial services..........with distinct clarity , later understanding of trading shall be easy.
SPECULATOR : DIRECTIONAL PLAY .........core strength is understanding /taking action before others........take higher risk.
ARBITRAGE PLAY ; preferred by professional institution , with directional bias,if tilted towards a particular direction,cut off other leg,.......let
profit run in tilting side. Also prefer to play underwriter in option.........considering novices/individuals shall make mistake most of the
time.LARGELY use media in favour to destabilise public by constantly pouring with info/misinfo........confusion as a tool,.........so earn both by
arbitrage,.......also if bias is created,.......naturally as INSTITUTION keep different teammembers, for buy/for sell/for risk mitigation.........but
actual control in a system /very mature team.
Hedger : they r basically play safe mentality..........use a concept called insurance........mainly commodity/forex........also in very up
stockmarket........used by mature institution .........spend a small amount to derisk..
Brokers want maximum entry /exit..........(ORDER PLACING BY NOVICE)
Govt in capitalism structure .......prefer distribution money to more knowledgable individual/institute........ofcourse losing should be less in %.
creating dream/job oppurtunity /analyst course/financial literate,........around 5% fund distribution + tax generation
But problem starts vested interest of individual.........policy liberalisation/loan disbursement/commission in order and leaking inside info ,ofcourse
by favourable judgement.........CORRUPTION is real culprit.
Have u seen ........PM saying, we earn more,.......purchase better thing..........so cost is increasing.........is the reason behind inflation,....... he creates
joke out of him.
Mutual Fund or specialist in banking system.........earns by INSIDE INFO, by getting to know beforehand from company and management,........so
they miscampaign toughness/volatility ..........tell u to give money to them for play.
FII is better lot.......using some method /better paid staff /meeting at analyst meet,.....ofcourse playing with proper cornering ......and better
execution with software,......may get some return.
SO where u stand as an individual.....U r fighting against them, better see who r bull or bear/out of this 2 who is winning, where money is
flowing , join there and make money.
Most imp : understand value of a stock firsthand...........keep a band of error for u, throw away hype factor,.........be a buyer at lower band,.........
.and always a seller at higher zone. If nothing u know,.........simply follow p/e....
..around band 15 buyzone.........around 22-24 sell as per fund manager.
Pl always watch on info,.............also learn to decipher it.THEN only come to market..
.....sit beside great player .........learn and watch his action,.........why he is getting out.
WHY at dec 08.........i investment..........a 5lakh 1 yr portfolio.........because i feel shall not fall big in 1 yr time frame.
U understand now.............luck is not mentioned in MODEL
PL understand market structure,................distribution ........accumulation.
HOW weak hand sell and feel fustrated later, make buy again at top,............because dont understand MARKET.
ITS a felicilation oppurtunity with right knowledge people.........actual success ratio 0.01 %,........yes 99.99% shall fail.
.............................................
Do u really know
Ans:This is one of the toughest topic i face. Yes unless u faced an upside move.....in which u miss ,another one u make money,similarly another
downside move.........where u hold and lose , in other one u short & earn,........then comes a short /longer phase of volatilty .........u buy at
top,instead of break out, market comes down........u book early loss ; similarly eager short play ,,,,,,,suddenly market take U-turn ,forcing u to
short-cover;................yes U have to go through this, atleast 2 bull/bear cycle
.......one must be profit/loss ............another sudden volatile direction play ........in which faced LOSS financially(learnet from MASTER TRAINER
MARKET HIMSELF,.......then after only really U KNOW ,what may happen psychologically,.........U KNOW NOW......
YOUR ADVANTAGEOUS EXPERIENCE,OTHER'S SHALL REACT WRONG(others r new in game)...............so now actually u make
money , being in RIGHT side. U may lose occasionally..........but definitely not big loss
Certain thing, u must know...........how many stocklist u can watch.
which which sector u can follow.
What factor influence that sector
How much av time u take to understand what is going on in a sector/stock.
From where u expect distraction ?(a personal shield to avoid it)
On what condition ,out of frustration u may sabotage own trade a/c
What u really know better than professional analyst...........so that if he seats against in other side of trade ,U DEFINITELY WIN.
How u follow your equity curve & ur plan for long haul.
Another typical difference to understand TACTICS vs strategy
Tactics is what u have to do NOW ? ........reactive, response as per situation
STRATEGY : long term plan, depends upon market structure, ur major assumption on life,attitude to loss,what u plan to do with
money,knowledge acquiring idea,macro things
money,knowledge acquiring idea,macro things

Both must NOT foul much. Infact synergy between this 2, Applying tactics in strategic context is a sure way to get success in life, added with
REALITY
.................................................. ....................................
Let me explain further.................in trading after practicing for certain yr, we may face the truth.Truth are
1] market is flexible /changing.
2] u have to understand trade selectivity/on sp condition u enter/present condition has some bias for future direction,understood by u before others
and taken entry and keeping /observing change in scenario/ur preassumption
3] If wrong dont pray, get out at first instance
............................
Market view market itself changes...............In layman's term.........a blind has found a pole before crossing the road,.........next day he
comes..........by hitting with stick ,on that expected pole ,he finds its not there.Now the dilemma.......is the pole is removed ? or i am making wrong
Once you understand..........market itself change its characteristic..........solve a lot of beginner's trouble.
2]Trade is not possible in all condition/all stock............u have to understand sp characteristic of a stock/sector. Also sp condition market like how
longer its duration bullish/bearish/volatile condition,.........beforehand or at the time of its happening.
Now from ur past study of market, u prevail this sp condition ,scenario shall exist for a certain time.Based on this assumption u create or visualise
some stock movement ,commonly known as Target.Know at least risk pt or high probability of happening the event u enter.(also opposite view of
yours ie. who shall be otherside of potential trade-if they going to be RIGHT ,when u throw TOWEL.)
Now see the info/is there any case sp macro/micro change. Shall it affect my target..........favourable.........increase holding TIME.........to get more
profit out of it
3] If any were wrong, micro/company sp/govt scenario/uncertainiy........based on reflection in price(price is dropping)..........pl GET OUT.be on
survival mode.
............this is the essence of trading i found in over a decade being in market.
A Plan vs. Method

05 July 2015
12:29 PM
Normally i see what to be done ,in detail as hypothetical case is a plan,method is how to implement with suitability.
In theory of PPC,production plannning and control,...........we are learnt first put desire outcome, then see resource availibility, then constrain of it, then comes
scenario preparation ...........how to do something on that scenario on paper.Suddenly we find after experience,something suits someone better............
basic idea of METHOD starts.
A chess player use sp plan which suits him in a battle/a level playing competition among equals............suddenly he finds opponent is taking unnatural time to
think.So he does not make game SIMPLE.ALLOW the opponent most to consume most imp resource....TIME.SO his winning method is deliberate complication
to win by time.
But suppose he is up a KNIGHT, his method is simplification.........and use opponent to fight in close contour, allowing knght fork, even that fails ,use extra pc
in endgame to capture pawn,............use extra pawn to QUEENING.
so method is something with comfortability.For example...........swing is a method , break out is a method.
how u will make money ........is a business plan . how much u risk,where to put stop........part of plan.
SWING METHOD .........suits comfortably with day/week time frame, naturally understand support,.........use discreation.
BREAK OUT ..........suits when understand RESISTANCE better, ......volume thrust, conditional suitability of market/stock.
so we know now at a natural resistance ............30% chance to fail.........so with volume thrust breakout possible. Another 70% chance to HOLD..........so
swing short possible,......so depending upon actually scenario, we plan for both idea..............as situation favour or against .........book profit or predetermined
loss,.....and move to another stock.
SOMEONE who has mastered............may play any one of above SWING/BREAK OUT, with programming to find out set up within N number of stock , and with
particular set up , when price also confirms ..........just take predetermined size position and trade out of it......a best use of mechanical approach.
,,,,,,,,,,,,,,,,,,,,,,,,,,
Role of media
.................................................. ...................................
Media normally we consider for INFO.............is basically a tool for marketing in finance industry.Normal gullible people dont understand abc of
finance...........so get attracted by it on its AD,sometimes after being cheated ..........create bloc against it.
IN marketing technique...........interest has to be hyped also repeated.............after sometime,..........those who READ,..........may make believed by it......A
powder can not change ur colour,a shampoo can make a little outshine to hair,.........all knows it,it is the food + natural color.........MORE IMP.
ALL CINE STARS,use wiggs /make up...........as per requirement of role,.............but fashion may be created.........by hype .........and young boys & girls(read
NOVICE/FAN) may follow it ....Director/make up decides casting/role play.Role demand as fix....... make up, looking original. Similarly ur thorough knowledge
on market may only TRAIN u to understand..........what is HYPE , by financial media.
Another case, not understanding NEWS...In normal news , is info of past considering current affairs, but in gossip.............of a company buy back, take over, a
new product successfully tested.............now to be launched...ibasically NEWS.
So in rumor state.........if u could get,.........decipher it, based on your experience with higher chance of happening is REFER as NEWS,
Since stock market forward looking,..........thats why RESULT is meaningless,.........but forward guidance is NEWS.
Since operators /MF makes money out of new comers MISTAKE, heavily advertise before SELL......all things look excellent future..............READ forward
earning of 3yr.
AND similarly when they BUY....suggest market is too risky,............U should WATCH and WAIT(they tell in media)......actually let me complete my buy)Many
a times CEO also join in them by lure of making easy money ......and cycle goes on as if eternal truth.
So form part of system- around market top.....excessive hype by media,........ pl sell PORTFOLIO.
Businessline /Business std...........certain publish better economic report and ET sometimes write company sp RUMOR.
TV channels........r worst type,.............infact very easily opp. direction play is possible ,if u have RIGHT skill of execution.
Unfortunately in INDIA ,most technical analyst coming in MEDIA , are not passed CMT,(they r hype type- get paid for it) so ethics dont apply to them(quacks).
We create hulla-bulla in media for........forgy DOCTORS/ pilots/food adultration...........but not against TA/media hype,.........and operators use them as per
game plan.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
understanding financial model
(My background : trained by 2yr in ITM, attended course by BSE on financial model and from corporate bridge academy + CFA material reference.some basic
idea in first page of thread-so some light will be touched upon )
.................................................. ....................................
Actual user of financial models r credit rating institute/UTI/some broking house.......based on excel.Also used by Investment banker
In accounting we use past data, however in market ,its only on future and probability.
So we use basically forecasting model, and linear approach.......also growth model.
PREMISES are..........if studying ......past yr -3,-2,-1,........if u can reach o year ie. present base yr.
Similar forward looking estimate can help .......to predict FUTURE, atleast to some extent,.....then use an error band,..........u may REACH
somewhere..........something is better than nothing.
we have 3 statement : balance sheet, profit & loss, cash flow.
Assumed we know their interrelation. In some industries............sales data is stable....so on it ,with tax rate 30% , capex growth nil, salary growth(expense )
10% , material consumption cost 8%.........other factor....we get ............cost side. Now we increase 10 % sales growth,advertise cost 5% higher,.....we get
some profitability. Against 15% growth , adding 8% capex........we further increase the model for
yr+1, yr +2,YR+3..............so a sensitivity is developed, however crude it may look.
Now from cashflow,..........creating o trouble,...........we may get an idea in ideal condition .Actual things start now.............WACC,various assumption on
improvement on growth, non collection of actual money about 2%,inflation factor,............now may create a DCF, pl use a terminal value ,substract loan
amount , u can get value of company ,........divided by number of share........u get worth of a share.
Damodaran has done good work ,,also Mckinsey model..........yet who shall apply it r too theoritician, also audit suggests.......management rarely gives True
PICTURE. Also so many ifs and buts exist,with due respect to error factor and uncertainity,...........this is near impractical to trade by it alone, however getting
job by this skill is good,.......also good for giving lectures,sellng financial products.
though very useful in INVESTMENT BANKING,
It helps for anchoring some valuation,..........so that hit of the moment,u should not pay high price to buy(losing objectivity)
BTW :some materials r copyrighted,but freely available in 4shared and torrent,......those who reqd may collect.
U may get pleasure out of calculation.....geting a final value,......more useful is SENSIVITY, and if u know to use P/E band ............with help of peer analysis in
sectors
So for a company ,if it 3 different types of business , pl consider them separately as part1,part2,part3.........create their value , and then add to get total.
This model may work in FMCG, also in continuous steady growth for a company.
............But entirely FAIL in cyclic product , business environment changing.(hypothetically entity works for better, with sole aim to improve shateholders'
value...........which is not true.
but this creates a micro model by which we understand a company..........and strength /weakness study helps to follow sustainability .
Never apply them in small cap, as data r prepared,[ unless u r the auditor..........to have access to real cash flow data.]
For a sector, relative valuation plays imp clarity............why a company is leader of a sector..........others r laggerd,............some company enjoys better
p/e........darling of market.
.................
this model may help ,catagorically when u put..............sectorwise company.
1]fmcg
2]software
3]automobiles
3]automobiles
4]pharma
5] fertilizer
6] paper
7] cement
8] steel
9]sugar
10] hotel
11]paint.......etc
any std magazine like capitalmarket is helpful.
Master positional trader then develop another skill, multi timeframe analysis,........ie. how a bias of one timeframe can be carry forward to another.(fractal
concept)
Some checks also various indicator,.......short term RSI holding above 60,........may suggest breakout is possible in higher timeframe.
Another critical study on time,........what worked on past...........shall work in future or NOT?
People underestimate the time it takes to succeed as a trader. Some people come here
and think they can sit with me for a week and become great traders. How many people
when they went to college would've thought to walk up to the professor and say, "I know
the course is for a semester, but I think a week should be enough for me ."
Gaining proficiency is the same in trading as in any other professionit requires
experience, and experience takes time. A man few years ago asked me, "How long will it
take me to become a professional trader ?"
"Three to five years,at least" I said.
why we r born to fail /but u can convert urself successful trader

05 July 2015
12:30 PM
Few parents wish their children,most r born by wedlock,........allah ka daan'..........but even by circumstances from early notorioty, rarely we find children as
product of environment.........,strong will power is rare,astonishly death of parents produced ........some extremely rare survival quality, by which we may
outshine.
Normally children r grown up with aim to fulfil parents' desire.........what they have not achieved,............fulfilment of dream.
As per society norms/schooling one goes through the stage.........respect/do's and dont, hatred, belongings........all this create a rational defination(a blockade
in mind), which r against normal trade environment.
Infact cheating, discipline,freedom,taking money from weaker, self-centred........some natural trait u apply as trader.........r not natural.
Attribute of a cunnying fighter, principle of chanakya,...........should be baby's day ............for a child trader.
Unless u develop to be thrifty,..........how u trigger small stoploss?
Unless u r perfectionist by habit ,how u develop a system.........?
Unless u kill bird/cockcroach by hand,........ do execute smoothly as trader?
unless u have mastery of observation of ants/fishes hr after hr,.......how u learn to grab a Right trade ........after rejecting 9 greedy trade ?
Yes these r not with us,.........let us face the fact, before we start.
Let us consider ourself lucky..........born with silver spoon in life,......naturally COCKY, so we r designed to fail ,due to not understanding value of humility.
Next .........a bright student, la iitian + iim product,......chosen to be Madam right , a super confident,.........naturally above mentioned failure+non believe in
stop,( i must be right attitude-superiority complex)........dont understand value of experience ........a sure recipe of disaster
Another scenario, a rich film star/model.......naturally a great oil taker(lives on hype) ,........can not understand u to be public shy,......without showing others
have to understand market,.............characteristics totally unsuitable for showman.
A product from,lower class , strong determined candidate............only problem is dreaming for money,.........so loss distract him more, should
understand.........loss is a part of trading in stock market.
..................So now i have mentioned generalised public ,.........similar plenty of cases,.........but message is same, not suitability.
Only advantage is of big broker's/fund manager's siblings, same like owner's of circus (an old gladiator himself)..........train new strong physique slaves in
weaponery to survive in battle field of GLADIATOR.
That's why many a good fund manager dont train their son.........to survive in this battle field, unless they see knack in that chap, also a failure in other field.
.................................................. .....................
It makes a good ground..........only banking industry in their protective environment know .........what to be done, teach some part to rare
breed,..........utiicm.com /nism in india...............but for rest,...........all dont know,........u require a real drive to know from scratch.
2nd part is now how we can convert us to be successful .
The good experiment of turtle proved.........we can learn it, provided we have basic psychological ingradients and a proven right method,........which we shall
copy with discipline.
Basically its nothing but behavior modification to follow some rules in the field of TRADING.
1] trading is lose making business ,if played always,........only on certain favourable condition u shall play ,otherwise fold.
2] without participation u dont know what is right,.........so take entry and get out with small loss.
3] If right , use your advantage to play to earn.
4] money managent is more imp.
5] discipline is key.
6] u must know some background,.......terrain.
7] emotion should be least here.
8] right mentor can help, though market is best teacher.
9] documentation and planning really helpful ,believe in yourself.
Another aspect is reading of good books, .........a heavy doze on what may happen, if u r not always cautious, previous generation market wizard,and modern
expert ......how they cool to face adversity.
u reqd.........tremendous hard effort..............to maintain state of unconscoius confidence.
Yes...........come back attitude u have to master.
whether Discreationary or Mechanical
.................................................. .........
Both r ok, actually individual choice.For All new learner..............mechanical is better, but 8yr onwards one may switch to discreation for further better result.
At the start...........discreation is very dangerous,infact harmful..........as clear idea of what to be done, can not be executed .
So learn little , follow some rule, use mechanical entry/exit..........practice trade journal , that way prepare urself...........if returns r coming , consider urself
exceptionally lucky,..........market condition actually favouring ur style of trading.
Discreation can not be started..............unless u have seen bull-bear cycle, directional bias before something can happen , then only may come within
YOU.........
Also u have to study lot of INDICATORS in past,......so when indicate Right, where they fail,.........is known to you.
Infact discreation is use of your VAST EXPERIENCE,....
But if mechanical return is ok, never plan to shift.
For simple mechanical 2MA x is better,..........also some condition profit booking.
Add pattern criteria.Then add momentum tool.
Later u may see some conditional tool,...........to understand market.
However slowly develop a habit of reading financial news, and its impact on market.........u may shift oneday to create a filter out of it.
Alternately total shut NEWS,...........if it affect your price reading(forecasting) quality.
Mind it,...........u have to practice and practice again.........until it becomes habit.
Also then u shift to particular style like swing .
Problem of self sabotage

............................................
All traders know this problem.............definitely the most imp thing for blow out,..........after trading a decade.
Self sabotage is when u know what to be done,...........yet u do as per whims...........destroying our a/c.
example : an arbitrage player............playing a big directional trade.
2] a good forecasting player...........suddenly not triggering stoploss,........holding position to prove himself RIGHT at market.
3] a break out player , seeing gold at high , with new buy coming from some Govt, due to some inexplicable reason........plan to short........(desiring upside is
limited so i am shorting.)
...................Last2 EXAMPLE HAVE COMMON THEME............desire to prove market/price wrong.
First one..........Going against own philosophy of trade,...holding losers may cost heavily if u wish price shall turn in opposite direction , alas he will be not a
player.........
So get out on danger sense is not followed ... only big loss when market proven wrong,....u r putting hope.........on bounce i shall get out,.........which may not
materialise at all.
Last 2 cases r being rooky...........so the sabotage.
..................
It has been told we have adventurism..........suddenly after many yr,.........which resurfaces , braking our discipline barrier ,...........and we join our tradeadventure, spoiling not only hard earned money,.........but also own trade system.
....................
Known work by Ryan jones.........is best to prevent it.
Known work by Ryan jones.........is best to prevent it.

Arrogance is your enemy..........core reason of sabotage.
Mastery over Ego.........and indecision ..............helps to overcome sabotage.
Key idea is ...............sabotage is natural, extreme discipline to be practiced , again & again to can stop it.
Risk of loss must be seen as REAL , and control ur expectation.
Imp of preparation in mind ,scenario preparation vs. your action guide line written ....again and again emphasised here.
"have talked with thousands of traders in my life. Many of them are well-educated and have high-paying jobs. You name it, doctors, lawyers, engineers, realestate developers, airline pilots, scientists and the list goes on. Inevitably, almost ALL of them I have talked to believe that because of their education, because
of their success in their job, they can simply transfer that education, experience and success into the trading world. This is ego talking, not truth.
The truth is that an airline pilot cannot transfer his education, experience and success to the operating table and seriously expect to succeed. Why, then do you
expect your education, experience and success to transfer to trading? Vast and enormous mistakes are made as a result of this erroneous belief about
trading"...........Ryan jones
..................... There are no short-cuts except to do it right .Successful traders dont FORCE their comfort levels on the markets, they conform their comfort
levels to WHAT WORKS!
remember : if u can not give ur allocated time............its sabotage. If u bring nearer one to ur trading a/c.............without proper experience(ie bringing
inefficient near your trading)..........its self sabotage, .......sure recipe for failure,.............i vow for it knowing it firsthand Not once but Twice.
Envirornment
...................................
An auxiliary aspect of stockmarket.Normally understanding financial services is first step towards clarity on finance/stock market.
Bank does business on give and take of loan , with a fixed % in between
CENTRAL BANK, rbi in india, control banks, decide interest rate, govt borrowing policy, stimulas to export,maintanances of stability of doller/rupee parity,
maintain macro policy with SLR,CRR, REPO/REVERSE REPO, brief financial threat to govt ,and give stimulus togrowth/debt/inflation.
Leasing/factoring...........a spl service
NBFC.........ARRANGEMENT OF pvt loan
INSURANCE SECTOR : risk to be distributed among masses , againt premium underwriting........making a little money out of it.
Investment banker.......does the valuation for company.
RATING AGENCY.............grade a company/country based on its past.
CA.....DOING AUDITING OF COMPANY and for financial part of individual fot tax purpose.
COST A/C.........studying cost analysis , so that project viability can be seen in real term.
FE/FI.........expertise on new innovative product preparation and its sell, without considering its consequence.
Brokers...........purely getting a little commission out of buy/sell by invidual ,though large in number ,normally bottom of food chain.
Sebi/stock exchange.........ensure...........small -ive sum game available to masses with illusion to big profit, actually helps brokers generation after generation
to run families of stock brokers and a little money to govt, with a key cover of transperency/regulation
ALL types of money ,basically by dream of enterprenaur come to development with a belief of growth,.....create services,.........growth can be sustained or
not .......thats a different story.
PROBLEM STARTS ........we all have greed , also seeds of speculation and dream of easy money.
.............................
CERTAIN TIME , instead being pro of our otherlife..........we plan to earn more.......out of our specialization.
NORMAL BANKS..........WITH THE HELP OF MutualFund...purchase company shares,.
which they know shall outperform........as economy/growth shall be reflected with better prices of stock in long run, also media shall do its part of greed hype.
Investment bankers.....after doing value justification in the interest of client, also plan to buy a distress sell company....after understanding its better potential.
INDIVIDUAL OFFICIAL...in various capacity , lure by personal interest.......accept favour........detoriating the service , also putting institution at RISK.
COMPANY OWNERS..............with help of operator/brokers tells big story,.........corner stocks........and later dump (pooring the fools-common investor)
CORRUPTION IS part of system, accept it,deminishing return exists,.....u have to be shrewd to prosper.
..................
So keep an open eye/ear.............evaluate gossip , do real SWOT on it,..........if u believe it may become an opportunity , put some money on it.
...................
Normally what is written on top , this essence is reqd to understand ......atmosphere u r working.also realise a concept called ......'failed
trader'..........educator, call giver, financial planner ....all different pseudo name.
NEXT U REVIEW A SPACE ...........called HOME....... why in financial industry..........a comfortable space in office...?...for decision making
..........to avoid distraction, a place to do positive for the company in objective way.
MAY BE........your home is not suitable for that, DISTRACTION IS HIGH ........u may do sabotage, may be other members dont understand ........what is
reqd,.....a hindrence . Other member May do harmful comment.....'what nonsense u r doing? bring abc from market instead'..........'be join a service'
YES ....showing seeds on concrete.....adding coal tar, ......CAN NEVER PRODUCE A TREE.
.................................................. ............
So environment shall be like an INDEPENDENT Puja room in a house,...........where u r the priest.
Do your ritual to keep discipline,..........spend time on decision making, alternate scenario preparation , written instruction for execution,.........and later journal
writing. Out of these only,....execution may be delegated to a subbroker/RM. other 3.....strict NO
U May use , various outsource............to filter data,(like pro membership, fully knowing what they provide & accuracy level,......more u add more inefficiency
comes in)
An independent data source, for fundamental as well as technical is better.
Also if u could afford COACH , to cut out any psychological issue,...(not triggering stop )
also afl may be helpful................to stop out.
Pl use a concept AUDITING............atleast a month, for investor..........once in quarter.
.................................
Plot ur return.......if in 4 yr.....if no improve,....QUIT......trading is not everything in life.
But if u get good return..........30% annually ........pl do everything to maitain it, create a strong barrier to protect that dream gem in u
Economics..........the backyard for trading field

05 July 2015
12:30 PM
first i come to know from a course by Mark Boucher.......who teaches for fund managers and in tradingmarkets.com in 2002. I check it and found principle
work it all markets....
Austrian economic model championed by SOROS........u have to consider Economy is the backbone of industry.If in democratic country, free will
exist.............it shall surplus expectation , creating a boomimg economy,.........
Contrarily,when growth rate shall be forced to turn down..inflation's ugly head turns up.
......central bank abandons it creating a bust.This economic boom-bust cycle can create prosperity in country's stock market, which has also bull-bear cycle.
If u understand properly this as global scenario.....u can be way ahead......global fund managers use it......considering country as a scrip.......invest and get
out,.........both with leading macro economics..... GOVT IMPLEMENTABLE POLICY, WORKFORCE/ENTERPRENAURSHIP and moneyflow...........tools they
employ in financial model, helped by p/e band for timimg.
............................................
i use little of it, without understanding in 2002............,if most indians not in market,.... dont understand big money has not yet entered.........just simply
buy,......sell at first signal of turn down in nifty ,DEC03/JAN'04......around bse'6000.
Later i have studied in detail macro-economy..........to understand,,,,,,,,,,demand/supply fitment in commodity model.
Crude calculation mathematically may be found in Elder's bull power/bear power tools, also DR BILL WILLIAM'S fading trade model.
Basis is at crucial/imp pivot...........study demand/supply with moneyflow, see also newspaper headng as contrarian, coincide with p/e
band.......lower/upperzone,......
yes u can beat fund managers' in their own game.
..fiscal deficit and inflation study.........may give u real knowledge.......whether growth of a country sustainable,...when stock market
....decouple with growth, may turn south.
.........................
Yes utility concept, demand/supply , monopoly creation,sustainability of growth, govt's will to implement fiscal policy.....................this things u have to
understand/practiced in your backyard's....before employ them in trading. THEY GIVE MONEY
Equity curve.............INSA ALLAH of stoploss
.................................................. .....................
All engineers know data representation,mba aspirants practice to clear written test, accounting and marketing guys dreadfully see it in ppt to understand
fall,...........yes data representation in plot on a graph.........has a more impact.
Yes most failed trader has a common fault to ignore equity curve,..........portfolio plotted in chart.
Dr elder uses it 6% concept, for u may be 10% ...........if your total portfolio falls 10% from top, simply get out,...........save money,after suitable behavior
modification or change in market condition,.......... come back to market.
For a technical trader, u may follow similar to SAR , in any technical software..........a definite stopolss to save a trade.
Similarly total portfolio must be seen , it helps to save trading business, not addition/subtraction on value.........plot it , it can be done in excel, may be graph
paper on weekend 1pt, but definitely...........save your big money. STATOR -std trading /money management software has this facility.
Normally new forex trainee candidates practice to improve execution......'no let loss run.'
...........i vow this technique will improve bottomline of trading business, and do it yourself, so firsthand u know .........market may burn your house, so pour
water...
...once a draw down of 50% happens , its very difficult to survive.
ALL pro follow this philosophy in trading
DO i STRESSFREE ?
.......................................
No, that is the reason of new learners failure.If i am not properly commited, there exist gap...........dream vs reality........a source of stress.
We all know eu-stress ,..........stress within limit to act is BETTER.The stress band u feel comfortable is good ,problem lies..........outcome which is not within
ur hand,........takes your brain time-creating a gap between thought process vs. execution..........,distract in ur planned operation ,.......this failure to time
target creates.....pending work dilemma.........adding to point of no return psychologically , creating stress.
How much u r overloaded.........can easily help u to understand stress in modern day. Say, u r age of 26, doing job 8hr x 5 days , journey 3hr x5 days ,
personal time being ready 2hr, sleep 6.5 hr,sitting in computer / reading 2hr.............so 8+3+2+6.5+2= 21.5hr, less than 24.........u have leisure to
relax.........NO STRESS.
Suddenly u r abused in office/ u want to improve , become mba.........your weekend old habit........has to cut to fit college time,..........also ur gap of 2.5
hr......will help to do little bit study,.............so now schedule is hectic,............but YOU CAN MANAGE.
Suddenly u find a good looking girl, who may fit with ur dream,...............but u have to spend time with her,.......or new priority must cut down........old
garbage of computer/reading,.......then cutting personal time to 1 hr and sleeping upto 5 hr,..........u create.........a time schdule , and adjusting with
time,.......within stress limit. Suddenly your boss tells u to stay another 3 hr more at office,........creates a stress.Your families talk on arranged marriage
adds irritation with you,...........now a small indifference of ur girlfriend............add insult to injury.........may cause an outburst towards that girl,........yes
this is stress , showing its ugly head,.........i know as my past in games of chess/bridge...........study , professional service life.........other familylife.........all
messed up,.....to create bodily trouble ,in form of BP , diabetis also in memory fall.
This body m/c shall fail oneday i know,.......so with some modern de-stressing technique like bipasana/reiki /walk ........can heal,.....but really i have to
change lifestyle.
I must understand my limit,.........live a dog's day. so prefer trading.........to get more time and live on own terms, and with normal conflict in personal life.
......so its a chamber of utilising 24 hr, on job, personal learning, family, my hobby.........also some time to body m/c.UNLESS THEY R PROPERLY
CHAMBERISED .........THEY SHALL KILL TRADER IN ME.
,,,,,,,,,,,,,,,,,,
A trader must understand this thing in long haul, all good traders.........balance this front first and then they trade, remember..........sabotage.
Actually trading is a stressful event, so life front....stress should be minimal to do right trade. u must get a set up to give your best...........as u have to fight
in market, ......
...................
Actually morning walk. pranayama, reiki, seeing fish in aquarium,.......quiet mind......really helps trader
understanding EIC model(economy-sector-company)
...........................................
Many years back there is a debate what is imp....economy or performance of company ? Course r created in 1963........in mba to use best avalible practice in
america,...........so a course was born in 1970......as per success seen by industry and feed to mba colleges,.....cfa r created to evaluate company / stock
analysis better. Naturally it come mba-finance curriculum in iim, speciality in icfai,hyderabad........utiicm course later,.......also now in bse.
since its for industry.................
FIRST must be economy.govt plan ........where new stress , sez also export orientation.......r key theme.
pl understand money supply,........how a confident enterprenaur successfully apply porter's five force model..... strategic management course and spl
economics by......go to it........... extensively detail.
Basic thing is if u understand ECONOMICS,........u may understand where DEMAND shall come.
Now study SECTOR,.........upstream/downstream facility with integration factor, pl study original idea.......its for industry...........not for novices ( fallacy is CA
never worked there/nor the college teacher, so inbuilt error exists) But atleast u get skeleton to work in industry......so understand with Porter's
model ........sustainabiity and plan & condition to develop growth.........so comes I.
Also search for new economy sectors............just see the leader.U R through.........allow CFA to read and write then publish on C.......company. U simply
read , check its assumption , see price strength from stock market..........EARN by the model.
ICFAI had done good work in C .......considering many research .......pioneer,......just u have to add latest data...........if u love hardcore research.
Actually company micro study is nothing but auditing, data scanning........to throw out lie, just like investment to find its true value,.....also future
forecast...........here again problem.....unless u have first hand experience in that sector........u cant get it(here lies superiority of a mature business
person ,he understands , he smells)
person ,he understands , he smells)

......................................
OFF topic...........analyst's use......in a board meeting in presence of 3 good analysts CEO suddenly asks his finance guy.......'do we have fund idle ?".....yes
sir . 3pairs of ears reacted .Suddenly discusses expansion plan which turns (conclude -ive)down,.......... but he suggests fund should be utilized and company
has a rosy picture after 2 yr. From a corner a chap calls to use that fund in better way. CEO stops him, suggests to honor 3 great analysts to go to
lunch.........he can close door to discuss further , and promise within 10 min to join in buffet.So bright eyes have to move out,.......taking foods and later
eager to know after 15 min,..........CEO suggests nothing . One of his associate while taking lunch suggests buy back is thought.Also 25% growth rate is very
much achievable. CEO tells..........he may talk in next quarter.After 20 days suddenly 6% upsurge in that stock.......and slowly moving NORTH .CEO on
telephonically told ......i shall tell in next quarter........another 63 days. Yes board meeting day is decided and analysts r called. .............But before.........the
2 days of meetings.............price around 30-25% up , considered from first meet,....stocks are dumped.
Of course.......who made money .......u know now...........who lost,.....the dumb fund manager/tipstar...directly associated with those analysts,.......Fish eat
fishes in their own game.
.................
REPEATING again,.........it is proven beyond doubt eonomy , sector to be studied first...........not the company
Understanding sector model
................................................
Concept of sector is very imp,.........as birds of similar feature,shows crowd mentality,........so same sector moves up/down with strong
correlation ..........first proven by Mark Boucher.
In mature market, money rotates.............rarely we can see strong bull move, money moves to where result is better and then where expected to be farther
better.
In india equitymaster.com.........has created good sector, also visualtrader , a software .......show in volume and price moving up , in syncronization.Its a
trend up for somedays, intra -sector,.............however for inter-sector..........money flows out from bad to good one.Actually its a strategic play between
Hedgefund type , shortterm play.......where overall moves little ,but inter sector movement is around 10% in month.
Play plan is similar to commodity,...........consider a upper band /lower band .........play in between ,within sector index. Alternately...........main 5 company
of a sector........may be with high beta, speculate to move further with +ive correlation.
Sugar, paper, steel, aluminium , power, software, pharma, hotel...........all places u can play like this.
In metastock,........omnitrader, i know.....sector strength up calculation,.....similar can be done , in other software.Superior rel strength in
14days........suggest sectorial upmove.
Another play plan is,...........allow a sector to fall,....
.then bottom fish ........the sector, atleast after 6month,..........if price is moving up, or strong fundamental good announcement on a particular sector.
......It suit to positional trader.............not in day trade.
Risk mitigation theory
.................................................. ...
Actually i find it most useful as trader.During project implementation.............i find .......u have to visualise first, then only MITIGATE
.A what if scenario preparation,........
.in permit raj of HOTwork.......i follow the same model,
While studying FincialRisk Management books........many very bookish jdea r told,
......core is acceptance as probabilty of happening , be prepared if unavoidable,...
...cut down..the sizes as well as cost......minimize risk first.
I think knowledge..............well awareness of what may happen ........first tool to control.
NO iffy trade,.....................
Find certainity of some potential move,.....be not surprised by MARKET,....
.......read prices.....what its telling.
If u dont know your line of action price showing uncertainity, dont enter...trading can not be HOBBY.
After some favourable move,...........book some profit..........take real money,..
.......DONT give back market.
If u r busy,.........dont ever enter new position.
Equity curve on portfolio value...........really helpful.
old saying in investment..........never lose money.
Old saying in trading .............never let LOSS run.
Old saying in risk management,..........never experiment,........Do in which, u r an expert.
Demand supply is an imp concept...extensively taught in OTA...
..........here students of economics have superiority.
Higher the demand ,price shall move up in stock..........if more money is chasing....so is the demand. Money flow concept......correlate with float
analysis.......suggests what may be the expectation.......strength of buyer's conviction .
Other one is giant footprint...............what big fund managers/fii r doing.......
.....try to get that info........NOT MEDIA HYPE. Chance of earning big from market by u , easier.......when u flow in same direction .........not against them.
Read to understand.......accumulation and distribution.........study in on chart.......
definitely u can tell what is actually going on.Yes .........if u can say accurately....
....present phase an actually bearish distribution,so u can avoid bulltrap.
U know when accumulation at lower price shall start......simply take position.Naturally to understand this concept........basic support/resistance u know...
.....and their intricacy i.e. dynamic support/resistance +pivot/swing pt.
Take any software....study the price(after market hr)....spend some hr....soon u know them.
See the chart.......to know how other pros shall behave, also other majority traders.(who will give money to u).......their expected line of action.
so give weightage ...who can win easily.......strength and conviction in trend.
Thats why pro makes big money........out of market........strong visualisation and watchful eye.........a master in execution and money management.
ORDINARY MORTAL SHOULD DREAM OF IT........so that they can be atleast a pro.
Starting on TRADING SYSTEM

05 July 2015
12:31 PM
if no system : poor trade result occurs with emotional trading.

Basic is risk/reward , low risk and high probability trade.
Even with system,when personal psychology not match with particular style,it fails.
hence a system of timing must have
1. set up condition
2. entry
3. exit...profit target
4. risk analysis
5. exit ..contingency plan
philosophy of trade : market is war arena..ruthless fighter can only survive
You must have seen one 1bull-bear cycle..or as a pro 100% retracement and comeback.
trading offers great no of oppurtunity to pick.A position

may be oppurtunity or a trouble[loss]...nobody knows
while picking,What it shall be.TIME will unfold......it is profit making one or take money out of you.
other element : experience,
market research and checking data for validity/testing [ ofcourse u must have ability to test]
position management
Day trading , short term , position trade and investment..4 r different scenario . condition for success in each ..has some peculiarity.
Day Trading System

05 July 2015
12:31 PM
master your craft.practice and practice...ignore all others is the mantra

............u have to understand how price reflect everything..suitable indicator(derivative from price).. ..to maintain strength...and eye for order flow....
thats all...alas! one is sufficiently difficult...3 is awesome in real time.
SO u must have some method to understand price increament shall continue
and then another when price dilution coming.
[objectively a programmer can do]2min/10min ma x...also 15min rsi has some use...big order coming in sell side has its impact.
whatever it may be , real time execution is key.alert helps
.................................................. ......................................
high probable trade
............................
its the directional bias...where most waiting watchers r ready to join..
market buying(selling) r coming...big volume r increasing
concept is use momentum ...act now.
Another concept a trend started yesterday 3pm..hence further steam left.
scan at night for candidate.(BTST).....without any news. on real time..sudden volume surge..price is also moving up.ACT NOW ..NO TIME TO THINK make
money
shortterm trade/ swing trade
............................................
here u must reqd eod data .... a software ..preferably some risk reward analysis
some low risk entry tactics and stop-umbrella to save from rain.
u have to define entry characteristic .
1. entry after break out over longterm resistance zone
2. after twice bounce in support ..price just starts moving up.
3. sector starts moving up..stock has good rel strength comparison within sector.
stop
......below 3% of last week low
if not 4% up move occurs within 5 trade days..use time stop
profit target 8-10% from entry..however after 5-6% price is NOT HOLDING ie.showing not to move further infact going down about 1-2 %
....get out with small profit...DONT turn profit into loss
for system study see beyond ta..by Tusher chande
next position trading
..............................
personally i decide only some shortterm winner to be extended for long.
its basically on chart ..after trend change suggested entry at predetermined pt
for me some% up with volume increase...in metastock RSC EXPLORER candidate must be in upperside.
yes i use eye ball technique and pattern failure[ in h&s when instead of fall price starts move up and w.pattern price slowly starts moving..acceptance of
price]
my idea given money in past..i dont know whether shall it work now.
IMP:support base has to be created.....
another criteria...when nifty starts moving up again after retracement
Enter good candidate[presently who r in near yearly high ]
Third unexpected good result published and buy volume shows high demand
Most imp part of position trade is stock list...here u know from back ground move shall continue..further.....as u try for bigger profit ,failure rate is high.
hence u must have inbuild moneymanagement system to get out with small loss and add on winner.
Say being in known field i must track some news on company..
also result out of infy(weather indicator in software) ..how +ive it is , so how it shall affect midcap computer company..
As position trade is a judgement game..hit of the moment decision should NEVER be taken..infact temporary fall is a great buy oppurtunity
Strength indicator on 2week chart basis [ ie converting data on 10day high-low-close basis available in metastock] is good way to see.
however stop and checking of nifty must...its better to see advance-decline curve as in www.icharts.in
For further study understand extended bullmarket and volatility condition
and see after result out how price is behaving
system implementation
..............................
1. assumption .....condition of trade....if it does not exist no trade
2. entry..particular signal
3. holding profit one...give time.
4. exit..with profit target
with loss.
5. contingency plan..to save skin.
6. write after completion of trade what i learn ..implementation vs. reaction of me based on price.... ..what actually works.
OTHER ELEMENT
........................
........................
U factor..how to be neutralised so that i can think right...before taking position i must have an opinion but PRICE must confirm my opinion otherwise i must
use stop and book loss and throw away opinion.
MARKET HAS TRENDINESS AND ALSO UNPREDICTABILITY ELEMENT. NEWS AFFECT MARKET [UNKNOWN EVENT]....MAJORITY TRIES TO GUESS WHAT
MAJORITY MAY DO , TAKING RISK OF PREDICTION BY PUTTING MONEY BUT READY TO RETREAT IF WRONG........PUT MORE MONEY WHEN RIGHT.
Here is my personal opinioned model on positional trade
.................................................. ...........................
u have to work on prediction model in which chance of RIGHT/BEING WRONG has to evaluated.
a. company result..good business../..20% weightage
b. macro economy + moneyflow....40% weightage
c.sector business ..priority 20% weightage
d. other factor..operators game/random factor ..20% weightage
total 100%
ALWAYS TAKE CHANCE OF BEING WRONG 40%...SO THAT IF WRONG ...MUST BE PREPARED
by the chart , i SEE how others r viewing..ready with my move ..tv news guide me how fools shall behave,..many a time i am wrong ..but i stick to it.
For TA it takes time....the same chart looked by 3lakh ta enthuaists
hardly 200 shall be right....
....as trading is not a game of perfection , 50%accuracy is sufficient.
read...HUNTER AND THE HUNTED,
so in this trade universe....3terms i introduce...exhausive, exclusive and intersection ie. interrelation between 2 element. I use 3 statistical term....
INTERSECTION;INTERRELATION BETWEEN 2 ELEMENT...INTERRELATIONSHIP BETWEEN MARKET...INTERRELATIONSHIP BETWEEN MANY COMPANY IN A
PARTICULAR SECTOR.
So before reaching to become a master...one goes through various way to question and answer this 3 element...[may be in different name]....he knows how
far he understands...his limit..so now practice on regular basis[system]
now u see all good potential trade in search mode..nothing but ..can be expansion of 3 idea.
Another idea....yes EXECUTION.Pl UNDERSTAND SLIPPAGE IS A BAD ELEMENT....u miss ur total effort.... idea in real sense...so the difference with beginner
and pro clearer to me..its IMPLEMENTATION.
EVERYTHING U CAN VISUALISE...,BUT THEY WILL BE VALID ON IMPLEMENTATION BY U.
Random trading /fractal system ; its great to see theory of Dr Bill William , and quantum trade software, principle of 3ma,allegator concept, behavior of
natural tendency of price reversal at defined pivot........yes i made money out of that theory, but not as told,.....actully by confirmation through PRICE.
.yes it is the best filter.........confirmation by price.
Remember 3 force co exist in market...........trend, reversal tendency, fractal [random factor]...........u as an observer what is dormant NOW..also check who
will rule soon ie. near future.
If u use any discreation cautionary note:IGNORANCE is highest risk, MOOD swing next,OVERCONFIDENCE then
SUPERIORITY of advance learner;
1)nightly preparation and scanlist
2)WHAT IF scenario preparation ......and past trade analysis .......yes thats all.
ALSO sharpening ur skill , if u r a programmer , practice more programe for further objectivity.......for execution ........bigger size position.
also future long term skill to learn.......holding winner, add if possible.
PRO now develop a portfolio. a list of stock(based on past trade & understanding of Market)... condition to trade,.......
how quickly u understand danger..........and get out quickly from bad trade
Some also prepare ......sector sp strategy/ and study fund rotation principle.
other imp aspect of PRO...........they dont search holygrail........its already with them, occasionally they lose, but they self tune again.
JUST looking back their journey to professional trading to success road......its matter of some tuning.......hey they have done that in past.........when
situation was tougher.
MAXIMUM HE NEEDS A CLOSE CELL TO THINK AGAIN IN MIND-MOVIE .
PRO"S thought process
......................................
i see , but before entry i confirm by price.
i do consistently...........i am doing in last so many year.
i shall be not in market...........as situation is in unpredictable zone , even with my experience.
i have seen in 2 cycle of bull-bear-volatile market.........now first i can define present market context...........so its an opportunity.
losing trade is part of trade business,only i have to check in journal exit/entry rules followed.
i am a specialist in this market, in this type of trade.
regularity and health is also my priority........so i am a better trader
If u believe, u r Advance level of trader but psychology reqd some improvement ,here is Mastering the Mental Game
Identify your personal trade barriers
How to mentally focus and follow through on your personal plan before, during and after the trade.
The use of New Habit Formation to negate harmful emotions and reinforce positive emotions that affect your trading success and effective decision-making.
Successful discipline is about skill-building and a structure of routines, habits & protocols.DECIDE first Playing not to lose and THEN play to win.
.................................................. .................
If u trade for some yr ,but want to get better return
Advance TA stratregy is right answer.Index Futures traders can analyze the markets trends and behaviors in order to classify, distinguish and properly time
Advance TA stratregy is right answer.Index Futures traders can analyze the markets trends and behaviors in order to classify, distinguish and properly time
their trades. Youll learn to determine the markets overall direction and then take a position that is harmonious with the market. These will be focused
around pure price-based technical analysis using the major indices as forecasting bias.you have to learn:
Identify trends in multiple time frames through dynamic correlation.
How to use analytical tools to apply logic, concepts and strategies to changes in the market.
How to select the appropriate strategies and adapt your trading plan accordingly
Use of IMPACT TA ,including GAP + Understanding the Market from Economic Data Releases and Sectors Rotation
Quantifying a supply and demand imbalance for opportunity
This shall be followed by Rule-Based Strategies for Trading
o Buying the Supply Breakout
o Buying at Demand Levels
o Selling Short the Break of Demand
o Selling Short at Supply
o Low Risk Entries from lower timeframe & Profit Targets
hope it will help to create trading system for a trader

...........................
every book has some uniqueness in it....for simplicity i write 2lines.
Bill Williams - Lit (New Trading Dimensions}... it gives new light on market and randomness
Book - Tom Williams Volume Spread Analysis..read it..u see..use of volume ..why?
DYNAMIC TRADER GUIDE ..understand judgement ..price time analysis
Encyclopedia of Trading Strategies ..idea what may suit u
Kuhn - Marder Intermediate-Term Momentum Trading Course ..a technique to trade
Momentum Investing By Ken Wolff ...same in depth..key theme of modern trade
OmniTrader (Systems Manual) ...background of comp.based trade with low risk
Steve Nison Japanesse Candlestick Charting Techniques ..a must
The Daytraders Bible by Richard D. Wyckofff ..how a real trader succeed in market
The Four Biggest Mistakes in Futures Trading by Jay Kaeppel Book ..teaches to keep a foot on brake always
Trading as a business ..a basic but imp concept..for all dreamer
Willam J O'Neils How to Make Money in Stocks ..why buy high,sell higher works..the useful concept of fundamental,stop,cup and handle pattern
,,,,,,,,,,,,,,,,,,,,,,,
only with exceptional mental stability....a person can be flexible like clay
......for others.....a Zone has to be created......on certain conditional fulfilment ,before, accepting a trade......otherwise....REJECT THE
OPPURTUNITY[considering uncertainity]
Surrogate concept i learn from
............................
1]divergent concept.........explained in paolo's blue print
2]trading system .......kaufman and beyond ta
3]psychology of trading with ta.......tony plummer
4] concept of trading & life....dr van tharp
5] trading idea & implementation........kiev
6] broad market analysis......key theme in modern day trading
7] volatility Vs price prediction........random & fractal concept
8] moneyflow idea and present fundamental fad.....do read research report of houses to get idea(dont trade with them,just gain knowledge)
9] how newspaper/tv sells .........hypes biasedness for creating opinion .......to create momentum of bullish/bearish theme
10] market structure .......trend .........trend termination play.......application of mechanical stop
Being advanced learner,understand some people r ahead of others........search for oppurtunity-some pro can identify & risk analyst by nature.
......Others r gullible, simply bombard by media.....and believe to follow.they r the source of food for U....concept of marketing story..........a brahmin, a
goat[ which he believes a dog due to self doubt,........ploy used by 3 thugs],an excellent teaching of panchatantra........u see in day to day life, media
hype........understand how news flow create wrong illusion on market.
-------------------------------------------------------------Lists of good company...what i know...what they do...on what condition company profitability move up...its a key arsenal..................
MAJORITY MAY DO. I TAKE RISK OF PREDICTION BY PUTTING MONEY BUT READY TO RETREAT IF WRONG...AND PUT MORE MONEY WHEN RIGHT.... .
UP...DOWN ...VOLATILE...3DIFFERENT STRATEGIC PLAN ...
............................
LET us give stress on useful part of ta.
concept of break out is imp......
concept of support buy r useful........
most imp is predict market danger zone(when not to trade)
.......................................
learn trend first......
defn of up/down......volatile.......
next distribution /accumulation
........this must be applied on nifty
........then study,..........fibonacci
then study pattern .....psychology behind each pattern
....imp one for actual trading.......
.......in bullish market ..cup and handle
...then learn bearish one.....h&s..double top/triple top.....and what condition they fail
learn shortterm imminent reversal......oneday/ 2day sp. pattern bullish/bearish reversal based on candlestick.
next solve.......gap up and gap down.......use it to judge strength of market....no other purpose.....till u grasp it fully..
after this u should u can look through indicator.....
use ma........dual ma.....experiment with many alternatve.......remember just basic......
smaller one cutting and move up.....shows upward bias.
take a suitable indicator....to gauge strength of market.when u know more study one momentum tool for overbought/oversold .....i prefer william%r.
next level .......is to define and predict........trend or non trend.........which as per me a trader must learn first......2 /3 tools available choose any one
....spend time on it........patience pays
now come developing a system based on technical.....ha ha..its ur job(hints r given)
now come developing a system based on technical.....ha ha..its ur job(hints r given)

.btw .....in actual position trade,without divergence study do nothing
.........................
u think u know......but.....study another 2tool ...advance decline and new high/low data......and raw moneyflow data...partic ularly fii/mf.
Next i try to throw some light on rsc......rel strength comparative.....
its a good tool ...first extensively advocated by mark boucher in his course....
its momentum tool....strength of index vs a share.......a stock in a particular sector rank.
"buy with the professionals and sell to amateurs.......the reason behind gap up/down .
fortunately.....gap up/down.. fade trading r very useful .
normally amateurs get shock....as they have no plan to trade with it......instead they must write what to do ..if gap up .....this particular value....again
another set......if gap up another value......always .....watch by price and flow of market.........whether its diminishing or increasing........this is essence of
strategic day trading.
Support and Resistance r dynamic in nature.
moreover...depending on variation on chart...timeframe...it varies
...static idea...as if similarity with daily pivot...reason of most loss .
...instead follow idea of cluster of price zone.....this is one of right approach.A good trader will always make a good analyst,not true for the reverse.
We have to take decision/action before that people make and move markets,
By studying in detail of PAST price action -what has happened in the PRESENT and
as the past tends to repeat itself it can give us an indication from the PRESENT ,what may happen in the future.So technical analysis provides the framework
for a systematic approach to trading. More importantly, it gives us the confidence to make our trading decisions- critical for success.
TA provides precise mechanisms for trade entry and exit....the best strategy for determining the timing, particularly useful over the short-term.
Indicators are derivatives or second tiered smoothing of price action. Inherently, all indicators are lagging in one way or another. It is important to
understand how they relate to price, potential future movement of price and how they are affected by past price spikes.
does ta work?yes...yes...yes..
trading has a random element..also.. trend factor...
known event..+ expected result ..is always discounted in price...
so u have to know..how to react in unknown...
ta ..visualisation..gives..fair idea...how MAJORITY MAY SHALL BEHAVE...
nothingmore, nothingless...
alterative scenario..must be in your plan.....
if u apply ta in this context...u shall be always successful...
Q1]...TA AS PREDICTIVE TOOL....no hardly 50% times correct...
ta as probabilistic model...definitely workable....
Q2] MOST IMP INDICATOR....
PRICE...normally..few can follow ..with discipline...
price roc...crossing an price 10dayma ROC ..derivative is good...
however...aroon continuation..validity of strength helps...
TRADING ON PRICE HAS 3ELEMENT...NOISE...TREND.....SHOCK/EVENT
Noise..a price within +/- 3%[arbitary..as per my experience ]
its the time u should watch..
soon some big fund /syndicate starts buy or sell..with price change +/-change..defining an up or down trend accordingly...
its when more volume joins ..media writes....oppurtunity to make money for early entrants..when trend is no more moving up..[i put hope on triangle
pattern shall show CONTINUATION]..ANOTHER RISKY ATTEMPT CAN BE MADE..BUT WITH STRICT STOP..........
Q3] OTHER..HELPING HAND APART FROM PRICE...IF ANY...
VOLUME...MOMENTUM STRENGTH
Q4] WHAT ABOUT PATTERN....
its subjective....experience helps...
Q5]what about support/resistance..trendline....
THIS ARE TOOLS TO 'SEE' HOW OTHER TRADER SHALL BEHAVE...
so its purpose is to prepare trade strategy...
Q6]WHAT ABOUT MA...
better use it as a confirmation tool..., better is ma..X..
q7]divergence study....is it useful ?YES
8]HOW TO STUDY STRENGTH?
correlate..expected...vs. ACTUAL...ANSWER lies there...
9]how can i learn better ta...
USE SOFTWARE.. TO SCAN...SEE CHART.
DANGER OF TA
......................
WITH AV INTELLIGENCE.... IT TAKES..3YR STUDY+2YR PRACTICING
expect another 2yr to mastery...total 7yr to learn
oversold zone..bullish candlepattern...NORMALLY SUCCESSFUL
but those who use sector rotation...higher comparative strength with ..NIFTY...ALWAYS
MAKE PROFIT....
However concept of buyer strength VS. seller stength...
based on that WHO is winning...and JOIN WINNERS SIDE
NORMALLY GIVES PROFITABLE TRADE....
IMP:Technical analysis just points out to the possibility of price action in the future...you have to look for evidence, cross verify, go to the past and
future...AND THEN DECIDE whether the probability of occurance AND the CHANCE of FAILURE fits within your RISK - REWARD ratio.
Using different forms of money management with different account sizes, (what my be suitable risk reward to you, may not be suitable to me. )There are
nothing like UNIVERSAL low risk trades...then everybody would have taken that and the trade would immediately move away from its base making it a
profitable one.
I present here.'how to lose money in stockmarket'......pl avoid them

.................................................. .........................................
1]Trade in options without understanding and context of present market condition
2]not use stoploss
3]Cut your profits short and let the losses run
4]Select a method and start trading it because you are in a hurry to trade, not because the method is sound
5]Don't use any method or plan at all! ... Just buy as much as you can or short as much as you can
6]Take a position and go to sleep!
7]Listen and trade according to CNBC calls........(JUST REVERSE ,ITS GOOD EARNING METHOD).
8] Never use your own brain for trading ... Never try to learn anything but taking position and squaring it off! Search extensively secret underground sources
8] Never use your own brain for trading ... Never try to learn anything but taking position and squaring it off! Search extensively secret underground sources
for TIP ...
9]Trade against trend ..........BUT THIS IS ONE OF MY EARNING METHOD.
10]Engage in extra-curricular activities during market hours AND Forget your commitment of trading seriously/mindfully .
11]Always assume that you are right..even when proved wrong by price....take it as temporary setback and start with fresh vigor resuming your assumption
that you are and will be always right.
12] If the basic hypothesis upon which a trade is entered does not exist, then one has to remain in the trade, hoping the situation will improve(actually it
worsens)
13] Emotions aka false ego.... i know all -i longed/shorted this script and its going to follow me,i longed/shorted this script coz i know all about
markets,(always remember markets are supreme)
.................................................. ....
Avoiding the methods of losing money mentioned in this thread would be quite helpful to become a successful trader
------------------------------------------------------------------------------------
Worst Trading Mistakes

05 July 2015
12:35 PM
Just curious to see what are worst trading mistakes that we commit- to help each others.
* Traded blindly without any homework or trading plans (poor discipline).

* Traded impatiently in congestion or non-trending zone (poor trade plan).
* Traded without Stop Loss or with too big Stop Losses (poor Risk Management).
* Traded way too many trades in a day resulting net losses (overtrading).
* Traded against the prevailing trend and then booked losses (Ego problem).
* Traded with the trend but booked small profit and too early.(forgeting trade rule)
* Traded with good plan (mm, rm, plan, discipline) but with no faith in the plan resulting less profit .
* Traded at Market Price in less volume scrips resulting big losses.(novice mistake)
* Traded on speculations, rumour or news and getting trapped in Market Makers game resulting big losses.
*Traded within fear/greed barrier and without knowing risk/reward ratio.(emotional fool)
* Traded on spoon fed tips resulting huge losses. Traded getting psyched from CNBC or US/Europe speculations and resulted hug e losses.(food to pro)
* Traded not even realizing after loosing lots of money & time in markets is Not Knowing which Time frame suits personality.( Ignorant)
* Averaging and overleveraging to losing position and selling in panic.(novice)

* Converted intraday or swing trades into short term and long term without reasons.
* Was unable to bare the loss and then traded more and more to recover the loss..ultimately completely or nearly wiped out th e account(self sabotage)
Private Lone Trader

05 July 2015
12:36 PM
Before u become a Pro- a pvt lone trader (only trade on own money) should have checked his return as part-time trader.
A QUALITATIVE CHECKLIST ON
1] CONFIDENCE
2[ KNOWLEDGE ON MARKET
3] KNOWLEDGE ON TA -HOW FAR TA CAN BE APPLIED
4] EXPERIENCE
5] SKILL OF EXECUTION
6] MARKET PSYCHOLOGY-CROWD BEHAVIOR
7] OWN PSYCHOLOGY
8] OWN EMOTIONAL CONTROLLING MECHANISM WHILE ON TRADE
9] RISK MANAGEMENT
9] DISCIPLINE ATTITUDE
10] DEFINING OPPORTUNITY
.................................................. ......................
method checklist
intraday -momentum
swing -countertrend
position-both fundamental+ ta bias
OUT OF THIS WHICH HAS MORE SUITED ie. by which style actually u made money
............................................
WHERE U R MASTER?- SOME PARTICULAR STOCKs ,or some sector, some technical pattern
What is ur threshold for booking stop?How u define HIGH Probability in a trade ,before u enter- what mitigation plan if otherside low probability event
actually happens.
..............................................
What is your plan of learning/behavior modification plan in everchanging Market condition (which may change some characteristics even within a week)
How do u capitalize sector rotation of fundflow?
.................................................. ......
all this things must be written & follow regular basis ,in your journey as a pro
hope u enjoy to become a pvt trader.
P A R T - - 2 RAUNAK AS I SEE IMPORTANCE FROM

OTHERS' VIEW WHICH HELP ME TO BECOME A BETTER
TRADER.
05 July 2015
12:38 PM
First Mr Raunak
...........................
Solution to any problem in any form of life begins by asking the right set of question. If the right set of Questions are asked, the right set of Solution are
sought after. This is one aspect which successful people do very well. Going by the same notion, we can say that the first step in becoming Successful in
Investments is to ask the right set of Questions. You need to know why you need to Invest, why you need to be in the Markets and What are your Goals.
Follow the Set of Questions mentioned below to start with. Once you answer these, you will be amazed by how important this is to seek clarity of thought.
a) What is Your Main Motive behind Investing?
b) What is Your Long Term Goal? Where do you see yourself in the next 10 Years. How does Investing help you to reach that?
c) What is Your Past Experience with Investing?
d) What are the Short Coming from the Past Experiences? How do You intend to improve?
e) How much time can you devote to the Market?
f) What are the "Instruments" which you have identified for Investments?
e) How much can you lose in Investing?
f) What is your back up plan? How are you going to plan your finances in case of Investments failing?
g) What are your current beliefs about the market? Have these beliefs helped you to make money? If not, its time to revisit those beliefs.
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Write down the answers to these questions and keep it in your "Investment Journal". Make a section in the Journal and Call it "Knowing Myself" and keep this
answer within that section.
What these set of questions will do is, it will get you focused towards what "You" want in your life and more importantly from Markets. It will remind you of
your long term ambitions and it will prevent you from making short term wrong investments which eventually give you negative returns.
Out of all the Investors out there, there are about 1% Investors who undertake this step. Those 1% are among the most successful Investors. Hence, if you
need to become an Investor, begin answering these questions.
Remember, Returns in Market & Clarity of Thought, go hand in hand.
Take the First Step: Being an Optimist and Being Realistic
Once you have answered the set of questions mentioned above and known more about yourself and your Investment needs, it is time to move on to this
section wherein the importance of being an Optimist and being Realistic is highlighted.
Being Optimistic - Since you are now entering the World of Investment, you need to know one thing and that is that in this World, there is only one certainty;
Risk. Everything else revolves around this. There are a lot of investors who get intimidated by the amount of money they can lose and hence they either move
out too early or after one bad experience never return to the markets. To prevent yourself from making these mistakes, you need to be an Optimist in this
field. Believe me, there is no pessimist who has ever conquered the stock markets. And as far as I know, there will never ever be one. Investing is just like
any other business. You need to stay in this for long to reap the benefits of it. All the successful investors in this world have remained in this market for 'n'
number of years and understand the importance of having a long term view of the markets.
Markets will supply you all kind of information you need to be successful in this business. However, it does not supply the "Emotional" quotient required for
this business. On the contrary, it will always make you feel like you are doing something wrong in this field. Hence, the most important supply (that is the
Emotion Supply) has to come from your side and make sure it comprises of Discipline, Hard Work and Optimism.
Being Realistic - Apart from being an Optimist, one has to be Realistic. The disconnect between perception and reality is of utmost importance. Reality in this
field can be judged by the answers to the questions you gave in the first section. See if any of the answers you gave in the first section, matches what is
being described below. If it does, then correct your perception right away and make the first step towards embracing reality.
Often, investors come in this field to make stupendous returns over time frame of 1-2 years and most often get disappointed to know that it was more of their
wishful thinking and less of research that made them think so. Yes, investors can make amazing returns, but the focus should be over a period of 3-5years.
One must always be rationale enough to know how much time one's investments need in order to grow multi folds from their initial value.
One must also judge and expect returns in terms of opportunity costs for investments. For example, Fixed deposits in India offer 8-9% per annum (risk free)
and thus if your investments in Equity market is not generating 8-9% returns (excluding inflation etc) then your opportunity costs are mounting up. Your
investments must at least outperform the Fixed deposit rates and in best case account for the inflation in order to realize true returns. Therefore, a more
realistic return that one must expect from one's capital is around 20% - 25% growth on an average period of 5 years. Furthermore, one must also be savvy
enough to judge where returns can be made more easily. An astute investor always knows when the markets are not conducive for returns and hence one
such period comes, he his flexible enough to shift his funds towards instruments like Bank deposits which in that period gives risk free returns.
Having a balance between Reality & Optimism is going to take one a long way in the field of Investing. The tools and techniques required to do so are
discussed at a much later stage, however at this stage, the most important thing to realize is to be Optimistic at heart and Realistic in Mind.
Now, we come to the most fascinating question often asked in the field of Investing. That is, whether to apply a Fundamental approach or Technical Approach
for Investing?
The answer to this again depends on how you have answered the set of questions provided to you. Hence, if your purpose is to make long term gains out of
the market, then the best approach for you is adopting a Fundamental approach to Buy and Technical approach to manage your positions. Let us get into a
snapshot of each of these approaches and once you have answered the question set and you have gone through these snapshots, you will know which
approach is the best suited for you.
The broad definition of Fundamental Analysis and Technical Analysis here is the Investment Model which I use for our Investment decisions. Similarly we have
explained the same .
Fundamental Analysis This is an approach where an investor looks at the following in order to determine the scope of Investment. Kindly look at the brief
framework below. This framework will be individually explained in Fundamental Analysis section.
1. Prospects of the Economy
- Fundamentals of the Economy
- Growth of the Economy
- Governance within the Country
- Policy Actions and Government Actions
- Growth Potential
- Interest rates & Inflation
- Production Capacity/Expansion
2. Prospects of Sector
-
Composition of Sector
Outlook for Demand
Outlook for Prices
Outlook for Costs
Growth Potential Within the Sector
3. Prospects of Company
3. Prospects of Company
-
Market position & Strategy

Quality of Management
Mergers & Acquisition Impact
Key Performance Ratios
Valuation of the Company
Technical Analysis - This is an approach where Investor is concerned about the Price structure of Sector/Stock along with other indications of how well the
Stock is shaping up for the move ahead. This relies more on studying historical movement of prices and thereby judging the future move. Investors should
broadly concern themselves with following points.
1. Identification of Trend
2. Identifying stages in Markets
3. Market Classification according to the Dow Theory/Elliot Wave
4. Sector Rotation and its importance
5. Analyzing the Broader markets - Sister Stocks Approach
6. Identifying Bullish - Bearish Range within the market
7. Risk & Money Management.
Whatever methodology one follows, make sure to be comfortable with it. Which methodology is more beneficial and which is not, will always remain up for
debate. But from our experience, all we can say is that, combining Fundamentals and Technicals is the best way to move forward. Feel free to explore these
domains and accordingly pick your methodology.
Take the First Step: Choosing the Right Set of Tools
Now that you have gone through the building blocks of becoming an Investor, it is the right time for us to show you how to select the right kind of tools you
require for executing what you have learnt. Every Investor has his own set of tools and hence he needs to get acquainted with them. For us, we have
identified certain tools which we use day in and day out.
Fundamental Investor Tools

- Brokerage Reports Available from your Broker (Almost all brokers provide this)
- Databases for Macroeconomic Research - Data for Financial Analysis Technical Investor Tools
- Charting softwares - Metastock 11 & Amibroker. Prefer to use either of them. Please avoid Web based charting packages.
- Data - Avoid taking data from local subscribers. Data is often prone to errors.
- Technical Stock Scans - Available for free at Moneycontrol.com

Computers/Laptop Configurations
- Processor - Anything above 1.8 Ghz will do fine. They have high computational power and are very fast.
- Monitor - Flat Screen LCD with Minimum 24 inch display. Make sure to see the charts on big monitors. Its much more easier to identify good stocks.
- Multi Monitor - NVIDIA Graphics Card for Multi Monitor Setup. Card versions keep changing hence PM me for latest Card configuration.
- Disk - Hard Disk with minimum 500 GB's as capacity (Quite common)
- KeyBoard & Mouse - Compact Key Board & Mouse. You don't want your work desk to be too cluttered.
Take the First Step: Choosing the Broker
You are now almost ready to get started in the Financial World. However, before you do so, you need to select the right broker for your needs. Brokers charge
commissions (plus taxes) and hence having the best brokerage along with the right kind of service can impact your profitability in the right way. Follow the
guidelines below to find the right broker for you.
1. Brokerage - Whether you are a small investor or big investor, you will have to pay brokerage. Try and bargain for the best brokerage price. Your Broker will
tell you that he is offering you the best rate, but try and bargain further. Usually they can give you rates which you don't even dream off. Hence with the right
kind of account size, you can get the right brokerage. In our opinion, if you are paying anything more than 0.2% on delivery and 0.02% on futures (inclusive
everything) then you are paying too much. We have our accounts with one of the largest Brokers in India and we pay Brokerage less than what we
recommend here. If your account size is large, then you can get unbelievable brokerage prices. So Investors, Please Bargain more !!
2. Investing Platform - Choose a Broker who gives you a Desktop based application for placing your orders. There is no problem with Web Based applications.
However during busy times, it becomes difficult to login through web based applications. Most of the good brokers have Desktop based application, hence opt
for them. Some brokers will charge you for the application. However, with the right kind of negotiation, those charges can be waived off.
3. Research Reports - Most brokers provide free Technical and Fundamental research reports. Make sure to avail this through your brokers.
4. Reputation - Try and strike a balance between the rates you want and the reputation that the broker has in the Market. As a rule, stick with good brokers.
In the end it matters a lot.
5. Transaction Alert Facility - Avail the facility of "Transaction Alert" from your broker. This can be either availed on Mobile or on Email. Good brokers should
provide these basic facilities.
6. Range of Services - Make sure you find out what services your broker can provide. For E.g. ETF buying, Mutual Fund subscription, IPO Online, Online
Payment (within T+1), linkages with online bank accounts. These services seem unimportant, but in reality these are very important.
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Simply Technicals
With the Advent of Technology, Markets have evolved and transcended into new dimensions. What seemed to have worked earlier has lost the edge now as
Participants, Volumes, Volatility and Financial instruments have evolved on their own. Due to this, there has been an explosion of Analysts and their views
regarding how to trade and invest in markets. Instead of making things simplified, they have contributed towards barrage of information which eventually
confuses a beginner even further.
Practical Side of Technical Analysis is an effort to make a beginner realise that if one has to earn well from markets, then one has to keep things simple and
logical and has to practice the principles of Technical Analysis on a Consistent basis. -these are the things which we look at while analyzing markets. As a
word of caution, do not take this thread as a guide towards trading. This is purely Investment oriented Technical approach.
1.Basics of Technical Analysis
2.Defining Trend
3.Identifying Stages in Markets
4.Dow Theory Revisited
5.Sector Rotation
6.Sister Stocks
7.Identifying Bullish - Bearish Range through RSI
8.RSI Bullish - Bearish Range in Investment Model Form
9.Understanding Risk & Money Management
10.Putting it altogether
1. What is Technical Analysis?
- Study of the Market within itself rather than studying what moves the market. -Studying Pure Price action.
- Study of various Market Statistics. For E.g. Studying Volume patterns, OI patterns, Historical movements, Cyclical Analysis.
- Study of various Market Statistics. For E.g. Studying Volume patterns, OI patterns, Historical movements, Cyclical Analysis.
- Study of various Human aspects. For E.g. Studying Bullish/Bearish Sentiment, Using News as an Indicator, Futures and Options data.
2. Assumptions in Technical Analysis
- Markets move up/down in Trends.
- Market is always correct. Opinions are often wrong. Stick with the trend and don't try to second guess market movements.
- Markets are solely determined by Demand and Supply and Markets often tend to move in trends.
- More than information, it is how Investors react to the information is more important. Any reaction can shift demand and supply which eventually causes
reversal in trends.
3. How to use Technical Analysis to benefit
- To benefit from Technical Analysis, one can use it in two different forms; Predictive & Reactive.
- Predictive Technical Analyst try and predict the next market move by using various principles of this discipline.
- Reactive Technical Analyst follow what the markets are doing in the present. They believe that markets are supreme and follow the flow of the market.
- Reactive & Predictive can both be beneficial. One must know when to be reactive and when to be predictive. Since prediction has more risk associated with
it, it must be practiced with great discipline
PREDICTIVE IS USED IN COUNTER TREND
1. What is a Trend?
- Trend is a phase where markets continue to move in one direction with momentum.
- Trends are of two types; Uptrend & Downtrend
- Uptrend is when prices make Higher Peaks and Higher Troughs
- Downtrend is when prices make Lower Peaks and Lower Troughs
2. How Can a Trend be identified?
- Trend can be identified by various methods;
Visual Inspection, Linear Least Square Regression method, Moving Averages and Highs/Lows.
- Trend can be identified clearly by analyzing Previous Highs/Lows.
3. Visual Analysis of Trend - Trendlines
- In order to visually analyze a trend, we can draw trendlines between tops and bottoms
- Trendlines are lines drawn between extreme points, tops and bottoms which are separated by reasonable number of days in between.
- Draw back of this method is that its easy to identify a trend and draw a trendline in hindsight.
4. Analyzing Previous High/Low - Better way of determining Trend - Dow Theory Way
- We analyze the previous Highs/Lows of the market
- We trade in the direction of the trend when the breakout happens from previous high
- This method is more reliable as it makes us trade the "Present"
Base is marked in Red. Immediate tops are marked in Blue. Whenever prices move above "Blue" lines, its time to Buy keeping the previous base ("Red" line)
as stop loss.
- When the previous base ("Red" line) begins to get breached on the downside, its an early warning that trend change is in place.
- This method was widely discussed first by Larry Connors.
1. What is the basic meaning of Stage?

- Markets have always operated in stages which can be identified. This is not similar to an Investing model. It is just a way to identify stages. For some
markets these stages will be identified easily. However for some, it won't be easy to do so.
- Broadly, these are three stages in which markets can be categorized; Accumulation phase, Mark up phase, Distribution phase and Mark down phase.
2. How Can Stages be used?
- Stages can be used in Investing and in Trading
- Key is to identify which stage the markets are in currently and devise a strategy for that stage
- Most important aspect of identifying a stage is that once its done, an investor will always be on the right side of the market. For E.g. - In a Mark down
phase, one would not commit the mistake to go long.
3. What are the Characteristics of Accumulation Phase?
- During Accumulation phase, sentiment would be the worst.
- Market would have declined for several weeks
- Markets will eventually appear to have lost down side momentum.
- Eventually Markets would start trading side ways to mildly positive
- Gradual increase in Volumes and arrest in selling pressure will be witnessed.
- An eventual breakout would happen of the previous range. Breakout should be considered for only that range where the markets have stopped sliding.
- Markets will start to trade over its 50 Week Moving Average
- Accumulation stage is more clearly visible on broad time frames (Weekly, Monthly)
4. What are the Characterisitics of Mark Up Phase?
- Volumes during this stage will be robust
- Market corrections stop at the 50 Week Moving average or move maximum of 5% below it. Whipsaws around the 50 Week Moving Average happen less
frequently.
- Broader sectors/Market leading sectors will confirm the same with the main market index.
- Periodic corrections of 15-20% will be a feature of this phase.
5. What are the characteristics of Distribution Phase?
- Volumes in this phase will really start picking up.
- Along with volumes, Volatility bands will start expanding
- Prices will start fluctuating around 50 Week MA and whipsaws will be common
- Magnitude of correction will increase significantly
- Open Interest and F&O activity will be peaking
6. What are the Characteristics of Mark Down Phase?
- Prices will continue to trade below the 50 MA and will retrace upto/above 20 MA
- Stocks with low Market Capitalization will begin to show disproportianate cuts.
- Volumes will be relatively (in comparison with recent stages) highest.
- 50 Week Moving Average will start trading flat. Whereas 20 Week Moving Average will start trading down.
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Simply Technicals - Dow Theory Modified
1. What is Dow theory?
- Perhaps the oldest Technical theory along with Elliot Wave. Its usage in the current era is minimal. But that does not mean that it does not work. Emphasis
on Price trends and Business trends within the Economy.
- Important point to note is that it is not used to forecast market movement.
- One of the only few theories along with Elliot wave which gives emphasis on Trend confirmation and Trend direction.
2. What are the main Principles of Dow theory which are applicable today?
a) Markets reflects all the news/earnings/rumors - Whether it was the previous Bull run, severe Bear Run or the Current Bull run, markets discount all
a) Markets reflects all the news/earnings/rumors - Whether it was the previous Bull run, severe Bear Run or the Current Bull run, markets discount all
information. Trust the price and only price.
b) Markets consist of Primary Trend & Secondary Trend - Primary Trend can be a long term Bull market, whereas Secondary Trend can be corrections within
that Bull market. Magnitude of Secondary trend can range from 15-25% of the Primary Move. All the "red" support zones are marked. None of the previous
supports were broken in the entire Bull run. Supports were only broken in 2008 March which triggered one of the worst Bear Phase. Even during the current
phase, unless May 2010 low (4786) gets breached we will not be in a Bear market. Till then the current 2011 correction is a Secondary reaction within the
Primary Bull market. Dow theory is late in reacting, but it will keep one on the right side maximum number of times.
c) Emphasis on Closing price & Volumes - Given the volatility today, it was wise earlier and even wiser today to pay more emphasis on closing prices. Also,
Volumes and Prices go hand in hand. Though this might not happen always, but in general look for expansion of volume with expansion in price. If volume is
missing, be cautious.
d) Confirmation of Indices - Bull markets is when Prices rise. Bear markets are when prices fall. Direction-less markets are when neither prices rise nor do
they fall. One of the best ways to catch a Bull phase and a Bear phase is to look for confirmation among indices. In Bull markets, majority of Indices will be
Bullish and in Bearish markets, majority of indices will be bearish. In direction less markets, major sector indices will reflect the same.
E.g. - Lets say we are in a Bear market, in case we suspect a Bull market taking shape, look at rest of the indices. See if they have stopped falling and started
forming a base. Eventually when broader index breaks out, see if others are breaking out as well. If they are, then you have got yourself a new Bull market!
Dow theory looked at confirmation of Two indices. Given today's markets, it is wise to apply this to other sectorial indices and see their trend with respect to
broader market index.
What is Sector Rotation

05 July 2015
12:39 PM
1. What is Sector Rotation?

- Stock Markets operate in Cycles and money flows in/out of various sectors all the time. As an analyst one is expected to know which sector does well in various
economic scenarios.
- Broadly, Stock Market moves on two broad Industrial Categories; Liquidity Driven Industries & Earnings driven Industries.
2. How to we classify various Economic Sectors & rotation of money within them?
- In Technicals, this concept was first introduced by Martin Pring. Would definitely recommend for you to read the original pie ce of work. We have just adapted
and slightly modified what had been explained by him.
- Bull Market - Stage 1 - At beginning of a Bull market, Liquidity driven sectors tend to do very well. These typically include Financials (Brokers, Ba nks, Nbfc's),
Consumer Non durables (Personal Care, Foods, Tobacco, Beverages), Real Estate & Construction and Transports. Basically all th ose Sectors which are
directly/indirectly related to consumer spending.
- Bull Market - Stage 2 - In this stage Conservative sectors like Consumer Durables (Autos, Media, Hotels, Appliances), Health care (Hospitals, Pharmac eutical
Companies, Health insurance companies), Retailers & Manufacturers do well.
- Bull Market - Stage 3 - During the end of Bull market, Earnings driven sectors tend to do very well. These are typically related to Coal & Mining, Oi l & Oil
refineries, Technology and Basic Industry (Steel, Metal, Machinery, Chemical, Paper)
- In Bear Markets, its exactly the opposite. First, Liquidity driven sectors fall, then Conservative sectors and finally Earnin gs driven sectors. The necessary order
may not play out, but the extent of correction exists. That is, Liquidity driven sectors correct the most, followed by Conser vative sectors and Earnings driven
sector.
What are Sister Stocks?
Since I have introduced the concept of Sector rotation, let me introduce the concept of Sister Stocks. Sister stocks are stoc ks belonging to the same sector and
the same industry. So, for example, Hdfc Bank & Icici Bank are sister stocks.
Market tide effect
Tracking the movement of Sister stocks together is extremely important. Tide in the market, lifts nearly every stock belongin g to the same sector. This is not a
rule, but exceptions in this is a rarity. Usually when a Sector becomes in flavor, all the stocks belonging to that sector se e spurt of buying interest. Tracking
stocks together gives us good insight into how the broader sector should do going forward.
How can tracking Sister stocks be beneficial?
Tracking movement of Sister stocks together leads to elimination of whipsaws. For example, if many stocks from the same secto r are breaking out, the
likelihood of the breakout being GENUINE. Tracking movement of Sister stocks also enables us to stay within the "moment" of m arket action. That is, staying
with stocks which are moving. As Investors or Traders, least you want is to stay with stocks which do not move. Lastly, Siste r stocks movement can in one
glance tell you the sectors which are leaders and laggards within the current move.
What is Relative Strength Index?

Relative Strength Index, introduced by J. Welles Wilder measures the strength of an issue against its history of price change by comparing up days to down
days. Wilder assumed that overbought levels generally occur after market has advanced for a disproportionate number of days a nd that oversold levels generally
follow a significant number of declining days. The RSI can range between 0 to 100 and the most popular parameter used by trad ers is 14. The most common
use of RSI is to trade on the positive side once it breaches 30 on the upside and to trade on the short side once it breaches 80 or 70 on the down side. Now,
most of you who have ever traded this indicator, would know that this method works well some times while rest of the times it is not profitable. It leads to more
whipsaws and draw downs which cannot be sustained by small trading accounts. Hence, what we will use in this is slightly diff erent.
How to Use the RSI to identify Bullish - Bearish Range?
As mentioned earlier, RSI used traditionally cannot generate returns over the long run and this is precisely why we will be u sing RSI in a modified manner to
measure a securities Strength and Weakness. Credit to identifying this modified use of RSI should go to Andrew Cardwell about whom I read in Constance
Browns book. I would definitely recommend any trader reading the original piece of work. Let us discuss the rules briefly her e for the sake of understanding and
later on we will revisit rules in form of examples.
Modified RSI Use,
In Bull Market RSI remains in the range of 80 40 - RSI never goes below 33
In Bear Market RSI remains in the range of 60 20 RSI never goes above 60 67
Application of this Rule?
By using this, in one glance we should be able to identify the Bullish - Bearish range of the stock. If on the weekly time frame, we find a stock maintaining range
of 80 - 40 RSI, then we'd know that the stock has legs in it to go even further. We can then devise trading strategies around this co ncept to take advantage of
the same. Similarly, if we find that stock has been maintaining RSI range of 60 -20, it would mean that stock does not have significant strength within to move
up.
ABB in the previous Bull run respected the range (marked in green), but after that has struggled to climb up and is not shift ing with a downward bias as RSI
level is capped on 60 (marked in Red).
Unitech is the same as ABB. Here, till mid of 2010, 40 range was respected. What this said was that stock has enough legs to move higher. But eventually when
the stock started to Rise, RSI found difficult to cross the previously respected 60 band and hence the stock begun to crack a gain.
(Bullish Bearish RSI range Investment Model)
Moving Averages
To help understand moving averages, it is first necessary to discuss time series, i.e., series of data points that are chrono logically ordered. The daily closing
prices for a commodity are one example: They form a string of data points or bars that follow one another in time. In a g iven series, a sample of consecutive
data points may be referred to as a time window. If the data points (e.g., closing prices) in a given time window were adde d together, and the sum divided by
the number of data points in the sample, an average would result. A moving average is when this averaging process is repeat ed over and over as the sampling
period is advanced, one data point at a time, through the series. The averages themselves form a new time series, a set of va lues ordered by time. The new
series is referred to as the moving average of the original or underlying time series (in this case, the moving average of the close). The type of moving
average just described is known as a simple moving average, since the average was computed by simply summing the data points in the time window, giving
each point equal weight, and then dividing by the number of data points summed.
Using Moving Average
For our Swing Trading Model, we will be using a Simple Moving Average with a Parameter of 50 on a Weekly Time frame. As per y our research, this parameter
can be adjusted. I have found this Parameter to work well across various asset classes.
Why Moving Averages and RSI together?
Moving Averages are used to capture trends and to essentially have enter and exit points and RSI is used to measure the stren gth of the securities price
structure. Moving Average techniques will only be applied to those securities whose price structure is strong and hence we wo uld avoid having too many
whipsaws. In a nutshell, Strength would be captured by Trend.
Parameters required by this Model
Weekly Time Frame of the Security
Simple Moving Average with 50 as Parameter
Relative Strength Indicator (15) with levels of 80 & 40 in Green and 60 & 20 in Red
Relative Strength Indicator (15) with levels of 80 & 40 in Green and 60 & 20 in Red
Model Specific Rules (Buy Sell Hold)

1. Identifying the Current Market
First step in this model is to identify the current securities strength/weakness. To see that, look at where the RSI is tradi ng. To be more specific, look at the
range in which RSI is trading. Whether it is in the Bullish range (80 - 40) or is it in the Bearish range (60 20). Visual inspection should instantly tell you
whether the stock is Bullish or Bearish. Refer to the chart below. Since April 1930 to April 1932, Dow was trading in a Beari sh Zone. How do we know it? Look at
the RSI(15) range. It is trading between 60 and 20! Similarly Bullish stocks can be identified.
2. Making a Trading Decision
Once the current markets structure has been identified, all you have to do is wait for a suitable entry. For entry and exit we will be using a 50 MA or a 20 MA in
some specific case. If we see, a Securitys RSI hovering around the 40 level (That is, RSI taking support near 40), we will w ait for the price to move above the
50 period average. Once this happens, we will then keep a stop loss of 50 DMA or can use volatility based stop to protect our account. In case of profits, we will
let our profits run with suitable trailing stop as we move higher
Similarly, if we spot the RSI taking resistance at 55-63 zone, we will wait for prices to close below 50 MA or 20 MA in order to go short.
Buy RSI Strength + Price above 50 MA
Short RSI Weakness + Price below 50 MA
There will be times when trends are so strong that prices wont retrace back to 50 MA for a suitable entry. In that case we w ill use 20 MA for entries.
Buy RSI strength + Price above 20 MA
Short RSI Weakness + Price below 20 MA
In no case shall we ever Short a market trading above its 50 MA even if RSI is showing weakness. Similarly, in no case shall we ever Buy a stock trading below
its 50 MA even if RSI is showing strength.
Putting it altogether
We have covered so much information that somehow for a new user this will look very intimidating. This is precisely why I am here to guide you step by step on
applying what you have learned so far. This step by step review will contain information on how to start through scratch in A nalyzing a specific Asset.
Step 1: Always Start with Broader Market
The reason this is so important is because if broader markets start to slide down, no matter how good the stock is, it will e ventually follow the course. Hence
determining what the broader market is doing is absolutely critical.
Since we realize the importance of broader market trend, we need to now form a small framework on how we will analyze the tre nd. The first and foremost step
here is to analyze the Previous/High low points on the chart (That is, the Mini Dow theory) as explained earlier. Then come t o Dow theory and see whether we
are in Primary Trend or in Secondary Trend. Once we are through with this, analyze the Stage of the market as explained earli er.
Mini Dow Theory - Identify whether on Daily charts and weekly charts we are forming Higher highs and higher lows
Dow Theory - Apply the concepts of Dow theory to identify whether we are in Primary Trend or Secondary Trend. Look at Volume confirmation and confirmation
of other indices. Apply the concept of Sister stocks on Sister indices as well.
Identify Market Stage - Once you have noted the observations of Dow theory, identify which stage we are into. If we are in Stage 4, and Dow theory is showing
Bullishness, then it might be possible that we are entering Stage 1 and then Stage 2 in future. However, if we are strongly i n Stage 3, wait for more
confirmation and do not be eager to initiate trades.
Identify Sectors - Identify the strongest sectors in the market. See if other Industrial indices are confirming the same what the major sector i s conveying. Use
the above mentioned steps in finding out the Trend and Stage of the Sector and the Industries within that Sector.
Step 2: Identification of Stocks to Invest
Once the broader Market trend is identified and the Individual sectors are identified, its time to narrow down to Stocks. Sto ck identification has to be done with
the following steps.
Stock Trend - Identify the stock trend the way you have analyzed the broader market trend using Mini Dow theory and Dow theory.
Stock Stage - Identify the Stock stage and see if we are in Accumulation phase or in Distribution phase.
Bullish - Bearish Range - If the Trend and Stage of the stock is clear, identify and confirm the same with the RSI Bullish -Bearish Range.
Investing - Once the above analysis is in place, use the RSI Model described in step 8 to start investing in the stock.
Step 3: Risk & Money Management-.In a nutshell,
Know Your Capital
Risk Per Trade
Exit Point
Correct Position Sizing Technique
Correct Pyramiding Technique
Since every Investor has his own risk appetite, we cannot tell you how much to risk and how much to buy. You need to figure t his on your own.
In conclusion, what we have discussed here are steps for an Investor to make it on his own. If you practice what has been tau ght here, we have no doubt that
you will be immensely successful going ahead. Remember, you need to have patience in this business before you start finding t hings to work for you. Be Patient,
Invest Wisely and Manage your risk well.
Trading Strategy using TA

05 July 2015
12:40 PM
Trading strategy using TA ...........by Raunak

Intraday Strategies
1.
2.
3.
4.
5.
6.
Rectangular breakout for Intraday Purpose

Using 5-Min Charts for Profit (Ascending triangle)
15 - Minute Chart Breakout
15 Min Intraday Setup
Classical Gap Setup for Intraday Trades
RSI and Bollinger Band Setup on 60 Minute Time Frame
Daily Strategies
1.
2.
3.
4.
5.
6.
7.
8.
9.
Retangular Consolidation Pattern

Failed double top - Daily Pattern
5 Day Momentum Trading Strategy
RSI Divergence Strategy using Daily Chart
Dual Time Frame Momentum Strategy
Using a trending Indicator (ADX) efficiently
Trading Positive Divergence on Daily Time Frame
Swing Trading with MACD and Stochastics
Trading Setups
Weekly Strategies
1.
2.
3.
4.
2-3 Week Swing Trade Setup

3-4 Days Swing Setup
EMA Cross Over System
Turtle Soup Plus One (With AFL to spot the pattern)
Other Useful Posts

1. Position Sizing in Investments
2. Importance of Data Validation and Data Accuracy
3. Importance of Getting in and Getting out of Trades
4. The "What If" Syndrome
5. Futures or Equities
6. Picking the right kind of stocks for Swing Trading
7. Setting Stop Losses
8. Position Sizing Techniques
9. Setting Stop Losses Using Historical Volatility
10. Focussed Approach versus Diversified Approach
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I would certainly provide you with the kind of sources you want. But I'd like you to specify what you exactly want. As far as I am concerned, I use some
standard setups for each time frame.
Weekly trades: I rely a lot on rectangle patterns clubbed with MACD, ADX, Trendlines, Volumes
Daily Trades: I rely on classic A-B-C pattern clubbed with MACD, Volumes and ADX
Intraday Trades: I use two setups (Rectangle pattern and Sure trend pattern) with MACD and MA.
As I explained the weekly setup in my previous post, I will be explaining the daily and intraday setups in the following post s. So to understand what I do, you
will require basic understanding in,
1)Candlesticks
2)Macd
3)Adx
4)Volumes
5)MA - Moving Averages
6)Basic technical patterns
7)Trendlines
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RECTANGULAR PATTERN ON WEEKLY BASIS
Tools Candlestick/Bar Chart, ADX (14) and MACD Oscillator with standard settings
Trade Setup The basics of this setup is very easy to understand. All you need to do is monitor selective stocks (high beta high volume) o r the Index. The
pattern to look out is usually a horizontal range in which the particular entity trades and then gives a breakout in either d irection. This pattern is extremely
effective and provides with good risk/reward ratio. I chose high beta stocks to cash in on the moves as quickly as possible.
Time Validity - I trade this pattern only on weekly charts. The reason behind this is simple. The more the data, the more reliable the patter n. Thus data and
patterns on monthly charts are certainly more reliable than weekly chart. Some analysts do say that the weekly pattern should not extend beyond certain
weeks. However, my research indicates that this condition may or may not hold true. Personally, I prefer the formation rather than the time frame.
When does it occur - This pattern can be found during consolidations, new highs and new lows. Some books do indicate that these patterns are typic ally
consolidation patterns but I have found these patterns effective in nearly every situation.
How to trade it - Refer to the chart below. What we see is that HCC forms a bottom by forming a rectangle pattern. Usually there must be 4 poin ts of contact
in the pattern (as marked in the figure). However, in some extreme cases I have seen points stretching to 6 -8. Volumes during the pattern should diminish
and the NDI should be greater than PDI. Though NDI is greater than PDI, the stock instead of falling further consolidates in a range. This usually is the first
clue for the stock validating the pattern. As the pattern develops and begin to show strength, the volumes, ADX (14) and PDI all start to pick up. This is
usually the second clue and beyond this only the breakout confirmation is required. The breakout confirmation is usually reco mmended as validation of pattern
usually the second clue and beyond this only the breakout confirmation is required. The breakout confirmation is usually reco mmended as validation of pattern
breach. However, I personally prefer to see a gap up breach (check chart). I have found that gap up along with the previous c lues mentioned works
exceptionally well for this pattern. The stock usually runs up quite fast and doubles in near term. Though the gap up is rare , but if you find one, then latch on
to it. Keep in mind the slope of MACD while buying. It should be positive and should have an upward bias.
Target - Add the range of the rectangle to the breaching level. This is the minimum target that can be achieved. The maximum cannot be predicted.
STOPLOSS - I would prefer not to refer to stop loss levels as every trader is different in having his own rules of money management. Ple ase use your own rules
for managing equity.
Usage - This pattern is effective in weekly and daily trades. However, I have also had considerable amount of success using it on int raday basis. If someone
wants, I'll post how to use this in intraday setup
What makes trading so fascinating and, at the same time, difficult to learn is that you really don't need lots of skills; you just need a genuine winning attitude.
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RECTANGULAR PATTERN ON INTRADAY BASIS
This is the "heart" of my day trading. And I hope it will benefit all.
Tools Candlestick/Bar Chart (5 Minutes), MACD Oscillator with standard settings, Support and Resistance levels on 5 Minute chart
Trade Setup The basics of this setup is very easy to understand. All you need to do is monitor selective stocks (high beta high volume) o r the Index. The
pattern to look out is usually a horizontal range in which the particular entity trades and then gives a breakout in either d irection. This pattern is extremely
effective and has occurred nearly 70 times in the past 11 months on Nifty. On an average one can find at least 3 -5 trading days in a month where this pattern
forms. The average points to capture on one particular move are about 20 -60. These figures on based on Nifty analysis. However, with 50 high beta futures
stock, this pattern is bound to occur in many stocks on daily basis. Top 48 beta stocks exhibit this pattern atleast 1 -2 times. So on different days you might
get different stocks exhibiting this pattern.
Buy Setup A typical buy setup occurs when the entity breaks out on the upside after trading in a horizontal range for most of the day. Buy at the closing of
the breakout candle and keep a stop loss at the low of the previous candle. MACD slope in this setup should largely be up. The risk reward ratio of this setup
is extremely rewarding. Prior to the breakout ideally Nifty should have traded in the range of 25 -35 points.
Sell Setup A typical sell setup occurs when the entity breaks out on the downside after trading in a horizontal range for most of the da y. Short at the closing
of the breakout candle and keep a stop loss at the high of the previous candle. MACD slope in this setup should largely be down. The risk reward ratio of this
setup is extremely rewarding. Prior to the breakout ideally Nifty should have traded in the range of 25 -35 points.
Important Notes Look at the slope of MACD when you enter the trade. Also, always take a note of where prices are trading with respect to thei r support and
resistance.
Have patience and you will see this pattern occurring regularly.
I am posting two out of many examples I have for NIFTY alone. If you want to see this for individual stocks then let me know.
Trailing stop - If one wants, in a short sell setup, the moment the current candle's high is taken out, the position can be squared off. Howe ver, the drawback
with this is that often prices tumble again and the good move is missed out. I have researched 3 years of Intraday data and w hat I have found is that it is
better not to keep a trailing loss. Instead what I do is that for NIFTY I keep a target of 20 points and keep the market runn ing down. If the market turns
around, then I square off the position the moment my 20 points profit is in threat. So this way, the minimum I make is 20 and the maximum is what luck
throws at you.
Exit - Again this is subject to the choice of the trader. Out of 183 times (in 3 years) that this pattern has occurred, the NIFTY ha s fallen in the range of 20-30
'63' times and rest results vary. Hence, the minimum would be 20. I have a lot of trading capital and hence I take up huge po sitions in order to compensate for
any loss in potential points. Hence, as a trader one must decide how much points he wants. For some 10 -15 points is too much and for others sky is the limit.
__________________
As far as I am concerned ... I don't use oscillators on such small time frame ... the reason is simple ... over the period of time, the more data you plot your
indicators, the less accurate results you get .
One thing that you must remember is that Oscillator values are the effect ... they themselves are not the cause for price to move ... only when 'price' moves
does the value of oscillator change ...
Hence Price is the cause and oscillator values is the effect ... unless and untill you are a swing trader there is no point l ooking in oscillators for such small time
frame ...
But if still you want to know ... then I would use 13 and 5 for MACD and 3 for signal line ... however you will get many whip saws out of such small time
frame ... if you are a swing trader ... either switch to 60 Min chart or 30 min chart .. nothing less than this ...
If you want to use a 5 - min chart ... then trust price patterns and volumes activity on such smaller frame
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Ascending Triangle on 5 - Min Chart
Tools Candlestick/Bar Chart and Volume(Color Coded). Since 5-min chart is extremely small time frame, I prefer not to use any oscillator or indicator.
Trade Setup The basics of this setup is very easy to understand. All you need to do is monitor selective stocks (futures based stocks) or the Index. The
pattern to look out is usually a horizontal range on the top and higher lows on the bottom. This pattern is extremely effecti ve and provides with good
risk/reward ratio on 5-min chart. Essentially can be used as an effective swing trade strategy.Those with sizable cash in portfolios can choose futu res stocks for
this pattern (leverage advantage). I'll use a very recent example to demonstrate the use of the pattern.
Time Validity - I trade this pattern only on 5-Min chart. The reason behind this is based on my own research. Ascending triangles which occur on daily or
weekly charts either dont complete fully or give false breakouts. On analyzing 5 -min charts I found that these patterns are highly effective on this time frame.
When does it occur - This pattern can be found during consolidations when a stock pauses before moving higher. Higher bottoms in this pattern indi cates
bullish momentum being built up.
How to trade it - Refer to the chart below. What we see is that Aditya Birla Nuovo has recently finished a ascending triangle pattern. It forme d a nice horizontal
base (A,B and C) around 895 levels with it constantly forming higher bottoms (1,2,3,4,5,6,7). The stock eventually broke out from these levels and is trading
at 909 currently. The ideal setup would be to buy on breakout only when there is huge increase in volume activity around brea kout levels (refer chart).
Target - Add the range of the ascending triangle to the breaching level. In this case it would be the vertical distance between point 1 and A (roughly about 35
points).
STOPLOSS - Use point 7 as stoploss levels. We would ideally want the triangle to fall out completely before deciding that it is a false one.
Important Points - Along with the standard points mentioned above, there are a few points I would like to share in order to judge the strength o f the pattern.
1) Strength of Horizontal Top Line - Ideally there should be atleast 2-4 points of contact made with the horizontal top line. In this case we have had 3 point of
contacts marked as A, B and C.
2)Strength of Trendline - Number of point of contacts made with the trendline determine the strength of it. In our case we have 7 point of contact. Thi s is
brilliant. Ideally I would like to see 3-4 point of contact.
3) Strength of the points (A to C and 1 to 7) - We need to check whether these points are of any use or not. Plotting points is not difficult. However testing
them is difficult and important. A simple way to do this is to monitor the volume activity. Look below each major point (1 to 7) how volume acivity picks up as
soon as the price reaches the trendline. High volume at these points resemble force (demand) and hence make these points impo rtant. I have circled the
volume activity underneath each point.
4) Strength of Pattern - When the above mentioned points are in place, then the only thing left to verify is the time of the breakout. Ideally the pat tern must
breakout before the lines converge. At point 7 the pattern is 70 -75% complete and hence this is the right time of breakout.
Ultimately always remember that no pattern is fool proof. In this particular case we have found a very healthy pattern and we can just hope this blossoms into
profit. I have huge positions in this stock. Hope this works
Those interested in using Moving Average systems (Price crossovers) to trade can use these Parameters for ADITY BIRLA NUOVO ( 5 - min chart only)
Buy Average:60 EMA
Sell Average: 30 EMA
Short Average: 35 EMA
Cover Average: 5 EMA
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Not always true, I have seen an ascending triangle breaking downwards on many occasions, and similar behavior with descending triangle too.
Well said ... The way I see it ... if a pattern fails ... its an awesome opportunity ... some of the best trades (in the opp direction) occur when patterns fail ... In
every faliure there exists an opportunity ....
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i am talking about the normal market behaviour. in normal market behaviour the ascending and descending triangles work, but w hen on peaks and bottom can
reverse any times... Reversals are always there...to identify them you need to include more studies
...for eg. If you consider the ascending triangle to be good buy signal in overbought stochastics, declining rsi and crossing averages then no body can do any
thing. Then nothing can be done .so its better that we introduce the methods one by one if it is a beginners data...and then move on to next step...the reversal
of ascending or descending triangle can be predicted by various method including divergence, volume etc. But some things are rather learnt practically and
step by step. it is much better if you try to figure the formations ur self....it will give you practice and help identify th e trend for this patter....try to identify it
on various time frames like on intraday, daily or weekly charts....try to figure out what they do on specific movement...if o pposite is occuring in the formation
then try to look for the reason for opposite movement....hope you will find the answer....more you will analyse more you will know
....just do your homework.....later ............The problem with MACD is that it plots an average of an average of an average .This is an extremely lagging
indicator. As price moves first and MACD
second it is much more useful for longer-term trends. As a rule of thumb it is lagging 5 periods on a candle chart. Consider using this on a 10 -minute chart, it
is lagging 50 minutes.
How useful can this be in day trading?
However,when picking out a longer-term trend, a five-day lag may not be too
harmful considering the time you intend to hold the position.
15- Min Breakout Setup

05 July 2015
12:41 PM
15-Min Intraday Setup

Requirement Candlestick Charts/Bar Charts with MACD (standard setting) and MA (50), EMA (20) and EMA (10)
Brief Introduction I came across this setup while watching Greg Capra's seminar. I have modified this setup based on my trading experience.
I have added the MACD indicator for filtering out bad trades. The setup is simple to understand and implement. This setup is extremely effective to day trade
and can get about 30-50 points on the Nifty. Please use this strategy on Nifty as I have researched this setup on it.
Trade Setup - Pick a stock which has run up quite a bit and is due for a correction. A typical setup occurs when the 50 MA slopes down (wit h angle between
20-30) and prices fall sharply. Eventually prices retrace back to 20 EMA or 10 EMA which also happens to be the 38 -50% retracement from the swing high.
Enter a short position at this point and book profits according to your own appetite.
Example - In an example shown below, Nifty has run up quite a bit and has formed a new high. Prices start to drop off from this level. Over the period of two
days, the slope of 50 SMA starts to curve down and the setup is formed. Prices fall off on 14th sharply and then retrace back to 20 EMA on the 15th. This level
is also between 38.2 and 50% retracement level from swing high. MACD slope is negative and is about to turn below zero. Ideal setup for a short trade.
StopLoss - Stoploss if it breaches the 20 EMA and reaches the 50 SMA. Ideally, one can stop if the trade breaches 20 EMA.
Usage - This pattern can be used on 15Min charts for day trades.
1) Firstly, there is NO TRADE which is a lucky trade. Give yourself some credit for this wonderful piece of analysis.
2) Now, since you are using Robert Miner's Dual time frame Strategy, I will show you how to execute it with greater efficienc y so that you can enter the trade
early. Also, with this point, you will know that it wasn't luck that favoured you. But it was your analysis. Look at the char t below, I have marked three letters
A,B,C. THIS is the key to the setup. At point 1, there is a new swing high. From there on there is the first swing low (marke d as A). Then the prices rally a bit to
form mark B. Now to determine whether the markets will move higher, the low at A should be taken out and new low should be fo rmed. Then, after the new
low is formed, the market must again move back in the range of A. When this happens, then, just above B you must enter the tr ade and hold on to it. This is
what actually happens. Market from B forms a new low at C (low is a low even if it is just few paise below). Then from C, the prices move back to A range. This
signifies that the new high is probably going to be made. Once B is taken out, you must enter and ride the trend. You entered at 145.5, whereas according to
Rob Miner's work, you should have entered at 144. Hope you got my point.
3) Your usage of E-Wave and retracement was very good. Whether or not the ewave will complete is difficult to say. But once the A,B,C thing happ ens, it is
more than likely that the new high is going to be formed. Targets as you have done can be measured from APP and Fib extension s (Internal and External). I
hope you used the dual momentum setup with stochastic of two different time frames. You can plot both the stochastic on the s ame chart. Will be easier for
you to analyse trades.
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could you please why ABC correction happening in market ?
The way I think, ABC is a way for uncertain traders to be driven out of the market. Now, lets say someone is not sure of this trade. The moment a new low is
made (C), he will think of unwinding the position. Had he been an informed investor with faith on his analysis, then he would have seen the prices go back
again in the 'A' range and would have profited. Those who are unsure about their own analysis and those who do not trade prag matically are eventually driven
out at point C.
could you please comment on mass physiology behind all popular setup like Bollinger Band etc ?
one more question,please tell how to set two different Time Frame stochastic on same window in Amibroker?
Now if you are using 5min chart for smaller time frame, select the stochastic indicator and this will be stochastic for 5 -min chart. Now if you want to use 30 min
chart (larger time frame) and want to see level of stochstic of this then save the attached file in your indicator list as "S tochastic 30 Min" and then select
indicator and press insert linked. Now you get two stochastic (one of 5 min chart and other of 30 min chart). Below is the co de for stochastic 30 min (8,3,3).
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Failed Double Top - Daily Pattern
Tools Candlestick/Bar Chart (Daily), Colour Coded Volume, 21 and 50 SMA
Trade Setup This is a very powerful EOD setup which I came across during my early days of trading. It is one of my favourite EOD trading strategies. To walk
you through this setup, I am going to explain it to you in various steps.
1. Trend Determination - There has to be a 'trend' in place for an effective reversal to kick in. Hence, the first step of this setup is to identify s tocks which are
trending. You can either do this through a trend line or you can use the method which I use. I usually plot 2 SMA (period 21 and period 50) and determine the
trend of the stock by the slope of these averages. If 21 SMA and 50SMA do not touch for a while and both exhibit slope greate r than 25 degrees, then the stock
is in a very strong up trend. These are the kind of stocks we want to choose for this particular strategy.
2. The Pull-Back Phase - After, a descent run up, the stock forms a new high (1st Top) with heavy volumes and retraces back to the 21 SMA or 50 SMA. U sually
the stock does not touch the 50 SMA. The stock usually forms a candlestick reversal pattern and head's off to make a new high .
3. The Trap (Top) - As the name suggests, this is the phase where a New High is formed. This is a new high, which is formed on very light volume and
convinces many traders as a genuine high (breakout). It is here when many traders enter long positions in anticipation of a p rice rise. What essentially happens
is that the prices fall back below the first top (within 2 days) and continue to slide down to the previous swing high. This dents the confidence of those who
went long on the new highs and usually panic selling kicks in. The gain is quick in the set -up and the risk reward ratio is amazing.
Example - Oriental Bank recently formed this pattern. The stock was in an uptrend from september as determined by the slope of averages . The volumes at
first top were high whereas at the second top they were low. The stock price fell below the previous top within 2 working ses sions. Finally it fell back to the
previous swing high.
Important Notes Do NOT forget to look at the trend of the stock and the volumes. Finally, the prices must fall back within 2 days below the f irst top.
Stop Loss - Keep a strict stop loss of a close beyond the high of the 2nd top.
-----------------------------------Now look above. How about an ascending triangle ?? Look at the black lines.
The key here is the present leg of wave being formed. This will determine whether we r in a horizontal range or ascending tri angle. As of now just wait and
watch. My gut feeling is that Yes Bank is trading a bit weak. If it takes out the current high on good volumes then the price would (and should) rise
dramatically. But since it is little weak (not too much though) on daily charts, I'll wait n watch this script carefully.
One more thing ... your horizontal range isn't right .. thrs one bar (around 1) which is out of the range. Though some may sa y this is allowed, I'll still tell u this
is not that valid. Rest time will tell .
....................
83.4 is the current swing low ... now it is trading above that level but also in symm triangle zone. One the price breaks dow n from the symm triangle, wait for
83.4 to be taken out. If on retracement the prices do not re -enter the sub 83.6 levels , then short it. MRPL is relatively under performing the NIFTY. So it
83.4 to be taken out. If on retracement the prices do not re -enter the sub 83.6 levels , then short it. MRPL is relatively under performing the NIFTY. So it
should be a good trade.
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if previous swing low or high taken out by progressing complex correction .then it is end of complex correction?
Yes. You will have two factors on your side.
1. Triangle breakout (strong sign)
2. Prev Swing low taken out (again a strong sign)
Add up volumes to check validity
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I had told you guys that I was trying a system which I had mentioned in My Stock Watch list thread. Well, since this is in te sting phase, I'll post my list here.
The beauty of this system (mixture of Trend Following Systems and Mean Reversion Systems) is that it gives returns within 1 -4 day of trades. It's a real time
scan system and hence positions have to be taken between 15.15 - 15.30. I have got in house development done for the system's software. I'll be posting my
results live here and will certainly release the system (with software) once it is successful. Results on backtesting the dat a were very good. But it is necessary
to see if it works in real time. At times this system generates contradictory signals
. Eg: If it gives BUY for a security on 4th Jan and then short for the same on 6th Jan, then earlier position have to be clos ed and new positions should be
added. At present am tracking only 40(high beta stocks). I hope it works. Here are results for January along with today's res ults. CMP indicates closing price of
signal generation day. Stop Loss is based on EOD prices.
[12 jan'2010]This is the final list as of 15.15 - 15.20
Banks and sugar stocks are looking weak.
For Short - BAJAJHIND, BANKINDIA,RENUKA,CENTURYTEX,IBREALEST, ICICIBANK,TATASTEEL
For Long - Wipro
Testing phase is on. Please don't trade.
Signals are based on closing prices. So, since we r seeing these at 15.20, It might be that (in very rare case) we might get one false signal.
-------------------------------------------------------------------------------Since this is a T + 1 to T + 4 system (Maximum holding till 4 sessions), I am uploading performance of signals generated on 4 th and 5th of this month. Four
day cycle for these are over. On 6th and 7th there were no signals. And the next signal was on 8th, 11th and 12th (today). Wi ll be uploading result when 4 day
cycle ends for them.
-------------------------------------------------------------------------------Signals for Today. I had posted these at 15.20. Just doing them again in proper format. Keep SL 5310 for NIFTY. Rest SL at 2. 5%
CMP is the market price on the SIGNAL day
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i had a query. the nifty short call was initiated at 5210 with a sl of 5340. so shoul we expect a fall of at least 200 points nifty considering the sl to be 130
points?
Watcher right above the image I had mentioned SL of Nifty as 5300 ... coz thts the next major level ... I think u missed this line ... refer back to the original
post.. also today was T + 1 of the signal ... the signal takes maximum T + 3 to validate ... if not it has to be ignored ... still testing to let us see if we can
modify a few things here .
These are the signals generated in 2009 for Nifty. As you may see, this strategy is effective (30% net return deducting broke rage at 0.03% each side + extra
costs) for Day 1 trade. So, what I do is, if the Buy Nifty is generated today at 15.15, I buy the nifty and hold only for '1' day. If it gives me profit, then fine else
I close my position at end of the day. In no circumstance do I take a loss of beyond 2.5%. I manually square off the deal. Th is is just a BTST or STCT strategy.
You can see the list and get an average target.
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As per your 2-3 week swing trading set up, I have screened two scripts. Please let me know if my selection of stocks are correct as per you r strategy.
1) INDHOTEL------uptrending stock with a pullback, hammer candle pattern formed on 13/01
2) SAIL----------uptrending stock with a pullback, I hope its bullish engulfing candle pattern on 13/01
Sail has not given a Engulfing pattern .. it is more of a piercing one ... and in Indhotel I would have wanted the hammer to be a little more ideal (long
shadow) ... for Indian Hot the patterns have formed at 38.2 retracement level ... it would have been good had it formed at 50 % retracement ... for Sail though
it has formed at 50% retracement ... which is good
Sail especially is looking good on the broader note ... Displaying more strength than Indian Hotel ... stop loss of 215 and 2 32 looks good ...
__________________
Do you mean fibonacci retracement level should be 50% and above for strong buy signal.
Am I right in understanding your message. Please clarify me.
Finally regarding the entry price, target price and stop loss methods explained and followed by you in simple english will be really helpful.......
Yes it should be at 50 or between 38.2 and 50 ... for Sail it is exactly at 50 ...
Entry - if you are planning to take up 100 positions ... then first do a probe test ... this means .. first buy only 20% of your posi tion once the stock crosses
previous day's high ... If you then continue to see the stock showing strength over the past 2 -3 days, then increase your position. This way, even if the stock
goes against you, you will have less loss as you have invested only 20% of your position at first...
Target - I dont believe in target's ... so it's upto you when you want to exit .. or you can use your strategy
Stop loss - previous swing high ... or you can take 61.8% fib level
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Honestly I don't believe in back testing results ... there r so many dynamic things in the market (plus the human element) th at back test results do not
incorporate ... hence am testing it live .. lets see ...
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Classical Gap Setup - Intraday Trades
Tools Candlestick/Bar Chart (Hourly Time Frame), Comparative Relative Strength (Base Index: Nifty)
Brief Introduction Now, Lets take time over understanding this. Markets are based on demand and supply. Gap down, as shown in one of the images below
indicates that today the market opened lower. Hence, the bidding today started much lower than yesterdays lows. This means t raders are expecting the
market to go down and hence are not even bidding near the levels of yesterday. This is classical sign of bearishness. Same go es for upward gap.
Concept of Relative Strength - First of all, do not confuse this with Relative Strength Index (RSI). RSI is completely different. Comparative Relative stren gth is
when a stock is compared with a base entity (lets say an index; Nifty). By using Comparative Relative Strength we compare wh ether the stock is outperforming
NIFTY or underperforming NIFTY. We will always want to buy stocks which are outperforming the index and will always want to s hort stocks which
underperform NIFTY.
Trade Setup - This is one of the few setups which gives consistent returns in intraday. We enter a BUY position when there is an upward gap on Hourly time
frame and the gap is sustained for one hour with the Comparative Relative strength sloping/pointing up. We enter a SHORT posi tion when there is downward
gap on Hourly time frame and the gap is sustained for one hour with Comparative Relative strength indicator sloping/pointing down.
Time and Validity - I trade this pattern only on Hourly charts. Out of 10, I must say 6 of the gap patterns are successful. If you get a gap up i n a stock that has
reversed or formed a base, then the pattern seems to work more efficiently. If you apply the same structure on daily charts, results can be even better.
Stoploss and Target - I have explained the stop loss in the charts. Targets may vary depending on the range of the stock.
Examples - I have given 2 very recent examples. One for Buy setp and one for short setup. Please refer below.
Note - Intraday trades are for very experienced traders. Please master some setup and paper trade it before putting real money.
__________________
Punjllyod is giving a lot of false signals ... it is common for a stock to do so if its not trending ... we r planning to inc orporate a trend identifier in the system so
that better results can be given ..
prefer desktop based applications like Amibroker, Metastock , Tradestation ...
I can tell u how to add Comp Rel Strength indicator in them ...
------------------------------------------------------------------------------As promised the AFL is ready. AM posting the results of the strategy (3 -4 Swing trade setup) and I must say results are pretty good.
Since you know I don't believe in giving targets, hence I measure the performance of the strategy in days. Here, since it is swing trade, i have measured the
performance in two durations; 5 days and 10 days. I must say the results are pretty satisfying. In 2009, this strategy has ge nerated 72 Buy signals and in 5
days from day of trade, the success rate has been 73%. When performance is measured in 10 days from trade, the success rate i s 86%. Results are based on
stocks trading in the Futures and Options segment. As mentioned, this strategy works well in Strong Trending stocks. Will be posting the AFL
2009 ---> 5 day hold --> Trades 72 ---> Success 73%
2009 ---> 10 day hold -> Trades 72 ---> Success 86
2009 ---> 10 day hold -> Trades 72 ---> Success 86

.................Entered SAIL at 242.95 (2-3 Week swing strategy). Closed at 240.85. Lets wait and watch.
Why did u exit ??? din u do a probe test ... U had a valid reason to enter ...
But did u have a valid reason to exit ??? I had a look personally at Sail .. its not looking bad at all
You had a swing trade for 2-3 weeks ... then y did u square off based on one day ...
__________________
I guess slope of 22 SMA ---Lupin----is flat, instead of up. Please correct me if I am wrong.
Tata motors -----satisfies the rule----however, I see that this script has ended in red last couple of days, even though market ended green last couple of days.
Your views on this Raunak ?
Yes that was one of the reasons why Lupin is little weak compared to Tata motors ..
Tata motors meets requirements and though the stock has closed in red, I would still prefer it ... however since it is result s season, I'd definitely do probe test
entry in both stocks... the day previous day's high is taken out, entry should be made in small quantities.
__________________
for EOD Stochastic 8,3,3 or 6,3,3 with a bullish candlestick pattern does give good next day results ...
.............................
RSI and Bollinger Band Setup
Tools Candlestick on Hourly Time Frame and RSI (14)

Trade Setup I just can't recollect where I read this setup. But, it is a very useful one of you apply it correctly. If you identify the s tocks on which this setup
works, then it is going to be very profitable. Usually, you should pick weak stocks for this setup. Stocks which are under pe rforming the broader market or
which are in intermediate down trend. Else you can get many false signals.
How to trade it - Look at the chart below. Bharti has been under performing the market for quite sometime now. If you look closely. The prices have crossed
and closed above Bollinger band (upper) two times. On both occasions the RSI(14) was not above 70. Now, RSI is an indicator o f strength and despite the price
closing above the band, the RSI remains below 70 (does not exhibit strength). Hence, we then look for some sort of bearish co nfirmation on candlesticks (Doji,
Hanging Man, Bearish Engulfing). The moment you get this confirmation, short the stock with stop loss being the highest price (of the previous two candles). In
case of Bharti, in the first case we got a Doji whereas on the second case it was a variation of bearish engulfing pattern.
STOPLOSS - Stop loss is the highest price (high) of the previous two candles.
Usage - Can be used on 60 Minute time frame chart. You can use 15 - Minute chart for entry.
-------------------------------------------------------------------------------------------------------
Mr. Savant
05 July 2015
12:43 PM
What Mr. Savant gives is not a blind proposition for investment. If you have the patience of going through his threads, you will indeed learn a lot. His returns
are more than 100%. However the time duration is much longer.
What we do here are small trades and quick trades. These trades look attractive, but are only effective if you are an experienced trader. It is not to say that
you won't make money here, but all am saying is that monitor these strategies for some time before committing even a paisa into them. Hence, what I'll
advise you to do is that learn what suites you the best. But don't put in money straight away. If you loose during this, your appetite for learning will diminish
exponentially. Follow Mr. Savant's stocks, invest in them and simultaneously learn from here. Once you learn and master something, then neither you will
need Mr. Savant's thread nor this thread for making your own killing in the market.
.................................................. ........
Following are the stocks for "Investment". Start accumulating small quantities on dips. The stop loss for the stocks will be low which just goes to show the
growth these stocks can have over the period of time (usually 12-24 months).
1. Hold these stocks for Investment purpose only. These are not swing trades nor they are scalping trades. These are purely investment based trades based
on numerous factors.
2. Maximum loss that we will take for a particular stock is 10 - 15%. Again, the stop loss is deep but these stocks can give amazing returns. For some stocks
stop losses are more deep. However, this is only because these stocks are showing good long term momentum.
3. Buying criteria is based on a weekly technical system (neither a trending system nor a mean reversion system) and long term fundamental - economic
system.
I'll be really grateful if someone could assist me with updating this list of stocks on weekly basis.
I'll be posting the list in this same post in sometime ... Will be updating the stocks as I find new investment opportunities ..
.............-------------------------------------------------------------------------------AvgRange = Sum( abs(O-C),15 )/15;
Doji = IIf(abs(O-C)<=0.1*(H-L),1,0);
HAMMER = IIf( (H-L > 1.5*AvgRange) AND (C > (H+L)/2) AND (O > C),1,0);
Cond1 = Cross(StochK(8,3), StochD(8,3,3)) AND StochK(8,3) <30;
Cond2 = RSI(3) < 30;
Cond3 = Close > MA(Close,150);
Buy = Cond1 AND Cond2 AND Cond3 AND (Doji OR HAMMER);
Sell = BuyPrice*1.05;
Filter = Buy;
AddColumn(Buy, "Buy", 1.2);
AddColumn(Close, "CMP", 1.2);
AddColumn(BuyPrice*0.97, "SL set at 3%", 1.2);
AddColumn(IIf(Buy,100*((Ref(Close,5)-Close)/Close),100*(Close-Ref(Close,5))/Close),"Profit% on Day 5",1.2,3,width = -2);
AddColumn(IIf(Buy,100*((Ref(Close,10)-Close)/Close),100*(Close-Ref(Close,10))/Close),"Profit% on Day 10",1.2,3,width = -2);
// Have included performance tracker in percentage terms (%) after period of 5 and 10 days
// Stop loss is set at 3%. Please suit your own risk levels
//Stochastic setting are at 8,3,3 You can modify it to 6,3,3 as per original settings. However it does not make much of a difference. Since you have the AFL
now, I'd advise you to follow it first without putting in the money. Keep a note of all the dummy trades and see what exit policy suites you better ... Backtest
the afl and see what sort of gains it gives ... It is YOU who has to be comfortable with the system ...
Personally, I never take a loss of more than 5% on any stock ... and I do wait for end of day closing prices ... Stock may be down 7% on intraday but for me
closing price matters.
Today nucleus was down 6 % but when it closed, it was not down so much ... hence i held on to the trade ...
__________________
Watcher, we all work with probabilities .. sometimes we r right ... sometimes we r wrong
.................Originally Posted by watcher
Slowly but steadily I am maturing to the fact that TA gives you more chances of winning, keeping your losses in check. Like all other methods it is not 100%
foolproof, but it is always better to go with structured probability rather than our whims.
Oh certainly .. Knowledge gives you an edge in everything ... I'll soon be starting a fundamental analysis thread where I'll teach how to analyse firms
fundamentally from scratch ... I aim to give out atleast 100 strategies here for TA ... Once am done with it ... I'll switch to fundamentals ... Do not fear
developing your own technical system ... Failure comes first ... and then comes success ...
---------------------------------------------------------------------------------------------------------------------------------------------------------------------
I know one thing which leads to a wipe out ...

Too much of leverage coupled with lack of knowledge of the risk involved in doing so with absolutely no stop loss (risk management rules).
...................................
exited sail at 232 since it trigerred stop loss...
tatamotors is doing good......
just a learning experenice for me.....since real money was involved, there was more concentration of everything about the scripts....price, volume,
indicators...etc.
I was not able to get the same concentration on paper trading.....
hope would stick to some strategy with less risk and less profit....
If you identify a strategy that works, give at least 50 trades (small quantities) to see whether it works or not in real time ...
--------------------------------------------------------------------------------------------------------------------------------------------------------------------............Have taken short positions (5230) in the NIFTY with a stop loss of 5260 .... This is an extreme high risk trade ... will post the details later as to why I
have gone short for the shorter time horizon ... ..............Ok, now's the time as to why I was short on the market ...
have gone short for the shorter time horizon ... ..............Ok, now's the time as to why I was short on the market ...
1. Asian market's have been weak from the past 3-4 trading sessions and Indian market's have been in the range of 5200 - 5260.
2. Majority of Asian market's have not made new highs and have been falling on momentum. India in this case has made a high on low momentum.
3. US market's have had earnings been reported with majority of earnings still showing signs of concerns.
4. China over the past week has started controlling the credit outburst and their markets are rightly correcting gradually.
5. Technically, we are looking a little weak for the short term and hence a correction at this stage would be very healthy.
I had posted one article on Jan 6th ... Its a pure technical view about short term correction ... Do refer it .
................................................. had shorted the Nifty at 5230 as previously mentioned and I squared off 70% of my short positions today. At present, I
want to tell you how I am trading the nifty. Refer to the figure below. The nifty had violated Trendline 1 (marked in white) and hence shorting was a good
opportunity. Now, after two days of volatility, the Nifty has taken support at Trendline 2 marked in Red. Till this support prevails, I will look to be long in the
market with fewer short positions for restricting loss. Support at trendline 2 was formed with hammer-like formation and support has a good chance to hold.
EMA Cross Over Weekly Trades

Tools Candlestick/Bar Chart (Daily), 150 EMA, 70 EMA and 20 EMA
Trade Setup This is a trend trading system which gives enormous returns while trending markets and many whipsaws in non trending markets. Keeping our
economy in view, this is going to be a profitable system in coming years as we are in an age of trending markets (either up or down). In this system we make
use of 3 EMA; 150 EMA (Long term average), 70 EMA (Medium term Average) and 20 EMA (Short term Average).
Buy Setup A typical buy setup occurs when the Short term average (20 EMA) crosses over the 70 EMA with the 70 EMA being above the 150 EMA. Same
principle (but reverse) goes out for short trades.
Sell Setup Exit the trade once the short term average (20 EMA) crosses the medium term average (70 EMA) form above.
Important Notes To use this system effectively, exit the positions once you get returns in the range of 50-70%. Start offloading the positions once 50%
return is on the cards.
----------------------------------------------------------------------------------------------------------------------------------------------------------------
Accumulation
05 July 2015
12:44 PM
Accumulation is always on the cards watcher. However one has to weigh in the current scenario. Markets are not going anywhere . Investment opportunities will
always arise and the one with patience will be rewarded.
At present the markets are a bit heated. It might run up to new highs and hence missing out on the rally also seems unwise. W hat I have done at present is
committed only 15 % of my cash. I was in the market sub 2800 levels and now I am waiting for a reasonable dip before starting to commit more funds.
IIP numbers for the country have exceeded everyone's expectations by atleast 1.5%. Inflation rates are rising and the credit demand is picking up. Credit growth
usually lags behind the industrial growth by about two quarters. Hence by keeping this view in mind, the RBI is almost likely to increase the repo rate and
reverse repo rate.
I am waiting for the rate impact and the budget impacts on the market. During this duration, we will get a good entry price a nd I would then increase the
position.
..............With reference to EMA setup for weekly trade, is it EMAs crossing each other or price crossing EMAs ? I checked with 20, 70 & 150 EMA for most stocks
for last one year period. There is hardly any crossover of EMAs in most of them for last one year whereas this set up is supp osed to be for weekly trade. In other
words if EMSs donot cross, trade will not be initiated in the first place.
Alok, the 20 EMA crosses the 70 EMA. I have put this in the weekly setup because I have not created a monthly category on the 1st page. This is a monthly trade
if you actually test it. Returns are good when held on for months. Such setup happens once a year (if it is successful, its r eturns are good).
Almost all the trending stocks this year have given this setup between Apr and May ...
..............Actually, I was never vouching for the markets to crash. I was expecting a fall before 5300 is breached. See, c orrections like these which happened in
last two days are healthy for the market.
I totally agree with you on the points you had mentioned earlier. Hence, untill something major happens, our markets will con tinue to do well. My only concern is
that the price structure of Shanghai, Hangseng and now Taiwan is not looking good. Whether this scenario spills to our market s or not,
--------------------
I had shorted the Nifty at 5230 as previously mentioned and I squared off 70% of my short positions today. At present, I want to tell you how I am trading the
nifty. Refer to the figure below. The nifty had violated Trendline 1 (marked in white) and hence shorting was a good opportun ity. Now, after two days of volatility,
the Nifty has taken support at Trendline 2 marked in Red. Till this support prevails, I will look to be long in the market wi th fewer short positions for restricting
loss. Support at trendline 2 was formed with hammer-like formation and support has a good chance to hold.
Now, the markets have broken the trend line 2 mentioned in the chart above. This leads us now in the 'wait and watch' period for the markets. The markets from
here can either fall or can stagnate. Bounce from these levels is almost likely. However, I will be very circumspect regardin g the rallies in the market. I am still
accumulating shares in very small quantities for my long term portfolio. However, I am completely out of the market's as far as trading is concerned.
An ideal market participant has to switch roles in the market. Currently, the 'investor' role is likely to be more profitable as the market's may witness great deal
of volatility which may lead to losses for traders.
Here's the updated view of the market. If the Market's don't claw back and hold on to 4900+ levels, then it can tank down to 4650-4700 levels. .
There are few things I wanted to say,
1. We are not in a bear market. That's why I don't think any rally here is a bear market rally. Nifty is going to make a new high this year and I strongly believe in
this. The market would change it's stance from Bull to Bear when 4500 and more importantly (3900) get's taken out decisively.
2. TA assumes that the trend will continue in motion till signs emerge to suggest otherwise. As of now, there is nothing that suggests this. It is human tendency
to get shaken up by such corrections and volatility. How much has been the rise since April and how much has been the correct ion recently ?? As traders and
investors we should not draw conclusions so early.
3. What Dow is doing currently is completely different. They have a structure economic problem which is far from getting over . The recent changes in US policies
do indicate that. Hence, before linking Dow with Nifty, we need to consider the economic structure of the countries in perspe ctive. The transition of growth and
benchmarking has to take place from the US to the Asian countries. Hence, the impact might be there initially, but It wont be a permanent one.
4. The RBI quarterly review released yesterday indicates that in our economic system, things are progressing well and though monitoring is still been done, there
are no apparent signs of any weakness.
5. Technically Nifty has formed a high wave candle (indecision of movement) on Thursday and a strong hammer on Friday. Hence, clinging on to these levels is
not such a bad idea. Volatility will be there and hence trader's should stay out. But, for long term portfolio, it is not a b ad idea to accumulate stocks. If the
market signals a bear move ahead, then we can liquidate always. But anticipating what the market is going to do is always fat al.
The earlier short signal at 5300 was given by my positional system .
----------------------------------------------------------------------------------------------------------------
For Investment Purpose Only

05 July 2015
12:45 PM
Stocks selected here are not based on any system mentioned in the thread. This is based on my own personal system which I use for my trades.
Unfortunately, it is not an AFL but a customized application.
. Please select stocks out of these lists suiting your own investment criteria. These are pure technical play outs and I don' t know whether they are
fundamentally strong or not. [31 jan'2010
......RSI Divergence Strategy Using Daily Charts
Tools Candlestick/Bar Chart, RSI(15)
Trade Setup On Daily chart frame, this strategy is going to give out extremely good results if you continue to stick with it. The setup i s fairly easy, but you
do need to monitor selective group of stocks to get a feel of their levels. Hence, this strategy does require some subjective analysis.
Time Validity - I trade this pattern only on daily charts. I use this particular time frame because divergence is more easily visible here. O nce the trade is
initiated, I carry forward the trades for 2-7 days.
When does it occur and How to Trade it- This pattern occurs when a stock or an index runs up quite a bit and retraces back to some level. From there on,
the stock/index ralies again and makes a significant new high. It is during this high that we need to look at the RSI level. If the RSI level is significantly low
than the previous high's level, then initiate short position with High of the rally as a stop loss. I have particularly used this strategy to short the Nifty recently
at 5300 level which I had disclosed on this thread.
Examples - I have provided example of Nifty. Refer to the chart below to understand the setup properly.
, though I have provided some setups on Intraday, I personally don't use intraday that often in stock market's. In forex thou gh, I am mostly a day trader
and hence I avoid carrying positions forward.
I'll advise you to pick one intra day setup and master it. While doing so you'll automatically realise the screening procedur e. Screening procedure is not
entirely mechanical.
....................................
Though these are tough times, I still believe we are in a long term bull market. However, I will change my mind once 4540 and more importantly 3900 get's
taken off. My long term system has indicated closing off long positions on Nifty but has not indicated short positions.
It may seem surprising but I am still accumulating stocks in small quantities for my long term portfolio. Rather than believi ng news going around, I am
trusting the level's reflected in charts. So, I am comfortable till 4540 and 3900 holds.
At present, I don't think we need a system to tell us what's gonna happen in near future. Thing's are getting ugly on global front (just look at currencies,
commodities and stock market's) and I think same is going to happen to us. At this stage I can't take a call on very short te rm movements
----------------------------------------------------------------------------------------------------------------------------- As a human being, we are tuned for this...i.e.to see the people around us with similar thoughts like ours. Unfortunately, tha t is damaging trait in trading.
If you have already setup your max pain limit of loss then take action when that limit is hit. You might be able to take loss of 5Lac that doesn't mean u
should wait till it reaches that level. After big loss, recovery would be difficult.
If you are not able to take the pain, then my suggestion will be to atleast cut your position partially, rather then fully. T ry to see historical pattern in chart,
and observe
- how much steep a fall could be
- what happens after that
- how much worse can it get in short term etc.
- what signals appear that indicate bounce is fizzling out and downtrend is again building up.
Based on that draw down ,prepare OWN strategy to play in the market.
In my observations, all global markets have fallen 5 to 10% in last 5 -6 days with no real bounce. Selling after selloff is typical trait of novice /immatuare
traders. Even if market has to goto 4k level, it will not happen in one wave.. there will be bounces in between.
After such steep fall, bounce is inevitable but can't predict whether this will happen tomorrow or in next 4 days. Hence DON' t be contrarian and build long
position until u see some signs of bears disappearing. Bulls will keep showing up but they get beaten down again.
There could be bounce which might help you in cutting your loss. If your system told you when to enter, you must trust it for when to exit. By taking my
views or any other user's view, you are cluttering your mind with too many things.
Things are going to get tough today. We have to see where we go from here. For your future reference I'd suggest you to pract ice the probe test buying
technique.
As far as your current positions are concerned, you might well be selling off in a typical "Sell off" situation. You might ge t a bounce back.
If your stop's have been triggered, it's always better to exit. Else, I will stand by the system (assuming that your system i s back tested with good results).
----------------------------------------------------------------------------------------------------------------------------- ----
Trading is not a Game.Its a Business

05 July 2015
12:46 PM
trading is not a game... its a business...

Before entering any business You should have good knowledge about it and how to manage it.
Because in trading lots of risk involved...
Stocks for Investments Only. Keep away from low volume stocks.
________________________________________
Dual Time Frame Momentum Strategy
Tools Candlestick/Bar Chart, Stochastic (8,3,3) Daily and Stochastic (8,3,3) Weekly
Trade Setup This setup was made popular by Robert Miner. The basis of this setup is to use momentum of 2 time frames to get into trades. Though Robert
Miner also showed how to use E-wave and fibonacci with this setup, we will essentially stick only with the basic dual direction momentum setup.
Trading the Setup - Switch to the daily chart mode to use this setup. Below the main price window, you must have Stochastic (8,3,3) daily time frame and
Stochastic (8,3,3) weekly time frame. It is absolutely essential to have both the stochastic windows (one for daily time frame and other for weekly time frame)
on the same time. We enter the trade when the Weekly stochastic has crossed over in the oversold range (usually should have crossed around the 20-30
range) and is pointing up. We then pay attention to the daily stochastic and then buy when the daily stochastic crosses on the same mentioned range. When
the daily crossover happens, the weekly stochastic should not be in the overbought range. Best signals in this setup occur when both the weekly stochastic and
daily stochastic cross together. One such example, in the case of DLF has been explained below.
Target - Continue to hold the stock till the daily stochastic indicator does not signal a typical sell signal (that is, bearish crossover).
Stoploss - Stop loss in this strategy is fairly simple. Either this strategy works or it fails. Thus whenever the signal comes, do not take loss of more than 3% on
the trade or keep stop loss of previous swing low. This strategy has a success rate of about 60%.
Note - This is not an investment strategy. Hence, do not continue holding the stock. This is pure momentum play. Buy it and exit once you get good gains and
when the sell signal emerges. For better understanding I have cherry picked this example. Like all the strategies, even this is fallible.
Time Frames - You have to pick out proper pairs to execute this strategy. Here I have used Daily - Weekly pairs as I don't believe too much in shorter time
frame trades. You can experiment by using 30 Min - 5 Hour pair or 5 Min - 30 Min pair. But bear in mind that there will be a lot many false signals as you
continue to shorten the time frame.
the main point in this setups is that when both daily and weekly stochastic hook out of the oversold zone...above 20 at the same time...only then we should
enter the trade
..Simultaneous crosses and moving out of zones give the best signal ...
Otherwise even if weekly has moved out earlier (but not overbought) and daily gives you a buy currently ... even then u can enter.
My target is to read at least one book about trading every month and this month it is a book about selling strategy's on options on futures from John Summa.
.................................
FOR Watcher : that's going to be very difficult to do. See, its a complete portfolio and I cant specify which one's are the strong one and which are the weaker
one's. All stocks are buy's based on various parameters. Minimum holding period is 1 year. So, it may be that they are not performing now, but they might
begin to perform in coming days.
Watcher, am not an avid supporter of support and resistance hence I wont give you any level. But, I am looking for 4540 as a critical point. Not because it is
some major support level but due to its relevance in determining the structure of the market. I will begin to worry when this level is taken out. Hence, till this
happens, I will continue to hold on to my positions. It is better not to anticipate in this scenario. I invest equally in every stock that gives a buy. That way,
investment gets diversified and investments remain small and well divided.
As of today, most of the stocks are giving better entry points. I will continue buying till the market does not show me structural changes. No matter who the
chartist is, till the market shows me the change, I will never react.
......What I appreciate most in you is not the conviction but the clarity of thought. Because the former is the effect and the latter the cause.
Using ADX for Profit

05 July 2015
12:46 PM
Using ADX to Profit

Tools Candlestick on Hourly Time Frame , ADX (14) and MA 20 period
Trade Setup A 14-period ADX must initially be greater than 30 and rising. This is mainly done to identify strongly trending market. Once the initial job of
identifying a strongly trending market is undertaken, then look for a retracement in price to the 20-period moving average. When the price touches the 20period moving average, buy above the high of the previous bar and ride the trend. The buy signal should come within the next two trading sessions. If this does
not happen, then the pattern is void.
Example - Below is an example of Auropharma which has been one of the trending stocks in the current run (look at the 14 period ADX below). I have
highlighted three areas where the price has touched the 20 period average and formed the pattern mentioned above. Everytime the prices touched the MA 20
period average, the next bar high has given the entry signal. Profits usually should be taken once the price moves 5-10% away from the moving average. This
pattern is extremely effective but works only with strong trending stocks.
STOPLOSS - Stop loss is if the price closes below the 20 period average. Also previous swing low can be used.
Usage - Can be used on Daily time frame chart.
______________
15-Min Intraday Setup
Requirement Candlestick Charts/Bar Charts with MACD (standard setting) and MA (50), EMA (20) and EMA (10)
Brief Introduction I came across this setup while watching Greg Capra's seminar. I have modified this setup based on my trading experience.
I have added the MACD indicator for filtering out bad trades. The setup is simple to understand and implement. This setup is extremely effective to day trade
and can get about 30-50 points on the Nifty. Please use this strategy on Nifty as I have researched this setup on it.
Trade Setup - Pick a stock which has run up quite a bit and is due for a correction. A typical setup occurs when the 50 MA slopes down (with angle between
20-30) and prices fall sharply. Eventually prices retrace back to 20 EMA or 10 EMA which also happens to be the 38 -50% retracement from the swing high.
Enter a short position at this point and book profits according to your own appetite.
Example - In an example shown below, Nifty has run up quite a bit and has formed a new high. Prices start to drop off from this level. Over the period of two
days, the slope of 50 SMA starts to curve down and the setup is formed. Prices fall off on 14th sharply and then retrace back to 20 EMA on the 15th. This level
is also between 38.2 and 50% retracement level from swing high. MACD slope is negative and is about to turn below zero. Ideal setup for a short trade.
StopLoss - Stoploss if it breaches the 20 EMA and reaches the 50 SMA. Ideally, one can stop if the trade breaches 20 EMA.
Usage - This pattern can be used on 15Min charts for day trades.
-------------------------------------------------------------------------------Markets have potentially entered an 'iffy' period. I don't know how long this would last. But as of now I am not adding long positions. I would particularly wait
now for the previous high to be taken out (5330). This would be a good point to go long. As of now though, I am sitting with tight trailing stop loss waiting for
the market's to show me what to do.
Markets globally have rallied for quite sometime now. In particular if we speak of India, investors have got a healthy return of over 70% on the index alone.
There has been no notable period of correction in this one year period. Probably equity markets were having their best time last year as a result of low interest
rates, low P/E multiple and the positive growth story of India. However, at this juncture, things dont look that positive. World market problems are beginning to
creep up, commodity and oil prices are rising, dollar is continuously falling and the inflation rates are heading north. Typically these scenarios are never good
for stock markets and I feel now it is time to book profits and have cash in hand (atleast 75%).
The current price rise and the currency appreciating is a sign of problems to come in the stock markets. The RBI which will meet this month for monetary policy
review is already hinting at hiking interest rates. The IIP numbers have been good in the past and on Monday if the numbers turn out to be more positive, then
it would almost ensure a rate hike in coming few days. Moreover, if one observes the market action closely, Capital good sector and Basic material sector is
beginning to do well. These sectors usually do well in middle expansion phase of economy where rate hikes are part of the economic scenario. On 13th April
2010, Infosys is going to declare its results and guidance. It is perhaps going to set the tone for the markets. Even if the markets continue to rise, I would
personally be very skeptical regarding the rally. Upside may indeed exist, but the risk to reward ratio does not favor a trade currently.
_______, what is the cut off point will you place to exit all longs, for example your long time investment portfolio. Will you advice to exit in the event of market
correcting? or will you advice to hold all longs irrespective of the fact correction setting in?
Sai, last week I squared off 40% of my portfolio. In the coming week, on Monday, I am going to offload another 40% or so. See, I am not positive on the
market, because technically and fundamentally it is not the right time to be investing. I'm willing to miss out on another 1000+ rally but I am not willing to go
against what I am thinking. In the mean time I will be undertaking swing trades so that even if market's correct, I am not hurt badly. On an average I have had
a very good return on my portfolio and I don't intend to be too greedy for another 10-15% or so. Once I am comfortable with the market's, I'll return back to
commit funds.
But for me, as of now, swing trading seems to be the flavor of the month.[11april 2010]
Thrust Swing Trading

05 July 2015
02:14 PM
Yes thrust Swing trading essentially means staying in stocks which show good momentum (upwards or downwards). Swing trades may or may not be based on
news. I personally dont care about the news. I have a system/methodology for swing trades and i follow that.
If Nifty closes around these levels or it closes below current levels (5350) but not higher than 5380, then we could be potentially forming a tweezer top or
harami pattern on the candlestick chart. The fact that this will form around good resistance level will make it more meaningful. Let's see how Nifty spans out.
[12 th april2010
Tools Candlestick/Bar Chart
Trade Setup This pattern was popularized by Larry Connors and Linda Bradford. Now everyone knows the original turtle trading system where shorts were
initiated when new 20 day lows were made and longs were initiated when new 20 day high was made. The problem with turtle trading system was that it had
many false signals. This pattern tends to capitalize on these false moves.
Buy Setup - The typical buy conditions are as follows. The market makes a new 20 day low with the previous 20 day low being atleast 3 sessions ago. The
current close should be near or below the previous 20 day low. Following this, the next day market rebounds and trades above the previous low (ideally should
close above the previous low). Enter the stock by placing a stop at the previous low. This offers an excellent risk to reward ratio.
Time Validity - This pattern has to be looked for on daily charts. But the trading time frame should be of 3-5 days. Book profit after 3-5 days.
How to trade it - As most of my previous examples, I have again picked a stock which has recently formed this pattern. I recommended Balrampur Chini as a
buy in my swing trading thread. And this was precisely why. Look at the chart below. Balrampur forms a 20 day low (Rs 90.3) on 25/03/2010. After this the
stock rallies a bit and then again makes a new 20 day low on 1st april 2010 (Rs 87.7). Now, on the next session the stock closes at 90.8 which is above the
previous low of Rs 90.3. We enter here placing a stop at 87.7 and trade on the long side. Currently the stock is trading at Rs 99 which is about 10% gain in 6
trading sessions.
Target - Target is specified in time. Book profits in 5-6 trading sessions.
STOPLOSS - Previous Low made.
The Turtle system was essentially built (conceptualized) on the Donchian channel system. So when this fails, turtle soup plus one and turtle soup comes into
the foray.
Here's an AFL to plot horizontal lines at 10 day high and 10 day low. By right clicking on the parameters window and adjusting the value, one can plot lines for
any duration. This will visually help to scan the Turtle Soup plus one strategy mentioned.
_SECTION_BEGIN("N_Day_HiLo");
// Set chart display parameters
// Chart background is Black,
// Date Axis displayed,
// Long titles wrapped to next line
SetChartOptions(0, chartShowDates | chartWrapTitle);
SetChartBkColor(colorBlack);
// Locate Highest HIGH and Lowest LOW in last N days
N = Param("Days to go back(Excl today)", 10, 2, 200, 1);
PriceStyle = ParamStyle("Chart Type", styleCandle, maskPrice);
LineStyle = ParamStyle("Line Style");
NDayHi = H[BarCount - 1 - N];
NDayLo = L[BarCount - 1 - N];
XH = XL = BarCount - 1 - N;
for(i = BarCount - 1 - N; i < BarCount - 1; i++)
{
if(H[i] > NDayHi)
{
NDayHi = H[i];
XH = i;
}
if(L[i] < NDayLo)
{
NDayLo = L[i];
XL = i;
}
}
// Define the Lines to be drawn
HLine = LineArray(BarCount - 1 - N, NDayHi, BarCount - 2, NDayHi);
LLine = LineArray(BarCount - 1 - N, NDayLo, BarCount - 2, NDayLo);
// Plot chart
_N(Title = StrFormat("{{NAME}} ({{INTERVAL}}) {{DATE}} {{OHLCX}} Vol=%1.0f\n{{VALUES}}", V));
Plot(C, "", colorGrey50, PriceStyle);
Plot(Hline, WriteVal(N, 1.0) + " Day Hi", colorBrightGreen, LineStyle);
Plot(LLine, WriteVal(N, 1.0) + " Day Lo", colorYellow, LineStyle);
_SECTION_END();
__________________
In my view, Results tell the history..i.e what happened in last 3 months / 1 year.
whereas, stock market discounts the future earning in price. So even if results are good,
current price of reliance already takes it into account.
Do you think those highly paid analysts /fund managers have not done their analysis ?
My common observation is, if results are good, price jumps for short time, or few days due to purchase by novice who think they are smart and making sound
fundamental investment decision, and very soon, professionals come in to dump their stock and price drops or corrects.
And, CEO's are another breed of human being.. in bullish market, they are more optimistic about their projection.. and when market is bearish, they dump all
the bad news.
One thing that my expensive education taught me was that "The best sellers in the world are not the one's who win a Pulitzer or a Booker's prize. But they are
the one's who sit at Wall Street"
I agree, what is the cut off point will you place to exit all longs, for example your long time investment portfolio. Will you advice to exit in the event of market
correcting? or will you advice to hold all longs irrespective of the fact correction setting in?
As of friday, I am completely in Cash now. Have descent amount of short positions though. Don't mind missing the upmoves from here (if they happen)
It may seem surprising but I am still accumulating stocks in small quantities for my long term portfolio. Rather than believing news going around, I am
trusting the level's reflected in charts. So, I am comfortable till 4540 and 3900 holds.
At present, I don't think we need a system to tell us what's gonna happen in near future. Thing's are getting ugly on global front (just look at currencies,
commodities and stock market's) and I think same is going to happen to us. At this stage I can't take a call on very short term movements.
..........................................
In my observations, all global markets have fallen 5 to 10% in last 5-6 days with no real bounce. Selling after selloff is typical trait of novice /immatuare
traders. Even if market has to goto 4k level, it will not happen in one wave.. there will be bounces in between.
After such steep fall, bounce is inevitable but can't predict whether this will happen tomorrow or in next 4 days. Hence DON't be contrarian and build long
position until u see some signs of bears disappearing. Bulls will keep showing up but they get beaten down again.
There could be bounce which might help you in cutting your loss. If my post make u think then do keep in mind that there are same 50% chance that the pain
might get worse before it can get better. Nimish I agree with what AW10 has said. If your system told you when to enter, you must trust it for when to exit.
By taking my views or any other user's view, you are cluttering your mind with too many things.
Things are going to get tough today. We have to see where we go from here. For your future reference I'd suggest you to practice the probe test buying
technique.
Trading Positive Divergence on Daily Time Frame

05 July 2015
02:15 PM
Tools Candlestick/Bar Chart, Stochastic Oscillator with standard settings (15,3). Overbought/Oversold conditions used as 80/20
Trade Setup The basics of this setup is very easy to understand. If possible, monitors stocks which move in any kind of market. Typically these are high beta
stocks. However, most of the stocks traded in Futures segment should do fine. What we are looking for is a stock making a new high whereas the stochastic highs
forming a lower high. That means, stock makes a higher high and Indicator makes a Lower High. This is highlighted in red lines on price and Indicator. Now once
the stock makes a new high, we need to see the indicator levels. If this indicator level forms a divergence and goes back into the neutral zone (that is below 80)
then we short the stock, keeping the high as our stop loss. I usually target a 5-8% move. Remember, the divergences should occur over period of 1-2 Months.
Time Validity - I trade this pattern only on daily charts. However, it can work on any time frame. Please remember to adjust your targets accordingly. On daily
time frame I use targets of 5-8%. On an hourly frame, this comes down to about 2-4%.
How to trade it - Refer to the chart below. Gujrat Ambuja made a high on 3/29/2010. It then rallied in April and made a new high on 29th April 2010. There was a
distinct divergence visible on the charts. We now wait for our indicator to go into the neutral zone (that is, below 80). This happens on 30th April 2010. We get
filled at 121.05 and keep a stop loss of 125.8. Over the next 10 sessions Gujrat Ambuja attains the target of 5-8%. The stock goes down much lower, but we
maintain out targets and exit the trade.
Adding Positions - Divergence setups usually have very good risk to reward ratio. When trading these patterns with indicators, there is always a risk for the
indicators to reverse and the price to move up. Hence, we need to take use of signals which are perfect. To do this, what we do is add one more lot once the
stochastic indicator goes below 50. Usually indicator reversals for perfect signals rarely take place below 50. Hence we add position here. This is depicted by Blue
horizontal lines.
Target - 5- 8%
STOPLOSS - Recent high of prices
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Usually how u trade breakouts? I read that we should trade the pullbacks of breakout and not breakout.Take LT, it gave breakout on 17/05/10. I didnot enter as
such a huge volume and it went up from 1474 to 1606 in a day.But two days past its still going up only. Now waiting for pullback,but missed a gud move.
So in general how we should trade breakouts?
Trading breakouts on pullback is "Ideally" the right way to do it. However, let me tell you something. Most of the breakouts which do run up quite a bit are the
one's which never give a pullback. Hence you need to see how and when the break out occurs. If the stock has been negative (not so bullish) for quite sometime
and then you suddenly see it breaking out of a range, then this kind of breakout will run up fast.
E.g: LT was trading weak. It suddenly broke out and is now heading high. Broke out after news hit the market.
E.g: RNRL was doing the same. But the news even was yet to be delivered. Hence you need to be careful.
Hope you get my point.
..........................................
Let me give u a small story
Once a person was learning astrology ok
after some time he tell that I know now everything about astrology
person ask him what is in his feast (hand)
He started calculation and in that it comes that there is something living thing with more then 4 legs
he tell at once wow see my calculation its OCTOPUS
he never think that it can b cockroch or ant just like that people saw only chart never see what is happening it gave 15% more then street expectations
I know few person who shorted on that day too and leter cried ohhhh my sl hit
TA is just to help think of a trade after keeping in mind everything
__________________
"Coin Always Makes Sound But The Currency Notes Are Always Silent So When Your Value Increases Keep Yourself Calm Silent"
----------------------------------------------------------------------------------------------------------------------------- --......Either keep a fixed target (range of 30 - 50) points or use trailing profit protection of price crossing and closing above the 10 EMA or 20 EMA in volatile
conditions. Hope this helps.
However I have two points to make.
Firstly, you are using Robert Miner's Dual time frame strategy. Now you haven't taken into consideration ABC correction phase and time retracements. In my
opinion you are missing out on very important factors. You have to consider ABC correction wave and time retracement. It's like driving a car without steering and
brakes. ABC correction phase (is steering; tells you whether market is in correction or trend) and time retracement (is brake; it tells you when to stop). Hence, I
will encourage you to use these two important points in your trade. It's better to master a setup rather than mastering a part of it.
Secondly, since you are relying on fibonacci retracement, I would advise you to use trend lines with it. Using trendlines, fibonacci and candlesticks together give
some of the most amazing trades. Once you master this setup, you will start buying much lower and will make larger gains. If I were you, I would have entered
the trade once the prices would have retraced back to zone 'A' (15 minute chart keeping stop loss of 722).
----------------------------------------------------------------------------------------------------------------------------- ----------
Swing and Positional Trading

05 July 2015
02:16 PM
Swing and Positional trades are two different things. Hope you get my point.
............................
If you have a positional trade then stick with your stop loss. Weekly momentum is still not positive. Whether it will get pos itive going forward, only time will
tell. Whatever your reasoning was, just stick to your plans. It does not matter what I or other users say. Ultimately, market 's will decide where it wants to
go.
M&M is in a very strong trend. Avoid shorting it. Also, the stochastic which you mention is in overbought zone now. It can re main there for a while and the
stock can continue to remain up. Short weak stocks and Buy strong stocks. Avoid doing the opposite. Look for divergence in we ak stocks.
--------------------------------------------------------------------------------------------------------my 2 cents on this topic.. (specailly from the way i practice it)
- Price is the main source.. and indicators are only derivative of price. So start with price chart.
- I pay attention to price pivots (or swing points - these are points where price has changed the direction) on the chart.. So any analysis is based on price
pivots first..
- to identify divergence, take any two price pivots, and take the oscillator values at that time, compare them and interpret th em.
- If they are diverging, then u get a nice setup..Now go ahead and look at your precise entry rules to take a trade or wait for some more bars to develop
- And if you get Convergence.. it is another signal.. Not to anticipate reversal but confirmaion of trend continuation .. so tr ade that as well.
- while taking a trade on the basis of divergence, keep monitring that oscillator has not negated the prev reading.. (i.e. from oscillator making lower highs, it
has made new higher high).
- I don't call 0.1 or 0.5 differnece in RSI/Stoch as a divergence.. Hence define your own limits to call it divergence.. (say a tleast x% of difference). Similarly,
the price peaks have to few bars away.. not just the 3rd or 4th bar.
Example - say as per EOD chart we in good up trending and intra chart (say 5 min TF) makes a negative divergence and after that it refu ses to fall for
sometime, but it does enough to give negative feeling to many. Then we would get a flying move when price crosses above the h igh. This is because, all
would have gone short seeing the divergence! The way I look for entry with trigger above high. To judge whether we are in cor rect trade not, you will find
price would move 15-20 points minimum in next 5-10 min in favor.
...........................................
.................................................. .........
When u don't see divergence, then ther is potential that u might see convergence.
Look at the left side of the chart that u posted. In Nov, there was small pause in Stoch around 60 level, and then it broke -out from that on stoch. at the same
time price also made new high..
In Dec starting, again there was breakout in stoch as well as in price.
Only in Jan, we see some divergence coming in.
In Early March, prev div that we saw in Feb got negated, price made new high and so the stoch.. and mkt flew to new high afte r that.
Hope you can catch some pointers from this and build further on it .
----------------------------------------------------------------------------------------------------------------------------- -----------------------I wud like to share something from larry connors book... I have not experimented it yet and m still not sure on how this work s... just sharing with you all as I
happen to learn this strategy this weekend only...
1. Stock must be trading near or at 3 months low
2. Today;s volume must be double the 15 days average volume (more than double is better)
3. Either today, tomorrow or day after, stock must close above its open
4. When rule 3 is met within next 2 days, buy above the rule 3 day high
5. Initial stop loss should be placed lil below rule 3 day low.
...........................
I am no analyst nor a guy worth giving an opinion on the mkts but I feel that every transaction that happens in the mkt is a clash of opinion / ideology (the
buyer wants the stock price worth a buy and the seller feels the opposite).
We can all have differences of opinion and thats the charm of the mkts and also of life. But there are civilised ways of putt ing forward our differences. And
also when we put forward a differing opinion then we become party to a difference. Then let the Mkts in due course of time de cide who is correct instead of
trying to pull someone down.
I am of the opinion that there are 3 kinds of people in this mkt.
The first ones (in a pathetic minority in terms of numbers, but the ones who dictate the flow) draw the graphs,
the second ones analyse them and the thrid ones (read morons) keep pestering the second ones for their opinions.
Now I do not know of anyone (and trust me I have worked with many analysts/operators) who are mostly correct about the mkts.
----------------------------------------------------------------------------------------------------------------------------- ----------You can try and use some filters as ADX. Everything mentioned here is a start up. It is not a complete system. You can use a basic setup mentioned here and
create a system of your own with various filters and rules.
.........................................
Look at the big picture first. Now I am going to reply in point terms. Look at the chart while reading it.
1. Look where I have written point 1. I have marked it at a long white candle which was the swing high in mid June. Now, lets come back to the 13th July
candle. What has this candle actually done? It has surpassed the previous swing high made almost 20 days back. This entire th ing happened in one session.
This in itself is a very bullish sign. If ever you would have entertained thoughts of selling, it would only be below the pre vious swing high. That is, below 70.
2. Now see where I have written 2. I have circled it at a place where you sold because of black candle piercing. In my honest opinion, that is not a piercing
pattern. The black candle started above the 13th July candle, but did not penetrate enough to be verified as a piercing trade . Please remember, piercing
pattern is valid only when the black candle, starts above a previous bullish candle and penetrates deep into the white candle (closes atleast below the half of
white candle).
3. I haven't marked the point 3rd on the chart. THis is because this is more of a concept. Usually when you have a long white candle, the middle part of it
becomes strong support. Till the price does not penetrate the mid point of the long candle, do not entertain any thoughts to sell.
4. Make use of moving averages for trend determination. Not for trading decisions. Think about this. Does market care which m oving average you look at??
What you should actually do:
1. Always look at the intermediate swing high support

2. When using candlesticks, be sure to apply the concept properly. Everyone struggles, even I did, but once you understand wh at works and what does not,
things are going to be much easier.
3. Always and always look at bigger picture before deciding to buy or sell.
4. Most important, define what you want to do with the stock first. In my opinion, clutch auto should not be sold. It is a bu y on dip stock as of now.
----------------------------------------------------------------------------------------------------------------------------- ------------
Checklist
05 July 2015
02:18 PM
Checklist:
Day prior to set up day 1 has to have close greater than close of four trading session earlier: Y
Set up :9 consecutive close less than close 4 trading days ago: Y
Set up Qualifier: n Ninth day's low less than 6th day's low: Y
Countdown
13 close less than/equal to low 2 trading days earlier: Y
Countdown qualifiers:
Close of day 8 of buy countdown less than close of day 5 of buy count down: Y
Close of day 8 of buy countdown less than close of day 3 of buy count down: Y
Close of day 13 is less than/equal to close of day 8: Y
Confirmation of entry
Price flip appear on day after 13 or before stop loss is triggered Y
Cancellation
An intraday high which is higher than the highest close in setup/countdown: N
An intraday high which is higher than the highest high in setup/countdown: N
Close higher than highest close: N
Close higher than highest high: N
Close higher than highest true high: N
Contradictory set up appeared: N
.................................................. .
This time I m in need of guidance from the perspective of money management or trade management.
What do we do when trade is not going in favor of your analysis and neither it is hitting stop loss? Shall I get out of it with minor loss especially market is at
the stage wherein it can have explosive move either side? I have been holding FDC for last 20 days or so and it is not hitting stop loss and neither moving
upward. I m at loss of around 1 rs per share including brokerage shall I get out of it?
I am a short term trader and usually hold position for couple of weeks... however, I have enough capitalization to hold position further.
As far as I go, if a stock is not hitting your stop loss, then it is definitely going in your favor. So just hold on to the position and see. FDC is low on volatility;
both on day basis and Annual basis. Hence, it will give returns with respect to its volatility. Always consider the stocks volatility (historical) before deciding
upon your level of expectation. Recently the stock is trading with good volatility.
FDC should come down (consolidate) little more before it starts to move forward. Keep SL of 85-86. The double top that you see on the daily frame is as of
now a fake one. Let's see. I'll track this stock. Overall the stock is in a good bullish structure.
.................................
When the number of correction candles increase, it does not always signify bears gaining control. In this case, even though the number of bearish candles are
increasing, the stock is undergoing mere consolidation. The correct way to interpret this is that the "Cycle or the waiting period of the stock is increasing". This
means, anyone now wishing to buy this stock, should be prepared for a little bit more holding time than the situation was on the previous minor cycle. Hope
this helps.
I have been building up positions in Adani from 530 levels. Hence for swing perspective, I had a 40 point profit on average. I purely exited based on this. It
may well go up and had it been for Investment purpose I would have held on to the stock. But for Swing trades I always have some % profit booking zone and
Adani reached those zones. Moreover, I found Lupin on friday, and hence had built up huge futures positions in it. Was up by 4% today, so that kind of also
begins to enter my profit zone.
So if you want a one line answer, here it is. "I prefer to buy at weakness and sell at strength". This is applicable to swing trades only.
.......................................
Nice piece of work. Frankly, I did not see so many things are in favor of this stock. I am more the "Feel" kind of player. If I "Feel" it is good, I just go for it.
The stock is relatively weak and hence I am buying it. I'll sell it when it shows strength. Regarding stop losses, my rules are little different than what book
teaches. I don't kind of look at previous swing lows that often. I monitor the prices continuously and from that I get a feel of whether the prices are going to
slide or going to take support.
If you are talking from text book perspective, then I do feel the SL set by you is appropriate. On the whole Divergence part and ADX part mentioned by you
does bring some value.
................................
I don't know how you pick a stock for swing trades. But for me, fundamentals don't form a part of swing trades. However, if this is the way you do it and are
successful at it, then do not change your method.
As far as technicals are concerned, if markets remain healthy, ABAN should see levels of 925 and 948 for swing perspective. On very shorter time frame, the
stock can also undergo consolidation. Hence, be patient.
Basically Learning
05 July 2015
02:19 PM
U R BASICALLY LEARNING FROM RAUNAK AKA SWINGKING ,AS COPY PASTED IN MY LAST THREAD'- METHOD HE HAS CHOSEN -Q & A - AS WELL AS
EXPLANATION
.................................................. ..................................................
4. Most important, define what you want to do with the stock first. In my opinion, clutch auto should not be sold. It is a bu y on dip stock as of now.
Waiting to enter .... was on radar ... just at the blue TL. Solid support there .. it i just retracement ... check the volume (not in the attached charts .. imo it
should be on decreasing vols) and then the bounce should be super ...
.............................................
What is your holding period?
Which instrument have you invested in ? Equity or Futures
Anyway, if u have bought equity, keep holding it. Banking sector is doing very well. If you have bought futures, then you hav e to decide when to exit it. On
short term stock is positive.
...........................
In IDEA according to weekly charts, can this be called as a possible breakout from the descending triangle formation? We had high volumes too last
week(though, it was a red candle) when it broke out.
So, is this valid formation?
It looks like it is a valid formation. However, I would still wait before actually buying this for investment. Let it show so me strength.
Stock however is strong on momentum on lower time frames. Hence, looking good for swing trades.
.............................
My 2 paisa...
I agree... I wud wait for previous swing to be carried out if it is descending triangle.... Fundamental thought behind descen ding triangle is, bears r in power
and pushing price down with the maintained lower highs (swing points) and bulls are also having some strength to not let pric e go below certain level and
hence maintaining equal lows (swing points). When we got higher break out from descending triangle means, bears are getting t ired and bulls have hit final
stroke.. it cud be coupe de grace by bulls but what if bears are not actually tired.. They are just setting back and preparin g themselves for final stroke???!!! so
just to make sure who is getting control I wud wait for previous swing high to be carried out with momentum....
Had this been Ascending or symmetric triangle, I wud think of initiating trade on break out...
----------------------------------------------------------------------------------------------------------------------------- -How do we interprete these 3 candles made by NIITTECH? 1st long bulling white candle, 2nd not so long but good sized black ca ndle, 3rd again not so long but
good sized black candle...
As Per Steve Nison, many time we shud or we can combine 2 candles against first one to reach to particular pattern.... so on a similar note, can we say
NIITTECH making bearish engulfing or dark cloud cover???
Kindly give your opinion from your observation on indian market for this type of patterns.?
Look at the chart below. Your chart had too many lines, so read carefully what I have written on your chart.
Look where I have marked previous resistance. It is precisely at a place where bearish engulfing was formed and this now beco mes our primary support area
(Resistance turning into support).
Also look at the base of a long white candle. Usually mid level and low level of a long white candle becomes important suppor t. Hence we have two zones very
close to each other which form good support levels. Also if you look below the long white candle support zone, near levels of 183, NIIT reversed near mid of
june. Hence this intermediate swing top is also a support. So you have three support zones around 190, 186 and 183. If stock goes below these, its time to
exit.
These candles do not represent anything as of now. First candle is not a piercing pattern nor is it engulfing one. However, t hey do represent new resistance
zone at 200. Hence anyone holding this stock should only add further positions once the stock is above 200 levels.
Always always and always see where is your candle pattern emerging. Ask yourself, where is the previous support. In this case strong support zone is in
180-190 zone. Stock is in a good bullish wave structure. Even if support breaks, we need to review our view again.
----------------------------------------------------------------------------------------------------------------------------- ----
Risk : Reward
05 July 2015
02:20 PM
This might sound strange. But why wait for 1:2 or 1:3 risk reward trades. To me this concept does not make sense. I go for tr ades with 1:1 rewards. It just
depends on the setup and the probability of it running in my favor. This is contrary to what you might have read in some book s. But for me, the concept of risk
to reward is blown out of proportion.
Apurv, this is completely normal. I'll advise you to develop a mechanical system first and trade it till you develop the nece ssary skills to analyze charts with
higher probability using discretion based analysis. Hence be patient, read a book on how to develop systems and then go and b uild one.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Regarding RPOWER
What you are trying to do here is very effective. And amazingly this works with very good accuracy. However, ask yourself thi s: What does market tell you
when correction bars are increasing? Can you tell me what this means? If you can't find the answer, let me know.
...............................
Sir I think all depend on experience of traders and his pocket size
But I saw most of people when in loss stay in trade in hope and when in profit they are in a haste to book instead of trailin g and I am one of them too .
.........................
When the number of correction candles increase, it does not always signify bears gaining control. In this case, even though t he number of bearish candles are
increasing, the stock is undergoing mere consolidation. The correct way to interpret this is that the "Cycle or the waiting p eriod of the stock is increasing". This
means, anyone now wishing to buy this stock, should be prepared for a little bit more holding time than the situation was on the previous minor cycle. Hope
this helps.
...............................
Another way is to look at the chart in a Weekly TF too ....
Price has taken resistance at 178 where some amount of supply has come in BUT follow -up supply vols are not there .. that means either the super vols in the
push-up bar of breaking the resistance of 163 has liquidated somewhat .. and the stock may test 163 again once and then bounce bac k ....
But surely it is not in a downtrend as of now ....
Also the 163 levels were a horizontal trading range for many days and has been broken. Target for the same is 163+(163 -136)=190 odd levels ...
If you see previous recent high, it is 210 BUT the body of the candle is from 194 which matches with the horizontal breakout target.
Just a matter of time and patience imo .... and those are two of the few things required in abundance for a trader/investor t o get better of the market ...
----------------------------------------------------------------------------------------------------------------------------- --------------------I have been building up positions in Adani from 530 levels. Hence for swing perspective, I had a 40 point profit on average. I purely exited based on this. It
may well go up and had it been for Investment purpose I would have held on to the stock. But for Swing trades I always have s ome % profit booking zone and
Adani reached those zones. Moreover, I found Lupin on friday, and hence had built up huge futures positions in it. Was up by 4% today, so that kind of also
begins to enter my profit zone.
So if you want a one line answer, here it is. "I prefer to buy at weakness and sell at strength". This is applicable to swing trades only.
.............................
What are we keeping as stop loss for Glaxo? My analysis as mentioned below kindly correct me if I m going wrong...
1> It is hovering at 20 and 50 EMAs and seems to be making base here...
2> Strong divergence from the perspective of RSI (9)
3> Contraction on 8 DMI from higher negative index getting contracted towards positive index - my interpretation is bulls loosing dominance...
4> ADX (8) coming down towards no trend strength zone from bear strength..
5> Combined interpretation of ADX and DMI - seems bear trend strength getting reduced and bulls are trying to get control and displayed as contraction of
DMI...
In my opinion stop loss should be little lower than 2000. Kindly evaluate my analysis and correct me.?
Nice piece of work. Frankly, I did not see so many things are in favor of this stock. I am more the "Feel" kind of player. If I "Feel" it is good, I just go for it.
The stock is relatively weak and hence I am buying it. I'll sell it when it shows strength. Regarding stop losses, my rules a re little different than what book
teaches. I don't kind of look at previous swing lows that often. I monitor the prices continuously and from that I get a feel of whether the prices are going to
slide or going to take support.
If you are talking from text book perspective, then I do feel the SL set by you is appropriate. On the whole Divergence part and ADX part mentioned by you
does bring some value.
----------------------------------------------------------------------------------------------------------------------------- ------------------------As on 27th JUL, 2010 I see that in the cash segment both FII and DII has turned -ve (22 and 222.28 Cr) respectively. In spite of that the indices were up
today. For almost the last 30 days FII were +ve(most days) and DIIs consistently negative. From todays figures can we infer t hat the domestic retail segment
is taking on the strength of the financial institutions? Because we can all see that there is no correction worth its name co ming though everyone has been
predicting the same since a pretty long time.
In case you find my query to be not relevant kindly ignore it.
PS : Was thrilled at the timing of the lupin call, but could not muster the courage to get in at these levels. I am sure that is I follow the thread we will have a
plenty of such successful calls coming from you.
FII and DII data is a bit difficult to relate with overall market situation. It works well in market extreme. But usually it does not work well in between. Hence
what you can do is use the data as one of the indicators to tell you what exactly is happening. On standalone basis the accur acy of this indicator is no good
than other indicators available.
..........................
Now that the fundamentals for the company has improved, the main negativity out of the way, what is the target for the compan y, and does it qualify for a
bullish/ swing trade.
I have gone long on the stock, today, at 885 aug fut 2 lots, added 1 lot at 900. what do you recommend that I should do.?
I don't know how you pick a stock for swing trades. But for me, fundamentals don't form a part of swing trades. However, if t his is the way you do it and are
successful at it, then do not change your method.
As far as technicals are concerned, if markets remain healthy, ABAN should see levels of 925 and 948 for swing perspective. O n very shorter time frame, the
stock can also undergo consolidation. Hence, be patient.
.................................
Today and tomorrow are extremely crucial days for the Index. For shorter term, we would know whether we are going to go highe r or on the way down. The
bias as of now remains on the long side in shorter time frame. ..........29.07.10
.............
Noticed these days ...
LT was down before results were declared. After results ... bcoz they were not as per expectations .. more down .....
Mkt was down bcoz of expectations of tougher stance on credit policy etc. Since they were good .. markets rallied back ....
So maybe today they are down in expectation of bad gdp of the US and if its better than expected we move back up else we stay (no more downs) as it is
already factored in ...
Just thinking aloud .. not necessary though ...
Options OI is showing bottom at 5300 though that can change in an hours time .
...................
Following stocks should do well in short term.
Following stocks should do well in short term.

Sterling Tools
Shasun Chem
Precision Wires
Mangalore Chemical and Fertilizers
Lanco Infratech
Indian Oil Corp
HDFC Ltd
ETC Network
Dabur
Archies
Andhra Bank
The one highlighted in Bold have their respective futures in the derivative market. Rest are some mid/small cap companies whi ch are looking reasonably good.
Let's see how these work. ..............2.8.10
Statistical probability and practical application of probability are two completely different things. You need to understand this before you can understand what i
write in future.
----------------------------------------------------------------------------------------------------------------------------- ------------------------------------I understand this is your scalped call & you squared it off as soon as you get profit.
Just wanted to know what if you would have hold it with stop loss(say5400) for day & waited till day end. OR you was of opini on that there will not be much
upside for the day.
Just want to understand your logic while closing this trade.
Whenever I trade, I trade with multiple sub divided accounts. I have divided my assets into three categories. Medium term tra der/Investor, Swing trader and
Scalper. So when I scalp 33 points, I am essentially doing it through Scalping section of my assets. It is quite possible tha t on same asset I am long in
medium time frame.
Regarding waiting to square off. My scalping targets are 30 -40 points on Nifty and 60-80 points on Bnifty. Whenever I get it, I just get out. The sooner the
better.
........................
All I can say is that go through this thread. You will find plenty of things that work. In some places, I have actually poste d charts and have explained why they
are a good buy. Most of the things mentioned here cannot be back tested as there is a lot of "relative analysis" involved. I am not entirely in favor of too many
mechanical systems. Human mind cannot be replaced by some "Ghz processor". Although, you will require to train your mind to l ook for set -ups. With
practice, it will come. Be patient.
..........................
I can help you. But you have to do the hard work.
Don't expect some system/software to generate Buy/Sell for you everyday. Had it been so simple, then all the fund managers wo uld have done the same.
Face the reality rather than living in hopes.
If you want to learn, I can help. If you want some system, I can't.
Here's what you can do.
1. Change your attitude !!! Markets pay you to make decisions which are tough, but correct. Market's don't know who Karan Is. Hence, stop being afraid and
be prepared to work hard.
2. Read these two books. Master the trade by John Carter and Trading in the zone by Michael Douglas. In the first book you wi ll find many strategies that
really work. You will need to master any one of them. But you will have to MASTER it. Second book will get you to think posit ively and it will help you a lot
psychologically.
There's no System which can do the hard work which you have to do. I am sorry if this disappoints you. But this is the most I can help you with. I dont sell
systems neither do I give tips. I believe in analysis and that is the path I can show you. I'll definitely help you if you ha ve doubts when you read those books
or for the matter any book you find resourceful. But beyond that, I cant do much and that is an honest reply.
.........................................
In my opinion, trading system is something which suites and fits individual... something like straight fit jeans fits me bett er and boot cut does not... it could be
otherway round in your case...
I wud suggest from my limited knowledge and experience that build your own trading system or pick one and alter it according to your trading style.... i
believe in this... "Read, Read and read a lot... then experiment and then u will automatically know what is ur trading system .."
If you can find, try to read Thomas DeMark methodologies, ADXcellence by Dr. Charles B. Schaap and RSI by John Hayden... Most ly these will solve dillema of
your life...
..........................
PTC
LT
JSW steel
Reliance Capital
Union Bank
Unitech
Those highlighted in Bold are my favorites. Let's see how these do......2.8.10
,,,,,,,,,,,,,,,,,,,,,,
...............
That may be the case blackberry. Accumulation stage is not important. It is the mark up phase after the accumulation phase wh ich holds importance. We have
to see when that begins.
Mark up is the phase we should concentrate.
As it is said that practical experience is better than theories, I would like to share my experience on similar note...
I m holding Aloktext since long bought at 18.50 or so with the consideration of accumulation and then sharp shoot out... Thou gh it gave break out but again
went into consolidation... Undoubtedly I am sitting on lil more than 10% profit which is not bad at all if ur holding period is less than 3 months...
So what I am trying make point is sometimes, accumulation phase gets stretched and we may get frustrated... in today's world sometimes, accumulation
phase is suddenly changed to distribution.
..........................................
Begin to tighten your stop losses. Protect your trading profits in whatever positions you hold............this is key.
.................
Markup phase buying and Euphoria based buying are two different things. Identification of each is extremely important for pro fitability.
..................
Keep a SL of 5575 - 5600 in mind. I doubt we will reach 5600 levels. But then, I have been proven wrong so many times that it makes me feel reall y old at
times. This is where Risk management comes into the foray.
.......................
Regarding setups, its better if you concentrate on positional setups first. Swing trading is something you can learn later. I t is not easy to pick up swing trading.
Hence once you become proficient in positional trading, you can start specializing in swing trading. I'll certainly help you with anything. Keep posting your
charts and your trades and I'll take you through.
----------------------------------------------------------------------------------------------------------------------------- -------------------------------When we measure correlation with an underlying asset, the period of standard deviation of results has to be such that error i s minimized. This means that
although day to day correlation between assets may not hold any value (as highlighted by SM), but long term correlation alway s holds very important
information. This in fact is the correct way to analyze what is happening across the globe. Once we start reducing our time f rame (that is, shift to day to day
analysis) we are attracting more and more random noise in our decision making. Which for instance is any trader's worst night mare.
analysis) we are attracting more and more random noise in our decision making. Which for instance is any trader's worst night mare.
..........................
In the same line, I try to do my analysis of bigger picture of our market based on our chart. Market follow simple thing most of the time (except certain big
changes) and it always repeats itself someway or other. We do not really need to see Dow for this.
But I too do some inter market relationship analysis. Sometime trading decisions affect this as well. It is always a complex relation, look at how many question
we have to answer, before we can decide what we are going react in current day trading and on the next day (most of us are in terested in these two).
1. If EU has fallen 1% in bullish market, can it bounce and trigger short covering in out market while trading?
2. If EU is negative now, can it be up tomorrow and make a bullish trigger tomorrow. Is it making shorters nervous today?
3. Dow has corrected yesterday, can it go up today?
4. Most Asia have closed down today, can those be up tomorrow?
Its a bit complex I think. Better, we look at our chart and get clue most of the time. Though, some cases, global markets do change the path of our market.
...........................
! What I really want to talk about today is to contrast something "context" free versus viewing something contextually.
The market is a two way auction process Allocates bids and offers in an extremely fair and efficient manner(supply and demand ) Searches out and
reveals market-generated information. If you will begin to think of markets as an auction process you will begin to understand that if highe r prices
are attracting more bids the odds are, that the auction will continue higher.
If higher pirces are cutting off a number of bids, the auction is ending and risk of maintaining long positions has increased substantially.
Of course, just the opposite would be true: if offers were taking the market lower. The results of the auction are what we re fer to as market generated
information. The three components of the auction are time, price and volume.
- Price advertises all opportunities
- Time regulates all opportunities i./e., if it is a good deal, it shuold not be there very long
- And volume measures the success or failure of the advertised opportunities
What is important to realize is that the The Market Profile is a real -time evolving database that capture sand records the markets two -way auctions
(content of slide you see) or, as we say, it allows you to view the market in the present tense
Phil Jackson said when he was managing the Bulls, Winning results from operating in the Present Tense, not rehashing yesterda y's game or playing
tomorrow's game too early.
----------------------------------------------------------------------------------------------------------------------------- ---------------------------------------We can take some questions for Jim.
Freddy [17:06:41]> Hi Jim, am your biggest fan and have been using the profile for more than a year now - your trading concepts are terrific - one of my
biggest challenge as a trader is to correctly anticipate - to the extent humanly possible (!) (and thus have CONFIDENCE in) the TYPE of day (and when there
are changes in conditions invalidating such analysis) - breakouts from low volatility, failed auctions or gaps are typical clues for possible trend days, and
neutral internals (breadth / volume) and no strong money flow clues for neutral days - any of your own tips you could share on that?
Also, if you don't mind , I'd like to hear you on how you use stops (on neutral and trend days) and how do you take into acco unt the risk/reward ratio (and as
well leverage) for your trades, any minimum RR you are looking for, any particular situation where you use more leverage, etc . thx Jim ! You rock
FReddy: the first thing I look for is to see if we are opening above value , within value, or below value
I look to see how much confidence there is around the opening For those who have read Markets in Profile you are aware that w e describe 4 types of
openings:
- Ranging from very high confidence, to very low confidence.
- Trend days, seldom occur, following an opening that takes place in the center of the previous days value.
- An upside trend day, for example, more often occurs when the market has opened above value for the previous day, combined wit h a high confidence
opening OR
- When the market has opened below the previous days value area and particularly below the previous days lowest price and shows a high confidence opening
to the upside (in the case of a long)
Once the trade is entered, it then becomes important to monitor the trade for continuation. By this I mean, the profile shoul d remain elongated with the
point of control that steadily migrates higher throughout the day Additionally, I would expect to see the market "one time fr aming" By one time framing,
if the market is trading higher, I mean that the second bar or period, does not take out the low of the first bar but does ta ke out the high of the first
bar (30 minute charts) With this process continuing throughout the day An inside bar, where price remains totally within the bar from the previous period,
..does not negate the one time framing action.
It is rare to have a trend day, where the market would stop "one time framing" for more then one period. This is my choice, n ot recommended for most: but I
seldom use stops, rather, I rely on changing market structure to tell me that my trade is not developing as anticipated.
rolcol [17:13:49]> (going from CQG display & Stedlmeier observations) ..........do you have any comments on either I/J (12 -1 pm cst) or M/N (2-3 pm cst)
overlap periods and their tendencies?
I do not consider issues like this even though from time to time they may have relevancy. I have found that by thinking of th ese types of things
thinking in terms of what time periods' highs or lows are made thinking in terms of average range extension actually diminish es my mental flexibility
and has a tendency to trap me on the really important days such as trend days.
To expand on this question, when the market is in a relatively narrow trading range for the day, these type of things that yo u bring up are meaningful,as are
more traditional technical indicators.
However, on the BIG days, when the long term money is in the markets, these type of indicators get blown away and can do some serous damage to short
term traders. It is not uncommon, to hear traders say they make money most of the days. However, if it hadn't been for one or two days of the month, it
would have been a great month.
By focusing too heavily on shorter term indicators it is too easy to miss the changes that occur as serious money quickly ent ers the market place.
----------------------------------------------------------------------------------------------------------------------------- -----------------------Kindly have a look on chart of IFB Ind. IMO, it is resuming upward journey after having little rest and consolidation.
Break out confirmations:
1> RSI (9) breaking out of down TL as well as breaking above previous peak
2> +DMI (13) breaking above its previous peak
3> Low volume during consolidation and significantly high volume on break out
4> ADX (8) moving above level of 20 to 25
Feel free to correct me if I am going wrong anywhere...
It's in a very strong uptrend . But let it cool off a bit. Accumulating it from levels of 130 would be ideal. Fundamentally this company will do good in coming
years. Business model is very encouraging. 5.8.10
years. Business model is very encouraging. 5.8.10

----------------------------------------------------------------------------------------------------------------------------- ------------------------I have mentioned many times on this thread that I don't trade through systems. Some times (only some times) when I scalp, I t rade with systems. I am a
medium term trader/investor and hence my analysis has lot to do with subjectivity. I dont have a setup/system which gives buy /sell signals. I have a
customized software, which suggests whether the asset is worth investing or not based on Fundamental and Technical parameters . That software is something
on which we operate our funds and i cant release it in a forum.
I suggested you Asnavale's setup because it is something that works. He has explained it beautifully. It is a positional base d system. Hence that should be
good for you to start with. later on you can read and develop your own system.
.....................
It entirely depends on your risk appetite. For me, protection does not mean buying options. When I am short on Index, and the Index keeps rising, I simply
open up long futures positions in stocks which are making the Index move higher. As stocks in the short run, tend to outperfo rm the Index, I gain in long
futures and if I am right shorting the markets, I gain in that too. Else, I close my positions. The key here is to know the v olatility component in each
instrument and choosing optimum position size to offset the losses in Index with the gain in Stock futures. Its a bit complex , but I hope you got the gist of it.
----------------------------------------------------------------------------------------------------------------------------- -------------------------I'll still stay away from these If's and But's. Till the price begins to move, I'll prefer to not listen to any of this. I am more comfortable in catching a trend,
riding it and exiting it when I have some profits. Rather than, buying something first, sitting on it and waiting for the tre nd to appear. Its just more stress free.
.................
IMO, Objectiveness is not in system, it is in mind... When one is running high on emotions, it is really difficult for the pe rson to be highly objective and keeps
on failing... it is common across the globe - no matter whether it is business of trading or any other profession.
I would like to share my own experience - when I passed out with my software degree back in 2003, I was struggling hard to get decent job (IT was just
coming out of wounds). I started getting into trading just to keep my mind occupied and get lil relief from the frustration o f being BE-ROJGAR. Here my point
is I was not going through balanced mind set... During those days I kept on jumping on to different methods, systems, strateg ies and nothing worked for
me....
Then eventually, I got the job in the world of software in 2005 and started getting into balanced mind set... now what I m ob serving is same bloody methods,
systems and strategies started working for me as big as one can say WOW WOW WOW! Then I started getting feeling that it is pu rely luck that these methods
did not work back in 2003/2004 and now in 2006/2007/2008 I am lucky and they are working.... then again they did not work in 2009 so I stopped trading
with the thought that year 2009 is not lucky enough for me...
Then in early this year (2010), I accidently happened to visit one website related to meditation and attended a seminar on th e subject matter of Left and Right
Hemisphere of brain and its functioning...
Then I started going through thought process of why I failed in trading in 2003, 2004 and 2009???!!! Why I got beautiful succ ess in 2007, 2008 and
2010???!!! What is common???!
As a result I realized that during 2003/2004 I was going through professional problems in life and in 2009 I was going throug h personal problems in life...
During both the phases I was not working with balanced right and left hemispheres of brain i.e. in simple words I was not hav ing balanced mind set due to
high degree of emotional flows.. Here emotions cud be anything anger, greed, fear, utter pessimism, utter optimism, access ha ppiness, access sadness etc....
As a bottomline, I would say balanced mindset is key to success in trading... many new traders/readers here might be facing s imilar problem. Observing
Karan's posts I started getting flashes of my past (No personal offense Karan, just got into some past memories)... My intent ion of writing this long story is to
explain that be calm, cool down ur emotions, sit aside and think think think....
I can talk or write as long as you want on this subject so better now I end here with the last word... I love Thomas DeMark's statement, "Read, read and read
a lot, research a lot and experiment a lot..." I personally say, reading, researching and experimenting is very helpful in co oling down emotions
----------------------------------------------------------------------------------------------------------------------------- -------------------------
Use of ADX / DMI

05 July 2015
02:25 PM
Since this thread is related to trading strategies, I would like to share my collection which I consolidated from different books... Kindly experiment at your own
risk...
Currently I am researching on use of ADX/DMI. I have selected ADX/DMI because it is not so widely used and popular and hence could give very effective
signals. I would surely share my study after sometime.
Buy Set ups
1 2 3 4 Method
1. ADX must be greater than 30
2. 14 days +DI reading must be higher than 14 days DI reading
3. Wait for the market to have 1 2 3 correction i.e. 3 consecutive intraday lower lows or 2 lower lows and one inside day
4. On day 4 only, buy 1 tick above day 3 high
5. Initial stop loss should be placed day 3 low.
Volatility Observations
1. Whenever 10 days volatility is 50% or less than 100 days volatility, large move is likely to occur
2. The longer the time frame a historical volatility remains under 50%, the larger the move will be
3. When these occurs look for the larger bar within last 9 days and trade in the direction of larger bar
The 8 day low reversal method
1. Day one must be 8 day low
2. Day two must trade above day one high
3. Day three or four or five or six must trade under the low of day two (this can be new low)
4. When condition 3 is satisfied, we buy one tick above day two high within next four trading sessions
5. Stop loss goes one tick below day two low
Spent Market Trading Pattern
1. Today it must make 10 period low
2. Todays trading range must be the largest range in last 10 trading sessions
3. Todays close must be in top 25% of the days range
4. Tomorrow or day after, buy one tick above todays high
5. Stop loss goes one tick below todays low
Sell Set up
1 2 3 4 Method
1. ADX must be greater than 30. Higher the ADX is better
2. The DI must be greater than +DI
3. Wait for 1 2 3 rally i.e. three higher highs
4. On day 4, sell 1 tick below day three low
5. Keep stop loss near day three high
Double Volume Topping Method
1. Stock must be trading near or at three months high
2. Todays volume must be double the 15 days average volume
3. Either today, tomorrow or next day, stock must close below its open
4. When rule 3 is met within next 2 days, sell under the rule 3 day low
5. Initial Stop Loss should be placed at top of rule 3 bar
The 8 day low reversal method
1. Day one must be 8 day high
2. Day two must trade below day one low
3. Day three, four, five or six must trade above day two high (this could be new high)
4. When condition 3 is satisfied, we sell short one tick below day two low within four trading session
5. Stop loss is high of day two
Spent Market Trading Pattern
1. Today it must make 10 period high
2. Todays trading range must be the largest range in last 10 trading sessions
3. Todays close must be in bottom 25% of the days range
4. Tomorrow or day after, buy one tick below todays low
5. Stop loss goes one tick below todays high.
Managing Risk
05 July 2015
02:26 PM
It is good to manage risk in markets. One way to do is with options (like you are doing) and the other way is to do it through low risk - high reward entry.
This does apply to forex more where we don't have issues of gap up/gap down, But it works just fine in case of Stock Indexes.
One of the negative aspects of dealing in options- to protect risk your profit potential gets limited. One really needs great deal of experience to know when to
close an option leg so as to increase the profit points. But the point is, how many people know when to do that?
What I usually do is I prefer to enter in situations where i see a low - risk high reward trade. Say for example the current situation, I know the market is
lacking momentum and hence any upmove is going to be slow. However, on the downside as the volatility picture is suggesting, Index could move down at a
much faster pace. Hence, for me this is one of the parameters which makes it qualify as a low risk trade. Hence, I take posit ions according to my risk profile
and forget about being right/wrong.
..........................
Any idea about crash in Alok ind today? I am holding it since around 18.5 and even after today's heavy fall i m sitting on profit. Shall I book profit or today's
crash is deceptive?
It has a base around 18, but nothing more and nothing less. Many good stocks to focus on. Better to stay out of non performing stocks. With every bad
investment, even if you don't loose money, you are indirectly loosing as every investment has an opportunity cost associated with it.
.......................................
Market's have a tendency to do same things over and over again. However, every time it finds new routes to do those things. This is something we need to
understand and include it in our trading plan. The reason I am writing this is because markets are testing the patience of most of the traders. I find it hard to
recollect when in the past markets have been so indecisive. I can recollect the period of 2003 when markets trended up and were due for a correction.
Correction came only in May 2004 surprising everyone. Currently, markets are trading extremely weak but still it is continuing to rally. I find it hard to believe
that this scenario is going to last for long. It is almost the 3rd consecutive month I am so bearish, but in my defense I hav e found nothing to suggest
otherwise.
As a trader, I still maintain bearish positions in the longer time frame and long positions in the shorter time frame. The time for short term trades seem to be
running out soon as the larger time frame begins to take effect. Technically and fundamentally we are on sticky grounds. We need to see if this situation
improves or worsens. My bet still remains on the bearish side.
-----------------------------------------------------------------------------------------------------------------Whether one take's Market Profile, Indicators, Price action, Fund action or Intermarket action, all are basically suggesting one thing; Confusion
But when I look at the volatility indicators, I find it very hard to believe that expansion in range lies on the upside. Options data or FII data can change in a
day's time and hence reading too much into it would not be of much value.
I belong to the Larry Connor's school of thought. I believe that essentially volatility is what drives our trading accounts. And to some extent there is less
happening in terms of price action but a lot happening in terms of volatility. Volatility based projections are suggesting a price rise of maximum 100-150
points from these levels.
Let's see what actually happens.
________________________________________
market it always right... Expect the unexpected that is the game of trading...!!! I m lovin it... my personal opinion and experience, we should never ever
combine TA with the FA...( I know I am challenging style of many people here)
Here are my points 1> When we combine TA with FA in our decision of trading, many times we end up converting our trading call into investment...
2> Many times we can't follow - "Plan your trade and trade your plan"
3> Many times it happens that something looking extremely good on chart but fundamentally company is scrap, we dont trade and ultimately we r missing
opportunity
I only mix those 2 aspects in the case of investment - if i want to invest in something, i wud use TA for the right entry time...
.. challenging ur opinion or way to trade/ style is not to be offensive, it is just raising one more point for brainstormin g... I meant to say is when we r
planning our trade for trading, we need to stick to TA and should not look at FA.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,
In your example - if we sell short and tomorrow we see some news coming about fundamental improvement, we don't need to still sell short further but we
need to look at our initial technical plan.... in most cases, technicals and charts run ahead of fundamentals. If my trade does not hit stop loss, i usually stick
to my trade unless it is taking unusually long time to run in my favor (example it is not hitting SL and neither it is moving in my favor....)
What i mostly do is, most of the time don't even look at CNBC or any other business channels.. trust me, 99.99% of the time, i dont even know what
company does (when i m analyzing for technical trading).... I surely study fundamentals when i have something for investment....
It may be only personal - to me but mixing those two methods have always confused me... i have many examples of past wherein i bought something for
short term trading and looking at their fundamentals i converted them as my investments... and as a result i many times got into liquidity crunch...
Usually, all the economic and fundamental developments are known to certain insiders well in advance which we call smart money... i mean they know it well
before news get published/released in market.... Smart money start flowing in or out in other words they take action before news is declared.... and that
action can be caught on chart.... I personally believe that chart is way of being ahead about internal developments... all the positives or negatives are plotted
on chart before news come in public..
--------------------------------------------------------------------------------------------------------------------................Look at the weekly chart and compare that with daily time frame using RSI and ADX and it was giving me feel o f upswing... honestly i did not
expect sudden jump...
......................
I agree- retail participation is missing. But there is onething we need to discount, and that is, retail participation in F&O markets. Retail investors are lacking
the patience, they don't talk about equities now, they want participation in F&O as they feel the road to get rich quick lies in this segment. No wonder why
data in futures market point towards high level of participation. How many of the participants here talk about equities? That's for you guys to think upon.
, retail participation in stock market is to make quick bucks.... and that is why during every bull run everybody talks about stock market and during bear
phase they all are gone... this reminded me high of year 2007 and 2008, everybody was talking stock market and giving tips....
-------------------------------------------------------------------------------Following the previous post, I am now posting equity curve of the system I use currently. This has been tested on Index with testing period ranging from
1995 to 2010 (current). Please bear in mind that this graph and the graph posted earlier are not curve fitted. I hope experienced readers realize that curve
fitting cannot yield such equity curves.
The reason I am posting this graph here is because any user building or operating a system should seek an equity curve similar to this. The key difference
between this system and the system posted earlier lies in the fact of its usage. Advantages of this system remain the same when compared to the previous
system
I have stopped using the previous system as the equity curve had stopped rising. But I am using this system because this system is still working as
highlighted by the rising equity curve. Index has not surpassed the previous high levels, but the system gains have continued to make a new high as shown
in the equity curve below.
Key taking: At the max a system should not take more than 2 years to make a new equity curve high. If it does not, then its time to review the system.
-----------------------------------------------------------------------------------------------------------------------Now This WRB's high will become strong resistance for upside isnt it?Plz some one explain .
Usually on a smaller time frame you will see many WRB with heavy volume. Not every bar means a down side from those levels. Let me explain this as a
WRB has developed on hourly time frame now.
At present we are witnessing a WRB on hourly with volumes. However, this should not be perceived as a sign of weakness. On hourly time frame 5360- 5380
is a pivotal support (it is also a pivotal support on daily charts). Hence, if this level breaches, we would know that the current swing move is now in downward
direction. Once this happens, one can review positions there. If there is no base building evident and indicators (if one uses) are also showing the same, then
one can initiate shorts.
............................
I am currently taking no longs. Be it scalp wise or swing wise. Markets have now entered a wait and watch zone. On short term, trend is turning down and if I
I am currently taking no longs. Be it scalp wise or swing wise. Markets have now entered a wait and watch zone. On short term, trend is turning down and if I
scalp, it will be on the short side. I feel markets will see more downside in next 2-3 days unless strength is depicted. But now I am not taking any position.
Believe in your system ...........16.8.10
..............................
this for swing or scalp trading sirji? Kindly share your analysis if you don't mind....
I dont want to sound utterly pessimistic but weekly chart and weekly ADX is not giving me confidence. I may want to wait for taking mid term call on this.
-Ve
1> Price is struggling to cross 50 & 100 weekly EMA
2> Weekly +DMI(13) not gettting dominance..
3> Last ADX peak was -ADX peak and was above the ADX peak before that which was also -ADX peak telling me during last ADX peak bears were still in
control. However, last 2 -ADX peaks were around or below level of 25 so that is lil relaxation and last -DMI(13) peak did not go above -DMI(13) peak right
before that kindda double top on -DMI.
Positives:
1> I cud see positive on daily chart is 20 EMA cross and hold 50 EMA...
2> Also +DMI(13) holding above -DMI(13) during retracements...
3> weekly 20 EMA is crossed by price and still holding that level....
4> Some of the other infra & realty stocks has already entered in mid term bull phase so we may expect this also to join the train....
------------------------------------------------------------------------------------------------------------------------
WHAT is the main question we have to ask our self every day--.
What will the market do next and what are we doing ?
what other persons thoughts would you have on that situation ?
They are meant to be recognized and analyzed .
I think what ST has stated could be more applicable to Weekly trading stocks. I would certainly not try and set a pivot point for a stock like Titan or Bajaj
Auto at this moment. But I would definitely look into the strategy ST mentioned on Weakly Bullish stocks and Strong Bearish Stocks. One of the main essence
to implementing a strategy is to classify it in which conditions and on which stocks (Strong Bullish, Weak Bullish, Strong Be arish and Weak Bearish) it works
the best.
.........................
List of Stocks which should be good for day trading in Next few Sessions.
Hind Petroleum
Sterlite Industries
IndiaBulls Real Estate
Unitech
HDIL
Rcom
Idea Cellular
Sesa Goa
Kindly decide the direction of trade. These are just list of stocks which can give good move in day trading. 19.8.10
-----------------------------------------------------------------------------------------------------------------------
Candlesticks
05 July 2015
02:27 PM
My personal view is that Candle bars by themselves do not give us any edge. You need to interpret the duration "before" and "after" a candle pattern as well.
I feel, a candlestick entry signal needs to consider the price action that occurred before that specific candlestick and needs to be confirmed with the bars that
occur after.
For example: That Doji, had it occured near that downtrend, would have indicated me to wait for a bullish signal. That bullish signal could have been a white
engulfing bar .
..................
.....................................
Where are the volumes ??
What does Candlestick or for that matter any formation depict?
They depict the level of Demand and Supply in the market. Can demand and supply be accurate in absence of volumes?? I think you know the answer to
this.
As a filter any stock below weekly average of 1,00,00,000 over period of 1-2 years is not worth looking at.
. Here we have long legged doji -. I try and interprete this way, stock opened high then some supply came which was eventually got absorbed and then
again it went up closing at high of the day which is opening also.
Volume interpretation in itself is like a different "Field".

What I was saying is that don't apply theories on illiquid stocks. Pick liquid one's. Keep volume rules as simple as possible. Regarding volumes, listen to what
father's of TA say. Hope you get my point.
But, Stay Liquid.
List of Futures Stocks which will be good for day trading
Sobha Developers
Ruchi Soya
Videocon Industries
Apollo Tyres
Uco Bank
Opto Circuits
IndiaBulls Real Estate
HDIL
Moser Baer
India Infoline
APIL
Sesa Goa
Suzlon
IVRCL
IFCI
Aurbindo Pharma
Tata Chemicals
Patni
Syndicate Bank
OBC
BOI
Maruti
Tata Motors
Kindly pick the direction of trade............20.8.10
----------------------------------------------Let me put it this way. Never get tied down with candle names/patterns/formations. As a trader, your aim is to detect change in demand/supply. Once you
do that, you need *SOME* confirmation --- Something that confirms your signal. So, you have your trade pattern first (In your case a long legged doji) and
then wait for a confirmation (say, a Bullish wide range bar or a engulfing bar)... Anything that confirms what the doji is trying to say to you.
This, a pattern+confirmation forms a trade signal for you. Choose either the bars before, or After, or combine both or none... Its your choice as to what
constitutes a pattern signal for you. Just ensure you dont loose sight of your end objective ie; Detecting change in Demand & Supply.
As per your study if a Doji at the end of downtrend constitutes a reversal signal --- So be it (As per me , it does not).
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,
Very true, but for me your DLF call is better...

Reasons you anticipated breakout earlier. We can only follow the move... that is where this is applicable - "Never try to predict the move just follow it"...
As per all theories and studies nobody can judge move in advance and that was the case with DLF. I don't think we had any indicator or method saying
getting into it right away. All were saying keep close watch...
I think this is where experience plays wider role than studies. Something like education vs workexperience.
............
Raunak ji any word about Ranbaxy sept. futures
Wait for consolidation to happen in Ranbaxy. Its undergoing a trend change kind of scenario. Need to see if this move is genuine. Breakout is quite visible.
But do you know in today's markets, only 4 out of 10 breakouts are successful. Why trade such a low winning probability setup. I am aggressive, but I need
to see where I get aggressive. For me, this is not yet a buy. It may well rally and I may be wrong. But in my books, there is a lot more than breakout I look
for while taking trades.
-----------------------------------------------........................Reversing positions - Nifty View
Well, I have been bearish for 2 months now expecting the Nifty to slide to 5100 levels. Last two days, our team has sat down and dismantled what is
happening underneath our markets. We have reached a conclusion that we are amidst a market which is extremely strong. Hence, on Monday we will be
reversing our stand on Nifty.
The Nifty could go into corrective phase (5300, 5200,5100 or 4900) this month or next month, but we have decided to be long in the markets with active risk
management. During past two months, some of the stock futures deals have worked very well for us. This is primarily why, despite of carrying short
positions on Index, we have managed to be deep in the green overall.
At present we are going to position ourselves as being conservatively bullish on the market and will structure our investments around this.
At present we are going to position ourselves as being conservatively bullish on the market and will structure our investments around this.
My entire shift from being a Bear to a Bull has been due to some long term fundamental and economic factors. There's nothing technical about it. I feel we
are on the brink of something Special. Hence even if markets correct (which it will), I am going to be a - net buyer.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Trading from 3-10 day perspective - Go through this thread.

For Equities and Investment - Go to "Stock to keep close eye on -II" thread by Savant
For Day Trading - Go to Columbus thread on Bollinger Bands or Praveen Taneja's thread
For Options related trading - Go to AW10's thread in Futures and options segment.
For general trade queries - Go to AW10's "Come into Trader's Den" thread or Rajputz thread in Introduction segment.
Following this, you will cover everything in your trading domain. Slowly start reading through these threads and in some time to come you will find yourself
profitable
----------------------------------------------------Just want to understand concept of reversing our stance from bearish to bullish or vice versa.
Normally, is it done by booking loss on particular trade?
Let me explain it to you, the way I think about this. I have two ways of executing trades.
1. Trade with trend
2. Trade with opinion
When both agree, my profits are huge. When either one of them agree, my profits are still very good. Now, to start with, I never argue with the markets.
Hence, if markets are trending up, I keep taking positions in stocks which are showing strength. Similarly, I never argue with my opinions. If I have a bearish
opinion, I do not hesitate to open up bearish positions. I know that the current trend positions will take care of my losses. And when trend reverses, I would
close my profits on long and would be prepared with my positions on the short side.
When I bet, I bet big. I don't mind to loose. If I see a trade, I go for it. There is no scope of if, but and why in my trading plan.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
As of now, I would reverse my positions after market closes above 5530. Reverse levels keep changing based on market scenarios.
My advise to you is to not argue with the markets. Always go with the flow. Our analysis is mere mortal. Markets are the King !!
A few questions :
1. Which is best setting to be used for Stoch for EOD & for intraday? 8,3,3 or 14,3,3 or anyother?
2. How do I to have both the stochastic windows (one for Hourly time frame and other for daily time frame) on the same time. Can you give me the code?
3. Similarly for the intraday trading purpose I would like to see both 15 mins stoch as well as hourly stoch at the same time. Can you give me the code for
hourly stoch plz
1. There is no universal setting for stochastic. Hence, you need to see what suites you. In my opinion for shorter frames 15,3 does well and for daily and
weekly 9,3 does well.
2. If you want stochastic on daily frame, then select it from the indicator panel. Furthermore, store the above mentioned code as stochastic_hourly.afl in your
indicator folder of amibroker. Then from your indicator list you can select Stochastic_Hourly and put it in another window. This way you will get Daily
stochastic and hourly stochastic in same view.
TimeFrameSet(inHourly);
Plot(StochK(15,3),"Stochastic %K(15,3) Hourly ",colorRed,styleLine);
Plot(StochD(15,3,3),"Stochastic %D(15,3,3) Hourly",colorBlue,styleLine);
TimeFrameRestore();
3. For 15 minute, this is the code. Save it as Stochastic_15 under indicators.
TimeFrameSet(in15Minute);
Plot(StochK(15,3),"Stochastic %K(15,3) 15 Minute ",colorRed,styleLine);
Plot(StochD(15,3,3),"Stochastic %D(15,3,3) 15 Minute",colorBlue,styleLine);
TimeFrameRestore();
----------------------------------------------------------------------------------------------
sometimes spot price is more and future price is less or vice versa,what does it indicates in both cases. ?
In more complex terms I could write a detailed post about why this happens. But I feel that will only confuse you. In much simpler terms, this happens near
expiry and also when roll over's are taking place.
There have been lot of research papers written on whether futures prices have predictive powers within them. And the findings are that future prices
(whether in risk or premium do not have predictive power).
As traders, we don't need to bother ourselves with this. Just trade the price. Go with the flow.
There are 10000 + analysts with better visibility trying to forecast what is going to happen. As far as I know, 99.9% of them are still scratching their heads.
Local investors and traders are better off not even trying to judge what's going to happen. Just follow the price and follow the flow. In long run, that would
work well.
My opinion on Mphasis which purely based on ADX (I usually trade with this single indicator only). Kindly look at attached chart and explaination for better
explaination of my style of trading.
1> Take a note of Peak A on price and peak A on +DMI
2> Now compare bottom formed at X and peak X with the A and A it tells me DMI did not have power to go beyond last peak formed by +DMI which is
A. So bears are still struggling
3> Now compare peak formed right after X which is peak Y on price chart and peak on + DMI, those also could not go beyond A and A as well as Y could not
go beyond X telling me that now bulls making attempt but even they dont have power to win the battle.
4> Again bears attacking with more power at bottom B on price and DMI peak at B. Here they had more power to win battle against bulls of Y and Y
because B DMI peak is higher than Y +DMI peak but still B DMI struggled to go beyond A + DMI peak which is the starting of consolidation peak.
5> Now comes bulls again making stroke I wud declare them as winner only if price breaks out with the +DMI peak higher than the strongest DMI peak
which B. For more conservative approach I wud also like bulls to have more power than when they had at peak A and A.
As per my style I wud keep close watch on this rather than directly getting into it
But whatever you explained, applies directly to price. And hence price can essentially convey the same information in a much more concise manner.
---------------------------------------------------------------------------------------------
What KSOILS
05 July 2015
02:29 PM
Firstly, If you are talking about some trade I took, and did not update it, then I think it would have hit profit of 4% or loss of 4%. What's there in telling that?
Numerous number of times I have said that I operate on 1:1 risk reward with 3-4% as SL and profit target. Majority of members here know this. As far as i
remember, in a discussion with SM I did mention that KSOILS was in neutral zone and not in a buying zone. Beyond that I don't think I remember much.
Secondly, if this is about how I pick stocks,. I suggest you go back - I work on subjectivity and screen time. Not on some systems. Hence, putting that
subjectivity in words is not possible. Even if that is possible, I would only give limited information. I dont believe in spoon feeding traders. I believe in Educating
them. Spoon feeding only leads to losses while education leads to profits. Whenever I write, I give enough clues for the prudent trader to catch. This is how one
can grow.
Lastly, I am a positional Bull now and Swing bear (I switched my stance from being a positional bear to a positional bull). And that switch was based on some
fundamental reasons. These two are different and try and see the words Positional and Swing before you think I have gone from Bull to bear in two days. My
style of working is to be positional and to be swing all the time. Ultimately, its what you generate in profits.
....................................
Why I was positional short earlier
Now, those who have been regular visitors of my posts know that when I swing trade I don't take fundamentals into consideration. But, when I trade on
positional basis, I do combine Technicals and Fundamentals together. I was positional short on the markets due to some fundamental reasons. Let me explain
those to you first.
When I take a fundamental call, I take into account India's forecast of annual GDP growth, production numbers and inflation. Government of India had given a
forecast of India to grow at 10% annual GDP. This was something I was not able to visualize. There were some reasons I thought about this. Let me explain in
detail.
Firstly, savings rates, which remain the back bone for any economy to move forward, dropped in 2008/09, and this is likely to continue in 2010/11. Second,
India's net fiscal deficit is at 10% of GDP which is also the highest in previous decade. Third, recently we have seen how dovish the Reserve bank of India is
behaving regarding Interest rates. Currently, the interest rates have begun to move higher and my personal take is that with rising inflation, we could
potentially maintain this trend. Lastly, appreciation of the rupee against the US dollar is beginning to act as substantial risk to Indian economy. There is no
doubt that with growing economy, our currency will appreciate. But the real threat in this scenario is the pace of appreciation.Since March 2009, effective
exchange rate has increased by 15.7% while that of other countries have seen little or no change.
What I had thought was that before moving forward, we would definitely see a bear phase. Fundamentals needed to catch up and that only happens when we
give our Economy enough time to restore the economical balance.
Why I changed my stance from being Positional Bear to Positional Bull
Last week I had posted that if and when Indian markets start correcting, I would be buying heavily into it. I changed my stance from being a positional bear to
positional bull. Here are the following reasons.
Now we all know that India is prospering and it grew at about 10% in previous decade. Analyst expect that this growth cannot be repeated and hence India
would grow at 7.2-7.7% in fiscal 2010 -2011. Now, in their own right they could be right. But they are not discounting the fact that India grew earlier at higher
levels due to exceptional Global economic conditions. Whereas now, India is growing based on faster expansion in private consumption and investment. With
some reasonable accuracy, we can say that global economic conditions are not going to enter a confident phase for a long time to come. But will that impede
India's growth? Well, the answer is no.
If one reads the 11th five year plan, then one would come to know that in the 11th Five Year Plan, Government of India would like to spend $500 billion in the
areas of Power, Road, Irrigation, Railways, Water Supply, Ports, Airports etc. Now this is some serious money which will pumped back into our economy and
will be again consumed within our country. With rising doubts about the real growth in "China" where would investors turn to. Which economy is surrounded
with problems but yet continues to grow amidst all threats and crisis?
The biggest positive for India is that our problems our known Internationally. Investors (FII's) know we have had a problem of unstable governments, poor
governance and problems associated with our neighbors. But yet, they recognize that India gets up at 6 in the morning, to live another day for a better future
tomorrow. Our governments don't support their citizens like governments do in other parts of the World. But still, our people find perky solutions to the never
ending problems and begin from scratch to build something substantial. These are some facts which cannot be validated statistically but are of immense
importance to my Investment decisions.
Personally, when I sat back and weighed all the problems in India, with the number of opportunities in India, then the Opportunities surpassed the problems by
a long margin. That for me was the critical point in being overly Bullish on our economy. I have had an amazing run from 2002 -2010 and I feel India's better
years are yet to come. In conclusion, change in my thought process was equivalent to resetting my mind to the 2002 year. It was a gradual process and
certainly not sudden.
There are obviously many more points to add, but I hope this certainly gives an insight on why I changed my stance. Time only permits me to write few things
on the web.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
my opinion, SL depends on the strategy you use. It cannot be applied similarly to every strategy. For eg, for some trade I post live SL. That's because it
changes with every tick. Whereas for some trades I place fixed SL.
........................................
But mostly I will planning trading on two fronts
1. Intraday
2. positional trade (Ready to hold upto one month also if potentials are good)
Currently i am not going into stocks & dealing with Nifty only till I gain confidence on one of the technique.
At this moment I am having positional trade of NF short @5490 qty 2lots.
I am already gaining `85points/lot. I feel potential to gain at least ~80 to 100points more. But as you always say "Market is king" hence have money
management & risk management plan.
................................
You probably did not follow what I wanted to convey.
You said you have this position in markets. But you did not mention based on which methodology you have taken this position. Every methodology has a
different SL technique. It cannot be same for every strategy.
.....................................
Those who are expecting markets to go down, should be prepared to be patient. Same applies for those who are long. Our stand remains the same, we are
swing short on the market and positional long. Our positional long time frame stands to 1 year as of now and swing short time frame is variable.
Short time down side seems to be around the corner. However, timing the markets is something which is so difficult. Don't expect markets to go down in a
straight line. Retracements till 5500 - 5600 are always possible. If one cannot manage risk via futures, then accumulating put options is not a bad idea.
Volatility is still low and options are not that expensive. ..............30.8.10
......................
Well, whether it reverts or not, we will have to review our position. Always remember that markets are dynamic and hence our opinions cannot be static. They
need to be dynamic as well.
---------------------------------------------------------------------------............................. keep working hard and strive for understanding concepts. Once you do that, money making in the markets will be as simple as you fishing
a frog from a well.
...........................
...........................
There's a fair bit of chance that we will open on gap up basis and will remain there in terms of market movement. But before calling for the markets to move
down further, I would wait for the price to confirm that. It's better to stay with the flow.
"Opinion can be separated from what is currently going on this will allow you to profit by trading with the market right now, instead of believing your opinion
should be right at this time.
One of the prime reasons few make money in the markets is because of our nature of arguing with the markets and its movements. Humans have a tendency
to justify everything. Those who can curb this instinct, do very well in markets. Sadly, less than 1% of traders can do that.
. I have learnt this the hard way not to be biased one way . Macro Economics and Fundamentals do matter in the long run. In the short run however, fighting
with the market is similar to bull fighting.
Will it or Won't it?
I think one question pondering every investor and trader on Dalal street is whether Nifty will crack or whether Nifty will rally? Virtually every investor is out
there with one theory or other justifying what the markets should (will) do. In my trading and investing career, this is the first time when everyone seems so
confused.
Some suggest volatility is at record low levels and hence markets should crack. Others suggest futures and options data is suggesting towards a crash. The
never ending theories of Volatility, F & O, Harmonic patterns, Seasonality and Elliot Wave are all going for the toss. It's not only Technicals, but Fundamentals
in their own are taking a beating too. Valuations are touch high, forward earnings are not encouraging, inflation is up, interest rates are rising and production if
not slowing is not galloping either. So what should an investor/trader do at this point?
The best way to be in this market is to trade it. Some suggest volatility is too low to trade. Well I would request the skeptics to visit volatility data of stocks
since 90's. Volatility is cyclical and currently we are in low volatility cycle. That's it !! This market is absolutely ideal for trading. However, there are few things
we need to take care of. While trading these markets, it is an absolute necessity to book partial profits. . We are in a phase where trends are being established
and reversed too quickly. Hence, we need to ensure, we take some profits off the table in order to keep our equity ticking.
As far as Investing in this market is concerned, I sincerely feel markets are fairly valued. Every year or two, we have got corrections of 15-20% and since the
last time that happened was in June - October 2008, I guess we are due for one now. I would be more happy to invest when this dip comes. At this moment,
we need to be objective. We need to be rational. And going by this, it seems more logical to wait for a dip rather than to invest in markets which are richly
valued.
Coming back to what Nifty will do. I feel markets are hinting towards following its price action closely. By following, I mean, going with the TREND And I feel at
this moment this is the right tactic to adopt. Lets follow the market and let our theories rest in peace.
--------------------------------------------------------------------------------
Back Testing Trading System

05 July 2015
02:30 PM
back testing trading system.

what I judge a system on- I don't want to disappoint you with my comments later on. I dont pay much emphasis on profitability. There is a vast difference
between profitable systems and good systems. A good system has to be profitable, but a profitable system is not necessarily good. For me, the main criteria
is Draw downs (in trade and end of day), profit factor, number of winning trades, time spent in markets and risk to reward. Apart from all these, I also give
importance to equity curve, MAE and MFE.
So, if you need an honest analysis, I will help you with it. If you want, I can also suggest you with some improvements if the need be.
.............................
Everyone hear's stories of how some guy became extremely rich by investing in penny stocks. Believe me, these stories are created and floated by some
sources to keep investors engaged.
Invest the right way and believe me markets will reward you in a manner you would never forget.
Whether it's small cap or large cap, I would not invest in a market which is trading near high's of its valuation band. I know in 6 months, I will get most of
these stocks at a much better price. It's only a matter of time.
With your cash, its not a bad idea to make 1 month fixed deposits. Let the market correct. You will get plenty of opportunities. sept'2010
.......................
Yes, two patterns can form within each other. Trust the one which reflects the broader picture.
Get hold of a good book and go in depth. Once you finish, try and figure out what works for you. Books are just for reference. One needs to figure out what
works for him.
......................................
Starting an Investment Portfolio
Since January - February 2010, we have been working constantly towards developing an "Investment" oriented Technical Model. After 7 months of rigorous
back testing across several asset classes and several International markets, we have finally finished the development phase. The results were very
encouraging and we have decided to replace this model with our current one. Currently, the model is being documented and we wish to take the model live
from January 2011. Meanwhile, Since this model will be in use from 2011, I would be posting investment related stocks starting from this Monday based on
this model.
Time frame of Investment

This can range from anything from a 3 month period to a 5 year period. In most cases, it is going to be long term bets. Please remember, we are going to
Invest in stocks. We are not going to trade them.
What about drawdowns
Since this model is Investment based, we do witness large drawdowns. Sometimes, drawdowns go up to 20%. I know this is too much, but the results we
have got are simply worth taking this risk. After all, there is no reward if there is no risk. When markets correct, we could see stocks falling to 20-30%. Even
in that scenario, if our investments still remain a buy, we will be holding our positions.
What type of Assets do we invest in
Absolutely everything and anything that moves. Be it stocks, etf's, mutual funds or commodities.
What about Penny stocks
List of stocks posted here could be penny stocks as well. Currently we are not separating penny stocks from rest. This is something we will be doing by
December 2010. Whichever stocks are traded in NSE, results for those shortlisted will be posted. Hence please watch out for Penny stocks or operator driven
stocks
What about exits and stop losses?
Finally .. What about returns
This is something we all will witness over time. If results are good, then I will keep posting it. If results are bad, we will go back to finding improvements.
Since this is investment based model, I will give this model enough time to work. Need to be patient.
TA is more of art than science... Success purely depends on individual's skills. And IMHO, faith, system/method/strategy and proper money management is
key to the making ur account profitable.
My views were reserved only from investment point of view. Usha Martin
But from swing point of view, it looks kinda ok. Range expansion is being witnessed in all forms. Should do well. You would get a better risk reward from
investment trade. Not from swing trade. Investment is a lot easier and more rewarding than trading. If done properly.
Investment Portfolio
Guys, in the below mentioned link, there is a spreadsheet linked. That contains list of stocks which are worth investing till they show sign of not moving
forward. Since we are just seeing the real time results, it would be strongly advisable not to buy any stock based on this list. Let us see how this goes. The
sheet has two pages, one is the fresh buy column and the second one contains list of stocks which had given buy earlier but still look good to move forward.
In this list, A category stocks are highlighted in green and Z category stocks in orange. Personally, I would never ever invest in a Z category stock. Stay with
the 'A' list always. Since we have not separated the A category from the Z category in our database, we are posting results for both. Also, some stocks may
be low volume, operator driven stocks. At present we are posting results for all stocks. By December 2010 we will be separating stocks based on various
criteria.
The current price column contains the last trade price of the stock. Anyone who knows how to link the price to NSE website or google finance page can
volunteer to code the current price column. That way, the sheet would be updated real time. Else, every week I will get one of my guys to do it.
..................................................
I think the most crucial thing is discipline and money management. One can make money in the mkts consistently without any TA or any kind of analysis but
no one will make money without the first two. Even the best of technical analysis will not yield money without money management and discipline in place.
Once we put in place a discipline and money management strategy then we should go in for technical analysis.
Also what Raunak has mentioned many times that he uses MM to minimise losses when the trade goes wrong and maximise profits when the trade goes
right. This I personally believe is the ideal approach.
-----------------------------------------------------------------------------------------------With what reason can one attribute to, the todays up move in market?
1) Is it due to the US job report?
Neither it ever was, nor it will ever be. What has US jobs got to do with Indian Economy? Yes we do get temporary gyrations. But long term price structure
has no relevance with US jobs
2) Is it a bear trap to trap innocent investors built by heavy weights?
Trap is created by innocent investors themselves. No one can trap anyone. Do they make one trade at gun point? The problem is, innocent investor
speculates a lot. He does not think of investing. All he wants is short term quick gains.
3) Is it Short covering or creation of fresh longs?
Till the price structure suggests, it is better not to argue with the markets. One can trade with the markets and with opinions. Balance is required though.
4) Or nothing in the above, as on expected lines only?
To expect is to commit the biggest mistake.
To expect is to commit the biggest mistake.

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__________________
Position Sizing in Investments
Assuming account of Rs. 10 Lac
Risk per trade - Variable or based on historical volatility
Maximum positions - 20
No brokerage is assumed for simplicity
Initial Strategy
Now it is widely known that position sizing can vastly increase one's trading performance. In this post, I am going to highlight a simple technique which I use
for positioning my trades. Please remember, position sizing is different for the kind of trade one undertakes. Here, I am going to explain position sizing for
long term investments. Hence don't follow these techniques when you trade.
Now, lets say I identify Stock ABC as a potential investment candidate. Initially, I put in 1% of the account size, which in this case would be Rs. 10,000. If I
have identified something as investment trade, I would definitely expect before hand what sort of levels that stock can attain. Usually, if everything remains
normal, it is fine to assume that a good investment will double in 2-3 years. Hence, our motive should be to capture bulk of the move with the correct
position size.
The maximum I invest in any one trade is 5% (in current market conditions) or 10% (if market conditions are extremely robust). At the moment, I would
commit only 5% of my account size in one trade. So this means we need to start with investment of Rs. 10,000 and scale in positions till our investment
reaches limit of Rs. 50,000.
TO start with, lets assume ABC is currently trading at Rs. 100. With an initial investment of Rs. 10,000, I would be in a position to buy 100 shares. I would
then, scale in another Rs. 10,000 when ABC appreciates by 10% that is, Rs 110. Going forward, I will keep increasing my position at every 10% gain till my
investment reaches value of Rs 50,000. When I do so, I would get an average price of Rs. 119.9 and number of shares equivalent to 417.
What if trades begin to fail
I will just mention two scenarios here and I would leave the rest for you to figure out.
Scenario 1: Stock Moves down from 100
In this case, we would incur a loss on 100 shares. That is, loss on Rs. 10,000. The amount of loss occurred is determined by the kind of exit strategy one
uses. I have observed most traders keep stop losses in the wrong manner. They keep a fixed % stop losses for all stocks. Well this should not be done
because every stock has different volatility levels and hence each stock must have a different stop level in % terms. Else, one simple way to limit large
losses is to not incur loss of more than 20% of investment. Which in this case would be Rs. 2000 on investment of Rs. 10000.
Scenario 2: Stock Moves up to 110 and then collapses to 100 and then probably further.
In this case the average price would be 104.7 and we would get 191 shares. Well, the exit in this case is very simple. If the stock reaches Rs. 110, you
would be in profit of Rs. 1000 (100 shares * 10 Rs gain) and it is here where you would add another Rs. 10,000. You would get roughly 91 shares at 110
level on investment of Rs. 10,000. SO, if the stock collapses and reaches Rs 100 again, you would be incurring a loss of Rs 910 (91 shares * Rs 10 loss).
Once Rs 100 is reached, I would square off the add on position with a loss of Rs 910 and would have the basic 100 share position open which I took when I
bought the first time. With this position, I would exit the same way like I did in scenario 1. Remember, our main motive is to ride a possible trend of 100 300 % and hence we should be prepared to take a loss of 20-30% on our investments. Since this percentage seems high, we diversify and position size to
take loss at small quantity and gain at higher position size.
Isn't investing Rs. 50000 at one stroke better?
Well, lets work the math here. Typically, before getting on to the real trend, we would get whipsawed a great deal. Hence we need to ensure our losses are
small. Now lets assume, I buy Rs. 50,000 worth shares when ABC was at 100. I would get 500 shares. If I take 20% loss on investment as stop loss, then I
would roughly loose Rs 10,000 on one trade. Now imagine what if I have 5 such losses in a row. I would incur a total loss of Rs. 50,000, which by the way is
5% of my account size.
Now, going by our original plan of investing just Rs.10,000, we would have a loss of Rs.2000 on each trade. Even if we take 5 losses in a row, we would get
a loss of Rs. 10,000 in total. This is only 1% of our account size and is totally acceptable. Remember, our main aim is to preserve capital. And once we learn
how to do this, we will be far better money managers than we were earlier.
I hope this post helped many of you who wanted to position size properly. This is not exhaustive. Infact this is something I have worked on my own as it
suits my style of investing. At times I scale in quickly if I find a stock moving at great pace. Hence, position sizing is also subjective and discretionary. If one
wants advanced strategies, then one can refer to many writings by Van Tharp.
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My Beliefs
05 July 2015
02:31 PM
Any indicator or chart can talk to you if you spend quality time with it to learn and understand it especially construction and structure of it. ADX is not
something exceptionally good. It is just I happen to read work of Dr. Charles and Chuck Lebeau and when implemented in my trading found good results so I
continued with using ADX.
Like any other indicator, ADX also has got lot of subjectivity involved.
What I still do not know:
How to use it for intermediate time frame or lil more profit than swing of 5-7 %.
When to exit Currently I use 5% exit strategy. I seriously want to learn this combining any other indicator with ADX. I would appreciate if somebody helps
me in this.
How do I use ADX/DMI:
ADX to know trend strength but generally this is just informative nothing else we all know how does this work. If ADX is above 20-25 and rising tells us trend
is strong enough to trade in the direction.
Relative analysis of ADX peaks i.e. comparing ADX peak with the past ADX peaks. This is very important to understand whether current down move is
retracement or reversal. I would mark previous couple of ADX as +ADX or ADX. When DMI is above +DMI and ADX has formed peak, I wud say that ADX
peak is ADX and vice versa. Whenever, I encounter down move very first thing I would do is will compare current ADX peak which is -ADX peak for down
move with the previous ADX peaks if current ADX peak is significantly lower than previous couple of +ADX peaks then there is a possibility that current down
move is complex correction rather than down trend.
Range expansion and contraction on DMIs. Here I wud keep my eyes on DMI behaviors within the consolidation. For example if range between 2 DMIs is
expanding within the consolidation, I wud get early guess of which direction price going to break out. We should get into breakout only.
Traditional use of DMI is to go long or short on crossovers. I do not give importance to cross over on standalone basis. I always want DMI to make new high
after cross over. When I say new high, I mean DMI should make high above all the opposite DMI highs as well as same DMI highs within the consolidation
period. If price breaks out or breaks down but respective DMI is not going above all DMI peaks within the consolidation period I wud not get into trade (Dr.
Charles quote this as cross over high theory). The only exception (my observation) is DMI expansion within the consolidation. If DMIs have clear range
expansion within the consolidation and respective DMI does not make new high on break out, I wud still get into trade. As Raunakji mentioned many times,
sometimes we can make educated guess. However, I wud not recommend getting into trade without new high if you are not having sound understanding of
this indicator.
Cross & Hold and Dominant DMI many times it happens that DMI does not give us trigger high on breakout. Does this mean we shud not get into trade on
this type of breakout? I wud watch DMIs after breakout. If DMIs do not cross back in reverse direction and holds the original cross over, I wud get into trade as
soon as DMI makes new trigger high. This is lagging signal but works so I thought of including it.
DMI continuation high many times we dont get consolidation and have established trend. Why wud we let go trading opportunity presented by established
trend or in other words why wud we not ride on established trend? I would wait for the price retracement and DMI contraction. Once it happened, I wud get
into trade as soon as dominant DMI goes above its previous pivot high.
DMI divergence As we had discussed earlier, I am still not fully convinced with the divergence concept. However, I give lil importance to DMI divergence in
getting information. Divergence between price and dominant DMI tells me that correction/retracement/reversal can be on cards. I do not take action based on
this. I wud want price to confirm with the breakdown or lower high/low.
Putting all together:
I usually trade where ADX is below 15 and preferably below 10 suggesting me currently price is in congestion or consolidation. I will watch price to give break
out with the trigger high/low on respective DMI.
When ADX is extremely low, DMI and price break out generally work for you. Very less chance of getting stopped out.
Well established trend and retracement First check relative ADX peaks with previous ADX peaks. If it suggests you that it is not trend change. Get into trend
as soon as respective DMI makes continuation high. This works best when combined with MAs.
I also combine John Hayden way of looking at Fibonacci and RSI with my ADX analysis. Since this is all together separate topic I am not going into much
details here.
I generally use 8 ADX of 13 DMI or 7 ADX of 12 DMI but also seen simple conventional 14 ADX and 14 DMI working equally well. I usually reduce look back
period of ADX to make it little more sensitive.
I mostly trade in the direction of higher time frame I need to have weekly ADX telling me same story about trend when I want to trade on daily chart. Or I
need to have daily chart telling me same story when I want to trade on 60 min or 30 min chart.
I have certain strategies defined to trade using these but I am keeping them with me. I am very confident that anybody can improve failure to success ratio
understanding above concepts very well and being friends with ADX.
I am very much open for constructive and healthy debate on this if anybody having different opinion. Healthy debate and brainstorming always lead to greater
insight and understanding.
-----------------------------------------------------------------However, kindly go through below mentioned charts for the points.
Go through USHA Martin daily chart for knowing relative ADX analysis and break out from consolidation and confirmation on DMI by making crossover high.
Also go through ACC daily chart for breakout confirmation on DMI. Weekly chart will show you relative analysis study.
Check 60 min Fed Bank chart for breakout confirmation on DMI. Daily chart of Fed Bank will give you relative analysis study also.
Check sonata software daily chart for probable dominance failure by -DMI. This is still under development.
Check Nifty daily chart for break down but -DMI did not made cross over high, neither cross & hold and maintain dominance.
Check TVS Srichakra chart for DMI range expansion example...07.09.10
...................
Nifty is climbing up, yesterday's moved look liked a climax. P/E ratios are coming at 25 now for the index. Bubble phase is underway and this is the most
riskiest period as everything in the market goes up and everything goes crazy. Everyday market rises.
Bubble of any sort is identified quite easily with the kind of leverage underneath. There has to be something substantial for the bubble to form and for it to
burst. Words like crash, bubble are used so frequently by the media these days that even a common investor now understands these terms. In my opinion, any
information which is out with the masses has no value at all. Remember, it is information asymmetry which causes markets to move. Not symmetry of
information.
As far as PE goes, I think world wide in all economies, PE bands have shifted range. This happens in a growth stock so why can't it happen in a growing
economy. When the band shifts, the momentum and prices are bound to expand. I feel currently we are witnessing the same. I don't rule out the possibility of
a correction, but I won't anticipate it. If it comes, so be it. I am prepared.
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On Investment Model
05 July 2015
02:32 PM
pls confirm me on my Understanding.

1) You anticipate 100% to 300% growth in these stocks in next 2-3year
2) You will have next investment of 10k, only after you see 10% rise on your current investment. You will keep on doing so till you invest 50k in each stock.
(With this logic Wockhardt should have deployed with next lot of 10k)
3) You will come out if you see 20% loss in any script.
I am not clear on following points.
1) We have invested all 50k. Let us take your example & assume our avg price is Rs119. our target is min of Rs200 for this stock. If stock starts falling down
before target is hit then what should be SL? Is it Rs95 (20% lower than avg buying price of Rs 119)? or Rs120 (20% lower than your last purchase @Rs150)?
2) What will be exit strategy after hitting target of 100% growth? Will it be, exiting 20% amount everytime in five steps or exit with all the qty in one shot.
For Wockhardt, next lot of Rs. 10,000 has already been deployed today.
Rahul, as we scale in at every 10% jump, we begin to scale out when our positions start coming to the price where we added lots. Only loss we take on add
ons is the brokerage loss. For the first lot (Rs. 10,000), I take a loss of X% depending on the volatility of the stock, which typically ranges from 10 - 30%. For
every stock this is different.
Regarding exit, if our investment gives 100% return, we start keeping a trailing stop loss. Now this again depends on the volatility the stock is exhibiting. I
would never get out of a investment just because it has doubled. On the contrary, once I have 100% returns, I would think about deploying more money in
that stock.
We keep going in and out, we keep scaling in and scaling out and this is all done to adjust the alpha and the beta of our portfolio.
Lets see how it goes, we are just testing a new model with real money. We are confident of the performance, lets see what markets have to offer. My aim is to
outperform the market. Thats it.
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Just a word on Investing and trading.
If we have a portfolio, in which alpha is generated with given set of stocks. We need to make sure that when the market goes into volatile phase or starts to
correct, short selling becomes an instrument to rebalance the alpha lost by market correction on portfolio.
This is where a trading technique or a system comes in handy. During consolidation, our alpha won't be affected much and we must not get into the frenzy of
trading. However, when signs emerge of correction, then we must be prepared to short sell in order to restore the alpha lost in correction. This is how one can
be a long term investor and at the same time be a short term trader in order to balance alpha. In other words, Trading instrument simply becomes another
portfolio vehicle ensuring alpha generation capability.
Let me answer your query in parts.
1. Index stocks - I am a value investor and there are so many small sized companies which are going to do wonders ahead. Yes, I trade and invest a lot based
on Technicals. But, I am very sound on fundamentals too. Most of the companies I buy are either good fundamentally or are expecting a turn around.
However, some of the companies which I buy are not so good on fundamentals but are still rallying ahead due to momentum. I still prefer to ride those. In
short, I am aiming at growth stocks, momentum stocks and value stocks. This in itself is diversification within diversification.
2. Correction - I am very bullish on India. And I assume India's good years are yet to come. We have our own risks, but I think we will sail through all the
hurdles. An economy with every individual wanting to be rich can never go off track. Hunger to survive and to do well in life is what India is all about.
Dreaming is essence to enhanced performance and my dear India is full of dreams and aspirations. So, when corrections come, I will trade those to balance
my portfolio. But till anything catastrophic happens, I will continue buying. We are investing and we should not be scared of a 10-20% correction. Should we?
Keep strict money management rules and be disciplined.
3. Trying this concept - I will strongly encourage you to try this concept and you can comfortably try it with any fixed amount you want. But stay in equities
and try this entire sizing concept with your own system and own stocks. I have mentioned earlier, we are trying out things with real money. So, just be careful
picking out stocks directly based on the sheet given. We are here to stay for long term and I am not expecting returns in a day or two.
4. List of stocks - When you open the sheet, the list of stocks whose rows are in Green are A category stocks. List of stocks highlighted in orange are Z
category stocks.
...................According to recent report FII have largely exited investments in small caps and have focussed on the larger caps. Hence many are available still
at attractive prices. For a long time now the action has shifted to small and midcap. Any correction will have a small blip but the targeted returns are
potentially higher.
Since brokerage is a percentage it will not matter either ways. For starters you can look at returns for 3-6 months. Short term calls are less riskier than trying
to do intraday and you can get better returns.
Well, I won't read too much into what FII report says about where they are investing. Trading where the action is something one should focus on. Historically,
in every economy, midcaps have always outperformed large caps. Also, Midcaps and small caps also fall a lot more than large caps. Hence, the risks are more
in such stocks.
But if you pick the right kind of midcaps, the gains are just staggering. How many large caps are the best performing stocks every year? Some manage to
creep up, but the majority of best stocks year on year in terms of risk reward are usually midcaps. Small cap are a bit scary though.
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As traders why should we have a long term perspective of

Investment
05 July 2015
02:32 PM
As traders why should we have a long term perspective of Investment ?

Well, it entirely depends on your mindset. If you are a trader, then you don't need to bother about anything else. As I have posted earlier, I cover up some
of my investment draw downs by trading. So, in short I am a medium term trader and long term investor. My time frame in defining what is Long term and
what is short term is not fixed,it changes with volatility.
In what way a short term portfolio(1week to 1 month holding) different from a long term Investment portfolio ? How the returns are expected to exceed the
returns of a Swing trading Portfolio ?
It is different in terms of alpha and beta both. In short term portfolio, your gains are less and your risk is relatively high. Depending on your skill set you
can find suitable risk to reward trades. In long term, you have time on your side and if your investments are sound, then the gains can be spectacular.
For a short term portfolio's returns to be greater than long term portfolio, you need to have the right sort of environment. For eg, when the volatility is high,
your short term returns can out run the long term portfolio returns. But, how many traders actually know how to position themselves in high volatility
environment? That my friend is key to returns in the shorter term. And don't forget the risk that high volatility environment brings to a trader.
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You can't draw inferences based on some trades. Furthermore, one year like 2008 will sway your faith away from trading. So many traders in that year
swore never to trade again. Hence, its a double edged sword dear. Ultimately you need to know what works for you.
...................................India is in second place with 39 entities, 19 more than last year, thus making it the biggest gainer. More Indian companies made it
to the list this year as the country is less open than many other Asian economies and was therefore less affected by the global downturn," Forbes said in a
statement today.
Other Indian firms in the list include Allied Digital Services, Exide Industries, Jubilant Organosys, Spice Mobility, Zydus Wellness, Amara Raja Industries,
Compact Disc India, Everonn Education and Micro Technologies.
The 'Best Under A Billion' list is chosen from nearly 13,000 publicly-listed Asia-Pacific companies with actively traded shares and having sales in the range of
USD 5 million- USD 1 billion.
The selection of the best 200 companies is based on earnings growth, sales growth, and shareholders' return on equity in the past 12 months and over
three years.
According to Forbes, the latest list has 151 new entrants as compared to 136 last year. Information technology, health care and electronics companies
accounted for nearly half of the 200 entities.
Indian entities such as Ashiana Housing, Banco Products (India), Bliss GVS Pharma, Deep Industries, Glodyne Technoserve, Kaveri Seed, KNR
Constructions, ELGI Equipments and ICSA (India) are also part of the list.
ADX has its limitations

05 July 2015
02:33 PM
That's fine with me and I don't mind being considered the resident expert on ADX. It is an excellent measure of trendiness and a good indicator to be linked
with.
However, I think it is a mistake to try and over work or become too dependent on any one indicator. If you were going to build a house you would need more
than one tool and you wouldn't try to do it with just a hammer. The same is true of building systems. The ADX can be a very valuable tool if used correctly but
it has some major shortcomings that everyone should be aware of: We all know that the ADX is slow. This is because of all the smoothing in the formula. The
basic ingredients are smoothed and then the results are smoothed again. For example I think it takes more than 30 bars of data to calculate a 14 bar ADX.
This smoothing makes the ADX slow but there is an even greater problem than just the speed of the indicator. The logic of measuring directional movement
makes the ADX very reliable at certain times and very unreliable at other times.
A rising ADX is a reliable indication of a trend when there has been an extended sideways period before the trend gets started. Before all the high tech
computer mumbo jumbo we used to simply refer to this sideways period as a "basing pattern". The ADX is most effective when it begins to rise from a low
level (low = 15 or less). This low level on the ADX indicates that there has been a basing pattern for a while. This interpretation is contradictory to those users
of the ADX who want to see the ADX cross above a specified threshold (usually 20 or 25) to indicate that a trend is underway. This technique would make the
ADX even slower and means you would be confirming a trend and entering your trade long after the basing pattern was broken. But even if you were late due
to your method of interpreting the ADX, following the ADX after a base pattern is still quite reliable. The potential problem I want to bring to your attention in
this article is the action of the ADX after major peaks and valleys.
The logic of the ADX is best visualized as measuring directional movement over a moving window of data on a bar chart. If we have sideways data in the
window followed by recent trending data (lets think of rising prices but it could be the reverse), the rising prices would show directional movement relative to
the sideways data at the beginning of our window. The ADX would promptly rise and call our attention to the fact that there is now a direction in prices that
should continue for a while.
However, if the prices rise for an extended period and then begin to fall sharply (a typical scenario) we now have a window of data that shows rising prices
followed immediately by falling prices. The ADX formula measures the rising prices in the window and compares them with the declining prices in the window.
Because the two trends are about equal they cancel each other and the ADX does not detect any net directional movement. The ADX now begins to decline
indicating that it is finding no net directional movement in the period measured by the window.
As the window moves forward, eventually the older rising price data falls outside the back of the window so that the window now contains only the more
recent downward price movement. The ADX suddenly begins to rise rapidly because the data window at this point contains only one trend. The problem with
this new signal is that the downward trend in prices has been underway for quite some time and only now has the ADX finally begun to rise. This is obviously
not a good point to be entering a trade to the short side. We are probably nearer the end of the trend than the beginning.
Remember that the ADX works best after a basing period and is unreliable after a "V" bottom or top.
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., although I do agree one should not rely too heavily on one indicator, I also support the view of having absolute mastery over any one of the good
indicators.
We don't need to dwell too deep into science to understand why at times trading with one indicator is a good thing. We just need some basic combination
theory to understand this. Now, if we have 2 variables, Price and one indicator, we could map out different market specific behavior of these two variables and
study them under those conditions. We could then know, how these two variables behaved and what result to expect under those circumstances. Now, as we
begin to increase our variables, we find it very tough to monitor and research these variables. Two variables combined with each other, gives a finite
combination. But as we begin to introduce more and more variables, the combinations start to increase and hence the result starts to vary. Now, which result
to pick in which condition becomes quite a task.
This is precisely why financial markets are something one needs to be at peace with. Some can manage 2-4 indicators, while some can only manage one. The
effectiveness however of using 1-2 indicators is no less than using 2-4 indicators. This is just my own experience. At the most I prefer to see one indicator.
That's it!! Most of the times, price is enough.
Anyhow, the way to master the markets is to approach it step by step. If one picks up one indicator, he should try and research it in and out. It is only then
that one can truly master the markets. And once that's done, you'd be in a position to take out money at your own will.
Selecting Time frame to Trade - Data Validation
Majority of the traders in the stock market like to Swing trade using the daily time frame and the 60 minute time frame. Furthermore, about 99% of them use
indicators to take a trade in either direction. Now, taking trades based on multiple time frames is very logical as this ensures that the trader always trades in
the direction of larger trend. But, which smaller time frame one uses determines whether the trade results in profits or losses. In this post, I want to highlight
a very important aspect of data validation which is often the most neglected aspect in Swing trading
For the sake of simplicity, we will assume that a trader uses Daily time frame to measure the trend direction and 60 Minute time frame for taking the trades.
Furthermore, we will also assume that the trader uses stochastic oscillator to enter and exit trades. Now, before getting into data validation aspect, lets briefly
review what the stochastic oscillator does. The Stochastic Oscillator measures the level of the close relative to the high-low range over a given period of time.
So, when we apply the stochastic oscillator over period of daily time frame, then, the stochastic readings typically depict the level of close relative to the
High - low range over the entire day. Now, till here, everything seems fine. It is only when the trader switches to 60 minute does the problem begin to arise.
Our markets are open from 0915 am IST to 1530 Pm IST. This means we have 6 bars (each of 60 minute) on hourly frame and 1 bar of 15 minute trading.
Now, this poses a serious problem if one wants to take trades based on hourly time frame. Each price bar is a representation of the supply and demand
prevailing in that hour. So we are bound to get an error as that bar does not represent the accurate demand and supply scenario in the market.(Best u merge
in mid bar that 12-15 to 13-30 as less activity in dull lunch hr )
Similarly, now, If the trader is using Stochastics oscillator that measures overbought and oversold based on where the close fell relative to the high and low of
a bar, then the size of the bar is integral to the result. Because price ranges tend to increase with the length of time, a bar with too little time will give
inaccurate signals and give false reading on a market. Once this happens, the profitability of the trader gets seriously affected as now he has deviated from
his plan unknowingly.
Typical solution to counter this problem is to create bar sizes with equal length of trading action.(62.5 min each bar) Those who fail to adapt to this concept,
will be neglecting a very serious problem of data validation. All we do is trade on data, and if the underlying data is not validated and accurate, then our entire
plan is prone to errors.
In conclusion, the next time one uses different time frames to enter trades, please ensure your data is validated and is error free.
Nifty View
05 July 2015
02:34 PM
I have given my Nifty view earlier when I became extremely bullish on markets (Technical And Fundamental) and the view remain s the same. If you have right
money management rules in place, nothing should bother you. Just ride the trend. -, having an opinion is good, but sticking to it and expecting it to happen
CREATE -ive expectancy.
Don't focus on what FII's or any other investor is doing. Focus on what your thought process is and what the market is tellin g you right now. Once you focus on
these two aspects, you will get your answer.
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valid interpretation of Open Interests in Options.
" Open interest represents the total number of option contracts currently open and is a measure of liquidity in a particular options class. In other words, open
interest is a figure that reflects the number of contracts that have been traded but that have not yet been exercised or liqu idated by an offsetting trade. When
you trade an option, you may in fact be creating a new option contract. Both buying and selling options will increase the ope n interest figure, providing the action
opens a position. Conversely, buying or selling to close a position will cause open interest to fall. If one side is opening a buy position and the counterparty to the
trade is selling his existing bought position, then the open interest will not change.
Looking at the open interest, there is no way of knowing whether the options were bought or sold. However, the figure can be compared with the volume of
contracts traded on a given day. When the daily volume exceeds the existing open interest, it suggests that trading in that o ption was unusually high. Open
interest also indicates the liquidity of an option. When options have high open interest, it means they have a large number o f buyers and sellers, and an active
secondary market will increase the odds of getting an order filled at a decent price. Generally speaking, the larger the open interest, the easier it will be to trade
that option at a reasonable bid-ask spread. "
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Importance of Getting in and Getting out of a trade
Has it ever happened to you that as a trader you chase a stock and it continues to give you whipsaws. You finally make up you r mind to give up on that stock
and ironically find it rallying on the very next move. I guess, this has happened to each one of us in our trading career. Th erefore, as traders what can we do to
counter this? Before we touch upon this topic in detail, I'll assume that everyone reading this has a distinct advantage over the markets in form of systems or
methodology. By distinctive advantage, I mean a system which does not depend on specific market conditions to work. So, let's begin !
Well, if you think about this issue in detail, this is more of a psychological issue than a system issue. As soon as we get a couple of loss making trades, we begin
to look at our P&L statement. Furthermore, we begin to extrapolate the P&L "if" we were to loose a few more trades. Believe m e, if you want to be successful,
then don't do this ! We all go through phases where the stocks just don't move and eventually when they do move, we are ultim ately out of it. Most of you who
follow this thread, must have noted on many occasions that I keep reversing my trades till I find that stock in my favor. Cur rently, I am doing the same with
India Bulls Real estate. I will keep reversing my positions till that stock fits my scaling in and profit booking criteria. I t's psychologically tough, but who told that
markets rewards one for taking easy decisions? When we are wrong, we want to make sure our losses are small and when we are r ight, we need to make sure
our profits are relatively large.
There are few things in trading which are not documented well enough. Out of those, the topic of getting out and getting in i s one. Folks, as far as our system
has a positive expectancy, we should not be bothered with the whipsaws and the draw downs. To be successful in this, never ev er forget the 2% risk
management rule. If you don't let one trade take more than 2% of your portfolio, believe me you'll be soon taking your accoun t in the whole new direction. That
is, towards profits.
If you intend to become a good trader, you have to incorporate this in your trading plan. Be relentless, don't think about po tential losses, let them show up and
then apply the risk management rules. Don't trade what you think, trade what you see.
1. Focus on your thought process - This means focus on your methodology, your system. If your system is good, it will always chase the smart money. If you are
able to do this, you will be able to make money. Don't think what they will do, just keep going with the flow.
2. What the market is telling your right now - This means look at the Nifty, Bank Nifty and ask yourself what do you see? Does the Nifty tell you it's going to
correct? Don't think it might correct. Let it tell you in person. Once it does, reverse your positions. For eg. As of now if I ask Nifty to short it, I get an answer
where Nifty tells me I am a fool. Hope you get my point. It's communication, its logic and its all about being in the present
3 Different Trading Accounts

05 July 2015
02:34 PM
I have three completely different accounts.

One for Swing,
One for Investments
and the last one for scalping.
For Swing and Investments I keep 2% (Swing) & 1% (investment) criteria of the account size. For scalping, it is usually 0.3 -0.5 %.
Now coming back to your query, we can never know when FII's will pull out their money. Hence, don't pay attention to these ne ws or rumors. If they will, we
will come to know through price structure. Till then, its better not to assume. October is cyclically a corrective month for India and the Global markets. This is
just a possibility. This is not certainty. Hence, trade with stop losses and you will be fine
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To me FII wud pull out money only if they have major redemption pressure else in normal situation they wud not because
1) retail participation is not there and if they start pulling out money they will be in loss
2) they do not have any other (other than global emerging markets countries) places to park their money. their internal syste m is not efficient enough to get
good returns.
I completely agree that we wud never know when they wud pull out money coz most of the money dumped in indian market is of he dge fund and regulations
are not good enough world wide to have any quality standards.
The "What If" Syndrome
As technical traders, we are always dealing with probability and never with certainty. We make systems, we practice them and eventually we trade them in the
real markets. In the end, we all know that no matter what analysis we do, markets will eventually do what it wants to do.
When we see certain trades going against us, we immediately begin to question our systems, market structure and eventually co nceive the worst syndrome a
trader can ever have. That is, "The What if Syndrome".
This is a syndrome which is responsible for wiping off 50 -60% trading accounts every year.
What this does is, it creates doubt about our skills, about our intellect, about our systems and about the potential change t he market can go through going
forward. We begin to look around and start to feel inferior to other knowledgeable traders around. Believe me, trading has no thing to do with intellect and
nothing to do with vast knowledge. Like we cannot change ourselves overnight, similarly markets don't change overnight. It ta kes time for Bull market to turn
Bear, and for Bear market to turn Bull. We begin to assume that just because we start trading certain methodology, the market will start changing its inherent
character. This concept is wrong and this never happens.
Once a trader gets affected by this syndrome, he steps out on a path to find the ultimate indicator, oscillator or system. He believes he can find one such
system which is going to yield minimum losses and maximum profits. There is absolutely no such system which yields minimum lo sses. Losses are a part of
Technical trading and have to be accepted if one has to stay in the game. Typical symptoms of this syndrome is when one start s switching systems or when
one realizes that it is more knowledge which is required to become a good trader. If anyone of you is suffering from this syn drome, then let me tell you that all
one needs is a simple methodology, simple rules and discipline.
If systems and methodology were so important, then eventually every technical trader should have been extremely rich. The tru th is, systems and
methodology form a small part within one's entire trading system. The key ingredient to one's success is the right mind set a nd immense discipline. If you
remain mentally strong, then neither will you nor the markets work against you. Ultimately, strength does not lie in systems, it lies truly in the mind. Keep the
"what if" syndrome out of your trading plan and work towards peace and prosperity.
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Here's how to identify stock price structure. Look at the graph below.
Now there are two parts to this. One is identifying base and second is what happens after base is formed. In this case, whene ver a base is formed, the stock
has made a new high with force. This has happened on 3 occasions. Today it was the 4th time when the price has just brushed t hrough the previous high's.
The OI and volumes was building with every base and peak.
. Because today, the volumes were so high, it could be possible that stock has been passed on to new entrants. However, today there was an OI addition of
70%. Hence we need to see what happens. For traders to execute these type of trades, one has to have a care free attitude. If it works, it works. Else, bring
the next trade on.
Monthly breakout after consolidating in a narrow range on heavy volume.
Also the stock is in news
OI has increased by 77.69 % or 700 lots.
Today is the 52 week high.
A good BTST candidate too.
----------------------------------------------------------------------------------------------------------------------------- -------------------------------------------But the stock has closed well below its VWAP of 794.
700 lots or 35,000 stocks addition in OI is definitely insignificant compared to the traded volume of 19,82,031.
Delivery volume is 17%. which comes to 338364.
Not able to guess if it is accumulation or distribution at the higher levels ?
Please advice on how to find accumulation/distribution patterns ?
Entry criteria also depends on Exit criteria. I entered APIL for 2 -3% kind of play. Hence my entry yesterday is justified. If you wish to enter for another leg of
upmove, then let it consolidate.
1. Focus on your thought process - This means focus on your methodology, your system. If your system is good, it will always chase the smart money. If you
are able to do this, you will be able to make money. Don't think what they will do, just keep going with the flow.
2. What the market is telling your right now - This means look at the Nifty, Bank Nifty and ask yourself what do you see? Does the Nifty tell you it's going to
correct? Don't think it might correct. Let it tell you in person. Once it does, reverse your positions. For eg. As of now if I ask Nifty to short it, I get an answer
where Nifty tells me I am a fool. Hope you get my point. It's communication, its logic and its all about being in the present .
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The mind always resists to see what is happening in the markets.
The mind remains in anxiety of greed or fear thinking of the past or anticipating the future.
It always tries to find an opinion about the direction and tries to stick on to that.
Or in other words it wants some thing concrete.
It is not flexible enough to change with the change.
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How to develop the Skills

05 July 2015
02:35 PM
(How to develop the skill ).

For example Yesterday morning before market opening I was of the opinion that Tata steel is weak
But the same morning it went almost 1.35% up.
From 602 it went to 609.
Came to 597 again went to 607 range.
Finally corrected down to 593.
But in the meanwhile the roller-coster turmoil undergone by the mind was tremendous.
Each time the script reacted against the opinion held by the mind the struggle was more.
To take positions opposite to the opinion of the mind but with the direction of the script is a very
difficult challenge.
How the mind got its opinion ? By analysis.
.Analysis is the key of the mind to keep itself alive
Because in the "present or now" mind is not alive. Hence it is an survival tactics played by the mind.
How to see the prices and trade without keeping an opinion ?
Does this mean that don't do your homework ?
Don't do analysis ?
Because by doing analysis mind gets an opinion.
The opinion framed or the belief that the prices would go up or down is the key obstacle for trading.
Which again creates block in ur mind.
So which means throw all your technical analysis/charts/fundamentals/News etc and just follow the price action or flow
At the end of the day I get very tired.
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Please enlighten us how to make trading a pleasurable event with least stress?
What you have analysed is very true and congratulations to have got this right in such an early stage. Now, coming back to answering your query.
Markets neither know Fundamental Analysis, nor does it know Technical Analysis. There have been proponents of both fields and yet somehow they are so
wrong. Fundamentals argue about valuations, P/E, Growth and Technicals argue about Patterns, VSA, Market Profile etc. Does the market actually care about
these? Well, I have seen stocks dropping like there's no tomorrow even when there P/E/Valuations were indicating 'Buy'. Similarly, patterns, VSA etc fail more
often than they work. Hence, both methodologies are prone to fallacies.
What does an investor do then? Well, the answer lies in our mind. It is not that Fundamentals and Technicals don't work. It is just that one has to hone his
own skills to judge when these will work. This unfortunately comes only with persistent practice and discipline. Both these fields have immense value, but that
value needs to be unlocked by conquering our mind. And that my dear is not an easy task.
Have you ever thought why market analyst try and justify Technicals and Fundamentals? Answer to this lies within our psychology. Our mind has a habit to
compartmentalize all the information available to us. It is within this compartment that we seek an answer to all the investment related queries. If the
compartment and the information within it is not organized and appropriate, no matter how hard we try, we would never succeed. Hence, the answer to all
your queries is the word "Organize". You have to see what you believe in and then have to organize your thoughts in a way where picking stocks becomes just
another habit for you.
Don't worry and keep trying. We have all been in this similar situation. The one's who never give up are the one's who always succeed.
Trading with MACD and Stochastics

05 July 2015
02:36 PM
Trading with MACD and Stochastics

Tools Candlestick/Bar Chart , MACD Oscillator with standard settings, Stochastic Oscillator with Standard settings
Trade Setup The basics of this setup is very easy to understand. All you need to do is monitor selective stocks (high beta high volume) or the Index. My
preference is more towards Index. Now, everyone absolutely loves trading with Stochastic and MACD. But in my Opinion, they use these tools in the wrong
way. Stochastic and MACD are extremely valuable tools and one needs to use them correctly in order to profit from them.
Buy Setup Usually, traders begin to buy stocks when they see the stochastic cross below 20/30 or any level. Though this is profitable sometimes, it leads to
serious draw downs in the long run. The value of stochastic crossover increases tremendously when it is used with MACD. Next time whenever you see a
stochastic cross, wait for the MACD cross to happen. In other words, if one stock exhibits stochastic crossover, begin to watch it. Start looking at the MACD, if
the MACD cross happens, then take that trade. Essentially we are using MACD as a trigger to enter trades.
Important Notes At times, it will happen that Stochastic crosses for a Buy and then by the time MACD crosses for a Buy, Stochastic would cross for a Sell
trade. Under these circumstances, always trust the MACD cross. Stochastic will eventually turn up and will move up. To enhance the profitability, one should
always trade this setup in the direction of the main trend. Furthermore, this setup will work well in stocks which depict high volatility.
Short Setup - Exactly opposite of the Buy setup.

Targets - Aim for 3-5% Gain.
Example - Look at the example below. I am not going to take you deep down in the History. Hence, I have attached example of Bank Nifty for the Year 2010.
With this setup, you would have captured every down move and up move in this year. Whipsaws are common for this strategy as it is for every other, but once
you get the hang of it, this is again profitable. I have plotted the recent down move and up move as example. Go back and history and see if this makes sense
to you. Try and visually identify this setup. Don't pick up your trading platforms and code it. The more you trade this visually, the more accurately you will
identify the false signals. Computer cannot see what the human eye can. Remember, this is no Holy Grail !
__________________j
But the key question is whether you would trade the price action ,if it has a compelling significant move ,opposite to your view before market opening or would
stand your ground and enter only once the price action reverts to your view?
Majority of times, one will always know when an explosive move is about to occur. This just comes with experience and significant amount of screen time. So
there's no question of trading when the price is not moving in your favor.
Markets opening up or down, against or in your favor, is just another phase in market. Often overstated, but statistically of far less significance.
Thanks to the golden words "Trade what you see and not what you think".
Instead of holding an opinion on the Script, If I had blindly traded the script with Price Action - I could have eliminated the element of fear and doubt of the
trade pricking my mind against my opinion.
That particular day the script moved twice against my opinion and twice in the direction of my opinion.So out of the 4 moves - I was able to remain calm only
for 2 moves.
By entering a trade only when the the price action reverts to my view
again
1. The opinion still remains.
2. There is a chance that I could have missed a big move on that against my opinion or hit my stop loss.
So it is highly imperative to trade with out framing an opinion.
or in other words don't have a long or short view at least in day trading.
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To elaborate more - How opinions framed kills traders I would like to share the following real story.
My friends were seeking professional advice from a well known TA.
He was of the opinion that Nifty would go down from 5100 levels after a pullback from 4800 levels because of RSI divergence in the monthly charts.
They wrote 4900,5000,5100 calls.
In spite of all the technical indicators showing long they didn't square of their positions till the month end saying that we will stick on to his instructions. Again
they rolled over their positions to the next month and again went short by writing calls. LOST HEAVILY
Markets never corrected as per their opinion.Markets are designed to deceive people.
How to deceive people ?
By making them to believe in something by making them to form an opinion.Then react exactly opposite to the opinions of the majority.
TA is not a science it is an art - what does this mean - There is only a high probability but there is no guarantee of the predictions based on TA.
Hence stick on to your trading rules but don't stick on to your opinions (even based on Technical analysis/FA remember price is supreme)
Market makers,TV channels,News Papers,Analysts,Broking houses want us to have a opinion and stick on to that.So that it will be easy for them to move the
markets against most of the crowds opinion.
It took so long to understand the real meaning of the golden words - "Trade what you see and not what you think".
Markets are designed only to give one success, provided you listen to it. It does not know who you are, what you do or where you come from.
Also, Market makers, brokers, analyst etc don't form an opinion for you. They don't make anyone trade on gun point. It is the trader himself who forms an
opinion based on what he hears. Also, the concept of majority and minority is just over stated. There's no visible majority and similarly there's no visible
minority where the majority r targeted.
Also, how do you intend forming rules without FA OR TA? Opinions are inevitable. Hence, its easy to say that opinions should not be formed. An year like
1987,1995,2000, 2008 will get all these concepts out of any trader's head. That is why, trading is the highest paid profession, and also the most difficult one.
Listening to the Markets

05 July 2015
02:37 PM
if you are able listen to the markets then one will get success.
Markets are designed only to give one success, provided you listen to it.
It does not know who you are, what you do or where you come from.
Most of you would have heard mutual fund advertisements and at the end there will be lightning voice
"Mutual funds investments are subjected to market risks".Have any one thought what those risks are ?
Some thing like a lier's poker.
In Las Vegas terms - The house always wins.
Like wise in capital markets majority of the people loose their hard earned money for the benefit of a few.
No matter how good a stock - the price is determined by the smart money.
There are several good stocks with less P/E,PEG ratio buts till remaining un touched.
What do you mean by listening to markets ? -- go in the direction of the smart money.
Find out the scripts where accumulation is happening or where distribution is happening.
NEVER SIT IN FRONT THE TRADING TERMINAL.SIT IN FRONT OF A DECISION MAKING SYSTEM.
This is the first basic thumb rule for a trader to take money out of the markets.
How many people can afford to do this ?
How many people have the capacity in terms Money,Knowledge,Patience,SW background to understand the market dynamics.That's th e reason people come in
and go but markets remain.
How many people in our country have advanced get/Amibroker/Metastock or conversant with AFL ?
All the rules are in favour of Big Investors.
Even Automation SW are highly priced to the tune of 1 Lakh/month.
First of all how many people are aware that trading could be automated.
How many of people know that Big investors get news few minutes before news getting published in the TV channels.?
How many people here are aware of Reuters ?
Trading is not a Zero Sum Game.
For every click on a computer trading terminal some one is paying the following
Govt + Brokers + Stock Exchange one way or the other.
They are the winners irrespective of people make or loose money or crash or bull run.
Govt being the highest gainer out of Stock markets.
Stocks doesn't have any intrinsic value for themselves like commodities.
There is no real production involved.You have limited stocks.
Supply and demand of the stocks are created artificially.
It is just the opinion or bet on the stocks future prospects.
If you have money Just accumulate/operate a stock at the bottom and dump it on the retailers at the High.No questions asked.J ust make sure that it is not done
so visibly like Harshad Metha,Ketan Parekh.
A stock like Satyam can go down to 7 - 8 rs from 650 rs in stock markets but the same cannot happen for a commodity.So who determines this price.It can go
to zero as well.
Global Trust Bank.
DSQ.
The list goes on..
Who brought the price of Satyam to 7 - 8 rs level ? - The market makers.
By precisely knowing the demand and supply of a stock they are able to manipulate well.
LIES ON MARKET
One fine morning One reputed TA gives a short call news in CNBC on Tata Steel with a down side target of 480 rs a day or two before expiry.The same day it
touched 494 rs.
A smart Fund manager of a reputed Mutual fund purchased certain percentage of TS that day.The script is going up non stop fro m then.That evening the news
appeared in the same channel.
The day before expiry Maruti crashed like any thing.
On the day of results BOI(11 % earnings up) crashed 11%.
During the previous govt, Most of us should be aware of the play on oil companies like BPCL,IOC,HPCL by the then Mr.
Why go to that extent. Most of us would have observed Block deals in NSE.
The companies would buy in lump like 5 lakh shares.
The retail people would buy the shares following jump in volume.
They would dump it pass it on to the retail customers with a minimal margin say a ruppee per share.
So we cannot avoid manipulation by smart money.
Just think of the following situation
1. Remove the so called liquidity providers/Market makers from the exchange.
2. Companies should not be allowed to provide the market makers with crores and crores of shares.
3. Corporates should not be allowed to trade their shares.
4. or Leave market making to a Non profit organisation.
5. Define an intrinsic value for each share.
6. No rumours/News/policies/ during market hours.
7. On upper freeze down freeze days publish the names of the major profit makers.
8. After listing a share with premium if the share price goes down beyond a certain limit.
9. Make sure if the company board of directors/insiders trading.
Or it should be released with a buy back promise from the company.
9. On any single day whether any one has been charged with circular trading ?
How many people have committed suicide in the 2008 market crash ?
Why do analysts/Brokers give calls they could themselves buy the shares and get rich ?
It is some thing like this why do you trust a Broker/analyst ?
Bcoz for the lack of infrastructure,knowledge,Money one person seeks advice from an analyst.
Otherwise TV channels and Analysts wont exists.people getting free calls are more vulnerable to cheating.
Why a loosing trader is not able to stop trading ?
It is called gambler's syndrome.He will always be deluded with a false hope that he could recover the loss and make a fortune in short span. One cannot keep
himself out of trading even knowing that he will loose when he goes to broker house.But your inner urge to recover the loss w ill create chaos and will make a
person ultimately to surrender to some sources.
Broker Houses
1. I know personally broker houses giving calls to generate their daily turnover.
They will make sure that their clients will not make huge profit or loss but survive so as to generate enough brokerage for t hem.
2.Their HNI calls gets circulated first few days well before in advance than to ordinary clients.
Analysts
Analysts
1.Some Analysts do have hidden agenda there are many wrong calls given by them purposefully during accumulation/distribution phases.
2.For analysts it is a risk free source of money in the form of consultation or technical calls which is highly being misused now a days by mushrooming TA
companies.
TV channels/News Papers
Are being misused by operators/Smart money to distribute/accumulate shares.
Insider trading is happening.This will happen and nothing can be done since Market makers/Brokers/Analysts/Traders - They are hand in gloves- all humans with
greed.
What about the watch dogs and Regulators
I went to court with my friend for his sub broker fraudulently cheated him by selling a IFCI call@10 paise from his account a nd sold the same immediately at
8.75 rs when the stock was trading 9 rs.
The Judge asked what do you mean "Options" ?...........................
Fundamentals are required but again are today they are highly and easily manipulated.Not all fundamentally strong companies a re trading at their deserving
valuations(which is again highly subjective).
Technicals are absolutely required to pick a stock.
Personally I would prefer technicals rather than fundamentals and keep fundamentals as a supporting mechanism for a stock pic k.
My point is technicals or fundamentals- just don't hold on your bullish or bearish views.
Just go with the Price action and be with the trend and let the markets decide the view.
Trading rules - Money management rules.

Fibanocci or ATR based targets/Stop loss.
And especially for day trading I think trading with out any bias or opinion would be best.
My point is "It is our hard earned sweet money friends" and it is our responsibility to protect ourselves from the markets. I t is a high risk game and we should
play the game accordingly.
My apologies if I hurt sentiments of others by my above writing.
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So The essence and beauty of Raunak's Teaching is Let life (Market) flow, go with the flow..and the Core message is.."You hav e a right to perform your
prescribed action,but you have no 'control' to the fruits of your action.": -("Karmanye Vadhikaraste Ma Phaleshu Kadachana),...The highest principle to live this
complex life (Market) successfully/peacefully Result is the destiny anyway...same is said as "thy (Market's) 'Will' be done.. not my 'will'."
you just focus on your methodology 'your right of 'action' in the given situation'...rest is INSHA ALLAH... If we focus to mu ch on the results (thniking) there will
be stress, we can save our that energy and focus what we simply 'see' in price - "Trade what you see and not what you think".
One more thing -Divergence is among the most over rated technique in Technical trading.only works in NEW HIGH .
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Futures or Equities?
This is one question which bothers every novice trader. When one enters the market, the first thing he hears before depositin g funds in the market is how
margin trading can fulfill all his dreams and desires. For him, the words "Futures and Options" open the doors towards financ ial freedom and towards prosperity.
As many have realized in the past, Futures and Options route is one of the most destructive ways to financial freedom. Howeve r, for some, it indeed is the most
desirable way to participate in the market. So, why is it that Futures for some is boon and for others is curse?
I strongly believe that Psychology is far more important than Methodology. Methodology in this case includes your system and trading instrument (Futures,
Equities). Hence, in most of the cases it is the trader's psychology which prevents him from participating in Futures. I have seen many well funded traders
unable to take positions in Futures and at times this is nothing but psychological barrier. Just think, if you know the stock is going to behave in a certain manner,
then how would it matter whether you trade in Futures or Equities? The problem of trading in Futures only arises if you have limited funds available. In that
case, Equities is the best option.
As far as my trading goes, I never feel the difference if I am holding Equities or Futures. When I hold futures, I can sleep as well as when I hold equities. In my
opinion, anyone who is properly funded and does not trade futures is missing out on the calculative advantage of margin tradi ng. In most of the cases, this is
mainly due to lack of proper planning. Here, I'll be giving out a systematic approach (series of questions to answer) to solv e this problem for those who
experience this barrier.
A) Are you Well Funded?
B) Do you have a Trading Plan?
C) Do you have a specific Entry point?
D) Do you have a specific Exit Point?
E) Do you understand 'R' of your system?
F) Are you afraid of Gap down?
In my opinion, if you have answered Questions A to E as Yes, then you must simply start trading futures from tomorrow. As far as "F" is concerned, since you
will have a specific exit point, you would know when and where to get out. Having psychological barrier is very common and ge tting rid of this barrier is what
differentiates an expert trader from the rest. If you know how to use calculated leverage, then use it. By not using it, you are limiting equity growth and your
growth as a trader.
Trading lines
05 July 2015
02:39 PM
For the past couple of weeks, I have been able to see some success in my endeavor of having some understanding of stock market. It may also be because
the Market is going up; and at this time anyone can think of having understood the markets. But, I am trying my best to be as disciplined and clear as
possible.
My question/problem is that though I sometime get good entry levels, but do not know how to decide the target appropriately and also have some
problems in exiting the loosing trades.
Therefore, I request you to guide me on this with this chart, if it is possible for you to spare time from your busy schedule. This chart is till 23rd Sept 2010
on which base I made entry. Since, I am still not able to figure out the targets, all I do is to keep the very next resistance as my target, which in this case I
observed 290 (the trend line resistance) and then 300, being the round figure near previous resistance. Can you please comment and guide me in this
regard, if I have chosen the correct levels of resistance.
Further, the very painful problem is the level of buying the stocks. When I decide to take long trade in a script, I dont know how to handle it during the
next day, when market opens. What I do, is to buy the script at whatever price it is available (which many times around 2-4 % more than the closing price
on which basis I decide); therefore, it is eating most of the profit, which should have been there if I would have been able to enter the trade at appropriate
level. Because, many times the script comes down around 2-4% and then I have to wait with tensed mind.
Therefore, is there any idea of knowing that the script may come down after opening at higher levels and then go up. I don't know if I had been able to
express my problems; but I do hope that being a very experienced trader, you may have got the point of problem, which I am facing.
I have tried calculating the targets with the help of chart patterns like flag, rectangle, triangle, wedges, pennants, cup & handle etc. But my problem is
many times (around more than 50% of the time), the target is never met. May be because of myself choosing wrong scripts or some other reason. Like in
this chart, if I calculate the target with Flag Pattern, it will be around 380. But that will be only operational if the price violates the resistance and keep
moving up. Because, I have taken the trade in advance I don't know how to deal it.
ANSWER: Yes Crown .. it happens ....
b/o s generally have a retest .. and that is where you should enter.
See DLF chart ... 348 was b/o level. Came to 348 y'day and today see .. 365/- again.
I was waiting for entry and it never came to 348 in the next 2/3 days .. so left it.
Y'day it did come BUT my mind was elsewhere .. though I did trade DLF today BUT that was intra based from 349 to 363.
Same with RCap .. see the b/o and then no retest .. BUT y'day it retested b/o levels and today bounced again.
So we have to be patient and this patience HAS TO BE cultivated else our entries and exits both will be wrong.
Again, sometimes we just miss it .. and since the scrip is very strong it may just move on after b/o .. happens .. can't help it .... all part of the game ...
We win some .. we lose some ... just make sure that the ones we win are more than the ones we lose .
.................1. which chart shall I use( Candlestic 30 Min, Daily etc)
2. As there are lot of strategies which are mentioned here which will suit my requirement more appropriately ? So that I will try to learn that effectively.
3. Do I need to consider only High priced/High volumes Stocks ?
4. Is there a way where I can see which are the stocks eligible to trade or I need to monitor all trades on daily basis to identify if any of these matching the
buy criteria.
Let me tell you what you are asking me to do. You are asking me to be YOU.
Dear this is not how trading works. You must know all the answers to these question. Do some work and work hard. Dont expect easy money.
This is the rule............because of ur superiority of knowledge/experience & skill of execution .........money shall come to u.........against loss of other
trader.
But in my View, its not for which Raunak is aiming here for that little spoon feed. Rather he wants to learn us the fundamentals, the technicals of the
market, i mean the analysis part,and wants us to become self reliant. Thats the reason for him to wear the mantle of the mentor. And its the reason he
takes pain to post strategies, techniques etc in between.
Think a while, Do we come and follow his thread, when he keep on posting, theories, techniques, fundamental analysis only? May be one or two, and then
naturally our mind, will never compromise to have the WILL for learning, and in the process will give a pass to this thread, saying," Oh, this is no different"
HENCE, THIS bloody mind BEGINS TO THINK, "if we practice 'n follow the guidelines,one day or other why not we can become like RAUNAK"and then starts
to work harder and harder towards the goal.
I don't know, what i said above suits to you pals here or not, but for me, i keep on learning and i am proud to say that my learning curve is becoming
increasingly higher.
The overall concept is fine. But you need to monitor levels from different time frames. Without doing that, your analysis will remain incomplete. Look at
colgate again and see what and how I have integrated. Intraday levels are only monitored to detect the change in Demand and Supply situation.
. Also, I tend to overlook stocks which are not within my volatility criteria.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
I have clearly explained Dual time frame strategy in one of the pages. Just refer to the index. It is basically taking trades in the direction of higher time
frame while entering from a time frame lower than the higher one. Go through the entire post where I have posted this strategy, you will understand it.
Wipro moved up from 370 to 440 in Jul -Aug. Like colgate, wipro witnessed a nice upmove. But, Colgate consolidated (2-5%) last month, whereas Wipro
corrected. This means Wipro despite of moving up had selling pressure prevailing which made it correct for 8-10%. Whereas Colgate simply consolidated
representing no selling pressure.
Hence these two are different. We are always looking for 3 things .
pullback -Consolidation - Breakout
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------If I remember correctly, I have explained this EW and ABC correction method somewhere in the beginning of this thread. I think I had explained it to you.
Anyway, let me come back to your query now.
In my opinion, all the EW practitioners, with exception to some EW experts, practice EW in the wrong way. EW was never to be used in trading. It is only to
be used to "judge" where the markets stands at this point. Hence, let me give you a framework based on EW so that it becomes easier for you to use it in
your trading.
Every trader must divide his judgement about markets into two halves. One should reflect the long term market picture and another one should reflect the
short term picture. The broader term price structure should be used to trade in the direction of the larger trend whereas the short term price structure
should be used to generate alpha. Now, in your case, this is how you should structure your trades.
Broader Price Structure
EW - Where is the market currently? Which Wave? Is it 1,3 or 5? Or is it 2 or 4? Which should be the correct strategy in this case? What about volatility? Is
it low or high? If its high, how do I protect myself from risk?
Now, these are the sort of questions you must ask yourself before trying to decide in which direction you have to trade. Now, lets say markets are in Wave
5, this means, broader term structure still remains intact and markets are in uptrend. However, this also means, we are in the last leg of the Bull move and
volatility is high, which also means chances of corrections increase. Hence, in this case, I would use my trades for some quick gains and would tighten my
stop losses on my investments.
Short Term Price Structure

Dual Time frame Strategy - What do I do here? What message did the market give me in broad price structure? Are we in a bull wave? If yes, which wave?
How's the volatility playing? Do I look to take trades based on dual time frame on the buy side or short side?
Now, of you see the market in Wave 5, you should be taking trades in the Buy side, but must also be prepared to use the same strategy to initiate short
trades. By time extensions, you will always know probable time when correction (ABC) should begin and hence you must be prepared for it. This is exactly
what you should be doing. Your approach is slightly wrong wherein you are trying to trade (time) the markets using EW. Use EW for trend direction and use
your swing strategy for trade execution.
I hope this has helped you to channelize your thoughts. Try and always work in a framework.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,,,,,,,,
......................
Swing System for Nifty and Bank Nifty
System Trading
Most of the traders who (un)intentionally develop trading systems have absolutely no idea of what they are doing. In other words, they are unaware of
their systems risk, rewards, market suitability and other attributes which are absolutely essential for the systems to work. Unfortunately, most of the
system developers intend to develop one universal system for all market types. For those who don't know, markets can be divided into broadly three
categories; Bull, Sideways and Bear. Furthermore, markets can be sub divided into Volatile Bull, Volatile Sideways, Volatile Bear, Low volatile Bull, Low
Volatile sideways and Low volatile Bear market. So essentially, we are dealing with 6 varied market types. How can there be one system which copes up
with all these different market scenarios? The answer is, It cannot . A single Long term trading system can incorporate all these market types within itself,
but a Swing Trading system cannot. Every time you start doubting what I have written here, ask yourself this. "If one short term system is suitable for all
markets, then why aren't fund managers simply using that system? Why are they sitting behind their desks, trying to find the correct approach in the
current market?" If you ask this question with complete honesty and objectivity, you will get the desired answer. If you still wish to stay in self denial, then
its completely upto you to deal with what lies ahead. Keeping this in mind, we move to our objective of designing a simple system for Low Volatile Bull
markets which will ensure we catch significant swing up moves and also ensure that we keep out of high volatile (Days/Scenarios).
Objectives
1) Building a Swing System for Low Volatile Bull markets which catches significant amount of swing up trends and leads to significantly lower draw downs.
2) Protection of capital due to increase in volatility. During periods of increase volatility, we intend to be out of the market.
3) Prevents us from Over trading. That is, keeps us in the market for fewer number of days.
Approach
Based on the objectives 1,2 & 3 we intend to use a technique which in itself can be used for short term trend following and can be used to incorporate the
inherent volatility in the market. For this very reason, we will be using Bollinger Bands for swing trading.
Bollinger Bands are volatility bands placed above and below a moving average. Volatility is based on the standard deviation, which changes a volatility
increase and decreases. One of the other great advantages of Bollinger bands is that they adapt dynamically to price expanding and contracting as volatility
increases and decreases. Therefore, the bands naturally widen and narrow in sync with price action, creating a very accurate trending envelope. Bollinger
Bands consist of a middle band with two outer bands. The middle band is a simple moving average that is usually set at 20 periods. A simple moving
average is used because a simple moving average is also used in the standard deviation formula. The look-back period for the standard deviation is the
same as for the simple moving average. The outer bands are usually set 2 standard deviations above and below the middle band. Settings can be adjusted
to suit the characteristics of particular securities or trading styles.
Since our trading style is to have enough trades, to protect our capital by getting out on slight increased volatility and to keep a check on draw downs, we
will use the Standard Upper Bollinger Band with average of 20, but will reduce the standard volatility to as low as 0.5. There are mainly two ways to use
Bollinger bands. One is to Buy at lower band and sell at higher band (Side ways market) and other is to buy at upper band and remain in trades till the
reversal comes (Trending market). Since we are aiming for Bull markets, we will use the latter approach. So essentially, when we identify a Low Volatility
Bull Market, we will simply go long every time the prices close above the 20 period Bollinger Band with St deviation 0.5 and will exit if the price closes
below the same.
System Statistics
I don't intend to self appraise this system and hence will not like to write the % profit, gross profit, draw down etc. Moreover, Profit and draw downs are
directly proportionate to how aggressively one trades and hence it will differ for each trader. However, I will give some statistics which are more useful.
Total number of trades from 1995 are around 200. Out of which only 38% trades are winners. Average profit/loss % is 1.32. Standard deviation of the
same is 4.9%. Average profit % is 6% and Average loss % is 1.33% and Profit factor is 3.38. Time spent in markets is at 53%. That is, 47% of time we
remain out of the markets and hence whatever we make in profits is by staying in the market for only 53% of entire time. Rupee value calculated using lot
size 100 of Average winner is Rs. 36,000 and Average loss is Rs. 8000. Rupee value of Average trade is Rs. 7950
Word of Caution
Most of you who have interacted with me know that I am not a systems trader. I had got many request for posting some system and hence I am doing the
same. In no way is this system holy grail. Also, use, understand and test this system thoroughly before even trying to place bets according to this.
This system is only suitable for Low volatile Bull markets and will fail miserably in other market types. Please do not try to use this system in any other
market type. If you do so, kindly modify based on your understanding. Lot of modifications can be undertaken and hence do it if you understand the same.
Contracts to be traded:Nifty and Bank Nifty.
For stock futures, this needs to be modified. I have not researched on the same and hence cannot advise on it.
Modification
I don't like spoon feeding any trader and hence this system is just a basic system which needs to be adapted to one's own needs. On the whole, anyone
who trades this system in the concerned market type, should get good gains. But the one who understands this in or out, will know how to modify this
system to take it to a completely different level.
Please understand, due to time constraints, I would not be justifying/clarifying any system statistic related doubts. This is mainly due to two reasons,
1) I have mentioned earlier that results are based on my sizing methods, risk profile and hence can vary according to what you chose.
2) System testing is itself a different ball game. Less than 5% of actual traders know how to test systems. It is not as simple as what Metastock/Amibroker
dishes out. Hence, any genuine system related query would be answered. Rest I will choose not to comment on as that would require detail system analysis
skills to understand.
Doubts related to system methodology are always encouraged.
AFL
I am not an expert in writing AFL's but I have provided the basic afl which is required to see how this strategy works. Anyone who is an expert in designing
AFL's can modify this AFL and post it here. Typical modifications would include, telling the trader whether the position is on Buy, Buy hold, when to add the
next lot and when to exit the lot etc. Similar to some thing what Anant has done for his positional system.
Code:
_SECTION_BEGIN("Price");
SetChartOptions(0,chartShowArrows|chartShowDates);
SetChartOptions(0,chartShowArrows|chartShowDates);
_N(Title = StrFormat("{{NAME}} - {{INTERVAL}} {{DATE}} Open %g, Hi %g, Lo %g, Close %g (%.1f%%) Vol " +WriteVal( V, 1.0 ) +" {{VALUES}}", O,
H, L, C, SelectedValue( ROC( C, 1 )) ));
Plot( C, "Close", ParamColor("Color", colorBlack ), styleNoTitle | ParamStyle("Style") | GetPriceStyle() );
if( ParamToggle("Tooltip shows", "All Values|Only Prices" ) )
{
ToolTip=StrFormat("Open: %g\nHigh: %g\nLow: %g\nClose: %g (%.1f%%)\nVolume: "+NumToStr( V, 1 ), O, H, L, C, SelectedValue( ROC( C, 1 )));
}
_SECTION_END();
Buy = Close > BBandTop(Close,20,0.5);
Sell =Close < BBandTop(Close,20,0.5);
Buy = ExRem(Buy,Sell);
Sell = ExRem(Sell,Buy);
shape = Buy * shapeUpArrow + Sell * shapeDownArrow;

PlotShapes( shape, IIf( Buy, colorGreen, colorRed ), 0, IIf( Buy, Low, High ) );Tc
*Explanation of Bollinger bands is borrowed from Stockcharts.com
Perspective 1
Assuming I have Rs. 1 Lac to invest, I would not be using What Elder has prescribed. Every trader has a different style of trading and position sizing and
hence what Elder has described suites his style. In my opinion, most of the traders misinterpret what Elder has explained.
His way of position sizing deals with accounts which are of much higher rupee value. For portfolios of smaller rupee value, it is always better to position size
by fixed equity method. That is, dividing 1 lac into 4 equal parts and investing the concerned amount in 4 different entities. I won't be too concerned about
the 6% or 10% or X% rule. If the methodology is robust, then rest of the things automatically fall into place.
See, When I trade, I need to ensure that my wins are meaningful to me. Now If I position size conservatively on 1 Lac and win Rs. 1000 (1%), then that
win is not that meaningful to me. This is precisely why making higher returns is much easier if one has portfolio of higher rupee value.
Perspective 2
Here's another way one can approach position sizing in small rupee value portfolio. Lets say I select 4 scripts on 1 lac Portfolio. I will start off by investing
only Rs. 5000 on each. Since winning % of most methodologies is 30-40%, I would expect only one to do well in this list. I would keep adding 5000 on
every 5% move in the winning stock. This way, in the end my gains in portfolio % terms will be very high and if neither of them work, then I will take a
loss of X% on only Rs 20,000 (5000 * 4). Remember, we are only averaging up and not averaging down. I personally follow this position sizing method
with some minor altercations when I invest. This way I loose less and gain a lot more.
-----------------------------------------------------------------------------------------------------------------------------------------
Traders who want to take risks

05 July 2015
02:40 PM
Traders who are willing to take significant risk can go long in GSPL @ 113.8
Lot size for this stock is 4000. Hence, a move of 5% in the opposite direction can yield a loss of Rs 20,000. If I am right, I am expecting some good
movement in this stock. On the contrary, if I am wrong, I would get out of the stock if (when) it close below 110.
Those who don't deal in Futures, can go long in this stock (equities segment) by keeping the same stop loss. Risk reward wise , the trade is pretty
good..........27.9.10
................
never short a rising stock.
Hence, for me, HUL is only a buy candidate. Certainly not a short candidate.
Candlestick pattern should be a small part of the entire decision making system. Not the core of it...........28.9.10
................. HDFC bank is in a wonderful uptrend. Why would you want to short it? Yes, you may have a 2 -4% kind of consolidation, but timing the entry and
exit will be difficult. Its a very strong stock. You should be looking to buy into it.
Don't fight the trend.........28.9.10
............Calculating Support and resistance does not vary with methods. Calculation is done the traditional way. I can giv e you some pointers which I use.
1.
2.
3.
4.
5.
Look for WRB (wide range bars) in that particular time frame
Look at the volumes and the respective price action
Look around which levels we witness NRB (narrow range bars), inside bars.
Advanced users can also use market profile.
Look at the pivot high/low.
Support/Resistance which I draw on charts can be completely different from what someone else might draw. Hence, spotting supp ort and resistance is very
subjective and depends on the skill of the user.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,
...................................
One of the most eminent qualities of a flamingo is that it never loses its vision or focus even while standing on one leg. It knows it's prey will eventually come
to it and it maintains perfect poise to strike at the right moment. Surprisingly, it never anticipates the movement of its pr ey.
As traders, we need to have that right balance in our approach, which in this case would be to wait for the right moment to r e - enter (increase positions) in
the market. Thoughts about correction should not even cross our minds. As I said before, India is at the brink of something r eally really special. Lets be
prepared to enjoy it.
...............
Ashok Leyland is actually at very critical levels and is offering excellent risk to reward. One can go long with SL of 72. No t much to loose here.
For the stock to turn bullish again it needs to close above 75. Below 72, it will turn neutral and would demand patience for re - entry. 29.9.10
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
fear/greed......
There is always a reason to Enter a trade and always a reason to Exit a trade. If you don't have a reason to exit a trade, th en you are just randomly
speculating. Probably this is why you are losing money.
Your trades couple of months back have nothing to do with your trades today. Stop seeing your P/L statement and just focus on what you are seeing now. As
humans we always fear the unknown. Ironically, markets pay only those who conquer their fears. Practice more and trust your i nstincts.
I can tell you what I do.

I have explained position sizing for investments in one of my posts. Just refer to the index page. I have used a 10% threshol d for adding positions in
investment related trades. For swing trades, adding positions depends on target %. Let's say I think I would get a 5% rise. I n this case I would add positions
two times (once when the stock is up a 1% from entry and next when it is up 2% from entry). This works for me.
You need to know what works for you. Position sizing depends a lot on kind of system one uses. Hence, this cannot be same for everyone.
...................
There are 'n' number of theories regarding something happening to market around expiry. With all due respect, I can show 'n' number of instances when
those theories don't work. Regarding your particular observation, I would say that those systems which are related to volatil ity could be affected near expiry.
Markets do tend to be volatile near expiry. Otherwise, on the top of my head, I can't think of anything else. ............... ....
Now, I don't know what will happen to Bajaj Auto or GSPL tomorrow. But as of now, I do know that these are the stocks which w ere moving in our favor.
Hence we need not fiddle with them too much.
On the flip side, since Ashok leyland was not moving in our favor, we immediately got out with a very small loss. Now, we don t have to worry about a stock
which was not moving in our favor.
.........................
I have attached two images below. The first one is a chart legend. Understand this before reading the chart. Since I have exp lained the entire 2010 year for
Sterlite, the chart might seem confusing. Hence, its absolutely essential to understand the chart legend first (which is self explanatory).
Now, since the legend is clear, we will come back to Sterlite chart. In my opinion, this stock should never have been bought in the first case. For a stock to
remain in an upmove, stock should exhibit significant strength. By strength we mean, a stock should not retrace more than 38. 2%. Here are some guidelines.
Extremely Bullish - Retraces less than or equal to 38.2% of previous move.
Weakly Bullish - Retraces more than 38.2% but less than 50%
Neutral - Retraces more than 50% but less than 61.8% but remains sideways
Weakly Bearish - Retraces more than 61.8% but less than 100%
Extremely Bearish - Retraces more than 100% move.
Lets review the sterlite chart now. I have marked points 1-5 depicting the entire upmoves. Not even once has this stock stabilized at some level. The above
framework that I have given classifies Sterlite as an Extremely bearish stock since starting of 2010. Hence the line of least resistance has always been on the
downside. Any trade taken on the upside is just fighting the trend.
I don't emphasize too much on patterns or indicators, hence I have not discussed any indicators here. Price is sufficient if looked at from all angles.
, regarding the retracement percentage being more than 50% makes the stock somewhat weak. The GSPL chart is also showing more than 50% retracement,
is that the reason that you said it was a high risk trade? And when you have taken the trade, there had to be some reason,?
What I had explained earlier was Overall price structure of Sterlite which was bearish since long.
For GSPL, the overall price structure remains ok. It will get weak if it breaches the current base and then the stock will ge t weak. That is why it was termed as
risky bet.
29.9.10
,,,,,,,,,,,,,,,,,,,,,,,,,
........................................
Ash Ley has taken support at your SL 72
Ash Ley has taken support at your SL 72

Support was changed on a real time basis after witnessing weakness in price structure. Our aim is to cut losses short. Will e nter only if bullishness re appears.30.9.10
Always remember guys, the key to good short term trading is always managing risk properly.
As Ed Seykota says,
"The elements of good trading are cutting losses, cutting losses, and cutting losses."
........................
Tomorrow, take the trade in Dabur in Equities segment. We will wait for a little longer to get into Sintex as the risk - reward is still not favorable. I want to
highlight one more important aspect here. So, just read this carefully.
Now, those who are regular to this thread, must be noticing that I discourage sometimes to trade in futures for some stocks. Whereas, I encourage
sometimes to trade in futures for some other stocks. I want to highlight the reason behind this. We will assume the account s ize to be of 10 Lac
We recently traded GSPL, where I had mentioned that futures segment poses significant risk for this stock and hence risk aver se traders should trade in
Equities. Let us walk through some numbers here. GSPL had a contract size of 4000. We entered around 113.5 and got out today around 110. That gives us a
loss of 3.5 Rs + commissions. If we assume commissions in futures to be 0.03% each side, then our total loss would be [(113.5 - 110)*4000 + (113.5*0.03*
4000)/100 + (110*0.03*4000) /100]. This amounts to loss of 14268. That is, when we deal in futures. This would roughly be 1.4 2 % of entire equity size of
Rs 10 Lac. Under risk management rules, this is acceptable.
Lets look at the Equities scenario. Here, if we did a probe test with 1000 quantities, assuming the same exit and entry price (commissions at 0.3% each side),
it would have resulted in a loss of [(113.5 - 110)*1000 + (113.5*0.3*1000)/100 + (110*0.3*1000) /100] Rs 4200. This would roughly be 0.4 % of the entire
equity size of Rs 10 Lac. Under the risk management rules, this is something exceptional. Remember guys as traders, we want t o ensure that our profits our
meaningful.
Some of you must be wondering that our position size was small and hence our loss was small. This is true. But what if we add the similar amount of positions
(that is, 4000) when the stock begins to move in our direction. Wont that be great? Well, definitely. We can always begin sma ll (but begin meaningfully) and
can always increase the position size. Point to remember is that the first position size should be big enough to make an impa ct at your equity. If GSPL has
moved up 10 Rs, then gain of 10,000 Rs (1000*10) is meaningful as it forms 1% of your equity.
Going by the similar notion, trade Dabur tomorrow with Equity size which is meaningful to your portfolio. If the trade goes i n our favor, we can add positions
when stock begins to move in our favor.
30.9.10
..........We don't do day trading here. We are into Swing Trading. Profits can range from 5 -10%. We don't sell till the price shows weakness. Hence,
sometimes profits are even more. That's not the point though. The main point is to limit risk. That's why, I promote risk her e, not targets.
Investing and Trading

05 July 2015
02:41 PM
Investing - Based on Good Fundamentals and Positive Technicals

Trading - Only based on Technicals
..................................................
Bro, I think you are in a quick mood to earn quick money.Learn the market, by studying its behavior, analyze various patterns and technicals discussed here
by gurus here, and then select the one strategy which suits your style of trading, then do paper trading with that strategy.. and then test the results of your
paper trades, only then if you have a good success ratio, start trading/investing with real money.
Mostly all the newbies to market will ignore all these and straight away make trades blindly, only to make other man rich. Th e choice is yours, either you can
make a straight dive, or make a step by step progress.
To determine the answers of the above I use technicals and fundamentals together. Sadly, there is no right or wrong answer fo r this. Had you believed in
Technicals, you could determine which fundamentally good stocks look good technically. Furthermore, you could also determine at what price to enter and
exit the stock.
Bro, its also my belief that there is no such technique or no such way where monitoring markets regularly is not required. Th ose who don't watch markets
regularly, pay a heavy price for that. This is just my observation .
................................
Will the FII's continue to PUMP IN, with SEBI banning nearly 200 of their accounts?
Answer:
Will the earth stop spinning tomorrow? Yesterday some scientist's were explaining the after effects of global warming.
Sai, get these thoughts out of your head and relax. Whatever will happen, we'll see. Market does not target us, so why should we doubt it or anticipate it?
.............................
On friday you are entred in Dabur...I want to know in which base you are entred in this scrip?
is it as Base? Or daily BO and hourly ?
I entered because there is base effect visible. Four days action has formed a base and low at nearly same levels. Hence, we c an comfortably take the trade.
Need to see if it works in our favor.............3.10.10
................
Futures to focus on today
Buy Aban Offshore @ 852 SL 825-832
Buy Bharat Forge @371 SL 360-363
Buy Mcleod Russel @243 SL 240
Buy Ivrcl Infrastructure @ 163.1 SL 160 - 162 [Risky trade]
Buy Reliance MediaWorks @213 SL 209-210
These are again getting in and getting out type of trades. Hence, only take these trades if you are comfortable psychological ly to execute this. 4.10.10
..................Dow is in a sustainable uptrend currently. If it's falling, its good. It is going to attract buying soon. E xpansion and Contraction is part of market
movements. At this stage, even if we have some contraction, it won't be that bad. A healthy contraction would be something wh ere Dow stabilizes around
10200-10300 and Nifty around 5800 - 6000.
There is a disconnect between global markets as of now. I expect markets like US and UK to do reasonably well. Whereas expect markets like Germany,
Greece, France to underperform.
...........................
Fresh Investment Buy List
Code:
Script Date Buy SL
Cipla 10/5/2010 328 320-323
Chennai Petroleum 10/5/2010 258.5 252-255
Hexaware Technologies 10/5/2010 78.7 75-77
Hindustan Construction 10/5/2010 62.4 60
Kamat Hotels 10/5/2010 137 120
Tulip Telecom 10/5/2010 190 178
Gateway Distriparks 10/5/2010 117 112* SL given here is for Weekly closing prices
** Position Sizing has to be carried out in the same way as it was explained earlier...4.10.10
............................
Here's a small quiz for you guys. Now, you guys know that when I swing trade, I exit a stock after 5 -7% rise. But today despite a 17% rise in Reliance
Media, why am I not exiting the stock? To help you answer this question, I am going to post two charts, one of Intraday and o ne of Eod. Both are of reliance
media. Answer is not that difficult, but one who get's it correct, will open doors to whole new way of looking into trades. 5 .10.10
.........................On an intraday basis the stock has been steadily increasing and has been forming newer bases.It is t aking out resistances regularly @234
then @252 now attempting 255 . Also each resistance is being broken and it is becoming a support.Also any attempted retraceme nt or all dips have been
bought into and there seems to be no weakness in the stock. The momentum is still very strong so there is no sign of weakness that would would warrant an
exit yet.
On an EOD basis it has broken comprehensively taking out the recent high at 240 (resistance since Feb 2010) and looks all set to attempt to cross 280.
levels (last in Jan 2010)
But we can afford to keep a trailing stop loss of about 12% and be long. Stocks don't move up 20% for no reason. Anyway if we have our SL in place, then
why to worry.
....................
There are 2 things which are worth noting amidst what is going on in the market.
A) The euphoria which was missing earlier is beginning to come back now. Look at how stocks are just heading up. Everyday the re are many stocks which
are moving 5-7% with good volumes.
B) Leaders are stalling. Banking stocks and Auto stocks have now started to relatively under perform. On the other hand, High beta counters are now
moving ferociously.
Just be alert guys. There is nothing to panic as of now. But keep your eyes open but do not question the markets. 05.10.10
...................
Intraday Chart
Initial burst was with volumes (lets call it stage 1). Then the stock went into consolidation phase (stage 2) with very very low volumes. Eventually, the stock
broke its range with increase in volumes (stage 3) around 12 Pm. Once, this happened, the stock did not look back. It continu ed to march on with strong
volumes (stage 4).
EOD Chart
Now what do we have here? We have initial burst with volumes (stage 1) in June - July. Then stock goes into consolidation phase (stage 2) in August September with very very low volumes. Eventually, today the stock broke out of a long range (stage 3) with exceptional volume s. Now, it should continue to
September with very very low volumes. Eventually, today the stock broke out of a long range (stage 3) with exceptional volume s. Now, it should continue to
march on. That is, stage 4 is pending.
The reason I posted both charts together was because, on smaller time frame we were seeing all stages playing out, but on the larger time frame, stage 4
was pending.
Do you now understand why I said that we would be continuing with Reliance Media? In the end, the reason why I squared of the futures position was
because the stock rallied by 36%. Hence, I shifted my positions in Equities by taking 1/3rd position of my original futures p osition. Now, when the stock
consolidates, I will begin to buy more. If it does not, we still have locked in profits worth 66% of our position. Hope you g et this point.
What are high Beta counters???

05 July 2015
02:42 PM
Btw, my 2 cents on similar note...

Generally, I take signal of euphoria from my neighbors, relatives and family members... so far they were utterly scared to pump in fresh money... now they
started buying something.. I still say something so they are still lil worried and have fear...
But this is how I take sign... when i heard they started buying, I took first note of euphoria building... now I am waiting for them to give me tips... when
they will call me all the way from India to US just to give me tip... I wud be instantly closing my investment positions and will remain on swings with tight
stop loss....
..............................................
Lets say a guy is running at a good momentum,knowing very well that he has one good obstacle of considerable height on his way. With all calculations in
his mind and confidence that he will cross the barrier, he approaches it with that generated speed. But then when he comes very close to it, he realises with
the speed generated so far, is not good to overcome the barrier.
So, he stops a while, RETRACES A FEW STEPS BACKWARD, and AGAIN STARTS HIS RUN, this time with more increased speed, LIKE THAT OF A " LONG
JUMPER"
Don't you think, that nifty is doing like this, to overcome the all time high.
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Good you brought this up.
Caution is the name of the game. However, blindly assuming caution, and not trading because of that is not advisable. What I have written above is that
there is a need to keep your eyes open and to avoid taking leverage in the markets. Mass hysteria and euphoria can last for many months altogether. But it
does not mean we stop trading because of it.
Markets don't fall off the cliff suddenly. There is a psychological pattern to it. Before a 10-15% drop, there is always a fall of 3-4% in Bull markets. This is
the best case scenario. If the markets move 3-4% downwards, all the positions will be closed and hence there will be no catastrophic loss. My way of
trading is such that incurring heavy loss is just not possible (stops are so tight).
In Worst Case scenario assuming a 10% gap down on markets, our positions will yield a total loss of 1.5 - 2 lakh (assuming one lot). Current margin
requirement for all positions is not much and hence trades are well planned and calculated. I trade according to my account size and am prepared to lose
the calculated amount of money. I hope those who are following this thread will be doing the same.
.................................
When any trader begins to blame luck for his positions, that means the trader does not have a trading plan, does not know what he is doing, does not have
the correct psychological make up and definitely does not have a methodology with positive expectancy. In short, if one works towards the right things, luck
automatically falls into place.
Nobody is a lousy trader. The good thing is you recognize that you have some problem in trading. This is something many are not able to realize. Hence
congratulate yourself on that.
Moving forward, make notes on what comforts you in the market. That is, what are your beliefs about the market, what methodologies are you comfortable
with and finally which instruments you will be comfortable trading. Start working on some plan and then stick to it. Trading has a lot to do with minimizing
mistakes. Hence keep track of your mistakes and make sure you don't repeat them.
.........................
A Word on Markets
For the next couple of sessions, especially tomorrow, try and keep the media channels out of your trades. There could be gyrations in the European and
American markets today and hence tomorrow things will be reported in a way which will definitely sound as the end of the world.
Broader markets including US and FTSE markets are holding up well as of today. Hence, on global front there is nothing serious to worry about. There is a
reason why markets have rallied from 4800 to 6100 and that reason cannot be over in a day. Forget about 2008. That was an once in 2-3 decade
phenomenon. Be confident about your trades and always have a stop price in your mind.
Todays movement was only a form of consolidation. It should not be associated with "weak session", "Sell off", "Broad based weakness", "Pending
Correction" and many more as the channels are reporting.
07.10.10
the moves seemed to be moving up tentatively testing resistances after moving up smartly and there was no indication that the buying support would
momentarily disappear. Naturally stop losses would have been hit. Most of the down move was retraced though. Some scripts lost much more that others.
Few seemed to have recovered and closed at their supports.
What to sell and what to hold would have been tricky.
As it was people were mindful of the 2 year anniversary of the crash so the effect was exaggerated due to bandwagon effect.
Something has to be said about tightening stop losses as and when necessary. Of course the question is when.
In trading, stop losses have to be always tight. It is not the question of when, but it is the question of how to place it. Investment is a different ball game
altogether. But trading requires quick entry and quick exit. Your profits get limited to an extent (most of the times it won't) in keeping tight stops. But
throughout your trading career you will never face horrendous losses. That to me is more important than profits
,,,,,,,,,,,,,,,,,,,,,,,,,
......................
Markets don't turn upside down in one day . So there is no need to panic. If and when that has to happen, we will get plenty of time to exit everything. Why
bother till then? Isn't it?
If profits are embraced with zeal, then why should one dislike losses.
......................
Please give some more info ?
about your entries....still some thing missing to me...after selecting scrips..next day what are the criteria you are looking to enter....also about
stoploss...when we decide at eod..how we handle when scrip going to close too low from our s/l point?eg...today BGR when I closed it arround 790-791...or
we took it as one loss trading ...
I will post more charts on weekend so that you can understand better. Unfortunately there is no mechanical system regarding this. Its about seeing how
relatively the stock is behaving. Methodology that we are trying to learn here is of trend following. Essentially we will have many losses like BGR energy
which range from 5000 - 10000 in Rupee terms. But eventually, we will catch a pretty big trend which will take care of all the losses plus will give us the
desired profit. Its about patience, its about controlling your emotions and its definitely about trade management. Our aim is to minimize the losses and not
get trapped into a catastrophic loss.
As far as close being low from our SL is concerned, that is not that common. For Eg. If we exit 10 trades based on SL, then 3 out of 10 will be far from our
initial SL. This is just a part of trading and nothing can be done about it. But, lets say our SL is 100 and the stock is continuously trading at 97-98, which is
about 2% from our SL, then in that case we would exit immediately. So the threshold you are looking for is that of 1 - 2%. If a stock is trading throughout
the day between 1-2% of SL, then its fine. Anything more than that is not acceptable.
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I have drawn 2 more probable trend lines. If Nifty breaches the last trend line, it could move sideways or start a down move. Trend lines represent pace of
movement. Breaching of trend line does not necessarily represent markets going down. It just represents slowness in pace of trend, which in the present
market scenario seems more possible.
P.S - Good work crown. Supports and Resistance have been identified well. Just keep this new concept of trend line in your mind now.........8.10.10
Most of the indicators around are derivatives of price and though they are very valuable, most of the traders (90% +) do not know how to use one. Infact,
most of them do not even know how it is calculated. If a trader does not have sound knowledge on indicator construction, then no matter what he does, he
cannot use it profitably for a sustained period of time.
Hence, the simplest and the most effective way to determine a trend is to study price action. One indicator which does not lag and which does not require in
depth knowledge about its construction is price. Trader who can master this, can master the markets.
Do not be tempted to short the market. If and when the opportunity arises, I will let you know. Currently I would be looking for a close below 6000 - 5980
to get into SAR* kind of trades. As of now, be long.
* - SAR (Stop and reverse) kind of trades are where we short the market and if we get stopped out, we reverse the trade and go long. We keep doing this
till we catch the correct direction. 08.10.10
..............
I have highlighted the word "Probable" when I have drawn the trendline. What this means is that out of my experience of how prices move, I have drawn
two highly probable trendlines which could develop in the future. I am looking for the Nifty to take support around those two trend lines. If it does take the
support, you would get your second point. Hope you get it.
This is called Futuristic evaluation of the markets where we try to figure out what will happen next when we meditate. With experience, it will come to you
too.Its a valid question hence don't mind asking it.
Anyway now coming to your actual query. I'll answer your questions in parts and hence it will be easier for you and for others to understand. Your questions
are highlighted in Bold black.
Q. But for full time trader it is important that his losses are always low than his profit.
Ans. This actually varies from trader to trader. One of my trader friend (who by the way is a full time trader) gets off the market every time he gets a 3%
profit, yet year on year his returns are simply outstanding. He risks 3% and waits for gains of 3%, hence his profits are not bigger than his losses. What
saves him is his winning %. As far as I can remember, he has a winning % of over 70%. As far as I am concerned, I absolutely love trends. I like to take
small losses (3-5%) in high volatility environment and (1-3%) in low volatility environment and I absolutely let my profits run.
Q. But I need to know this as I want to get in this profession full time.... may be five years from now.... & wanted to know if I can fetch returns on my
investments which will be sufficient for my living.
Ans. Rahul, to make a living out of trading, one has to be realistic. Let me explain this to you. Let's assume one set's a target of earning 10 lacs per year.
Now whether that trader will achieve this objective or not will depend on many factors. Let's assume he has a good system, perfect psychological make up
and good money management. Now to get this objective realized, the most important aspect after all those factors mentioned above is trading capital.
Making a 10% return on a Capital of 1 Crore is relatively easy. 10% of 1 Crore is 10 Lakhs and hence the objective is realized. But making 10 lakhs on a
capital of 10 lakhs is very difficult. This is because now the trader needs to make a 100% return. Now, this becomes difficult. This is precisely why trading
has a lot to do with other aspects than a trading system
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..................
The above expectation is based upon psychological reaction of the herd. I don't know whether I have been able to understand the reasons behind
movement in market, but I think it is all between the struggle of bears and bulls to have control. The very main concept of TA that believe what you see not
what you expect, is somewhat compromised by me for certain specific issues; like I always avoid reacting towards sudden movements, even if I have to
take loss. And around 7 out of 10 times, this has saved me from entering or exiting at wrong levels. The latest experience which I had was with Radico
Khaitan which I purchased around 177 (i think) on 21 Sept 2010. On the very next day, it was showing some doubt but closed in green. My s/l was between
172-170 depending upon the momentum at that time. on the next day, it went down and closed below 175. I just kept that holding, in the expectation that
because the momentum was still positive, it may go up in future. For next few days, the script remained rangebound and was giving red candles
continuously. It was really difficult to manage and control my mind because of regular urge of selling the stock and booking the loss. But somehow, I
managed not to go by emotions. On 30 Sept, the hell broke loose and the stock made a low of 160 during the very initial hour. I was sweating heavily and
the mind stopped working. There was just one thing which kept my confidence that if I had some inside information of that script and that if I had to sell
that stock, I wouldn't be doing like that. Anyway, within couple of hours, the script was again trading above 170 and from thereon, it again touched its
resistance level of 184; and seeing that it may again fail to breach that resistance, specially in the light of ongoing Nifty movement, yesterday i sold that
script @ 182.15.
Therefore, if I have some inside information of future weakness in the market, I wouldn't be diluting my position in a way that it can be noticed so easily. I
would be trying to sell at upper levels. Currently, Nifty is trading around 100 points below its recent high, if I start selling now; I would not be getting the
appropriate price.
On the other hand, if I have some inside information of future strength in the market, I wouldn't be buying either at these levels. Reason is the same, if I
buy right now, I will be getting it at a very high price because any buying at current levels would increase the price to the significant level which will not be
suitable for me. Therefore, what I will do is to discard the market in a way that the herd should start diluting their holdings. And, in that moment, I will just
do something or will expect something like to happen, which will create panic. And, at some level, which I find suitable, I will make a quick entry and bang.
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thanks for your kind words. There is one person, whom I consider my Guru in my personal life and besides him, there was one another great trader (name I
can not remember right now); both of them are having one common funda for success and that is FEAR.
Everytime, when I am on losing side, I start feeling the fear so much so that sometimes the shivering of the body can be easily seen by the person sitting
beside me. Whenever, i discuss about this problem with my Guru, he says always respect fear, because it will keep you alert. The moment you become
confident, the chances of losing become more prone. And perhaps, my doing fast [if it actually is fast ] is simply because of this high level of fear which
makes the mind work fast enough which wouldn't be possible if I have learned relaxing. My personal experience, may not be correct though, is that in stead
of hating yourself for being fearful, just start loving your fear. Express it to your own. Talk to your ownself and things will start becoming more and more
clear.
.........With all due respect to Crown and his mentor's, I would like to say that trading in my own experience does not work this way. Fear, in my own
experience is a parasite in trading. Fear in my opinion is not a bad thing. It is a form of emotion that will either fuel the desired change in your life or will
paralyze you. While the former might be more witnessed in other walks of life, in trading especially fear more often tends to paralyze a trader. If the
markets begin to drop 1% every 10 minutes (which has happened in the past), then no matter what you do or preach, fear is going to get you out of your
positions. It will force you to act against your plan and will definitely make you release your emotional charge by getting you out of what you are into.
Trading is the only profession where you can see your capital being eroded every second. Hence, it is also the most difficult profession to be in
psychologically. It is never ever easy to lose money. Our mind is trained to release pressure. Hence no matter what you do, never ever be afraid of 'fear'. If
you are afraid of being in fear, your mind will sub consciously make you do the thing which will put you out of fear. Statistically there are very few traders
who can stick to their plan even when they are deep inside grabbed by fear. The best way to trade in my opinion is to be in a different psychological zone. It
is achieved by constantly practicing the state of being emotionless. For eg, I never get excited when I see profits. Going by the same token, I never get
bored (sad,depressed) seeing my losses. It is only at the end of the year, after I take a break from trading, do I celebrate my profits or celebrate my losses.
Hence, when one trades, he should neither be confident, nor should he be afraid.
Please remember, my experience is not a rule. It is just my experience.
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Raunakji.... you r one utterly disciplined (don't take it otherwise) person in ur personal life and probably that is making u utterly organized and disciplined in
ur trading profession... I have seen u going off early every evening and getting up at one particular time..... being utterly disciplined or organized is sign of
mental strength... Hats off to you....
However, general public is not so organized... bitter but it is fact... if we all introspect, we know that we r not like you... now somebody who is not utterly
organized and disciplined in personal life, u cannot expect them to cultivate emotional balance for trading as u r having.... we got to accept the fact that
organized and disciplined in personal life, u cannot expect them to cultivate emotional balance for trading as u r having.... we got to accept the fact that
general can only procrastinate.... This is the best trading system available in global trading business if one wants to learn otherwise I can bet there is
nothing like SYSTEM in trading.
now coming to the discussion u were having with Rahul on being full time trader... it is also again related to your disciplined and organized life style...
people like u can be successful anywhere.. it is not just trading... u go anywhere and work with ur soul, u will be successful... I envy ur disciplined life style
. Make me disciplined, organized and structured like u and I can bet I can make 10 lacs out of 10 lacs in one year.... to me the only lacking part i m
having is i procrastinate and that is again because of lack of discipline in life...
So as a bottomline, I agree with Crown that observing one own self and emotions is very early starting point to develop right mindset. Once we
continuously do that, we go one step ahead in being successful trader.. i m sure 90% people cannot do this more than 21 days.. i can bet... (btw, i m one of
those 90% but trying hard to improve myself)... profit and loss are part of business... we just need to make sure our losses shud not be bigger that our loss
tolerance... today loss.. tomorrow cud be profit...
now if u correlate this with what I wrote a month or two back about emotional imbalance or balance in left and right hemispheres of brain, one will realize
how these two points are related to each other balanced hemispheres are required to be detached/disciplined/stop procrastination and all these are signs
of mental strength
Quote:
now if u correlate this with what I wrote a month or two back about emotional imbalance or balance in left and right hemispheres of brain, one will realize
how these two points are related to each other balanced hemispheres are required to be detached/disciplined/stop procrastination and all these are signs
of mental strength ... if possible can you please give the link ......I have been a strict follower of this concept or theory i.e. left and right hemispheres of
brain....and I know that both of my hemispheres are below average.....But there is one third hemisphere in which both these hemispheres exist....and that
is quite strong..and that is the only thing which gives me some hope in my life...As far as trading is concerned... IMHO....the operation of right hemisphere
(which is purely imaginative) is more important.... and IMHO....most of the successful persons on the earth were/are highly disorganized in a very
organized way.....
...............................
And discipline is an outcome of many things that individually contribute to trading success. Like keeping up to date with various traders perspective and
systems i.e a good reading habit. Also being alert in recognizing a trading opportunity and a safe entry point. Alertness is contributed in no small measure
by a healthy lifestyle including a fitness via an active gym attendance and off time where you tune off say after 9 pm IST. Early to rise and meditate and
pray.
Various points that can be learned from him that can be considered as part of good trading practice . Take for instance a small list to trade from which is
vetted in advance. This helps to avoid spreading one's energies thin.
Raunak's emphasis on high probability trades is key here. He enters early when the volumes is low to avoid the mad scramble when the volumes pick up
thus creating a margin of safety.
Setting Stop Losses

05 July 2015
02:42 PM
This is one of my favorite concepts in Trading because of its usability and its necessity. Many traders don't even know how t o keep appropriate stop loss for a
stock and yet they keep trading randomly. Either their stop loss is too low, or it is too near. In either case, achieving res ults is not possible. The key to setting a
stop loss is to link it with the concerned entities volatility. Every stock has its inherent character (range of movement, pa ce of movement) and hence stop losses
for every stock has to be different. The inherent concept could remain the same, but incorporation of volatility within its c ore methodology would be ideally the
right way to go about it.
Again there are many ways to do this. But, here I will focus on how it is done through ATR (Average True Range). Now, before getting into the depth, lets first
recollect what ATR is. It is is the difference between the high and low price on any given day. It reveals information about how volatile a stock is. Large ranges
indicate high volatility and small ranges indicate low volatility. Essentially this means, if a stock A of Rs 100 has ATR (14 ) of 10 Rs and another stock B has
ATR(14) of 5 Rs, then there is high probability that stock A can fluctuate 100 + 10 or 100 - 10 and stock B can fluctuate 100 + 5 or 100 - 5. Hence, stop losses
for both cannot be the same as their fluctuation range is different statistically. I hope this is clear up till now.
Moving forward, let's actually see how it is done. There are many ways to implement ATR in stops. However, here I will explai n it in the most simplest form. Let
us assume we are using a Technical System where we Buy when prices crosses 20 day MA and Sell when the price crosses below 20 DMA. Now the initial stop
loss considered by most traders in these systems is the 20 DMA itself. For Eg. If Nifty is at 5000 and it has crossed its 20 DMA (4950) today and given a buy,
then many traders will keep 20 DMA (4950) as the stop loss. Now, keeping this stop loss is wrong as it does not take into acc ount the inherent volatility which is
being reflected currently. To make the stop loss more meaningful, we can subtract the 20 DMA with the 10 day ATR to get a mor e appropriate stop loss. This
way, we would give ourselves, reasonable margin of not getting whipsawed again and again. Below I have attached a figure to u nderstand this better.
Please see, the original stop above based on the 20 DMA and the modified stop above based on 20 DMA minus the ATR. The extrem e right column will indicate
the difference (%) between the two. As you can notice, year like 2008 where volatility was extremely high, the difference bet ween the two prices is over 5%.
Whereas today the difference is only 1%. This is reflecting the fact that 2008 was a highly volatile year and stops should ha ve been lower as on up days markets
were rallying close to 6-8% every session. This was done to avoid whipsaws. Whereas in 2010, markets are very low on volatility and traders should kee p tight
stop losses in order to lock their profits. Since 2008, we have entered into a low volatility phase. Volatility has been redu cing drastically since 2008 and now we
will at sometime start moving up in terms of volatility. This can be very valuable information for traders. Since volatility is more cyclical than price, the high
volatile phase is bound to come.
P.S. - The above illustration is based on a very basic system. I am not encouraging you to use this system, but have just given you an example of how to use
this system and avoid whipsaws by incorporating volatility in your trading. There are 'n' number of ways this can be done for your system, and now since you
have a good understanding of the underlying concept, start experimenting till you find something that suites you.
......................................
I will here just post what was written 1912 :
In 1912, an interviewer asked Harriman about his stock market skills and secrets. The trader replied : If you want to know th e secret of making money in the
stock market, it is this : Kill your losses. Never let a stock run against you than three -quarters of a point, but if it goes your way, let it run.
Move your stops up behind it so that it will have room to fluctuate and move higher.
Like I say, it was written 1912.
................................................An yway now coming to what you have written. As a futures trader, I absolutel y agree with the fact that stops should be very
tight. If you would have noticed, whenever I trade in futures I keep getting in and out numerous number of times till I final ly catch a good move. That is
primarily my style of trading in Futures. However, in stocks, I keep stops at a reasonably lower level. I absolutely never mo ve my stops down. I am always
looking to move up my stops.
Regarding the note written in 1912, I feel in the current age, where technology has made trading easily accessible and hence added range volatility in prices,
keeping three quarters of a SL is not advisable. Markets have changed, volatility behavior has changed and hence nature of st op losses has also changed. In the
end we are so many traders, so many different inherent personalities and certainly traders with different risk profiles and h ence SL like entry and exit should be
determined with what one is comfortable with.
....................
Coming back to the subject you mentioned.
Stop loss with shares is as essential as in any other trading papers.
That was the message I wanted to make clear here. If it now was 1912 or today, the idea is the same : Small losses and if pos sible, big profit.
....................
Every thing I found interesting or was taught in the past, I collected.
As I see the reaction to some of my post, I realize how individual my knowledge is about trading. First time I see the real v alue of it when comparing it to other
trading styles. The one which taught me, was a millionaire. Now I know why.
Individuality is a key to extreme success. Learned this today.
Keep your trading in an individual style and you will be the winner
----------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------my SL is my risk management as far as Swing trades are concerned. I am not a defensive trader and hence I don't worry about t he 'what if' factor. If I am in a
trade, I constantly monitor it. The kind of swing trading I do, it requires more of visual approach. Hence, when I spot press ure shifting down wards, I
immediately begin scaling out. I keep marking pressure points on my charts and I keep scaling in and out.
As far as options are concerned, I don't feel options hedging is the right strategy for Swing trades. By nature, Swing tradin g is relatively short term trading and
my belief is that the shorter time gets, the more difficult it is to judge options and its movements. it works for me. I am n o expert in options and hence I keep
away from things I don't understand
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By pressure , believe you meant change in demand-supply. Do you incorporate volume(and book) or just price action analysis to ascertain this shift.?
In my day trades, i use WRB for checking on this shift (ofcourse its not the only criteria). For me, i rely on certain candle formation in my S/R zone to determine
the shift. Hammer is one of my Fav pattern.
Ans.......I don't monitor Volumes and Book on tick by tick basis. But they do form a part of my analysis. I rely more on Pric e structure and S/R. In price
structure I like to see WRB, Bar patterns and Candlestick patterns. Whereas S/R is similar to what I have marked on DLF (Pivo t points)
DLF is witnessing some short build up at the moment. Results are due today, so there is some risk underneath. Since our rever sal point is 357, those with
current positions can keep a SL of 359.9 to capture 3-4 Rs per lot.
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............
You have to exit it.
What are you waiting for? Where are your SL rules? What are your entry rules? Exit rules?
You have shorted the strongest stock in the Futures segment. So take a decision and get a framework
Your selection of futures contracts is bad to start with. Select most liquid ones so you can trade these regularly. Trying is catch the move in some of the lesser
liquid contracts is quite hazardous.
This is why it is easier to to go long in futures,because we can identify a trend.
However in other to short successfully,one needs to distinguish between a downtrend and weakness.
In the case of a Titan perhaps you ignored that a strong uptrend was in place and speculated on when the weakness would occur ,with no backing evidence on
the charts even indicating weakness.
A major battle is finding the contracts which you can read the price action successfully. This needs live simulated trading w ith an appropriate time frame.
Some stocks are literally monopolies in the sense that they are leaders in the listed space like Asian paints,Titan, Jubilant Foodwords,GSK Consumer.These are
valued much higher and they are also defensives ,they do not decrease so easily. So shorting these may be foolhardy ..10.11.1 0
valued much higher and they are also defensives ,they do not decrease so easily. So shorting these may be foolhardy ..10.11.1 0
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If you want to be a Swing trader, you have to deal with this. What if we short today and tomorrow it goes up by 5%. What will you do then? Can you deal with
this stress? And more importantly can your account handle these gyrations? Do only those things which make you comfortable. I f holding such trades is making
you uncomfortable, then this clearly means that Swing trading is not for you.
If one trades against what media reports, those trades would be highly profitable. .....One advise which I would like to give all of you who swing trade is to
"Drink lots and lots of water during trading hours". The more you drink, the better it is. In times of stress, take deep brea ths and stand straight.
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Mental preparation is very important.
Every morning, for about an hour, I visualize every position I have dropping by more than 10 - 15% on intraday basis and EOD basis. Following this, I practice
to remain calm in that state and try to focus on what my action would be seeing this. I keep practicing it. Currently DLF is down 4%, but I have already prepared
myself for this. At the moment, I am sipping away on a very cold Vanilla milk shake whilst I watch DLF plummet to new lows.
Let me give you one more example. You go through my portfolio sheet everyday. Currently we have many stocks giving wonderful returns. Now, I am expecting
markets to head in rough waters for the next 45 days. During this period, I expect most of my stocks to give away all the gai ns and many to trigger stop losses.
Every morning, I visualize this and keep practicing exiting stocks and keeping my cool. This is what Trading and Investing is all about.
..................................
I don't know by what quantum Nifty is going to go down.
But, I can say with some certainty that for the next 45 days, we will definitely be witnessing some trading action. Action is more likely to be on the down side.
There is too much of money waiting on the side lines and hence too much down side is not expected. But I see no reason why le vels of 5700-5800 cannot be
attained. In the end, trade with the markets and don't predict..........11.11.10
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On an average I am able to find out profitable shares, but am very bad at exiting... so far I have exited from about 3 stocks after taking 2% profit and they went
on to increase about 11% - 16%.. Any advice on it??
You need to have a clear trading plan. When to exit, when to enter, when to scale in and when to scale out. You are lacking a plan. Start working on it.
How long is your average holding period? And how long have you been trading? (asking this to figure out how long did it take you to become this good :-) )
It completely depends on Market conditions. Sometimes it spans to few days, whereas other times it is held for just 2 -3 days. Success in markets does not
depend on number of years spent. It depends on your understanding of yourself and the markets. Some do it in one year, wherea s some cannot do it for
lifetime.
See markets have run up a lot. And given the nature of markets it is bound to correct and come down. When that will happen, t hat no one can say. Cyclically we
are due for a down move, plus most of the funds will be on holidays from December and hence we can expect some profit booking as yearly bonuses for
managers are also due. Corrections may not be too steep as there is lot of money waiting on the sidelines. Hence, lets see wh at happens. I always move with
the markets and what I said is just an opinion. 11.11.10
Don't be scared of the market. Its not functioning to put you out of the Business. If you took the first trade in DLF, you sh ould have taken the short trade as
well. But yes, you need to see you have enough capital to tolerate some draw downs and whipsaws.
...................
The way I am visualizing DLF trade at the moment, it seems we may have a 2% down move tomorrow followed by stability in price s for next 1-3 days and then
eventually getting a buy signal which would give the desired profits. Lets see how it spans out. We'll try and be as close to price as possible.
Honestly, If I were you, I would not care about what the market is going to do. Hence, I would not anticipate some action and square my positions off. I always
have an opinion about the markets, but I almost never trade against the markets.
----------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------First,- S/R is what S/R means. Level where the demand-supply ratio had changed previously. Its an absolute value and not a average. So, a S/R level for me is
where the price changed the direction. Consider those as area where you feel people are most likely to keep their pending ord ers. Again, i do utilize S/R for my
exits, but i also look for price action to justify my exits. So for example, once price reaches near my S/R zone and if i see price action stalling or showing
weakness, i bail out. The reason i wait for price action is that , many a times, the strong hands will cross the S/R zones to induce the naive traders only to come
back within the zone. This simply gives me a bit more money in my pocket.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,
One question I'd like to ask people who have succeeded is that what are your strategies to find the stocks to invest in.
Good point. Im a day trader and typically trade in fixed instrument , like some 8 stocks and Nifty. This are liquid stocks. I have decided to concentrate on only
some liquid stocks and Nifty as this allows me to understand the behavior of this stocks , which helps me in the price action strategy that i utilize.
As for "Investing", i really dont know how do they filter the candidates. Some do NEWS based , some utilize Volume gainers wh ile some utilize 52 weeks H/L
candidates. BUT, im not sure.
If you find a trader, who misses the up move and then misses the current down move despite of knowing that this was expected, then this clearly reflects lack of
clarity of thought. I am sure this has happened to many traders here.
----------------------------------------------------------------------------------------------------------------------------- -----------------------------------------------------
Word on Markets
05 July 2015
02:43 PM
I would be looking for a positive price structure along with some good volumes. I don't use some complex methodologies. I just keep it simple. If price
structure is in place and volumes are favorable, then that's my trade for the taking. Once one gets in a trade, then it is more about trading intelligence and
trade management.
Word on Markets
This is perhaps a very ideal time to be trading. However, bear in mind that at every stage, there is different inherent character of a market operating.
Currently we are in a low volatility phase where our stops need to be reasonably tight. As volatility picks up, we would not like our positions to amplify our
losses as a result of volatility expansion.
In my own opinion, we still have upside left in the market and whenever short term reversal signs emerge, we need to reverse our trades and go short.
Current market environment which we are into is ideal for SAR trades. Either side we will profit, provided we don't argue with the market. Those of you who
have systems with reasonable positive expectancy (long and short side) should be ready to take SAR trades based on your own system.
__________________
It is a market with full of risk.. But if you know your risk taking capacity and ready to take a risk for better earnig, then it is the place where you should be.
But for that you should know about the market/how this market work etc.
Try to learn first.
Then open your vallet to invest.
Stops on intraday basis are a bit different from that on daily, weekly or monthly basis.
Also, I would encourage you to visit Columbus's own thread where you will get much further insights into how things are done. Markets have to be seen in a
framework at all the time and I think you will get an idea of how to do it by visiting that thread more often.
I don't specialize in intra day trading and hence my knowledge in that domain is limited.
1. There is no Buy and Forget investment. Every single deal has to be monitored atleast once a week.
2. Your understanding of PE is not right. General motors which was the darling of America, traded for low PE's for years. Just look at its chart. You will know
what I am saying. If PE's worked this way, every fundamental analyst would be a billionaire. Its like saying buy this stock as its RSI is oversold. Hope you
get it.
3. Our fundamental analysis is carried out through a in - house financial model. I cannot release the details here as its development has costed significant
amount of resources. However, I will soon be posting list of stocks fundamentally attractive.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
__________________Godrej Industries is offering some good opportunity to swing trade. An uptrend channel is highlighted in Red and Support lines are
mentioned in blue. Please don't get into the technicalities of drawing channels and trendlines. We can be subjective at times and this trade seems to be more
of subjective kind.
Trade it in delivery only. Buy X quantities and keep SL of 219 and 212
Square off X/2 quantities if 219 gets violated and then remaining if 212 gets violated. Let's see if this works out. Any queries let me know.
..12.10.10
Portfolio
05 July 2015
02:43 PM
Q. Generally I have seem that your portfolio consist of three parts,one with the fundamental long term style (where you scale up 10%), the second with the
derivative swing i.e futures and the third with equity swing . Are all these based on this proprietary model you developed in the sense that are these stocks
thrown up by the model.
Since you stress that price is a sufficient criteria wouldnt we need to check the price action in these fundamentally attract ive scripts?
To be very precise about my portfolio, I have a very different approach to my trading. I don't have any fixed % of money attr ibuted to some style of trading.
It keeps changing with market scenario. For E.g., currently, we are planning to invest heavily and hence all our focus is tow ards finding good investment
related stocks. Precisely we are going to invest 50% of the money we have. Out of the remaining 50%, nearly 30% will go towar ds swing trading (that is, for
margins and stuff) and rest will be for Scalping. Sometimes I get adventurous and i go on a scalping spree.
Fundamentally good stocks are chosen (short listed) through our financial model. Once I get the shortlisted stocks, I hide th e name of the stock on our custom
made software and let it play one by one on a large LCD. All the stocks are numbered 1 to 'n'. The stocks I like in one glanc e are noted and finally I invest in
those. Essentially, I am selecting only those fundamentally good stocks whose price structure is positive. I have explained m any times how i identify price
structure and I am sure you are now aware of it.
Q. Your knack for zeroing on the scripts before they start buzzing is amazing. Any guidance on how to go about this.
How to interpret/read the behaviour of stock after the approach or cross their year's high ?
I don't have some mechanical system for swing trades. I feel any system one makes, has to lag behind the market action. Hence , I keep rolling on the charts
one by one spending no more than 1 second on them. The moment I see something I like, I post it here. Again this is simply ba sed on short term price
structure. I agree to what Ed Seykota says and that is, Advanced technology for analyzing the markets is interesting, enterta ining, distracting, and even
counter-productive to coming to terms with emotional reactions to uncertainty and volatility. Hence, I always tend to keep it extreme ly simple. In one line if I
have to tell you why I succeed it is because I don't fear failure. Today I picked up Godrej because it appealed to me instant aneously. See, I lay a lot of
emphasis on Risk Reward and hence even if my trades fail, I usually don't lose that much.
........................There is a reason that the particular stock is trading at its year's high. I try and see if I could s ee some potential problems that would affect
the price. If i can't find one, I enter it whole heartedly. A body in motion will remain in motion, unless acted upon by an o utside force.
As simple as that. Keep it simple. That's the key.
,,,,,,,,,,,,,,,,,,
I'm basically a day trader, none the less, i guess my point should be valid for swing traders as well.
Selecting Targets and Stop Loss, surprisingly, is not given the same attention as a one does to his indicators or trade signa ls. I mean, people usually apply the
percentage model to both "Target" and "Stop Loss". Some apply the brakes near S/R zones. Others follow the order books, and s o on. Each has its merits.
So there is no Right or Wrong answer to this. To each his own. Personally i find the above fixed % and pivots as flawed. Each trade is unique. You have
different reason for entries. So why keep same model for StopLoss and Target across trades? . I believe a trader should not h ave a fixed StopLoss and Target
model. Rather let price action dictate this.
For me, i don't apply the percentage or S/R model for Target and StopLoss.
My Stop Loss is way above/below the "OBVIOUS" S/R zone. Yes, sometimes, my risk level does not permit to take such a risk, ot her times i time my entry
early to minimize the risk.
My Target is based on price action (And not S/R or Pivots). Till the time the price action suggest momentum i stick with my t rade.
I write very less on indicators, hence i hope you know by now I don't emphasize much on them. S/R lines and trend lines are n early zero lag indicators. If you
get a good grasp on these, I think you should do well.
Also, it is not necessary that you profited because of Bull market. Many were not even able to do that. Hence congratulate yo urself. You have the correct
psychological make up it seems.
Regarding books - I have largely been a self taught trader. I had a thing to not trust what other authors have written. Hence, I have found my own style for
trading. I have read a lot of books on market psychology, but have read very few books on indicators or anything else. My onl y piece of advice in this regard is
to pick up 2 indicators, absolutely master their construction and behavior and finally writing some rules based on your obser vation. If you can do this, then
that is all you will require.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
This entirely depends upon what and where are you investing in. If you are a swing trader, your first lot of profit should be booked around 6-8% of gain and
then you can manage your trades on other lots. But again this is so very subjective and hence very difficult to put in words. Unfortunately i have also not
come across books which deal into these subjects.
As traders you have to set target for yourself. For eg. If you want your equity curve to grow by 10% in next two months, then you have a target of 5% per
month. This small target will make you take trades where you can achieve your results and will keep you aware on where to boo k profits. Hence, I feel if a
trader keeps such small targets in mind, then booking profit and loss becomes a lot easier.
.....................
Regarding this I had mentioned in my previous post. What you are lacking is a consistent way to pick stocks. That can only co me if you have a trading plan. A
Trading plan is a structural approach to market where in you refer to it for every trade. Now, even if your methodology sugge sts trading on momentum, then
try and formulate more rules for different market phases. The more market phases you see, the more rules will you come up wit h. Keep modifying your rules
with the market and within a period of 6-12 months you will have a complete trading plan ready.
Always remember that we are in the market for long term. We are not here to get rich quickly. That can rarely happen. Long ti me survival is only possible with
a sound trading plan. Start developing it right away and you will become consistently profitable. Develop your plan only acco rding to your methodology. It is
only then that you will be successful.
.............It is useful to accept and understand and see any support and resistance in any up or down trend for those, whic h have a problem with that part of
trading.
Draw exact lines from any tops to any tops in the trend and draw lines from any down to any down in the trend.
Cut out the whole trend with any top and down in the chart with a scissors and hold this pace of paper horizontal in front of you. It then looks like a sideway
market and so it is easier for some trader, to really see and accept, that this is the real range in any trending market. Man y trader get confused about this by
looking at a chart which is in a trend. We still can make positioning trading in such market, but we have to accept and see t his supports and resistances on a
permanent moving strike level. Not easy and still makable.
..................Fundamentally this stock is not as strong as Renuka or Balrampur. But, price structure wise it is in much b etter shape. I could not find any
significant overhead supply in this, whereas in Balrampur and Renuka I could clearly see overhead supply. Sometimes my intuit ion contributes a great deal in
my decision making.
"The trend is your friend except at the end when it bends" What I'd like to add to this is,
Those who worry about the bend, can never profit till the end.
................
don't know what to tell you. Look at the chart which is posted by Alroyraj. What can you see? Can you see the uptrend? If yes , then why did you short this
stock? When a market is down and a stock is up, what does it tell you? Does it tell you to short? Don't trade randomly.
stock? When a market is down and a stock is up, what does it tell you? Does it tell you to short? Don't trade randomly.
Don't blame it on luck. This stock was never a short candidate in the first place. Take responsibility and remember your mist ake. You'll get better.
If you want to improve, Form rules, Form rules and Form rules.
If you want to succeed,Don't break the Rules, Don't break the Rules and Don't break the Rules.
...................................
....................
Look at the chart below of Tata Chem. Notice anything similar?
See the formation where 'A' is mentioned. I have pointed an arrow there where there is a WRB following 'A'.
Now see the formation 'B'. It is almost similar to 'A' and even it gets a WRB (today) similar to what we got when 'A' was for med.
How cool is that ? ...........14.10.10
Nifty has come a long way in its current movement. As of now there seems to be nothing which suggests that this rally is goin g to end. In fact, the WRB I
have highlighted on the chart are testimony to the fact the underlying Bullish pressure is pretty much intact. I have also ma rked a trend line on the chart to
show the pace of movement. Usually when we see such an angle being formed, we must be prepared to witness some volatility. Vo latility in this means, for
the next few - many sessions markets are going to be extremely good for day trading. The bias will remain positive, but we will also see neg ative days more
often. The main reason why will see this is because this is a market which has split open Bulls and Bears into two equal halv es. On one side, trend followers
are arguing that the markets will continue to rise and on the other hand, Bears will argue that markets are seasonally due fo r correction and are very rich on
valuation. The end result could be lack of weekly trend in the market but significant amount of intraday trend going forward. Overall though the markets will
continue to inch upwards. Momentum traders should be prepared to adjust their stop losses as and when volatility expands.
At the end of the day, use your own analysis and don't buy what is being reported in the media. They never got this upmove ri ght and hence don't expect
them to get any down move right either.
Nifty Price Analysis
The word of some serious corrections is again doing the rounds; especially by the coveted guests in some of the prominent cha nnels. Not all are notorious and
misleading, some of them are indeed stalwarts of the markets who have seen many cycles in the market and know the structure o f the market well enough to
draw attention towards what they are saying. Though their views and (our's) cannot be negated, we need to be as objective as the ticker requires us to be. In
other words, we need to listen to what the screen is telling us.
There are many arguments about momentum slowing and divergences forming. But, as Haile Gebrselassie will tell you, in order t o win a long marathon , one
needs to slow down at intervals and needs to breathe slowly before the next acceleration is enforced. This is the essence of winning a Marathon. Similarly,
Markets slowing down in momentum and forming divergences is actually a sign of Bullishness (on longer term) and Bearishness ( on smaller term). The
concerned Bearishness need not have to be larger in magnitude as it is engulfed by the longer term Bullishness.
The question that we need to answer is where do we feel the markets are heading? But even before this fundamental question ca n be answered, there is
another basic question of a more technical character, which must be addressed andif not answeredat least contemplated. Where is the next underlying
base for the market? There really are no generic, ready-made answers to this question, because base for me might be different for you and something
completely different for someone else. Whatever your answer is, it is correct for you and not for anyone else to question. Ma rkets tend to reverse at bases and
hence we need to keep our 'feeling' out and need to focus on near term bases. An upper base that we have identified is curren tly at 6250-6300 and the lower
base identified (highlighted in chart) is between 5800-6000. As far as we are above this base, things are merrier. This is not something I am telling you. This
is something which is very evident on the price structure.
In my last post, I had mentioned that markets are going to be extremely good for intraday trading and I continue to hold that view even now. Last few
sessions have been wonderful for day traders and this trend is likely to continue for sometime
Quantitative Easing Part 2 seems more like a movie than a broad based measure taken by Government. I am sure, the Promoters o f this move are prepared
to give the Wachowski Brothers (Promoters of Matrix Trilogy) a run for their money. Look at how much coverage its getting. Ne arly everyone seems to have
an opinion on what is going to happen and everyone is literally spelling out next week as doom's day for the markets.
Anyway, the market structure is completely healthy and as of now there are absolutely no signs of any crack down coming in th e markets. Look at the chart
posted below. I have circled the October Months action. There are just 3 Bullish price days in the entire month and nearly 11 bearish days followed by 3-4
days of indecision. Despite of this negative price bias, we are literally at the same level as we were when October started. To me, this does not look like a
market which is about to correct heavily. Balance of power still remains with the Bulls as they have taken just 3 session in the entire month to stamp their
authority.
Going forward, we could well have consolidation which could take is around 300 points lower but that for me will be the limit of the down move. I expect
November to be similar to October with prices moving below October lows and probably heading 3 -5 % lower. In December, I expect the markets to bounce
back from November lows and retest highs made in September and finally from December end to January 2011, I expect the market s to take out the
September highs and move forward. This is just how I am visualizing the movement of the markets. In the end, my aim is always to move with the markets
and I sincerely hope, you'll do the same. As traders we need to honor the market's opinion and should not expect otherwise.
Going forward, my views regarding Intraday trading remains the same as posted above. This market is going to be very good for day traders and it will
remains so for at least a month or two.
------------------------------------------------------------------------------------------
Can anyone please give me some tips on how to NOT PANIC! when things go wrong? I cannot control my anxiety and that leads to bigger blunders, wrong
decisions and big losses...
Essentially what you are asking is how to become a successful trader.
The moment you stop doing the above, you will move into a different zone which is reserved for the elite traders. Keep rememb ering your mistakes and more
importantly keep practicing what you do. Slowly but surely you will get there. If one cannot manage the emotions, then one do es not deserve to be in the
game.
Keep practicing
my personal opinion, which may or may not be correct, in this regard is that panic occurs mainly due to two reasons
1. Understanding
2. Experience
1. Understanding: When you truly understand what actually is happening, the panic automatically fades away. Therefore, the fi rst and foremost requirement is
to understand what is happening in the market right now. And, that will not let you think about what will happen in the futur e because you will become too
much involved in the present, that no other thoughts will come into the mind. In order to build understanding, one need to tr y and try hard till it comes to
your logic, then your mind and in last it comes in your blood.
2. Experience: The more you experience the trading, the more understanding will get refined to the level that you will become capable of dealing wid ur
trades. In my personal opinion, this panic feeling is good required you know about it. As you have already said that you are getting panic, this is actually a
good sign because until and unless one knows about his weak points, he can not gain the strength to conquer them.
Caution: When you apply these in sequence, i.e. first try to build an understanding and then check it with experience; it wor ks. Though, during initial phase
you may not be successful and you may find that the understanding is not working. But when you keep up building understanding s and experiencing them;
after a period of time, you gain both. Do not try to gain the understanding by experiencing i.e. do not trade without underst anding. make some
understanding, let it be wrong, doesn't matter. Every stalwart of trading has gone through this very phase and so are you.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
OR If you want to become a Professional Trader, learn to be in the markets in October and May. There is no better way to trai n yourself emotionally than in
live volatile sessions. One can always manage emotions when things move up, but it is sessions like these which make you acce pt the red.
Learn to embrace the Red. It is only then that the Green will show up more consistently.
don't know on which methodology you have taken these trades and hence I cannot comment on it individually. If you tell me why you have done it, then
probably I could look from that angle and comment.
probably I could look from that angle and comment.

Regarding retracement all I can say is that it is too early to comment. Today's minor move has shaken a lot of people and hen ce as usual media is portraying
it as the end of the Bull run. I won't be bothered about what happened today. I very much believe that we are still into a Bu llish phase and will continue to be
in it.
Please remember Lungs exhale air 50% of the time. This is how it functions. Similarly, Bull run exhales nearly 15 -20% move every now and then and this is
the way markets function. 15.10.10
Originally Posted by gauharjk
I have been holding Century Textiles since 7th October @542. It had been on a steady upmove for the last 5 trading sessions, since 1st October. It moved
from 503 to 550 in 5 trading sessions, and there was a lot of momentum. In Futures, it touched a high of 552 before coming do wn to 540 levels. I bought it
then because it had a 52-week high of 601, and I thought this script would touch its 52-week high. But it crashed the same day, and since then has been
trading between 525 and 535. Today was a very bad day. After making a high of 533, it closed down during the last 30 minutes at 516. It was not expected
because all Textile stocks, like Arvind (+2.61%) and Raymond (+2.53) made gains today.
I bought Cummins India on 13th October @747 to scalp a few bucks. Next day, it made a high of 758 in the Futures market (my t arget 760), but dropped at
the end with the rest of the Index. I thought it would bounce back. Today, it touched a high of 750, before closing at 734. C ummins is a strong company, and
has had an almost unstoppable run.
But I guess it didn't work out. I couldn't see this crash coming so soon. I thought there would be sideways movement, because the Americans are printing a
lot of money to balance their deficit, and RBI is also printing plenty of Rupees to keep our exports competitive and prevent Rupee from strengthening. How
can there be a liquidity crisis when global interest rates are near 0%?
REPLY:
1. Century Textiles - You have absolutely no plan. So what if momentum is strong? How can you assume it will test some level? Where is the SL when you
started seeing the trade going against you? No methodology highlighted. Momentum is fine but were are the rules?
2. Cummins - You entered the stock to scalp a few bucks and then started justifying your move with company fundamentals? What is the relat ion between
scalping and fundamentals? My dear, you have to seriously think about improving before you end up blowing your account. By th e way, why are your trading
futures?
If you are serious about trading, work on a plan. Else, just donate your money. Atleast you will feel better from latter beca use the former is going to make you
feel resentful towards markets. 15.10.10
Ans:
I have written to you regarding your problem. You have to read it carefully. I don't spoon feed any trader as even if I do, t he result is going to be a big zero. A
trader or in this case you has to put in the efforts to graduate to the next level. You cannot expect to walk - in the markets will loads of cash expecting to
make money. Its not so easy. It is easy if you work towards it methodologically. So here's what you have to do.
1. Education - You need to get basic understanding of markets and technical trading. Don't be a book worm, but start with basics where you c an learn what to
buy and what not to buy.
2. Implementation - After having some basic education/reading on markets, try and put in some plan in place. A plan which will tell you what to t rade, when
to trade, how much to trade and how to set risk level.
3. Attitude - Markets are not targeting you. It is you who has to get in tune with the markets. Develop respect towards the force of the ma rket and always be
humble towards what it gives you. You are losing because you want to lose. That's a fact. Face it!
If you follow these guidelines, you will be successful gradually. Success is in your hands.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
All trades are taken on two parameters,
1) Trend continuation (For Eg, Action Construction Equipment, Bata)
2) Fresh Breakouts (For Eg Sesa Goa)
Its all their in the price structure...........16.10.10
......................
Code:
Script Trade Price Stop Loss
Action Construction Equipment 66 64.7
Ahmednagar Forgings 126.28 123.43
Ansal Properties 95.84 91.7
Bata India 345.05 332.64
Finolex Cables 59.74 59
National Fertilizers 128.9 120.8
Sesa Goa 374.81 335.77
Patni Computer Systems 452
Parsvanath Developers 140
Mujal Show 62
KPIT Cummins 168
Banco Products 112
Along with the trades posted earlier, the following trades will be executed tomorrow morning. The new stocks are mentioned ab ove without trade price. The
stop loss mentioned is to be followed on Weekly basis. In case within the week, prices fall 5% + below our stop loss, we will review the trades accordingly. For
most of the stocks, stop loss is very near to the Friday's close. This is mainly because this suites my style of Investing. I don't like stocks moving against my
positions and hence I keep getting in and out of stocks unless I catch the right move. My style of Investing as you may all k now sounds very familiar to my
style of Swing trading. This suites my risk profile and my psychological profile. As mentioned earlier, I don't expect more t han 3-4 stocks out of this list to
continue doing well. Rest will be exited if stop loss is triggered and new investments will be sought after.
Trades to be taken in Equities segment only.........17.10.10
You have summed it up yourself .

Stock has consolidated well and is moving out of a base.
Advance .. Consolidate ... Decline
This is all you need. Three stages of stock movement. ....
--------------------------------------------------------Your series of questions posted earlier does give someone a structured approach to look at options. This would be very useful . Furthermore, no wonder why
options trading is different than futures. In futures, if you get the direction right, money is to be taken, whereas in Optio ns, this necessarily is not true.
No wonder why options require in depth understanding and perhaps are more difficult to trade than share or future. I wonder h ow so many retail participants
trade in options. Do they actually know the nuances associated with it? I personally don't think so.
................................................
Nifty Price Analysis 8th November 2010
The Current Price structure of the Nifty remains Bullish. At present there are three important zones within which price struc ture is confined. The one
highlighted in Purple is the all time intra day high of the Nifty which would prove to be a stiff level for the index to cros s. The ones highlighted in Red and
Black are the two support zones where one highlights an important peak formed in December 2007 and the another one highlighte d in black as the immediate
level where the markets took support recently. Another aspect which represents the underlying Bullishness is the gap up openi ng (with increased volumes)
which has happened on two instances (highlighted in Black arrows).
On the higher time frames, the Index continues to remain extremely positive but certainly appears to be over bought. Going fo rward, it would be healthy for
the markets if it were to consolidate or even correct from these levels. Rise has almost been vertical and this is never a go od sign for any entity. The
the markets if it were to consolidate or even correct from these levels. Rise has almost been vertical and this is never a go od sign for any entity. The
immediate course of movement it seems will be on the upside towards the all time high. Once that level is breached, we will t hen have to measure the
quantity and the quality of the rise to make a better assessment.
On the Macro Economic front, with the QE2 out of the picture, things remain a bit mixed. There was some pertinent weakness ac ross the commodities
markets, but given the news of QE2, things will have to be reviewed again. With the Fed's boosting the economy with Quantitat ive easing, another bout of
liquidity inflow should be expected. Personally, I don't think QE2 is all so good for markets. In the short run, it could pro vide the desired boost, but in the long
run it is posing some serious problems for RBI and our Economy.
Capital inflows are good for the country to the extent they help bridge the current account deficit (currently at 13.7 Bn Dol lars), but in the long run, it leads to
currency appreciation which impacts many sectors within the economy. In nominal terms, Rupee is still trading at 43.9, but in more realistic terms as denoted
by Real Exchange effective Index (REER), Rupee has already crossed (Currently 124) the levels made in October 2007 (previousl y 115). India, unlike Brazil is
not a country which imposes the Tobin tax (Tax on capital inflows) and hence RBI has to deal with this problem in different w ay. Rising inflation is also another
problem which the RBI needs to address. RBI has categorically stated that it will not use currency appreciation as a toll aga inst inflation and therefore this
leaves the RBI with no other option than to intervene in the Forex market. However, even this option does not seem feasible. Intervening in the markets
would mean that RBI would be buying Dollars. This would infuse liquidity into the system and hence will fuel inflation. The m ain agenda of RBI at present is to
curb inflation and by intervening in the markets it would be acting against the desired objective.
What we can draw from this is that in the shorter run, liquidity driven rally might continue. Main inflation (food) in our co untry is a result of rising prices of
pulses which has greater weight in the food inflation index. RBI at present would hope that with good rains and better transp ortation network, the supply of
such food items meets the demand. Historically demand has never been met, but we are entering a cyclical phase where inflatio n does cool off a bit. At the
most we can expect RBI to tighten interest rates further in wake of appreciation of currency and can expect RBI to step into control the volatility of Rupee. It
seems unlikely at the moment of the RBI to intervene and determine the direction of the Rupee.
In conclusion, things remain good for the Economy, but the problem of "Pace" of Currency appreciation and Inflation needs to be addressed. Assuming that
liquidity flows will not affect the Currencies and Commodities adversely is wrong. Hence, while we should trade in the direct ion of trend, we should also be
aware of the stark realities.
----------------------------------------------------------------------------------------------------------------------------- --------------------------------------
A stock needs to have sustainable fundamentals to qualify as an

investment
05 July 2015
02:46 PM
A stock needs to have sustainable fundamentals to qualify as an investment.
Besides. many stocks do go through a phase when they are viewed as the next greatest thing during a bull run. And one can really get stuck if one enters
these assuming the party will last forever. Ideally one may enter such stocks but should take the gains off the table. In this bull run education and
microfinance were celebrated. Some names like Edserv and SKS rise and ebb quite steeply.
Sometimes a lot can be learnt from a cursory look at how the sector in general is faring. Mining in general in this case. recently a lot of regulatory hurdles are
coming its way: sharing 26% profits with the locals, tribal land issues, ban on ore exports in Karnataka etc. Too many issues here.
........................................
I absolutely admire what Ed Seykota has to say on Position Sizing. He says,
1. Bet high enough to make meaningful profits when you win.
2. Bet low enough so you are ok financially and psychologically when you lose.
3. If (1) and (2) don't overlap, don't trade.
. Anyway let me give you an example of smart work.

"I always buy based on both fundamentals and technicals, but when it comes to selling, I always do it based on pure technicals. Earnings and Charts don't lie
and together they highlight information that only a fool can deny. "
................
Fundamentals and Technicals of good stocks are always helpful.
Fundamentals and Technicals of junk stocks are never helpful.
...........................
Our style of investment is identifying stocks which are about to break out. Hence if you refer to the investment sheet, you will find many stocks with double
digit gain within a month from where they were recommended. Hence, keep watching what i post
................The relation between Tortoise and Hare with stock market lies with the two most important aspects of trading; Position Sizing and Exits.
Its not about who wins. Its about what roles you adopt. In the end, this will determine your profitability.
Tortoise - Keep adding small positions on your way to the top. Move slowly and gradually but still make every % count more by building positions.
Hare - On signs of weakness, be prepared to become the 'Hare'. Take your profits and run before the market begins to beat you down.
If you manage to do this, this will be the first time when you will tell someone that in the race of Tortoise and Hare, in the end both Win.
,,,,,,,,,,,,,,,,,,,,,,,,,,,
Which Sizing Technique; Equal, Reducing or Increasing.
I don't want to get into the theory here, and hence lets work our way directly with Numbers. In each of the cases, we will want to Invest Rs. 500000 in a
counter at every 10% positive move. The counter is of Rs 60 currently and we keep adding quantities till it appreciates by 40%, that is it moves from 60 to
84. On ever 10% rise in the price from 60, we will add positions on 60, 66, 72, 78 and 84. In the end, we will sell everything at 120, that is a 100% gain.
Reducing
Under this, the initial Bet size is the biggest and then we keep reducing in some proportion. In our case, in this sizing method, we invest 140000, 120000,
100000, 80000 and 60000 respectively at each level. The starting amount is 500000 and the ending amount is 873639. This gives us gain of 75%.
Equal Size
Under this, equal size is bet on every 10% move. That is, 100000 is invested at every step. The initial capital of 500000 grows to 845188. This gives a gain of
69%.
Increasing Size
Under this, our first bet is the lowest and last the highest. We invest 60000, 80000, 100000, 120000 and 140000 at every 10% move. The starting capital is
500000 and the ending capital grows to 816736. This gives us gain of 63%.
We can see clearly that the best result is in Reducing the bet size and the worst result is by Increasing the bet size. However, this is one side of the story. We
are only looking at the Gains. What if, we enter an investment with a SL of 10% and for each of the techniques, the SL gets triggered. How would the picture
look now?
Well, for this, we will be using the gross gain of each technique and will divide it by the one time 10% loss on each technique. In the end we will take absolute
value of the same to arrive at profit factor. An accurate measure of profit factor would only come on series of trades, but here with one trade on three
different techniques, we can get a rough idea.
On 10% stop loss for every technique on initial bet quantity, the losses are Rs 14,000 , 10,000 and Rs 6,000 for Reducing, Equal and Increasing bet sizing
technique. This means, Reducing technique would be resulting in Maximum gains, but maximum loss. Whereas, Increasing technique would be resulting in
Minimum Gain and Minimum losses. Increasing technique would have the best profit factor based on this example and Reducing technique would have the
worst. Hence what do we do now?
Now it comes down to personal choice. I trade with Equal bets and I just like the trade off between what this technique has to offer in Profits and what it has
to take in Losses. I prefer not to be on the extremes. On a broader note though, I can suggest one position sizing framework for those who are more
adventurous.
High Volatility Environment - Either use Increasing technique or Equal Technique. Do not use Reducing technique here.
Low Volatility Environment - Either use Reducing technique or Equal Technique. Do not use Increasing technique here.
When Volatility is high, draw downs and losses are more, hence use conservative techniques. When volatility is low, draw downs and losses are relatively less
and hence use aggressive techniques. I can hope some of you have now guessed why I use the equal sizing technique. If not, then the answer lies in the fact
that it features in both the volatile and non volatile environment.
Look Farther
05 July 2015
02:46 PM
Here's something Winston Churchill Once said,

The farther back you can look, the farther forward you are likely to see.
If all you traders, begin to apply this in market, you will know where we are heading; Up or Down. Once this happens, all the speculation will end.
.In other words : Trend, volatility and probability...........................
It is what it is .. Markets are the best indicators. Our opinions are mere speculations.
different time frames attract diffferent stoplosses, for short term trades say one month to one week the stoploss should be f ixed to the nearest figure of
fibnocii number so must be target or in otherwise nearest support level so must be the stoploss.
if it is medium term say six months to 1 year the next fibnocii level or nearest to the medium term support level .
the supportlevel for long term say 1 to 3 years will have a different support level which will be a different level of fibnoc ii level, i donot know how u fixed 10%
as ur stoploss& 6 months time frame that is the reason u got confused between say -6months &support level& stoploss
...................
Setting Stop Losses Using Historical Volatility
Historical Volatility
Historical Volatility is a measure of price fluctuation over time. It uses historical price data to empirically measure the v olatility of a market or instrument in
the past. In other words, it is also known as statistical volatility, which is also the standard deviation of day to day pric e change expressed as annual
percentage. In terms of practical implementation in trading, Historical volatility is essentially used to know how a stock ha s fluctuated in the past and how
much likely it is to fluctuate in the future.
Calculation
HV = StandardDeviation(Ln(close/yesterday'sclose), days) *100*Sqrt(number of trading days in year)
where, Days = Length of days (10,20,30,40 .... )
Ln = Natural Logarithm
For e.g A 50 Day HV with 252 trading days in an year would be calculated like this,
HV(50) = Stdev(Ln(Close/Yesterday's close), 50)*100*Sqrt(252)
Use in Setting Stop Losses
Suppose the 50 day HV of stock which trades at 100 is 20%. Now, if we assume that prices are normally distributed, we can wit h 66% certainty say that
prices for this stock will fluctuate between 80 - 120 one year from now. Hence any stop set on this stock should be kept with this fact in mind. If you don't use
this concept, then you are going to get stopped out more often than you should.
One more thing that has to be analysed is that every stock of same price range has different volatility and hence stop loss t echnique cannot be same for both.
Hence, depending on the stocks volatility, stop price is set.
For Investment trades, try and use HV calculated across 40 -60 days and use it on the daily frame only.
Caution
Some times you will find that the volatility band is just too wide and hence stop losses will be set 10 -15% away from the current price. In this case, you can
do two things.
1) Either use ATR in this case as I had explained earlier.
2) Find stocks which offer better risk to reward in terms of stop losses set on HV parameters.
Don't expect to get hang of this concept immediately. It took me almost 6 months to refine and use this properly and hence be patient with it. One easy way
would be for me to share my entire research here. But, that will limit your growth as a trader. Believe me, I have given a lo t of lead here. You just have to put
in a little more effort.
At first this concept seems very intimidating, but as you research more, you will know how to use this better. Once you can d o this, your Investments and
Options understanding will reach the next level. Hence, research more and don't expect any easy answers from the market.
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..............................
What you are facing is a serious problem.
Before telling you what you should do, one thing I would like to tell you is that on Stocks like Arvind remedies etc, no form of analysis works. Hence, use
penny stocks for fun and not for using analysis.
Anyway now coming back to your query. You are facing the problem of choosing between a focussed portfolio and diversified por tfolio.
Before starting to pick stocks, you need to define what your goals are. How you would shortlist stocks and how much you would invest. If you intend to
choose a focussed portfolio approach (only few stocks) then you need to make peace with the fact that you won't be able to ca tch all the stocks in the market.
If you choose diversified approach, then you must divide your net amount into small equals and then invest the same in divers ified stocks. There are 1400
stocks in NSE and one cannot chase all the stocks. One way to filter would be to invest in 'A' category stocks. This would na rrow your list to 800 stocks.
Furthermore you can add some volume filters (300000 quantity over period of 5 weeks) and you could narrow it further to 600 s tocks. Hope you get it.
You need to decide the filters according to your trading strategy, account size and positive expectancy to risk ratio.
..............................
Focussed Approach versus Diversified Approach in Investments
Focussed approach is when we track only some number of stocks in the database and invest when the opportunity presents itself . On the other hand,
Diversified approach is one where we track all the stocks in our database and keep investing very small quantities in every s tock we find with potential profits.
Lately, I have been getting requests for traders willing to narrow down the list of stocks they track. Many write about missi ng out on mid cap and small cap
moves and fear losing out the big triple digit gains which occur in those stocks. This is precisely why I thought about writi ng a detailed post to how to cope
with this problem.
Now, narrowing down a stock watch list for Investment trades is completely different from a watch list created for Swing trad es. Hence, fundamentally one
has to be logical in doing so. Since this post is about Investment related stocks, I would limit my post within this domain. Later, if someone wants, I will write
about how to narrow down stocks for Swing Trades.
To narrow down stocks for Investments, the only criteria I use is of investing my money into high volume counters. I always w ant a buyer when I want to sell.
In investments, you need to prepare for the worst and the worst case scenario here being the fact that many counters run dead when markets get into a
frenzy mode. Therefore, whatever the situation may be, I always want to be in high volume stocks. The criteria that I use are ,
a) 100 day Average volumes of 400000 above,

b) Closing price being Above 30 Rs and
c) 'A' Category Stock
Once I run these filters over the database, I roughly get a list of 300 stocks which I choose from for investments.
Tackling the Problem of Midcap and Small Cap

For those who wish to invest in Mid Caps and Small Caps, here is what you can do. Apart from the 300 stock list, you can choo se top 100 midcap stocks based
on Volumes which belong to the A category stocks. Else, your list could comprise of some percentage of large caps, some perce ntage of mid caps and some
percentage of small cap stocks. This way you would have a diversified stock watch list.
There is always news doing the rounds of how some small cap or mid cap stock has quadrupled over 1 year. However, no one give s the stat on the % of mid
cap stocks which exhibit such move. No one can track and buy 1400 stocks in NSE. The top volume shares are usually large cap shares and don't think by not
tracking the rest of the shares you will miss rally somewhere else. Believe me, if markets move, so will large cap and so wil l mid cap. If you have a sound
investment technique, you will get the desired returns over any counter.
Hence, Invest wisely and invest where the "Inflow" is.

Scale in and Scale out depends on the system. We cannot generalize a 10% add rule and test it on any system. Hope you get my point. The kind of technique
I use, the 10% rule fits in properly. But it is certainly not a benchmark way to do it. Hence, the MAE and MFE that you are e xperiencing is system oriented
largely and position size is affecting it to a lesser extent. Such MAE/MFE results are usually achieved on a Moving average t ype system and hence, if your exits
and SL techniques are better, the system statistics automatically fall in place.
Identifying movers
05 July 2015
02:48 PM
Back then, when I was in the UK, I was once rock climbing in Scotland. As I started moving higher, I started getting more and more confident about my
climbing skills. The pace at which I was climbing made me seem like a pro. That is when, our team leader told me something which changed my thought
process completely. He said,
"The further you move up, the more cautious you must become. Remember, if you slip, the fall could take you down a lot faster and could dent you physically
and psychologically. Enjoy your ride up, but keep looking down so that you don't lose your grip"
Markets are a lot like rock climbing and hence I hope you guys got what I wanted to say. Trade smartly, not blindly.
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Identifying Next Big Movers - Hindustan Unilever
Over the past 15 days, we have been extensively researching stocks which are beginning to show strength in Price patterns and Fundamentals. We have
identified many such stocks and have begun to invest aggressively in them. One such stock which I would like to bring to notice is Hindustan Unilever.
Everyone knows how Unilever has been one stock which has not given investors any return over a period of 10 years. With the Consumption scheme now
playing out, I feel the time has come for this stock to move. There are particularly two factors which we have considered while marking this stock as the next
big mover; Improving Fundamentals and Robust Price structure. Let us look at these two factors individually.
Fundamentals
For long Unilever has been hampered by margins contraction, rising costs and management's defensive approach. However, these problems as of now seems
to be something the management is ready to put behind. This is the third consecutive quarter where the company has reported Volume growth (double digit)
of 14%. Furthermore, the management in its investor release has also indicated of this trend to continue and build consistently. There are also a series of
product launches in Cream segment, Cheap dishwash brand segment and the Blue segment which are due to add to the margins in d ue quarters. Currently the
company is facing high expenditures which is partly due to the aggressive brand building campaign. Such initiatives cannot be priced in currently and hence we
feel the company should start doing exceptionally well. EBITDA and EPS is likely to improve heading ahead and the company is positioned well to trade at least
20% higher from these levels. India as a country is growing exceptionally and if our Economy is truly heading towards the target of 5-6 Trillion dollars over the
period of 15 years, then this is one stock and sector which is going to grow leaps and bound.
Technicals
There is nothing much to write in Technicals segment as the chart of Unilever pretty much shows what has happened over the decade. However, the fall in
prices has arrested as of now and it seems to form a wonderful base around 200 - 230. The stock is also trading at 9 years high and is looking poised for much
higher levels. The volumes in recent times have picked up and it seems this stock is finally ready to move.
SL
There is no stock which can be bought and forgotten. Hence, there are a series of stops we are using for this stock. At the breach of every level, we would be
liquidating some part of our positions. The levels are 290, 280 and 270.
Target
The first target for this stock is 360. Lets see how it performs
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I believe one edge that Raunak has over us is that he writes the scripts ,takes the right position (RRR) and has the ability to weather market gyrations (even a
gap down) till the target is achieved of course with charts supporting. Had I taken this position when he had and seen it go against my position I would have
been tempted to wind it up. Of course behind such tenacity is hours of backtesting and intelligent placement of stop loss.
Yes you pointed it out correctly. I spent 377 days precisely to develop an eye for what I do now. Those days I worked more than 18 hours a day including
weekends. I had gone through 'n' number of charts and seen what works and what does not. Based on that, I have created a visual picture of what will work in
future. Hence now, whenever I see charts on my monitor, with "some" accuracy I can say whether the trade is going to work or not. Depending on that I bet
more and I bet less. Sounds simple and believe me it is indeed.
You know whose my "Idol" in real life from whom I draw inspiration for trading? To everybody's surprise its no investor or trader, but it is Charles Darwin. The
reason is because he gave mankind one "tool" which is literally never ever followed by anyone and is more often overlooked. The tool which he gave was the
"Power of Observation". The reason I am telling you this is because this entire thread and the posts which I write on this forum are reflective of Darwin's
underlying belief. This thread is full of my observations of market activity. Sometimes observations come out in the form of Price analysis and sometimes in the
form of Risk and Money management. Hence, I would still say that everything I use to pick stocks is already mentioned in the thread. And precisely there is
nothing other than this. But, the problem with mankind is his desire to search for something Sacred by ignoring something present in front of him. This my
dear is common to all traders. The one who can tame this desire is the one who will walk the extra mile.
In summary,
Timing is done by Observation
Stock selection is done by Observation
Support and Resistance is spotted through Observation
Discipline and Control is attained through Self Observation
This is my secret of success. Its not visible in form of a system or code and hence it feels incomplete.
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Assume- Clarity of thought is a stage reached after much self reflection. This is precisely why it cannot be taught. Its a stage which comes after immense
frustration and failure. Most of the traders quit during this stage and the one's who are resolute reach the next level.
Those intending to reach a level of self satisfaction need to conquer themselves. This I feel is more important than anything in trading.
......................
Risk/MM/Position Sizing ... Everything is structured. My way may not be as most text book advise it to be .. But it works for me and hence I use it. Its not
fancy enough to intimidate most users, but it works just fine.
But don't invest in such Junk stocks. The probability of hitting a winner in Penny stocks is very small. Hence don't waste your time and money. I think you have
entered these stocks before you started learning. Now that you are learning, try and apply your knowledge on these stocks. See if your decision, matches
mine. Don't exit because I am saying so. Try and analyze on your own.
A Word on Markets
05 July 2015
02:49 PM
The long awaited correction seems to have crept in the markets. Personally, I won't hold that opinion as of now. Lets think o f this objectively. An uptrend is
defined as a scenario where price structure forms higher highs and higher lows. Apart from this, higher Pivot highs and highe r Pivot lows are formed. Violation of
Pivot must always be considered on closing basis. On intraday basis, pivots are breached, but often retrace back from that br each. Hence, for the sake of
simplicity and objectivity, we would want a close below critical pivots.
Currently if we see the price structure of the market, we would find that we are in a strong uptrend. The latest pivot low is 5934 and it is only after violation of
this level on closing basis (daily frame) should we assume temporary pause of the uptrend. If however, close is below 5934 on weekly basis, we must definitely
brace ourselves to see levels of 5500 - 5700 on intra day basis at least. There is a lot of macro economic development taking place all over the globe and hence
sectors related to Realty, Metals, and Currency could gyrate viciously.
For traders, unless and until 5934 is violated on closing basis, one must look to go long. Personally, I would be looking to go long on slightest bit of visible
strength. Trades won't be aggressive, but certainly I would rely more on price action than on anticipation. Every Bull run ha s a phase where prices collapse
10-20% every 12 - 15 months and if the current move is a beginning of that, then long term investors should use this weekend to make a list of stocks which
they intend to accumulate.
.....................
Now coming to trades. It is one thing to spot a pattern and another thing to trade it profitably. The neckline according to y our chart is 344. DLF now has sold off
nearly 12% in two days and markets have corrected 800 points. Now given the fact that we are still in Bull market, the chance s of markets bouncing back are
far more. Hence, DLF could bounce 3-4% in the next 1-2 sessions. This would take the counter to 337 - 338 price levels following which you could have initiated
fresh shorts with the neckline level as stop loss. This would have given you a better risk to reward to trade with. 12.11.10
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I second your view about this : Always check higher time frames then the one you trade, to get a better view about market dir ection.
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........................
Do you know what type of trader/investor you are. You seem to be too bothered with this trade. Look dear, world is not going to end on Monday. Hence, stop
worrying about Tata steel. Luckily the global environment is not that supportive, and hence whatever upomove will happen in t ata steel will be subdued in
comparison to if markets were extremely strong. Stock will still gap up, but the quantum will be comparatively less. If there is more negative news from China
on Monday, then gap up would be largely subdued. Hence, lets see what happens.
Do you know how many contracts I am short on Tata steel? I am short 14 contracts on Tata steel. This means, my losses are goi ng to be 14 times more than
what you will suffer. And yet, I have enjoyed and not thought about what is going to happen on Monday. Markets are beyond our control and what is within our
control is our ability to manage ourselves. Hence, this is what I am doing.
What will happen on Monday has nothing to do with what will happen on the longer run. In trading, every trade is mutually exc lusive of what will happen to the
next trade (in terms of result). Hence, just relax and wait for what the screen shows you. As I mentioned earlier, whatever l osses we make, will be recovered.
........................................
..........................
by the way while joining the EOD data for the rectangular patterns or any other patterns whether we should join only the high /low tick of the candlestick or the
body of the candlestick. kindly guide me.
There is no hard and fast rule for this. Just narrow down a band for identifying rectangular/box trades. Even if you identify a trade which does not fit in the exact
highs or lows but looks visually effective, try and trade it.
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When you first want to analyse a stock how you go about it.
What are the basic steps do you follow to come to a conclusion of Buy/Sell/Wait for the stock
For eg.
a.Do you plot a weekly chart first to see the trend
b.Then go for daily chart to see the structure of it.
c.Does any of the indicators like MACD,RSI,STOCTISC, EMA do you use regularly
.....................Wherever anyone is in the World, one has to always follow the price and nothing else. No one accept the price is right. Follow it and it will reward
you.
This is basically analyzing price structure for Swing trades, which for me forms the most important aspect. Beyond that I lik e to look at the stock's sector and
how that sector is pretty much behaving compared to Nifty. By the time I do this, I am clear whether I will take the trade or not.
If you like indicators then I'll advise you to read John Carter's book (Mastering the trade) where he gives out a framework o f how he looks at the market through
MACD, RSI etc. Its a good read. Will open your mind to new ideas.
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Whatever I say, or whatever "opinion" I have, I absolutely never place it in front of what the markets are showing me.
When Tata steel declared good results, I was expecting stock to open much much higher. But, I had mentioned that ultimately w hatever I will do on Monday will
depend on how stock opens up. The opening has been largely subdued and hence I am adhering to my initial SL of 640 as of now. Tomorrow probably I will
bring down this to 630-632 levels and will see from there.
Opinion - Stock will rally. Will cross 640 easily. Hence will reverse.
Market - Stock did not rally. Hence am in trade.
Similarly when DLF was down 12% in two days, I had an opinion that stock might reverse and those who wanted could book profit s. But i never reversed it as
markets were indicating more bearishness. And look currently it is down 10Rs from 328.
Hope you get it. 15.11.10
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2. Never ever carry your position from one time frame to another just because you start 'worrying' or 'assuming' about market s. Unless your strategy says so,
you must close out your position in the designated time frame. If it was intraday according to your strategy, why have you sh ifted that to EOD now?
3. Always have an idea of where the markets are heading. Now, somewhere in the forum, someone has quoted the above post of mi ne and said that I am short
on the market and expect it to go down. However, if you read my post above carefully, I am actually looking for an opportunit y to go long. Hence, when I have a
rough idea of what daily time frame is indicating, I will never carry my trades from lower time frame to higher frame unless it is in the direction of higher time
frame. For doing this, one must view the markets on higher time frame objectively (price structure) and not through some sell /buy signal through systems.
When you are using higher time frame,
a) Know the direction of markets on higher time frame

b) trade in the direction of higher time frame on lower time frame
c) A & B only fail when trends starts to change from lower time frame and eventually spread out to higher time frame. ....... ...15.11.10
...............................................
Let me answer this from a psychological aspect. Some parts may sound rude to you .If you were to allow me to judge what you h ave done, then I would say
that what you did tells me three things.
a) You don't have faith on your Index EOD system - If you had faith, then you would have closed the intra day trade today itself and booked profits on it. You
have not done so to get peace of mind today. Markets don't pay anyone for taking easy decisions. Just remember that.
b) You are not disciplined - You are a system trader and the one thing system traders don't do is they never break their rules. You have taken a intraday system
and now turned it into a EOD trade. Stick to rules. Either be discretionary or be a system related trader. Don't mix both.
c) Learn to Embrace Pain - You need to learn to embrace pain. Fall in love with red and it will start ignoring you. Which means, you will start to see m ore of
green in your account. This is the most difficult part in trading and is very very hard to practice.
For E.g. - You questioned me on Tata steel today. Despite of what was going on and despite of excellent results, I did not break my rule s. Over the weekend, I
did not anticipate, I embraced the "probable" pain and I am still in my position. This is because I don't mind losing 'N' % t omorrow.
How you need to approach the two time frames is something I have explained in the previous post and hence you can refer that.
...............................
let me make it clear that what I understand about hedging and Stop lose.
Hedging............
1. By spending an additional 5% on our investments you are insured for minimum loses and have a chance of earning even if our trade go negative.
2. If our trade go positively you will not loose the entire 5% hedging fund. you will get a chance to cut it down to 3% in be tween.
3 Yes If our script did not move to either side till the expiry you may loose up to 3% or even full and you will have to find another 5% for next month (But here
we have solutions...... we can go for scripts with momentum).
From my experience I believe that we will get enough bonus as in the case of SBIN to cover this types of loses
Stop Loss
1. You can only control your lose and it will be a sure shot (minimum)lose in case you script moves against your view.
2. You do not loose an additional percentage if your view go positive.
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) I am asking you to follow only your method as there is no right or wrong method of doing anything. There is only one method , and that is the method which
"works". Hence, if your method is working and generating returns, just follow it.
Also, don't take my view or anyone's view on Nifty and couple it with your system. Your system on standalone basis is suffici ent if it is a robust one. Hence rely
only on what signals it gives. Markets essentially know no one. No matter how experienced that person is. Hence, just trust y our system and your instincts.
Living in the present is to be aware of what is happening to you, what you are doing and what you are feeling and thinking. I t is being conscious of your
thoughts and focusing them on the present. In this way you look at situations as they are, without coloring them with your pa st experiences. Living in such a
way makes it easier to deal with whatever you are doing at the present moment. You see things as they are, without being infl uenced by fears, anger, desires or
attachments.
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If your past experiences of relationships were pleasant and positive, that is how you going to think about your future relati onships. If the experiences were
negative, that is how you are going to visualize your future. It is always the past recreating your life.
You probably think sometimes about what someone told you, how someone treated you, how you did this or that. It is always abo ut the past. You are letting the
past captivate you and influence your behavior. Reliving the past is recreating it constantly. You are not letting change ent er your life. It is all right to recreate
the past if it was pleasant, but why repeat in your mind if it was unpleasant?
There is a story about two friends traveling by train. One was very nervous, restless and full of complaints the whole trip. He was impatient to reach his
destination, and disliked every moment of the trip. He did not pay attention to his surroundings, as his mind was full of imp atient, restless and grumpy thoughts.
His friend, on the other hand, enjoyed the scenery, drank a cup of coffee, ate a piece of cake and chatted with the other pas sengers. He enjoyed every moment
the trip. He lived in the present moment and made the most of it. On arrival he was fresh and felt good. His friend, as expec ted, arrived exhausted, tired and
unhappy.
It is a matter of the right attitude. Life becomes a happy and enjoyable trip when the attitude toward it and its events is p ositive, and the present moment is
used in the best possible way.
Living in the present means concentrating on what is happening now, enjoying it and making the most of it.
Do you know how many opportunities are missed due to dwelling on the past, instead of seeing and being conscious of what is h appening at the present
moment? When our mind is elsewhere we behave like robots, and repeat the same mistakes of the past, do the same things, and t hen complain that our life is
dull and uninteresting.
Wake up to the present moment and live in it. The past happened and passed, so what is the use of reliving it? Do you enjoy r eliving it? If it is a pleasant
experience that's okay. You may wish to relive it and recreate it in your life. But why repeat the same event again, if it wa s an unhappy one? Why do you repeat
something that has caused you pain?
We are usually unaware of the process of thinking that is going on in our heads. We repeat the same thoughts as a matter of h abit. They come and we do not
resist them. We welcome them even if they are unpleasant. We get used to our thoughts and habits, even if we do not admit it. In this way they become
stronger and more powerful. As our minds recreate our past, we find that the present is always the mirror of the past. Then n othing new happens and we
complain that life is always the same, that nothing changes. Weird, foolish, tragic and funny at the same time, isn't it?
By being aware of your thoughts and feelings, it becomes easier to be a little more detached. When you are detached you becom e able to choose how to react to
people, events and circumstances, which can save yourself a lot of inconvenience, trouble and embarrassment.
.......................................
SIMULATION
On the other hand it is a perfect tool to learn or to improve to trade with just the simplest indicators and only concentrate what is going on on the chart and only
on the chart ! No TV, no tips, no fundamentals, no influence from any body, no input from outside. Pure trading decisions bui ld on personal technical knowledge,
real experience, coolness and knowledge about the different order possibilities on your brokers platform include the margins you need to have for any of this
trades.
And that is one of the main points, which makes the different between the successful individual trader compare to the holy gr ail searching traders or to the
normal public traders.
I am clear, that in this simulation not real money is involved. So what ? We can use our imagination and experience we have w ith real money trades and trade
in such a way, that it comes near to that reality. As the data in the simulation are real data from the past ( in my case fro m the 28 oct 2010 ), there is a good
chance to make this like nearly real trades.
Use the same ideas from the past and find out, what was wrong with that idea in that moment or better, what was top in that s ituation to become an approval
again of that.
What is Hard Work?

05 July 2015
02:50 PM
Hard Work is when one dedicates himself to the field and does whatever is required to succeed.
In art, this is depicted by the artists creation. The hard work behind the art is that of patience and creativity and letting one's mind explore in the infinite space.
In sports, this is depicted by Sweat and Discipline. All the achievements in sports are made by those who shed a lot of Sweat working for their desired goal. In
trading however, hard work is not depicted in the form of Sweat or Imagination. It is depicted by controlling one's emotions and being immensely disciplined.
Any Trader who can exhibit these two aspects, is working hard. Systems, strategies, etc contribute around 5% of what is required. The real 'Hard Work' is
identifying your strengths and your weaknesses and controlling the inner desire to free yourself from stress. Hence, remember, we are Futures traders and we
need to control our desires.
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Smart money or Dumb money .. How can one classify it?
Quantitative trading has made the distinction between smart money and dumb money almost impossible. Going by the same notion, with the markets selling off
currently, and the volumes expanding, is it smart money or dumb money? No one can say for sure. Moreover, Indian markets are so open now, almost every
script in Futures has some sort of smart money operating in it.
Such things are just not in our control. Hence, I don't try and look into which script has which kind of money operating in them.
As of now, there is no visible base building happening on any time frame. Longs should be traded cautiously. My view on the Nifty and other stocks remain the
same as earlier. That is, on the slightest bit of visible strength, I am going to go long in the Nifty and the stocks. Nifty as shown below is not showing any signs
of robustness. Whereas Tata steel is stabilizing around 595 - 600 across all frames. Hence, on Monday, after opening we will review the short position again of
Tata Steel.
IMO - The objective of the technical analysis is to track the demand/supply and the direction of the smart money
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My questions-The objective of SM is to distort the demand and supply and buy or sell ?
So for Intraday trading purpose the technical indicators are perfect in predicting the demand and supply but what about SM activity ?
But how to find that the SMART money is actually buying on that day during a falling day during market hours.
There should be a way to gauge the market internals and SM activity real time in TA.
2.Why closing basis is given so much importance ?
Is it advisable to create long or shorts on a closing basis or wait for the next day opening and create long or short based on the breakout of previous day high or
low ?
............
Technical Analysis by its own nature is very limiting. It is a very powerful tool when used within a structured approach in the markets, but is by no means the
only tool to use. In my own opinion, techniques of detecting smart money or dumb money have been vastly advertised and when one studies them in depth,
one can realize that it is no different than any other theories floating around. That is, it fails more often than it succeeds. Hence, in my own experience, the only
thing that actually works is if one studies the price action directly off the chart. Within this, I don't feel using closing or opening price would make much of
difference. It is the price structure on the whole that one should look at. Mastering price analysis is very difficult and requires much more effort and dedication.
It's much beyond higher highs, lower lows, pivots etc.
my believe is that TA works only because of most big investments comes in the market with the support of TA.. Right? Now finding retrace levels are the
part of TA.
Reason. No.1
If you carefully see the EOD you can find that previous bounce of NIFTY from 4th august 09 to 9th oct. 09.. 3rd Nov.09 to 5th Jan. 10 5th Feb.10 to 5th
April 10 retraced breaking down their. 61.8% levels and reached up to 70% levels. If the sequence happen here it can come up to 5555 levels.
Reason No.2
As you know that there are difference in people using retrace levels.. i.e. a short term investor will always use a short retrace time frame like the nearest low to
the top and medium term investor use a little bigger time frame and the long term investor can use the longest time frame. Now let us use here with the all
three time frames and have a look at the levels.
short term 4806 to 6320 medium term 3974 to 6320.. 2580 to 6320
We can find that the if 2 retrace levels of two time frames are more dependable than a single retrace level of a single time frame.
Here we can find that a two retrace level of two time frames come near 6750 and there for this will be a little dependable place.There is a chance the NIFTY to
go up a little from here.But you can find that 2 retrace lines of two different time frames again meet at 5555 levels with another support of another time frame
at 5380. Now I think you get my point.
Now let us live in present and think. We can find that the FIIs came aggressively in our market in 2010 in the month of May and June with their SMART
MONEY And there is no doubt that they came to make money.
Now we can find a clear vision of their ACCUMULATION till August 10.(EOD) which is the first process of SMART MONEY.
After August 10 you find that nifty gone up very fast.. This can be counted as the MARKING UP which is normally the second process by SMART MONEY And
here is the place where DUMP MONEY enter the market.. And the third process by SMART MONEY is DISTRIBUTION and that they have started when the market
was around 6200 plus levels.
The market touched 5880 levels twice and I believe all this was because of DISTRIBUTION. Here is the place where more DUMP MONEY enter the market
including retail investors
The next and the brutal process of the SMART MONEY is MARKING DOWN. The process of MARKING DOWN is a very fast and forceful action. Because the
SMART MONEY dose not want the DUMP MONEY to get a chance to come out from their position.
I DOUBT THAT IS WHAT HAPPENING NOW.
Reason No. 3
Think that suppose we are some one who is entering in the market with the support of thousands of millions of rupees at when NIFTY was at 5380 level...
What will be our target.. I believe that our easy target will be some where 6300 which is a nice place where the sentiments can easily reach
Then off course we will start selling from 6200 levels, Right. Even though we dont have thousands of millions of rupees why cant we think like biggies
in words of Mr DOW- When market goes up.. All the Large Caps move 1st and Mid caps 2nd and small caps 3rd
But when the market correct it will work on the opposite way.. Small caps 1st mid caps then and Large caps last.
I think our Large caps are not yet corrected.
. TA does not have answers to everything. In fact nothing has. Its a mixture of TA, FA, Macro view, Inner instinct etc.
My answer to your SM query was answered earlier as well. To repeat the same, I would say that I don't indulge into trying to recognize smart money or dumb
money. In a very polite way, I would like to say that I am smart and I like to believe that where I put my money is where smart money is putting it. In the end,
money. In a very polite way, I would like to say that I am smart and I like to believe that where I put my money is where smart money is putting it. In the end,
whether I am right or wrong, is for the Tape to decide. Nothing more and nothing less.
...........................
Sometimes I post views on Nifty and Bnifty. But I can't do it on every day basis. The reason for that is that every minute trend does not change. The reason you
are experiencing losses is because you don't have clear rules to trade the trend. To do that first you need to define what your horizon is for trend trading. Are
you looking to scalp the micro trend or are you looking to ride the big winners.
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You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
Know when to run
You never count your money
When you're sittin' at the table
There'll be time enough for countin'
When the dealin's done
Every gambler knows

That the secret to survivin'
Is knowin' what to throw away
And knowin' what to keep
'Cause every hand's a winner
And every hand's a loser
And the best that you can hope for
Is to die in your sleep"
And when he finished speakin'
He turned back toward the window
Crushed out his cigarette
And faded off to sleep
And somewhere in the darkness
The gambler he broke even
And in his final words
I found an ace that I could keep
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. The essence is to know when to exit. In my opinion, very few training courses show the exit door. This song is completely applicable to markets.
Nimbleness in Markets
05 July 2015
02:50 PM
Nimbleness develops with time.... only thing one should be very unforgiving to themselves... benchmark should be.... better than the Best in existence
anywhere in the world.... and with each error committed ....one should promise themselves that they will not make the same mistake twice.....& ofcourse fire in
the belly to be the best not to show the world but to themselves.
................Based on what I have learnt in the markets, it is always better to keep SL in your mind and not in the system. Also, pick out SL's which most people
won't follow. Avoid round figures, important supports/resistance. Hope you get the point.
Just a word on Intra day/Swing futures - When you talk about whipsaws, you must realize what they essentially are. See, you will have a lot less whipsaws on
weekly charts and a lot more whipsaws on 5 min chart. The underneath character of whipsaw hence is determined by the time frame you trade in.
Intraday/Swing trades will have a lot more whipsaws, but will also enable you to capture trend early. Make sure you ride the winners as they will eventually pay
out for your whipsaw trades.
Strategies with low winning percentages (more whipsaws) and lumpy and inconsistent returns (skewed distributions) are personally preferable because the
risks tend to be obvious but manageable. The inconsistency of such strategies makes them unpalatable to even the most seasoned trader and institutions, a
condition which virtually ensures durability.
In the end, I would like to quote Ed Seykota here regarding to his opinion on Whipsaws.
"Ed Seykota: To avoid whipsaw losses, stop trading"

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Whipsaws cannot be eliminated. Some use filters like volatility, volumes, late entries, confirmation indicators to eliminate the same. But, with elimination, some
of the profit also gets eroded. Hence, it is a trade off between frustration and profits. Hope you understand it. The nature of whipsaws is such that it tests the
most prudent trader around. This is precisely why less than 3% of traders end up being profitable. Not everyone can control their own nature to fight what
usually happens.
Few things that I will tell you which help one through such phases are Positive attitude, Awareness of direction of trend, Adaptability across different time
frames and of course managing emotions in real time. Whipsaw is like your lungs exhaling before starting to inhale. Since exhaling and inhaling is essential for
survival. So is Winning and Whipsawing essential for Trading sustainability.
Most of the time stocks recover after hitting SL.I do this in trail basis ,cant afford to adopt as few losing trades hits me badly .
Now about mental SL.What is your reflex if a stock touch your mental stop.Do you square off position immediately, or wait for pull back ,(if u see some strength
technically )
Another thing how do you manage your mental stop ,if you trade in 4 scripts and unfortunately if mental sl hits all simultaneously.
............................
If I am in a trade, where I have intraday stop loss, then when my stop loss is hit, and if it is hit by a wave of selling which happened due to no apparent reason,
then I wait for retracement to sell. Else, I exit it immediately.
If I am having an EOD stop loss and on intra day, stop loss gets triggered, then I adopt the KBN (Kill by Neglect) principle. Here I kill my desire to square off by
neglecting my desires. I stick to EOD rule. This comes with practice, but it can be achieved.
Regarding mental aspect of Stop losses. Even if I am into 4-6 trades, and each of them violates SL on intra day basis, I stick to my rules. Under no
circumstances do I violate it. I strongly believe that if I go broke, I want to do so from my opinion and hence this motivates me to challenge my inner desire.
BankBaroda (950), Voltas (240), Tata Motors (1150) & Sriram Transport Finance (800).
SL is mentioned in bracket. To be adhered on EOD basis.
Markets are very volatile. Hence all trades are risky now. Take your risk appetite into consideration. For so many trades, one must have reasonably large
account size. 24.11.10
There are many ways to do this. The way which you suggested, is also valid and hopefully profitable. The way I would do this is,
Stage 1: Identifying next probable Out performer

Stage 2: Confirmation of Stage 1 by Price of that stock
Stage 3: Investing in the stock
Stage 4: Swing trading and Scalping on Micro Trends
Stage 5: Be watchful at the top
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Learn the rules before you start to run. I would hate to see someone taking considerable losses despite of being in the company of some of the traders of
Traderji. Just an advice from someone who has seen a lot. Rest is up to you.
The averaging I learned myself because I did not wanted to sell something below the price I bought it... I belongs to Kerala. and my father was a coconut
merchant. I heard him saying that when the price is less you just count the coconuts..... and when the price is high you start counting your money.
And you know coconuts not have a life of more than 1 year after it is picket out from tree........ But here you see shares have a life or more than us with the
perpetual existence of the companies that belongs to. then why should you worry about investing.
The point at which markets usually turn are dominated by either one of the factors (Technical or Fundamental), but once the direction is set, both these fields
kind of collaborate to set the course of the new move. At present we are poised at a place where either of them can trigger the new move. What I anticipate or
what you do is not of much importance currently. However, what is of importance is to anticipate that something is likely to happen. Over the next 2 weeks it
should be clear as to which way markets will likely move. This is precisely why one must be ready for either scenarios.
. What I have written above is a factual side of Fundamentals and Technicals. This needs to be understood in the context in which it is written. Its not a
recommendation. When a recommendation is given, it is given with a definite direction and stop loss and hence dont confuse this with that. What I have written
above is a very realistic way of seeing the markets at this stage and hence if you prefer to read it with a bias of 'mumbo jumbo', you will exactly see that.
However, if you prefer to read it with the practical insight of trading, you will see the underlying message in it.
, if Fundamentals dominate this market, then one should be braced for much erratic price movements and turbulent sessions on D-Street. Fundamentally, we
are reasonably priced currently and for our economy to become attractive again, markets either need to consolidate for a good 3-4 months in a range or need
to correct and gravitate towards levels of 6400.
last week I had written that I am a buyer in Index and would continue to do so till market proves me wrong. Again, this is not a target, but it is just my trading
style of reading the Tape movement. If I am proven wrong, I would reverse immediately. Hence essentially I am always following the market and not predicting
it
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Your market is moving up and down and up and down and that is called a sideway market. You as a trader_man need to have three types of strategies in your
trading arsenal. One for up markets, one for down market and one for such markets you have now.
......................................
Jack Schwager: My impression is that you often implement positions near market turns. Sometimes your precision has been uncanny. What is it about your
decision-making process that allows you to get in so close to the turns?
Paul Tudor Jones: I have very strong view of the long-run direction of all markets. I also have a very short-term horizon for pain. As a result, frequently, I may
try repeated trades from the long side over a period of weeks in a market which continues to move lower.
Jack Schwager: Is it a matter of doing a series of probes until you finally hit it?
Jack Schwager: Is it a matter of doing a series of probes until you finally hit it?
Paul Tudor Jones: Exactly- I consider myself a premier market opportunist. That means I develop an idea on the market and pursue it from a very-low-risk
standpoint until I have repeatedly been proven wrong, or until I change my viewpoint.
Jack Schwager: In other words, it makes a better story to say, Paul Tudor Jones buys the T-bond market 2 ticks from the low, rather than On his fifth try,
Paul Jones buys the T-bond market 2 ticks from its low.
Paul Tudor Jones: I think that is certainly part of it. The other part is that I have always been a swing trader, meaning that I believe the very best money is to
be made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all the money by catching the trends in the middle.
Well, for twelve years, I have often been missing the meat in the middle, but I have caught a lot of bottoms and tops
If you are a trend follower trying to catch the profits in the middle of a move, you have to use very wide stops. I'm not comfortable doing that. Also, markets
trend only about 15 percent of the time; the rest of the time they move sideways.
.............................
In ancient times, a blind man visiting a teachers home got delayed till nightfall to return home and despite the teachers insistence of staying back the night at
his place, the blind man insisted on returning home, walking back, as the distance was not too long.
The teacher gave him an oil lamp to carry along as it was pitch dark with no street lights nor moon light. The argumentative blind man questioned the logic and
benefit of carrying the oil lamp as he was anyway blind! The teacher explained you may be blind to the world, but the world is not blind to you! People
seeing you with the lamp will avoid bumping into you. This satisfied the blind man who set off home with the lamp.
Empowered with the oil lamp the blind man walked briskly, almost dangerously, smiling confidently acknowledging the teachers wisdom of providing him the
light for a safe home journey.
Suddenly, the blind man hits into a bulky stranger with big impact, falls down in pain with a broken, bleeding nose! On gaining poise, the blind man abuses and
accuses the stranger of acting blind and running into him! I am born blind, but could you not see the lamp I was carrying, that you crashed into me? wailed
the blind man in pain. The stranger replied Sir, not I, but it was you who crashed into me, as I was waiting by the wayside, and yes, the flame of the oil lamp
you were carrying had extinguished so I could not see you coming at high speed!!............
Knowledge is the lamp..........unless u have it, dont look at market.
----------------------------------------------------------------------------------------------------------------------------- ---------------------------The thing that is slightly bothering me is the fact that leadership in market (Banking sector) is showing some cracks. We still need to be very careful about
getting judgemental here and should wait for more clarity to emerge. On a broader note, I am still very bullish and would review my stance at the end of next
week as markets will dish out more information for us to base our assessment on. I still think we are undergoing a routine correction in a Bull market and the
phrases of Bear market should be kept at a distance. Markets usually don't turn completely in and out in a week's time. Hence at the most if I have to bet on
Bull market being over, I would bet more on a side ways market rather than a Bear market.
All the negative news flowing through the system is in a way good. I look at this process as a self cleansing mechanism of the market. Eventually, it will glow
more and give more. Just hang on with strict discipline. Amongst all of you, I have had the worst two weeks. I am currently down 10% of net value (draw
down) and have got my 11th consecutive swing trade loss. This is primarily because I am fighting the trend on the smaller frame but sticking with it on the
broader frame. Whenever the tide turns, I will make back much more than what is lost. So as of now, till the end of next week, I am still buying.
Once you go through what is given below, you will be able to trade on your own with practice. Broadly, whenever I look at the market, I look at 6 things.
1) Basic Analysis of Broader Market
2) Basic Analysis of Global Market
3) Psychological Makeup for Current Scenario
4) Selecting Correct stocks to Trade
5) Setting appropriate Stop losses based on underlying volatility
6) Final Price analysis before deciding when to initiate the trade
..................................................
Following is explained below. Hopefully, this will give you a very good idea of how to analyze the markets.
1. How I analyze main Index/Stock periodically. Below is a case study when I called the top on the markets in January 2010. I feel markets are headed down in
the shorter term. And here's why.
1. Ascending Triangle 1 - Markets had formed an ascending triangle from June to September and eventually broke out from it to rally to new intermediate
highs. During this formation, the momentum and strength of the market was extremely strong (refer to Momentum indicator and the RSI). However, when the
market broke out of the triangle, the momentum and strength of the market weakened as compared to the July-August levels. Market made a new high and
there was evidence of divergence visible.
2. Ascending Triangle 2 - Markets have agained formed an ascending triangle between November and December and have broken out from it yesterday.
However, there are quite number of things to be noted here. Firstly, the momentum and strength of the market is now weakest when compared to July August and ascending triangle 1. The divergence has now extended from Mid August to present. Secondly, historically it is quite known that triangles have a
50-50 chance of succeeding and failing. It is also very rare that two triangles have been formed back to back with no failures in between. The odds of two
successive triangles giving valid signals is very rare. Lastly, look at the breakout carefully. Triangle one broke out with NIFTY notching up 2.2% gain on that
day. Whereas triangle 2 breakout has been accompanied with double DOJI and a probable EVENING STAR (Major reversal pattern, have marked it with a
circle).
3. Price Projections - If you take the bottom B and project the price upwards, then the current level falls exactly between the 50 -61.8% retracement. Today
the markets rejected this level and fell down to 5282. The probability of price projections have to be weighed in with the uncertainties ahead (interest rates,
budget, global market correction, quarterly results).
4. Cyclic Analysis - If you take the two major top's Z and B, then the current time frame lies exactly in between 50 -61.8% retracement cycle. Which means
even time wise we are due for a correction. Again all the uncertainties mentioned above should be factored in.
5. Trendline - If you visualize a trend line from point A to C, then the chances of trendline being broken looks good if the markets start to correct. I have
purposely not drawn the trend line as I did not want to clutter the charts with too much information.
It is indeed very rare when Price patterns, Price projections, Cyclic analysis and the surrounding uncertainties fail together. If they indeed do, then that's the
beauty of STOCK MARKET guys.
...............................
2. How I analyze Global Markets in Conjunction with Nifty. Below is a case study when I called the top in market in April - May 2010
Another important day for the market came to a fitting end. As I had mentioned yesterday, the market tried and built a base to signal that it is not going to fall
further. Though many would suggest that today was a hammer sort of a formation, I would still not read too much into it. The reason is simple, A hammer is
only valid when it occurs near a strong base or a previous support level. There was no such significant level which I could find around today's low. Also, most of
the significant action today happened below yesterday's low. So technically, we were still trading weak today especially after witnessing an outside bar
engulfing yesterday. This week's action led to Nifty breaking its important trendline which extended right from March 2009 (See the figure below).
When we try and combine the global picture with what is happening in India, we find that there is a lot of uncertainty that is lurking around. Hanseng Index has
recently turned around from the complex head and shoulder neckline it had formed (See the figure). China Index has been forming a symmetrical triangle since
september 2009. China is going to have an Important meeting regarding it's currency valuation and interest rates scenario. Isn't it ironical that symmetrical
triangle being formed is precisely reflecting this (the uncertainty)? I could not find anything bearish in the US index accept from the fact that S&P is hovering
around a major trendline support and if it violates that things could look different for the short term. (Update: S&P has formed a classic Evening start pattern
on friday. From here on the high of 1214 remains a formidable resistance. World over we are witnessing reversal signals. Such insync signals always lead to
deeper corrections)
What we can conclude at this juncture is that globally there are uncertainties present but still we must still see how things will shape up. One thing is for sure,
What we can conclude at this juncture is that globally there are uncertainties present but still we must still see how things will shape up. One thing is for sure,
that in which ever direction the breakout occurs (or the price moves), the move could be significant and one should be alert and ruthless enough to switch
position. Volatility cycle at least suggests so. Let's have a nice weekend and let the market play its course.
.........................
3. This is my psychological make up when I trade. I keep getting in and keep getting out till I am right
Has it ever happened to you that as a trader you chase a stock and it continues to give you whipsaws. You finally make up your mind to give up on that stock
and ironically find it rallying on the very next move. I guess, this has happened to each one of us in our trading career. Therefore, as traders what can we do to
counter this? Before we touch upon this topic in detail, I'll assume that everyone reading this has a distinct advantage over the markets in form of systems or
methodology. By distinctive advantage, I mean a system which does not depend on specific market conditions to work. So, let's begin !
Well, if you think about this issue in detail, this is more of a psychological issue than a system issue. As soon as we get a couple of loss making trades, we
begin to look at our P&L statement. Furthermore, we begin to extrapolate the P&L "if" we were to loose a few more trades. Believe me, if you want to be
successful, then don't do this ! We all go through phases where the stocks just don't move and eventually when they do move, we are ultimately out of it. Most
of you who follow this thread, must have noted on many occasions that I keep reversing my trades till I find that stock in my favor. Currently, I am doing the
same with India Bulls Real estate. I will keep reversing my positions till that stock fits my scaling in and profit booking criteria. It's psychologically tough, but
who told that markets rewards one for taking easy decisions? When we are wrong, we want to make sure our losses are small and when we are right, we need
to make sure our profits are relatively large.
There are few things in trading which are not documented well enough. Out of those, the topic of getting out and getting in is one. Folks, as far as our system
has a positive expectancy, we should not be bothered with the whipsaws and the draw downs. To be successful in this, never ever forget the 2% risk
management rule. If you don't let one trade take more than 2% of your portfolio, believe me you'll be soon taking your account in the whole new direction.
That is, towards profits.
If you intend to become a good trader, you have to incorporate this in your trading plan. Be relentless, don't think about potential losses, let them show up and
then apply the risk management rules. Don't trade what you think, trade what you see.
..............................
4. How I select the right kind of Stock to Swing Trade
Essentially, Swing trading is a way of trading where we try to capture some percentage movement of a stock in either direction in order to profit. However, it is
essential we try and pick the right kind of stocks in order to capture some percentage move. If we don't identify the correct stocks, we are essentially
increasing the cost of trading by paying commissions for stocks which are not destined to move. As trader's we certainly don't want to be in this scenario. In
this post, I'll just highlight some methods to swing trade the right kind of stocks. So, lets begin !
Every stock has a different inherent character. This is precisely we need to research in depth to find out which stocks have the typical characteristics which suit
Swing trading. Before moving forward, lets us predetermine what we require in swing trading. For a Swing trade to be successful, we would require such stocks
which tend to move more frequently in either direction. Basically those stock which exhibit significant volatility. Taking this concept in mind, we can then build a
system around this and swing trade profitably.
There are essentially two ways in which one can determine which stocks to trade profitably. The first way is the Beta methodology and I will discuss this
method in this post. In future, I'll write about the second technique.
Beta methodology is essentially filtering out those set of stocks which move more than the underlying index in terms of volatility. For example, a stock with
Beta rating 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A
beta of greater than 1 indicates that the security's price will be more volatile than the market.Hence, if a stock's beta is 1.5, it's 50% more volatile than the
market. As swing trader's we want to be in stocks which exhibit Beta ratings of over 1.5. For our market, such stocks would typically be a DLF, Unitech, Rel
Capital, Hindalco, JSW, IBrealest etc. However, please bear in mind that trading high beta stocks is a double edged sword. If stock begins to go against you,
then the loss could be more than what you would undertake in a low beta stock. Hence make sure to keep tight stop losses.
How to incorporate this in your trading

I hope by now, you understand why it is almost quintessential to select the right kind of stock. Going forward, you would need to adopt this in your trading
plan. The best way to do is to weekly review which stocks in the index are exhibiting the highest beta rating. Be sure to calculate the Beta figures on at least
100 days of trading record. I would however encourage you to calculate beta over a period of 6 - 12 months of data. Remember, if the stock does not move,
your account will certainly not move.
.................................
5. This is how I set my stop losses
Historical Volatility
Historical Volatility is a measure of price fluctuation over time. It uses historical price data to empirically measure the volatility of a market or instrument in the
past. In other words, it is also known as statistical volatility, which is also the standard deviation of day to day price change expressed as annual percentage. In
terms of practical implementation in trading, Historical volatility is essentially used to know how a stock has fluctuated in the past and how much likely it is to
fluctuate in the future.
Calculation
HV = StandardDeviation(Ln(close/yesterday'sclose), days) *100*Sqrt(number of trading days in year)
where, Days = Length of days (10,20,30,40 .... )
Ln = Natural Logarithm
For e.g A 50 Day HV with 252 trading days in an year would be calculated like this,
HV(50) = Stdev(Ln(Close/Yesterday's close), 50)*100*Sqrt(252)
Use in Setting Stop Losses
Suppose the 50 day HV of stock which trades at 100 is 20%. Now, if we assume that prices are normally distributed, we can with 66% certainty say that prices
for this stock will fluctuate between 80 - 120 one year from now. Hence any stop set on this stock should be kept with this fact in mind. If you don't use this
concept, then you are going to get stopped out more often than you should.
One more thing that has to be analysed is that every stock of same price range has different volatility and hence stop loss technique cannot be same for both.
Hence, depending on the stocks volatility, stop price is set.
For Investment trades, try and use HV calculated across 40 -60 days and use it on the daily frame only.
Caution
Some times you will find that the volatility band is just too wide and hence stop losses will be set 10 -15% away from the current price. In this case, you can do
two things.
1) Either use ATR in this case as I had explained earlier.
2) Find stocks which offer better risk to reward in terms of stop losses set on HV parameters.
Don't expect to get hang of this concept immediately. It took me almost 6 months to refine and use this properly and hence be patient with it. One easy way
would be for me to share my entire research here. But, that will limit your growth as a trader. Believe me, I have given a lot of lead here. You just have to put
in a little more effort.
At first this concept seems very intimidating, but as you research more, you will know how to use this better. Once you can do this, your Investments and
Options understanding will reach the next level. Hence, research more and don't expect any easy answers from the market
................................................
................................................
6. Final Price Analysis

I have attached two images below. The first one is a chart legend. Understand this before reading the chart. Since I have explained the entire 2010 year for
Sterlite, the chart might seem confusing. Hence, its absolutely essential to understand the chart legend first (which is self explanatory).
Now, since the legend is clear, we will come back to Sterlite chart. In my opinion, this stock should never have been bought in the first case. For a stock to
remain in an upmove, stock should exhibit significant strength. By strength we mean, a stock should not retrace more than 38.2%. Here are some guidelines.
Extremely Bullish - Retraces less than or equal to 38.2% of previous move.
Weakly Bullish - Retraces more than 38.2% but less than 50%
Neutral - Retraces more than 50% but less than 61.8% but remains sideways
Weakly Bearish - Retraces more than 61.8% but less than 100%
Extremely Bearish - Retraces more than 100% move.
Lets review the sterlite chart now. I have marked points 1-5 depicting the entire upmoves. Not even once has this stock stabilized at some level. The above
framework that I have given classifies Sterlite as an Extremely bearish stock since starting of 2010. Hence the line of least resistance has always been on the
downside. Any trade taken on the upside is just fighting the trend.
If you have your entry point for what ever reason, you have to decide how many positions you take. Do you scale in or do you jump in whit a fix amount of
money or what is your idea about that.
An other way of trading is, that I go in with a certain amount of positions. I then take out some of them, when all my cost are leveled. The other positions I let
run and give them fix targets. If target is reached, I cash and reduce the positions. The rest I let run.
Over time, I have become a very careful trader. Trading losses in the past have made me very think full about any trade I do. In any trade I do, I am 100 %
clear about how many positions I am going to take
..................................................
..................
For Equities/Shares
Adding positions depend on market conditions. For eg, if we are in low volatile environment, one can take the plunge and invest the desired amount at one go.
Since the volatility is low, losses won't be out of proportion. However, when volatility is high, one can invest based on volatility based position sizing technique.
What I do personally is a bit different. Since we enter a high volatility phase, with rising uncertainty in markets, I take the plunge of investing directly. Volatility
is fairly cyclical and hence after high volatile phase, low volatility phase occurs. I anticipate this cycle and take the plunge. Hence rather than taking small
position initially, I take big positions and eventually manage my position in real time. Cutting losses aggressively and rebuilding positions immediately in this
technique is very important. Also, positions are always build in the direction of the broader term trend.
For Futures
If I have to invest N units in a futures trade, I usually invest N/3 at the first instance and then add the rest based on Average true range movements. Actually
scaling in and scaling out is more dependent on systems and techniques. If someone is Swing trading where targets are typically 3-5%, then there is not much
scope of scaling in. However, if someone is Trend trading in futures (carrying positions in next month and more) then adding position and scaling in actually is
essential.
Hence in Swing trades, I don't scale in more than once.

----------------------------------------------------------------------------------------------------------------------------- --------------------------------
Roll Over Analysis

05 July 2015
02:52 PM
Rollover Analysis
Basic Definition:
When a future contract of an Index or stock is near the expiry and one wants to carry over the position (long/short) he/she has to close the position in
that(current) expiry and form a fresh position (long/short) in the next months future contract. This covering of the open position in near month and
simultaneously forming fresh position in next month is known as rollover.
Formula:
(next month OI + far month OI) %/Total futures OI of all three series
Explanation:
Rollover analysis is not different from basics of open interest analysis. Most of the times when viewed on own, it is extremely misleading. Hence, following are
the broad guidelines one must follow while incorporating this in trading.
1) Always be aware of broader market and the stock's price action.
2) OI increase followed by price increase is bullish (Price analysis must support).
3) OI increase followed by price decrease is bearish (Price analysis must support).
4) Rollover is essentially to see if the Bullishness and Bearishness is getting followed to next series. Historical data of Rollover analysis is a must to compute this.
Suppose a stock has Bullish price pattern and positive relation with OI and historical rollover around 30%. If currently the stock has good price structure,
positive relation with OI and it sees rollover of 70% (which is more than historical rollover) then the stock should be perceived as Bullish.
Hence, when doing rollover analysis, you need to have historical data to base your analysis, positive price structure with OI (Or reverse) and be aware of
broader direction of market. Its subjective and hence it needs to be monitored with rest of the factors around.
Initially I had the opinion there is no Holy grail.In the middle again got confused and started believing that there is holy grail and people are not sharing.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
During every correction there is no way to predict the bottom and a reversal.
A confirmation of reversal can be confirmed only after a 100 or 200 points run up from here.
Now I understand that TA is more of an art than a science.It is all about probability.
Thanks to the markets for helping me to get rid of the illusion of holy grail.
The concept of trading price action, for our trading method, is the right side trading of prices that have previously been established from chart reading previous
price action areas that preceded breakout continuation price moves.
Price Action Area
The rectangle area is what I refer to as a price action area. A price action area is the area preceding where an 'extended' price move occurs - often from some
consolidation period like in this case.
Rectangle: this area shows the key price action involved with breaking out of the consolidation.
In the case of this price action area rectangle, there was a left side sell swing that consolidated between the swing low AND resistance, which was where the sell
swing last broke at the yellow circle.
I want to now try to identify the prices specifically [price specifics] related to the price action that occurred - which was a hold of resistance AND an eventual
breakout out of consolidation, and resumed the left side sell swing.
Our concept of trading price action 'says' that these same prices will again be relevant when there is a move back to this same area.
.........................
Price Action- Price Trading Setup
This chart shows a move back to the price action area shown on the charts above. Note the 839.80 - 839.10 - 838.40 prices AND how they 'acted'-'provided' the
trade setup that occurred - as price moves back to the 839.80 and holds 'to the tick', also becoming the start point to what becomes a reverse into sell.
red dot: The timing is after the initial reverse into sell - then 839.10 shifts-rejects as resistance WITH mex flow down [see dark blue rectangle] = -838.40|.30f
into-through the 2 blue squares [we chart read for price failure when the trade is done through 2 points]. This combination of a price reject-price failure WITH
mex flow - is one of our key price trade setups.
What is most important to me is that I already 'know' these prices AND how they were involved with previous price action - this very much 'helps' real time
decision making.
............................
Price Action Area Price Lines
Prices action area prices: 838.40 - 836.70-835.90
The first price action area chart above showed the consolidation break through 838.40 to 835.90.
Now note how there is a retrace-retest of 838.40 which holds at 838.30 AND the resulting price action to read - will there be a 'center area' hold and move up
back through 838.40 OR will there be a 'center area' break then reject WITH continuation back through 835.90 and again resume the sell.
As we can see, the sell did resume. The key price action AND related prices were the 836.70 shift to resistance then reject - then the failure-break of 835.90.
Now note how the 836.70 price action price was involved - the red dot was sold as an addon = 837.20|.10f sell - the timing of the entry as a break-failure of
836.70 through the 2 yellow squares.
dark blue line-dark blue dot: 836.70 broke continuing through 835.90 AND then retraces-retests 836.70 which holds. The resulting right side price action is a
price momentum divergence 'around' the 835.90 price action price. This resolves as a pmd failure, which is a continuation pattern AND the current sell swing
accelerated with the failure-break.
trade some times short time frames like most of you do. To have the odds in my favor, it is necessary to understand TA and other indicators. Many times, it is
only TA or price action, which gives me an odd. Watching price action and trading on price action is just a higher level of knowing different TA. There is no secret
behind price action. It is just the next level of simple TA.
If you never have been aware of simple TA, price action could be out of the range for U.
Formulate your long term Investment strategy

05 July 2015
02:52 PM
You can use this to formulate your long term Investment strategy.
.............................
For 2011
Estimated Real GDP 8.5% vs 8.3%
Inflation 6.1% vs 7.7&
CPI 6.3% vs 10.2%
Indian government is forced to peg the Rupee loosely to the Dollar. As the US Federal Reserve prints trillions of new USDs for Quantitative Easing, Indian RBI
will have to continue to weaken the Rupee viz-a-viz the USD to keep Indian exports competitive.
That also means higher commodity prices, higher inflation and higher CPI.
Also, sovereign debt default risk in Europe is very very high, and would make stock markets extremely volatile. This would further fuel the commodities and
bond market.
Higher oil prices, resulting from shortages of crude oil due to Peak in Oil production would further dampen the environment for international trade, and
automobile sales would be affected.
IMO, the best companies to invest in in 2011 would be those which cater purely to local markets and are not dependent on expo rts or imports. Low debt to
equity ratio levels would be a plus.
In 2011, we would see
1. Higher Interest Rates
2. Higher Commodity Prices
3. Re-localization of Businesses.
.................................................. ........
. It is just that traders here are missing out on the larger picture. They are more interested towards knowing what moves and how to benefit from that. I find
very few who are actually bothered about what moves things. Eventually one day if 'what moves' stops being posted, where would traders go then? This is
precisely why learning is so very important. Everyone must earn, but more importantly, they must learn. Short term vision is always detrimental to a business.
And short term vision in trading is very fulfilling in the short run, but very painful in the long run. What I write today won't make sense to many, but as time
passes, one will realize this.
I have been in the markets since a very young age and hence I have learnt many things very quickly. One thing that I can assure every trader is that no trader
can make any money in the market till 'he' actually knows how to do it. If a trader cannot visualize a trade spanning out based on his views, he will always fail
in the long run. Answers I think lie in the statistics below.
98.5% of day traders lose money
89% of Swing traders lose money
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,
For Swing trade of One week. This is what I will do.
Main Trend Reference - Weekly chart

Daily Trend - Daily chart with price analysis
Hourly chart - For timing purpose
Golden rule - Swing trade in direction of Weekly chart.
..............................
A computer generated AFL cannot be more intelligent and smart than your brain. Believe me on this. Visual inspection is absolutely the best. Trust your
instincts and trust your intelligence. You don't have to be a genius to do well in markets. You just have to practice a bit.
Also, using weekly and monthly charts plus support and resistance is always beneficial.
..................................
Anyway regarding Intraday trade now.
My psychological make up does not permit me to do intra day trades. What day traders make over period of 20 days, I make much more in swing trades over
the same period. I am not being derogatory towards day traders, on the contrary I acknowledge they are more skillful, but somehow I have mastered Swing
trading more.
On an average, if I take up 10 Swing trades, 8 of them result in small losses. Whereas 2-3 of them are big winners. This is how I trade and I feel very
comfortable with that. Furthermore, I am extremely relaxed kind of person in my real life and hence I am slow to react to things. I take my time to think and I
take my time to trade. Hence, I don't have fast fingers which are required by day traders.
Day trading is very luring. It attracts most of the traders. The feeling of not carrying any positions for tomorrow gives a feeling of beating the market everyday.
This feeling is what results into maximum of traders losing money in this genre of trading. Once mastered, it can be very profitable. But, it needs to be
Mastered.
If you are day trading based on what Savant is trading, then its better if you learn something from him. Read his thread, ask him questions and get your
doubts cleared. Don't just sit and follow his trades. That is not going to be fruitful in anyway. Make use of his experience and make it a point to learn one new
thing everyday
.......................................
The key to finding one's psychological make up is to measure one's pulse rate.
Its as simple as that. If you put a day trade, and your pulse rate increases to a point where you lose your rationality, then day trades are not for you. Similarly,
if this happens in Swing trades, then next thing to explore would be Investment horizon trades.
When I day trade, I have found that I cannot be relaxed. This is the first indication that day trading is not for me. The second thing which I would like to
highlight is the ability to tolerate pain (in terms of losing money). I can tolerate immense pain in Swing trades, but I cannot do the same for Day trades.
Hence, in a nutshell, two things which will tell you your psychological profile are; Pulse rate and Ability to tolerate Pain
...........................
Let me analyze the same counter for decision making. Ultimately, our main aim is to take a decision which is profitable. Historic analysis has to be done in such
a way which gives us some edge for making decisions. Let's take Hindalco as an Example.
Remember, the price legend analysis is only a way to find what the stock has been doing till now. It is not something which can give much insight in future.
Now, see how I am looking at Hindalco. I will consider price (primary analysis) and indicators (secondary analysis) while doing so.
Hindalco
1. Lows - I have marked important Swing lows on the counter (A - E). From points A-D, Hindalco has never broken a major Swing low on EOD basis. This tells
us that the stock is in an uptrend. It is only in this recent correction has the Stock broken below its Swing low (D). The new Swing low now is (E). Now you
must be thinking, if the counter has broken the Swing low (D), then why am I long on this stock? Here's the Reason.
Whenever a major Swing low is breached on EOD basis, that Swing low becomes a major hurdle for the stock. That is for Hindalco, point D was a major hurdle
when it broke it in November. Within 2 days, the stock crossed (D) on the upside with a Wide range candle indicating Bullishness. This is the point where I
went long. Now that the stock has formed a high at 220, we are watching for two levels (210-212) and 200. The former is half of the entire swing move (from
195-220) and the latter is the previous Swing low (D) below which the stock would turn bearish again.
195-220) and the latter is the previous Swing low (D) below which the stock would turn bearish again.
2. Price Analysis - According to Price Analysis Legend, all the moves which are marked in Red arrows have retraced somewhere between 0-38% and 38% to
46%, these moves have indicated that the stock is in uptrend. It is only the recent move, highlighted in Blue where the stock has retraced the entire move. If
you see the counter retracement of the recent Bearish move, you will find that prices have already retraced nearly 68% of the move towards upside. This
shows us that even the most immediate bearish trend is Weakly Bearish. Hence, the immediate price trend is bearish. This is precisely why stops are very
tight. But because previous price structure over period of 1 year have been Bullish, we will still look to go long............5.12.10
...................
3. Weekly Trend - On the Weekly chart, the most recent retracement has completed at 38.2%. Recent week's High was greater than previous week's high and
recent week's low was greater than previous week's low. Hence on weekly chart the Price structure is extremely Bullish. On da ily frame hence, we will always
be looking to go Long.
4. MACD and Momentum - Just for supplementary analysis, we can see that Momentum is positive on Weekly frame and MACD is still in Bullish shape. Though
it seems as if it will cross, but till that happens, we will assume for the trend to be up.
5. Decision - Buy
Immediate Daily trend - Weakly Bearish
Weekly Trend - Bullish
Weekly Indicator - Bullish
Overall shape of Nifty - Bullish
Stop Loss - Zone of 200-202 & 210-212
Current Swing High - 220
Position Add - Above 220
.................................................
Let me interprete by your explanation, first historical analysis will give us the clear picture , how the particular script had performed so far, & their
characteristic in conjunction with broader sector & market. Here now we know that overall Hindalco is in up move , & its due to correction stock has fallen with
broader market , so now market is showing sign of strength, this stock is again showing sign of bullishness on longer time frame, even stock is weakly bearish
on daily chart we can go long
Also we can use the last swing low & difference between current swing low & high as immediate stop loss.here I have one question, how to use HV here?
Now coming back to your query.

At what speed do you drive? If I gift you a car tomorrow on a condition that you will never drive below 100 mph, will you accept that gift? If not, then why not?
Let me give you the answer.
You have pre programmed your mind to not indulge into any activity which could be life threatening. Hence once this offer is made to you, your mind will
completely refuse to accept this in order to protect you from threat.
Same goes out for Trading. Taking profits early is the worst thing professionals can ever do. Its equivalent to putting your life at risk. It is just that your brain
does not think of this in this manner. Hence, you will need to program your brain to respond to early profit booking as a sign of something which should never
be done. Once you can do that, you will never book profits early. I know your next question is how to do this. Hence, let me tell you that for each trader this is
different. Some can implement this from the very next day, whereas some cannot for years to come. In the end it boils down to self control and determination.
If you are comfortable trading with indicators, then MACD and RSI would serve your purpose fruitfully. Don't use too many indicators. You can use MACD to
identify broad trend and RSI to identify overbought/oversold regions. Try and work your way with these indicators. Try and find out how they react at different
situations. In short, whatever tools you use, just master them.
.................................................. ...
Apollo Tyre
1. Lows & Price Analysis - Stock was in a strong upmove as depicted by its rising lows from A - D. Once D was broken, the stock has consistently formed lower
lows with minor rallies being retraced on the down side to extent of 100% retracements. What does this tell us? It tells us that on daily frame the stock is in
extremely bearish mode. It is only now that the stock for the first time has taken a previous pivot high (Blue line). Hence now, we will wait for retracement to
occur. Will then review it again.
2. Weekly Trend
On the Weekly trend, over the past one year it has largely remained Extremely Bullish to Weakly Bullish. However for the first time it has now retraced 100%
of its move on weekly frame. Hence, I would be careful with it as the price structure is not very positive. As of now it is definitely indicating that the stock is in
Extreme Bearish structure.
3. MACD and Momentum - Just for supplementary analysis, we can see that Momentum is negative on Weekly frame and MACD is still in Bearish shape.
4. Decision - Wait and Watch
Immediate Daily trend - Extremely Bearish but recent Pivot high breached
Weekly Trend - Extremely Bearish
Weekly Indicator - Bearish
Overall shape of Nifty - Bullish
We will watch how this retracement on the daily frame spans out. If weakness emerges, it will be time to go short. .....5.12.10
............................................As you may see here, we don't use indicators that much. Just a broad framework to trade in the direction of long term trend.
Mainly price analysis and how the stock is structured on the whole.
For Positional and Investment Trades

05 July 2015
02:53 PM
Main Trend Reference - Monthly chart

Shorter Trend - Weekly chart with price analysis
Daily chart - For timing purpose
Golden rule - Invest in direction of Monthly chart.
Choosing time frame and nature of trades depend on the underlying goal. If the goal is clear, tools will show up. Else, one will just keep fluctuating between
different time frames. Hence, set your goals and the time frame will show up. Good luck.
So, in case of swing trade we look at Weekly chart for direction.
Now, suppose a stock is in uptrend, if we analyse weekly charts and use 1 year's data. The same stock is in downtrend if we just use last 3 months data.
So, my question is how much time period do you look back to infer the trend or the direction?
.
Please see the attached chart. If we analyse it, starting 2010 till now, it has been making higher highs and higher lows, so it is in uptrend.
1. Everyone in trading circles know that high beta stocks are best to Swing trade. But how many can actually trade them? They are extremely dangerous to
trade with yet most profitable. These stocks have highest volatility when compared to other stocks and hence can wipe out small accounts in one trade. Untill
and unless you have deep pockets (large account size), do not trade in High Beta stocks and do not venture into Futures. Learn trading the Nifty first. Then
venture into stock specific trading.
2. To calculate Beta and plot it just go to the Amirboker help section. They have explained it in the most simplest way. As easy as adding any other indicator.
3. Risk reward in trading is dependent again on account size. Usually 1-2% risk on each trade is kind of fine. But again it depends on one's risk profile, account
size, ability to tolerate pain and psychological makeup. I cant decide these factors for you and hence you will have to do some trades related soul searching.
...................................
. In the end, I will only tell you to trust your own instincts and your view. You'll always be more comfortable with that. For example, I think markets are robust
and hence I am buying. No matter who says what, I will do what my analysis asks me to do. In the end, if I am wrong, I am wrong and I am ready to bear the
consequences.
Markets know no one, no matter who that person is. And if someone thinks that markets know this and that particular analyst, they are so wrong. If ever I go
broke, I want to do it with my analysis and not from anyone else's opinion. You are an experienced investor and hence trust yourself. There is no one out there
who is more brighter than you and hence you are right in your opinion. Stick to it, execute it and live with it. This is the attitude that I adopt while Trading.
Remember, life is a lot like chess, accept that after check mate, it still continues to move forward.
...........................................
In swing-Profits in between 4-6% with a risk of 1% should be extremely good. Basically your target should be a 5% move.
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About the Market

05 July 2015
02:57 PM
There is no secret to what I do. I rely on price structure and visualization to narrow my stocks down. If in a sector I see bunch of stocks with a positive
structure, I place them on my large LCD screen and view them from a distance of atleast 10 feet. The one which looks the best is the one I select to trade.
Look at Hindalco, Tata Steel, Sail, Sterlite etc. All have descent short term price structure. But when I saw Hindalco from a distance, I just knew that was the
stock to bet on. Similarly, probably all auto stocks have good price structure, but the best one's from a 10 feet distance are Bajaj Auto and Tata Motors.
About 10-12 days back, when I had written to avoid Banks, I did the same. I am not completely bearish on banks. It is just that now I see gains coming from
other sectors. Even if you look at Sugar stocks, the best price structure and visualization is in Renuka sugars. Hence, I am vested in the same.
One more important factor in determining where to invest is the awareness of market fundamentals and sector valuations. If you see, the simple reason why
banks did not appeal much to me were because the valuations (short term) were simply exorbitant. It had to correct and I am glad it is correcting. Eventually
when banks are ready for upmove again, they will contribute immensely to the broader market. I have positions now in commodity related sectors as I feel that
markets will largely rally due to this sector doing well.
In conclusion, if I have to sum it up, I combine Price structure and Visualization with Fundamentals and Economic analysis to determine what will probably
happen next. Once the initial view is structured, positions are taken. In this thread I can teach price structure but I cannot teach how to build Economic insight.
This is something which will come naturally after observing markets and understanding structure of our economy.
Markets have so many factors playing underneath that it is almost impossible to gauge what will happen next. What appeals bearish today may change and
appear Bullish tomorrow. Hence, whatever view you have on markets should be based on broader term observations. A session, a day and a week contribute
towards the price movement. Each on their own, cannot be used to base a judgment.
The way I look at it, Nifty still remains positive. We are just witnessing some volatility which is natural. Market dynamics keep changing by the second and
hence we'll review Nifty time and again to check our opinion.
...............
None of the indicators are leading. Everything lags. This is precisely why I use indicators very rarely. The only "In - Present" indicator is Price. Even Price is not
Leading if you look at it purely based on what it does in the present.
Anyway now coming back to your query. MACD and RSI need to be used carefully. MACD is a combination of (26 day EMA - 12 day EMA) and 9 day EMA of the
(26 day EMA - 12 day EMA). Hence when you use RSI with it, a default 14 day RSI may not give you a clearer picture. See, MACD is a trending indicator. It
indicates long term trend and RSI is relatively short term when you use the default settings. Hence, either shorten the settings of MACD or increase the setting
of RSI for it to give you the real picture.
Also remember, indicators like RSI and Stoch can stay in Overbought and Oversold range for a long time. It does not indicate change of trend necessarily. Infact
if RSI is above overbought levels for more than 3-4 days, then that's Bullish for the stock. Just read more on such indicators in Tom Demark's book
Whatever your trades are, adhere to your stop losses in this market. Whether this is a shake out or otherwise will only be clear with time. Protection of capital is
utmost important. Series of small losses can be made back by one trade. Hence, adhere to your stop losses.
I am not an expert in understanding a distribution or accumulation pattern. And one more thing is to be noted is that.......... any type of charts have its
limitation in understanding the conditions of accumulation and distribution because both conditions looks as good as same in the charts.. Hence the parameter I
use to observe it is the play of volume and mainly the understanding of the market conditions and in which part of that are we at present..(i.e. after a fast bull
run NIFTY corrected around 500 points last month... Ok.. So the next chance is of a side way market where shorts are covered and further positions are built up
according to the sentiments. We have already seen short covering till 6050 levels and then the chance is to test it 5750 or even 5550. levels... In conclusion.. I
believe Niftry will trade in between 5550 and 6100 this month.)
....................
The basic premise behind the volume spread analysis is that the market is basically moved by the Smart Money. The smart money accumulates the stocks at
low prices. Then begins process of marking up the price. Then the Dumb Money starts entering the smart slowly. The smart money starts passing the
ownership of the stocks to the dumb money. This process is called Distribution. Soon more and more dumb money starts rushing into the market not wanting to
be left out of the big rally. Unfortunately the retail traders are the last to get in. Once the process of distribution is complete the smart money starts rapidly
marking down the prices and the dumb money are left holding the stock which was bought at high prices. At the end the smart money is much richer and they
can again start accumulating the stock at lower prices. The cycle continues.
This one way explains why the move moves are slow and the down moves are very rapid. The process of marking up the prices and distribution is a slow
process. It takes some effort to get the dumb money interested in buying into the rally. The mark down process is very rapid as the smart moneys intention is
to trap the dumb money. They have to give very little chances to dumb money which is generally slow in reacting to exit.
VSA attempts to read the moves of the smart money by looking at the price, volume and the spread of prices.
..................Traditional approach if Price increases along with higher volume then (+)ve or Price decreases along with higher volume then (-)ve.
It was the era of OBV,in the sixties.(On Balance Volume)
Joseph Granville, creator of the On Balance Volume indicator, insisted on the importance of volume analysis. He exclaims that volume precedes price, and he
even goes so far as to argue that volume is cause and price is effect.
Then traders made few more observations on Volume :
a)Traders must always look at price patterns in conjunction with their associated volume pattern, never alone. A stock may appear to be in a head and
shoulders pattern, but the volume pattern must confirm that analysis.
b)Careful analysis of the volume of selling that occurred above current resistance will help you estimate how long a stock will stall at that level.
c)Well-above-normal volume is essential when separating a true from a false breakout above resistance.
d)Well-above-normal volume on the break of a key support level is likely to keep the swing trader from making the mistake of shorting into a deceptive "spring"
formation.
e)Climactic volume can occur after a sustained downtrend. The retest of the support level of the selling climax can provide a good trading opportunity if it is
accompanied by low volume (as compared to the selling climax).
Like these enters VSA = Volume Spread Analysis (Though the person behind this Tom Williams has taken the concept from a Richard Wykoff of 19th century &
built upon it.)
There is also another New Approach "Profile".
Just a slight clarification for newbies. Market Profile plots Time per Price, while the commonly available Volume Profile plots Volume per Price. Distinction is for
conceptual clarity only. after that you can use VP properly to get readings "similar" to MP and use VPOC too.
The foundations for volume spread analysis were laid by R.Wyckoff way back in the early 1930s. Wyckoff was supposed to have made fortunes with his
principles. Wyckoff stared with a premise that price / volume / Time could provide a picture of the demand and supply from smart money (he called the smart
money composite man). We will come back Wyckoff later in the thread. It would be nice to look at Wyckoff methods time to time as his work is the basic one
and others have built on it.
Wyckoff had three basic principles or..say.. laws
Supply and Demand
Cause and Effect
Effort and Result
The current day VSA available in the market still relate to these tenets.
Much later in the 70s Tom Williams who worked with a syndicate (read Smart money) for 15 years, developed on the Wyckoffs work and came up with
Volume Spread Analysis and later commercialized it. ( Now many more companies offer their own concoction of VSA, and genie software )
Tom Williams VSA basically ignores the open of a bar and uses high, Low and Close. This is where it basically differs from classical candlestick analysis. Most
commercial vendors claim to use more than 300 indicators to analyze each bar. I have seen that some of the VSA vendors use other indicators though not
explicitly.
One thing is certain that the availability of basic information on VSA is scarce. I have come across much discussion on other forums on VSA. However most
revolve around commercially available packages. Our intention in this thread will be to explore the basics so that each one of us can arrive at our own
convenient VSA analysis.
convenient VSA analysis.

I know most of you are eager to get straight into the core of VSA. But let us lay some foundations before building the blocks of VSA. First thing is of course to
understand a little more about working of Smart Money (hereafter we will just use the term SM to indicate Smart money).
The SM basically moves the market in four phases as follows
1. Accumulation
2. Markup
3. Distribution
4. Mark Down
Most of you may be fully aware of these. Still we will look at these phases more in details as this would help us to understand the SM operation better which in
turn would give a better perspective to VSA.
There will not be any demand for something when there is plenty of it available and nobody wants it. As the availability decreases and more people want it then
the demand increases. So the first thing the SM does is find something that is available a plenty and cheap. The next step is to create a scarcity of the same and
get people interested in it which in turn generates the demand. This is first phase which is Accumulation.
Accumulation is a process through which the SM acquires a large quantity of the stock at the lowest possible price. Accumulation is a subtle, sophisticated and
sly process of cornering a huge quantity of the stock that makes the following phases possible and worthwhile. Once a large quantity has been absorbed the
number of floating stock reduces and the demand increases. This makes possible the next phase Markup.
Accumulation normally takes place in congestion areas. Congestion area are mostly sideways range bound movements where the stock appears to have no
interest to either move up or move down. The SM ensures that the stock is contained below a certain upper level which is the supply area. At the same time the
SM also supports the prices above a certain lower line which is the support area. The stock moves within an upper resistance or supply area and a lower support
area.
The congestion areas are characterized by Indecision. One of the most important characters of congestion areas is the Low Volume. When most traders are
bullish or bearish the volume is high. Low volumes indicate indecision among the traders on bullishness and bearishness.
Ah.. Sounds easy.. Well the problem is that congestion areas are seen in both accumulation areas as well as Distribution areas oh , Well that is not the
only problem. There will be periods where no one seems to be interested in the stock the pattern of price movement most of time very similar to the
congestion pattern..
So the naturally the question is how one would ascertain if the pattern is really accumulation in progress. A little later on this and other congestion
patterns..
So the question was How one checks if the congestion area is really an accumulation area.
There are a few things to lookout for..
First, the indecision should be quite visible. In other words the volume should be low and quite. No huge volume upsurges. Even if the volume is relatively
higher the range between up day volumes and down day volume should be narrow.
Second, the spread of the bars (High Low) should be narrow.
Third, the volume should shrink near the support line and expand near the resistance line.
Fourth, the stock should be trading in a range for some weeks if not months.
Also you may see some shakeouts in the trading range. The SM would temporarily drive down the prices below the support line in order to takeout the stop
losses and panic the weak hands into selling. You will see the stock bounces back above the support line immediately. By this process the SM is shaking out the
weak money from the stock. For most of us it is just a failed breakout. Sometime the stock instead of bouncing back would continue to drop if there was too
much supply. So trading these breakouts could be tricky.
Also it would a good sign if the stocks trading range is much above the support line.
Normally we would see some of the above signs if not all in the accumulation area.
There are many other patterns which signify accumulation. Some of them are rounding bottoms, reverse head and shoulder and double bottoms (or W)
patterns. Each could be explained in terms of SM activity. However we would go into the details now. One thing to keep in mind when evaluating patterns is that
it is very important to check the volume pattern as well.
.............................
A few points about the congestion zone we are looking at for signs of accumulation. It is important to look at the history of the stock prior to the congestion
area.
Has the stock gone through a cycle of accumulation, markup, distribution and markdown previously? Were there signs of a selling climax just prior to the
congestion? If so, the SM are really looking out for making another round.
Or the stock has been languishing aimlessly prior to the congestion zone you are looking at. If so, this area you are looking at is not accumulation at all.
Was the stock enjoying an uptrend prior to the congestion? If so, this could be a re-accumulation going on here.
Was the stock undergoing a minor down trend (after an up move) prior to the congestion? Was there a downtrend without selling climax? Then this could mean
there is re-distribution in progress and it may be advisable to look out for sign of distribution.
...................
Now we come to the next phase in the game plan of SM, namely Mark Up.
Once the smart money has a cornered a huge chunk of the stocks they are ready for the next move. The idea is to jack up the prices so the SM can fill their
pockets. Typically you will see the low are getting higher. The closes are slowly getting nearer to the high. The prices are getting higher on lower volumes as
there is very less supply. The reactions happen much higher than the support line.
Then ..the stock shoots through the resistance or supply line with higher volume. For that matter the stock need not exhibit the characteristics mentioned
above. Suddenly it can just pop out of the congestion zone.
It is better to take note on the volume at this juncture. The volume need not be very high at all. Since there is no supply (SM have the majority of the floating
stock). If the volume is moderate we should see it coming in strongly soon. Otherwise the move will collapse and stock would return to the base. We should see
a large swift increase in the volume in case of a genuine breakout. The stock should be closing near the top. Also too much volume is not good. It would mean
too much supply is coming in. Heavy volume with the stock closing in lower half would definitely mean supply coming in. Typically an 150% increase in volume
with the close near the top would indicate a successful breakout.
The breakout is just the beginning. Then the stock moves up in stages. Each stage would be an advance at higher volumes and a retracement at lower volumes.
The retracement is mainly due to short term traders booking their profits. The SM also starts the distribution during the retracement. The point at which the
retracement stops become important. These should be above the previous retracement stops. In simple terms as Saint would put it the stock is making higher
high pivots and higher low points.
We will also see sideways movement during the up move which would be congestion areas. We need to pay lot of attention to these congestion areas for this
could be final distribution areas before the mark down begins. Also it pays to give attention to volume during retracement and congestion areas. Increasing
volumes near support line and low pivots indicate problem. If the increase is dramatic then it is time to re-evaluate your position.
Finally the stock could make a climax run where the price and volume explode. The shorts run for cover and the green horns rush in not to be left out... like
cattle rushing into a abattoir. Soon rapid markdown starts leaving the weak money holding the bag and he SM their cash.
Please do note that here we are talking about more of an idealistic picture. In reality it could be more complex and many a time difficult to decipher. But then
practice makes one perfect.
.......................................
Now let us come to the third phase in the SM game plan which is Distribution. Distribution is the process where the SM is offloading their accumulated stock at
a much higher price.
It is not very easy to spot distribution. Many a times you will not see any congestion areas. The UP move may slowly deteriorate and start rapidly deciding after
a furl of heightened activity. The Wyckoff puritans may disagree here.
In mark up phase after the stock has run up for some time you will the volume diminishing and the spreads narrowing. The angle of ascent becomes lesser and
lesser. The stock trend may even flatten. This would mean that the demand is drying up. The buyers are not willing to pay a higher price for the stock. Also
sellers are reluctant to offload their positions hoping and waiting for a better price. It is here the SM slowly start offloading their stock. Much care is taken not to
make it visible. Volume is never too high. Prices are support at certain levels so that there is no panic. Here it is important to take note of the volume price
pattern and angle of ascent. Too steep an ascent is also a problem. Suddenly you will see the stock dropping down like stone from its high perch.
It is at the top you will see patterns like H&S and double Tops which are distribution patterns.
Many times it is hard to maintain any semblance of the uptrend continuing and so a sideways congestion move ensues. The congestion zone will be quite similar
to the zone we discussed earlier for accumulation. You will see the price being supported at some support level and being contained within a resistance level.
to the zone we discussed earlier for accumulation. You will see the price being supported at some support level and being contained within a resistance level.
The points to take note are the same ones we talked about in the accumulation zone. Just like in the shake outs in the accumulation zone you will see a
shakeout in terms of up thrust bars. One has to be very careful trading the breakout from the distribution zone. If it turns out to be the final climax move you
will be left holding the bag. But then the stock may goes for another up move. Here looking for uptrusts and other weak indication becomes necessary. We will
be talking about these indications later.
In the final climax run the stock explodes in terms of volume and price. Like I said before the breakout traders , greenhorns rush in and the shorts will run for
cover. Then you will see many Uptrust Bars where distribution takes place with maximum prices. There could be a series of Uptrusts and then.BANG.. the
stock drops down like a stone.
We now come to final step in the SM game plan, the Mark Down. When the SM has disposed off most of the accumulated stock they start the most dramatic
move of crashing down the prices. Suddenly supply comes in plenty overwhelming the demand. The price starts tumbling. The spreads dramatically widen.
There is panic selling from investors. But the prices drop so rapidly and most of the investors and green horns that entered late never get a chance to off load
there holdings.
Like the markup phase we will see some rallies in the downtrend. These are more off reactions. Either the SM themselves try to shore up the price for their last
bit of holding. Day traders, Value Investors trying to bottom pick and the green horns trying to Average contribute to these rallies. Our friend Saints calls
averaging Catching a dropping knife. I cannot find a better description for Averaging. It is better to note the volume during the rallies. You will find the
volume is more on down days and less on up days. When the rally fails the average investor panic and start selling and that accelerates the fall.
It may take weeks for the down trend to reach the bottom. The end is generally indicated by a stopping volume or an absorption volume. The SM may be
absorbing the stocks to start the game again. You would find a High volume bar with long spread and closing near the top.
It is during the mark down phase you will see rallies like the Dead Cat Bounce. Pay attention to the volume pattern during these rallies.
The mark down phase is the most depressing and cruel part of the SM game plan. By the end of it the SM would be taking delivery of his brand new E class
Benz while the average investor is scouting for a buyer for his run down maruti.
Of course the Markdown phase does offer good opportunities to smart investors who are adept in short side trades.
But the mark down phase has a silver lining towards the end it offers the smart investors many opportunity to enter into some really profitable trades. We will
discuss all these later
High Volume happens during the early stage of the Mark Up as well. Also SM use High volume to cross high supply zones. So it is important to see if the high
volume move is supported by SM and the market in general. How we can infer this? We can do this by looking at the spread and the close. This is just what VSA
is about.
Now that we have a general idea about the SM operation we can step into the world of VSA.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,,,,,,,
VSA involves analyzing each bar with respect volume, spread and close. We will ignore the open. Also while analyzing the bar action we will also keep in mind
the general background of the market.
As a first step let us make some definitions. These are elementary and most of you understand this. But for the sake of synchronizing our thought I will repeat
these here.
Some Basic Bar definitions.
Upbar - A bar would be called a up bar if the close of the bar is above the close of the previous bar.
Downbar A bar would be called a Downbar if the close of the bar is below the close of previous bar.
Spread Spread is the difference between High and Low.
A wide spread Bar If the spread of the bar is above 1.8 times the average spread then we will term it as a wide spread bar. The factor of 1.8 is a tentative
one.
A narrow spread bar if the spread of the bar is 0.8 times the average spread then we will term in a narrow bar. The factor 0.8 is again tentative.
The problem of calculating the average spread is that during volatile period the average spread is high and in non volatile period the average spread is lower. So
a bar which could be termed as a wide spread bar (WRB) in non volatile times could become a average or even a Narrow spread bar (NRB) in volatile times. For
simplicity sake and to take the discussion forward we will keep the above factors common. At a later stage we can discuss about methods to arrive at better
methods of defining the average which works at all times.
................................................
Next we come to topic of volume. How high is high and how low is low? For this we should have a reference volume which can used to compare with the
daily/bar volume. The simplest way is to have 30 day/bar moving average of the volume. From the very little experience I have in VSA I feel that the 30
day/Bar simple moving average of volume serves the purpose quite well. We will take it as the starting point.
Mike had pointed out another method. We can discuss these further in the thread later as points of refinement after we establish the basic indicators of VSA.
Again as a starting point we will define any volume above 1.8 times the average as High volume. Volume above 3 times the average would be termed Ultra
High volumes. Volume below 0.7 times the average volume will be low volume.
With these basic definitions we are ready to look at some of frequent Indicators (do not confuse with the normal TA indicators, here we are talking about the
various type of Bars related to VSA analysis)
Some members felt that the thread looked too elementary in a Advanced Strategy section. Maybe it is true. I wanted the thread in this way since it should be
easily understandable even for the newbee. Also, even more experienced people are not reluctant to look at the market in this way. The indicator trader would
definitely find a Bar by Bar analysis a hard pill to swallow.
A note of caution, before we proceed into the real VSA study. Please note that it will be difficult to build a mechanical trading system from VSA though not
impossible. However knowledge of VSA will greatly help one to understand the market better and will be a great support tool complimenting their trading
systems. Also VSA on its own provides some excellent entry and early exit points resulting is good profitable trades
Finally. we will step in the actual VSA. VSA measures the weakness and strength of individual bars. In addition it looks at the background strength/Weakness.
So we have to always look out for Weakness in a uptrend and for strength in a down Trend
............................
Each bar could be characterized to indicate Strength or Weakness based on the Spread and volume.
We will start with looking out for weakness. First we will look into one of the most easily identifiable and strong indication of weakness which is commonly called
the UPTHRUST Bar. And what a day to talk about Upthrust The charts are full of them todayEven the nifty is showing a Upthrustof course not a one of the
ideal one. But distinct weakness shown on the nifty.
What is an UPTHRUST BAR ?
An Upthrust Bar is a wide range bar, with a high volume and closing down. It indicates that the prices were marked up during the day (for simplicity we use
day, it is equally applicable on all time frames), the Trading activity was High as indicated by the High volume and the prices dropped to near the low (or to the
low) towards the closing hours.
Looking the SM perspective what happened was that the SM marked up the prices in early trading hours indicating strong bullishness. Enticed by this bullish
move the weak money also rushed to acquire the stock. Shorts if any would also have rushed for cover. Meanwhile the SM is quietly distributing their holding to
the weak money. In the later part of the day the SM drastically marks the price down trapping the weak money holding stocks at much higher prices.
In order to make this ideal, the Upthrust normally appears after a wide range upbar with high volume. This makes it easy for the SM to markup the price and
entice the weak money. Most of the time the Upthrust will be moving into new higher territory. The High of this bar will be much higher than the previous high..
High volume should be an important consideration.
What are the Things to Look for in a Uptrust?
1.
2.
3.
4.
5.
6.
High Volume and How high?

Wide Spread?
Close, near or on the Low?
What was the previous bar action?
Did the bar into new territory?
Is the stock in an up trend?
The Answers for the above would decide how potent the Upthrust is.
High volume Upthrust are a sure indication of weakness, higher the Volume the stronger the indication. It may be even wise to get out of the stock if the
Upthrust has ultra high volume.
Wider the spread more potent the Upthrust
Lower the closer the stronger the indication of weakness. Ideally it should close should be the Low. If the close is towards the middle it would mean than the SM
was not successful in marking the price down. There was too much demand.
An ideal Upthrust will move into new territory. The High will be very much higher than the high of the previous bar. This means the SM was really successful in
marking the price up and many traders get trapped into bad positions in the end of the day.
marking the price up and many traders get trapped into bad positions in the end of the day.
Upthrusts are effective when the trend has been in force for some time. Sometime you would find weak up thrusts in early trends.
Many times you will Upthrusts with low volume. I call them Pseudo Upthrusts. These are not effective as the Upthrust. But are still signs of weakness..
............this view r from Kartik...............on secrets of VSA .
-----------------------------------------------------------------------------------------------------When you are swing trading, you need not be bothered about the Monthly trend. This is precisely why I gave you two separate frameworks and this is why I
stressed about more objectivity and goal specification. When you are looking to Swing trade, just look at dominant weekly trend and dominant daily trend. Last
6 months of data should be fine to work with.
Resistance,support, retracements are just one of the factors one needs to watch. There is much more to how one should bottom fish.As of now I am staying
away from Midcaps and Smallcaps.
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Before Buying or Shorting

05 July 2015
02:58 PM
Before getting in the Buy or Short mode on respective sectors and stocks, you need to get into broad based market definition mode. For example,
If (Markets are in a Bull phase)
a) How do I define Bull phase
b) What is the current Economic cycle
C) What about market data (inflation, valuations etc)
d) What about the strategy I will use (Long or short or Long/Short)
e) Will that strategy be for low/high volatile market
f) Which instrument will I use
g) If its highly volatile, will I hedge
h) Which stocks have done well in these phases
i) What is my backup plan
j) How do I give this plan a feedback
This is just one of the scenarios I have explained to you for varied market conditions. You need to have scenarios like these prepared for different market
conditions. Hope you get my point
....................
MFI
Basics - This is basically a Momentum Indicator which indicates the Money flowing in and money flowing out. Typical way to use this is to look for divergence
between Money flowing in and price and by seeing when markets are reaching top and bottom (80 & 30 levels). Very similar to h ow you would use the RSI.
Calculation - There are basically three stages of calculation done to determine the MFI
a) First we calculate the Typical price which is equivalent to (High + Close + low)/3
b) Second we calculate the Money flow, which is equivalent to Typical Price*Volume. In this case if today's Typical price is greater than yesterdays typical
price, then it is considered as Positive Money flow. Else vice versa.
c) We typically get two Variables in this. The positive money flow and the negative money flow. If we take the ratio of both, we then get the Money Ratio.
d) Finally we calculate the MFI which is equivalent to 100/(1+Money Ratio).
PVT
Basics - PVT essentially is a cumulative total of volume which mainly depends on the "%change" of the closing price. This is not a mom entum indicator, but it
is more like "price" which essentially has no limitations on the upside and downside. Though many consider it to be similar t o OBV, mathematically they differ
a lot. While OBV adds all volume of the day if price close up and subtracts all volume of day when prices close down, PVT onl y adds and subtracts portion of
volume depending on the extend of movement.
Lets say volume yesterday was 100. Today prices closed up by 10% with volume of 20. Obv would add the volume of 20 to yesterd ay's volume of 100. SO
total volume would be 120. Whereas PVT would add (0.01*20) 2 to yesterday's volume of 100. Basically it is weighing the magni tude of price move. This is
precisely why PVT is more accurate and important.
Calculation - PVT is essentially calculated by multiplying day's volume with the price change and finally adding this to cumulative.
(%Change in Price*Volume) + Yesterday's PVT
PVT & MFI
a) MFI is more a momentum indicator and hence has its inherent draw backs like any other momentum indicator. That is, can rem ain in oversold and
overbought regions for many days and hence cannot aid in proper analysis. PVT is more like a price indicator. Visual inspecti on and inference is more easier
and accurate.
b) MFI also does not take into account the price weightage. This is a serious draw back. A day with 5% move with volumes is m ore significant than a day
with 1% movement with volumes. PVT corrects this.
c) In terms of value addition, PVT adds far more value as it is easy to analyze and more meaningful when it comes to market a nalysis. It does not contain
the calculation bias which usual momentum indicator do. That is, on slight change of volume, the reading on MFI can jump from 40-60 without any
meaningful interpretation. Similar to the problem faced by RSI.
Hence overall, amongst all PVT stands out the most.
--------------------------------------------------------------------------------------------------------------------
.................There is no harm in Bottom Fishing based on Technical Patterns.

But, do that for the strong stocks. In the current market that would be stocks like Titan, Bajaj, Cummins, Tata Motors etc. . There's more chance that such
stocks will bounce more faster.
...................................
. Will give you an example in May when we were correcting the banks refused to sell off in the correction and when the market s resumed the rally they went
up and gave the best gain in the rally so far.
So identifying the sector is my mission in this correction

Hence be patient. Even if bear markets are coming, we will trade it just as well as we have traded the Bull market.
And what is a winning attitude?.... It is well described by Krishna to Arjuna
"YOGASTHA KURU KARMANI
SANGHAM THYAKTHUA DHANANJAYA
SIDHYA SIDHYOHO SAMO BHUTHUA
SAMATHUAM YOGA UCHIYATHE".
"Hey Arjuna.... don't be attached to your personal feelings when you are performing your duties....and be even minded about t he results...evenness of mind
will always lead you to success."
Now my dear friend, Investing and trading is a business for me and no business is a success with out proper planing. So I wil l do it in every possible way.
As you said... shorter time frame... I trade intraday in a shorter time frame with the support of longer time frames and till date I am winning on 80 percent
trades.
...........................
...........................
hope you guys had your stop losses in place. I have always told that there is no stock which can be bought and forgotten and hence everything must have a
SL. I had warned that in this market stop losses need to be adhered to.. take out your trading diaries and note what marke t has taught you today
----------------------------------------------------------------------------------------------------
Trading in Financial Markets

05 July 2015
02:59 PM
Trading in the financial markets can be fun and profitable. Trading is a skill that can be learned over time. It takes a period of trying different methodologies
and acquiring market knowledge. Usually, the beginning trader is confronted with a myriad of strategies and information. The number of various instructive
materials to choose from is mind-boggling to say the least. It is no wonder that the beginner and even more experienced traders become confused and
frustrated.
The would-be-trader or investor has to keep in mind that much of this confusion is created for a reason. The purpose of this disorder is to urge you to seek
professional help. Books, trading courses, stock gurus, TV, brokers and advisors all stand ready to pluck your wallet in exchange for giving you the secrets of
making money. As with most everything else, some of this advice is useful and much of it is not.
One key to successful trading is to keep things simple.
How can a trader make his trading life easier? By having to make fewer decisions in regards to every trade. Contrary to what most experts say, it is very
possible to trade with fewer inputs. Inputs would be areas like financial news, world news, and economy related news. It might also include the number of
indicators and charting tools that are used for discovering and managing trades. Another input that could be avoided is listening to other's opinions about what
or when to make a trade.
Whenever you listen to the news and the opinions of others, you then have to filter that data through your thinking process. You actually have to make some
kind of decision concerning all those tidbits of information you come across. And attempting to understand how all those various inputs will affect the markets
is usually difficult to manage. Predicting how other traders and investors will react to the multitude of news items is often futile. It is really a guessing game
where most experts are unable to consistently figure out.
If a trader is aware of his thinking, often he will find himself second-guessing a possible trade set-up. That piece of information he came across yesterday is
affecting his thinking. Or, he heard some news today that has his contemplating future events. It is extremely rare that all the inputs will point in one direction
at the same time. In effect, the more data points that you try to use in your methodology, the more chance for conflicting and confusing findings. This opens
the door for more mistakes and losses from trading.
...............................
Whenever i get into a discussion there is one thing i always emphasize. Markets are dynamic by nature and hence they inevitably change their nature at some
point of time or the other. So check the overall economic/general conditions in which things have looked pretty and where they look dull.
Psychological Barrier
05 July 2015
03:00 PM
Holding on to capital and not trading/investing is probably the biggest psychological barrier one has to overcome. This is the only thing which distinguishes a
trader/investor to a risk averse person who wants safety. Get used to handling risk and just go for it without hesitation.
Most people sit on the sidelines not because of lack of opportunity but rather due to lack of conviction. There is always an opportunity to mint money , one
has to just take a closer look at things.
.................This kind of Mental make up is what separates the best from the rest. But I agree to what you have said as it applies to the majority. And read
the report, (research reports) which by the way are a lot costlier and full of accurate information.
In the end it depends on how an Individual thinks. Everyone can think differently and still be profitable.
,,,,,,,,,,,,,,,,,,,,,,,,
SOME SUMMARY
Have a master plan! What are the big points you want to achieve over the next year. All activities should support the achievement of your big points. By big
points I mean for example: By 2011 I want to have two trading systems with a distinct investment style. I expect each of them to return XY% per year.. I
know this isnt rocket science, though its so easy getting lost in narrow focused system optimization.
Make it a process! Focus on getting better day in day out, eventually results will show up. Build a methodology how you want to develop a system. In the past
I often heard, we dont have time for processes; we have to create products now. Know what you do before you start and dont describe what you did after
you have finished. I often fall into the trap (especially in the first year) to JUST test an idea and hours passed away without noticing. Follow your master plan!
Stay focused! There are only a very few different trading systems (styles) out there. In the beginning I made the mistake having up to 10 different systems
(all focused on equities). In reality its been one system with different setups. I thought having a swing trading system on the German DAX is a different thing
than having a swing trading system on the SPY. Of course it isnt!
Furthermore I spent way too much time on trying to develop an intraday system. I believe creating good intraday systems is more difficult than creating solid
EOD systems. Hindsight I should have focused on EOD systems right from the beginning.
Dont read too many books! (before you start). I should have started earlier by getting my hands dirty in system development. In my opinion there is too
much money made in selling redundant trading books by failed traders. Of course education is important, but dont underestimate the power of hands-on
experience.
There is no way of getting rich quickly! Only one of getting poor. Things are going to take time, at least for me. Ive invested about 4000 hours of system
development (not counting the endless hours of reading books). Im still not there, I feel like Im an intermediate. I expect to need 10.000h in order to reach
expert level ground. There is a great book about this topic (non trading related), its called Outliers: The story of success. The essence of the book: talent
isnt born, its a process and takes time. At least 10.000 hours.
A system is more than an entry! Do not underestimate the power of money management. Invest time in researching about when is the right time to increase
or decrease your position size. Eventually this is going to set you apart from the crowd.
Trading has to be painful (sometimes)! Trust your system. Often times I questioned the entries of my system, because its been painful to execute the trade
(into deeply oversold setups) as everybody was talking about the world coming to an end (finally). Of course that would have been the perfect time to make
BIG money.
Dont wait until its perfect! Once you have a solid first version of your system begin trading. Start with small position size. This way you learn how to execute
the system. This is something thats totally overlooked in my opinion. You will figure out if you can emotionally execute the trade, have the time or if its at all
possible to execute the trade as your back tested result suggested. Furthermore you will run into some issues and make mistakes. Thats good. Its better to
make them early (while you maintain a small position size). Believe me; I made every possible mistake one can make during the course of such a journey.
Im not proud of these mistakes, but at least Im trying to not make them a second time.
Be honest with yourself! There is only one person in the world you cant lie to. Dont look for the shortcut, there isnt one. Focus on the concept and dont
spend endless hours on over optimizing results. I know its tempting.
Find a mentor! Get support early in the process. Have somebody that has experience in the field of system design and trading. He or she can guide you
without giving you the shortcuts. I believe this has been the single most important factor in improving my system design and trading. Working with this
expert required me to be more explicit in my thinking and system design.
As you can see: I did it my way. Certainly not the perfect way, but Im alive and continue to earn. I know Ive to continue learn and excel in order to succeed
AND pass the 10.000 hours.

Couple of observations:
1. A beginner has to gather knowledge on what markets are about and in this respect certain amount of study is required before embarking on any system
development.
Remember, over reading can be counterproductive.(digest what u can)
2. At the outset it is crucial to remember that markets are made up of people, human beings and no indicators or systems can address all the nuances of
human behaviour.
3. The fundamental law governing all markets, in any time frame, (intraday(1min-240min) or EOD(weekly, monthly, yearly) is Supply and Demand. Many
think it is perceived value via fundamental analysis and news reports, world events etc but all these perceptions have to eventually materialise on a chart as
price and investors/traders have to enter the market with either buy or sell orders which in turn creates the Buying and Selling pressure ie. Supply and
Demand.
4. Hence I would suggest that a beginner would do well to study Wyckoff, It is 100yrs old but the principles outlined therein will remain valid in any decade.
The teachings have remained out of public domain for a very long time. Only in the past 10 or so years the work has come to light and gained prominence.
5. Wyckoff's work provides insight into the workings of the market, the market manipulation etc and how price action can be read through range ie. price
movement and activity ie. Volume. Volume is the Effort and Price is the Result.
Alongside it would also be prudent to undertake a systematic study of Taylor
It is a gem, however it is a very hard read, Taylor was foremost a trader and writer second. Most find it so difficult to grasp that they walk away casting his
work as antiquated but have patience and persistence and the light will come on.
6. Once this background is in place, one can set about constructing strategies and tactics to create an edge to take advantage of the opportunities that the
market provides. Then all the steps you outline come into play.
....When you are in stock markets, you need to think rationally and not like a non investor. You are in a profession, where no gains on capital is also a gain.
Non erosion of capital in itself is an achievement. Do you know how many fund managers lose money and how many seriously under perform? If you begin to
dig deep in this, you will be shocked to know the stats.
Don't calculate returns the way you are calculating. Keeping money in your account is actually saving money since you don't find the market environment
appropriate to invest. Hence, be realistic and realize that you are in a profession where bulk of the gains sometimes comes in one year. This is why stock
market returns follow Log Normal distributions and not perfect Normal distributions. A solution to your problem would be to invest the 50% funds in 1 month
fixed deposits. This is not hard to do as these days flexibility in FD investments is available. Returns wont be much, but at least psychologically you will be
fine.
If you have 50% money in your account at the moment, then this means you are lacking some planning in your investments. A complete trader is one who is
ready with every situation the market bestows upon him. His plan covers all aspects and certainly one aspect is to see that money is never
idle. ...........RAUNAK
Fibonacci Levels
05 July 2015
03:00 PM
Finding Fibonacci retrace levels are the part of TECHNICAL ANALYSIS. Now it is not necessary that all the traders who use Fibonacci retrace levels should take
it from the same time frame. Their view may differ according to their time frame of investment or trading periods.
But the place where retrace levels of two time frames match are the place where the mind of different traders with different views are getting matched. i.e.
there you get a little stronger support or resistance
But you have to believe that all this happens because of some basic thing and that basic thing is TECHNICAL ANALYSIS
This is the reason I call it as a science- right.
Normally a Bull run undergoes a correction of 15-20% and hence once can expect such corrections to come up. Though the Nifty has corrected only 10%,
around 20% of stocks traded on the index have corrected 25-50% whereas around 30% have corrected to 15-18%. These stats have to be taken into strides
before expecting the markets to dip any further. Trade with strict stop losses . 30.11.10
so here also we would select sector which has performed better in line with market & in that sector best performing stocks. & reverse when market is in
downturn.
............Stock Selection - Don't get too caught in top down analysis or bottom up analysis in markets. Analyzing sector and its performance is important for
Investments. Not for Swing trades. Let me give you an example.
DLF belongs to Realty sector. It has underperformed markets both as a stock and as an index constituent. Realty sector has been the worst performer in the
market. Yet, I have extracted majority of my swing trades through DLF. If you go back a few pages, you would see that I shorted DLF at 348 and covered
once at 310. I again went short at 318 and covered at 269. Recently I went long on DLF at 274 and have covered positions at 315. Now, what has sector got
to do with my trades here? The answer is absolutely nothing.
Hence, if you want to Swing trade, stick with High Beta stocks. DLF,Hindalco, Tata Steel, Rel Cap are god's gift to Swing traders. Hope you get it.
As far as getting Beta data is concerned, most of the charting softwares give you that. Amibroker and Metastock do that. I don't know about the rest. You can
manually calculate Beta too. Just seek more information regarding it on Investopedia.com
..................
System Never makes any mistakes.. It is our mind and attitude makes mistakes and that depends on our greed and worries. I have noticed and practiced it
very well... And I have created my attitude like...... (LET THE MARKET GO ANY WHERE ...... I DON'T CARE....... I AM AN INVESTOR AND I TRADE TO FEED MY
INVESTMENTS).....In my first year of trading I use to be revengeful to the market because of my loosing money. I use to think in a wishful way and I was
also encouraged by the brokers. But the entire result was against me. There I decided not to sell any thing below my purchase rate..... The result for some
time was I use to buy scripts and it goes down and I use to wait till it come up to my purchase rate and exited but I never earned but the broker earned.
Correction
05 July 2015
03:01 PM
Correction - most of the time it happens un expected.

That day could be any day even tomorrow no body knows so please be prepared.So we have to be cautious on every day.
This is not induce fear but caution.
What you have mentioned is Mean reversion of prices. This is one technique which works well but is very difficult to time.
As human beings, we are always destined to grow into someone who makes significant impact on our lives or on the society in g eneral. The trend is always up
as far as our growth is concerned. However, some still fail to reach the heights they are destined to. This is because, they fill themselves up with Negativity and
remorse and this counters the god gifted positivity and enthusiasm to do things. Its a fact of life that negativity is far mo re dominating than positivity and
hence this limits the growth of the individual. This is precisely why I say that if one has genuine winning attitude, rest of things automatically fall in place.
Now coming to markets. All the markets in the world exist to grow and rise. History is witness to this and no matter what mar ket you look at, it always has an
inclination to grow and rise. Have you ever thought that why do Bull markets last for several years and Bear markets last for relatively fewer years? Again, this
is only because markets are always looking for reasons to rise. When they cant find any, they fall. But eventually it will ag ain find reasons to rise.
Having said this, there are certain times when markets go out of favor and some other market begins to rise. This is a cycle which has always existed and will
never cease to exist. When a market is in favor, it takes a whole lot of negativity to turn it around. Usually such turns are accompanied by some asset bubble
or some serious fundamental issue. As of now, there is nothing of the sort which suggests that we are into some kind of bubbl e. The next decade or more
belongs to Emerging markets and for this to go out of favor, there is something catastrophic which needs to happen. Hence, ra ther than getting into any
technical or fundamental factor, the only thing at this juncture which would sum up my bullishness is the fact that I see Ind ian markets in favor at the moment.
Now whether the rise begins from 5500, 5200 or 4800, I don't care. Even if markets have to enter bearish phase, the transitio n has to take time. If bear
markets are the name of the game in future, there is just one thing I am going to say and that is "Bring it On"!!
Trading Psychology
05 July 2015
03:02 PM
the inherent nature of markets never change. By this, I mean that a long term BULL -trend needs to counter itself with "Greater" amount of negative factors for
it to reverse and change its course. Let me explain this with a discussion.
.....................................
Trading Psychology - IF Lose Discussion
* consecutive losers in short time - becomes thinking that i don't know how to trade
* method trades BUT losing -thinks the method doesn't work
Trading Method - IF Lose Discussion
* were the trades -really method trades? IF yes - retain confidence and stay with the method based on your experience and consistency of repetition over the
larger number of trades.
IF no - be sure that you are only 'base' method trading - it is fine if these trades lose AND there is no way to limit those times that they may be consecutive.
Self Awareness AND Realization
* problem of transition - normal trading emotion to anxious/start spiral to out of control
* be aware - what do you most want to remember/think about to 'stop' the spiraling.
Being able to laugh at what you 'feel' was a 'dumb' trade and go on to the next setup - (instead of going ballistic on yourself for being the most stupid moronic
brain-dead trader alive, which is just about going to guarantee you are going to spiral if that next trade is also a loser )- may be more beneficial than your
'favorite' trade setup.
.................................................. ............
IF there is a transition where the trader goes from acceptable emotion to trading psych spiraling THEN there is a crossover point where IF you are aware of the
situation, you have an opportunity to 'stop' this WRONG transition within YOU.
Though its difficult to do, BUT this is more necessary , as this is happening internally and chances are you typically would not be aware of it, until it was too
late AND may not even consciously realize it until the spiraling has taken over and you give into it hopelessly.
In light of this, traders can for example take there key issues and write them on an index card AND stick them on there personal monitors. The objective is
realization and making this available to your conscious as a reminder,( instead of only available to your subconscious as a problem).
Thus, when you do this, BE SURE that you are writing short non-judgmental notes - DON'T let the 'solution' make the 'problem' worse.
For instance, consider the combination of a build of emotions coming from consecutive losses which are also occurring during congestion zone trade - write
notes similar to these on your card:
* a build in emotions may come from a series of quick consecutive losses
*
*
*
*
quick consecutive losses often come from trading inside of congestion Zone.
are your losses 'base' congestion method trades OR are you overtrading
there is nothing wrong with 'base' method trade loses
your trading results are fine when you 'base' method trade
Now consider the same situation BUT different notes:

* don't be a stupid idiot and overtrade congestion like you always do
* you are going to lose your ass and end up with another losing day like usual
* you do this same crap every day and the same thing happens
* you have no reason to even trade if this is all that you are going to do
Does this seem far fetched, does common sense indicate that no one would ever write notes like these? Absolutely some people would write these note AND
worse [been there - done that], as they take the attitude that this kind of emphasis on what the problem leads to is an emphatic warning that will keep it from
occurring. But instead it backfires, as most decisive self-talk even of any kind tends to do.
Now not only are the emotions stemming from this kind of self-talk in your subconscious where we know their potential to become debilitating, you have also
put them into your conscious. AND since you have them in writing - right in front of you on your monitor next to your trading charts AND SINCE what you have
written is a very prevalent TRADE-psych problem - WHERE do you think your focus in going to be? Do you think you will continue to focus on those charts and
trading method OR do you think you will keep 'seeing' your notes and intensify the problem and thus the speed of your trade-psych spiral? The solution makes
the problem worse.
So soln is Remain Neutral
....................................
The Answer helped me not only to understand the movement of markets but also to understand view in a whole.
I have checked with the whole nifty chart from 2000 s where it started from 890 levels and found that only once it corrected more than 50% and all other
corrections were some where 15% to 30 %..... so this could not be counted as bear market...... and any corrective,should be used as opportunities to grab
positions.
Contrarian Bets
05 July 2015
03:02 PM
Contrarian bets involve less of fundamentals and more of intuition. Hence if you see the fundamentals improving and the secto rs doing well, you must invest in
them. Intuition is very important in Investing and Trading and hence bet with it. Keep SL's though. As reality now may be som ething different.
________________________________________
May be on extreme short term, trades would be range bound. But if you take a weekly perspective, we are heading higher. Have been screaming ever since
markets were at 5700 that we are not going down. Hence take little longer term call and trade. Since commodities are inching up, expect the rally to be volatile
............
An inside look how hedge fund manager work. I say it like this : They can see the stop loss levels of the retail traders. So what to do, to bring them out of the
market ? This levels are tested as long until the retail traders become afraid and move out of the market. So what next ? As soon as the retail traders are
catched, means the funds have hedged all there positions on this levels, they can go long or on the upside, they can go short . Just to give a simple idea, how
such levels are traded from the bigger money.
Markets are dynamic. Hence views are always dynamic. (Leading sector like Bank,Auto doing poorly, defensive sectors like cons umption and IT doing better) do
make me jittery. This in itself indicates that markets are defensive currently. Hence, I have turned a bit cautious. Not Bear ish.
One cannot have a single opinion and stick with it. Adaptability is absolutely critical.
Everyone at this stage needs to be cautious. Personally, this is the first time in many months that I am looking at the marke ts with extreme caution. There are
certain broad based indicators which are pointing towards this. The way I am trading the market now, I am eagerly watching fo r the band of The breach
of this band will definitely invite shorts from my end. As of now, I am holding on to my longs. From a traders perspective we also have to be prepared for some
whipsaws and false trades.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
From the look of it, you are struggling to keep up with Volatility. If that's the case, then you need to get your psychologic al make up correct for Swing trading.
There is no getting away with Volatility when you need to Swing Trade. Hence ask yourself if you are a Swing trader.
Self inspection in life is very important. Hence, before you go to sleep, close your eyes and ask yourself whether you know h ow to make money. In my opinion,
there are two kind of market players; one who earn on 'Will' of themselves and others who earn on the 'Will' of others. If yo u fall in the latter category, you will
never succeed in the long run. Trust me on that. The problem is, many of you don't want to read this. You'll be happy as far as your account is getting filled.
This is precisely why self inspection is so important. The answer lies within you, if you search for it.
The reality of trading industry is that very few people actually reveal how to make money. Most of the experts either evade t he questions or reveal only limited
information in seminars/training etc. This in my opinion is not wrong. What is wrong is that unsuccessful traders expect the successful one's to reveal their
method. Successful traders do reveal limited information which is enough for smart traders to latch upon and build something substantial. And I feel this is how
it should be. And this is something which I have always done.
The correct way to approach the market is not to ask someone to show you the way. But it is for you to find what your mind le ads you to. If I were to be
believed, then making money in markets is only a state of mind. Nothing more and nothing less.
Many of you are already nearing success. I hope some of you are realizing that. You need to push forward and trust your insti ncts. Take the leap forward and
see what happens next.
. Most important thing learned : to create mindset for trader
Plan for PRO is
1. Take out good points from various system which you personally have tried.
2. Develop OWN system which will suit your personality.
3. Start documentation of every trade. & Review it weekly/monthly basis. Clearly mention lesson learnt during week/month to f ine tune system.
................................
with is compilation of Raunak is over
2nd Trader: Mr Vvonteru

05 July 2015
03:04 PM
2nd Trader: Mr VVonteru-HERE I AM WRITING CONCEPT OF MY FAVOURITE SWING TRADER.VVONTERU

........................................
let us start....I do swing trading.
Please take a look at: http://www.icharts.in/breadth-charts.html. The market in the hindsight will have a deeper correction (more than a pull back). So, be
careful and have stops.
any slight downturn, can make people jittery and leave their positions open-Resulting deeper correction and heavy losses.
trading and investing is different. I am a trader using TA.
you placed a stop at 450 (below the recent base and taking into consideration the volatility of the stock and below its 50 day EMA). Right now, the stock is at
650. so, you had more than the risk run. I would take 50% off, and move the stop to 530 (break even). So, now you can let the stock run on table's (read
others) money. As the stock moves up, move the stop. Make sure you put the stop below 50 day EMA, around 100 rupees (volatility based on price of stock)
less than current price and below a recent base.
In TA, when you select a stock, look at the chart considering data from all years. Then compare the chart with the sector and the market. The reason I like
stock pick 1 than 2 is that, stock 1 mimics the market more than stock 2. I did not compare with the sector.
Ideally, the sector should also be trending. We want the momentum. We want the wind to sail easily. Avoid the harder stocks. There are so many easy ones like
the stock pick 1.
Remember the saying, Bulls make money, Bears make money, Pigs get Slaughtered. Don't look at your paper money and be happy. Till you book your profits,
you will see the money and then one day, you don't have it. Think stock trading as business. If you had profits in your business, will you continue to invest all
the profits in the business?,
you are picking good stocks and making right entries. Concentrate on the market, pick right sector and then the right stock. Take profits (always).
Again. Market, Sector, Stock, Clean Chart. I know the market is shooting. I didn't see which sector your stock is it in. I don't have to. The chart is all over the
map. Its like a heart beep. beep! beep! beep!.... Like Sine curve. Avoid those stocks. Ask yourself a question. Is the market doing the same. Market is trending
at an angle 40 to 70 degrees. Pick stocks like that. Take some from harmad's pick. You don't have to reinvent the wheel. I like Godrej Consumer . Wait for a
pull back around 2 to 4 days. Make sure the market has also pulled back (distinquish between pull back and sell off). Go long with a stop 10 rupees or X amount
based on the volatility (determined based on the stock price and how much average it moves in a day) above previous high. If you are interested, here are
suggested readings on swing trading.
1. Dave Landry's 10 Best Swing Trading Patterns and Strategies
2. Dave Landry on Swing Trading
To get basic ideas of stock trading, I would read
1. Come Into My Trading Room: A Complete Guide to Trading - Elder
2. Reminiscences of a Stock Operator - Edwin Lefvre
3. Trading for a Living: Psychology, Trading Tactics, Money Management - Elder's 1st book
Buying high is a fool's game. When you buy high, what you are expecting is that another fool will come along and buy it from you at even higher. The guy who
bought at pull back or at 50 day EMA will run all the way to the bank by sell the shares to you. You like that? So, next time, buy at pull backs or given the
volatility of the current market, buy at 50 day EMA.
Positive: Having said the above, hopefully the bad times are over. 8 day EMA has crossed above 50 day EMA. MACD is showing bullish. There will be slight pull
back before the stock takes off.
Negative: Trend line has been broken. It may depend also on the general market. Index is moving up. Stocks are not. See Advances versus Decliners chart
comparision with Index chart.
So what we do. We put a stop. Conservative - 230. You want to give some room, 220. All depends on the market and the sector in which this stock is in.
Frankly, there are no enough tools to see the sector chart.
Be careful of the 50 day EMA. In this kind of bull market, stocks always test 50 day EMA and have high volatility. 50 day EMA for this stock is 369. I would put a
stop at 400. Hopefully, the stock comes out of the pull back. Based on your risk (hopeful you thought at some loss, you would come out of the stock), take
partial profits. Lets say, when you entered at 412, your stop was at 380 (base below previous pull back), your risk was 32 rupees. So, at 444, you would take
50% of profits, and trail the stop on the remaining shares. Hope you got the idea.
You can Buy, Sell, Short & Cover stocks. But, there is time to Buy, time to Sell, time to Short and time to Cover. Trying to pick top is a loser's game. Many tried
that and lost shirts. Always first allow selling to happing first (I forgot something, Profit Taking. Do you know profit taking is different from selling?). Then,
depending on the percentage of % drop (above minimum 7%. Conservative 10%), how much the stock has recovered, and based on the volume of recovery
(volume must be low for recovery versus sell off), you would decide to go short.
Ofcourse, there are other patterns (Double Top, Head & Shoulder's) under which you can decide to go short.
Stock selection is most important. In the previous email, I mentioned, one can Buy, Sell, Short, Cover and take Profits. I forgot to mention another thing you
can do with a (lot of) stock(s)- Just pass on. Don't pick a stock because you see something in future or something is going to happen. You should say to
yourself, let it happen. Let the stock show why I should buy it. Its like playing cards. Who will show their cards first. If you buy now thinking something is going
to happen 1 month from now, you already showed your cards. You should wait for the stock to show. Then, on a pull back, you will reward the stock by buying
it.
The chart by itself was not interesting. Stuck in a trading range from the last 6 months. So, if you want to buy this stock, let it come out of the trading range,
go beyond the previous high aroung 120 and then on pull back, you would buy it.
Rather, look at some stocks previously, I discussed in this thread. Compare those charts with this stock. You will understand what I am after. Need a clean
chart. No mumbo jumbo Sino curvo heart beto.
You need to select stocks which
a. have high average volume ( high liquidity)
b. Move a lot - high beta ( you don't want something not going anywhere. They are waste of time)
2. You need to know where to enter and where to exit. These points should typically help you make money. Thats the hardest part. Since, there is lot of noise
during the day.
3. However, in this market, for the most part, they always go up. Just avoid trading when they go down. I mean to say, avoid trading when the market is
pulling back
4. Use good money management. When the stock moves on your side and crosses what you risked, take 50% profits. Then, move the stop where you bought
to break even. This way, you make enough income to keep you going. During day trading, the stocks typically move up and down (noise). Don't expect to see
chart like what you see in EOD chart. They don't just go up. So, if the stock goes towards you, take half off. There are high chances that those profits will also
go if you don't make a move. That way, you will not last long enough
What were your reasons for entering (rewarding) this stock. Its below 50 day EMA (read Bearish). Could not take previous high (Aug vs Jan at 130). The
market is pulling back. So, ask yourself why you entered this stock today
how much time we need to spend studying for the opportunities of endless wealth. You need to give yourself atleast 2 to 10 years. Everyday you learn
something. Please read the books I mentioned before you put your money. Start with small amounts so that you will lose less amount while you learn your
lessons.
-------------------------------------------------------------------------------------------------------------
TA-MACD
05 July 2015
03:05 PM
I don't remember the exact definition of MACD. Please refer the books. But, the way it works: there are 2 EMAs. Short term EM A (9) and Long Term EMA
(12,26). Short term EMA tells what is happening right now. Long Term EMA tells you what has been happening for some time. Dif ference between these EMAs
will give you the divergence (Present - Past), shown by MACD histogram. MACD is a very powerful indicator. It can tell you what is happening underneath the
price movement. As with any indicator(s), MACD may not be useful all the time. For instance, if the stock is any trading rang e, MACD is not useful. MACD
Histogram above 0 will tell you bullishness and below bearishness. This is useful to compare how strong bullishness/bearishne ss between 2 points.
....................................
...................................
Nothing replaces the experience though. Continue to look at the charts. You might have seen earlier that I have just been tra ding for only last 2 years. So,
you might wonder how I got so much knowledge. I almost spend each day looking at charts. I might have looked at thousands of them. Stock Market is my
passion. I continue to read books along the way. This is important to not forget the basis in the midst of fear and greed.
As Elder says, in stock market, 3 Ms are important. Mind, Method and Money Management. Control your mind from fear and greed. Have a methodology
(Tripple Screen, Swing Trading etc) and follow it in every trade, so that the probability works in your favour. Have a money management plan to allow the
maximum risk (typically less than 2% of your principal amount) you want to take in each trade. Keep this risk constant and ch ange the position size you are
going to trade based on the stock price and loss stop.
Example, if you are following Tripple screen (I am not going to go through the methodoloy. Please refer online or book), deci de on the risk. Lets say, your
principal is 1,00,000 (1 lakh). You want to risk 1% on any trade. You would risk a maximum of (100000 * 0.01) Rs1000 per trad e. If the stock price is 100,
your determine stop at 90 (based on volatility/support), your risk is Rs10 per share. So, at max you can trade position (1000 /(100-90)) 100 shares. If the
stock price is 1000, stop is 900, your position is (1000/(1000-900)) 10. This way, the amount of money you risk is constant.
Basically, this technic of money management rewards you to trade more when you make money. Similarly, it would reduce your po sition when you are losing.
Hope I made a point.
I am not a break out player. I am a kind who ask, let it breakout and then I will think about it. Playing breakouts is a risk y game. There are a lot of false
breakouts.
Not trading is most important part of trading stocks
Whoever reads this article, I want to stress on simplicity. Don't think there is always secret behind the price movements. Sp ecially, there is none when the
market is so strong. Don't go after all those indicators (DMI, RSI etc etc). What is most important is Price and Volume. Pric e tells whether there is demand for
it or not. Volume gives us the value for that demand. Every thing else is a potpourii of this data.
I use Price, EMA(8), EMA(50), EMA(200), Volume on top. In the middle, I use MACD. Last box, I use Williams or Slow Stocastic (if I don't have Williams). I am
using EMA to get a feel for the average price. MACD is used for divergence (I already explained in this thread). Williams, I use it for overbought and oversold
condition (Try not to buy where this indicator is above 80%. Don't sell (short) when this indicator is below 20%).
EMA(200) is for fund managers buy point. Anything below that are the fallen ones (dogs, don't touch them in this market). EMA (50) is a buy point for lot of
fundamental stock investors. Avoid shorting at this point (wait for it go below this point and pull up). Stocks display elast ic band effect over here. EMA(8) is
the short one, which gives us the heart beat check of the current price.
Volume can help us for confirmation. If you are buying, look at the volume. For example, if the price is going up, volume is drying, we don't want to buy that
stock. This is also divergence (secret underneath the price )
Stock selection:
When you look at a chart, if you spend more than couple of seconds, then its not worth it. Skip it. Chart should not be compl icated. It should be simple. Take
a look at NIFTY chart. It should be simple as that. There were couple of stocks (SATYAMCOMP) mentioned in this thread. Look a t them. Simplicity is the key.
It all depends on your methodology. If you are person buying at 200 day EMA (always), why not. Look at the stock. If fundamen tals (thats what fund
managers look at 200 EMA) are good, but the stock is down for some temporary reason, they go in.
MACD is slightly turning positive, which in itself is not a big thing. The big thing over here is that this stock has lost lo t of points and is at 200 day EMA. I
looked at ROC indicator. It is going up. So what. I don't think you want to go just based on that. As I said, you have to be careful in using the indicators. You
have to know their applicability, given the price movements.
Don't use indicators only to justify your entry in to the market. When I say that I mean, be consistent in using indicators. If you are using ROC for entry, use
that always. Don't use ROC one time and the next stock use RSI. On the other hand, you can see lot of indicators for confirma tion of information your regular
indicator has given. (I always use MACD and Williams. Thats it).
For this stock, I will go for it (if someone is forcing me with a gun) based on the following reasons:
1. If my methodology warrants me to buy. Most important. Don't change your methodology in order to trade different stocks. Ov erall results will be skewed. I
discussed this before in this thread.
2. Fundamentals look good at the long term. I admit I am bad (nor interested) at looking at fundamentals.
3. This stock technically uses 200 day support. Look at the chart on 2005 April and 2005 Nov. Both the cases, the stock jumpe d after trying 200 day ema.
Hopefully, it does that this time too.
4. Draw a trend line joining 3 points (2005 April, 2005 Nov and current price). Trend line is not breached.
Negatives (I would not buy this stock for the following reasons):
1. This stock does not follow the regular market. Compare this stock's chart with nifty. No comparison! Nifty is above 8, 50 and 200 EMA. This stock is not.
Select stocks that mimic the market (haven't I repeated myself enough already). Are you asking why? Because, you need stronge r wind to sail. If nifty is the
wind, the sector is the breeze. You need these to sail fast to reach your destination (money ). You don't want to stay in the middle of sea all by yourself right?
(how do you feel if the market moved 100 points and your stock didn't even move 5 rupees. Even worse, it goes down).
2. For me, I am not a 200 day EMA player (Unless the market i.e., nifty is also at 200 day ema). I am a kind looking for stoc ks above 50, 200 ema. Need to
mimic nifty. Simply said, my stock filter would be,
52 Week High and minimum 2 day Pull back.
52 Week High and minimum 2 day Pull back.

I will go long above the 2nd day pull back.
Pull back:
Look for a pull back for atleast 2 days. You can be conservative and wait for more than 2 days. I know people who enter after 1 day pull back. I don't.
Is 2 day pull back enough? How do I know if it is a pull back versus sell off versus no change. It all depends. Read further.
1. The whole idea of pull back is that somebody is taking profits after a good run (Wouldn't You ). This will lead to stock l osing some points. How much,
depends on the stock price. Based on the experience, you will figure it out.
2. If the stock has more than 7 days of pull back, its more than a pull back. Some times, stocks do 2 to 4 days pull back. Tr igger your stop. Then don't take
off, but don't go down either. This happens when market conditions are not right. That doesn't mean you should quit your posi tion. Don't micromanage. Once
you are in the stock, give it a chance. Think before you go in. Not after.
3. If a stock loses 7 to 10% in the last 10 days, its may be a sell off. Atleast you would think before you go in.
Would I just use pull back to enter. Not true.
1. I am selecting the stock which made 52 week high (just like nifty). That tells me the stock is strong.
2. I look for clean chart. Not lot of gaps. Looking for trending stocks.
3. I look at MACD for convergence and no divergence.
4. I look at Volume to make sure it is not drying up.
5. I look at the sector of the stock to also have made 52 week high and has pulled back. If this is not true, I don't take th e bite.
Thats it. Is that easy or what. Thats what I mean about simplicity.
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You observe something from the above. Its not the problem with the stocks. Its a problem with you. Please stop trading. Go ba ck to basis. Read books. Come
back later. You can always make money. But, at least do your homework. Know what you are doing. Winning or Losing is not the question. They are part of
the risk of trading. But, if you follow certain methodology, mentally prepared, follow specific money management, you have ch ance of reducing losses versus
winnings. Even if you lose, at least you can take home that you gave your best shot. What I mean to say is, You Will Not Feel Like a Loser.
I suggested not to enter before it comes out of the trading range. You see couple of stocks discussed above. They have been s tuck in trading range for 6
months to 1 year. What a waste of money's time. Rather, in this bull market, you need to find stocks like Pidilite which are nicely trending just like the
market.
You might be wondering why I want all data chart. Before I trade a stock, I like to know its history. I always look at all th e data. If there is noise in daily data,
I look at weekly chart to get feel for the stock. Each stock is different like each of us. They display different patterns. B y looking previous data, you can
rationalize how they acted before. So, you can decide how its going to doing now.
You can take 3 approaches.
1) Don't predetermine the market. Let the market determine by its movement. This is what I mean
a. If the index is going up, the stocks are not doing the same, you should find less no of entries. Obviously, you will be tr ading less.
b. If the index is going up, the stocks are going down and you are getting stopped out. Isn't market telling you something.
2. If you are not confortable with the market (indicators are telling you or for whatever reasons), reduce the position size. Lets say your money management
formula requires you to trade 200 shares. You would only trade 50% (or whatever) of the position, i.e., 100 shares. You can t ake this approach if you feel the
market conditions are not ideal.
3. Your idea is not bad either. Nobody would penalize you for not trading. Atleast we know that for sure, you would not lose money by not trading.
But, just because something is going up doesn't mean it is going to come down pretty soon. I want to stress on "pretty soon". Thats the issue with the stock
market. Anybody can predict whether some xyz stock will go up or down. The question is when? Time is the question. That is wh y peers suggest not to try to
pick top or bottom of the stock. Trail your stops and let the market tell by its movement whether you need to be there or not .
Disclaimer: My suggestions are based on Trading versus Investing. Please take them at your own risk. Above all, as anything e lse, I feel trading is common
sense. If you can make sense out of what I say, use my advise. If not, avoid but Read all charts....
Let me do the best I can

05 July 2015
03:05 PM
Let me do the best I can.

When you start looking at these charts, it looks foreign at first. You read books. Understand various terms. Continue to read charts. You will go through several
phases. That is the reason, I suggested it would take 2 to 10 years to be really good. All along, you will learn something ev ery day.
Each day, you will become better trader. But, the question is, do you have interest. There are several ways to make money. So me do job, business etc etc. We
can opt for the one which gives us lot of money. But, if that line is not of interest, can you continue year after year. So, I suggest you to ask yourself if stocks
are of interest to you. If it is, then spend time and eventually you will get it.
Its like bike/car driving. At first, it is so hard. You tend to observe everything. Once you get a hang of it, you don't even think about it. Some part of brain
automatically takes care of it. Same thing with charts.
...........................................
Pattern: Acceleration and Persistent Pullback

previous movement was 5 to 10). This means, the stock is accelerating.
2. The new trend is parabolic. I some how feel it is not sustainable. You know, feelings and hope have no value in stock mark et.
3. The new trend is giving only 1 day pull back. But, don't use Friday's pull back to enter. Let another day pass by to have at least high of the day below
previous high. See for example, on March 28. Enter with a buy stop above high (stop = today's high + 4).
4. What I like about this stock is, when going down, its volume was low. Going up, volume is high. It picked up good volume o n the new trend.
5. Please check the sector. I couldn't find it. Once you know the sector, check the chart of the index (in BSE) to be trendin g and this stock is comparable to the
sector. I gave the link to look at the sector and index charts in the
People who read my thread might be considering me crazy when I ask them to wait for pullback. This is the reason. When you bu y at top, you feel uneasy when
the stock is below your mark. Its like going to the market and buying something at high price, when you know you can wait for day or two and get it at low
price. Please practice to wait. Sooner or later we need this behaviour.
Right now, don't panic. I don't know how much did you calculate for stop loss. I suggest you put sell stop under previous bas e, which is 200. Hopefully, it will
continue with the new up trend.
I want you guys to look at the nifty chart. Look at the volume when going down versus going up. Just an observation.
what price you entered. That way, my analysis would be to the point and useful to you.
All I can tell you is the probability of stock going up or down. We just trail the stop. If the stock goes up, our stop goes up. We do that as far as stock goes. We
don't care how far up the stock goes. In the mean time, we do take partial profits to generate income to our account
I like to be counted in the short term to intermediate trader group. My hold can be from 1 day to a week to a month to a year (s). At the same time, I don't
believe in buy and hold philosophy. I don't buy a stock and think, ok, let me wake up after 1/2/3/4/5 years, the stock is wai ting for you to take profits.
My Methodology?
Basic underlying pattern is pullback. The question is after what scenario the pullback is of interest to me? I can give you o ne scenario which is useful in the
current market. 52 week high and pullback. Ofcourse, clean chart with a trending stock.
When I enter, I never enter directly in to stock. I enter with a buy stop above the yesterday's high (given that there was a pullback). The value above the high
depends on the stock price and volatility. Once I enter, I determine my risk and initial profit target. I keep them same amou nt value. The risk depends on the
stock price or chart pattern.
Once the profit hits, I sell 50% and move the risk stop to where I bought. At this point, I am breakeven and will be playing with table's (read other's) money.
As the stock goes up, I move the stop. When, I do this, I don't move the stop close to the current price. I use bases to move the stop up, giving lot of room to
the stock. This should be ok since we are already in the profit. Our goal should be to get the max out of the stock. Therefor e, you choose not to micromanage
at this point. So, thats the reason, I am more of a intermediate player.
Book the profits ...
In most cases, I don't sell all the shares directly. I sell in chunks when there is huge movement in the stock. For example, from the above you know I will sell
50% when the initial profit hits. Then, on further movement, if I decide that the stock has run good enough, I may sell 10 to 20%. I trail the remaining 30%
with a stop. This may continue.
Bull Market
05 July 2015
03:06 PM
Another question ---- it is a bull market. Will we get such clean charts at bear market?
In a bear market (why do you think about it? Really!! Are you missing it already), you will have to go by sectors. What I mean is, there will still be some sectors
which will trend. So, you will choose those (At this point, you would also short). In the worst case scenario (Lets say, if the market is in trading range, which is
no no for us, who believe in trend is your friend philosophy), you will choose sectors that trade independent of the market. For example, metals and oils. I hope
bear market is long way to go.
......................
Voltas
I do like the chart. But, looks like it is going through some minor correction due to change in gears, which....
however one can be assured of the underlying fact that a clean chart with good volumes fairly indicates strong fundamentals----Thats the whole point. A price of the stock already contains the fundamental information (somebody has done the homework for us. Remember, we want to
make money easy way.) + what people speculate its future value is. Since there is speculation for future and future is not predictable, stock's price is adjusted
once the future is known ( + again the future speculation). This goes on.
, famous trader, Ed Seykota says, "Fundamentals are Fun For Mentals". I woudn't go so far. No matter what methodology you use, as long as you follow it in all
your trades (no exceptions) and use sound money management, you can make money. Simply put, do the following for success:
1. Control Your Mind (don't feel left out and jump into a trade. Think before you trade).
2. Select a methodology that suits you and you believe in. Use it for all the trades.
3. Have a sound money management so that you are in the game in spite of loses. No one loss should take you out of the market.
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Before we delve into anything below, I want to touch on the market in general. Please avoid new positions for now. We will have to adopt wait and see approach
with the market. Stick to the stops you have (for traders). Don't move them as the market approaches your stops. Elder calls them losers, who move stops
down.
--- As I mentioned before, price and volume are the most important elements to look for in the market. Everything else (indicators) are there to remove the
daily noise and see clearly what is happening (with crowd behaviour). For example, SMAs, EMAs, MACD etc.
Overhead Supply
--- Lets pick a stock that is beaten down (say its current price is 50% of its high). Some part of the crowd thinks this stock is at value. They think this stock was
100 3 months back, now its 50. They say its cheap. What they are forgetting is a group of people who bought all the way from 50 to 100 3 months back. This
group is called Overhead Supply. This group is just waiting badly for the stock to go up so that they can dump (sell) theirs. Elder gives a perfect common sense
example for these kind of stocks. Think about 2 scenarios.
Scenario 1: Falling down 3 stairs. U just wipe your butt off and there you go.
Sceanrio 2: Falling down 10 stairs. U will first check whether you can breath. Then check whether hands and legs are fine. Then look for people to help you
(sector action). Then try to get up. You will fall down. This repeats couple of times. Finally (assuming that you didn't end up in hospital with broken
hands/legs/ribs), you will get up.
From our perspective, these kind of stocks have a lesser probability to make you money (from Buying point of view) than a stock which has just made 52 week
high and has no overhead resistance. Just like water, stocks go the path of least/no resistance.
good volumes(relative to what), iilquid stocks etc.
volume also subjective to the time frame you are seeing
--- When you see a chart of a stock (picked for more review), you look at the complete data (for all years and different time frames). You will look what
happened to the price of the stock. Similarly, u will look at the volume and indicator Average Volume (to remove noise/sudden spikes in a day). When they say
"good volumes", what them mean is price action supported by increase/decrease in volume (average volume). That there is really a demand/no demand for this
stock.
--- Average volume can help to filter low volume stocks. Low volume stocks are hard to liquidate (sell) your positions. U will put a sell order and no one is there
to buy. This means, you will have to reduce your price and then try again. This results in high volatility of the stock and lot of gaps. U need to pick stocks that
have good (based on Ur confortability) average volume. That do not have lot of gaps (they result in lot of difference in buy vs. ask price). Stock elimination is as
important as stock selection. When in doubt, leave it.
--- Volume Time Frame: Definitly. Lets say a stock's volume has gone up last 2 days. When we see that, our immediate thought is, something is going on. Why
are people interested? How about 5 days volume spike. There is really something going on. How about 3 weeks. 3 months? 6 months? As the time frame
increases, your confidence on the price action supported by volume data increases. You will trust the price action better.
Don't go after low priced stocks. They can be easily played by market makers. They suck you in.
I don't like the charts for new entry. Are U are already in? If you are, trail the stop below previous base.
If the market goes down, individual stocks are nothing. Doesn't mean you should relinquish your position. Because, we don't know whether the market is going
to continue the downward path tomorrow. Stick with the stops. Let the market determine its next step
No matter what I say below, I suggest No Entry to any of stocks. Wait for the market to show the direction. It is still in the break down mode.
........................................
JPAssociates
-- Pullback has stretched into the short term trading range below. Let this condition improve. I think this is true for most of the stocks (look at Wipro). These
conditions will improve when the market improves.
Day Trading (Volume, MA, Medium Liquid Stocks, Price Movement Manipulation)
-- In day trading you need the following to excel:
1. Avoid looking at too many things. You will have very less reaction time and attention span. More on this in the next few points.
2. Have a tool which can execute orders fast. Don't have some thing which takes you to another page for confirmation and then executes the order. Those are
good for End of day trading.
3. Bargain for low commissions on day trading. You need low commissions because U will be trading a lot as U will get lot more signals in day trading.
4. Determine before hand (before sesson starts) what stocks you will day trade. Use volume, beta (volatility) of the stocks as the criteria as the selection. You
need high volume, medium price, medium to high beta stocks. Further, determine what direction these stocks have chance of trading. U do that looking at EOD
data on a daily chart using EMAs. Also, look at the charts I am attaching. U will have an idea. Basically, what I am saying is, U need to decide whether to go
long or short before hand for a stock.
5. Restrict to only 2 stocks for watch list. If you don't see any movement for couple of hours, then start looking at another 2 stocks. Not at any point of time you
will be looking at more than 2 stocks. Try to restrict looking at 10 stocks in general. That way, Ur mind will get tuned with their price movements. After a while,
U will know them more and your actions will get aligned with their movements.
6. Avoid looking at 1 minute chart in a day chart. Its close to imposible to make decisions on 1 minute chart because of noise.
. Now, coming to what indicators you will be using.
a. Look at 5 day chart. I don't know whether you have the tool which shows 5 days of data. In this, use 1 minute time frame. I know U are confused at this
point based on what I said on point 6. But, here we are looking at 5 day chart. Read next how this makes a difference.
b. U will be using EMA(8) min and EMA(50) min. Since we are using 5 day chart instead of 1 day chart, this effects the EMA calculation. They will take out the
noise.
c. U will be using MACD with line and Histogram (atleast histogram). Again, hopefully Ur tool has these.
Methodology Hints
a. As in EOD trading, we need enter and exit points that make you money. But, unline EOD trading, you have less time to make decisions and there is lot of
volatility. So, you need clarity.
b. We will be using crossovers for this. When 8 min EMA crosses above 50 min EMA, you buy. Similarly, if 8 min EMA crosses down 50 min EMA, you will sell
short. When the ema crosses over, wait for pull back (pull up in case of short). Patience!Patience! Patience! before triggering. It is better to avoid then do it
wrong. Crossover is Ur ultimate test
. If you want to be 80 % correct, then U will confirm the crossover using 5 min timeframe on 5 day chart. Remember, it will take some time for the crossover to
appear on 5 minute chart after it appears on 1 minute chart. What this may mean is that you will enter at higher (lower for short) point than you would do using
1 minute chart. But, it will avoid false crossovers. So, you might make less money, but U will make consistently. 1 minute chart can be used to help you get
ready for upcoming crossover.
d. MACD histogram is also helpfull for confirmation. Lines above the 0 bar means bullish. Below bearish (I know U know). So, when 8 crosses above 50, we are
going from bear to bull. See whether it is happening in MACD for confirmation.
e. So, I have talked above about entry. How about exit. As in my EOD trading, U need adopt immediate 50% profit booking methodology. When U enter, U
immediatly decide at what price the reverse crossover is going to happen (approximatly). This is your stop point.
f. If the stock moves in your direction, U should take 50% profits and move the stop where U entered for break even. Without this U will not survive. Because, in
a day, the stocks show lot of noise. What goes up in the morning, comes down in the evening. U will be left withnothing on your plate, inspite of your hardword.
U need income to continue for next day, just like people working in office do. Final exit will come when the reverse crossover happens.
9. In order to make money in day trading, U have to be a perfect person. U should not have fear or greed (applies to EOD too). You have to follow methodology
to the core. No exceptions. Believe me, this is going to be hard. U will get greedy once U start seeing the money flowing.
10. Never trade when U are tired. Day trading will suck lot of your energy. If you are tired, take a break. Further, if you have lost a lot of money (% of capital),
don't trade for couple of weeks.
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Price Manipulation
-- This is a given thing. We can restrict it by picking stocks that have good average volume, medium price and no gaps in price movement. If you want to know
price manipulation, read -The stock operator book, biography of Jesse Livermore.
I have mentioned to use only Price, EMA, Volume, MACD, Williams indicators. Just read them on line in investopedia.com.
sudden increase in volume at particular price ,intraday.
--- Stocks behave like us. Why? because WE operate them. An WE are made up of same stuff and think a like for most of the cases. So, when we put a stop, WE
all tend to put it at same point. Same for buy, sell decisions. As a result, there are lot of orders waiting to be executed at a same point. As a result, you will see
lot of volatility with high volume at some price points. For EOD traders, when you put a stop, place couple of points high/low than what you think should be to
avoid being stopped out.
--- Other scenario is, when you place stops, the market makers can see them. For low volume stocks, then can manipulate for a moment and hit your stop and
come back (it will if there is no demand at the point). That is the reason you will see this huge bars in daily charts.
--- Another scenario is gapping down at the beginning of the day. If you carry stops overnight to next day, the market makers in the early morning gap the
stock down, hit your stop. Since, there is no demand at the stop point, the stock goes back to previous day's trading region.
--- Having said the above, don't get paranoid from EOD trading stand point of view. It would be great if you don't carry stops overnight. Specially, if the stop is
close to the current price. If the stop is far, it will be hard to manipulate. If you don't have time to do it, that should be fine too. The chances of occuring are low
that you can disregard.
--- For day trading perspective, disregard volume info. You cannot do anything with volume in a day. Understand this. With all the TA, we are trying to read
crowd behaviour on an average basis. You cannot make a valid judgement based on spike in volume in intraday. So, leave the volume info.
---------------------------------------------------------------------------------------------------------------------------------------------------------------------Look for stocks having min. average volumes 3,00,000. More the volume the better.
---We have to wait for the market to improve. Individual stocks improvement will come automatically. Right now all the stocks are breaking down. I will attach
ITC chart.
For Day Traders:
--- Practice acquiring high Will Power. The crowd pull will be very high. The magnetic force is 100 times more than for EOD traders.
--- Don't count the money. Count the no. of times you used the methodology (crossover) to enter. Try to get this 100%. Money will flow as an after thought.
what do you think about Infosys now that the results are out and bonus announced? What are the probable scenarios?...
---Our basis is TA. So, disregard the news for all purposes. Are U saying why?
1. The news is already discounted in most cases. We are at the end of the food chain. Before we know, so many people already know about it. The rupee value
of the news at the point we know is negligible.
2. Have you ever observed the stock movement opposite to the news. The stock goes down inspite of good news. The stock goes up when the news is bad. This
is because of expectations or for unknown reasons. But, observe this. The movement in most cases happen in the direction of the trend.
So, the lesson is, don't use news as the reason for trading signals. You signals should be entirely based on your methodology. No exceptions. Even if you know
U can make money easily if U can make 1 time exception. U should not.
Money (greed) should not drive your signals. Your methodology should. This is required for your long term survival. U should come into this market thinking that
U will be there for long time to come. You should accumulate money slowly. Do you know how many get busted in the 1st year? Do you know why? Greed!!!!!
you can't define cheap in stock prices. Wait for the market to become better. We will have lot of entries. Wait!!. Waiting is the most importing part of trading in
stocks. You have to wait like cheetah waits for its prey. It doesn't pounce until it is certain. We have to do the same.
Picture speaks thousand words. Wait till we see better picture. If you are already in and not stopped out, I will give it a chance
i don't want to short this market.
---I don't think any body should. Its long way for us. But, for somebody who don't know what shorting is or is skeptic on the whole idea of shorting (oh they
say, there is no limit on the upside before covering), I recommend looking into it.
I wait till 3200, start looking for picks and make the positions by 3100-3070, i.e if i get the prices. At this level what will be the stop loss?, on Nifty or Sensex.
-- I personally feel that should be it. 3200 is 50 day support. 3200 is the previous pullback support after the gap on March 9th or 10th. But, as I said in earlier
posts, feelings have no value. Our attitude should be, 'let the market make the next step. I will look at it and place my next step. I would not reveal my step
before the market's'. Having said that, it is a nice idea to think through the various support and resistance levels and what U are going to do. Isn't this like a
chess game!!
Ideally, you want the market to test the support successfully. "Successfully" is the key. We want the market to test the support, pull up and pull back but not go
below the support. When it pullsback, thats when you would enter above the pullback. Ofcourse, I am talking about my methodology.
I think on the upper side i can do the same if markets sustain 3425 on closing. plz gide me if 3425 is the correct level
---Looks like you are expecting it to go above 8 or 10 day EMA. That would be nice too. But, I will wait for "Successful" test to happen. This will eliminate false
breakouts and daily noise. My methodology doesn't trust breakouts. Too much money is lost in false breakouts.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
---Oh Ya. I am your example. Why are wasting time. Give the methodology a chance. If it works in a time span, you keep it. From time to time, U can tune it to
suit Urself or based on market changes. More important, U should like it, should make sense to you and therefore U believe in it.
---As we don't know whether the market is going down, we don't know whether the market is not going up. We just know that the conditions are not ideal for
---As we don't know whether the market is going down, we don't know whether the market is not going up. We just know that the conditions are not ideal for
new stock entries. So, the existing entries should be dealt with stop loss. Let the market determine its next move. If it goes down, it will hit your stop loss. If it
goes up, do we have a problem?
I would keep the stop at 783 (where U bought. Now U have booked 50% profits and have no loss no gain on the remaining shares i.e., breakeven). Let the next
base clear up. When the stock moves up from this base, I will move the stop to 815. This is how I do on every stock. If you put the stop at 829, U are just
asking for it. A daily noise can take it out. If you are unconfortable or feel you are going to lose money, take more partial profits. Its all about how you feel
about the position. But, don't change how U put the stops.
Market: It was a nice come back. Lets wait for the follow through.
So can we say that the Key here is an unsuccessful attempt to breach the support levels, after a breakout?
--- Ya. We are looking for a pull back. We want to make sure that pull back does not go back to previous point from where the breakout has happened. If it
does, they call it a false breakout.
Print the 6 month chart (if you can), put it on the floor. Standing, look at the chart and see where is safer to put the stop. Thats the test. Don't go into details. If
we micromanage, we will lose the longer play. Our objective is to get the max out of the trade.
I have said earlier, we shouldn't prejudge the market. Thats the reason, we shouldn't come out of existing positions. The reason is, there is always be noise.
That shouldn't change our existing plans. But, for new plans (entries), we definitely want to see better conditions.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
With 1 day upside, the market has changed the charts. I now feel, probably, the previous downside was a deeper pullback. This can happen intermediate to
several smaller pullbacks. From our perspective, can we take new entries considering the market was a pullback
for short and longer term ...
I don't believe in short term or long term. I look at a stock's chart. If its good and has an entry point I enter. I give it a chance with a stop loss. If it hits, I come
out. I can't take the pain thinking this is long term. Similarly, if its winning, I ain't stupid to come out.
Tracking 5 to 10 stocks:
For beginners that should be it. Just track them. Wait for pullback and enter. Don't go around 100s of them. U go around and comeback, these 10 are gone
(Isn't there a saying One rabbit in your hand is better than 10 around the bush). Once U get hang of it, I suggest use a scanner to program patterns U like the
stocks to exhibit. Once U get the result of the scanner, U should be able to judge based on the charts.
I don't remember changing much. I modified the EMAs to use 8, 50, 200. Added another window (Shift + F12) to use MACD. Added another Window to use
Williams. Added Volume as overlay to Price (Unfortunately, it doesn't show up in the zoomed version). If U want, you can play with the color settings using
Indicator Settings menu.
-------------------------------------------------------------------------------------------------------------------------------------------------------Formula: 3 month high and pull back
highest_close[5] = highest_close[65] AND M_PriceFalls
>=2 and Close > 100 and MAVOL > 100000
U can tweek the numbers to include/exclude subset of stocks.
Considering the market (All sectors except Metals and Oils) putting up Double top, try not to take new positions for a day or 2, till we have a better idea.
Sensex 12000, Nifty 3573 ... what now? What do the charts tell?
--- Nothing definite. Sometimes thats what it is. We definitly don't want to take new positions. The indexes have been rallying straight 4 days (+ Friday even
though it was a down day, indexes did not give much back). The parabolic move suggests, there might be some pull back pretty soon.
Looks like too many people are expecting a correction. Too much bearishness makes the market bullish. If it doesn't come down pretty soon, all the people who
got stopped out recently and sitting in the sidelines waiting for the correction will jump back. This may lead to even more parabolic move in the indexes.
Sectors:
MIDCAP & SMLCAP & AUTO : Still have double top
IT : came down from double top ( WIPRO, SATYAMCOMP, TCS, INFOSYSTCH )
OILGAS: 1 day pull back after acceleration. Hopefully, we will find entries in this pretty soon.
METALS: we need it to come down more.
BANKS: forget this sector till it comes out of the trading range
.
Maintain your existing positions inspite of people advocating correction. That talk should only deter U from entering into new positions. In not ideal conditions, if
you want to go in, reduce Ur position size to 50% or 25%. Some of the good runs what we discussed recently are Reliance, ITC is looking more like a double
top.
Lesson: Stocks give you at least 1 chance to get out (in my observation). Lets say you did not honour Ur stop (I don't want U to do that). The stock will give you
another chance to get out. But, in most cases, we don't get out. We get greedy and think there will be follow through. My suggestion to you guys is, when in
doubt, execute 25% or 50% of position, either on the sell side or buy side. Atleast U will not be 100% wrong. Don't try to get every thing right. Don't be hard on
Urself. Accept the fact that there will be mistakes made (even if U are a pro) and we will learn from them.
My suggestion to U is, if at any time a position makes U tense from being Urself, that means the position size was not right with respect to the stop loss (this
comes under money management issue). So, ask yourself what position size would make you confortable if a loss happens. Once U know, reduce the position.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
U could have shorted using MACD divergence. Look at MACD histogram bullishness for each of the peaks. At the last peak, MACD went negative. That shows
that as new each new high was being made, the stock had lesser strength. An short entry point over here has higher risk as well as higher reward.
A higher probability trade would be using First Thrust Pattern. After making a new high, the stock falls down more than 10% and pulls up. Right now, its still
falling down after making 52 week high. Wait for it to pull up. Also, note the 50day EMA. Many people buy at 50 day EMA. So, it would be nice if the stock goes
below 50 EMA and then pulls up.
About shorting, at this time, understand the general market momentum is upside. In this kind of market even cats and dogs jump. Shorts have less probability
of making U money compared to Longs. So, avoid going shorting at this time
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
It has good chart. I came out from major trading range and has momentum. It is testing 50 day EMA. Stocks do that after a run up. I don't know how U want to
play this. Normally, I would wait for it successfully test 50 day, pull up and pull back. I would enter above pull back. When I say Normally, in those cases, stocks
take around 10 days to touch the 50 day EMA. In this case, its just 4 days. U can consider it just a pull back and enter at 93. Have stop below 50 EMA around
83.
Stock Entry: Above previous day's high (high + x) where x is based on stock price and volatility
U should always enter into a trade above previous day's high. Why, just look at all the stocks suggested yesterday. Look at Bajaj Auto. I suggested entry at
3000 above previous day's high (2989). Since, there was no up tick, our entry was not triggered. Using this technique, U can avoid some good trades that turn
into bad ones. They call it, No Ticky No Tacky.
The downside to this is that U may enter high of the day. But, going so far, taking out previous day's high, the stock showed its potential of turning back from
pull back.
Count the no. of day's its been down continuously. Total 10 days. In the last 11 days, only 1 day was an up day. I remember recently reviewing this stock for a
short. At that time, the stock was still in the trend. In the last 2 days, the trend line has been broken. Today was the nail in the coffin. All the guys on the upside
are caught now. They never had a chance to get out. They are waiting to get out. What they need is couple of updays. That is when we enter for short. They will
give us the impetus for the next leg down.
I currently do not scan for the stocks under this pattern (First Thrust). The market does not support the shorts. The only way we can make an exception is if the
sector would setup as short.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Market:
Considering that it still is a pull back, lets look at some stocks. In case the market goes down another day, we have to reconsider. It might be in trading range
or correction (I doubt).
This is a good scanner U can use. Lets see what we want based on the market.
This is a good scanner U can use. Lets see what we want based on the market.
1. 52 Week high
2. 3 days lower
3. Price between(User specified, in Indian Rupees(Rs.)) 100 - 5000
4. 10 day simple moving average above 20 day sma Yes
7. Volume between(User specified, in 10000 multiples) 10 - 100000
Other Indicators I would Play with:
1. Price Changes
2. Price closed above 10/20 day moving averag (instead of crossovers)
3. Volume changes
4. MACD
5. Support Resistance levels
Siemens ended above the neck line. When I say test the neck line, I am expecting a pull up. U don't want to short when it is going down. It is already down.
Whom are going to sell (short) it too? So, we need couple of up days. Right now, it is above neck line. Lets wait for another day to see if it is just noise. But,
why are U bent upon shorting. The market is shooting up. Why don't U go Long. I will recommend some.
............................
. We are here to make money. My trading philosophy (as I stressed in most of my replies) is that no methodology is wrong or right. You test it in the real
market and you make money, then use it. Thats your edge. Every body should find their own edge (what they can do their best) and use it repeatedly (this is
the key).
What I meant about the statement is, make trading simple. When you start trading initially, we come to the market with some pre-concieved notions. That you
can easily make money and fast (read greedy). When you don't, you think people who are making money know something you don't know. They are using
indicators and waves etc etc which you are not using. Thats the reason you are losing money. If you didn't have this thought, thats fine. I am talking in general.
Then you go after reading books, using new indicator for every new trade, change methodology etc etc. In the mean while, your portfolio still doesn't improve. I
have done this like anybody else. Ultimately, what I found is that, trading is just common sense. It is using probability to make your chances of winning high.
Accepting the fact that there will be losses and it is the business risk. That winnings are going to compensate your losses and make you profits.
In essence, don't try hard. When you see the chart, it gives most (80%, to give a value) of the information. The remaining 20% may not relevant in most cases.
So, why work hard going after that 20%. Since, you are leaving 20% (or whatever info) you may get some losses. But, assuming that you are following your
methodology to the core, the losses may be minimal compared the effort you are not putting. Just make life easier. Don't spend more than couple of seconds
(max 1 min) looking at a chart. Within that time, if you like it, study more like
1. Look at all the data (Ofcource, 1st thing you want to make sure is the overall index is doing good). Check it fits your methodology (this was the reason you
picked this stock for detailed review)
2. Look at the sector
3. Check whether your position in this stock fits your money manangement plan
4. Make a go or not go decision.
Having said the above, nobody is stopping you from researching. You can continue to do that. I decided I am not going to do it. Its just personal. I found my
edge and my final truth ( I spent my time before). I will just stick to it.
.........................
.do not get paranoid.i request u not to be judgmental.
NO NEW ENTRY means, I am suggesting to all readers that I do not approve these stocks for new positions. Based on my analysis, I don't want somebody to
think (based on stops) I am suggesting to buy them. Now, if U have already took positions in these stocks, there are couple of options.
1. Exit for profit if the stock chart is really bad.
2. Gracefully exit for no loss no profit.
3. Give a stop for last chance for the stock to make it.
U know, it is easier to read charts that are good than the bad ones. All these charts, I wouldn't spare a millisecond (infact thats the test). Now, trying to
understand them and make meaning out of them is hard.
...........................
My expertise is not with low priced stocks. Please see the chart attached. A triangle has formed. A decision soon will come, up or down. We can keep this stock if
it goes up (no brainer). If it goes down, how far will it go down (already 35). The stock has to be evaluated based on fundamentals more than technicals.
The time has come. It broke out. Wait for pull back, which will not go back to the trading range. What I don't like is the volume using which the breakout has
happened. I couldn't find the sector. It is considered in sector All. I also don't like the general market condition to suggest a new entry. But, U asked for the
RCVL. Here it
start with how stock prices go up or down. This is due to the demand for buy or sell. Lets take an example of RCVL. This has broken out of the trading range
recently and closed at 320.60. If no demand exists for buying above 320.60 (no buy orders above 320.60) and sell orders exist below 320.60, the stock price
will come down. I think so far U already know.
Now imagine some good news comes for RCVL. There are lots of traders who buy on news. They jump on news and put in buy orders. Most of them give market
orders (they don't want to miss the action). The market makers (MM, who execute all the buy and sell orders in our behalf) see so many buy orders for RCVL
and increase the buy price. Since these are market orders, they get executed no matter what the price is. Lets say more buy orders come in. MM see this as an
opportunity and increase the price (On the intra day chart, U will observe a long open and close tick). They will push it so high till a point where no demand
exists. Once U have this scenario, open a daily chart. The tick on that will have huge high (tail) low range. What we should read from the tick is that there is no
demand at this high point and go for a short next day. Elder talks about the levels and stops for doing this. Similar is the case when the stock goes down.
Now, identifying the Kangaroo Tail is tricky (infact, I used to argue with my friend all the time. He used to look at some volatility on a day and say, there goes
the kangaroo), just like using any indicators. Huge range can be there on any day. But, Kangaroo tail only applies on extremes. For example, when stock on a
bad news is going down. After several days of sell of, U see a huge down bar, now thats a Kangaroo Tail. Why, because, the stock has been going down so low
and at some point the MM tried to sell the last bit and found no orders to sell below that point. Similar is the case of upside.
I don't think that applies in this scenario (ofcourse its my opinion). The stock should have been going down or up for lot of days. This should typically happen
because of an event (which will determine this sharp break up or down). If the stock has been going flat, I don't know how much this applies. The pattern is
more based on
Any way, I don't trade on this pattern. Not that U can't make money on it. It doesn't fit into my methodology of pull backs.
Market is still in trading range. Avoid new entries for now till the market successfully comes out of the trading range
This stock is below 50 day EMA. 200 day EMA acted as support. Let it cross above 50 day EMA and then pull back. A safer bet would be after crossing 950
Resistance
did not look at all the indexes before. Here is the good news on other indexes. Most of the indexes broke out of the trading ranges. Lets see what are those.
BSE100
BSE200
BSE500 (This is better index to trust than SENSEX, which has just 30 stocks)
BSEHC
AUTO
AUTO
BANKEX
OILGAS
METALS (Was not in trading range. But, really going good)
MIDCAP
SMLCAP
Still in bad condition
IT
...................
Now what? Ideally, we would want the indexes to go up and pull back (not going back to trading range). Thats when we enter. However, if U are a aggressive
player and want to go in now, consider stocks that are already in pull back and check if U can safely enter those without a wider stop loss.
. What is the chance the sector of the stock doing the same. And what about the market in general. We need to have criteria for stock selection that mimics the
General Market. The general market is all time high. Pick stocks that are comparable to the market. Be in a sector that is going along with the market.
Stock selection (elimination) is the greatest challenge, once U gain knowledge of TA. Because, once U run a scan, U will get lot stocks in result. Which one U go
for finally?
-------------------------------------------------------------------------------------------------------------------------------------------------For me, MACD cross over and histogram gives information about the goodness of a stock trend. After that, I wait for pull back. Pull back is the ultimate pattern
for me to enter. Reason, I don't want to enter when the stock is going up. If I do, my stop loss will be far. And when people start taking profits, I will feel
uncertain, uncomfortable the stock getting close to my stop.
In general, market goes in 3 stages.
1. Value of market < Fundamentals. At this point, nobody really cares about the stock market.
2. Value of market = Fundamentals. People start observing. Still no talk.
3. Value of market > Fundamentals. Speculation Stage. Everybody knows. Wherever U go, there is a talk. Any one U talk is in the market. Every body is
dreaming of lots of money.
If U think something is over valued and not participate, U will miss lot of action. My philosophy is, not to prejudge the market. Let the market tell by its price
action. That is the reason, stick with Ur stops. If cement stocks are going down, Ur stop will hit.
Currently, how many people predicted correction in the market (I was effected by that talk too). Every Tom Dick and Harry was expecting correction. I was
talking to my brother-in-law who doesn't know ABCD of stocks. He was talking about correction. What happened? No correction. It is so much better not to heed
to the news. Just observe the price action. If the price action gives the signal (based on Ur methodology) to buy, go ahead.
,,,,,,,,,,,,,,,,,,,,,,,,,
Correction:
A loss of 7 to 10% can be regarded as correction. This can happen in 5 to 10 days. There after, the market or stock can continue to lose points or start a new
trend. From our point of view, we need to avoid new positions, take profits and trail stops for existing positions. We just need to differentiate between normal
profit taking verses sell off.
As I said always, when in doubt (even an iota), leave it. Its like leaving a ball while batting in cricket. Just choose the best one to hit. Leave the bad balls.
.....................................
On Ur analysis, I see about the jump. It made almost doubled in the matter of a month. Can it sustain. Probably not. Will it be in a trading range? Based on the
pattern, looks like it has more chances for it to be in a trading range. The current pattern looks different. It has lot more momentum then previously. It made
100% jump. However, as I said before, can it sustain? May not. So, lets skip it.
The chart looks good. The stock is in overbought condition. Wait for pull back to enter.
Stock Entries:
The market has been up 7 days in a row. Still waiting for a pull back. If we go in, we will be entering at overbought condition. If we don't go in, we might miss
the move. Do we? I was looking at my previous scans. Most of them are still in pull back mode. Thats the surprising part. Stocks are pulling back. But, the
indexes are up. Only Metal index is in kind of pull back mode. Banking index is 1 day down. On further pull back, we can look at couple of bank stocks identified
before. I have 2 metal stocks for entry. To be on conservative side, U can avoid entries in other sector stocks.
................................
RCVL - This is good stock to enter. I was looking for it to pull back a little more for entry. So, far no, just like the market. But, if it does pull back, I will strongly
recommend this stock.
Market moved a little bit. Based on its action, it looks close to its pull back. Can never predict though. Again, we have an option to sit out and manage existing
positions. If U want to trade, metals are still in pull back mode. Banks appear as pull back.
Previous day's entry on Hindustan Zinc still holds good. Adjust the entry point. I was look at some stocks which are cheap. Below Rs100. I got 1, attaching the
chart. I advise caution when U buy cheap stocks. They are prone to manipulation.
Normally, U will look at a chart on an average couple of seconds. If U like it, write it down for further analysis. Don't force a position on a stock. If the chart is
not good or chart is good but it is in over bought condition, skip the stock
It is a bull market with high valuations. There is lot of volatility. Combined with it, there are Market Makers who look at your close stops. They move the stock,
touch your stop and go back (since there is no demand to sell further or there is high demand to buy at that point). So, when you put Ur stops, U have to
consider:
1. Volatility of the stock. How much it can go down in a day. High - Low.
2. Whether the risk will fit your money management plan or Ur confirtability. The stock may be good for entry. But, if the stop has to be far, move on to the
next one.
The reason I have the stop far than it should be is to avoid getting hit due to daily volatility. When I say 2 ticks, I am trying say, the stock should really go
down. Not thru manipulation. However, if U can't look at the stock in day time, i.e., hands of approach, give actual stop. In this case, something below 500.
Triangle Pattern
--- I already have it in the chart. By, explosive, I mean, the base is not formed. Normally, the base is formed and tip is not formed. At the end of the tip, the
stock has to make a decision to go up or down. In this case, the end of the current pattern comes when the stock no longer is forming the base of the triange.
.....................
whether U read about my anology of falling from steps. If U have not, here it is.
Imagine U have fallen from 10 steps. U are trying to recover. U are about to get up. But, U see this gush of wind in the proportion of cyclone. Can U guess what
will happen to U. Will U get up or fall down. If U do fall down, how long will it take to get up again after that hit.
The reason I gave U that analogy is, the market had a bad hit today. It has come back to the previous trading range. This is bad. When market loses so many
points, these beaten down stocks get killed more. At this point, its just not this stock, avoid entries to all stocks. I will cover this further below.
Market Commentary:
When it had 2 days pull back, I thought, this is what I wanted on Friday night. But, looking at world markets, I had a bad feeling on Sunday evening. But, I did
give benefit of doubt to Indian Bull Market. I can't say I was not surprised the way it happened. At this point, lets adopt wait and see approach for couple of
days to get better understanding what today's price action means. Hopefully, 50 day EMA will act as support for Nifty and Sensex. If U have existing positions,
take partial profits or/and trail Ur stops to make Urself comfortable. Avoid new entries for now.
take partial profits or/and trail Ur stops to make Urself comfortable. Avoid new entries for now.
About the positions I suggested with entries and stops:
RCVL, Reliance, Hindustan Zinc and fedder Llyod did not hit the buy point. So, we are saved by the bell. This stresses the importance of not buying directly into
a stock. Try to buy at a point where U feel the stock really has scope for turning back. This is called, 'No Ticky, No Tacky'. Its like saying to the stock, 'If U don't
perform, U will not get rewarded with my money'. Ofcourse, there will be times, where Ur buy point will be hit and then the stock comes down. Didn't I say in
my previous reply that there is no full (fool) proof method. We just do the best.
,,,,,,,,,,,,,,,,,,,,,,,
When U decide to buy a stock (based on a tip or scan), Ur analysis starts with the market indexes. U will do the following.
1. Look at BSE500 (Look at others too: BSE200, BSE100, BSE30-sensex)
2. Look at Nifty
3. Identify industry and sector of the stock. Sometimes, U will not be able to get the charts for these. There are BSE indexes for some sectors. Look at chart of
the sector.
Our objective in looking at overall indexes and sector is to get a feel for the market conditions. We are trying to understand how all the traders are thinking.
Based on the above reading, if U feel the conditions are good, then compare the stock U want to buy with the sector. The stock should be comparable to the
sector. Then U will make a buy or no buy decision.
I know the process feels long. But, thats what I call principles/methodology. It should be a repeatable process. Then, U can evaluate the results with some
certainty. Try to take out degree of guessing, affected by greed and fear. Avoid gambling.
we still buy knowing that the pull back was cause of overall market and not stock specific.
When a Tree (market) falls down, what happens to the branches (sectors) and the leaves (stocks)? Hope I answered Ur question.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Market Commentary
05 July 2015
03:09 PM
What I didn't want to happen, it happened. The markets trend line is broken. We are in for correction. I will hold this view, till it comes back to the trend line or
forms another trend. But, I sincerely suspect. Market is going to setup for First Thrust pattern. Meaning, selling follows by more selling. At some point, it will be in
oversold condition. Then, there may be couple of days of buying, which will be followed by more selling (by those who missed selling now). Given this view, I
suggest avoid buying till we see better conditions in market.
What happened today is very good. Market went down by 400 points. Could find buyers to end up positive. This is really good. The trend is intact. Going in
tomorrow, it is one of those days, as a buyer we have an edge. As a buyer, U can say, 'I have a high probability of making mo ney tomorrow'. So, we will have a
list for buying. In that, the best will be RCVL (Reliance Communication). I will put up a chart. In the mean time, here is th e entry for U to look at.
FYI: Just like the market, RCVL had a reversal too. It tested previous trading range and closed at high. This is really bulli sh.
The books I have read and with the foundation I have in stock market, there is no term called 'Long Term' in my dictionary.
When U say long term, look for fundamental analysis and research.
1. Personally, I think its good that U lost money. At this point U might be cursing me. Let me explain.
Think in terms of TIME. Today, U have just lost Rs5000 (50 shares * 100 points). How about this. What if U made money now. U rejoice and make a similar
GAMBLE (Yes, what U did is Gambling, not Trading, not Investing). This time, U put 200 shares (U think, it easy to make money ). U lose 200 points (U think,
didn't it go up after losing 100 points. So lets wait. So U end up with 200 points). So, now Ur loss is Rs.40000. Do U think U will let go here. U will not. Because,
U tasted success 1st time. It got to work again. So U try again. U lose again.
2. Do not use money that is necessary for livelihood. What I mean to say is, use money that is after U had enough savings. Th at way, U will not be desperate.
3. If this is going to add solace to U, I too lost money on my first stock. Many lost just like U. U are not alone
Market Analysis:
I know its too late know. U guys already know what to do. Still, for some, who are ever optimistic, some words. PLEASE DON'T OPEN NEW POSITIONS. On
existing positions, if U are short to intermediate player, take partial profits/losses (Ya, taking loses is making profits)
Give Urself minimum 6 months. Market will be there for U. And don't forget that U are competing against best minds on the oth er side. They are there to grab Ur
hard earned money. This ain't lottery ticket to free money. If it is, everybody will leave their jobs and start trading.
When market falls, there are no reasons why individual stocks fall. Its the sentiment. Don't reason with the tape. Just follo w the price action.
? We are brought up in life to reason things. We are human beings with emotions and try to find reasons whether good or bad. I have learnt in the stock market
to not find reasons (disregard the financial papers' reasons. They will find anything to write). Thats hard.
1. How good is this company? Is the company going down in business?
3. Market is in oversold condition. That doesn't mean it is not going down Monday. It just means, it has faily good chance it may experience slight rebound. If it
does, Ur stock improves (don't wait for break even), get out. Get out on the second day of rebound. To be catious, take parti al out on the 1st day of rebound.
4. Finally, understand the main reason why this market is going down. Its because of METALS and OILS. Thats the correction. T hey had a huge run. Gold, Silver,
Steel, Aluminium etc had huge run up globally. Gold is all time high, seen earlier in 1980s. Right now, it is (was a week bac k) in speculation stage and had get
corrected. However, they are not going down. It is just a correction till they come close to 50day EMA.
Biggest thing we learn in stock market is decision making against time. Whether we lose or make money. We make decisions. Tho se who make better decisions
(which may not necessarily make money all the time, but are made on set of principles) win the race.
might be wondering why every stock is setting up for a short. Look at BSE500 or nifty. The market itself is setting up for a short. There are still no indications of
stop in downtrend. Answer to the question of adding or holding, it depends on your strategy. If U are a long term investor, I will not suggest U what to do.
Because, I don't believe in such thing called long term. If U are not a long term player, why are U still having positions? A bout adding new positions, no for short
to intermediate term, considering the current market conditions.
Looks like Ur confusion is, U did not make a determination of what kind of a player U are (long term, short/intermediate). It s high time U did that before the
confusion costs U. If U (or All) want suggestion, go for short to intermediate term.
......................
Now, coming to the stocks, its very hard to say what is the right thing to do. U will be damned if U do it, U will be damned if U don't do it.
, I just don't like to hope. We may escape now. But, one (dooms) day, there will be a final trap.
When do U know the market is going to come back? One pulse to check is, people start recommending stocks to buy in this threa d . Other would be the market
makes a double bottom or has MACD divergence and goes up with considerable volume.
With the expectation of updays, people will try to bail out. If there are no updays sooner or later, the reaction will be mor e severe. I don't believe in that case
right now.
My gurus are Elder and Dave Landry. Elder goes through basics. Thats the foundation. Dave lays out the different rooms of the building on the foundation. He
gives various patterns that are realistic. For day trading, use Marcel Link's book - High Probability Trading.
Indicators: Beginners struggle with them.. They don't understand that the complexity is not with the indicator but, in its application. U got to know where and
when to use them. More importantly, be consistent with their use, in getting Ur signals to trade. When a signal is not given for a day, don't go for a new indicator
to get signal.
For my friend with whom I developed this methodology, he has problem with greed. Our methodology worked fine. But, he would n ever get happy with the
money he was making. Lets say he makes Rs5000 on a day, he wouldn't quit on that day. He would continue to trade and end up w ith Rs500 at the end of the
day.
He had also problem with position sizing. They were giving unrealistic losses when stops get hit. And sometimes he moved the stops hoping the stock would come
back. The biggest problem he had was that he was applying EOD TA to day trading. He would confused with both. The reason I po int these is, these are common
issues U come across in day trading.
I don't know when U started day trading. If U are starting, my advise is to reduce position size. Smaller position eliminates fear and provides objective thinking. U
will stop thinking about money and think what is right thing to do. Money should flow as an after thought. Slowly, U will see things clearly and develop Ur own
method for trading (lets say fine tuning existing method). Thats what I call Ur edge. Till then, do it small. So, that Ur los es are minimal.
Yes. Look for only shorting while the market is in downtrend.Avoid long signals as they fetch less reward versus high risk. B ut, follow my methodology of
crossover. That way, when the market is pulling up (short covering), U will not get shorting signal. When the 8 min ema cross es down 50min ema, then short.
Cover when 8 crosses up over 50.
First Thrust Pattern

05 July 2015
03:09 PM
"First Thrust Pattern"

These patterns are explained in Dave Landry's (my current Guru) book. According to this pattern, the stock makes a new high a nd then collapses more than
10 percent. The way the stock makes high and collapses should be dramatic. Dramatic in the sense, fast and shocking, so that the longs are caught in the
trap. When the pull back happens, the longs should look to exit in herds.
About Head and Shoulder (H & S) pattern in day trades:

I believe for any pattern to work/trust, U need more data. Why? We need to read group behaviour over a period of time. Group behaviour over a day or two is
not trustable. Just use EMAs for day trading. That too, not for reading group behaviour. What I mean is, if 8 min ema is goin g up in a day, does not mean is
stock is doing good. I use 8 and 50 min ema to take out noise. To have points (when they cross) as entry and exit points. If not, these emas can turn up or
down in 5 minutes
Bottom picking is some thing trend followers will always miss out, but that is because they strongly believe that it is not easy to predict tops or bottom for the
market.
I think most get confused with methodology versus making money. Its just as in life. U can make money several ways. But, do U do that? Or do you stick to
your priniciples?
Other confusion is about a stock being cheap versus expensive. Most don't understand that neither a stock is cheap nor expensive. It is above when you buy
versus when you sell. The difference is all that matters. The question is how do you choose those points. What are your guiding principles that let you choose
those points. Can you make exceptions to those principles? (Can you make an exception in life's principles and take bribe to make money)
These are some thought provoking questions one need to answer. One can experience. Buy 5 shares of a stock. Feel the experience. How do you feel when
you make an exception to your principles and buy shares. How do you feel when you follow principles and buy stock. Even though people say its all about
money, seriously its not. As in real life, its about how you make it. How you make it consistently. It has to be a repeatable process. If not, you can make a
1000 today, lose 5000 tomorrow. Consistency and Repeatability are the key.
I think I took it far. Most of the people don't have set of principles to trade. What they are after is making quick money. They don't understand that trading
stocks is the most challenging art in the world. Its about snatching money from the other guy. If you are not smart, somebody else will grab the money from
you. Until they lose, they don't realize. Experience is everything!!
"Markets are the place to transfer wealth from the impatient to the patient"
Market is at a point of reflection. It can take it from here and move on up. Can go sideways there on, before going up. Given the double bottom and MACD
divergence, U can trade if U want. But, have a tight stop below the double bottom. And be sure to take profits as it comes. Don't wait for the whole thing to
happen.(a theoretical target achieve)
. Stock market is more of sentiment. Sentiment right now is bearish.Just an experiment to all those who want to buy now. Thro w up a knife. While the knife is
falling down, try to pick it.
Just kidding. Don't do it. At least answer to yourself, what is the probability that U will injure yourself versus catching safely? Didn't I say in the beginning of
my thread, 'Trading in stock market is Common Sense'.
Before I delve into the (real) examples, I just want to make a statement. Any thing can happen in the market. All options are open. They just have different
probabilities.
Examples (from US market):
1. This example is from US 2000 bull market. Nasdaq was around 5000. It dropped to 3500. People thought all the stocks were cheap. So, bought more. Then
it dropped further. People thought, the market was doing similar things as before. It drops and comes back. Till date, it nev er did. Nasdaq is around 2000 now.
2. During that bull market period, people bought a stock JDSU for $160. Now it is $3.00. After so much selling, JDSU was known more for Just Don't Sell Us.
Here is the link if U want to check out the stock. Like JDSU, there are several US stocks that are no where the price near 2000 year.
Just as doctors use stethoscope to check heart beat of a sick patient, we have EMAs to check our falling markets (Its a patient now). So, lets see how the
market (BSE500 or Sensex or Nifty) is doing using 8 (short), 50 (intermediate) and 200 (long term) day EMAs.
1. Below 8 day EMA. Bearish for short term
2. Below 50 day EMA. Bearish for Intermediate term.
3. Below 200 day EMA. Bearish for Long term.
4. 8 day EMA crossed down 50 day EMA. I use this for shorting.
5. 8 day EMA has not crossed down 200 day EMA. So, there is still hope for the market.
6. 50 day EMA has not crossed down 200 day EMA. This comes after step 5. This is the worst case. At this point 200 day EMA is sitting above 8 and 50. We
don't want this to happen.
From the above, if you scale from -5 (bearish) to 0 to 5 (bullish), the market is around -3. So, what do we want to see if the market has to become better.
Now the question is, when is the right time to enter.
1. Market must come above 200 EMA.

2. 8 day EMA must cross above 50 day EMA.
Let the above 2 happen. Then, I will put tons of stocks for U to buy. Until, then keep the powder dry. Have the cash.
Common Sense Note: Don't feed a sick patient who has lost weight. Let the patient recover from sickness. Then we feed.
....Currently, there is nothing to write on the market. It is in oversold condition. Just as in bull market it can stay in overbought condition for long spells, in
bear market it can stay oversold condition for some time. What it means to a trader:
1. Can't buy
2. Can't sell short either. I am not talking about day trading. In day trading, U can do either based on the signals. Bad thi ng in India is, you can't short and
keep it more than a day.
3. So, the only option is keep quiet and stay out.
Therefore, coming to daily input, there is nothing to analyze. U could analyze the levels the market will hold. But, U can do that out of interest. Other reason
could be trying to determine the turn in the market. I try not to catch bottom or top. Too many traders got burnt trying to d o that. I will leave that to pros.
So, just relax and read books in this gloomy time.
--------------------------------------------------------------------------------------------------------------------------------------Most of them don't realize. Markets will always be there. Traders experience a feeling of missing out. They go on buying spree when market is in downtrend.
You have to play that trade differently. You have to be quick in taking profits on that trade. Do not make this time term pla y a long term.
Markets didn't fall for no reason, if they have to go back up so fast.-is least expected.
On the other side, you can choose to stay out of the market and come back when 8 EMA crosses up 50 day EMA ,
On the other side, you can choose to stay out of the market and come back when 8 EMA crosses up 50 day EMA ,
or using BOW TIE pattern (crossover of 10, 20, 30 EMAs).
( 22nd June 2006, 11:53 PM )
-------------------------------------------------------------------------------Before I delve into it, you should know that I suggest how I will do it. May not be right for you. Use your judgement. I will suggest you to get out of all right
now .
1. Alok Textiles
Trend line was broker around 75. Alok closed today at 65. Looking at the chart, I am hopefull that it will break even. This is also based on the market short
term bull outlook. But, you never know. Take partial position out. On remaining, take them out on break even (75) or if 60 levels are breached.
2. Andhra bank
Difference is Rs30. Take partial out. Remaining, trail the stop at 55. Lets target for around 70.
3. UCO Bank
Its exactly at same point when it started back in Oct 2003. Very hard to tell what to do in this case. It has support at this level. But, the stock is in downward
mood. I will leave this on you.
As you realize from above response, its very hard to say when things are so bad. I am used to seeing things in the right way. I choose when to get in and
when to get out. There are no doubts in that. When presented with a chart that is different, it is very hard to say. From my methodology, you were not
supposed to be in these stocks. If you are, then you need to get out with as little damage as possible.
Ability to give up chance trade even though you know you can make money is a trait you need when trading. You want to do t hat if chance trade is against
your methodology. Even though in short span, you might make money on a trade or two of this sort, but, overall you stand to l ose moreas u r breaking
DISCIPLINE
Initially Don't concentrate on the money. Concentrate on doing it right. You should make money as an after thought. Overview of my methodology says,
1. Trade along the market direction.
2. Trade along the sector direction.
3. Trade the stock that follows the sector direction.
Since market direction is down, you have 2 options: Short OR Stay aside.
That does not mean you short a stock that is going up. In case of Tata Tea, it is setting up for a short. But, wait for the m arket to do that too. Lets see after
Monday. Nifty is going to test 50 day EMA.
For us to go Long on the stocks, there is some more time. If the indexes continue to rise, it may require atleast 1 to 2 weeks.
sometimes if you really dont know what can happen, its better to sit out and watch than loosing money.
If the market is so good like every one is saying, we will join them too. Just a little late. Our risk is less than theirs, so are our profits.
Money Management
I always used to follow percentage risk methodology for position size calculator. This was based on Elders suggestion. After reading Van Tharps book, Volatility
did make sense for consideration.
No matter what methodology you use or even random entry, you need position size calculator for money management. I am attachi ng a file to do the same.
Feel free to modify.
1. You can change parameters identifying % risk, % volatility, % total risk etc.
2. Add more conditions, like money limit per trade, in addition to % risk and % volatility.
ATR stands for Average True Range, which gives the volatility of the stock.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Market:
I was looking at some leaders. I am seeing positive things about them. I like Reliance Industries. We need to wait for pull back for entry. Hopefully, we will get
that next week
I recommend you to read Van Tharp's book, 'Trade Your Way to Financial Freedom'. This book has various systems to choose from . Or you can use Elder's
Tripple Screen system. Any system you develop should give you:
1.
2.
3.
4.
5.
Setup Criteria
Once the setup is there, Entry Criteria
Stop Exit
Profit Exit
Position Size Strategy
You could have several other exits (like Time Exit) as outlined in Van Tharp's book.
My current setup criteria are based on Dave Landry's patterns.
Entry criteria is always pull back. For example,
N_MonthHigh setup :
1. Market is trending up
2. Sector is trending up. Stock follows sector.
3. 3/6/9/12 month high + 8 day EMA above 50 day EMA above 200 day EMA
4. Volume > 1,00,000 + Price > 100
First Thrust setup
1. Stock makes a 3/6/9/12 month high and loses 10% in the last 10 days
2. Market has turned direction
3. Sector has turned direction. Stock follows sector.
4. Volume > 1,00,000 + Price > 100
For Stops: I used to use Dave's strategy based on value of the stock. After reading Van's book, I am planning to use 3 * ATR (Volatility of the Stock). I am
also looking at Chandelier's exit stop loss.
For Profits: I used Dave's reverse position sizing strategy for taking profits. i.e., once risk is reached, take 50% position off. Set the remaining .
I am considering of changing it based on my reading of Van's book. I want to test the strategy of trailing stop with multiple of ATR,
No matter what strategy you use, you need +ive expentency ,& your inner conviction, this to be successful.
You can start with Tripple Screen system. And don't look at the history of a stock and think what you missed. Thats the enigma with these stocks. History
looks so easy. Once you step in, things are different. So, train yourself not to think about history.
Indian markets so far are doing good. Looking at the charts, there should be a pull back this week. MACD has nice divergence and it worked. Hopefully, the
markets will pickup after the pullback and cross above 50 day EMA.
visual soft:
see chart from year 2000 to current date. The chart has 4 peaks. Now it is at the base of the 4the peak. Until 100 is taken, I would not enter this stock. Why
100? Draw a line touching all the bases. This line will end up close to 100. Incidentally, 100 is also 50 day EMA point, which is resistance right now. In the
short term, MACD histogram is positive. Hopefully, in the next 2 weeks, depending on the market, the stock crosses 100. But, expect drawdown in the mean
time.
time.
How do you know it is overbought or oversold. Use oscilators like Williams or Slow/Fast Stocastics or RSI etc.
Or, something has been up for 3 or more days, avoid buying. Wait for 2 or more down days (< 7) to buy.
Similar for shorting in the opposite way.
did not like the reversal today with high volume. This might be attributed to the stake sale news. Lets wait for couple of days more to see whether it will
recover from the reversal. You could use the slow stochastic crossover to enter.
It does not matter if you use MA or EMA. What matters is you using the indicators consistently to get buy or sell signals. When you make 10 trades, each trade
signal should have been taken based on same indicators. For this, define how and when you buy/sell a stock. What conditions should exist before you consider
a stock. What should happen there after for you to buy. How will you determine the risk you are going to take. How will you t ake profits.
.................................................. ..................
Here is the example, why SAIL has come to your consideration.
A.
1.
2.
3.
4.
5.
Lets say you had this Buy Criteria written down (This is called SETUP):
Market is trending up or turning with MACD divergence
Sector is trending up or turning. Stock is following sector.
8 day EMA crosses up 50 day EMA
Volume is above 1,00,000
Stock price is above 50
B. When will you pull the trigger? From the above, the stock is identified based on your setup criteria. Here is what you wro te down should happen for you to
pull the trigger.
1. Stock should pull back a minimum of 2 days and less than 7 days.
2. Enter above yesterday's high + x. If today's close is close to yesterday's high, then day before yesterday's high + x.
C. What is the risk?
1. You will be using 3 * ATR (Average True Range equivalent to average of High-Low for last 10 days, baring gaps)
D. How much position size should you use. You use the Excel I attached in previous reply.
1. You will be using 1% risk of your Principal.
2. Max 3% risk open positions
3. You willing to take volatility of Principal per day for a stock = 0.5% of Principal
[i]E. How will you take profits.
1. Will trail stop at 3 * ATR from price. Once 1R (R - Risk) is reached, stop will be trailed to 2 * R.
This is an example on how you take trades. Take out guess work. Even if you make 3 positive trades out of 10 trades, you will make money. Concentrate
more on Position Size and Exits (Risk and Profits) than the setup and entry. Most traders do the other way. They are more wor ried about setup than the exits.
They think about exit after an entry. Sometimes, they never have an exit strategy. Abimanyu Style!!
It does not matter you lose on 1 stock. 1 stock does not verify your strategy. You have to look statistics of 10 or 20 trades which have been made
consistently. Then you can determine your strategy is working.
Sail is looking good. Buy above yesterday's + x. Don't forget to think about exits.
..............................
So, indexes did go up. There are very few instances in the market, where you can say it will go in a direction with some confidence. In fact, one of the
objective in trading is to stay in the market. i.e., play small, risk less and focus on accumulation. This will help you stay longer in the market to take
advantage these easy moments. If you risk more, you will get busted. And you will bust anyone who mentions STOCK word thereafter (you might have come
across people who are anemic to STOCK word by now).
I was following Reliance Industries and wanted to recommend. I forgot. Recently, I did not recommend any stocks because, the market has still not reached a
point of confirmed trend. I am looking for 8 day EMA crossing up 50 day EMA for indexes. When I recommend some stock in this thread, I am cautious and
want to make sure there is high certainty. I did not scan recently. I will do that and put up a list if you want to choose.
EMA check
-- There is a reply if you go back 4 or 5 pages on checking health of the market. I use 3 EMAs. Short term EMA (8), Intermediate term EMA (50) and Long
term EMA (200). Uptrend is confirmed when EMA 8 > EMA 50 > EMA 200. In other case:
EMA 8 < (crossed down) 50 - Bad (Down Trend started)
EMA 8 < (crossed down) 200 - Worse (Down Trend Confirmed)
EMA 50 < (crossed down) 200 - Bear Market Confirmed
I use the above criteria to look for trends. I like Reliance Industries for
1. EMA 8 > EMA 50 > EMA 200.
2. It is in Oil & Gas sector which trades independently of the market.
3. Had a nice pull back for entry couple of days back.
stock can be overbought or oversold condition for long time. Normally, stocks move in waves (like waves in ocean). You buy when the wave is down (pull
back). When there is strong demand, the stock continues to stay in overbought condition. But, eventually, there will be profit taking and the stock pulls back.
you buy when EMA 8 > EMA 50 > EMA 200, you can avoid lot of false signals. What this may mean, you are not catching the trend early. You are not catching
the bottom. Risk is less. I don't know about reward. You can make money when you follow this technique too, instead of catching bottom.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,
Now you are asking why people buy at bottom. People who do that fall into different category players.
1. So called Long Term players. They look at P/E ratio of a stock and buy some shares.
2. Short term traders who look at the oversold market and make short term trade.
3. Amateurs/Gamblers who look at a price of a stock and compare before the stock has fallen and think it is cheap and buy it. But, they don't have an exit
plan.
When do you sell/profit. This has to be defined by you. Stop/Profit exits must be based on your risk level and comfortability . For example, I could use risk
based ATR, support, % risk, loss amount etc. Similarly, profits can be taken by trailing stop and let the market hit your sto p. Or using % profits. Please read
Van Tharp's book on 'Trade Your way to Financial Freedom' on Exits.
8 EMA crossing down 50 day EMA is an absolute sell condition. Most people buy at 50 day EMA. If that buying did not salvage that stock, then it is going down.
Holding that stock doesn't make sense. Think about it. If people used this simple technique, they would have been saved in last months downslide. 200 day
EMA is a buy for funds. They might help. But, you should wait for the stock to come back with 8 crossing above 50 for buying again.
RIL cannot be said to have overbought codition, as there was a pull back recently. Overbought condition can be seen using oscillators liek Williams, Stocastics,
RSI. If the stock remains above 80 for some duration, it can be considered overbought
You can determine the market strength based on the no. of stocks that come up in the scan. A month back, I used to get tons o f stocks ready for entry. I had
to look on how to eliminate the stocks from the list to display the best. Now, I only got 7 stocks as setup, not even ready f or entry. This explains the strength
of the market.
----------------------------------------------------------------------------------------------------------------------------- ----------
I just pointed what is missing in Elders Triple Screen Methodology. He does not consider market and sector into consideration in this methodology. Not that he
does not look at them when he actually trades.
Neither he talks about how to put stops and take profits. So, Elder's first 2 books are a good start. You should read Dave La ndry's books for Setups and Van
Tharps book for Money Management and Exits.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
I didn't understand your question about 'HOW TO HANDLE LOSS'. What do yo u mean by that. When you enter a stock, you know how much you are risking.
You are accepting that risk. If you are not accepting that risk, then you shouldn't be in that stock. You should accept loss or gain as same. Remember, just
because you made gain in a stock doesn't mean you are running away with the money to the bank and never coming back
For example:
Lets say in a span of 6 months you made 20 trades. To make it simple, lets say you made 15 wins and 5 loses (this is hard to achieve). You might be happy
when you made those 15 wins. But, if you do not have good trading strategy, money management and mental strength to stick wit h your defined
methodology, you might give back what you gained in the 5 loses. The example is to show you- how the result of not one trade matters but over multiple
trades.
So, strive to achieve consistent results, risking less and focus on accumulation. In the initial stages, defining and streamlining the process is more important
than making money. Don't gamble. Use smaller positions
.................................................
Dabur's ATR is Rs9. RIL ATR is Rs47. Each stock has different volatility. You need to choose a stock that you are comfortable with its volatility. That is were
position sizing will come into play. Volatility based position sizing for Dabur will give you more size than RIL. For example, if you are comfortable with a swing
of Rs500 per stock in your portfolio, your position size for Dabur is 500/9 = 55 shares. For RIL, 500/47 = 10 shares. Further, you may choose to filter your
selection based on volatility. You may choose not to trade stocks that have ATR < 20 and > 100. Thats up to you. Everyone has to customize the system
based upon themselves. You need to understand who you are to do this. Are you a low/medium/high risk taking person?
There is nothing in ITC or RIL that makes me think they are going to pull back. In general, a stock has to pull back. It cann ot go up forever. Somebody has to
take profits. RIL 2 days earlier was in pull back. There is no way to tell when they will do it (other than if they cross Bollinger Bands). Just follow the market. If
it pulls back, then identify stocks that also pulled back. Then enter.
About RIL. You should understand one thing about trailing stop and profit exit. If you want to make money, you need leave mon ey on the table. When you
trail stop, you are leaving some profits. But, this is essential if you want to make more. So, trail the stop = 3 * ATR = 3 * 47 = 141. So, your stop = 1079 141 = 938. Or you could put a stop below previous base at 970. Its up to you. As the stock goes up, raise your stop to captur e profits. If it goes down, do not
change the stop.
You need enough capital to withstand drawdown. This is more important if your timeframe is long term. You will not have the luxury of taking out the trade
when it goes bad like the short term players. If you are long term, if the trades goes down, you might consider buying in more rather than taking out. So, you
need more money. Minimum 5,00,000. More is better
..................................................
1.
2.
3.
4.
5.
6.
7.
8.
9.
Reliance (Wait for pull back)

ITC (I don't like the V pattern with a narrow channel. How long this pattern can continue?)
Dabur (Nice Pull back. Ready for entry.)
RelCapital (Enter above last 8 days high)
Wipro (Nice pull back. Ready for entry)
SatyamComp (Wait for 1 more day before entering)
Infosys (Wait for 1 or 2 days before entering)
Amarajabat (Enter about 6 days high).
Colgate ( I would have liked for it pull back more. But, still ok to enter).
These are the stocks I have been following

................................
Research on mutual funds that return > 15%. Pick company (that manages mutual fund) with reputation and history. Given India's growth story, select funds
that give you exposure from high to medium risk. Distribute the percentage based on your comfortability.
Technically, you could buy this stock if

1. It takes out 2 days high. or
2. If the Slow Stochastic crosses up and MACD does not cross down
I will look to sell the stock if

1. Takes out my stop based on 3 * ATR, if I used point 1 to buy.
2. If MACD crosses down, if I used point 2 above to buy.
See, when you enter a stock, you need an exit strategy. An entry will never determine whether you make a loss or profit. An exit will!!!. Inspite of this
information, most of us only concentrate on Entry than Exit.
Having said the above, I will take this trade based on positive MACD, coming out of divergence. From here on, it depends on t he general market condition. If
the market continues to go up, you could see this stock going up from pull back
See the attached charts.
Sectors that are doing good:
1. IT (Leaders - Satyam, Infosys, Wipro, TCS)
2. OILGAS (Reliance)
Sectors that are OK:

3. Metals
Sectors that are still lying down:
All the others including
1. BANKS
2. AUTO
3. Consumer Durables
4. Capital Goods
5. Health Care
6. MIDCAP
7. SMALLCAP
Overall, market is still in transition stage. Except some leaders, most of the stocks are down. This can be seen through MIDCAP and SMALLCAP index. Only
exception has been IT and Oil sectors. So, trade cautiously in sectors that are performing better.
None of the stocks are interesting. Some are in transition stage, like the general overall market. Wait for couple of weeks more to see the actual market trend
before jumping in any of the transition stocks.
Pull Back for entry:
As you might have read already, there are 2 levels you need consider before you open a position in a stock.
* Setup
* Setup
* Entry
--------------------------------------------------------------------------------------------------------------------------------------
Set Up
05 July 2015
03:11 PM
Setup tells you the scenario under which you will consider that stock for opening a position.
eg:
1. If you are trend follower, you will select a stock only if it is trending up or down. You will avoid stocks if they are in trading range.
2. If you are a break out player, you will only consider a stock if it has been in trading range for some time.
3. Various Patters: Double bottom, Double top, First Thrust, Head & Shoulders.
Entry
Specifically tells you how you will open the position (buy/short) in a stock.
eg:
1. If a stock is trending, you will buy at pivot point.
2. If a stock is trending, you will buy after a pullback and above today's/yesterday's high + x.
3. If a stock is in trading range, you will buy 1 day after breakout.
4. Each pattern has a way to enter a position after the pattern is complete. For example, in Head and Shoulder's patter, after the right shoulder forms, a line is
drawn touching the lower shoulder, neck and right shoulder. You need to enter when this neck line is tested.
Determine what suits you and what makes sense.
One of my criteria for entry is Pullback. Pullback makes sense to me because,
1. I don't want to buy at high.
2. I am ok with missing action in the mean while.
3. I am not ok knowing that somebody is making profits by selling to me at high price.
4. According to Elder: Buying at recent high is believing in fools theory. Because, when you buy, you plan to sell to somebody at even high price. So, if you buy
at high price, you are believing some other fool will buy from you at even high price.
After a pullback, Second criteria for my entry is buying above today's or yesterday's high + x. I use this criteria because,
1. I want to make sure there is still upward movement in the stock.
2. I want to buy when the stock is going up and not down.
3. You can never determine the end of downward pull. As the stock goes down, you reduce your buy point.
No criteria is full proof. There are downsides to the above Entry criteria.
1. Inspite of today's/yesterday's high + x, the stock might trigger and reverse.

-----One way to avoid some of these wrong take offs, is not enter position if the open price of a stock is greater that your entry price on that day. So, at the
beginning of the day, make sure the stock does not have a open price more than your entry price.
2. Pull back may continue. You should consider based on the stock/market pattern whether it is still pull back based on profit taking or sell off. It is prudent to
avoid pull backs that are more than 5 days.
Most important as I was say (preach) is, select a way to do things repetitively. Try out on atleast 10 trades and see how it works. Modify to suit yourself. Don't
make changes for each trade.
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The pull back is to enter as a buy or short, depending on whether the stock is in uptrend or downtrend.
Can be seen that way. If we do believe downtrend is going to start, what is our condition for shorting and when will we exit?
Shorting Condition
8 day EMA is testing 50 day EMA for nifty and sensex.
OR MACD crossing down (this will come little late)
Exit Condition
If 8 day EMA will cross up 50 day EMA, will get out.
OR if you use MACD crossing, then getout if crosses back up.
Profit Target
Previous Low will be your first target. Obviously, if it did reach there, I am sure it is going down more.
I must admit, this is low risk and high reward play. But, make sure you do exit if indexes cross or some other criteria as set by you before you take position.
Remember when trying to determine turning points. Run on the first sign of trouble. Don't wait and hope.
. Its ok to miss an entry. If the market continues to go up, we will find lots of entries. Its better to be wrong than lose money. Or you could play with smaller
position
That was huge pull back. RIL volatility is 47. On friday, High - Low = 68, with a reversal, opening at high and ending close to low. It took 5 days to go from
1020 to 1100. It took 1 day to come back from 1100 to 1020. This tells you the balance of power between upside and downside. Sometimes, this may be in the
heat of over all market and just fade off next day. So, in these conditions, we wait for next day or two to see if the stock recovers and is in pull back mode
rather than sell mode. All this text is for new entry. If you are already there, your stop is in place. If the stock hits the stop in the next couple of days, you are
out. Let the market hit the stop rather than you take it off. Why, because, no body knows it is going down until it goes down. Daily noise should not make you
change previous plans.
Dabur
--It had reversal too. But, not bad like RIL. Today I was looking at the volume. On the upside, volume is low, compared to the May month's downslide. Thats
something to take note off. Even though there have been 7 days of pull back, there has been not much downside in the last 3 days. An entry above the high of
last 3 days + x is still valid
Given the drawdown in RIL on Friday, it is prudent to wait for 1 more day. If it recovers on Monday, we will revisit it.
How much pullback? I currently do not follow %. I just eye ball the chart. Looking at a chart, I can tell if it is just a pull back or sell off or can go either way.
When it can go either way, like RIL, I wait next trading day for more light.
I agree with you that Dabur is not suitable for day trading.
My suggestions are not for day trading. They are for short term trading, holding for couple of days to weeks.
See, when you enter a stock, you need an exit strategy. An entry will never determine whether you make a loss or profit. An exit will!!!. Inspite of this
information, most of us only concentrate on Entry than Exit.
Having said the above, I will take this trade based on positive MACD, coming out of divergence. From here on, it depends on the general market condition. If
the market continues to go up, you could see this stock going up from pull back.
--Look at the chart. I was not comfortable with the narrow channel. That doesn't mean it will not go up in that channel. Observe there is an outlier channel.
Friday draw down was due to market in general. If it goes down below Friday's low, I would be little concerned. If it does, may be it is changing the narrow
channel trend or it is going down. That only time is going to tell. As long as 8 day EMA is above 50 day EMA, our bias should be upwards. Try the chandelier
stop 159. ITC ATR (Average High - Low) is 9. At stop of (range between 2 to 3) * ATR should be OK. Chandelier uses 3 * ATR.
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I am still sceptic about the market. Except some leaders, other stocks have been low. You can read it as not so great market (unlike the bull we have seen
I am still sceptic about the market. Except some leaders, other stocks have been low. You can read it as not so great market (unlike the bull we have seen
before) where only the best/blue chips do good. Others stay low. So, continue to concentrate on the best sectors and stocks in those sectors. Avoid others.
Hopefully, these leaders pull the others overtime.
I don't enter directly into a stock. I want the stock to go up enough to trigger my entry point. This triggering point's objective is to make sure the stock is
continuing the upward move after the pullback. This way, you can avoid those pullbacks that lend themselves into sell off. This triggering point can be either of
the following:
1. today's high + x. If the stock's today's volatility comparable to its ATR (average volatility over 10 days) and ends up close to Low of the day, you can use.
Choose x so that High + x - Close = (70% to 90%) of ATR.
2. If today's high + x is close to previous day's high, use Previous day's high + x. Here x should be below 25% of ATR. Look at Colgate. Friday's high + x
provides better proof net than today's high + x.
3. N day's high + x. Use this if there was a failed attempt on Nth previous day to go up. Buying above this failed attempt gives you a sense of security of the
stock going up. Again, choose x to below 25% of ATR. Look at RelCapital. Going above June 27 high is better option. Look also at amarajabat. Using this
techinique would have avoided you in buying these stocks.
x is more of an approximation to assure yourself that the stock has enough will to go up. Consider stock's ATR in calculating x.
The Position Sizing Price Graph Bar allows one to automatically view ATR, 3* ATR Stop Loss how many shares should be purchased based upon a 1% or 2% Risk
Management Rule while using Average True Range as a basis for stop losses
........................
1. Look at the volume from May 1st to June 26th. This was the time of its drawdown. Compare this volume to period June 27th to today. Volume during
drawdown was low compared to specially high volume during recent updays.
2. Belongs to Oil Sector, which is one of the 2 best performing sectors (the other being IT sector).
3. It does not have the V like pattern. I am looking slower transformation from the recent downtrend. This stock has it.
4. 8 day EMA crossed up 50 day EMA. This is my condition for going long.
5. Its setup as First Thrust pattern to go long.
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Either way, I don't trade breakouts. It requires different method of trading. There tends to be lot of false breakouts. Requires trying multiple times with low
stops. You may have lot of small losses (consider also commissions for buying and selling) and may do good once in a while. Don't get me wrong. Trading
breakouts still can make you money. It just needs different approach.
Rather, what I look for is, after the breakout, the stock pulls back and does not go back in to the trading range or triangle in this case
Couple of things:
1. I know some of the stocks have been mentioned by other members for buy. If you are comparing with my take on then, you will be confused. Each of us
have different trading methodologies. Each will produce different results. For example, my way of trading may produce 3 winners out of 10. But, when they do,
they may erase the money you lost. Other trading methodologies may produce 7 winners out of 10. But, they may result in less profits then mine. So, each of
us have different way of looking at things.
2. Like stock selection, stock elimination is as important. We have so many stocks. How do you pick the right one. What constraints do you use for eliminating
those stocks that have less probability of making you money. Following constraints help me focus on few:
a. One of the constraint I use for going long is short term EMA (8) cross up Intermediate EMA (50) day EMA. This condition will virtually eliminate lot of down
stocks. It also makes you buy close to 50 day EMA (when the stock pullsback), which is a sweet spot for many traders.
b. Other condition you can use is to pick a stock in the strong sector. In effect, you are eliminating all the other sector stocks.
It all depends on where you entered. If you just bought, use 350 (below previous base). ATR (Volatility of Sterlite) = 37. Consider trailing stop 3 * ATR. As you
make profits, consider locking profits by trailing stop by varying (reducing) the multiple of ATR.
Avoid dogs for now. Consider only leaders in IT sector for now. If you can't afford them, may be you are undercapitalized. Undercapitalization will fail you,
inspite of good system.
-- Trading is a mind game. Try to forget the past. Don't trade to regain loses. If you do, your analysis will be skewed. Trade objectively, with no emotions. Trade
because a stock gives you a signal based on set of conditions set forth by you. Ofcourse, this applies to every body (including me. I slip into that trap now and
then).
If a stock opens higher then the previous close and then thats the high of the day, its called reversal (not exact def'n). If you want to buy a stock tomorrow, and
a stock gaps up open and does reversal, you should avoid the stock. How can we do that. Wait for first 15 minutes to see if the gap is bullish gap. If the stock
continues to go up above the opening price, then it is ok to buy.
Why does the reversal occur? Mostly done by the market makers. If they see lot of buy orders at a point, they open the stock up high and get everything. If
there is no demand, the stock eventually falls down. But, can't explain why there are so many in this stock. Might be played out daily.
. Lets consider couple of scenarios.
1. Market goes down south from here. Lets use Nifty index for sell condition. If Nifty goes below , sell the stock.
2. 100 is close to previous base of GujAmbCement. Put the stop for break even.
Currently, I have a bias for downward market movement. So, my suggestion might be little negative.
..My bias is downwards. Nothing in the indexes is telling me that. I am looking at U.S. markets to come to the judgement.
1. Nasdaq is at worst levels. 200 EMA long gone. 50 day EMA crossed down 200 EMA long ago. Recent support level of 2100 (1 month support) broken.
2. Health and Utility stocks are rising. These sectors only rise in recession time.
3. Geopolitical suddenly changing to worse. Iran, Korea and now Gulf war.
Now, this may not happen to Indian markets. But, since there is not follow through to Wednesday rally, chart is not rosy either. Hopefully, Indian markets show
resilience. That time will only tell. So, I am adopting wait and see attitude on Indian markets scenario.
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We will use the following to identify the start of downtrend. Since, we are determining the turning point, our stop will be close to exit otherwise.
1.
2.
3.
4.
If Sensex goes below July 7th. This is the low of the recent base and also the high of previous pull back on June 26th.
If MACD crosses down. After June 19th crossing up, it never crossed down.
If 8 day EMA crosses down 50 day EMA.
Depending what signal we use, we will use the opposite to exit. In case of signal 1, we will use 11000 to exit.
Same can be pointed in case of Nifty.

Market turned. Point 1 came true. This will be followed by Point 2 and Point 3. Major support is at June 14th. At that point, it will be double bottom. If that
Market turned. Point 1 came true. This will be followed by Point 2 and Point 3. Major support is at June 14th. At that point, it will be double bottom. If that
doesn't save, then the market is doomed. However, there are intermediate smaller supports. If the market stops at these levels, we may for trading range.
Can you short? Market is not yet oversold (RSI = 50). Lets see if we can find stocks that already made a move. Our stops will be far, since we missed the
moved today. Or else, we can wait for next pull back. By that time, we will have a better picture. Consider the following for short:
When market goes down south, nothing holds, except Health Care, Utilities and commodity related stocks (Oil & Metals). Cements are doing good. Can they
resist the storm? Also, consider 8 day EMA crossing down 50 day EMA to get out.
Based on oscillators (RSI, Williams, Stocastics ....), still it is not oversold. Around 45 for RSI. Still worse is MACD crossing down with histogram negative. There
is a chance to attempt to go up after 5 days down. But, thats daily noise. Overall, the trend down is confirmed. Lets consider Down as long as MACD is negative.
Do not open new short positions now. You shouldn't have covered shorts either. The downside just started. However, it depends on your trading strategy. My
strategy is to get lot of gains with less number of trades taken and higher risk. Another strategy may be to get lot of winning trades with small gains and
smaller risk. Either is fine as long as U fine tune it with no. of trades taken and consistency with risk.
Here is my suggestion for you to consider. There are two steps you need to think about before taking a position. They are:
1. Setup
2. Entry
Does not matter if you are using Technical Analysis or Fundamental Analysis. Lets take Fundamental Analysis, since I know you use it. You look at a company's
fundamentals and find that company provides multiplied growth quarter after quarter and year after year. You like the management of the company. Its P/E
ratio is low compared to stocks within that sector. So, you determine that it is a well run company and available at low cost. You determine that you want to
invest in it. So far, you just have a SETUP.
Now you need determine the condition when you will enter a position in the stock. You don't want to enter when the stock and its sector is tanking. When the
market itself is tanking. At that point, it does not matter how good the stock is, how cheap the stock is etc. The conditions have to be right. I will get back to
you with some examples if there are any entry conditions from Fundamentals perspective. I know from technicals point of view if you want to consider.
1. Buy
2. Buy
3. Buy
group.
4. Buy
only at 50 day EMA. 50 day EMA is the heart beat of the stock.
only when 8 day EMA crossing above 50 day EMA. This is more stringent than 1.
when some stocks in the selected sector are also having condition 1 or 2 satisfying. Using this condition, you are making sure your stock is part of the
More safety net.
when Market Indexes are satisfying 1 or 2. More safety net in addition to 3.
I like to follow conditions 4, 3 and 2. But, you could choose to be lax only select one of the above conditions. Thats fine.
I like to give example of farming. Farmer determines to use a particular seed because of its high growth and higher output (SETUP). But, the farmer chooses
conditions of season and weather to finally plant the seed (ENTRY). He doesn't do it in summer when there is no rain. If he does, inspite of the seeds higher
output, he may get lower result or nothing. Why, conditions have to be right!!!
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Enough said. TVS Motors has been in continuos downtrend. Draw a trend line from peak of 170 to current price. The stock is below the trend line. Until it
crosses this trend line, there is no hope. If it does, we can see some change in trend. May not be up. What is different in this downtrend versus other stocks is,
the downtrend is slower along 50 day EMA. That means, less chances of correction. More the stock goes away from 50 day EMA, high chances of correction.
Aftek:
Read above about Setup and Entry.
Draw a trend line between 140, 120 and 100. If that line is broken, then consider for Entry. For your current position, get out if the stock comes down from
current trading range between 50 and 60. If it goes up, consider point around 70, where the trend line touches. That may act as resistance. If it goes beyond
70, then you got your multibagger. If not, it comes back to trading range of 50 to 60, I would come out of the stock.
For condition 3, IT index. Be sure to check stocks that are part of IT index. Recently, I bungled with OILGAS index. Index was showing good only because of 1
stock, i.e., Reliance. Thats no good. You can get information on the stocks in a index from BSE or from NDTV site. Search in this thread on NDTV.
For condition 4, follow BSE500. Sensex only tracks 50 stocks. Thats no barometer to check the entire market. Infact, I got side tracked and started following
Sensex. However, since Sensex and Nifty are followed through in general, be watchful of important levels. Like 10,000 for Sensex.
---------------------------------------------------------------------------------------------------------------------------WE R CONTINUE OUR LEARNING FROM GREAT VVONTERU
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Stop below previous Support (thats what I call base) is a good approach. Not previous low. I used to use previous low in the beginning. Used to get stopped out
a lot. Then the stock would go in the direction I intended to, leaving me with bad taste in my mouth.
If you don't have at least 2 * ATR for stop, you are not giving any room to the stock for noise.
.
Stock: Bank of India (BankIndia)
Sector: Banks (They are the weakest to go after)
Market: Pointing down. MACD crossed down. 8 day EMA crossed down 50 EMA
Setup: 8 day EMA crossed down 50 day EMA. Below recent major support 95, now major resistance.
Entry: 2 days of pull back. ATR 6. Recent low 85.25. Previous low 82. Lets make an entry at 81 below previous low.
Stop: minimum 2 * ATR = 12. But above resistance 95. 95 - 81 = 14. Lets make it 100, around 3 * ATR. However, closing above 95 decisively should give us
hint to get out.
Profit: There is a major resistance at 80, thats were the stock recently found support. After that, it has minor supports at 60s and 50s.
. Cements are not doing good. Neither do other stocks like reliance, ITC, tech stocks. I don't lose hope over here. Until the market indexes break major
resistances, they can still recover. But, if your Stop gets hit, get out.
ATR
-- I use 20 EMA of ATR(15). It does not have to be exact. The idea is to understand how much the stock swings in a day. So that your stop doesn't get hit
before you test your strategy for atleast 2 days. Thats why I suggest a minimum 2 * ATR.
Broadly, a system consists of Trading Strategy and Money Management (Position Size Calculation). Trading Strategy consists of
1. Setup Criteria
2. Entry Criteria
3. Risk Criteria
4. Profit Taking Strategy
There are hundreds of stocks. As a trader, initially you will ask, which one stock should I buy? Setup should tell you that. A simple example would be Channel
Setup. In this setup, you consider a channel of N no. of days. You will consider a stock if it goes above that channel. Lets say you are conservative buyer. You
will only consider to buy a stock if it breaks out of 52 week channel.
Once you select that stock, now you have to decide at what point/price you will enter. You can just enter as the stock breaks out of the channel. There are
numerous false breakouts. Either you are willing to attempt numerous times these breakouts or use other strategy to buy into the stock. I use pullbacks after
breakout to avoid false breakouts.
Most important whether you will make it or not is decided by Position Size calculation and Exit strategy. If you don't have a sound exit strategy, you can make a
winning INTO losing position. Or a losing position into a more losing position.
If you don't have Position Size strategy, you can succeed 11 months and lose all of it in 1 month because you took high risk trades in that 1 month and used
If you don't have Position Size strategy, you can succeed 11 months and lose all of it in 1 month because you took high risk trades in that 1 month and used
same position.
Minimum Stop = 2 * ATR
Maximum Stop = 3 * ATR
Actual Stop = Use previous support/resistance
So, your stop will be between 2 * ATR and 3 * ATR.
ATR(14) is ok.If waiting/holding for 1 year will help stocks popup, then everybody will do that. Buy and Hold is a pre-2000 thinking.
By 1 year span, if you are trying to convey to me that you are a long term player, you should know what the stock must be doing within the 1 year. How low or
high can the stock go. What fundamentals will help the stock go up in a year. You need to validate these along the 1 year. Just holding and hoping will not
help!!!
I am a short term player. I don't have the expertise to tell you where the stock will be in a year. I can only tell you in the next couple of weeks. You should ask
some other member who depends on fundamentals.
Each of us wish the stocks trend. But, after a huge fall, stocks take their time to form a trend. Until then, they just move in trading range. If you are a trend
follower, it is safe to be out during this time. If not, you will get burnt during the choppy trade.
Looks like that. In any case, it is just a setup so far. Entry condition is that, SENSEX goes above the neck line and pulls back to test the neck line successfully.
I would suggest you guys look at all the banks. Something sure is going on with all the banks with high volumes breaking out of the trading range.
Set Up 8 dma Crossing 50 dma : All the stocks except Ranbaxy have crossed this set up 12 to 14 days ago and started pull back with in 2-3 days for 6 to 7
days. Then they have started moving up again for 5 to 6 days and have gained around 8 to 12 % from their lows. Now we need to wait for pullback to take a
position.
the set up was favourable to take a position 4 days ago during the pullback or the sector analysis did not favour it. Or it went unnoticed.
I think you use dma. I use EMA. For CIPLA, 8 day crossed 50 day 2 days back. If you are following dma, thats fine. You could enter the stocks if you get signal
based on DMA as long you use it all the time, like I do EMA.
Looking at the action in indexes, I was not comfortable in recommending a buy. Indexes are still churning. A move above or below the trading range of the last
month is desirable, unless the stocks can trade independently of the general market.
Having 8 day EMA crossing 50 day EMA satisfies the SETUP condition. That includes the sector action. Wait for Entry i.e., pull back. Lets also wait for the market
indexes to cross the recent trading range. There might be slight pull back tomorrow. But, overall indexes are taking time and resisting downfall.
slope of 50 day EMA vs. crossing
-- U can use any strategy as long as you follow it all through for signals. Any setup + entry condition should give more than 50% probability when you test.
Because, we don't need to even think to get 50% success. It is either Buy or Short like heads or tails when you flip a coin.
Decision to Timing-. Up or Down ?
Sectors Up:
-- Banks (Good Volume. We have 1 day pull back after almost 10 day's of upside)
-- Cement
-- Pharma
Others:
Trading Range like BSE500
Initial leaders like IT are stuck in trading range now.
The fact that the indexes were up inspite of US stocks downward path is encouraging. However, the indexes are still range bound, just stopping at the top of the
range. Tomorrow's upward movement will get them out of the range.
So, you have couple of choices. Sit out till the indexes come out of the range. Or, if you don't want to miss in case indexes come out of the range tomorrow, buy
stocks at CLOSE + 75% of their ATR (ATR is available in iCharts.in). Logic is, if indexes move up, your stop gets hit and you buy into the stock. If the indexes
move downwards, you will not buy into the stock asStocks in pull back mode:
Note on Selection Of Stocks:
One of the problem facing traders is selection of stocks. Rather I would say elimination of stocks to remain with a few for consideration. That is the reason I
have strict setup criteria. Why do we need few for consideration. Because, currently my position sizing algorithm lets me have only 3 open positions. So, how do
I select 3 stocks from so many. Not that others don't go up. But, I can only expose my capital so much, unless I increase my capital or risk criteria. But, I am
only comfortable with the risk I have for the current capital.
The reason I am providing so much verbiage is, you need to customize position sizing algorithm to suit yourself. Some are willing to risk 2% on a trade. I can
only do 1%. Some are comfortable with swing of 1% capital per day. I am only comfortable with 0.75%. With the variables I have in the Excel sheet, determine
how many trades you can have open.
Then, have a setup criteria to select the best. If you can trade 10 stocks, your selection criteria must be lenient than mine. Because, a setup criteria must suit
the system you have. A setup criteria must end up giving you enough trades to fit your risk criteria. Finally, the amount of profit depends on the frequency and
no. of trades with the system you developed.Add to your setup criteria to limit them to 5.
Market:Its hanging in the trading range. Either it has no will to beyond the trading range or is waiting for some positive news to get up. BANKS are still doing
good.
52 week high or 3 month high means you are selecting the channel length. You want to consider stocks above/below the channel. Higher the channel length,
stronger/weaker the filtered stocks. Stock market consists of tons of data. There are alway attempts to filter the price and volume data. All the indicators are
just filters of price and volume data. 52 week high or 3 month high is another attempt to filter out those stocks that fall within the channel.
You have picked good momentum stocks overall. I have ranked them. Always restrict to 3 stock per sector. Concentrate on Banks, Cements and Pharma. Wait
for the indexes (BSE500, SENSEX, NIFTY) to come out of the trading range. If they don't go above the trading range next week, do not go long on stocks.
Dave is suggesting minimum channel length as 2 month for filter. If you start from stocks that made high compared to yesterday, 1 week high, 2 week high ....
1 month high .... 2 month high,- Dave is asking to consider 2 month high.
Channel length depends on your discretion and the market in general. After the recent downfall in May and June, if you have asked for 2 month high in July, you
might get nothing. In that case you have to try 1 month.
Channel is not some concept, but just a name for setup criteria. Think channel as 2 parallel lines, 1 top and 1 bottom determined by the period (2 month or 12
month etc). There are stocks that fall between the 2 parallel lines and those fall above and below. From the 90s, they has been general understanding that buy
stocks that make new highs and short stocks that make new lows. So, those stocks that appear above the top of the channel are considered for buying. Similar
is the case for short for stocks that fall below the bottom channel line.
also does "bollinger bands" comes under the channel length concept,
According to Elder in "come into..", buy stocks on the SMA of Boll Band., sell at the upper channel or when it is going below the upp.channel, and buyback
when it again reaches the SMA. how is it related to volatality?
Bollinger bands are drawn considering the volatility of the stock. I use it to avoid buying (rather sell) when a stock goes above the bollinger band
Elder likes to buy stocks when they come between two short term sma/ema. For example, if a stock comes between 10 and 20 ema. He calls it sweet zone.
Stock always go up and test the emas now and then.
Quote: how do we know that the trading range is over, does it means that it breaks above the resistence level?
Yes. However, there are false break outs. Dave suggests to wait for pull back after the break out. Currently, the indexes are hovering around the top of the
trading range. Same with U.S indexes. All are waiting for Tuesday's Federal Reserve Interest Rate Hike. If there is no hike, you can expect a big rally. So, I
advise wait for Wednesday. You will get hint from tuesday's U.S market.
Based on overbought condition. Nobody can say what market can do in the next day or week or month. It is just the probability of pull back after an overbought
condition increases. With stock market, we are just dealing with probability. If you have not read probability in Math, it is time for you to revisit.
Sometimes you can predict based on fundamental or news. For example, look at how indexes are just dancing around the top of the trading range. If you go
and put money now, you will scratch your head as they go up and down ... It is common sense that they (big money) are waiting for something to happen
before making decision either way. Closest event is the Fed increase of interest rates on Tuesday.
when trading, think at high level. Look at market indexes. Look at what sectors are doing good and bad. Look at economics of the market, like interest rates,
when trading, think at high level. Look at market indexes. Look at what sectors are doing good and bad. Look at economics of the market, like interest rates,
inflation etc. I know it is lot of work. But, thats what it takes. . EMA is a Trend Indicator
RSI, Williams, Mommentum, MACD, Stocastics etc are categorised as Oscillators. Anything which as boundaries (eg: 0 - 100) is an Oscillator. You can use 10 or
15 period for oscillator. Normally, anything above 80 is considered overbought and below 20 is oversold. Now, these numbers depend on period you choose and
stock/index you are looking at. Look at the history to get the number suitable for overbought and oversold indicator.
Recently, I found another way to look at overbought and oversold indicator. If you have data, find out Percentage of Stocks Above Moving Average 20, 50, 100,
200 etc for Today, Yesterday, Last Week, Last Month. If these percentages go above 80, then considered it overbought. If the percentage of stocks go below 20,
then consider it oversold.
Question 3:dave says, that even though that market is falling, go for sectors thatare strong, and then strong stocks in that sector, what is
Your view on this?
If you can only go long, ya why not.
I guess you are far away from what Trading means. You are more into investing mind frame. Stops doesn't make sense anymore. Talk to someone who knows
fundamental analysis. Ask them what to keep and what to drop.
-3/10 Oscillator is a price oscillator of 3 day and 10 moving average similar to MACD. You can construct it by using OSCP function or change the parameters of
MACD from 12,26 to 3,10. Oscillates above and below the Zero line.
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can you help me by explaining me how to read the future trends in charting?
Broad question. U could use trend lines, EMAs (& other tools) to read the future direction of a stock with certain confidence level. U have to understand that if
there is 70% chance of stock going up, there is still 30% chance the stock going down. We can't achieve 100%.
Even though I suggested a chart is good or bad, I don't want you to take my word in exiting the stock. Each trader's objective in exiting a trade is different.
When U entered the trade, what was your exit strategy. Please follow your plan.
Market:
Its impressive how the indexes came back. Even better is the action in banks (BANKNIFTY). Will there be a follow on to this? Will the volume and volatility be
better this time? Lets wait and see.
Keeping Ego Out of Your Trades:high priority
This tenet was told by my friend before I started trading. When you have big paper loss, you are not only losing money on that stock. But, more importantly, it
will affect your current and future trades till you close the paper loss trade. So, take the loss and move on.
Here is the example of daytrading using EMA crossovers. Use % profit taking method to take profits. For example, by looking at a chart if you feel the EMA cross
down will happen in Rs10, thats were your stop will be. If the stock goes in your favour, then you take profits as multiple of R is reached.
R = 10
1st R = 50%
2nd R = 25%
3rd R = 15%
4th R = 10%
Ofcourse, change the % to your convenience.
U need some improvisations to fine tune the no. of trades. U need to use 10 min, 15 min and hourly for selecting the direction of the trade.
Entry:
After crossover, try to enter when the price touches 8 EMA. Better if U enter when price touches 50 day EMA. Thats the low risk high reward play.
Exit:
Use bollinger bands. Don't forget to take % profits when price moves above the bollinger band. And never enter when price is above bollinger band.
Split V in the middle. U have left \ and then right /. Left represents stock going down. Where they meet is the low point. Right represents stock going up. I am
saying, buy low, but don't buy when stock is going down. Buy when stock is going up from low. See the attached image.
I can't help you in terms of setting your portfolio. I can give you following advice though.
1. Have only 2 stock per sector.
2. total Limit to 5 stocks. No. of stocks depends on your capital amount. But, 5 should be good enough to manage.
3. Try choosing momentum sector stocks. Look at banks. I don't see a bank stock in your portfolio.
Long bars. Careful with stops. Weekly chart looks better than daily. On daily, there was an extended pull back. It will take couple of days to week to see better
chart. So, if U say long term, lets apply weekly time frame. I think it looks good with MACD cross up, histogram positive and with nice pull back for entry.
Volume is not so great during period June to Sep compared to earlier times.
RSI is an oscillator, used in Trading Range. Use that for entry condition. For setup, ema1 (8 days) > ema2 (22 days) > ema3 (200 days) + MACDSignal, you
should get plenty. Recently, due to steeper index action, there might some going of the net due to MACD cross down. I suggest taking MACDSignal out of setup
criteria when scanning. But, when U are looking at the chart, then apply. MACD works best when the stock is nicely trending. When the stock is consolidating,
MACD doesn't work. Let me attach what I got from Amibroker. You should find more of these files in my thread.
I would advise U to read some books. Play with low amounts. More time U spend learning to trade, better Ur results will be. Good Luck.
Very nice chart. Perspective for next week. Market indices (Sensex & Nifty) have been up for a 4 days with good volumes. They are in overbought condition with
some price resistance. Ideally, I would like them to go past the resistance and then pull back. Still nothing is lost. I am still bullish on the market.years back I
realized I loved trading. Trading is something I never get bored. I can take a trading book and read several chapters in a row. I look at charts of stocks one
after another. I can and I am doing this day in and day out. Still I am not bored. So, that keeps me going. Everyone should find in their life some kind of
interest. I think I found that interest in trading. I will see how long it will last. Having said that, I am taking a break from this thread for next couple of weeks.
See U later. Good Luck with your trading.
Entry:
Your one of the filter criterian for the entry in the stock:
stock having 8EMA > 50 EMA. ( I am not saying it is right or wrong.)
- 8 trading days means apprx 2 weeks. 50 trading days means apprx 2 months. What is the relation of price and volume during these 50 days and last 2 weeks?
- Does chart talk to you?
You can find many of filters. e.g. 2 months high, 20 day breakout, 10-20-30 set up etc etc.
In software terminology, these filters are nothing but wrappers over P/V relation.
A relation between price and volume is the most important factor.
If one uses filters ignoring P/V then it is just like driving a car without understanding how the car works.
Only thing where filters can help in is to provide a psychological check.
Initial Stop:
Volatility based stops work better in trend following system. Volatility based stops are prone to drawdown. During the drawdown, the equity at risk has to be
adjusted.
Most of the time stock/market is not trending. If one wants to succeed in trend following then one needs to look at multiple markets. To do all this, it needs
tremendous discipline. That is what famous TURTLES did.
Do you sense something? Are you drifting away from swing trading to trend following?
Exit:
What if stock is trending?
What if stock is ranged?
What if there is a stiff resistance on higher time frame?
Position size:
Let us say R is a initial risk.
If one is already having a postion in the stock then,
if profit reaches to 1R,

should we add another pie of position?
should we book half of the profit?
Expectancy:
E = % of win * avg money win - % of loose * avg money loose.

How E can be greater?
These thoughts are just like fuel to propell you further
As long as you have a plan for them and take those trades as part of your trading. For example, your trade plan for this trade can be:
Setup Condition:
Stock goes outside the bollinger band. You can make this more stringent condition if you get many stocks. Stock Open is above the bollinger band.
Entry Condition:
Days close of the tick which is above the bollinger band.
Exit Condition:
Days high + X
Profit Condition:
Trail the stop above previous day's tick high + x or 10% profit met.
The above is just an example and change according based on your liking and experience. This kind of trade is a CONTRA Trade. Going against the trend. You
should be quick in either getting stopped out or taking profit. You will make lot more trades and will have lower loss and lower profits. Time frame for most of
these trades can be 1 day to a week. Hope you are getting the point. Each kind of trade has a character to it. No trade is wrong or right as long as you have a
plan as above. And you execute that plan to take those trades when you get them.
.THIS IS GIFT OF VVONTERU
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Rolta
-- Can't argue with what happened today on high volume. Hope there will be follow through. When you add more to a position, here are my suggestions.
1. Never add more than 50% of your existing position.
2. Consider adding after multiple of Risk is reached. If you have risked 20 points, wait at least the stock has gained 20 or 40 or 60 points above your buy point.
3. Add only on pull backs. So, don't add now. Stock went above its normal volatility (above upper bollinger band) and may slightly fix in the coming days. Look
at LUMAXIND for idea.
The idea is, never make a winning position a losing position.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Aftekinfo
-- You are right. The stock lacks momentum right now. You should have entered after the stock cleared the trading range. One of the reason I go after the
sector is for momentum.
Look at Banks sector. How they are flying. For short term traders, momentum is everything.
Don't you think - good, a consistent (or sudden) above average volume in a stock is a sign of something imminent---a sign of some dramatic change in the price
movement---upwards or downwards movement in the stock price. I want to buy into stocks before they make a upward correction in the stock price, not just
find a good trading range.
I agree buying into stocks that get above average volume.
Everyone wants to buy into a stock before they make a upward correction. There is underlying risk of picking the bottom. Today the market has recovered and
may make you feel that way. What if the market went down. Rather, have a consistent approach that defines when you will buy, that gives you an edge. That
way, you might have failures. But, overall, the success should override failures.
Guys, look at the stock CLASSIC DIAMOND (Gems sector). Its amazing how it is flying. It doesn't it even give chance to enter. Still, I wouldn't enter until it has
a correction.
Currently, we don't have tools that can display sector charts. Only website that offers sector data is http://www.ndtvprofit.com/ I had to go through so much
strain in getting sector data. Every day, after I load data, I run AmiBroker code to generate sector charts. When I talk about sector performance, I am not
talking about 1 day. I am looking at the sector just like a stock.
use ADX for scanning. For volatility of a stock, I use ATR.
I took position in this stock because of the following reasons:
a) Its quarterly and yearly results was expected on the 8th Aug. Around 1-2nd Aug. The trading volume had started increasing in the anticipation.
b) Low valuation: It was in the range of 220 to 280 for many months.; and the fundamentals have seemed to have improved. Like all good stocks it had
corrected.
c) IT companies had reported good results: strong dollar.
I'll keep in mind your advice about re-entry and adding more.
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the site i visit is twonahalf.com, i suggest u to visit that site. it provides basic information of which stocks are in uptrend, candelstick bullish/bearish patterns,52
week high/low, speed of trend,etc. register urself first, they send u an activation number, activate ur account, and get started.and do my own discretional
analysis.
Market has come out of the trading range. It is up 3 days. Will pull back pretty soon. At that time, consider these stocks for entry.
......................
. Historical volatility can be calculated using EMAs of ATR. You know stock's volatility by comparison to another stock. A stock that has ATR = 100 is more
volatile than a stock that has ATR=10. Volalitility is about how much swing (High - Low) in a day. You need this to place a stop and also to calculate position
sizing.
Lets say you are buying a stock that that has ATR=20 and close = 100. If you are putting a stop between 80 and 100, you are basically asking for the stop to be
hit. U are not giving the stock a chance to test your methodology. 3 * ATR is used to give the stock atleast 3 days to prove U are wrong. You could reduce it to
be between 2*ATR and 3*ATR based on previous support.
U need stock's volatility for position sizing. If you buy 100 shares of a stock that has ATR 100, you should expect a swing of Rs 10,000 per day. U need to ask
yourself the question, are U comfortable with that kind of change to your portfolio. If not, how much swing can you take in principal per stock per day.
A stock can be bought or short. Only 2 options. So, flip a coin before you buy or short. Heads or Tails. That gives you 50% probability to win or lose. Most setup
and entry algorithms have less than 50% chance of making you money. What makes your trading success or failure is the Position Sizing (money management)
and Stop Exit (risk) and Profit Exits (trailing stop mechanism). Do not evaluate your strategy over 1 or 2 trades. Evaluate over 10, 20 or 30 trades. The key is
making trades using the same strategy over and over again. Thats really hard. Thats called high probability trading. Read book, 'Trading in the Zone' by Mark
Douglas. The book is little bit boring, but does help in this perspective. The author challenges readers to make 10 trades consistently based on a predeveloped
setup and entry criteria
thing is, it does not matter. Think about. If you got 90% success trades over a span of 1 year with 10% failure. The success made Rs 10,000 profit. 10% Failure
made 8,000 loss. How will you evaluate this system. How about this. A system produced 70% failure and 30% success. Profits are 10,000 and loss is 5,000. Did
the percentage success matter?
So, success or failure are just outcomes of a trade where you don't have control over. Market is dynamic environment which is constantly changing. By selecting
a setup and entry criteria, you try to give more than 50% probability of success. If it fails, so fine. Your position sizing algorithm already gives you how much
you are constantly risking. If its a success, you want to make profit more than the risk. U only have control over what loss you can take when the trade fails and
what profits you can make when trade succeeds.
Most of what I write are my understanding of the market and my readings. I constantly read books along with my trading. They keep me in the loop. If not, as
you trade, there is a tendency to move away into the greed/gambling stuff.
Quote:Also, Should I buy only if there is a buy signal on the previous day or is it fine if I buy if buy signal is generated say 3-4 days back also?
As long as U are not trying to catch up. Feeling of missing out is always there. U should try to get out of the feeling as there will always be opportunities. If you
do take it, don't forget to change the entry and exit points in the Position Sizing Calculator to use the new position size.
Market is kind of overbought. But, different sectors are having different timing. Pharma has been down for some time. Look at Ranbaxy. I know from some of
you that it is fundamentally a good stock (if it helps setup, why not). It has nice crossover with pull back. What I am not liking about the pharma and cement
stocks is low volatility. But, sometimes that is good too. Low volatility compared to its historical volatility leads to higher prices. During the low volatility,
consolidation may take place
have 5 updays. I wouldn't buy it now until crossover and pullback. If U already have it, hold on. Market's new uptrend is confirmed. What that means is, most of
the stocks will come up.
In the recent days, MIDCAP and SMALLCAP have come out of the trading range. As U see (if you have followed me), we started with couple of sectors in July in
uptrend with now, most of them in the uptrend. I am seeing lot of stocks in setup. If market pulls back couple of days, there will be tons of them for entry.
I can give you tons of stocks showing this pattern. No doubt because most of the sectors are up. This is the good time to put your money as it is the start of
new uptrend and your entry will be closer to 50 day EMA.
Nice break out with good volume. Right now above the bollinger band. Let it pull back before entry.
whenever u buy stocks, first and foremost consideration has to management quality
Market:
I would have liked pullback. Are they not going to give us-DERISKING!!!
Alright, lets look at some of the stocks.
Ranbaxy nicely went off but, came back.
Amarajabat did ok. Its not like in text book isn't it!!! As far of now, I am very positive in the market. As long as you pick stocks in right sector (didn't they all
come up?) and with good tradability/trending you should make money.
Here are my reasons for me being positive about the market.
1) Look at all the sectors. They are all up except Metals.
http://charting.bseindia.com/charting/index.asp
2) My scans are giving high no. of stocks.
3) Most of the stocks are showing above the 50 day EMA with good volumes with few exceptions.
4) Indexes are up more than straight 5 days.
5) Look at Advances versus Decliners and other charts at http://www.icharts.in/breadth-charts.html
In the end, it is always about what methodology U follow. Simple put, what criteria U are looking for before U take a position. My setup criteria is:
1) Market Indexes (BSE500) should have at a minimum 8 EMA cross up 50 EMA

2) Sector of the stock should have at a minimum 8 EMA cross up 50 EMA
3) The stock has at a minimum 8 EMA cross up 50 EMA.
Criteria 1 is satisfied. Criteria 2 is satisifed for all except Metals. Criteria 3 will depend on the stock. If my methodology gives me a buy, I buy. It does not
matter even if I feel I will lose money. Similarly, I will not buy a stock if my methodology doesn't give me a buy, inspite of my feelings of making money.
I (or Neither U) do/should not fear losing. Loss and Gain are just outcomes of trading a stock, which I or U do not have control over. However, we do have
control over how we manage loss or gain. We limit loss by constant risk, increase gain with muliple of risk. Difference of this is going to make U winner.
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Swing Trading
05 July 2015
03:13 PM
Swing trading is synonymous for short term trading with a span of 1 day to couple of weeks.
Q. If A Particular Sector Has 20 Stocks, Out Of Which 10 Stocks Are
"top Gainers" And 2-3 Stocks Are "top Losers" For The Last 63 Days,
And For The Last 7 Days , If The Proportion Of "top Gainers" Has Increased, Does That Mean The Sector Is At Intermediate Uptrend?
-- U ask tough questions. May be. I normally look at an index of the sector or the aggregate chart of sector. I peak into some of the stocks in the sector to see
the trend. Normally, U would want the chart of the stock coincide with the sector chart. Look at BANKINDIA and BANKNIFTY for example.
2. Or, If A Stock Is At 63 Days High, Does That Mean The Sector Is Also In An Intermediate Uptrend? If Yes, Then Why Is It Necessary To See A Sector If The
Stock Is Trending?
-- A sector is important because of the crowd behaviour. U are trying to do the best in selecting a stock. Sometimes, it acts as a limiting agent. If not, U will
have so many stocks to consider for entry. At that point, U want to pick a stock which is part of the crowd that is going up/down. It gives the stock legitimacy.
That does not mean a stock that does not follow a sector will not go up or down. As I said earlier, U are trying to do the best.
As I said earlier, be consistent in the way you trade. You might make money in the short term by trading arbitrarily. But, you will lose on the long run. Have
conditions written down for
1. Setup: When U will consider a stock for buy
2. Entry: When U will actually enter that stock
3. Stop Loss: How U will determine stop loss
4. Profit: How U will sell to make profit
Repeat trades with these conditions without emotions. Once you are comfortable with these conditions, don't change them until U apply for 10 to 20 trades and
U can assess the results.
this case, it did work. I understand the reasoning behind what you are getting at. What U are looking for is, if difference between short term ema (8) and
intermediate term ema (50) is reducing compared to difference between 50 day ema and 200 ema, then a correction can be expected.
But, if go and look at the chart earlier to May, there were several times MACD(8,50,1) went below MACD(50,200,1). This did result in correction, but not a lot
like in May.
MACD(3,10,1) also looks good. Good work.
If you are not using or entering trades in the position size excel, you are not serious as a trader. One of the hard and boring part of trading is book keeping.
But, if you don't, how do you analyze your profits and loses. Can you do business without book keeping
. Look also ATR of nifty and sensex. From high of mid May to present, ATR of the indexes and the stocks have been falling. Ideally, a breakout from lows should
be with high volume with higher ATR. Lower ATR might mean 2 things. Either its consolidation followed by higher volatility or we are going down. How and when
do we know this? Future price action. Lets not predetermine change in market direction
It is worth to look at what Timtomlee has come up with. MACD(3, 10, 1) is good. It does very good in buy signals when line crosses 0. It also gives sell when
line crosses back. But, the sell signal may not make you money all the time. It works very good when the stock is trending.
For example, look at Sensex with this indicator. From 2005 Nov to 2006 May, there were only 2 cross downs below 0. One time was in Jan'06 when there was a
deeper pull back. The other one in May when sensex came down heavy. So, look at for each stock whether it makes sense. I think it does very well in providing
entry point. It provides signal earlier to crossover. Look at how the signal would have worked for:
.........................................
1. Reliance.
Why do you feel that? Having feelings is ok. But, don't act on those feelings until you see some positive happening for the stock in the direction of your feelings.
TA says nothing great about the stock. Why bother about this stock. Why don't U select better trending stocks.
TA: Stock still looks good, even though I admit last 2 days have been bad. Not because of price action, but because of Negative Volume. Remember, buy before
news, sell after news. That is the reason it went down after the news. I don't trade based on news. Because, by the time we get the news, its tradable value is
reduced. We are at the end of the food chain for news.
This is more of a MIND question rather than a TA question.
Think hard before U get in. Not after!!!.
One of the reason you need to track trades is to specify buy and sell conditions. When you make a buy, write down the reason why you are buying and what will
make you sell. Once you hold the position, continue to see whether conditions have changed.
So, I ask you why you bought the stock. If the answer is NEWS, then did that change in the last 2 days. Or is the downturn in the last 2 days has made you
fearful of loss. If you get swayed by a tick up or tick down, it will be hard to trade. Do not have emotions for failure or success. One trade will not matter. Even
if you make a success in this trade, what guarantee is that you will be positive at the end of the year.
Use the points below in changing how you trade.
1. An outcome of 1 trade does not matter.
2. If you make 40 trades a year, think how your portfolio can be positive after those 40 trades.
U could have 20 loses straight. But, you could also have 5 gains straight that make up 20 loses. What is the point in pondering about 1 trade loss.
Let me give an example. Let say you have 15 gains and 25 loses in an year. Lets use marbles of 2 colors, green and red for this example. Green, win, red a
loss. Put these marbles in a bag. Draw each marble out of the bag.
Q) What are the chances of drawing a red or green marble. If the probability of drawing a red marble is more, then did that change the portfolio amount at the
end of the year.
Q) Is it possible to draw 10 red marbles out of the bag straight.
Q) Similarly, is it possible to draw 10 green marbles straight.
A) Yes, it is possible, probably both with a lower probability.
The key in this example is, the marbles are constant, the action of drawing (trading) is constant and the risk (stop loss) is constant for either green or red
marble. Can we do that with stocks? Stop Loss! yes with position size management. No matter what stock trade we lose, our loss should be constant. Position
size should only change. Trading methodology should be constant. Don't trade arbitrarily. If not, results will be skewed.
3. Before you put a trade, assess the loss using Stop. If you can't take the loss, pass the trade. Because, once you put a trade, nobody can determine its
outcome.
4. If you can't think in terms of total trades in a year, probably you are trying to gamble. Remember, there is no easy money in stock market. U might have
realized this already in the last couple of months
. I look at price chart. Question: Is it in trading range or trending?
2. Answer: trending, then go to 3. Trading Range, avoid the stock.
3. I look at the volume chart. Question: Does the the recent uptrend has good volume?
4. Answer: yes, then go to 5. No, avoid the stock.
5. Look at MACD. Question: Is there divergence against the trend?
6. Answer: No, then go to 7. Yes, avoid the stock.
7. Look at Williams oscillator. Question: Is the stock in overbought condition?
8. Answer: No, then stock is selected for setup. Yes, avoid the stock temporarily.
8. Answer: No, then stock is selected for setup. Yes, avoid the stock temporarily.
At each of the step above, I am constantly asking myself why I should (not) trade this stock. Once a stock is selected based on setup condition, I look for my
entry condition to satisfy to put a trade. Hope the steps will help you.
Why would any one buy above the bollinger band. Either way, if you have chosen to trade intraday, why did you keep beyond that. It tells me you just gambled.
You thought you can just make a profit. You were not prepared for the loss. You never had a exit plan. Please read my earlier comments on Mind game.
TA: I am not worried about the price action today. I am more worried about the red volume. There were many trades that took profits. And why not after
gaining 40 points in one day. There may be another down day to make it come below bollinger band. Other than that, chart still looks good.
Stock looks good by price and volume action. 180/190 is resistance. Should you hold it? You should have thought about that before you bought it. CMP is 173,
exactly where you bought. What changed?
Now, it all depends on how you trade, what your expectations are etc etc.
Couple of options based on your trading methodologies profit taking:
1. Take half after 1 * ATR is reached and set the stop to break even. If you adopt this method, when a stock makes a high bar, continue to take % of shares for
profit. This is the reverse of buying in small lots.
2. After 1 * ATR is reached, continue to trail the stop to 2 * ATR to capture profits. Here you are not taking partial. You are holding on to 100% of the position.
Ofcourse, there are variations to this. You can rate your profit trade based on 1 * ATR - C, 2 * ATR - B, 3 * ATR - A. If 3 * ATR is reached, you can completly
take out the position since you have attained A rating for your trade.
3. And there may be other way to do it based on your objectives.

Before I used to follow Option 1. Recently, I changed to Option 2. Whatever option you choose, stick with it. Do not chose option 1 for a trade and use option 2
for another trade.
That depends on how U normally go long. Here are some of the options for buying on pullback. These do not apply if you are a breakout player.
1. Long at pivot point. Low of the pullback.

2. Long after stock takes out pivot successfully. On Friday, SIEMENS took out the pivot point successfully.
3. Long between two short term EMAs. Choose either 10 and 15 or 8 and 13. Whenever the stock pullsback to between EMAs, buy. Probably on Thursday. U
should note that some stocks have different pattern and may not pull down rather than create a base. SIEMENS is a perfect example. It created more of a base
than a pull back.
Depending on what option you choose, results will vary. As I always say, stick with one option for all trades. Don't change between trades.
I want U guys to think the other side of the trade and ask why not. Thats how we together improve our trading.
We need different opinions, with a basis. Thats how we learn. As a trader, we need to think like a lawyer. We need to think other side of the argument (trade)
and check if we have an edge
see the difference between mine and theirs. They are going in detail. I just eye ball the chart. I am looking for easy ones.
My criteria for stock is based on KISS methodology. Keep It Simple Stupid. Why? because U want to repeat the process. If U can't repeat the process,
probability will not work for U. Having such a detailed analysis will make it hard to repeat the process.
Another thing I noted from their analysis is they use Weekly charts. That kind of takes out the noise in daily charts. Its good and bad based on what time frame
U base your decisions on. So far, how did they work out for U. Do they give help on position and stop loss management
I observed that stocks kind of go in 3 stages. Most of the time, at the 3rd stage, they cannot keep up the previous momentum (buyers don't want to buy so
high and sellers had enough profit) and either correct or go sideways before they continue up. Thats what is happening to CLASSIC and so many stocks. What
are our options if we are already in the stock.
1. Stay in the stock till its corrected.
2. Use MACD cross down to get out of the stock. Get back in after MACD cross up.
I don't need to tell U that under various options will have different results. Try to follow only 1 option all the time.
..........................................
don't know if its the right time to short. Indexes had a good day on Monday. So far they are going up, why really short. Unless U want to use overbought
conditions in indexes and short them. At this point of time, resist shorting individual stocks. U should have plenty of stocks to fill your portfolio on the long side.
Pick one from each sector.
Reading indicators is tricky as they don't work all the time. MACD does not work if the stock is going sideways. It shows negative histogram and crosses down.
Nothing bad at that point. Can go bad or the stock may resume the trend. Don't make a decision using just MACD if the stock is going sideways. MACD is a
trend following indicator.
Some stocks are joining the party late. Buying at the beginning of the trend is the low risk high reward play. Ofcourse, determining the beginning is the key. I
use crossover to determine the beginning. There may be other ways U could explore.
There is no mystery: I look for good fundamentals, good financial results (past records); more importantly---as far as imminent share price appreciation is
concerned---consistent above average volumes and good technicals (this I've started to learn recently); of course, one also needs to consider the market
sentiments and the its current trend.
.........................
Long Term (I used Weelky time frame for 1 year duration)
-- Came out of the pull back on weekly too. MACD crossed up and histogram is showing positive indicating up trend.
I am a short term player. I am not good at saying some stock will be there at X position in 3/6 months. I believe any stock can go anywhere as long as good
environment exists. U trail the stop.
. Here are the most important aspects I think
1. Be consistent in whatever U do. Have a trading plan.
Trading is a small cycle. Write down the trading plan and following it consistently. Do not be swayed by the market. Market always lures into taking different
paths. Do not get swayed by it. Your trading plan is the Tree which you use it as support in the cyclone of the market.
Do you know about Odysseus and Sirens story. See the attached image. The mast is your plan. Sirens are the market. You drowning in the sea represents
loses.
2. Use Position Size for Money Management.
Use the calculator I attached earlier. Without using this, there is no hope for your success. Remember, with one Win you are not going to the bank and taking
your money. With one loss, you are not going bankrupt. If you are serious, you are there day in day out for many years. Position sizing with constant risk is the
your money. With one loss, you are not going bankrupt. If you are serious, you are there day in day out for many years. Position sizing with constant risk is the
key to winning on Long Term.
3. Stop Loss and Profit Taking

Devise a strategy for exits. Exits are the key to your winning. If you look around on Traderji, most people are bothered about entries. We are looking at the
wrong place.
4. Continue to read.
Give yourself many years. Accompany trading with reading. Continue to experiment and improve.
As I suggested in the recent replies, from now on, I want this thread to have your viewpoint. Specially, I like to hear contrary view points. This is what I want to
know.
1. I like to know views on pull back methodology.
2. New techniques for Stop Loss, Profit Taking methodologies.
3. When I suggest a stock, I want your pros and cons of taking the trade.
Basically, I want to avoid TUNNEL view. Lets share and improve our trading.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,
--- Consider EXIDEIND for entry.
Looks good. Look at the weekly chart for entry and stop due to the sideways action in daily. I think entry should be CMP.
Other way for entry based on daily is to use MACD crossup. We need this if a pull back turns into short term sideways action.
Entry into Exide Ind should be ok. Do not compromise on Stop Loss. Reduce position size instead.
Pros: Good trending stock with better price action.
Cons: U can see from the chart that it is overextended. It might get corrected to test 50 day EMA.
If U have questions on what approach to take, just choose one. Stick with that approach when similar situations arise.
woudn't lose hope at. Once U put a position, stick with it using a stop loss. Unless U have preset conditions that will tell you to take out the position
prematurely. And U follow these preset conditions always
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Lets take EXIDEIND for example. Lets say Ur trading plan says U will carry 100% position. But, U saw on August 29th, EXIDEIND hit 375. U got tempted and
took out 50% profit at 375. Today EXIDEIND is 385. And hit yourself hard because you don't have the 50% position as the stock still has momentum. So, my
friend, do what Ur plan says inspite of how market is behaving. On the long run, you can atleast look at your trades diary and see what is working and what is
not...............
. Elder stresses so much on keeping trading diary. Not many traders realize this. In addition, you should do a monthly checkup on your trades. Check why a
trade successfully worked while the other didn't work. See how you could have done differently. Beware that the market can be a bad teacher. It can award you
for bad trades and punish you for good trades. Keep that in mind when you change your trading plan. Avoid frequent changes.
.........................................
Q: some little birdie told me that stocks which hit 52 week high are more attracted to go higher. And same is case with 52 week low, they tend to go lower.
How far is this true????
Isn't that true. A stock will hit 52 week high because its got demand. Every one wants to own it. That is the reason its going up. Similarly, a stock is 52 week
low because no one wants to have it. All of them are selling it. Ofcourse, this understanding is at high level.
That is one reason you see websites recording stocks that hit 52 week high and 52 week low. Sometimes, there is speculation that can drive the stocks up.
Once that speculation is over, stock drops like a thud.
If U think about it, it works both ways. Lets do the 52 week low again.
Everybody is selling. Stock has been falling for long time. After some time, a stock is worth something that reflects the companies value: its cash flow,
technology, real estate etc. So, at that point, is it worth going and shorting. Why do we want to sell a stock when its value is equal or less to that of the
company.
Similarly, a value of stock as it goes up happens in 3 stages. In the 1st stage, the value is less than the fundamentals of the company. At this point only few
people know about this fact. In the 2nd stage, value is equal to the company's fundamentals. In the final stage, value is greater than the company's
fundamentals. The final stage is called the speculation stage. Everybody knows about. Like the stock CLASSIC.
Speculation stage is a good and bad. Good because the stock price increases faster as many people know about. Bad because, sooner or later, there will be
correction as the prices get too out of hand. Those people who join late will be hurt.
How do you know this stage. From TA point of view, the momentum should tell. From fundamentals, Trailing and Forward P/E of the stock compared to industry
and other stocks in the industry.
As I said in earlier posts, its very hard and risky to catch bottom and top. U may forsee stock or market is going to fall. Timing it is very hard. Rather approach
it based on your objectives. Be it either entry or profit taking.
Even though 52 week high is good for buying, the risk to reward is much better if you buy close to 50 day EMA. This also depends on the general market.
Before May downfall, if you were waiting for a stock to buy at 50 day EMA, you would have been waiting for ever. Right now, most of them are trading close to
50 day EMA. So, there is no straight answer.
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Day Trading
05 July 2015
03:15 PM
As U might have realized it by now, day trading is hard. Trading itself is a hard game. Day Trading multiplies that. I have a reply in my thread about day
trading techniques using cross over, stop loss and profit taking. % profit taking method makes more sense in day trading due to lot of volatility in a day.
Is there a correlation between open, high,.... Sometimes there is. For example, when reversal (open=high, close is near low o f day) occurs, U can predict
next day stock to go down.?- that u plan ALWAYS in day trade.
,,,,,,,,,,,,,,,,,,,,,,,,,,
Cut your loses!!!. But how? This is one area I am currently working. In many books you read, 'Cut your loses and let your win ners run'. But, they don't tell
how you cut your loses. I sent a mail to Dave Landry once about how we can cut loses. His opinion was that it is hard to cut loses due the recent stock price
action. Stocks are not going up immediatly after a pull back as they used to. They take their own time, going sideways before going up. So, here are some
questions that we need to answer. And we should be able to use the answers consistently without guesswork.
* how do you differentiate between a stock going up versus going sideways versus going down?
* When can we lose trust in a stock before it hits your stop
* Should we continue to hold a stock when you see a clear signal from the indexes like we saw today
I recently was toggling with MACD cross down as a signal to take out the position. MACD cross down occurs due to stock being not able to keep up with
earlier momentum. After the crossover, the stock can trade sideways and go up or go down. We have 2 options.
Option 1:
Cut loss when MACD cross down and avoid that stock until next pull back.
Option 2:
Cut loss when MACD cross down. Get back in when MACD crosses up. This happens if a stock is going sidways and then goes up.
Downside using MACD:
If using Option 2, U might have multiple crossovers if stock is going sideways. However, you could use last N day high to ent er again.
Application:
Choose a particular option. Don't change them between stocks.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Can we use MACD(3,10,1) for cutting loses

1. Be consistent in whatever U do. Have a trading plan.
Trading is a small cycle. Write down the trading plan and following it consistently. Do not be swayed by the market. Market a lways lures into taking different
paths. Do not get swayed by it. Your trading plan is the Tree which you use it as support in the cyclone of the market.
Do you know about Odysseus and Sirens story. See the attached image. The mast is your plan. Sirens are the market. You drowni ng in the sea represents
loses.
2. Use Position Size for Money Management.
Use the calculator I attached earlier. Without using this, there is no hope for your success. Remember, with one Win you are not going to the bank and taking
your money. With one loss, you are not going bankrupt. If you are serious, you are there day in day out for many years. Posit ion sizing with constant risk is
the key to winning on Long Term.
3. Stop Loss and Profit Taking
Devise a strategy for exits. Exits are the key to your winning.
Give yourself many years. Accompany trading with reading. Continue to experiment and improve.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
for a new learner,Objective: Select a stock that has liquidity, is tradable and is trending. Liquidity is defined by the aver age volume and the ease with which
you can buy and sell stock. Tradability can be ensured by avoiding stocks that have lot of gaps or have huge bars. A trend ca n be identified using EMA
crossovers or just looking at a chart.
One hint I will give U though. Survival in the market is more important than making money. Survival is all about preservation of capital.
Planning, Consistency, Will Power, Knowledge of Probability theory and be the best person in real life. Trading is all about what you are made off. It shows all
your weakness once U enter a trade. Trading requires U to be the best person U can be.
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NOW WE WILL ENTER ,SOME PRACTICAL INSIGHT -NOTES FROM CV

.................................................. ........................................
Here is a piece by Bo Yoder .
Stages of a Trader
This is where the neophyte trader begins. He has little or no understanding of market structure. He has no concept of the int errelationship among markets,
much less between markets and the economy. Price charts are a meaningless mish -mash of colored lines and squiggles that look more like a painting from
the MOMA than anything that contains information. Anyone who can make even a guess about price direction based on this tangle must be using black magic,
or voodoo.
Stage Two: The Hot Pot Stage
You scan the markets every day. After a while (sometimes a good long while), you notice a particular phenomenon which pops up regularly and seems to
"work" pretty well. You focus on this pattern. You begin to find more and more instances of it and all of them work! Your con fidence in the pattern grows and
you decide to take it the very next time it appears. You take it, and almost immediately your stop is hit, and you're underwa ter for the total amount of your
stoploss.
So you back off and study this pattern further. And the very next time it appears, it works. And again. And yet again. So you decide to try again. And you
take the full hit on your stoploss.
Practically everyone goes through this, but few understand that this is all part of the win -lose cycle. They do not yet understand that loss is an inevitable part
of any system/strategy/method/what have you, that is, there is no such thing as a 100% win approach. When they gauge the succ ess of a particular pattern
or setup, they get caught up in the win cycle. They don't wait for the "lose" cycle to see how long it lasts or what the win/ lose pattern is. Instead, they keep
touching the pot and getting burned, never understanding that it's not the pot (pattern/setup) that's the problem, but a fail ure on their part to understand
that it's the heat from the stove (the market) that they're paying no attention to whatsoever. So instead of trying to unders tand the nature of thermal
transfer (the market), they avoid the pot (the pattern), moving on to another pattern/setup without bothering to find out whe ther or not the stove is on.
Stage Three: The Cynical Skepticism Stage

You've studied so hard and put so much effort into your trading and this universal failure in the patterns only when you take them causes you to feel betrayed
by the market, the books and materials and gurus you tried to learn from. Everybody claims their ideas lead to profitability, but every time you take a trade,
by the market, the books and materials and gurus you tried to learn from. Everybody claims their ideas lead to profitability, but every time you take a trade,
it's a loser, even though the setups all worked perfectly before you played them. And since one of the most painful experienc es is to fail when success looks
easy, this embarrassment is transformed into anger: anger at the gurus, anger at the vendors, anger at the writers, the semin ars, the courses, the brokers,
the market makers, the specialists, the "manipulators". What's the point in trying to analyze and improve your own trading wh en there are so many dark
forces out to get you?
This excuse-driven blame game is a dead-end viewpoint, and explains a lot of what you find on message boards. Those who can't pull themselves out of it will
quit.
Stage Four: The Squiggle Trader Stage
If you don't quit, you'll move into the "squiggle trader" phase. Since you failed with patterns and so on, you figure there's some "secret weapon", a "holy
grail" that's known to the select few, something that will help you filter out all those bad trades. Once you find this magic al key, your profits will explode and
you'll achieve every dream you ever had.
You begin an obsessive study of every method and every indicator that is new to you. You buy every book, attend every course, sign up for every newsletter
and advisory service, register for every trading website and every chat room. You buy more elaborate software. You buy off -the-shelf systems. You spend
whatever it takes to buy success.
Unfortunately, you stack so much onto your charts that you become paralyzed. With so many inputs, you can't make a decision, particularly since they rarely
agree. So you focus on those which agree with the direction of the trade you've taken (or, if you're the fearful sort, you lo ok only for those which will prove to
you how much of a loser you think you are).
This is all characteristic of scared money. Without a genuine acceptance of the fact of loss and of the risks involved in tra ding, you flit around like a butterfly
in search of anything or anybody who will tell you that you know what you're doing. This serves two purposes: (1) it transfer s to others the responsibility for
the trade and (2) it shakes you out of trades as your indicators begin to conflict. The MACD says buy, the sto says sell. The ADX says the market is trending,
the OBV says it's overbought. By the end of the day, your brain is jelly.
This process can be useful if the trader learns from it what is popular, i.e., what other traders are doing, and, if he lasts , how to trade traps and
panic/euphoria. And even though he may decide that much of it is crap, he will, if he doesn't slip back into the Cynical Skep ticism Stage, have a more
profound appreciation -- achieved through personal experience -- of what is sensible and logical and what is nonsense. He might also learn something more
about the kind of trader he is, what "style" suits him best, learn to distinguish between what is desirable and what is pract ical.
But the vast majority of traders never leave this stage. They spend their "careers" searching for the answer, and even though they may eventually achieve
piddling profits (if they don't, they will of course eventually no longer be trading), they never become truly successful, an d this has its own insidious
consequences.
Stage Five: The Inwardly-Bound Stage
The trader who is able to pry himself out of Stage Four uses his experiences there productively. The trader learns, as stated earlier, what styles, techniques,
tactics are popular. But instead of focusing entirely on what's "out there", he begins to ask himself some questions:
What exactly does he want? What is he trying to accomplish?

What sort of trading makes the most sense to him? Long or intermediate -term trading? Short-term trading? Day-trading? Trend-trading? Scalping? Which is
most comfortable?
What instrument -- futures, stocks, ETFs, bonds, options -- provides the range and volatility he requires but is not outside his risk tolerance? Did he learn
anything at all about indicators in Stage Four that he might be able to use?
CreditViolet
-------------------------------------------------------------------------------And so he "auditions" all of this in order to determine what suits him, taking all that he has learned so far and experimenti ng with it.
He begins to incorporate the "scientific method" into his efforts in order to develop a trading plan, including risk manageme nt and trade management. He
learns the value of curiosity, of detached interest, of persistence and perseverance, of taking bits and pieces from here and there in order to fashion a trading
plan and strategy that are uniquely his, one in which he has complete confidence because he has tested it thoroughly and know s from his own experience
that it is consistently profitable.
He accepts fully the responsibility for his trades, including the losses, which is to say that he understands that losses are inevitable and unavoidable. Rather
than be thrown by them, he accepts them for what they are, a part of the natural course of business. He examines them, of cou rse, in order to determine
whether or not some error was made, particularly one that can be corrected, though true trading errors are rare. But, if not, he simply shrugs off the loss and
goes on about his business. He understands, after all, that he is in control of his risk in the market.
He doesn't rant about his broker or the specialist or the market maker or that vast conspiracy of everyone who's trying to ch eat him out of his money. He
doesn't attempt revenge against the market. He doesn't fret. He doesn't fume. He doesn't succumb to hope, fear, greed. Impuls ive, emotional trades are
gone. Instead, he just trades.
At this level, the trader achieves an almost Zen-like trading state. Planning, analysis, research are the focus of his time and his effort. When the trading day
opens, he's ready for it. He's calm, he's relaxed, he's centered.
Trading becomes effortless. He is thoroughly familiar with his plan. He knows exactly what he will do in any given situation, even if the doing means exiting
immediately upon a completely unexpected development. He understands the inevitability of loss and accepts it as a natural pa rt of the business of trading.
No one can hurt him because he's protected by his rules and his discipline.
He is sensitive to and in tune with the ebb and flow of market behavior and the natural actions and reactions to it that his research has taught him will
optimize his edge*. He is "available". He doesn't have to know what the market will do next because he knows how he will reac t to anything the market does
and is confident in his ability to react correctly.
He understands and practices "active inaction", knowing exactly what it is he wants, exactly what it is he's looking for, and waiting, patiently, for exactly the
right opportunity. If and when that opportunity presents itself, he acts decisively and without hesitation, then waits, patie ntly, again, for the next opportunity.
He does not convince himself that he is right. He watches price movement and draws his conclusions. When market behavior chan ges, so do his tactics. He
acknowledges that market movement is the ultimate truth. He doesn't try to outsmart or outguess it.
He is, in a sense, outside himself, acting as his own coach, asking himself questions and explaining to himself without ratio nalization what he's waiting for,
what he's doing, reminding himself of this or that, keeping himself centered and focused, taking distractions in stride. He d oesn't get overexcited about
what he's doing, reminding himself of this or that, keeping himself centered and focused, taking distractions in stride. He d oesn't get overexcited about
winning trades; he doesn't get depressed about losing trades. He accepts that price does what it does and the market is what it is. His performance has
nothing to do with his self-worth.
It is during this stage that the "intuitive" sense begins to manifest itself. As infrequent as it may be, he learns to experi ment with it and to build trust in it.
And at the end of the day, he reviews his work, makes whatever adjustments are necessary, if any, and begins his preparation for the following day, satisfied
with himself for having traded well.
...You have to put indicators in context. Theyre background information never the primary reason for a trade.
............Figuratively speaking, . . . the small trader should imagine himself as a hitch -hiker in the market. For the ordinary hitch-hiker, someone else supplies
the car, chauffeur, oil and gas. When he thinks the car is about to go in his direction, he jumps aboard and rides as far as he thinks the car will go. When he
notices the machine has been stopped by a red light, or is about to turn a corner and go in some other direction, or that the car is running out of gas, or the
brakes failing to work properly, he steps off and figures he has secured about as long a ride as he may expect. All he has su pplied in this transaction is a
modest commission and whatever brains were necessary to observe and recognize the opportunity when to get on and off.
. . . the experience of the past few years has emphasized the value of disregarding all considerations except those which rel ate to price movement, volume
and time. If one is endeavoring to realize profits from the principal swings in prices of stocks, it is my opinion that he sh ould disregard fundamental as well as
corporate statistics relating to the stocks in which he is trading, stick closely to a study of the action of the market and become deaf and blind to everything
else.
Your judgment will become poorer from the very time when you decide that you know more about the market than the market is te lling you. From that
moment your results will be unsatisfactory, for in this trading business the tape is the boss. You must learn to obey its ord ers, doing exactly what it tells you.
When you can accomplish this, you are on the high road to success in your stock trading.
By Brett Steenbarger
--------------------------------------------------------------------------------------------------------------------------1) Situation-focused talk vs. Emotion-focused talk - Traders who talk trading situations out loud--shifts in prices, looming exits, etc.--perform much better
than traders whose conversations are ventings of emotion (positive or negative). From the vantage point of cognitive neurosci ence, this makes sense: when
we're problem-focused, we're activating frontal regions of the brain associated with the executive functions of planning, judgment, and dec ision-making.
When we're in the throes of emotion, those same regions, key to trading behavior, are deactivated. Gladwell, in Blink!, point s out that our access to the
brain's frontal regions decreases dramatically as our heart rate elevates. Emotion -focused talk sustains physiological arousal, which impairs cognitive
functioning.
2) "I" talk vs. "Me" talk - I'm convinced that this subtle measure may be the best gauge of trader self -priming of all. Traders who are more likely to be
successful talk about "I". Traders in trouble refer to "me". The reason for this is that "I" reflects an active tense: "I" do things in relationships, in markets, in
life. But things happen to "me". When I'm in the "me" mode, I'm the passive recipient of events; circumstances influence me. When I'm in first-person mode,
I am the author of life's events. Successful traders experience themselves as efficacious; they prime themselves to feel in c ontrol. Unsuccessful traders
exhibit an external locus of control. They are primed to feel that situations control them.
3) On-task talk vs. off-task talk - Successful traders, I've found, display tenacity and a superior capacity for concentration. They can focus on markets from
opening bell to the close. Unsuccessful traders lack this intense focus. Much of their talk is off -task: it has nothing to do with markets. Less successful traders
IM during the trading day, surf the Web, chat with buddies on bulletin boards, e -mail, and engage in a host of activities that take them away from the flow of
market activity. Successful traders talk the market: who is in the market, how the market is trading, how they're adapting th eir strategy, etc. They are
primed for trading and competition; the less successful traders are primed for avoidance.
There is only one way to achieve success in speculationthrough hard work, persistently hard work. If there is any easy money lying around, no one is going
to try and give it to methis I know. My satisfaction always came from beating the market, solving the puzzle. The money was the reward, but it was no t the
main reason I loved the market. The stock market is the greatest, most complex puzzle ever invented, and it pays the biggest jackpot - Jesse Livermore
You will always be your worst enemy in futures trading, not your luck, not other traders, not unexpected news events and not the "markets." But this is
actually more good news. Because you cannot do anything about luck, other traders, the news or market behavior; but you can d o a great deal about
yourself. - Chick Goslin
Futures trading can be a very brutal business. If you let it, futures trading has the potential to destroy you. Fortunes far, far greater than yours have been
lost in this business by individuals at least as clever as you. Never, ever underestimate the dangers of trading the futures markets. They are populated by
people and organizations who will not flinch in the slightest as they take everything they can from you. Futures trading is f or consenting adults only. A
passion for the truth is the essential element of a sound approach to trading. - Chick Goslin
The average trader focuses too much on big payoffs. This is a stock market mentality, i.e., buy it and ride it to the sky, or sell it before the crash. Trading is
not about predicting and catching the "big" moves. This is "fantasy" trading. It is the "lottery" approach to trading which, in the end, pays off only for a very,
very few. Trading is about "seeing" momentum and positioning with it, "seeing" trend and following it.
The average trader relies too much on feel, on intuition. The possibility that any one of us is a natural market genius is re alistically somewhere between zero
and none. Accept that you will never be a world class athlete, sing a perfect musical note, or find a theory beyond relativit y; and neither will you ever reliably
predict the future. But be aware that you can know the past and see the present.
If you're going to trade futures, you might as well do it correctly; and doing it correctly means doing it intelligently. Loo k at reality. Futures trading is a
competition. It is financial warfare. You are trading against thousands of smart, aggressive, extremely well -informed, very well financed, extensively
experienced professionals. Look at the facts! Over eighty percent lose; so by definition the average trader (even the well ab ove average trader) is going to
lose--eventually. - Chick Goslin
Every trader will be tested emotionally, mentally and monetarily to varying degrees in his career. Most times, itll be extre mely unpleasant and youd most
likely want to quit right there and then. Only those who can endure this kind of hardship, learn from their mistakes and pers evere on will make it.
Ive experienced big losses, but have always been able to come back with a winning streak. So, I am no longer that sensitive about losses. I know that I can
make them back. Because of this, I am more willing to stop trading on bad days and take small or medium losses.
One of my strengths is the ability to become more aggressive during winning streaks and to do the opposite during a losing st reak. This goes against what
most people do. You should have a person who has nothing to do with trading who will turn off the trading terminal after a ce rtain amount of losses and send
you home; that would save traders thousands.
I am constantly adjusting my trading style to match specific market conditions. For example, on volatile days I generally put fewer orders into the market and
execute more directional trades, although I mostly hold them for only a few seconds.
I always set strict daily targets and limits for my profit and loss. The most important element is the stop limit, or simply the size of the loss, which will cause
me to turn off my trading screen. I try to liquidate my positions as soon as they start going against me.
A guru or analyst might have to stick to his opinion, but a trader should not have an opinion at all. The stronger your opini on is, the more problems one has
when its time to close a losing position.
We trade only price. We do not trade information. We do not trade knowledge (of the asset being traded). Nor do we trade comp uting power or expertise. We
do not trade anything at all other than price: ie: the number. Therefore since the only factor that counts in this game is th e price, it is only smart to focus all,
or almost all, our attention on this number on the pice and its movement; in other words, what the price has done in the past and is doing in the present.
or almost all, our attention on this number on the pice and its movement; in other words, what the price has done in the past and is doing in the present.
Approach the game/business of trading in this manner - an up down number game where the focus is on what the price does and not why - and you will be
on the right path to succss as a trader
You are trading against the wealthiest and most knowledgeable people and organizations in the world.Do not delude yourself, y ou cannot compete on their
terms: information, knowledge, experience, staying power, and so on.Do not spend time and energy trying to figure out why a p rice moves.Focus all your
attention and energy solely on what the price is doing.You are a trader. A trader does not get paid to understand or explain why something has happened.
The question "why?" deals with the past. The question "what?" deals with the present and provides the best clues to the futur e. And never forget that you are
trading "futures," not "pasts." Discovering the supposed "why" of a price move will provide you with little more than tempora ry intellectual comfort. Whereas
observing and focusing on what the price has done and is doing will help you anticipate what the price will do in the future. Leave the intellectualizing to those
paid for their words not their deeds, i.e., journalists and brokerage house analysts
Predictions tend to lock you into a preconceived scenario of the future making it more difficult for you to adapt to unforese en events.Futures trading is not
like betting on a horse race. In futures trading you can change your bet as the race progresses. In trading, as soon as you m ake a specific prediction about
where a market is going, you sacrifice your freedom. A trader must always feel free to change trading positions on very short notice. And most importantly,
you do not need to be good at predicting to do well at trading. If making predictions can be quite harmful and you do not nee d to be good at predicting in
order to be successful, why bother with predicting at all? - Chick Goslin
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A young basketball player is fascinated with The Shot. He doesnt think about the footwork he needs to get to the shot. Hes not aware of position on the
court or even body position in the constant tactical encounters at each end of the court. These fundamentals can make for eas y buckets or, alternatively, the
continual need to pull a great shot out of nowhere time after time. (As a trader, which mode would you prefer?)
Neither is the young player aware of the substitution pattern, game pace, or matchups except as he faces them momentarily on the court or while sitting on
the bench. The game plan is completely subordinate to hitting the shot and not getting beaten to the hoop.
It is the same in trading. - John Sweeney
The problems to which traders have set their faces have developed because their aspirations are infinitely expansible; the so lutions lie in the hope that their
knowledge and behavior are infinitely perfectible. In between the recognition of the problems and the acquisition of the quan titative and qualitative skills
needed for their solutions lies a series of searches athat must,many times, include the experience of failure.Indeed, no succ essful traders I have known can
follow their paths backward very far without running into failure.Its is not the act of failure, however, that differentiates the ultimately successful or
unsuccessful traders.Rather, it is that the successful traders get up, spend a few days healing, reaffirm what they know, and go about the business of adding
to their store of wisdom. In such a growth process the quality of persistence looms large and is virtually irreplaceable.
In the high-risk areas of the world of finance, the cold facts of probabilities cannot be changed by wishful thinking or by bemoaning the cruel realities of
life.Some people win frequently and accumulate large sums.Others are destined to lose frequently and at least as a group, los e the large sums that are won
by the smaller group of winners.The chance of success may be helped by thinking straight, negotiating low execution costs, de aling with a broker who
observes high standards of performance, and setting reasonable goals. Regardless of their intellectual capacity and the stren gth of their personal discipline,
however, most players in the futures game are destined to lose to the few.Those who cannot accept this truism are well advise d to turn their attention
elsewhere.
The person involved responsibly, both intellectually and behaviorally, with the experience of trading may, to paraphrase Theo dre Roosevelt, know at his best
the triumph of high achievement, but if he fails, he will have failed while daring greatly, and so his place will never be wi th those timid souls who know
neither victory nor defeat. Perhaps, then, in the final analysis, it may be as rewarding to travel as it is to arrive. -------------- Richard TewelesThat's the
problem with amateurs, they only have half a plan, the easy half. They know how much of a profit they're willing to take, but they don't have the foggiest
idea how much they're willing to lose. They're like deer in the headlights, they just freeze and wait to get run over. Their plan for a position that goes south
is, "Please God, let me out of this and I'll never do it again" but that's bullshit, because if by chance the position turns around, they'll soon forget about God.
They'll go back to thinking that they're geniuses, and they'll always do it again, which means that they're sure to get caugh t, and get caught bad. What most
people fail to understand is that while you're losing your money, you're also losing your objectivity. It's like being at the craps table in Vegas, and the fat
bleached blonde in the sequined dress is rolling the dice, and you're losing, and you're determined that you're not going to let her beat you. What you've
forgotten is that she doesn't care about you, she's just rolling the dice. Whenever you have jealousy as an emotion, or greed , or envy, it distorts your
judgment. The market's like the bleached blonde in Vegas, it doesn't care about you. That's why you have to put aside your eg o and get out. If you have
trouble doing that, as most people do, be like Odysseus: tie yourself to the mast with an automatic stop and take your emotio ns out of
play ---------------------------------------------------------------------------------------------------------------------------------------------------------------The typical trader will do most anything to avoid creating definition and rules because he does not want to take responsibili ty for the results of his trading. If
he knows exactly what he is going to do and under what conditions, then he would have something by which to measure his perfo rmance, thus making
himself accountable to himself. This is exactly what most traders don't want to do, preferring instead to keep their relation ship with the market somewhat
mysterious.
This creates a real psychological paradox for traders, because the only way to learn how to trade effectively is to make ones elf accountable by creating
structure: but, with accountability comes responsibility.
The crowd neither wants nor seeks knowledge, and the leaders of the crowd, in their own interests, try to strengthen its fear and dislike of everything new
and unknown. The slavery in which mankind lives is based upon this fear -----------------------------------G. I. Gurdjieff
Speculators and investors who simply guess, follow tips,rumors, newspaper talk and so -called inside information"have no chance of ever making a success WD Gann
No man can learn all their is to know about the forecasting of trends of stocks in 3,5,10 or 20 years,but if he is a deep stu dent and a hard worker,he learns
more and knowledge comes easier after years of experience" --- W D GANN in the "New stock trend Detector:
To make a success in speculation you cannot expect to buy low and sell high. You will make money when you do just the opposit e of what the average man
or woman tries to do and makes a failure and loses as a result of what they are trying to do. You will make profits when you learn to buy high and sell low.
You must learn to follow the trend in progress. . .
Racers are always looking for the quick and easy way to win. They're looking for the magic spring or the secret camshaft. Tho se things might exist, but I
couldn't begin to tell you where to go and find them. If those things do exist. they won't make you a consistent winner. The people who win consistently
aren't wasting their time looking for those things; they spend their time refining the basics and making sure they are prepar ed
Everyone is looking for a multibagger,For the next Infosys,For the next .......!!Get rich quick.
Truth is their is'nt any such stock,and even if their is one you would not know of it or maybe had it and sold it.
Don't see only the rainbows,just WALK.
1) Focus on being profitable for the week - Individual trades may go against you and individual trading days can offer little opportunity. As a senior trader
once explained to me, for the active trader, however, there are enough fresh opportunities in a week to make it reasonable to set a goal of being profitable
for the week. You won't reach your goal every single week, but the mere act of setting the goal keeps you focused. For exampl e, you don't want to lose so
much money in a single day that you can't make it back during the other days of the week. You also don't want to lose so much money on a single trade that
you can't come back during the remainder of the day. When you really push yourself to be profitable every week, you don't let individual days get away from
you. And when you don't let individual days get away from you, you start managing each trade carefully to ensure that your la rgest loss won't exceed your
largest gain. Time and again I've seen a consistent sign of progress among developing traders: they stop digging themselves i nto holes.
2) Take what the market gives you - Today I peeled out of several short positions after a spate of very negative TICK readings in the afternoon. I've learned
that such concentrated selling often precedes nasty short -covering rallies. My S&P position hadn't made as much profit as my NASDAQ and Russell positions,
but the market doesn't care about that. I took what the market gave me and started the week green. Did the market go down eve n further after I exited?
Absolutely. As one experienced trader explained to me, when the market rewards your position right off the bat, you want to t ake something off the table.
You might let a piece of your position ride if you have a longer -term opinion, but never give green a chance to become red. A winner that turns into a loser is
a double loss.
3) Always have something to "lean on" - Scalpers will notice heavy and persistent selling at a certain tick, accompanied by large offers in the order book.
They'll lean on that information to find a good entry to sell the market. If the offers disappear from the book or if new buy ers start lifting those offers in size,
They'll lean on that information to find a good entry to sell the market. If the offers disappear from the book or if new buy ers start lifting those offers in size,
they can get out quickly. Knowing you have something to lean on, however, allows you to ride out the noise between entry and exit. As long as what you're
leaning on doesn't vanish, you stay with your idea. Today I leaned on the inability of the Russell to make new highs on Frida y. When we got some morning
buying, but could not break above the early AM highs (and also above Friday's highs), I added to my shorts and vowed to stay short unless we broke the
highs with expanded buying. Leaning on the pattern of Russell weakness enabled me to stick with a good trade idea during a ch oppy morning.
So let's restate the pieces of wisdom in reverse order:

1) Before you put your capital at risk, have a well-formed trade idea;
2) When your idea pays you out quickly, take some profits;
3) Don't get caught up in individual trades; focus on profitability over a series of trades and days.
I know, I know. These things sound ridiculously simple. But it's only been in the last couple of years that I can look myself in the mirror and say that I'm
doing all three consistently. The spinning reverse dunks get the attention in basketball; the long touchdown pass makes the e vening replays; and the big
winning trades are the ones we like to talk about. The greater part of success, however, boils down to Xs and Os on the baske tball court; blocking and
tackling on the football field; and following basic fundamentals about framing and managing trades. It may not be sexy to exe cute on the fundamentals, but it
gets the job done day after day and builds a career.
My review of expert performers in such fields as chess, military, athletics, and performing arts --as well as my research review of exemplary performers-suggests that success is not simply a function of qualities of the individual. Rather, it is the fit between the talents (inb orn abilities), skills (acquired
competencies), interests, and opportunities afforded by a field that creates accelerated development and eventual mastery.
What does this mean for trading?
It means that success will not be found in better indicators, improved self -help techniques, or any of the endless parade of chart patterns, wave formations,
numerology schemes, or moving average arrays.
Rather, success is achieved when we find markets and styles of trading that take maximum advantage of our skills and talents. That keeps us focused on
markets and absorbed in them, enabling us--over time--to internalize their patterns.
Many, many times, traders do not live up to their potential simply because they are trading markets and methods that do not d raw upon their strengths.
Without that fit, they are not absorbed in what they do; frustration replaces focus and learning suffers.
If my book accomplishes nothing else, I hope that it assists you in thinking about where your niche might lie, not just in tr ading, but in life. The days pass by
quickly; life is too short to waste on anything that you're not passionate about and good at.
Rich people don't make big bets. Really rich-and smart-people don't make big bets. First they are not out to "prove" anything, they are out to make more
money, and second, they know that risk control is as important as the other two legs of speculation, selection and timing. Th at is all this business of
commodity trading gets down to, selection, timing, and risk control. - Larry Williams
Spotting the next Infosys et al is not a get rich quick scheme.
It takes courage, conviction, dilligence & above all patience.
Dilligence is needed to spot the company & then constantly monitor it's performance to see if it's living upto expectation.
Courage as an equivalent of risk appetite 'coz you can always go wrong. The company might just fizzle out after that initial promise; or produce that
occasional spark but not consistenly enough to raise itself to the big league.
Conviction to hold on through the numerous ups & downs of the mkts.
And, above all patience, as it doesn't happen overnight.
----------------------------------------------------------------------------------------------------------------------------- -----
A Trader's Morning Prayer

05 July 2015
03:16 PM
May my assessment of today's price action be based upon the facts, all of the facts and
nothing but the facts. May I not be influenced by fear, greed or the ill-advised comments
of others, which may be made in their interests and not my own. May I take into account
the past history laid before me on this chart and make my assessment based on my
knowledge, and logic, and not my emotions.
Tape Reading
05 July 2015
03:17 PM
"Tape reading was an important part of the game; so was beginning at the right time; so was sticking to your position. But my greatest discovery was that a
man must study general conditions, to size them so as to be able to anticipate probabilities." Reminiscences of a Stock Operator
1) You must know your own weaknesses. Each of us brings strengths and weaknesses to our own trading. Some find it exceedingly difficult not to tinker or play
around with the markets when trading and in the process we don't follow our systems; some find it difficult to pull the trigger; some find it difficult to endure
drawdowns of any size. Unless you know how you react to the markets and the pressures and elations of trading, you cannot compensate for your weaknesses.
2) You must understand statistics well enough to understand the limitations of trading using only history as our guide. I am constantly surprised by how many
people get this wrong. Even the so-called "experts" in trading.
3) You must learn about trading systems, many of them, many different kinds of systems. In this process, you will learn that there are many answers, many
paths to profits, but none of them are as neat and palatable as we might wish.
4) You must learn about brokers, markets, execution, risk, slippage, and other operational issues that affect trading profits. The best way to learn these issues
is to start trading somewhere using a small account. It needs to be big enough that the losses matter but not so big that you will bankrupt yourself if you lose
the entire account.
5) You must learn about yourself and how you react to all the items 1 to 4 above. This is perhaps the most important knowledge. How to fit your own
personality, weaknesses and strengths, into the trading ecosystem. You might find you are bored with long-term system, or that you can't stand looking at
screens, or that you need a robobroker to execute since you won't follow your systems closely enough. You will only learn this by being honest with yourself
and by reflecting on what works and doesn't.
The best possible way to learn is to sit side by side with someone who knows what they are doing, but this is not possible for most, so you will likely need to
find another way.
As far as a specific course of action, which is what you have asked for, I will offer one way that I think works pretty well. If you persevere and if you reflect on
your own condition honestly, you have a good chance at success if you follow this course.
1) Buy some testing software and learn some of the well-known systems that work. There are many examples of systems that work out there. Play around with
them, change them and see what happens. I'm obviously biased in my opinion of what software you should buy but I leave that decision to you.
2) Read and Study Trading. Initially, I suggest buying the Modus course. It is a very good foundation for people who don't know where to begin.
3) Start trading as soon as you think you are ready. Start small and don't worry about the profits, worry about what you learn about the markets and yourself.
Consider your initial losses as tuition that all traders pay.
4) Honestly assess yourself on a regular basis. What did you learn? what are you having trouble with? What do you need to compensate for?
5) Repeat starting at 1).

----------------------------------------------------------------------------------------------------------------------------------------------------------------------One thing that troubles many people is the high cost of software and courses. Consider however, the high cost of trading incorrectly as the alternative. If you
can't afford software, save up until you can. If you can't afford money for a course, you likely can't afford to lose as much money as you will if you start trading
without understanding what you are doing.
Last of all, don't be afraid to ask for the advice of others, even to pay for it where appropriate.
Keep one thing in mind, however, sometimes even successful traders are wrong about the reasons for their success. Trader A might think his success is due to
his fancy computers and sophisticated algorithms when in reality his success is due to his having a solid foundation and good operational execution.
Trading well is not easy, but it is something you can learn if you have the perseverance combined with the humility to be realistic about your own strengths and
weaknesses. - Curtis Faith ( Turtle Trader )
People, unless they are naturally well disciplined, are extremely open to suggestion. Folks like to be given, tips, listen to the news stories, seek out rumours in
internet chat rooms, or maybe subscribe to secret information leaked from unknown sources.
For the most part, professional traders, syndicate traders, and the specialists, do not look at these things. They simply do not have the time. Professionals have
to act swiftly, as soon as market conditions change, because they are up against other professionals who will act immediately against their interests if they are
too slow in reacting to the market. The only way they can respond that fast is to understand and react, almost instinctively, to what the market is telling them.
They read the market through volume and its relationship to price action. - Tom Williams
Know the enemy and know yourself; in a hundred battles you will never be in peril. When you are ignorant of the enemy, but know yourself, your chances of
winning or losing are equal. If ignorant both of your enemy and yourself, you are certain in every battle to be in peril.
What is of the greatest importance in war is extraordinary speed: One cannot afford to neglect opportunity
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Philosophy of Life
05 July 2015
03:18 PM
philosophy of life :Everything happens. All that appears in the life of a man, all that is done through him, all that comes from him; all this
happens. Man is a machine. All that he does, all his actions, his words, thoughts, feelings, convictions, opinions, habits are the result of
exterior influences ... popular movements, wars, revolutions, change of governments, everything happens. Man does not love, does not desire,
does not hate -everything happens.
It always seems to people that others invariably do things wrongly, not in the way they should be done. Everybody always thinks he could do
it better. They do not understand, and do not want to understand, that what is being done, and particularly what has already been done in one
way, cannot be, and could not have been, done in another way.
Scientific or not scientific is all the same to me. I want you to understand what I am saying. Look, all those people you see, (he pointed along
the street), are simply machinesnothing more. - G.I Gurdjieff
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,,,,,,,
The symbol of all relationships among such men, the moral symbol of respect for human beings, is the trader. We, who live by values, not by
loot are traders, both in manner and spirit. A trader is a man who earns what he gets and does not give or take the undeserved. A trader does
not ask to be paid for his failures, nor does he ask to be loved for his flaws. A trader does not squander his body as fodder, or his soul as alms.
Just as he does not give his work except in trade for material values, so he does not give the values of his spirithis love, his friendship, his
esteemexcept in payment and in trade for human virtue, in payment for his own selfish pleasure, which he receives from men he can
respect. The mystic parasites who have, throughout the ages, reviled the trader and held him in contempt, while honoring the beggars and the
looters, have known the secret motive of the sneers: a trader is the entity they dreada man of justice.
DESIGN A SYSTEM
05 July 2015
03:18 PM
First consideration - Time Frame

It is important to decide the timeframe that u are going to work towards in your system. This really comes down to how much time u are prepared to spend
trading and how active u require the system to be in terms of the number of trades. Broadly speaking there are four main timeframes:
Timeframe--------Period------------Data Used
Long-Term--------Months----------End of Day
Medium-Term------Weeks----------End of Day
Short-Term--------Days-----------Intra Day
Day-Trade------Up to 1 day-------Intra Day
Long Term trading systems will save on commission costs and have larger profits per trade. Shorter term trading systems will rack up the commission costs and
generally make less per trade but the frequency of trading opportunities will make up for this. For example:
System 1 makes an average of 250 points per trade but only trades 4 times a year.
System 2 only makes an average of 10 points per trade but trades 200 times a year.
System 1 makes 1,000 pts a year but system 2 makes 2,000 points a year. However if we allow 5 pts per trade for commission and slippage then system 1 costs
20 pts/year whereas system 2 costs 1,000 pts/year.
System 2 only makes an average of 10 points per trade but trades 200 times a year.
System 1 makes 1,000 pts a year but system 2 makes 2,000 points a year. However if we allow 5 pts per trade for commission and slippage then system 1 costs
20 pts/year whereas system 2 costs 1,000 pts/year.
Both systems make a similar net profit over the course of a year however there are a number of points to bear in mind:
* With only 4 trades per year for system 1 every trade is important and must be taken. It is likely that the bulk of the profits will come from only one of the
trades so this must not be missed. With system 2 producing a new signal every day it is not so reliant on individual trades.
* System 1 will require a larger capital base to trade as the trades will have to ride wider swings.
* System 2 will require a lot more work to trade as intra day data will have to be monitored.
* System 2 will be psychologically easier to trade as the equity draw down periods will be shorter. Well designed and robust day trading systems will rarely have
losing months.
The frequency of trading is an essential element of any trading system and our choice of timeframe will help to determine it. There is no right answer it is very
much a case of what suits the individual trader.
------------------------------------------------------------------------------------------------------------------Choosing an Instrument to Trade
The next thing u need to do when designing a trading system is to decide what u are actually going to trade to match your objectives. There is a huge range of
instruments available to traders from the underlying instruments such as stocks or currencies to derivatives such as futures or options
In order to develop a trading strategy it is extremely important to obtain historical data for the actual instrument that we intend to trade. Although derivatives
based on the same underlying instrument will move generally in tandem with each other it will not be exact. The futures will move more quickly and to greater
extremes than the underlying cash index. U cannot, therefore, develop a system using the cash index and expect it to perform to the same degree when trading
futures or any other derivative.
Third step
This is the meaty part about trade setup.Will get back with this tomorrow.Meanwhile couple of important terms to remember
Expectation/Expectancy of a trade = (PW * AW) - (PL * AL)
Expectation of profit factor = (PW * AW) / (PL * AL)
where
PW = probability of a winning trade

AW = average size of winning trade
PL = probability of a loss
AL = average size of a loss
-------------------------------------------------------------------------------------------------------------------Now coming to the next step we need a framework with precise entry and exit signals which is commonly called a setup.There are as many setups as there are
traders,infact I have to keep them indexed to keep track of them.I would post couple of them having good risk to reward ratio.I had better start a new thread and
link it here as this thread will become very difficult to read otherwise.There will be a lot of new terms introduced and it will be difficult for me to explain each and
everyone of them in detail so I will provide links or suggest books regarding those.
Also one point I would mention here is that if you are serious enough to have your own system than there can be no half measures,every part right from setup to
position management has to be written down and double checked so as to avoid any contradictions or errors.Those who dont have access to charting software can
have tape based strategy as trade setup while keeping the other parts similar to those mentioned here.Minimum requirement will be access to excel and notepad.
Another important about setup selection bfore we go on to the next step is about mixing different non-correlated strategies.People who have trendfollowing
systems will do better only if they add some sort of contra trend setups which may help them trade in markets which are moving sideways.By merely looking at a
chart many can conclude that markets do move sideways for considerable period.My support for the theories of gann,fibonacci and elliott is precisely for that
reason.They add a new dimension to market forecasting which is not possible with normal market indicators.Also a very important thing to consider is that these
theories focus entirely on price itself unlike various other theories which derive their relationship from price without cons idering it in its entirety.Tony Plummer
books are good read explaining them.
So lets get on with it with the setups
Inside bar - current bar's range is within the previous bar's range ie an inside bar has a low greater than the previous bar's low and a high less than the previous
bar's high.
See the attached pic for various inside bar setups.These can also be done on OHLC bars as well.
After you see inside bar setup, a filter need to be added .Can be a momentum indicator like a stochastic.The thing for look will be a stochastic crossover as the
insidebar unfolds.It can act as a confirmation to your entry signal.
insidebar unfolds.It can act as a confirmation to your entry signal.

Its a very good pattern to trade.Many reasons.For one, an inside bar means that there was just not enough interest in the stock to move it decisively one way or
another. As sure as day follows night, so does an increase in volatility follow the restricted trading of an inside day.Whenever you have an IB the market is
consolidating into a tight range of low volatility.A market will always explode out of a tight range. A market will not explode out of a market that has already run
up. The natural market cycle is to go from low volatility to high volatility and back again.
Ok to sum it up one by one
Buy Setup
1.Wait for an IB to form
2.One you have identified the IB then you need to have a stochastic cross confirmation to the upside before you can enter.
3.To find confirmation look at the stochastic in the chart that you look for IBsIf upward cross present than you can enter in the indicated direciton.
Sell Setup is exact opposite of this.
Will get back with couple more setups before proceeding to other parts
.What to buy
2.When to buy
Now comes the next step of how much to buy.
There are many different ways to vary the number of contracts or shares when trading. Some of the most commonly used methods are listed below.
1.Fixed number of contracts. The same number of contracts or shares is applied to each trade; e.g., two contracts per trade.
2.Fixed dollar amount per contract. A fixed dollar amount of account equity is needed for each contract or share; e.g.,5000Rs of account equity per contract.
3.Fixed fractional (also known as fixed risk). The number of contracts or shares is determined so that each trade risks a specified fraction of the account equity;
e.g., 2% of account equity is risked on each trade.
4.Fixed ratio. The number of contracts or shares increases by one for each "delta" amount of profit earned per contract. For example, if the delta is 3000Rs, and
the current number of contracts is two, you'll need 6000Rs of profit before increasing the number of contracts to three.
That goes for position sizing.Eventually it depends on the amount of capital in your account as some sizing rules require certain size for consistent account
growth.
So in our inside bar setup,you can choose a sizing rule which suits you.For eg sake we will use the fixed fractional strategy fixed to 2% of account equity.
Note however this is different than setting stoploss which we will cover next.
Many people confuse stoplosses with moneymanagement.That part may well be callled position management.
For good system my suggestion is to watch as many charts as possible preferrably realtime, make note of your observations and then test them out in a
controlled environment.
1)I have a doubt - "People who have trendfollowing systems will do better only if they add some sort of contra trend setups which may help them trade in
markets which are moving sideways"?
We have two options
a) we use a trend following system, and also a contra trend system.
b) we use some conformatory market direction signals togetther with some price range to filter out the sideways movement of prices. That is if the mkt direction
is + and STock direction is + then enter buy otherwise filter out as sideways.
Can be use the second option. Will that be better?
There is nothing like an anti-trend system

Even those methods that fade trends are actually betting on a trend in the opposite direction.
Systems can be broadly categorized into 2 categories
1. TrendFollowing ( MAs, Breakouts etc)
2. Mean Reversion ( Oscillators, PairTrading etc)
Also perhaps a few words on a 'premise' focussed trading system development vs a 'if it works it must be good' system development.
LBR's Turtle Soup is a good eg of a counter trend system.
Identifying market exhaustion is a tricky area.Intraday its actually much easier identifying exhaustion than looking for breakouts
the basic Turtle Methodology has no directional bias.When dealing with systems, the long-short thing takes a backseat..its all about pattern matching and proper
betsizing around that opportunity.
Ok to sum it up one by one
Buy Setup
1.Wait for an IB to form
2.One you have identified the IB then you need to have a stochastic cross confirmation to the upside before you can enter.
3.To find confirmation look at the stochastic in the chart that you look for IBs.
4.If upward cross present than you can enter in the indicated direciton.
Sell Setup is exact opposite of this.
When designing a trading system its wise to distribute the various functions like Entry, Exit, MM etc into different modules.Helps you in backtesting and to
pinpoint the system efficiency.
Different modules could be-Position Sizing Module
Filter Module (based on diff crieteria)
Entry Module
Trade Management Module (scaling in and out for eg)
Exit Module
Two or more modules can be combined together for eg the Trade Mgmt and Exit Modules.
So coming back to the system described earlier, entry on breakout of ID obviously comes under the Entry Module.Whether to hold it the next day or reverse is
independent of the entry factor. To answer that question you will have to backtest on your chosen instrument.Options could be - End of Day Exit, Trailing stops,
SAR ( stop and reverse ...
Money management is the process of analyzing trades for risk and potential profits, determining how much risk, if any, is acceptable and managing a trade
position (if taken) to control risk and maximize profitability.
Many traders pay lip service to money management while spending the bulk of their time and energy trying to find the perfect (read: imaginary) trading system
or entry method. But traders ignore money management at their own peril.
The importance of money management can best be shown through drawdown analysis.
Drawdown
Drawdown is simply the amount of money you lose trading, expressed as a percentage of your total trading equity. If all your trades were profitable, you would
never experience a drawdown. Drawdown does not measure overall performance, only the money lost while achieving that performance. Its calculation begins
only with a losing trade and continues as long as the account hits new equity lows.
Suppose you begin with an account of 10,000 and lose 2,000. Your drawdown would be 20%. On the 8,000 that remains, if you subsequently make 1,000, then
lose 2,000, you now have a drawdown of 30% (8,000 + 1,000 - 2,000 =7,000, a 30% loss on the original equity stake of 10,000). But, if you made 4,000 after
the initial 2,000 loss (increasing your account equity to 12,000), then lost another 3,000, your drawdown would be 25% (12,000 - 3,000 = 9,000, a 25% drop
from the new equity high of 12,000).
Maximum drawdown is the largest percentage drop in your account between equity peaks. In other words, it's how much money you lose until you get back to
breakeven. If you began with 10,000 and lost 4,000 before getting back to breakeven, your maximum drawdown would be 40%. Keep in mind that no matter
how much you are up in your account at any given time--100%, 200%, 300%--a 100% drawdown will wipe out your trading account. This leads us to our next
topic: the difficulty of recovering from drawdowns.
Even worse is that as the drawdowns deepen, the recovery percentage begins to grow geometrically. For example, a 50% loss requires a 100% return just to get
back to break even (see Table 1 and Figure 1 for details).
Professional traders and money mangers are well aware of how difficult it is to recover from drawdowns. Those who succeed long term have the utmost respect
for risk. They get on top and stay on top, not by being gunslingers and taking huge risks, but by controlling risk through proper money management. Sure, we all
like to read about famous traders who parlay small sums into fortunes, but what these stories fail to mention is that many such traders, through lack of respect
for risk, are eventually wiped out.
Guidelines that should help your long-term trading success.

1. Risk only a small percentage of total equity on each trade, preferably no more than 2% of your portfolio value. I know of two traders who have been actively
trading for over 15 years, both of whom have amassed small fortunes during this time. In fact, both have paid for their dream homes with cash out of their
trading accounts. I was amazed to find out that one rarely trades over 1,000 shares of stock and the other rarely trades more than two or three futures contracts
at a time. Both use extremely tight stops and risk less than 1% per trade.
2. Limit your total portfolio risk to 20%. In other words, if you were stopped out on every open position in your account at the same time, you would still retain
80% of your original trading capital.
3. Keep your reward-to-risk ratio at a minimum of 2:1, and preferably 3:1 or higher. In other words, if you are risking 1 point on each trade, you should be
making, on average, at least 2 points. An S&P futures system I recently saw did just the opposite: It risked 3 points to make only 1. That is, for every losing
trade, it took 3 winners make up for it. The first drawdown (string of losses) would wipe out all of the trader's money.
4. Be realistic about the amount of risk required to properly trade a given market. For instance, don't kid yourself by thinking you are only risking a small amount
if you are position trading (holding overnight) in a high-flying technology stock or a highly leveraged and volatile market like the S&P futures.
5. Understand the volatility of the market you are trading and adjust position size accordingly. That is, take smaller positions in more volatile stocks and futures.
Also, be aware that volatility is constantly changing as markets heat up and cool off.
6. Understand position correlation. If you are long heating oil, crude oil and unleaded gas, in reality you do not have three positions. Because these markets are
so highly correlated (meaning their price moves are very similar), you really have one position in energy with three times the risk of a single position. It would
essentially be the same as trading three crude, three heating oil, or three unleaded gas contracts.
7. Lock in at least a portion of windfall profits. If you are fortunate enough to catch a substantial move in a short amount of time, liquidate at least part of your
position. This is especially true for short-term trading, for which large gains are few and far between.
8. The more active a trader you are, the less you should risk per trade. Obviously, if you are making dozens of trades a day you can't afford to risk even 2% per
trade--one really bad day could virtually wipe you out. Longer-term traders who may make three to four trades per year could risk more, say 3-5% per trade.
Regardless of how active you are, just limit total portfolio risk to 20% (rule #2).
9. Make sure you are adequately capitalized. There is no "Holy Grail" in trading. However, if there was one, I think it would be having enough money to trade and
taking small risks. These principles help you survive long enough to prosper. I know of many successful traders who wiped out small accounts early in their
careers. It was only until they became adequately capitalized and took reasonable risks that they survived as long term traders.
10. Never add to or "average down" a losing position. If you are wrong, admit it and get out. Two wrongs do not make a right.
11. Avoid pyramiding altogether or only pyramid properly. By "properly," I mean only adding to profitable positions and establishing the largest position first. In
other words the position should look like an actual pyramid. For example, if your typical total position size in a stock is 1000 shares then you might initially buy
600 shares, add 300 (if the initial position is profitable), then 100 more as the position moves in your direction. In addition, if you do pyramid, make sure the
total position risk is within the guidelines outlined earlier (i.e., 2% on the entire position, total portfolio risk no more that 20%, etc.).
12. Always have an actual stop in the market. "Mental stops" do not work.
13. Be willing to take money off the table as a position moves in your favor; "2-for-1 money management1" is a good start. Essentially, once your profits exceed
your initial risk, exit half of your position and move your stop to breakeven on the remainder of your position. This way, barring overnight gaps, you are ensured,
at worst, a breakeven trade, and you still have the potential for gains on the remainder of the position.
14. Understand the market you are trading. This is especially true in derivative trading (i.e. options, futures).
15. Strive to keep maximum drawdowns between 20 and 25%. Once drawdowns exceed this amount it becomes increasingly difficult, if not impossible, to
completely recover. The importance of keeping drawdowns within reason was illustrated in the first installment of this series.
16. Be willing to stop trading and re-evaluate the markets and your methodology when you encounter a string of losses. The markets will always be there. Gann
said it best in his book, How to Make Profits in Commodities, published over 50 years ago: "When you make one to three trades that show losses, whether they
be large or small, something is wrong with you and not the market. Your trend may have changed. My rule is to get out and wait. Study the reason for your
losses. Remember, you will never lose any money by being out of the market."
17. Consider the psychological impact of losing money. Unlike most of the other techniques discussed here, this one can't be quantified. Obviously, no one likes to
lose money. However, each individual reacts differently. You must honestly ask yourself, What would happen if I lose X%? Would it have a material effect on my
lifestyle, my family or my mental well being? You should be willing to accept the consequences of being stopped out on any or all of your trades. Emotionally, you
should be completely comfortable with the risks you are taking.
should be completely comfortable with the risks you are taking.

The main point is that money management doesn't have to be rocket science. It all boils down to understanding the risk of the investment, risking only a small
percentage on any one trade (or trading approach) and keeping total exposure within reason. While the list above is not exhaustive, I believe it will help keep you
out of the majority of trouble spots. Those who survive to become successful traders not only study methodologies for trading, but they also study the risks
associated with them. I strongly urge you to do the same.
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TRADING
05 July 2015
03:20 PM
Trading is unique in many ways. It is not by accident that many of the people who are drawn to trading are successful people from other walks of life. After
all, to trade you need some free capital. Many obtain this from running or selling successful businesses, or from high paying professions. The problem is that
trading is unique from most other businesses...
Most of your previous successes in life will likely not be able to help you in trading. The things you have learned are often not transferable to trading. Worse
than that, they may be harmful. Take the successful doctor. Every time his stop hits, he decides to add more shares. Why? To the skilled trader, this is a
crime. To the doctor, this is a way of life; it is bred into his system. What is he thinking? He is thinking about 'saving the patient'. He is taught that the object
of his attention must be saved at all costs, at all measures. To trade he has to adopt the philosophy of 'killing the patient at the first signs of ill health'. This
appalls him at some level.
Consider the skilled lawyer. Taught to make a case and an argument for any possible situation. As his stock begins to fall, he comes up with dozens of ways
to justify the position. He is skilled at 'making the case' and he does so for the stock as it begins to fall. 'They just had good news, the fundamentals are
excellent, this is just a shake out, the operators are playing games'. He will use a thousand different arguments to stay with a loser
Consider any successful businessman. Often in the beginning, success came by simply working harder. Putting in more hours, taking on more personally.
Doing whatever it takes. Unfortunately, 'trading harder' is not even a working concept.
Consider the accountant. The accountant is a perfectionist with numbers. The thought of having 'red ink' on a trade can be hard to take. It forms the need to
not take small stops, hoping that the ledger can show all winners today.
Consider the professional athlete. Losing is not an option. Unfortunately, in trading, losing is mandatory. Losing the right way is what matters, small amount
on appropriate trades. Once a trade has stopped, it is a loss and the trader moves on. The trader knows that what matters is process that delivers winners
over a period of times, not what happens on one trade. To the athlete, losing is not acceptable. It must be avoided at all costs, at all levels.
So what is helpful? Learning the whole process of trading. Learning from those who have been through it, or having the ability to learn and adapt quickly as
you go. Having the mindset of having a plan, being able to adjust that plan, and carrying out the plan until the results are reached. Then constantly
evaluating the process, eliminating mistakes and being mindful of the need to change and be flexible.
"Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful people with talent. Genius will not;
unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The
slogan 'press on' has solved and always will solve the problems of the human race."
This is a good warning to all. Many talents you may have may not directly contribute to your trading. An open mind, coupled with persistence and
determination in your goal are keys to trading.
-------------------------------------------------------------------------------1.Trading with money you cant afford to loose: One of the greatest obstacles to successful trading is using money that you really cant afford to lose.
Ultimately what happens is that when someone knows in the back of their mind that they are risking the money they can not afford to lose, they trade out of
fear and emotion versus logic and no emotion. If you are in this situation It is highly recommend that you stop trading until you earn enough to put into an
account that you truly can afford to lose without causing major financial setbacks.
2.Lack Of Research Work: People just jump in. Without having the proper knowledge of the stock or dont knows about chart or never cares to view chart in
the right time frame. They dont have time to do some research work. They follow tips blindly and then gaze at night sky!
3.No Trading Plan (dont know entry, exit, stop loss, profit target): A trader with no trading plan is flying in the sky ready to crash any time. Successful
traders always keep their Trading Plans ready before entering into any transactions.
4.Not Learning From Losses take advantage of each loss to improve your knowledge of the market.
5.Lack Of Discipline- Never allow emotions to rule your trading decisions, which often lead to bad decisions and unacceptable trading losses.
6.Lack Of Money Management Lack of proper money management is a major cause of failure among new traders.
(Out of 10 Trades, if 6 are loser with 5% loss & 4 are winner with 10% PROFIT, Net Results GAIN.)
7.Never Apply STOP LOSS Most common mistakes made by traders is that they let their losses grow too large. Nobody likes to take a loss, but failing to
take a small loss early will often result in being forced to take a large loss later.
8.Never Fall In LOVE With A Stock Many traders fall in love with one or two stock and look opportunities to trade in those stocks only ignoring the other
profitable trading opportunities.
9.Not Keeping RECORDS Always keep records of your trading results and analyze the results.
10.Over-Trading Trading in too many markets at one time is a mistake espically if you are racking up losses............................................ .........
11.Not Preserving Capital: It is the part of money management so as to enable one to live to trade another day.
12.Under funding-Not enough capital to invest (this can sink the ship) know well that there is a minimum amount to be invested.
13.Blaming the Market: Dont blame the market for your losses. You are the sole reason for losses.
14.Adding to a losing Position - Never add to a losing position. It is a prescription for disaster.
15.Not getting a bigger view/perspective on Market One can look at daily chart for short-term, but by looking at the weekly or monthly chart for longerterm can reveal great secrets of the market.
16.Trading with a high EGO A person who do not expect that he would be wrong and refuse to get out of bad trades. This ego becomes the downfall.
17.Never use these things - HOPE, PRAYER THAT PRICE WILL MOVE UP
18. Ignoring the five basic pillars of trading :
Trade with trend,
Cut losses fast,
Let profits run,
Trade selectively,
Trade selectively,
Trade in the major index direction.
19.The key to wealth in trading is simplicity. Avoid techniques you don't understand.
20.Big movements take time to develop. Stay always PATIENT.
Thats all I have for now, I will add more points which I feel important.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Logics of Trading
* What
o Buy and Sell to make profits
+ Profits means Gain - Expense - Loss - Costs (Business expenses, Tax, Cost of living...)
+ on
# short term
* taking into account the short term variance of the market
* taking into account errors
# long term
* implies
o taking into account the long term variances of the market
+ Normal or predictable variance
+ Abnormal or unpredictable variance
o Take into account
+ Inflation
+ Accidents
+ Insurance
o Risk analysis
+ Can I afford ?
# Capital Requirement
# Time Requirement
# Family obligation
# Competency
# Health
# Psychology
* How
o Preparation
+ Taking the time to study
+ Iterative process
# Plan the study
# Study
# Experiment
* on paper
* on simulator
* for real
o Knowledge
+ Probability
# are SIMPLIFIED THEORY not REALITY
+ Market
# insiders, manipulations, brokers...
# techniques
# models
+ Economy
# Interest rates
# Inflation
# Bonds auction
+ Business
# law of growth
# Risk
# Opportunity
# Diversification in Trading business is different from Normal Business
+ Methods (optimisation, organisation)
o Chance
+ If one enters at the beginning of a secular trend
# Bullish
* Easier + Probability
# Bearish
o Psychology
+ Stress Resistance
+ Patience
+ Intellectual Honesty
+ Logic
+ Intuition
+ Learning capability
o Physical Capability
+ Reflex
# required all the more for short term trading
+ Training by repetition
o Strategy
+ Period
# Intraday
# Daily
# Weekly
# Monthly
+ Horizon within each period
# Short term
based on knowledge and dynamic models (non-linear models, rules of thumbs)
# Long term
* based on knowledge and static models (statistical distributions)
# Mid term
* the most difficult since it is between the two
+ Global Money Management (Choosing leverage range)
+ Global Money Management (Choosing leverage range)

+ Global Risk Management (Global loss limitation, Methodology to assess it at check points)
o Tactics
+ Analysis
# TA
* Candlestick
------------------------------------------------------------------------------------------------------------------------------------------------One important reason 95 percent of traders eventually lose is that they are too lazy to do the work it takes to be successful. Another reason is that they have
no plan or method. They are guessing, gambling and hoping.
Trading in the stock markets one of the most difficult endeavors there is.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,,,
Trading successfully is difficult, very difficultThe elements of good trading are: (1) cutting losses.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,
. Whenever you think that you are facing a contradiction, check your premises. You will find that one of them is wrong.
Contradiction is part of trading.
------------------------------------------------------------------------------------------------------------------------------------------------You have to put indicators in context. Theyre background information never the primary reason for a trade
. the experience of the past few years has emphasized the value of disregarding all considerations except those which relate to price movement, volume and
time. If one is endeavoring to realize profits from the principal swings in prices of stocks, it is my opinion that he should disregard fundamental as well as
corporate statistics relating to the stocks in which he is trading, stick closely to a study of the action of the market and become deaf and blind to everything
else.
There is only one way to achieve success in speculationthrough hard work, persistently hard work. If there is any easy money lying around, no one is going
to try and give it to methis I know. My satisfaction always came from beating the market, solving the puzzle. The money was the reward, but it was not the
main reason I loved the market. The stock market is the greatest, most complex puzzle ever invented, and it pays the biggest jackpot - Jesse Livermore
A passion for the truth is the essential element of a sound approach to trading. - Chick Goslin
Look at reality. Futures trading is a competition. It is financial warfare. You are trading against thousands of smart, aggressive, extremely well-informed, very
well financed, extensively experienced professionals. Look at the facts!
Every trader will be tested emotionally, mentally and monetarily to varying degrees in his career. Most times, itll be extremely unpleasant and youd most
likely want to quit right there and then. Only those who can endure this kind of hardship, learn from their mistakes and persevere on will make it.
One of my strengths is the ability to become more aggressive during winning streaks and to do the opposite during a losing streak. This goes against what
most people do. You should have a person who has nothing to do with trading who will turn off the trading terminal after a certain amount of losses and send
you home; that would save traders thousands.
I am constantly adjusting my trading style to match specific market conditions. For example, on volatile days I generally put fewer orders into the market and
execute more directional trades, although I mostly hold them for only a few seconds.
I always set strict daily targets and limits for my profit and loss. The most important element is the stop limit, or simply the size of the loss, which will cause
me to turn off my trading screen. I try to liquidate my positions as soon as they start going against me.
You are trading against the wealthiest and most knowledgeable people and organizations in the world.Do not delude yourself, you cannot compete on their
terms: information, knowledge, experience, staying power, and so on.Do not spend time and energy trying to figure out why a price moves.Focus all your
attention and energy solely on what the price is doing.You are a trader. A trader does not get paid to understand or explain why something has happened.
The question "why?" deals with the past. The question "what?" deals with the present and provides the best clues to the future. And never forget that you are
trading "futures," not "pasts." Discovering the supposed "why" of a price move will provide you with little more than temporary intellectual comfort. Whereas
observing and focusing on what the price has done and is doing will help you anticipate what the price will do in the futureA trader must always feel free to
change trading positions on very short notice. And most importantly, you do not need to be good at predicting
That's the problem with amateurs, they only have half a plan, the easy half. They know how much of a profit they're willing to take, but they don't have the
foggiest idea how much they're willing to lose. They're like deer in the headlights, they just freeze and wait to get run over. Their plan for a position that goes
south is, "Please God, let me out of this and I'll never do it again" but that's bullshit, because if by chance the position turns around, they'll soon forget about
God. They'll go back to thinking that they're geniuses, and they'll always do it again, which means that they're sure to get caught, and get caught bad. What
most people fail to understand is that while you're losing your money, you're also losing your objectivity. That's why you have to put aside your ego and get
out. If you have trouble doing that, as most people do, be like Odysseus: tie yourself to the mast with an automatic stop and take your emotions out of play --------------------------------------------------------------------------------------------------------------------------------Speculators and investors who simply guess, follow tips,rumors, newspaper talk and so-called inside information"have no chance of ever making a success
You will make money when you do just the opposite of what the average man or woman tries to do and makes a failure and loses as a result of what they are
trying to do
The people who win consistently spend their time refining the basics and making sure they are prepared.
Focus on being profitable for the week - Individual trades may go against you and individual trading days can offer little opportunity. As a senior trader once
explained to me, for the active trader, however, there are enough fresh opportunities in a week to make it reasonable to set a goal of being profitable for the
week. You won't reach your goal every single week, but the mere act of setting the goal keeps you focused. For example, you don't want to lose so much
money in a single day that you can't make it back during the other days of the week. You also don't want to lose so much money on a single trade that you
can't come back during the remainder of the day. When you really push yourself to be profitable every week, you don't let individual days get away from you.
And when you don't let individual days get away from you, you start managing each trade carefully to ensure that your largest loss won't exceed your largest
gain. Time and again I've seen a consistent sign of progress among developing traders: they stop digging themselves into holes.
Always have something to "lean on" - Scalpers will notice heavy and persistent selling at a certain tick, accompanied by large offers in the order book. They'll
lean on that information to find a good entry to sell the market. If the offers disappear from the book or if new buyers start lifting those offers in size, they
can get out quickly. Knowing you have something to lean on, however, allows you to ride out the noise between entry and exit. As long as what you're
leaning on doesn't vanish, you stay with your idea
1) Before you put your capital at risk, have a well-formed trade idea;
2) When your idea pays you out quickly, take some profits;
3) Don't get caught up in individual trades; focus on profitability over a series of trades and days.
It means that success will not be found in better indicators, improved self-help techniques, or any of the endless parade of chart patterns, wave formations,
numerology schemes, or moving average arrays.
Rather, success is achieved when we find markets and styles of trading that take maximum advantage of our skills and talents. That keeps us focused on
markets and absorbed in them, enabling us--over time--to internalize their patterns.They know that risk control is as important as the other two legs of
speculation, selection and timing. That is all this business of commodity trading gets down to, selection, timing, and risk control
May my assessment of today's price action be based upon the facts, all of the facts and nothing but the facts. May I not be influenced by fear, greed or the illadvised comments of others, which may be made in their interests and not my own. May I take into account the past history laid before me on this chart and
make my assessment based on my knowledge, and logic, and not my emotions
-----------------------------------------------------------------------------------------------------------------------------------------Keep one thing in mind, however, sometimes even successful traders are wrong about the reasons for their success. Trader A might think his success is due
to his fancy computers and sophisticated algorithms when in reality his success is due to his having a solid foundation and good operational execution.
Trading well is not easy, but it is something you can learn if you have the perseverance combined with the humility to be realistic about your own strengths
and weaknesses
For the most part, professional traders, syndicate traders, and the specialists, do not look at these things. They simply do not have the time. Professionals
For the most part, professional traders, syndicate traders, and the specialists, do not look at these things. They simply do not have the time. Professionals
have to act swiftly, as soon as market conditions change, because they are up against other professionals who will act immediately against their interests if
they are too slow in reacting to the market. The only way they can respond that fast is to understand and react, almost instinctively, to what the market is
telling them. They read the market through volume and its relationship to price action[If you do find a colleague who is consistently correct, either learn his
system so that you can use his tools with your own intuition and experience or delegate part of your trading strategy development to him.]To play the market
properly requires silence, and seclusion to examine the situation, and to appraise, and deliberate on new information that comes to hand during the trading
day. One must always have a clear strategy to play the market and clear rules to follow.
at least with regarding making decisions. If you can put aside what should be, what could be, what ought to be, what would have, could have, should have
occurred, and just pay attention to what is actually happening, the act of paying attention transforms what is. The greatest action, the wisest, the best action
that you can take in almost any situation is to stay with what is, instead of jumping to conclusions or trying to come up with conclusions.
I think one mistake novice traders make is that they begin trading before they have any real idea what they are doing. They are active, but they are not
accomplishing anything. I hardly spend any time trading. Over 99 percent of my time is spent on the computer, doing research.
1]What markets are you going to trade? You need to select a market that fits your personality because a market is reflection of the people who trade it.
2)What is your trading capitalization? On the one hand, you should honestly be able to say, "If I lose all this money, won't change my lifestyle." On the other
hand, you need a large enough account so that making at least as much as you do from your current job is a feasible goal. Otherwise, you will think that you
are a failure because you will work harder as a trader than you do at the job you are in now.
3)How will orders be entered? Will you scale into positions or put them on all at once? How will you exit losing trades? How will you exit winning trades?What
type of drawdown will cause you to stop trading and reevaluate your approach? What type of drawdown will cause you to shut down trading?
4)What are your profit goals, measured on as short a time frame as is feasible for your trading approach?
5)What procedure will you use for analyzing your trades?
6)What will you do if personal problems arise that could adversely impact your trading?
7)How will you set up your working environment so that it is conducive to trading and maximizes your chances for success
-------------------------------------------------------------------------------------------------------------------------------------------------. so a chart of the averages, or of a single stock, reflects the ideas, hopes, ambitions and purposes of the mass mind operating in the market, or of a
manipulator handling a single stock. But when a student undertakes to read from his charts the purposes and objective of those who are responsible for a
stock's action in the market, he is beginning to see, in a true light, the meaning of scientific stock speculation
As traders, we cannot afford the luxury of wishing and hoping because it puts us in a passive relationship with the markets. When we wish and hope, we are
shifting responsibility on to the markets for making something happen instead of confronting the conditions and doing something about it ourselves. If we find
ourselves wishing and hoping, it is an excellent indication that we don't know what is going on and as a result need to get out of the markets until we do.
The movement of price in any and all free markets is a function of the laws of pure supply and demand. Buying and selling opportunity emerges when this
simple and straight forward relationship is out of balance.
"It is very important to visualize the many ways in which the market may unfold, rather than trying to forcast or predict how it will unfold. With a market
understanding, you can begin to visualize each possibilitySuccessful real-time traders have a far better chance of taking their successful trading techniques
and applying them to automated trading systems
----------------------------------------------------------------------------------------------------------------------------------------------
VIEWS R OF TRADERJI, A 30 YR TRADE VETERAN

05 July 2015
03:23 PM
1] I had to undergo training in price movements with a number of professional traders where I learnt my first and most valuable lesson "The Trend is Your
Friend".
2]I prefer trading the medium to long term trends although I do sometimes trade short term trends lasting a few days.
3]I personally prefer the conventional simple or exponential MA and MACD
Indicators are a personal choice and most indicators give reliable trading signal. However the trick is to use them often over a long period of time to understand
how they behave under different market conditions. Then only will you get the desired results from that indicator.
4]About 30-40% of my trades are not profitable. The Maximum Loss I take on any single trade does not exceed 1% of my trading capital.
It does not take too long to cover up any loss as I trail profitable trades which enables me to capture a good 70-90 % of its trended move.
5]I do not do intra-day trading. I prefer positional trades where the holding period can be anywhere between weeks to months.
My method of selecting stocks to trade in are different. I do not use any technical indicators. I visually scan through the bar charts every day/week for
consolidation/congestion patterns and trade breakouts of those patterns
I also always make sure that the difference between my entry price and stop loss level multiplied by the number of contracts does not exceed 1% of my trading
capital.
Once in a trade I keep adding more positions (as soon as the current stoploss reaches break even level) in the direction of the profitable trend.
6]I prefer the ERS when compared to the RSC. The ERS is superior because it compares a single stock to all the other stocks in the market and ranks that stock
from 1 to 99. The RSC drawback is that it only compares a single stock to another single stock or index.
7]If I go long I use the previous 3 bar low as my stoploss
.................................................. ..................................
I search for stocks manually. I visually go through about 100-150 charts every day. This gives me a better feel of what patterns could be developing in every
stock.
A new three month high confirms and indicates that the stock has begun an intermediate uptrend.
A three month high is 63 bars on the daily chart and not 90 bars. You can easily scan for stocks making a new 3 month high using the following formula in
MetaStock:
c> ref(hhv(c,63),-1)
since I use a trailing stoploss which changes everyday I input stoploss orders on a daily basis.
The other things that I consider apart from price trends is volume ( I prefer to trade large & mid cap high volume stocks) and most important ERS.
I select sectors with the highest ERS and then stocks within that sector with the highest ERS. This helps me select the best performing stocks within the best
performing sectors. Most amateurs make the mistake of selecting stocks that have fallen the most and are cheap. However to be successful in trading one
should buy into stocks which have the HIGH ERS readings and short sell stocks with LOW ERS readings.
Volatility is important for intra-day traders and not for medium to long term position traders. In fact do you know that stocks in strong trends have low volatility
4] No warning signal just use a trailing stoploss which is the previous 3 day lowNo I do not trade in any other way. My current short trade on the NIFTY is still
on with a trailing stoploss at the 3 day high .
Since my trailing stoploss is at breakeven I will now initiate another short position on Monday. What this means that the risk on my previous short trade is nil
and I will be adding another position in the direction of the profitable trend.
To go short you need to confirm a downtrend first. For this look for a new 3 month low and not 3 month high. So the formula for the scan would be
c<ref(llv(c,63),-1)
It does not matter if you trade stocks or stock or commodity futures. Your approach should vary depending on the time frame you would like to trade.
If you a day trader you will have a strategy which will be different from a swing trader.
A swing trading strategy will be different from a position trading strategy.
So first you have to decide on the time frame you would like to trade in and then develop a trading strategy to suit that style
The 2% stoploss really depends on your trading capital. If you have a very large capital your stoploss could even be as low as 0.25% to 0.50%. If you have a
very small trading capital then one has to trade with a larger stoploss of maybe 3-5% of you trading capital. I always keep my stoploss the same, while taking
positional trades - last 3 days low for long trades and last 3 days high for short trades. If you can use a system tester check out its profitibility.
If I find that the stoploss is to large (during highly volatile times) I normally reduce the position size to fit into my % rule of money management. Keep in mind
that one should not change the stoploss to fit into your money management but rather the position size. If you find that the difference between the entry price
and stoploss is too large and you cannot take the loss then do not take the trade.
I do not change my trading strategy during the first three days of the month or last three days of the month. The trading strategy remains the same
In highly volatile markets it is always better to swing trade. Your stoploss should be the swing low and if you do your analysis correctly the chance of your
stoploss getting hit will be lower.
I use the previous 3 bar low or the swing low whichever is lower.
I would suggest you wait for a pullback and then BUY only after it closes/crosses above its previous bar's high.
Amaraja was a good swing trade. However it looks ready for a pullback/correction. Iwould suggest you to make a list of 50 stocks which you should visually
scan daily for such setups. I am sure you will not be disappointed
It is generally recommended to use trend following indicators in the daily chart when the weekly ADX is rising and oscillators in the daily chart when the weekly
ADX is falling.
The ADX indicates the strength of the trend whereas the MACD indicates the direction of the trend.
You can enter the next day immediately after a breakout out of the pattern. Taking a trade is probably the most common heartache faced by market timers and
all market traders, and is only compounded when it turns out that it would have been a profitable trade.
"Uncertainty is a powerful emotion that can weaken the resolve of even the best of market timers." You need to get rid of this.
"Most investors believe they know what is going to happen next. This causes traders to put too much weight on the outcome of the current trade, while not
assessing their performance as "a probability game" that they are playing over time. This manifests itself in investors getting too high and too low and causes
them to react emotionally, with excessive fear or greed after a series of losses or wins.
As the importance of an individual trade increases in the trader's mind, the fear level tends to increase as well. A trader becomes more hesitant and cautious,
seeking to avoid a mistake. The risk of choking under pressure increases as the trader feels the pressure build.
All traders have fear, but winning market timers manage their fear while losing timers (as well as all traders) are controlled by it. When faced with a potentially
dangerous situation, the instinctive tendency is to revert to the "fight or flight" response. We can either prepare to do battle against the perceived threat, or we
can flee from this danger.
When an investor interprets a state of arousal negatively as fear or stress, performance is likely to be impaired. A trader will tend to "freeze."
There are four major trading fears:

Fear Of Losing
The fear of losing when making a trade often has several consequences. Fear of loss tends to make a timer hesitant to execute his or her timing strategy. This
can often lead to an inability to pull the trigger on new entries as well as on new exits.
Fear Of Missing Out
Every trend always has its doubters. As the trend progresses, skeptics will slowly become converts due to the fear of missing out on profits or the pain of losses
in betting against that trend.
Fear of Missing Out on Profits
This fear is usually felt during runaway rallies. All your friends are talking about the incredible profits they are making every day. If you really look at this in the
right perspective, it is a very dangerous kind of fear. It eventually causes you to buy in, and of course, when you and thousands of others who feel the same
way react at the same time, the market is finally at its top.
Fear of Being Wrong
The desire to be "right" is in direct opposition to the ability to make money.
A market timer's desire to be right, to be able to tell his friends how successful he or she is, can become so powerful, that a he or she winds up second
guessing, the "strategy." Taking winners too quickly, or holding onto losers in the hopes that they will come back, or at least break even.
guessing, the "strategy." Taking winners too quickly, or holding onto losers in the hopes that they will come back, or at least break even.
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1]IMHO market Direction is most important as majority of stocks move in the same direction of the market. One should always trade in the direction of the
market.
The reachable % profit yearly depends on your trading style and how the market behaves. One cannot exactly pin point this figure.
2]use the 3 month high to identify stocks that are in an uptrend. Once the stock is in an uptrend I transfer it to a separate folder and then watch it for
consolidation patterns. The 3 month high/low can be used to identify stocks for swing or position trading.
When long I keep a stoploss at the previous 3 bar low. When I am short I keep a stoploss at the previous 3 bar high. I keep this stoploss irrespective of how the
market or that stock behaves.
2]Thats probably because most analyst are not professional traders and are unable to decipher the disinformation of the markets.
I could not find disinformation in my dictionary, but it is a term coined in the intelligence community and now in broad use. In intelligence parlance it means
false information designed to mislead and confuse the adversary.
The market behaves much like an opponent who is trying to teach you to trade poorly."
A common formulation of this phenomenon is the concept of random reinforcement. Traders are not rewarded with a profitable trade every time they do
something right, nor are they penalized with a loss every time they do something wrong.This makes it exceptionally difficult to figure out what is right and what
is wrong. Compare this to an electric fence. Every time you walk by and don't touch it, you feel fine. Every time you touch it, you receive a painful shock. It
doesn't take a man or animal long to learn how to relate to an electric fence.
Think how much easier learning to trade would be if you automatically took a loss every time you failed to follow correct decision-making procedures. At the
same time, what if you were always rewarded with a profit when you traded correctly? You would be able to learn the correct trading rules much more easily
3]The rounding bottom is a long-term reversal pattern that is best suited for weekly charts. It is also referred to as a saucer bottom, and represents a long
consolidation period that turns from a bearish bias to a bullish bias.
4]Close crossing above previous 3 day high
cross(c,ref(hhv(h,3),-1))
Close crossing below previous 3 day low
cross(c,ref(llv(l,3),-1))
the risk of losing money is a part of trading process. You just have to prepared for it and take it in your stride.
I generally try and aviod trading or holding open positions on highly volatile days when company results are declared or budget day, etc. This has saved me a
number of times.
I generally wait for 30 minutes before entering the trade.
An Anatomy of Stock Market

05 July 2015
03:24 PM
An anatomy of the Stock Market! - Bull & Bear Market Cycles

In financial markets, the majority is always wrong. When the investing majority or the crowd is overly bearish, this is the best time to be buying stocks.
When the crowd is overly exuberant, this is the time to be selling stocks. The financial markets work in this ironic way because not everyone can win in the
market.
The Start of a Bull Market
The bottom of the market starts at a time when the stock market is weak and the general population is pessimistic. At this point most investors sell after
having endured a long and torturous bear market. This extreme pessimism found at a bottom is always irrational and undeserved. Now the market is
undervalued and is a bargain. Savvy investors, the smart money, buy bargain stocks knowing that they will be able to sell them higher in the near future.
Smart money buying, called accumulation, causes stocks to rise.
The smart money often consists of operators, and corporate insiders (promoters of companies). These traders have access to information that the general
public does not.
Rising stocks eventually gain the respect of institutional investors, as billions of dollars of capital is introduced into the market place. Mutual fund investment
causes the stock market to advance in a powerful manner. Much of the steady large trends are powered by institutional investors. After the stock market has
gained, stocks are now fairly valued and are no longer considered bargains. The smart money is now sitting on a large profit, as well. The average investor is
still skeptical, however.
As bull market events unfold, retail investors begin to take interest in stocks. Retail investors, or the unsophisticated little guy, make up the vast majority of
investors. This group does not invest for a living. Retail investors often make investment decisions based on what they read in financial magazines, from their
brokers and from tips from friends. As the flood of retail capital is invested, the market soars, causing great euphoria. At this point in the cycle, many
companies become public, or launch an IPO. Companies go public when investor sentiment is most optimistic so as to gain the highest possible stock price.
IPOs generate even more optimism as unsophisticated investors buy into the fallacious thoughts of instant riches. Now is the time when many small investors
become wealthy. In this phase, stocks are doubling and tripling as the media cheers on the advancing bull market.
At this point, the smart money sells, or distributes, the now overvalued stocks to overconfident retail investors. The smart money knows that overvalued stocks
are no longer worthy investments, and will soon drop in value. Widespread greed always occurs, in some form, at stock market tops. Sometimes this greed
takes form as stock market scams and fraud. These immoral activities can take place because irrational retail investors will buy a stock simply because it is
glamorous. To compound the problems, investors will now start to use margin, or leverage, to further accelerate gains. All caution is thrown to the wind as
investors think the old rules dont apply
The Start of a Bear Market
After mutual funds and retail investors are fully invested, the market is overbought. This means that there is no more cash to fuel the rally. The market can
only go in one direction: down. All it takes is just a hint of negative news and the market collapses under its own weight. Investors quickly realize the market is
made of smoke and mirrors, as frauds or other scams come to light.
When panic selling starts, a market will always fall quicker than it had risen. Oftentimes, as everyone heads for the exit at the same time, there isnt anyone
willing to buy the stock. This can be especially disastrous for margin users as they grow deeply indebted to their brokers. Bankruptcy is the usual result for
these foolish gamblers. The majority of retail investors dont sell even as the market is plummeting. This crowd keeps holding on to stocks in hopes that the
market will recover. As the market plummets 25%, then 50% the average retail investor foolishly holds on, in complete denial that the bull market is over.
Finally retail investors sell every stock they own plummeting the market even further. This mass exodus is called capitulation.
The Cycle Starts Again
It is at this point that stocks are undervalued once again. The smart money is accumulating and stocks rise. The majority of retail investors bought at the top
and sold at the very bottom. This is the very essence of the dumb money. They are perpetually late into the game. This cycle continues over and over. Only
the smart money actually buys low and sells high. After trading in this manner, the dumb money will adhere to adages such as, the stock market is risky. In
reality, however, the stock market is only risky if you trade like the mindless majority
How does one know that the market is topping. Though I am no expert, these are my observations(nifty/sensex):1) Monthly charts at all time high
2) Momentum indicators in weekly charts showing overbought levels or prices falling below 30 week average
3) Prices falling below the 200 day moving average or below the two-thirds fibonnacci retracement of the primary market trend
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more detail what traderji has explained above. He says there are three categories of stocks-primary, secondary, tertiary. When the mkt bottoms out, savvy
investors first pick up the primary stocks or blue chips as a sign of revival. They being blue chips, others cannot afford at the end of bear cycle. Then after a
while they dump them to others and switch to secondary stocks and when both peak they sell both and sit pretty waiting for the market to bottom again. There
too the primary stocks are the last to fall and when they begin falling it can be a sign of doomsday.The five wave Elliot wave theory probably explains this
phenomenon but unfortunately the wave count is too bloody confusing. I know that profits are made mostly in the third and fifth impulse waves. I think at the
end of the first impulse wave, primary issues peak, third impulse wave-primary/secondary issues peak and fifth impulse wave- all peak and the market tops.
Us little guys unfortunately try to get in at every tom, dick and harry stock(in all the three categories)are at a peak and get butchered in the process unless we
are lucky.
One of the most ROBUST & RELIABLE WAY to identify BULL & BEAR Markets are as follows:
A BULL MARKET can be defined when the major Indices (BSE SENSEX, NSE NIFTY, etc) form a series of rising peaks and rising troughs (higher highs and
higher lows) in the WEEKLY CHARTS.
A BEAR MARKET can be identified when the major Indices (BSE SENSEX, NSE NIFTY, etc) form a series of declining peaks and declining troughs (lower highs
and lower lows) in the WEEKLY CHARTS
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Since v are talking about the Bulls and the Bears..im inclined to comment on the current market scenario....
There is a lot of caution within the circles of "know how"....these are the people with lot more knowledge and money invested in the market...
These are the people who are talking about terms such as "evaluations and overstretched"...
These are the BEARS of the market in the current scenario...who are trying to time their exit from the market now rather then their next multibagger...
At the same time v find the BULLS...these are momentum players and huge individual swing traders.....Average investers as me and majority of the members
are a part of this club...V are the people who probably boarded the train a bit late and are yet to realise the huge profits that would satisfy us...and v keep
throwin in more and more to keep the fire burning..
This market is close to crossroad with the BULLS and BEARS tugging it out...
As of now the BULLS are heavy with the market showing little appetite for corrections....Apart from one week in between the markets have closed in positive
on a weekly basis...
But as is mentioned in the previous article...as the market grows in confidence...gravity will finally will take over...there WILL BE a downfall...but for optimist
But as is mentioned in the previous article...as the market grows in confidence...gravity will finally will take over...there WILL BE a downfall...but for optimist
like me that will just be the start and foundation for another BULL RUN....
One way to learn how to trade correctly is to find a successful trader (mentor) and have him or her teach you exactly how they do it. So a course followed by a
live trading experience would be great!
However, this is not guaranteed to make you a successful trader. You might not have the capital necessary to trade the way they do. You would definitely not
have the years of experience they had developing their successful approach. You might not have the personality profile necessary to execute their style of
trading.
Another way to learn is by trial and error. This can be done by applying what you have read and learnt in the markets using REAL MONEY! This is the method of
choice for most people although they probably don't realize it.
The most obvious and practical way to learn how to trade correctly is to read books. Find the best books by the most respected authors and the best traders
and learn from them. This will expose you to ideas of other professional traders and the way they think and react under different market conditions.
Finally learning to trade is a combination of being exposed to ideas plus practical experience watching the markets on a day-to-day basis. This is not something
that can happen in only a few weeks. Professional trader and money manager Russell Sands describes the makeup of a successful trader: "Intelligence alone
does not make a great trader. Success is equal parts of intellect, applied psychology, practice, discipline, bankroll, self-understanding and emotional control."
To be successful you don't have to invent some complex approach that only a nuclear physicist could understand. In fact, successful trading plans tend to be
simple. They follow the general principles of correct trading in a more or less unique way.
LIKE:don't like to risk more than 2% of the account equity on any single trade
Look for a 3-1 profit objective.
By the same token, traders find it hard to resist taking profits too fast. One of the most successful big traders in the currency and interest-rate markets says
that he expects that 70 percent of his trades will be losers. But when he loses he loses small, and when he wins he wins big. Others who work in his trading
room will say that they are profitable on 70 percent of their trades-but most of them lose money, because they grab for small winnings.
He thought the best discipline for young traders was "spreading"-taking long positions in one contract against short positions in another, to exploit changes in
relative prices that would disappear as normal patterns reasserted themselves.
You should never be willing to let a position go against you by more than 8%. Remember, all stock are bad, unless they go up. Cut your losses at 8% and
move on.
If your are disciplined enough to cut losses at 8% while taking profits at 20% - 25%, you can't possibly lose money over time as this law of mathematics
cannot be broken. with these two simple rules, you can lose three times and win only once and still not get into financial trouble. Now, if you can't produce 1
winning trade out of every 3, you don't belong in the market
Once you're up 6% or more, decide never to be down in that position again.
Once you have a 15% gain and you have moved your stop to protect 10% of your profits, determine the exact price at which you will sell at least 1/2 of your
position. . The remaining half can stay in as long as the stock stays above it's 50 period simple moving average (sum of last 50 closing prices divided by 50).
Winners cut their losses short and move on to the next winning trade. Losers hold on to falling stocks 1/4 point by 1/4 point until the very ability to make a
rational decision has been zapped from their bodies
Needless to mention, you can add what you want to.
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DAY TRADING are primarily random with a small trend component.

This fact is extremely important to those desiring to pursue day trading in a rational, scientific manner. It means that any attempt to trade short-term patterns
and methods not based on trend are doomed to failure. It also explains why day trading is so difficult.
The shorter the time frame (day trading), the smaller the trend component.
Novice traders get lured to day trading because the price patterns on intra-day charts are similiar to the price patterns on long term charts. This similarity in
chart appearance convinces novice traders that they can day trade successfully with the same tools they use on longer-term charts.
However, the trend-following tools and indicators that work in intermediate to long-term time frames won't work in day trading. This is because the trend
component is so very small during the day that it is very unlikely for a novice day trader to make enough profits to overcome the costs of day trading.
In longer-term trading, you can let your profits run. In day trading you can only let your profits run to the end of the day. Thus your average profit per trade is
much smaller.
Also, your costs of trading--slippage, the bid/asked spread and mistakes--stay roughly the same on a per trade basis. Thus, your day trading system must be
much more consistent and robust to stay ahead of the costs of trading than would an intermediate to long-term system.
Remember that market price action is mostly random and the tendency of most markets to trend is the only possible edge in trading!
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To be Successful
05 July 2015
03:25 PM
To be successful in trading one must use methods that exploit the non-random feature of market price action.
The trend component is certainly are not present every day. That is why the person who tries to day trade at least once every day, and perhaps even more
often, is doomed to failure. The more often you day trade, the more likely it is that you will be a long-term loser.
The Two Realities of Trading
There are two realities every trader must understand and accept before she/he can actually start trading for a living!
1) It Is Impossible to Predict Market Turns
It has become very common in the financial markets for analysts or "experts" to offer their "outlook", or predictions for various markets. In fact, it has
become so common that many traders just assume that if so many people claim to be able to predict the future action of the markets, then it must be
possible. Nothing could be further from the truth.
There are two great emotions at work in the markets - fear and greed. However, contrary to conventional thinking, greed is not always manifested as a
lustful longing or need to make money. Quite often it is manifested in the form of "hope". And what could give a trader more "hope" than the belief that he
may be able to know in advance what a given market is going to do? But, think about it for a moment. Can you think of any other endeavor where people
can actually predict the future?
In order to be a successful futures trader, you must learn not to rely on predictions and forecasts. It is possible to find a person or committee or indicator or
wave count which will occasionally offer a prediction which actually comes true. However, the fact of the matter is that there is no person, committee,
indicator, or wave count, etc. which can consistently and accurately predict tops and bottoms in any market. It is simply not possible to do so on a regular
basis.
Once you free yourself of this notion, you open up your mind to the more important task of determining the current trend in a given market. In the long run,
such knowledge will be much more useful than a thousand forecasts.
2) Losing Trades are a Natural Part of Trading
Novice traders have a great deal of trouble accepting the notion that losing trades are a "natural" part of trading. Yet, if you are actively "cutting your
losses" on trades that don't go in your favor, a losing trade can actually be thought of as a positive step, because it is the act of consistently limiting your
losses to a manageable amount which allows you to keep coming back to trade another day. While losing money on a given trade is not in itself a good
thing, the very act of keeping each individual loss to a minimum is a necessary step in trading profitably over the long run.
When starting out, traders often shoot for a high percentage of winning trades, even though that generally means taking profits quickly and missing some
big winners. More experienced traders come to realize that the percentage of trades which are winners is often a meaningless statistic. In the end, the only
thing that counts is if the amount earned on winning trades exceed the amount lost on losing trades. As long as that is the case, it matters little if 3 out of
10 trades are profitable or if 7 out of 10 trades are profitable. The key is to make alot when you win and to lose a little when you lose.
.....................................
"The amateurs in most fields ask for forecasts,while professionals simply manage information and make decisions based on probabilities.Take medicine for
example.A patient is brought to an emergency room with a knife sticking out of his chest-and the anxious family members have only two questions:"Will he
survive?" and "when can he go home?"They ask the doctor for a forecast.
But the doctor is not forecasting-he is taking care of the problems as they emerge.His first job is to prevent the patient from dying from shock,and so he
gives him pain killers and starts an intravenous drip to replace lost blood.Then he removes the knife and sutures damaged organs. After that he has to
watch against infection. He monitors the trend of a patient's health and takes measures to prevent complications. He is managing -not forecasting. When a
family begs for a forecast,he may give it to them,but its practical value is low.
To make money trading,you do not need to forecast the future.You have to extract information from the market and find out whether bulls or bears are in
control. You need to measure the strength of the dominant market group and decide how likey the current trend is to continue.You need to practice
conservative money management aimed at long term survival and profit accumulation.nYou must observe how your mind works and avoid slipping into
greed or fear. A trader who does all of this will succeed more than any forecaster.
My observations...
I have come to the conclusion that trading is not an exact science. You can't do X and get Y every time. It is as much an art as it is anything else. There is
no magic formula. Trading is all about probability. It is the art of correctly applying a set of carefully thought out rules and allocating the probability of that
event to result in success.
Each trade is an independent event. The market does not remember if you lost or made money the last time you traded.
The way you approach the market psychologically has as much to do with your success as any trading plan.
Risk management is crucial if you want to have any hope of becoming a successful trader.
Matching a method of trading with your personality is the only way you will ever feel comfortable in the markets.
.The two things I focus on in terms of method is always limiting risk/managing risk and compounding yield. We may agree on some of the strategies of
entering and exiting trades, but the ONLY objective data i review and analyze is price, specifically macro price trends.
I'm just now getting into commodities with paper trades and have been able to translate my techniques from my stock and options trading with considerable
success. But it requires patience and perseverance...an unattached, unwavering, unyielding, immovable determination. I liken it to the Terminator who in
everything he did, centered around negotiating the chief objective without vague, ambiguous, and often erroneous debate and reasoning. He was cold and
calculating, always calculating mathematical probabilities as events unfolded. This is what I do and how I do it.
Others have their way, no doubt, but i find objective data and objective responses/reaction to be especially profitable and helpful in mitigating losses
An adequately funded account is necessary - not only to be able to take the trades you want, but also so you don't feel every trade is a live or die situation.
The journey to the road of successful trading will make you confront your deepest fears. Your armor on this journey will be confidence, knowledge and belief
in yourself that you can achieve your dreams.
Never, equate your success or failure in the markets with who you are as a person!
........................
.Agree with you on all counts.......Forecasting ,having an opinion is great---great to write newsletters,great to present seminars,great to seem
intelligent,great to make people feel one is an authority on the markets.Take a look at their records,one truly doubts if they are successful.The market is
right...always right.The market is right when we think it should go in a particular direction.The market is right when it goes the other way.The market is
never wrong.We are wrong if we went the wrong direction.One's opinion does not matter.To go with the flow of the market is everything........
Forecasting prevents vision.It prevents one from acting in the present because one's mind is rooted in the future.Once one is able to live in the present,one
then gives up all resistance to the flow of the market.One then automatically takes stops and not go into hope mode.One then naturally lets the trade run
with trail stops.
How not to loose too much of your trading capital.

05 July 2015
03:26 PM
Upon entering the trade, if you place a sell stop below the market if you're long (buy stop if you're short), you know right away how much money you will lose
in any given trade. You should never trade without employing stops. Thus, you should never be in a trade and have a losing position and not know where your
exit point is going to be.
How to lock in larger than normal PROFITS in a winning trade.
You should always stay with your profitable trades as long as possible because the trend is likely to continue and make your profits even larger.
This is easy to understand but not so easy to do when real money is involved. The difficulty is that although your profit may become much larger if you stay
with a trade, it may also decrease and even disappear. Human nature is such that it values a sure profit much more highly than the probability of a much
higher profit. Thus, traders are inclined to take their profits too soon which can be fatal to long-term success because big profits are necessary to overcome
the inevitable collection of small losses.
There is a good way to let profits run while still guarding against the possibility that prices will turn around and take away much of your accumulated profits
before the trend actually reverses. It is called a trailing stop. You include in your plan a method for moving an exit point along some distance behind your
trade. As long as the trend keeps moving in your favor, you stay in the trade. If the market reverses direction by the amount of your trailing stop, you exit the
trade at that point.
A trailing stop moves to lock in profits as the trade moves in the traders favour, it should never be moved backwards. There are many different ways to
calculate a trailing stop:
Volatility - the stop is calculated as a percentage of the average true range of x periods.
Rupee Amount - A set amount determined before the trade is entered.
Channel breakout - exit a long position at the low of the last x bars.
Chart patterns - ie move the trailing stop behind each consolidation as it forms.
__________________
Do you stay with your profitable trades as long as possible because the trend is likely to continue and make your profits even larger?
This is easy to understand but not so easy to do when real money is involved. The difficulty is that although your profit may become much larger if you stay
with a trade, it may also decrease and even disappear. Human nature is such that it values a sure profit much more highly than the probability of a much
higher profit. Thus, traders are inclined to take their profits too soon. This can be fatal to long-term success because big profits are necessary to overcome the
inevitable collection of small losses.
There is a good way to let profits run while still guarding against the possibility that prices will turn around and take away much of your accumulated profits
before the trend actually reverses. It is called a trailing stop. You include in your plan a method for moving an exit point along some distance behind your
trade. As long as the trend keeps moving in your favor, you stay in the trade. If the market reverses direction by the amount of your trailing stop, you exit the
trade at that point. You would also offset your trade and reverse position if the trend reversed.
One way to set a trailing stop is to protect a certain percentage of the accumulated profit. That will always insure that you keep some profit on a good trade.
The holy grails of trading are as follows:
1)keep your bets small
2)cut your losses short
3)let your profits run
4)follow the above rules with out question.
Most traders ignore reward/risk ratios, hoping that luck will save them when things start to go bad.
This is probably the main reason so many of them are destined to fail. It's really dumb when you think about it, because reward/risk is the easiest way to get
a definable edge on the market house.
The reward/risk equation builds a safety net around your open positions. It's designed to tell you how much can be won, or lost, on each trade you take. The
secondary purpose is to remove emotion so you can focus squarely on the cold, hard numbers.
Let's look at 15 ways that reward/risk will improve your trading performance.
1. Every setup carries a directional probability that reflects a specific pattern. Always execute positions in the highest-odds direction. Exit your trades when a
price fails to respond according to your expectations.
2. Every setup has a price level that violates the pattern. Only take trades where price needs to move a short distance to hit this "risk target." Look the other
way and find the "reward target" at the next support or resistance level. Trade positions with the highest reward target to risk target ratios.
3. Markets move in trend and countertrend waves. Many traders panic during countertrends and exit good positions out of fear. After every trend in your
favor, decide how much you're willing to give back when things turn against you
4. What you don't see will hurt you. Back up and look for past highs and lows your trade must pass through to get to the reward target. Each price level will
present an obstacle that must be overcome.
5. Time impacts reward/risk as efficiently as price. Choose a holding period based on the distance from your entry to the reward target. Then use price and
time for stop-loss management. Also use time to exit trades even when price stops haven't been hit.
6. Forgo marginal positions and wait for the best opportunities. Prepare to experience long periods of boredom between frantic surges of concentration. Expect
to stand aside, wait and watch when the markets have nothing to offer.
7. Good setups come in various shades of gray. Analyze conflicting information and jump in when enough ducks line up in a row. Often the best thing to do is
calculate how much you'll lose if you're wrong, and then take the trade.
8. Careful stock selection controls risk better than any stop-loss system. Realize that standing aside requires as much deliberation as an entry or an exit, and
must be considered on every setup.
9. Every trader has a different risk tolerance. Follow your natural tendencies rather than chasing the crowd. If you can't sleep at night, you're trading over
your head and need to cut your risk.
10. Never enter a position without knowing the exit. Trading is never a buy-and-hold exercise. Define your exit price in advance, and then stick to it when the
stock gets there
11. Information doesn't equal profit. Charts evolve slowly from one setup to the next. In between, they emit noise in which elements of risk and reward
conflict with each other.
12. Don't be fooled by beginner's luck. Trading longevity requires strict self-discipline. It's easy to make money for short periods of time. The markets will take
back every penny until you develop a sound risk-management plan.
13. Enter positions at low risk and exit them at high risk. This often parallels to buying at support and selling at resistance, but it can also be used to trade
momentum with safety and precision.
14. Look to exit in wild times in order to increase your reward. Wait for price acceleration and feed your position into the hungry hands of other traders just as
the price pushes into a high-risk zone.
15. Manage risk on both sides of the trade. Focus on optimizing entry and exit points and specialize in single, direct price waves. Remember that the execution
of low-risk entries into bad positions allows more flexibility than high-risk entries into good positions.
To survive as a professional trader/investor your risk (loss) per trade should not exceed 2% of your total trading capital.
And if you loose more than 10% of your total trading capital in one month, stop trading and re-evalute your strategy.
Clarity & psychological issues in trading

05 July 2015
03:30 PM
Now i am planning some copy paste of a tough but very high callibre traderji-TNSN2345.He has solved clarity & psychological issues in trading.
.................................................. .......................
COMMENTS ON A TRADE-LEARNERS LOSS-VALUES OF EXPERIENCE
No sympathies to you. Absoulutely no sympathies.
On the contrary I congratulate you on making a GREAT start to your trading / jobbing career. You are down JUST 26% and you are feeling sh*t.
THIS IS THE EXPERIENCE or even worse if you lose more here after, which I really wish, if you sincerely want to make this to be your livelyhood activity.
THIS FEELING can never be felt anywhere else, not by listening, reading books, hearing. Belive me this EXPERIENCE is a MUST and is the foundation stone for
trading career.
A few suggestion I would like to make to you:
1) Don't be vocal / expressive of all your feelings in public - you will dilute the learning experience and would commit same or graver mistakes in future. It is
your experience and you need to go through it. Enjoy it, feel it, nurture it - get your body, mind and soul adjust to this experience. By sharing it publicly you
are losing a big opportunity of learning. You may share it subsequently once you are out of the experience. This applies to Good experience as well as
"Learning" experience.
2) Don't be overconfident - going back with a bang in the market seldom wins. Vengeance trading is a sure receipe of failure.
3) Never target an amount or % gain - i.e. if you are down 26%, don't target to recover it first and so on. Returns - gains (or losses) are market dependedent.
Hence adjust yourself to the market on a particular trading day/period instead of adjusting your expected returns to the market.
4) Never ever quit - other than going on vacation or personal engagements. Even if you are feeling down (like now) don't quit. But REDUCE your volume, if
need be trade 1/10th, 1/20th, 1/50th or even 1/100th of our normal volume. But don't quit. You may take a break to address the strain / boredom of trading
but not due to booked large losses (or even profits otherwise too)
Finally, we all have read /heard it thousands of time. Successful people don't do different things, they do (same) things differently.
p.s. : Tip on Trading: Even for the most successful traders in the world 2 /3trades out of 10 are wrong. Brace with a fact that not all your trades will produce
profits. Means SOME (anything above 2 trades out of 10 trades) will CERTAINTLY be wrong. SO exit the wrong trade IMMEDIATELY.
..................
Hard lessons are learnt only when they are forced onto yourself. To learn from an experience, you need a stable mind not a cool mind.
By being expressive you may gain nothing but sympathy (is this your objective or definition of being a trader ?) or advices/suggestion from people whom you
don't know. . is nothing but noise, which you need to eliminate and not create. You may want a shoulder at this point of time, but if you get one, you will
always need one. Being independent means totally, independent. Supertraders are completely detached to what is happening to their positions, similarly you
will need this independence.
Instead, I would suggest you IMMEDIATELY (before you forget in this noise) LIST down things that went wrong, how did you act and how should you have
reacted. READ, RE-READ, RE-READ endlessly and basis this write down your own rules, dos and don'ts. Memorise them, paste in front of your computer screen.
Read it in the loo. Take a morning jog or a evening walk and rememorise it. BUT DO IT ALL ALONE.
Remember this will be your FIRST list, similarly you will have many such more lists, till you consolidate your learnings into a SMALL set of trading rules which
will finally suit YOUR OWN personality. And only after this, you will be ADMITTED to traders category. This could take several months or even years.
p.s.: Tip on Trading : By nature and default everyone has bad trading habit, over a period and through OWN learning experiences one can control bad trading
habits away. But still, NO ONE is immune to them, the moment one is lazy or callous they will return.
Two more points that could assist you:
1) RESET YOUR MIND: Like any disciplined child, when we START our trading day we are well behaved i.e. the initial trades of the day will be governed by our
set rules or entry / exit / stop loss etc. because our overnight revision and commitment to adhere to our rules is afresh. As we get into more trades we tend to
ignore rules, break them and by the end we realise that it was a messed up day.
Hence after each few trades take a pause, reset your mind to the same level as it was at the beginning of the day. You may want to take this pause at a preset
time then set alarm on your machine / mobile which will alert you to reset your mind. At this moment it could also help you exit immediately if you are holding
a losing position due to non adherence of your rules.
2) RESET YOUR MONEY TO 100: Either winning or losing reset your trading amount to 100. You being down by 32% has immediately prompted your mind to
analyse and send you a message that you are 1/3 down from your capital . This figure would play a pivotal role in your trading decisions all the times. Also the
mind would always be tempted to recover all the lost amount in one trade (which does not happen). Hence reset your trading account balance to 100 (even if
were in profits). Base your trading calls, quantity, risk-reward w.r.t. to 100. In other words, make all your daily calculations in % terms of your trading account
balance rather than the starting capital. This will make life much easier and would help you to focus on your actions rather than on results. This may take some
time and little practise but it is certainly not as hard as sticking to ones trading rules.
...............................
In trading there are two important things:
1. Plan - Instrument, Quantity (basis Risk:Reward), Entry, Exit (in profit), Exit (in loss), holding period/time
2. Rules - defining all of the above
To be a successful trader you will need to be ALWAYS RIGHT on BOTH the above things. Definition of ALWAYS RIGHT means 10/10. Anything other than 10/10
is equivalent to ALWAYS WRONG. Hence 0/10 = 5/10 = 8/10 = 9/10 = ALWAYS WRONG.
If you can UNDERSTAND the simple definition of ALWAYS WRONG then you have won the battle before it begins.
I will give you a simple but very effective tool to assess what is going wrong with your trading. i.e. the first point - PLAN or the second one - RULES
1. Decide ONE (only one) instrument you have been trading since last few days. There is no logic here, any random pick is fine, but you need to select only
ONE instrument.
2. Decide minimum permissible quantity/lot you can trade in that instrument.
3. Decide holding period/time as per your existing rules. For a jobber it could be 1 minute. You may decide 5 / 10 mins etc but you need to select ONE holding
period.
3. Take a 1 rupee coin having clearly defined Heads and Tails
4. Now don't look at the market, your charts, your indicators or any tool that you use. Absolutely NOTHING. Now toss the coin.
5. If it is Heads you BUY the decided quantity of decided instrument and if it is Tails you SELL (or do nothing incase you do not short otherwise) the decided
quantity of decided instrument.
6. Once this is done: Refer all your indicators, charts, etc to arrive at the BEST EXIT price. The BEST EXIT price could be in PROFIT or even LOSS, as you have
entered the trade randomly.
7. If your BEST EXIT price is achieved during the decided holding period, then EXIT at that price
7. If your BEST EXIT price is achieved during the decided holding period, then EXIT at that price
8. If your BEST EXIT price is not achieved during the decided holding period, then EXIT at the end of the decided holding period. For this purpose of EXIT at the
end of the decided holding period, you may use an alarm clock on you machine/mobile, which will prompt your to exit.
9. Repeat this activity by tossing the coin again number of times, you may do it constantly i.e. back to back or after pausing for sometime between trades.
Illustration:
1. Decided instrument : Nifty Futures
2. Decided quanity : 50
3. Decided holding period : 5 mins
(Entry Time) (Max. Exit Time) (Toss) (Action) (Entry Price) (BEST EXIT Price) (BEST EXIT Price Achieved) (Actual EXIT time) (Actual Exit Price) (P/L)
10:00
10:15
10:30
10:45
11:00
11:15
11:30
10:05
10:20
10:35
10:50
11:05
11:20
11:35
Heads Buy 5145 5152 No 10:05 5140 -5

Heads Buy 5150 5159 Yes 10:18 5159 9
Tails Sell 5162 5154 Yes 10:34 5154 8
Heads Buy 5144 5144 Yes 10:45 5144 0
Tails Sell 5152 5143 No 11:05 5150 2
Tails Sell 5136 5130 No 11:20 5142 -6
Heads Buy 5125 5129 No 11:35 5122 -3
Total Profit / Loss 5

Total Investment 40000
ROI 0.01%
Now let us analyse the results:

1. If summation of all trades done in the above fashion is lesser loss or in profit (calculation to be done strictly on % terms to investment made) than your
historic daily loss (again in % terms to your trading account balance) then - YOUR "RULES" ARE RIGHT BUT YOU NEED TO IMPROVE/CHANGE YOUR "PLAN"
2. If summation of the above is similar or nearer to your historic daily loss then - YOU "PLAN" IS RIGHT BUT YOU NEED TO IMPROVE/ CHANGE YOUR "RULES"
p.s. I know that the above tool will not be exciting to use as any other trading day, but if you look behind you will notice that exciting trading days have mostly
produced losses. The only way to make profit and consistent profits is to make trading activity as boring as possible.
..............................................
A classic example why trade when you know systems are not up and running? Successful traders blame no one for their losses but themselves. I hope you
understand the point
This month I broke my own record i.e. worst loss ever in my trading history. Around 27% loss on one trading day. While my best is just 5% profit. No. of
trading days which end up in profit is high but the losing days eat up all my profit.
What I feel sad to know that your casual announcement that "one has to refill the trading account number of times before making profit consistently". Please
understand that this is no prerequiste to success in trading. Ofcourse most of the traders undergo this, but you taking 'pride' in wiping out your capital just to
make refilling and start again is unwelcome...............A cue you may take here which may help you in your trading - be more observant, wait for 'opportunities'
to come to you instead of you searching them in the dark.
In trading, 'opportunities' have NO OPTION but to come to people WHO WAIT for them. Strike at the right time and strike hard.
many seasoned and successful traders might see their past performance, attitude as their own history .now he has the ability to bid and win big too (which
most of small-loss-profit traders may not develop over years) only if he can learn asset allocation and risk management in times to come. He can still evolve
and do better.
If sun rises in east (it is a given fact) you can't question or change that. Similarly, Money management (asset allocation) and Risk Management cannot change
either whether you are full time or part time trader.If you are good at the above two, I guess no one can stop you from becoming a net profitable trader. The
quantum of profit and RoI will depend on your method and instruments you trade
........................this statement of yours shows arrogance. Get rid of this thinking/attitude as soon as you can. This will destroy you. Market rewards you for
your discipline on trade after trade, on your prudence decision making and on your ability to keep cool. Personally I never got too far with this thinking "I take it
from Market".it seems u want 2 get back at 'them'who has taken your money, but believe me there is no 'them ' in this market, there is only 'me'.the
market is very impassionate towards my profits or losses.
I am powerless in this market. when I put in a trade to buy a stock, it is obvious that I want the stock to move up,but the market does not have any respect for
my desires. it is not in my power to move the stock even one tick above the price that I have bought it for.now if I am so powerless,where do I get the edge to
make money in this market.
I have one tool with me which all the power and might of this market cannot take away from me and that is my stoploss. so start taking care of ur losses and
ur profits will automatically start to take care of themselves if you want to last long, there is no way you can loathe reading, it must be your hobby,
passion, desire and indispensable thing. And anytime you are short of reading materials, do let me know. I have tons of them.
These days i am reading Patel's "Mind of a Trader", Norman's "Stock market logic" and Taylor's "Mastering Derivatives Market". and I highly suggest these
books.
---------------------------Always say-I'll show everyone that I can change.
Keep the attitude but never be arrogant. Market knows zillion ways to humble traders.
Sorry, I guess, my posts are like casual approach to you. ., actually its too painful. It's the pain of such days which makes a lasting impression and stops us
from breaking our rules.
( Remember, Market is for reverence and not revenge)....................I have gut that you may develop into a successful trader. I don't know why but just
sensing it somehow. The most important thing I think is you are very open to ideas and always ready to adapt to change. This is a great trait indeed for a
trader atleast.
To come to your point directly, if you do not leverage, making substantial gains from day trading for living is less likely. Even if you have large sum as your
trading capital. I would focus on monthly returns or RoI as a measure of how much money one can make in the market. Hence leveraging is necessary for day
trading. How much to leverage will depend on your MM and Risk Management. More so, if you have different time frames of trading other then day trading (like
in my case) your RoI will be different, as you are more focusing on MM. Hence your day trading may help you make double than your longer time frames
method.
Adding to.."sky is the limit", YOU can decide how much to make from the market. If your method produces say even 15% RoI p.m. and is scalable then
who is stopping you to borrow @ 2% pm and pocket the difference. You can make money without having money. BTW this is only an example I am providing
and am against trading on borrowed money. So your method's RoI and scalability is what you need to define to arrive at how much on an average you could
make every month.
................................................
................................................
Very rightly said 'Time cures everthing'. So take your time, and do some homework till then. This is your best time to prepare for future.If you are just starting
and havent' mastered any form (infact mastering is a life long process, i mean consistent in profits) then it is not good idea to jumble different styles of trading.
There is no problem in trading more than one style but you should know the difference and never jumble them. Don't enter thinking you will scalp it but then
you stayed longer seeing the profit rise. And vice-versa, don't scalp if you entered for trend.
Infact i see the market condition, which decides my form (very rarely both style of trading comes into picture in the same day).
In trading one does not blow out due to losses but due to unability to manage losses makes him think in the wrong direction, taking wrong decisions which
leads to deeper mess.LOSSES ARE PART OF TRADING
(or for that matter any business) for one and all, you, me and everybody. But only those come out successfully who manage themselves during this phase.
If one can learn how to LIVE with losses, one will start booking loss IMMEDIATELY after identifying a wrong trade. ..a key to be successful in trading. Profits
will always come how so ever dumb one is.
Ironically, some know this, few understand it and even fewer remember it. And those traders consistently trade 'net' profitably
. I've never modified stop loss on losing side. I just simply take the hit as it is. Acoording to me it is important reason for my survival .If a system has winning
ratio of only 35%, so only way to make money in such a system will be "CUT THE LOSERS & LET WINNERS RIDE" (It's not easy as it sounds, but after some
behavioral change its possible).
Also the reason, i didn't get into Jobbing was, it requires HIGH PROBABILITY setup which i find tough to find (or implement in REALTIME). High Probability is
necessitated because of LOW PROFIT (R:R = 1:1 or max 1:1.5).
I bet on HIGH PROFIT setup. I have done hours of backtesting of several systems and realised it is possible to find or make a decent system and with discipline
it can made high profit.
Stop Loss is grossly misused term to exit your WRONG TRADES.

I beg to differ almost all authors, traders, 'experts' who proclaim that SL (Stop Loss) is the most important part of their Risk Management strategy. And can,
have and would vociferously engage into a debate with them. Also I doubt if SL management would ever create successful trader.
.........................
A QUESTION FOR A TRADER
over the years I have found 'stop loss' to be the most potent tool in my arsenal. the first advantage that I can think of is that in ur initail formative years, it
keeps u in the game always.I feel that my loss is the only thing that I can control in the mkt.as regards jobbing, I am very clear that jobbing without
stoploss is like driving a car at high speed without brakes. crash is imminent.now since I am not jobbing actively anymore,all the systems that I trade these
days are based purely on stop loss ie. I do not have a price target but always a stop loss.
ANSWER:
partially do agree that Stop Loss is slighly misused and grossly misunderstood.
Keeping the stop-loss for the trade and waiting till the stop-loss hits is like looking forward to Stop being hit.
In almost all the cases my position is greatly reduced before it reaches to the point of STOP.
Exiting the Trade with stop loss means you don't have strategy for exit (for trades which are in not in your favour ofcourse). It is better to devise some rules
based on weakness of trend (if you are a trend player), piercing of Bollinger Band (if you are a ranger) and based on tape (if you are a jobber). This will give
you more control over the trade.
BUT this doesn't mean that there will be NO STOP LOSS. STOP LOSS must there to save you from catastrophe. Let's say your internet connection is gone or no
electricity, system crashes, thunder, and worst .Heart Attack .
Stoploss is the most important tool to prevent runaway losses. Also when i said i do not modify stoploss, i meant i do not expect the losing trade to suddenly
turn into winning one. If trade moves in opposite direction of what you expected there is always option of exiting the trade before the stoploss is hit.
I always have one.It's this that I prefer to exit a trade with a reason where reason is something other than "stop loss being hit".
Disclaimer to everyone (specially newbees into the field of trading), Please do not read my words as favour against not keeping STOP LOSS. Always have stop
loss, but then there are other facets to exiting a trade. Moreover don't take a position where a smaller runaway scares you (or your Trading equity)
suppose you meant "should you take profits or wait for maximum profit (by allowing your winners to ride).
This is where Trading becomes ART, and is mastered with Experience. It's the greatest Dilemma especially for Trend Players (Positional/Swing/Intra-Day).
I prefer to take 50% of profit at first sign of weakness (opposite candle to my trade direction). Deciding on this weakness also happens after multiple TFA
(sometime decision is settled by 1 min candle). Then i take 25% of profit where i see smaller pullback or rally (depending on side of trade) forming. Last 25%
happens either at b/e (if trade was already in profit) or at EOD (since i am intraday trader, i square off all trades by EOD, and no exception even if trade is in
huge profit or huge loss)
But then the scope of improvement is always around, everday after the market in hindsight looking at chart it seems i could have done better, or sometimes
waited little longer or sometimes booked little earlier, but these are knowledge of hindsight which doesn't come into picture during REAL TIME trading.
Every profession after some degree (i.e initial learning of rules) becomes Subjective i.e a matter of skill (or ART if you will)
---------------------------------------------------------------
Following are the assumptions before I get into this topic:

1. Traders trade basis TA (charts, indicators, volume etc) and not FA. Hence Jobbers will be excluded here as they generally do not use either TA or FA
2. A Trading Plan is in place before entering into a trade. A typical Trading Plan will include:
- Awareness of market condition
- Entry reason, instrument, time, price
- EXIT TIME (holding period of the position, if the position is in favour)
- Review period interval of the position (viz charts, indicators whatever your method uses)
- Adjustment plan (adds, reduction, status quo)
- Estimation of Maximum drawdown at the end of first review period (this can be done basis the volatility). Your quantity, exposure etc will depend on this
- Stop Loss : For 'traders' who religiously follow this practice and arrive at the SL amount on whatever calculation they do
3. Trader here is not a novice and has had fair experience of trading including undergoing trauma of living through losses for extended period of time
4. Trader here has a reasonable strike rates derived from his method(s) i.e. range between 40% to 70%
The Precursor:
Most of us have learnt to ride a bicycle in our childhood. We have fallen, got hurt, scared, demotivated to quit, but the fun of riding the bicycle always made us
to take a jig at it again and again, till we perfected it.
In the process we have had bruises, scars and even fractures. This is almost similar to trading without Stop Loss as there is not protection for you when you
lose balance and you crash getting hurt. (Ever wondered that you could prefect riding a bicycle despite without a SL, but have taken so many years to perfect
lose balance and you crash getting hurt. (Ever wondered that you could prefect riding a bicycle despite without a SL, but have taken so many years to perfect
Trading even putting SL???)
Suddenly, some smart man suggested that we should have Stop Loss on bicycles so kids dont injure themselves while learning. So he put a pair of small
wheels along the rear wheel, so the bicycle was actually a four wheeler than two. These two super supporting small wheels kept the kids (I guess most of us
have not learnt riding on such four wheelers, anyways) from falling on either side, hence protecting them from injuries. A good idea indeed !!
But as the kids grow up and they learn balancing on their own they would get rid of the first small wheel and a few days later the second small wheel. Now
they are riding a bicycle (two wheeler !!) in the real sense. We have all seen this right, so there is no excitement till now. But I would like to ask here, why do
you remove the small side wheels after you have learnt balancing???? You can very well keep them as it is, why remove it???
Yes, why we remove it? Why we remove this Stop Loss forever and never use it..
Fair assumption would that the wheels are removed because the kids have learnt riding the bicycle. This does not mean that the kid will not fall now, he can still
fall but now the fall would be mostly triggered not due to his own misadventure but by some external factors viz, some one banging him from rear, tyre burst
while riding, a stray dog suddenly running across the road, unnoticed potholes etc etc
But still we have decided to remove the wheels not because the kid will now NEVER FALL but he when is likely to fall he will use his own FOOT to prevent the
fall. He will not rely on EXTERNAL small wheels (Stop Loss) which used to protect him till now while he was still learning.
The small wheels are physical Stop Loss, while the feet is the mental Stop Loss. Using his feet to halt the bicycle at his destination or in between to prevent
himself from falling comes NATURALLY to the kid. There is NO THINKING involved when to put the FOOT DOWN. It comes naturally!!!. On the contrary if there
were the small wheels on the bicycle forever, they would always act as artificial external way to hinder the driving process and would always prevent him from
taking those sharp turns, do the wheelie, race the empty road, race through the slopes freely or struggle hard upway. The small wheels just cause
obstruction than help him now since he has now perfected doing the balancing act !!!
Market conditions are not same all the time (I am not covering this here), so you will sometimes have to face sharp turns, do the wheelie, travel downhill or
struggle uphill. Again you will never know what could happen next as the conditions may or may not change suddenly.
It is traders mentality to keep trading in various kinds of market conditions and all the time. Of these traders there are some smart traders who have different
methods to trade different market conditions. And unfortunately for most of these smart traders the methods get overlapped or interchanged. And then so
does their SL. But while I am saying this, the SL they put is most likely arrived in a RANDOM fashion or on the basis of % risk per trade (..haha..). How on the
earth would the Markets know YOUR risk per trade % and move in your favour keeping it in mind that YOUR SL should not be hit (I wonder..) As it is random
pricing of SL and further even illogical (read sentimental) concept of trailing SL, it is often called that SL management is art than science (you may read
abstract art. Abstract art : No one understands it, but do not want others to know about it hence you start appreciating it. The next guy also does the same.
So no one argues.)
The very fact that you have put the SL in the first place makes you feel that you are IMMUNE to everything happening in the market. You start feeling that
nothing can happen to you now as worst is that you will exit at the SL. You act God. This feeling deprives you of the opportunity to exit your WRONG trades
much earlier as you always have the feeling that you have the SL in place and this SL will HELP you make profit and the SL will never be hit. Invariably the SL
is hit. And hit. And hit. Then you increase the SL gap as you feel that the earlier SLs were too close (having seen market reverse after hitting your SLs).
Using SL for trading, you take 1 step down, x steps up, 2 down, x up, 2 down, 1 down, x up, 2 down, x upand so on. At the end of the month either you are
down or at par or at best marginally up. But is it worth all the effort, time and opportunity one had all during the month.
On similar lines, what is the use of a helmet when you ride a motorcycle? Why is the safety net in the circus? ..and their analogy in trading..
..................................
The very fact that you have put the SL in the first place makes you feel that you are IMMUNE to everything happening in the market. You start feeling that
nothing can happen to you now as worst is that you will exit at the SL. You act like God. This feeling deprives you of the opportunity to exit your WRONG
trades much earlier as you always have the feeling that you have the SL in place and this SL will HELP you make profit and the SL will never be hit. Invariably
the SL is hit. And hit. And hit. Then you increase the SL gap as you feel that the earlier SLs were too close (having seen market reverse after hitting your SLs
.. but the way I think is that if I put on a trade with a predetermined SL and later on find that the market does not behave in the manner that I expected it to
and square off my position before my SL is hit. what am I doing..... I am still booking my loss . hence I am still executing my SL albeit I have raised my SL
closer to my entry price. hence the debate now is not whether having a SL is good or bad, the debate here is whether the SL should be fixed at a preconceived
point or should it be raised or lowered according to the way the market reacts (or the way I perceive the market) after putting on my trade.
It is traders mentality to keep trading in various kinds of market conditions and all the time. Of these traders there are some smart traders who have different
methods to trade different market conditions. And unfortunately for most of these smart traders the methods get overlapped or interchanged. And then so
does their SL. But while I am saying this, the SL they put is most likely arrived in a RANDOM fashion or on the basis of % risk per trade . How on the earth
would the Markets know YOUR risk per trade % and move in your favour keeping it in mind that YOUR SL should not be hit (I wonder..) As it is random pricing
of SL and further even illogical (read sentimental) concept of trailing SL, it is often called that SL management is art than science ..: No one understands
it, but do not want others to know about it hence you start appreciating it. The next guy also does the same. So no one argues.
there are a lot of guys around who feel that all price movement is random.I also subscribe to the same school of thought.I beleive that all price movement is
random with a few trends thrown in, as would be the case if we try to chart the outcome of a simple coin toss. the general outcome would be random with a
series of successive heads or tails thrown in between.this series of successive heads or tails is what I consider as 'trends'. I totally agree here that the market
would not respect any random SL, but believe me it would not even respect any 'pivot low or high' or any 'fibonacci levels' if it doesnt want to. hence I do not
believe that there is any harm in putting a random SL initially and then moving it later on according to the way the market moves .
Also stoploss is used to prevent runaway losses especially during sharp move in opposite direction of trade.
Now coming to your analogy of bicycle. Everyone has his own prespective and sees the world accordingly. In my view the smaller wheels are like extra caution,
e.g. like someone uses 1 indicator to trade with 40% chance also when he has 2 indicators giving same signal his chances get to say 55%. So he trades only
when both indicators give same signal. So he obviously misses some oppurtunity as well. So in my view inherent precautions in ones system are the two
smaller wheels.
Now what is stoploss then?
Stoploss is the brakes. It is used to prevent falling in pothole. Now whether you drive 2 or 4 wheeler brakes are paramount. Also its importance increases with
increase in stakes. Like one can drive bicycle withot brakes but what about driving a car without brakes!
I always (of course not always, after initial hiccups in trading) had a view that One should have Discipline enough to Cut the losers on own Will and not depend
on Stop-Loss (which in a way kind of forces you, though some novice traders horribly move their stop down which is another crime completely).
but all said, no one can expect a novice Trader to mature soon enough (without hitting some stones) to a disciplined trader where he can put the legs down
automatically without any hesitation, so everyone has to go with the phase where you use "Extra wheels". The small wheels are post facto hence they will not
come into play till the rider decides to ride the the bicycle and sits on it and starts paddling. The brakes are reduction in you position as there is uncertainty
whether you will reach the destination by the stipulated time. Paddling is adds to the position. Putting foot down due to sudden hinderence is actual exit from
your position at that point of time (either in loss or profit whatever it is), slowing down as you reach the destination, stepping down your positions (likely in
your position at that point of time (either in loss or profit whatever it is), slowing down as you reach the destination, stepping down your positions (likely in
profit) culminating into final touch down at destination, exiting fully.
Also we should never discount the possibility of "Black Swan" occurring (for the completely uninitiated, its events with very low probability but very high impact
say October 19, 1987 when Dow crashed 22%) and for such scenario's there must be a stop loss , which according to me should be at level where it doesn't
come into play on normal days.Extending the analogy, i would like to call these kind of black swan stops as "helmets" and not "extra wheels" (this is first time
when i am deliberately trying to fore-run your thoughts, i hope i am getting it right ?), though a bike rider doesn't expect to hit an accident everyday and by
probability chances of it occurring (even in is complete lifetime) is very low so he would rather not use one and rather enjoy free ride but then one accident
without helmet could kill him ending any further progress (analogical to getting bankrupt). So the question is, Is it worth to wear helmet everyday where
expectancy of life killing accident is very small, i firmly say yes.
While Aaditya you are putting SL to address a catastrophe, Anurag is defining by expected loss (defined by his initial random SL) closer to lesser loss in the
event of identifying a wrong trade. Sanjay is a fence sitter .
While Aaditya definition is similar to wearing helmet riding a motorcycle (or the safety net in a circus) where the idea is not to get down from the bike headdown first. The helmet is just to protect us from any UNFORSEEN circumstances which are out of our control (aptly defined by Aaditya in his post w.r.t.
trading). It is still the feet which we use to get down from the bike when we reach our destination or are interrupted before reaching it. This definition can be
termed as CSL - catastrophe stop loss and not SL which is widely used in trading.
Anurag, with your definition, which most of the traders would do there is an element (howsoever small) of unconviction when you enter a trade. No one likes to
see his position going down immediately one enters the trade. But is happens many (or most) of the time, especially to traders who put the SL (as per your
definition) as the decision to trade is taken on the basis of R:R rather than probabilitiy of the trade. I would always take a large position even if the reward were
very small than the risk (maximum draw down till the end of first review period) if the probability is very very high.
The moment you have the SL idea in the mind, the trades with not very high probability, equal probability or even low probability are undertaken as you
evaluate the decision to enter on the basis of R:R and not the probability of outcome.
Not using SL (certainly one should use the CSL though) will direct all your engery and focus on taking the HIGH probability trades. You wait till you have a
pattern/trend in the random movement of the market and grab the opportunity with both the hands.
Another analogy here is the Law of the land, which states that the law may not punish a criminal (by giving benefit of doubt) just to ensure that no innocent is
punished. Similarly, there one would let go and lose many high probability trades (as one may not be fully convinced at that point of time) but this would
ensure that wrong trades are not undertaken.
And it is much easier to exit such fully convinced trades too, because it is very very easy to identify the indications that your predicted direction may not
happen. Hence, easier to exit immediately and abort the mission praising the Law of the land.
My conclusions:
- Putting SL on trades directs you to undertake any probability trade as primarily there is a soothing feeling that you will be stopped soon and not bear large
loss. (Forgetting that the whole idea here is to make money and not exit at 'small' loss)
- Lot of such 'small' loss (due to poor selection of trades) result into a sizeable loss, which may get covered in some good trades, but we have lost time and
other great opportunities in between. End of the month where are we? At the same place, or just somewhere near.
- And this make a lot of difference between a super trader (who wins many, loses some), a regular net profitable trader (who wins some, loses some) or a net
loser trader (who wins some, loses many)
The definition of SL is clearly your unrealised expected loss in case the trade is wrong. This forms the basis of quantity or exposure you may want to take on a
trade. The definition of wrong trade is not necessarily move in the wrong direction but the outcome is not as per EXPECTION.
The second point of large runaway losses in the opposite direction can be termed as something happening exactly opposite to your thinking and the outcome is
UNEXPECTED.
If one is using a same SL for both of the above objectives than he may end up taking many low or equal probable trades than higher probable trades.
Effectively the success rate of trades may be compromised. See only MM and discipline alone cannot create substantial wealth for a trader. Higher success rate
of trades is also a prerequiste to become a successful trader.
----------------------------------------------------------------------------------------------------------------------------- --What tnsn is emphasizing is that once we start to identify high probable trades ,we would not need to depend heavily on the stop loss. Also he means that by
using Risk Return ,we may choose trades that are of low probability. But more importantly we have to choose higher probability trades of even low RR . This
way we end the month positive rather than have small losses every day only to take stock at the end of the month and start worrying.
..............................
Open book - Kinda market depth, which shows the depth of the market.
Print - Kinda tick list, shows price and quantity traded.
__________________
What about profit booking ?
I believe this is where experience makes it different, as its more ART than LOGIC (or SYSTEM). Infact Even Saint uses more discretionary while booking profit.
May be after day's of Retrospection on Trades, we finally get the "Sweet Spot".
Mine's strategy is to book some on first sign of weakness (as i find many a times this is a critical pivot), then some on failure of pullback/rally and then I
delibrately leave some part till the END or Breakeven just to ride the trend to maximum.
yes I do carry the element of unconviction every time I enter a trade because,as I said earlier, I believe that price movement is random." i believe that my
position is wrong untill proven right". there are a lot of examples in the real trading world which show that u can have a very small percentage of winning
trades and still be very profitable. a case in point would be Richard Dennis.. his winning trades are not more than 35% of his total trades but still on balance
he is profitable.
To me having a large percentage of my trades to be winners is not important.(when I am not jobbing), but what is important is how do I extract the maximum
juice out of my profitable trades, even though they may be few as compared to my loosing trades. hence I am always comfortable working with a SL, whether it
be in the mkt. or it be mental.
..........................
I think this is the main point to master, how to book profits...and another complicated thing is where ( at which point) to add in the winners...you dont want to
add in the winning trade , just to see the trade reverse....
everybody has two types of trade only..
one type is wrong trade..here you can exit 1) through SL, 2) before SL hit, or 3) not exit by hoping that trade will move in your favour and in the process
averaging at lower levels..the first two exit methods will keep your losses small, but the third method of averaging will kill you in the long run..because the
loosing trade may move once in a while in your favour but most of the times it will force you to accept large losses, which quickly eat your trading capital. and
loosing trade may move once in a while in your favour but most of the times it will force you to accept large losses, which quickly eat your trading capital. and
most of times traders try to average...because no one wants to accept defeat or take losses, its human tendency..
second type of trade is winning trade..now trade moves in your direction..what most of the traders do now..at the first sign of reversing traders exit by
pocketing their profit by moving trailing SL...only to see trade again reversed and goes higher and higher and higher or as may be the case...oh my GOD..itna
mil jaata..haath se nikal gaya...mood kharab ho gaya....now next time you again in this situation...now you book profit only @ 50 % at the first sign of
reversing, and what happens, the trade is going down the drain..and your next 50 % position will be either in very small profit or breakeven or in the
red ...dragging overall trade in red... oh my GOD...isse accha toh pehle hi 100 % profit le lete..jitna mil raha tha theek toh tha..jyada ke chakkar mein aadha
bhi gaya...
therefore those traders who master the art of booking maximum profit ie not run with small profit, they survive the longest run. My hats off to those traders.
Everbody has some lossing trades, some winning trades. but those traders will survive only who take losses small and ride their winners till the end. but
generally traders mentality is just opposite, they quickly take profits early (baad mein yeh bhi nahin milega mentality)..and take losses big (dont want to accept
they just entered in a wrong trade , kabhi toh upper jayege mentality).
so only two rules to remember in trading ( but how many master these ?)
1) take your losses small - exit from your wrong trades quikly.
2) ride your winners - take maximum juice out of your winners.
..........................
To me there is no iota of doubt that will allow me to ride my winners / to take maximum profit possible. I will not earn any thing free in the market.
And this is not the egoistic me which is saying this but the years of experience in this area. But for the simple reason as we hold on the habit of letting our
winners ride (due to reasons other than our method/thought) we may also do the same with our losers. When you leave riding your winners to the market you
are 'subconsiously learning' speculating. Today you have allowed your winner to ride, the same 'habit' will one day (just one day or just one trade) ride your
loser to the place where you started or beyond that. So it's again 2-1-1+3-2+1-1+3-2+6-2+1-5....and it gets you nowhere.
SPECULATING IN TRADING IS DANGEROUS !!!! (Either with losses or with PROFITS)
In the randomness of the market there are times when you will have trends when you "KNOW" what will happen next. This is the only time to trade. There is no
speculation here. When this trend/pattern gives away to randomness, it's TIME TO EXIT. Effectively you are in the market only at the start (or just after start)
and are out (just before end) or at the end of the logical move that the trend / pattern is 'most certainly' likely to exhibit.
I can vouch that you can make lots and lots of money by being observant of the market most of the times, staying out of the market most of the times and in it
only for a small period - when there is 'CERTAINITY' of the outcome.
Staying Out = Money 'Earned' (the simple old definition : 'money saved is money earned')
Coming to my style, I have had written broadly in another thread "Thoughts on Risk Management" which I am pasting here for your reference.
----------------------------------------------------------------------------------------------------------------------------- I would like to explain in very simple terms and easy to understand by pro and novice .
Step I:
1) Decide on Portfolio Allocation: Portfolio allocation starts with defining Financial Objectives : How much money you would need and when? Your assets,
liabilities, income and expenditure. This is a different subject altogether but still ultimately one (even a trader) has to start here.
(a) Variable (positive / negative): Equity, Real estate, Gold, F&O (Directional positions)
(b) Variable (positive but unsteady returns) : F&O (multilegged strategies primarily using Options)
(c) Fixed (positive) : FDs, NSCs, PPF etc
2) Decide on time frame to adjust Portfolio Allocation : Could be quarterly, half yearly or yearly. Depending on your portfolio performance, income from other
sources/job/inheritance etc
Step II: Here I am zeroing on the aggressive part of portfolio allocation - Trading in Options:
1) Risk = Uncertainty of DESIRED outcome
2) Desired Outcome = (a) + (b)
(a) Primary Desired Outcome = For position taken at Time T0, price CHANGES in favour of position taken at Time T1
(b) Secondary Desired Outcome = MAGNITUDE of price change from P0 (at Time T0) to P1 (at Time T1)
Hence at Time T0 and Price P0, we need to define both, T1 and P1.
For a one market, one instrument, one trading plan trader (like me) T1 is sacrosant (FIXED), P1 is the only variable.
P1 is defined before trade initiation. P1 is defined both for positive outcome and for negative outcome.
Eg If I am buying Nifty Options @ time Time T0 at price P0 (Rs. 100), and defined is P1 is Rs. 95 (worst drawdown) or Rs. 107 (best outcome), my Risk is Rs.
5. (Rs. 250 for one lot).
If my trading capital (which is PART of my Portfolio) is say 10 L and I decide to RISK 2% per trade (this % is decided at the end of each week for the next week
depending on the performance in the week gone by. The range of Risk / trade is between 1% to 4%), then I would buy 80 lots of Nifty Options.
At time T1, the probable outcome of Option prices could be:
93 : Exit fully (2.8% loss of trading capital : 80 x 50 x (-7) = -28000)
95 : Exit fully (2% loss of trading capital : 80 x 50 x (-5) = -20000)
97 : Exit fully (1.2% loss of trading capital : 80 x 50 x (-3) = -12000)
100: Exit fully (0% loss of trading capital : 80 x 50 x 0 = 0)
103: Exit 75% (0.9% profit to trading capital : 60 x 50 x (+3) = +9000)
106: Exit 50% (1.2% profit to trading capital : 40 x 50 x (+6) = + 12000)
109: Exit 25% (0.9% profit to trading capital : 20 x 50 X (+9) = +9000)
You would notice that if the price at Time T1 is less than 100 I exit fully and on some occasions the loss could be higher then anticipated 2% in this case if I exit
at 93. But this margin of error in my risk management is acceptable since I exit at Time T1.
Secondly you would notice that at price levels > 100 (i.e. 103, 106, 109) I have partially exited. But these exit % are NOT RANDOM.
If the price is > 100 at Time T1, then this T1 becomes new T0 and the current price say 103 become new P0. From here I would again calculate new P1 (both
worst drawdown and best outcome scenario) and accordingly adjust the quantity.
Step III:
Treat your profitable trade and non-profitable trades separately. The MOMENT I close my profitable trade, the profit made on the trade flies off out of my
trading capital account and rests in a different account which is my Variable - steady profit funding account, where I use multi-legged Options strategy with low
risk and average returns as the time frame used in these strategies is quite larger (almost 2 to 3 weeks or sometimes till near month expiry). Most common
strategy is Covered Call, which may be covered in detail in some thread on this forum. Also sometimes, strangle or straddle or simply deep OTM call/put
strategy is Covered Call, which may be covered in detail in some thread on this forum. Also sometimes, strangle or straddle or simply deep OTM call/put
writing, depending on the market condition. HOWEVER here too, my RISK management techinique is quite similiar to the one mentioned in step II of trading
naked options. i.e. P0 at T0 and defining P1 at T1. i.e. fundamentally though the strategy has changed as the funds are from different account, but RISK
management is still the same.
Now as I keep withdrawing the profits from my trading capital account, and continue trading eventually my trading capital would tend to cease some point of
time as there are some loss making trades which eats the trading capital. Yes this is what could happen eventually, hence with each passing period, my trade
size reduces as my trading capital reduces. Though my Trading capital could tend to be zero it doesn't happen, WHY?
Because, remember adjustment in Portfolio Allocation (Step I), which I do every calendar quarter end. Hence basically I have to live with my trading capital for
a period of 3 months, the better I trade I get more quantity to trade and then quantity decreases gradually. Profits keep going out.
When Portfolio Allocation adjustment happens at the quarter end, Trading Capital is top-uped up STRICLY on the basis of trading performance in the last
quarter, hence if I started with 10 L trading capital which was reduced to 5L in three months and has generated profit of 8 L then I may be entitled to top up to
10 L or even higher depending on my overall Portfolio performance in the quarter gone by. Alternatively instead of 8 Lacs if the profit generated was 4 Lacs,
then my trading capital can be top-uped to a max of 9 L it could be generally be lower viz, 8 L or 7 L as performance was NOT ACCEPTABLE.
STEP IV:
At the quarter end review and portfolio allocation adjustment, majority of the incremental profits generated by Trading, Variable (steady profit) strategy are
allocated another account which funds conservative investment account. The investment made through this account essentially follow simple 100 days / 200
days moving averages which are held for longer period of time.
STEP V: THE PURPOSE!!!!!

Why do we do all this? i.e. trading, portfolio allocation, risk management etc. Do we want to grow our wealth to Eternity and leave it for someone after we are
gone. NO.
I am working as a portfolio manager (or better still - a hedge fund manger) then I should be paid for my services. This is what precisely I do when I levy PMS
charges every quarter end and take out that amount from the Portfolio to my 'personal account' for my personal consumption. The charges I levy are similar to
any PMS charges which includes, fixed and performance linked payouts over a hurdle rate of return every quarter.
p.s. :
1) To maintain simplicity here I have not covered Portfolio performance parameters, weekly volatility (standard deviation) of portfolio etc. These are the
parameters against which I evaluate my performance every month and do course correction. My remuneration is linked to some of these parameters.
2) All the above mentioned steps of Portfolio and trade management are documented in black and white for reference and remove conflict of interest.
3) For all different strategies and aspect of my wealth management, I have given them names and there are really funny names which makes it very easy to
implement them.
4) As all actions (tradewise) are documented. I conduct a monthly audit of these documents and for actions inappropriate or outside the defined parameters of
my scheme of managment, penalties are imposed, which include ban from trading for a period, cut in remuneration etc.
...because no one wants to accept defeat or take losses, its human tendency...
Simply be inhumane (and I am not joking) because the market is. This is what detached trading is all about. Be ruthless with the outcome of your trades be it
profit or loss, you decide fast before market decides for you.
therefore those traders who master the art of booking maximum profit ie not run with small profit, they survive the longest run.
In my opinion they are speculators. I don't speculate. You said it right they may 'survive' (just survive) the longest. But this is the intermidiary state of a
traders' life, what next? How does he evolve and grow?
2) ride your winners - take maximum juice out of your winners
Doesn't fit my scheme of thoughts 'now', so no intention of 'mastering' it. Because earlier when I wanted to do it, I mastered it but alongwith, I also mastered
how to ride my losers, so effectively as you mentioned, I survived and survived, but just survived.
Regards,
p.s. Kindly excuse me if my statements are bit blunt. But that's how trading life is.
-----------------------------------------------------------------------------------------------------------------In my early days i believed Trading like battlefield where i would enter hit my traget and runway with the winning money (read gorilla warfare), there i
considered being able to ambush and not getting trapped as Successful Trade, then realised that was fun but not business.
These days, i feel equally happy to exit the trade if not working on my side.
So, if i have to define successful trade, I would say where i can enter and exit at the positions i want (predetermined) (and exit could be with profit/loss). I hate
sometimes (even on Intraday) , the price jumps (gaps) too far away from my position and I feel pain in exit (as this wasn't the level in my mind, and also it
screws with my R:R).
Some of you may be wondering what about Stop loss (it gets hit, but since it is market order stop loss, i get the worst fill).
Also successful trade would be where I have time and judgement to add of pullbacks and rallies (what greater success than that) [but sadly sometimes (read
often) the rally/pullback turns out to be Trend Reversal and sometimes no pullback/rally at all.
there can be 2 types of trades
1. winning trade
2. loosing trade
to me a winning trade does not necessarily mean a successful trade and a loosing trade does not necessarily mean an unsucessful trade.
a trade where I have followed my rules (whether it be winning or loosing) is to me a 'sucessful trade'
....................
Remember keeping stop loss you may lose litle of money more often but you will never lose a lot of money (which if happened will make a dent in your Equity
from which it will be an herculean task to recover)
.....................................
This is the hard fact of Trading (read: All kind of probability game).
Only because probability of success in that particular trade (or anything for that matter) was greater does not mean it will give you success. That is why pros
never worry about every individual trader. To let the probability work you will have to take them in lots (I always see weekly numbers, and then decide the
probability of the system).
I hope some of the following words from Saint will be helpful
Not only cut the Losses,but Ride the Profits.
Adherence to stop losses is important and vital,but allowing a trend trade to run its course before tampering with it is as important,if not more
-------------------------------------------------------------------------------------------------------------Let us take another Trader.Unlike our Trader friend above,this Trader is more disciplined,more ruthless.He knows the importance of stops,he realises the
importance of his capital and its preservation,.he therefore adheres to his stops.Not only does he adhere but he realises that stops are to be placed at vital
points(talking Tech Trading).He takes on the Market and after 10 trades,he makes 5 losses,and 5 wins ie 5x-5x=0.He has lost commissions,and misc charges
and made nothing.His next 10 trades have 6 losses and 4 gainsall gains are about x,and losses at x each.He ends this on a losing note as well.
This Trader has gotten it better than the previous guy..he is following half the Wisdom and finds himself perennially at Breakeven to Mild losses.After 20
such trades,he realises that his fallacy was in placing stops in the first place.The next 10 sees him hurtling down and joining the previous Trader in his
ranks..what has happened is a slow breakdown of his discipline ,which is nothing but a Totality of Minds in action .Frustrated and disappointed,he thinks that
his fault lies in the method,his system,and runs around in circles collecting this afl and that.
So too,at the end of the month,when we look at our Trade Analysis,we kick ourselves for not adhering to our stopsWe notice instantly that our stops of x
was not adhered to a few times and that led to the downfall in that month.Nothing could be further than the truth. What the Month end analysis does not
show is that the profits earned of say x or 2x was in a move of 10x or 12x..to put it crisply, we did not capitalise on the move.Not capitalising sends the mind
into Regret. Regret sends the Mind into Wrong Decision.Trades are taken when they should not have been.Stops are placed at incorrect points. Multiple
useless,unnecessary trades are put,and the broker instead laughs all the way to the bank.Even if stops are taken,the trader does not make enough to cover the
losses sustained.Sustained lack of victories sends the Mind into Defeat Mode and he then finds every possible way to shoot himself in the foot..
The Wisdom of the Ancients has always been to cut the losses,and to ride the Profits..Somehow,the 2nd half of that great wisdom stands neglectedObey
that Wisdom,and great profits follow.Neglect it,and Peril will follow in a matter of time.
........................
The best part I like about A TRADE LEARNER is his simplicity, flexibility and adaptability. In my opinion these are the only things (in order) to be successful in
any sphere of life (including trading). Some possess it naturally, some eventually get there but at the fag end of their lives,
--------------------------------------------------------------------------------------------------Good to learn that you are profiting consistently. Keep doing the same thing again and again, get bored doing it, don't try anything new. You will soon realise
that you are getting 'paid' to get bored. I also liked your approach and subscribe to the theory of trading one instrument. You see, there is no excitement here
too, as you are tracking and trading only one scrip, come what may. This is a THE approach to make money in trading.
A friend known to me for over 12 years has been trading/investing/speculating/hedging etc etc only on one stock (part of Nifty and Sensex) and this he has
been doing even before I knew him. He doesn't know (or rather want to know) what DJI, FTSE, HSI etc is, neither the US job market/housing data or closer at
home, what is GDP growth projection, monsoon failure/success, composition of Nifty, OI, rollover, A/D, PCR etc or what is the Sensex level or even when are
the General elections? For him the day starts with this stock and ends with it. And yes, he has only but grown wealthy all these years.
At worst in life one can still not be one woman man, but for successful trading one need to be one scrip (per market/method) man.
........................................
I consumed almost first three years of my trading career to get my objective close to disciplined trading. I realised that my objective of getting super rich
or quick rich was wrong. Only once I set my objective , there was no looking back.
Being modest is one thing that can only help make money in trading.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
1)
2)
3)
4)
Currently I have 5 allocations of my funds, spread over different time horizons, least being for intraday and highest being 9 months - 1 year horizon.
Over 70% of my investments are in F&O. The shorter term allocations including intraday are 100% in F&O.
2 of my allocations are fully built with Options strategies
I do not use stop loss for any of my positions (Yes Catastrophe Stop Loss is always on).
5) I do not use any FA for trading decisions. Infact the only TA tool which I use is candlestick chart. I DO NOT use any indicators / statistics, just a plain
candlestick chart. Even for Options greeks - vega, theta and delta I use candlestick chart. When I started trading I used almost every tool and indicator
availabe on earth and after years I found solace with a plain candlestick chart. (So I am not a MD, MBBS, BAMS or even BHMS, I am just a Hakim )
6) For me there is a predefined limited time to see the chart and make a decision to enter, hold or exit i.e. I get a LIMITED time to observe the chart. e.g. for
intraday, I can see the 5 min candlestick chart only for 4 seconds to make a decision, then the chart vanishes (I have software programmes for this), similarly
for daily candlestick chart I get 1 min to decide before the chart vanishes. You see, I am not involved in the market in between the review periods. As the time
to observe and decide is limited, there is rarely any conflict in the decision making process. The decision - right or wrong is FIRM.
7) I do NOT know what price I have bought or sold (again programmes to give limit orders without punching the price and quantity), so I do not trade prices
but just the charts. The contract notes and bills are checked every Saturday that is when I would know the buying-selling price and also the account balance.
8) I trade on high to very high probable trades and with no/zero focus on Risk : Reward ratio etc. My average success rate for all 5 allocations for the quarter
ended June'10 was 73%, for quarter ending Mar'10 it was 77% and for quarter ending Dec'09 it was 71%.
9) Since I do not focus on R:R, I do not target returns. Returns on my allocations are not co-linear. So on QoQ the returns could vary.
--------------------------------------------------------------------------------------------------------------------
What do we need for a living

05 July 2015
03:34 PM
What do we need for a living, I mean, a good living?... MONEY !!! But is money everything which can get us all what we need i n life?
While initially a decade ago I thought so, but then I realized that it isnt the only thing. All traders want to make money, more money and even
more money but what about the life you are leading. I have met many traders in my life a few of them very successful. They ha ve tons of money
but I fear what kind of social life they lead for themselves their society and do they have a sense of satisfaction of having done or helped
someone or their community. If they indulge in parties or donations to show off their wealth, it is all short lived. People a round them do not
understand their profession and are not interested in knowing it either and most disturbing is that these successful full tim e traders do not find
any thing in common to discuss at social gatherings, marriages or even during morning jogs. They are all aloof for the rest o f the world and their
world is either 10x10 office or a tiny room of their big houses.
Man is a SOCIAL ANIMAL, and we all need people to talk, listen, love and confide. Trading is one profession which does not in volve anybody
else than you. You live with yourself. You are your best friend, the worst enemy, it is you and only you. The people around y ou give you a skip
and you dont understand them as you have mentality of a trader which they dont have so there is no compatibility. You cant teach them
trading too as your strategies and methods will not work for them, even if someone does trades as per your advise, he will st ill lose in the long
run as your personality and risk taking ability is different to theirs. So you are all alone again.
Thanks to technological advancement, most of the full time traders will find virtual friends, enemies on such forums, some will become
virtual mentors. Their lives will be confined to a monitor for trading during the day and seeking peace by surfing the net during the night. A
few may write books, newsletters which will contain nothing different than thousands of trading books available today. - A point to ponder
again!!!
The problem with most of the part time traders (who are also doing jobs) is that they WANT TO LEAVE their jobs and do full ti me trading but
are still hooked on the job (for whatever reasons) due to this conflict in their minds they fail in trading and at job too. I being one of them a few
years ago, when redefined my objective (by incorporating the initials discussion above) of NOT wanting to leave my job and do ing only part
time trading, I could see U turn, both at trading and at work.
I find it worthwhile to lead a neutral life, make money by trading part time and still feel complete by being just another ma n going out to work
every day morning.
.....................................
A life is nothing but change and change for betterment (remember Kaizen - continuos improvement) - could you list 2 or 3 things that you have
decided to change from your ealier experience and how you plan to implement/adhere to those changes? This will enlighten read ers about the
process of life cycle of a trader and will also help you endorse it in your mind to stick to it all the times.
Perhaps the most important thing to remember is not to short a strongly bullish instrument or in other words to trade against the trend.
At the back of our minds,we are expecting a correction or we are hoping there would be a fall so we can pocket the break down wards. It is an
assumption,it is better to trade what we see. Today for example, nifty peaked by 10 and fell by 10:40, so based on technical parameter based on
volumes it could have been traded well. These days the main action is at open till 10:30 .In fact if you cannot enter by 10:3 0 or latest 12 there
seems very little to do in terms of catching a reasonable move.
....................
One way is to reduce quantity of stock/value you used to trade earlier. Hence you should restart with your fresh funds withou t leveraging. Try it
with your favourite stock or one/two large cap Index based stocks. By not levarging you will know if you have adapted the cha nges you planned
and can evaluate the results. Only after a sustained period of time and consistently favourable results (by 'result' I do not mean profit, but
successful adherence to your trading plan and method) you can get back to your initial quantity/value per trade.
Derivatives is much complex subject (especially Options) and there are various F&O statistics which can misguide you if you a re new to it.
Even experienced derivative traders too are not sure of interpretation of these numbers. Also theory is different than practi ce. Trading
derivatives without much experience can simply evaporate your capital before you know it happen.
Somewhere I am getting a feeling that you want to catch up your lost capital and hence are getting from jobbing/scalping to s tocks to derivatives
in a span of less than 5 months. You are into full time trading so you need to be more careful of failure and set back as the re aren't any/much
option for you in case of wipeout.
So stick to stocks and reduce the quantity of your trade.
,,,,,,,,,,,,,,,,,,,,,,,,,,,
Selection of the security to be traded is paramount in trading equity derivatives. And second,there are some derivatives that you can understand
the movement and other that you dont. Start with the nifty and the most liquid counters -it seems the action has shifted to the largecap names.
And thirdly,your time in the trade can be made dependent on your allocated capital (especially for the margin heavy contracts ).
ON QUESTION OF ASKING SUGGESTION
seeking advise/cofirmation on trading calls is no good for either the seeker or giver. If you mix two of the best traders, yo u will get the worst of
them .
If I wasn't good at reducing/cut back mistakes with the lesser risky instrument, how would I survive with the higher one with out rectifying those
mistakes. Definitely this will evaporate my trading capital.
...............................
For say atleast 3 days, simulate your trades with the nifty. This is vital. You need to see whether your system and your intu ition is correct .
The key thing with derivatives as with other securities is to know the state of the market: trending ,or rangebound and/or wi th a possible
negative/positive bias. The nifty has made a major move as of now so it is waiting for breathe. Also the time frame is a key consideration start
with 5 min TF and then SWITCH UP TF, then switch back.
Most of you spent years to learn your jobs and now they think, they can trade in a few days by reading in a forum and even wi ll make the same
money as they do in there jobs or even more, just by doing that. Nobody can help such minds !!
. Any way, check the trends of longer time frames like months, go down to two weeks and plan your trade at the begin on a wee kly time frame
or maybe two or three day time frame.
Give your self time to feel comfortable to the time frame you trade and if you feel, you are comfortable with this time frame , you slowly, and I
mean slowly test a shorter time frame.
Ask your self then, if you feel comfortable with that and so on. Test your time frame.
But be serious : Giving up after one week is really not some thing, which shows of your personality.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
exclusively use CandleStick for different TF trades including intraday. While I DO NOT follow any of the book patterns, I hav e developed my
own set of patterns (over a period of time) which works well for me (even of multiple underlying).
------------------------------------------------------------
So the question of risk management is not avoid the risk, but it is about managing the risk.
Managing the risk is based on the measures of severity and frequency.
1. low frequency and low severity. (For eg. opportunity losses in trading due to non-availabilty of connectivity, executing personnel - which can
be managed by placing adequate stand by (backup) arrangements.)
2. high frequency low severity (For eg. trading losses due to short term fluctuations in market prices, which traders manage generally with the
help of stop losses, appropriate trading strategies)
3. low frequency high severity (For example system crashes, software system failures , absence of key personnel etc which nee ds to be managed
with insurance, which we were trying to discuss in detail
4. High frequency high severity which is practically nil for any business, (may be except in agriculture)
managing it when the so called calculated risk goes wild.
A stoloss is not an insurance, it mere a pallatative way of quitting before it gets wilder. The market may not give a chance to exit at your
stoploss, like opening gap.
Hedging with options is a viable way to get insured without nullifying your profits, provided you are not hedged throughout. Though risks are an
intricate part of trading, it is usually well defined with peaks and troughs at certain points, where hedging is indicated.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
first understand entrepreneurship in trading.

In trading .......knowledge /discipline/adaptability/understanding market/objectivity r supreme.......u have to acquire or le arn it.
It takes time.......according to me 10yr atleast.
then understand risk involve in trade........basic difference is here risk is not potential but ACTUAL, where as profit is po tential .Newcomer
never understand it.
Next prepare an Edge.......anybody against u should be loser.
Use that EDGE , which timeframe suits u.......that modality of fitment by real time trade & analysis.
Where & when u r right ........just keep that one...........all others r to be unlearned.THEN can u learn Pyramiding/leverage that edge.......
again practice Discipline........only to stick to it,......may codify/or just follow it.Dont allow other variable to distract .
actually in trading is thorough put,u continuously buy/sell in a discrete manner.......based on ur understanding/experiment/l uck factor. Key is
hold winner and throw loser early..........when u take a position ,i dont know what shall happen, so based on market observat ion , i shall book
loss as per my criteria,.......best is can i add to winner.keep the ball/money so far u understand and getting return.....if its not, just stay
out,.......sharpen ur skill and again comeback
..............................
In trade its very imp to to create a risk-shield.............u r ready to protect ur money like knight.
after that learn.....what way u r comfortable............since u plan to continue as a marathan runner in market to earn atle ast next 10yr........after
successful trade learning.
indicators basic purpose is to give u confidence,........definitely momentum, understand exhausion of trend is imp,.........t oughest learning is
switch from one timeframe analysis to another time frame...........as accuracy may vary drastically ..........both +/ -.
Mind it sensex is indicator of growth.
order book is indicator of profit potential and research is indicator of longterm sustainability.
toughest learning is switch from one timeframe analysis to another time frame...."
can you explain this a little more?
ya explaining it.
Ans : In normal 3 yr of learning ,all novices start to learn some method of entry, may be long term......bull entry, may be i ntraday.......% move
and then profit book, similarly some swing buy.....like buy in pullback ie.bottom of a cup pattern.
Soon ie. after 3yr , its not suffient to earn from market is now known to him.......unless by God gifted luck he had made eno ugh and left out
Market.
So other method . other timeframe play, other forecasting idea like.......fundamental.ta or psychological + bookish random va riable entry/exit
system.....quantum method/fractal theory.........r read and variable strategy for different market condition which one to be applied.............r
practiced for mastering.
Another problem is to fit ,where he fits naturally.........thats timeframe and style gives higher return with better strike r ate.
In this search and learning ,he found out........its difficult to erase ......first pick up learning , it may be say break ou t play. So he has learnt it
early......its with him now,........so even after 7 yr , .....if he finds a break out play in present market condition with p oor probability , he may
actually trade it only to lose money ,.......as he enjoys the thrill of early learning days.SIMILARLY its the time frame,.... .....many trader starts
early as investor,........that backgroud stops not to trade at certain condition, because of complex RISK..NONO. THose who st arts strong as
dealer,......can not hold a 3day profit run..........knowing fully well it will move another 15% ,but block with condition of max 5%profit book,
more than that u r greedy,,,,,,,,scalpers curse.
Similarly a trained swing trader of booking around 10-12 % profit ,.......can not move down to 3-5 %profit in random time frame mode so easily.
YES IT IS THE HARDEST THING TO DO
Trading starts with excesses.........excess knowledge/excess time/excess money.
3places u have to fight..............self/other traders/market.
3places u have to fight..............self/other traders/market.

Your other life.......should not fight with your trade learning life,this environment is imp.
then comes choise of system /strategy/timeframe.
variable market condition.......up/down/volatile/nontrend small move .
Which one to be done by you.......as per ur expectation......buy/hold/sell.
What price is telling u to do? .....buy/hold/sell
Now understand to prepare trade journal.........its tool of tuning,understand what u r supposed to do vs what u have done act ually.
What is ur info source......can u nullify any hearsay from market..........your decision making skill should not be variable. ....it must be sharpen
constantly.
how u handle stress generated out of trading.
ALL this must be writen and followed just like breathing, then u r a trader
Journey of a trader starts from novice to beginner to advance level to expert. then comes Master.Now between advance level an d
expert.............its really very slippery,.......i forgot to count how many times i flawed........mostly when i think i kno w market..........i am humbled
to basic.........fortunately like cat has 9 lives........again i move. Humilation ,to face it........discipline ,recoup energ y and walk again.
this view is because.............we r by birth not at all trader,......say first doing ur swot.........u know what u r,...... so from somewhere u r
transforming u a trader.
First i am giving a hypothetical case,.......a math postgraduation topper, shifting to a trader. As to learn trading,......it takes time,........so u r doing
some formula - model to know ,what may work as a trader for u.
U may choose.......arbitrage model, or simple random mean reversion, even excel based fundamental equity based.......forecast ing proforma
model. Now u find , based on actual what is gap,........ie. error,.......but being trained mathematician,......u cant take... ....possibility for absolute
number to change, objectivity works for u,........but since system itself is variable,.........u have to understand.........b lock with number itself is
harmful for ur development as trader,......conceptually to take 300pt up, followed by 450pt down within 3 days......tells eit her ur programming is
wrong OR ur mathematical idea-notion is wrong.............this is a type of internal fight.
similarly u understand........u have u learn certain thing,.......but time constraint or other priority ..........makes u cho ose...........so again come fight
against U.
Next i am telling my chess case,.......in chess as i have learnt in childhood.....understand pattern , but for competition... ........u must fight till
death,........use ur best defence skill ......when playing against GM.
.............now understand the problem with me,.......i was known as av chess player........my rank was within single digit, in my state in
1975.......and after that with chess study of 10 yr.........later i am shifting to tradelearning,........
YES u r not supposed to fight,.........but i can not take loss,.........simple a trade loss is nothing.........just wont hold it,.........or else face mother of
all loses...........a la 5lakh..............i know how much bleed by it.
In trade ,pure small losing trade should be thrown out first...........but due to my different conditioning i showing fight b ack attitude,......create
trouble for my trading a/c..........this i call fight within self.
-------------------------------------------------------------------------
This marginal trade and opportunity trade r excellent money management concept........an advance level learner on market prac tices.......first one
is how much more he can squeeze out of same trade. opportunity trade in mm is spill bean concept.........both r subjective.
By the way, similar name trade exists ........both r used by momentum traders.......a volume set up , then a trigger on price ......a quick small profit
execution.u can do it mathematically.
.............
'Execution' (or say implementation) is one area which has taken many years and money for me to tame. Over a period I have man aged to create
a system which is devoid of interference of various functions of Trading and portfolio management.
Having read various books on related subjects, the basis of this system is dervied from a very simple and a small book titled - Six Thinking
Hats : Edward de Bono. You can find jist of this small and wonderful book on the net.
STEP V: THE PURPOSE!!!!!
Why do we do all this? i.e. trading, portfolio allocation, risk management etc. Do we want to grow our wealth to Eternity and leave it for
someone after we are gone. NO.
I am working as a portfolio manager (or better still - a hedge fund manger) then I should be paid for my services. This is what precisely I do
when I levy PMS charges every quarter end and take out that amount from the Portfolio to my 'personal account' for my persona l consumption.
The charges I levy are similar to any PMS charges which includes, fixed and performance linked payouts over a hurdle rate of return every
quarter.
1) To maintain simplicity here I have not covered Portfolio performance parameters, weekly volatility (standard deviation) of portfolio etc.
These are the parameters against which I evaluate my performance every month and do course correction. My remuneration is lin ked to some of
these parameters.
2) All the above mentioned steps of Portfolio and trade management are documented in black and white for reference and remove conflict of
interest.
3) For all different strategies and aspect of my wealth management, I have given them names and there are really funny names which makes it
very easy to implement them.
4) As all actions (tradewise) are documented. I conduct a monthly audit of these documents and for actions inappropriate or o utside the defined
parameters of my scheme of managment, penalties are imposed, which include ban from trading for a period, cut in remuneration etc.
The concept is wearing one 'hat' a time and thinking only on those lines what is indicated by the colour of the 'hat'.
Trading, like any other corporate business comprises of various 'people' who are instrumental in running the business (read t rading here)
smoothly.
In any corporate, you have the core decision making team comprising of the MD, the senior management team - the think tank. Within The think
In any corporate, you have the core decision making team comprising of the MD, the senior management team - the think tank. Within The think
tank you will have Product Development, Risk, Compliance, Legal guys etc.
Then you have a set of field managers, who are implementors/executors whose job is to just sell the product.
In the intermediary you also have Process team, who defines the company's process policies etc and finally the HR team too.
If you define Trading as a "BUSINESS", you will have to relate and allocate all the above roles to different 'people' of this business. But the
irony is there is only one indiviudal - "I" who has to do all these roles constanly, day in day out and this is where we fail in initial years in this
business as there is a constant overlap, haphazard, random thinking and interchaning of roles which we are not able to define and regulate and
ultimately blaming our 'emotions' to the losses we accumulate in the initial years.
Coming to specifics, I run a virtual Corporate entity in myself.

The decision making, implenting, process, operations, risk, compliance, legal and HR is all rolled in ONE person. The only di fference is the way
all these 'different' people function. And this is where the concept of 'Six Thinking Hats' comes. Each individual function i s taken
'INDEPENDENTLY' by physical objects (small toys) which are placed in front of me at a time, which directs to think only on an d through that
respective roles. Once the outcome is reached it is written on the scrible note and passed on the next role and so on.
I know it may be sounding weird but it works, one can get into a specific role mindset by making the environment look like th at and physical
objects makes it more easier. Also documenting the outcome helps the cause. For e.g. if the 'decision making team' makes a bu y call, defining
time frame, drawdown, payoffs etc. it is written on the note and then passed on to the 'execution team'. The role of this tea m is to just execute as
per the instructions written in the note. Post this, they would write a note stating 'job done'. This is just one example whi ch I have stated. This is
how the entire machiney works, which includes, operations team, whose job is to ensure that systems, net, broking house matte rs are taken care
without hassles. The accounting team takes care of contract notes, bills, bank statements, charges etc on weekly basis for st orage. Any special
observations by these 'teams' during their course of action are noted and taken up at the review meeting which is generally o n a weekend.
Sounds funny... but it works as the thinking, execution, etc is compartmentalised with no overlap. It is nothing but Keeping it Simple (here it is
not necessarily Short, but who cares if this is what works for me well)
Red hat is also important, once you put it on, you ask yourself how you are 'feeling' / 'intuition' at the point of taking th e trade...this could be
relating to the trade in question, trade closed earlier or even not related to trading viz, the ac is not working, there is s ome external unexpected
disturbance .
Be focused
Keep things simple
Follow Kaizen - continuous improvement
Adapt to change (Again a very small book - "Who moved my Cheese?", would help)
And most importantly, keep smile.
......wearing the red hat...', kudos. If you can adapt this concept in your trading profession, you can effectively address m any areas viz risk,
money management through this.
Thoughts on Money and Risk Management. Money Management is simple if we create a rule and strictly follow it with extreme dis cipline.
Everything will become confusing if we do not maintain extreme Discipline. I follow a simple Money Management technique, and stick to it, at
any cost. I made a Risk to Reward Ratio at 1:2. I maintain 5 p.c. Stop Loss and 10 p.c. gain. I never put in more than 10 p.c . of my equity in one
counter. When there is a loss in one counter, I take a gap of 10 days to re-enter provided signals are good. I only invest those money which if
lost doesn't change my lifestyle. I lost money on various occasions, but only to my Risk to Reward Ratio principle, but I am still comfortable
trading due to the fact that I do make lot of winning trades also. Its my R-R ratio that helps me stay in trade
...... There are only sums of data and information's which give us for a certain trade enough cross over information to be mo re sure, that the odds
are in our favor to take the trade."
-Secrets of Top Trading PerformanceMuch of a trader's early education is concentrated on strategies and market analysis. But what are the necessary ingredients for peak
performance? What are the tools for both mastering the mental side of the game and busting out of the inevitable slumps that can occur along the
way?
There are several key common ingredients when you are performing your best, no matter what the field.
EXPECT success.
It begins initially with your self-talk. Do you get down on yourself when you make a mistake? - or do you say to yourself - next time I will do
better because I have great trade management and am a superior trader! Be your own best motivator and believer in yourself. P ositive Self Talk
leads to positive BELIEFS. If you believe you can do something, you WILL eventually find a way. When you have a positive beli ef system that
the eventual outcome will be OK, then you are more mentally and physically relaxed. You then have better concentration, which leads to
smoother execution, which of course leads to peak performance.
Be Prepared
All of the above factors deal with external factors and internal belief systems. Now let's get down to the DOING part! Every trader should be
prepared before the markets open because they already did their homework - right?! One of the most impressive points in the Rogue Warrior
book was this veteran navy seal's obsession for being totally prepared for Mr. Murphy! There was always a backup plan for eve rything and this
is what kept him alive. Prepare your daily game plan by looking for both new setups and preparing strategies for managing exi sting positions.
So, assuming that you have done your daily homework as a trader, the next step is to learn how to get into the groove. There is no better tool for
this than having routines and rituals. Pre-market rituals help calm the nerves, get you into a rhythm, and also help to turn off the logical part of
your brain - the part that wants to over analyze everything.
Here is another helpful factor: A healthy body keeps a healthy mind. EXERCISE! This gets oxygen to the brain and keeps the bl ood flowing.
How can you expect to be a peak performer when you are eating junk food and going through insulin swings? Or perhaps you dran k too much
wine the night before or are jittery from drinking too much coffee. How can you concentrate well if you are not getting a ful l decent night's
sleep? Sure, most of these are minor factors but they can all add up to major bumps in your performance. One moment of sloppi ness can lead to
forgetting to place stops or letting a bad trade go too long. Then when damage is done, your confidence gets chipped away. Yo u must treat your
confidence level as something to be protected. Good habits will keep your confidence level high. Once you have good habits, i t will allow you to
increase your trading size.
Goal Setting
* Flexibility. Be flexible - if what you are doing isn't working, change what you are doing!
* Confidence. When down, get a little rhythm and confidence going. Don't worry about being too ambitious.
* Concentration. Stay with your game. Don't let outside distractions bother you. They take energy and break your concentratio n.
* Know Yourself. Match your particular strengths to the type of market conditions.
The battleground isn't the markets but what's within you!!!

And on that last note, remember that ATTITUDE is everything. How you frame out an individual experience or event will affect your success in
the long run. Do you see a trading loss or bad draw down period as a major setback, or do you see it as a learning experience from which you
can figure out how to be on the RIGHT side of a trade instead of the wrong side the next time around. Many great traders use periods after draw
downs to go back to the drawing board. Some of the best systems and trading ideas have come after periods of adversity. What incentive is there
to learn and improve ourselves when everything is smooth sailing and we are fat and happy? But when times are tough, that is when we can rise
to the occasion and prove that we can overcome any OBSTACLE set down in our path.
So many great athletes have been able to come from behind when they are down because they have learned how to seize that one opening or
opportunity and CONVERT. They latch on to the tiniest shift in momentum and milk it for all it is worth. Latch on to that nex t winning trade
and convert. The first small moral victory is the first step towards reaching the top of Mt. Everest. And if you keep making small steady steps,
you will eventually reach the top. Sometimes for a trader, the greatest feeling in the world can be making back those losses, no matter how long
it takes, because once you have done that, you realize you can do anything.
- Risk per trade 1%,
- Risk per day - 4%,
- Risk per Week - 8%,
- Risk per month - 10%.
At the start of month I calculate these number and then they are reset only on next month begining.
You can have different % here. But higher the number, difficult it gets to recover the loss. In my approach even if I am down 10% in a month, I
can easily recover in next month.. but if I am down 30% in a month (i.e from 100, i have come down to 70), then I will need a RoR of 45 to 50%
to recover.. which is not practical in a month. So, I keep fighting for 2/3 months just to get back my loss.. Not a good trad ing loop where I want
to be in.
The Must rule for me is to stop trading for as soon as any of the loss limit is hit.
If I have 4 loosing trades in a day, my trading day is over. If I have 1 4% lossing day, and next day again I loose 4 trades, I am on holiday for a
week. No more trading, no fighting with mkt to recover my loss.. Psychological impact of losses on our decision making is ver y different topic.
follow following MM rules in my trading :
1) The initial risk in any trade should not exceed 1% of the trading capital...with adds it should not exceed 1.5 %
2) Max risk at any point on all open daytrading positions should not exceed 3%
I will also suggest the following to follow in the loosing streak :
1) Trade small till you get on the winning streak and get back your confidence because loosing streak not only dents your tra ding account but it
dents your confidence,clarity of thoughts,judgement etc
2) You must learn to hold on to your positions when they are going in your favour...also add to your profitable positions...t his is the key to
trading profits....no amount of brilliant thinking will do that for you ....it is your adding and sitting with profitable pos itions which will make
enough money in your succesful trades much more than your losses in loosing trades....and this applies to daytrading as well you can have 2-3
profitable adds during the day.
3) Wait for proper set ups to develop before you take a trade...this is particularly necessary in loosing streaks..
I am sure you will get out of this loosing streak and get on to rocking streak soon. Look at it from positive perspective tha t after this loosing
streak,the winning period is round the corner....so cheer up .It is obvious that if you ask questions about money management instead of
techniques, then you need just some fine tuning, attitude building to make things up.
Calculate Risk and Reward before entering every trade and write it down on paper. This would help you to define clear, techni cal stops/targets
and most of the time, I have changed my mind when I wrote Risk/Reward ratio on paper.
Try to preserve what you have earned, does not matter how little they are, on day to day basis
Keep survival alone as your trading goal, you will be doing great money management. Once you have seasoned, you will automati cally trade for
big profits. Till that time comes, don't push yourself. Be slow and just learn to survive.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
I feel at times we tend to make simple things complicated. when we speak of day trading, why think in terms of a/c size. when u r trading, u r
either trading some system or ur intuition. either way, trade so small initially that even a string of losses does not upset u financially or
emotionally. once u r confidant that on balance u r taking money from the market, keep on increasing ur positions steadily. w e all know what the
power of compounding can do. after a winning streak if u again encounter a string of losses, start cutting back on ur positio n size. this way u
would be able to keep a part of the money that u have made and would also be able to rationally analyze ur mistakes. I have p ersonally gone
down from doing an average turnover of 20 cr a day to 2cr a day in a weeks' time and going totally flat the next week.
.........
Draw very clear rules .. Lets accept the fact, as human being, none of us are wired to be successful trading. To succeed in T rading, we got to do
things very differently. And clear cut rules does help a lot.Once u have a set of rules (don't worry, even if they are not pe rfect, or they are
wrong.. just start somewhere),, then plz backtest them on last the chart of 1 stock first and then on few more stocks.. If yo u find that it these sets
of rules make money on paper, then only u can expect them to work with real moeny in future.. Else u are kidding yourself.
Paper trading /backtesting is similar to what doctors / we as driver/ pilot/ fighter plan pilot all go thru in their simulate d training.. Once they
reach a level of success then only they are given the real stuff.. Unfortunately, trading is so easy that we all feel no need of all this.
For me too (I guess with most of the novice traders too) the initial failures could be attributed to the clash of thought pro cess within self. There
is no firmness to the thought that goes in the mind once you intiate a position, hence a short TF position would become a lon g term investment if
the immediate move was against the position, similarly a long term call would be closed immediately looking at profits. And h ere it all starts the chaos in the mind, which continues for long long time, until there is a concentrated and focused effort to address it (wh ich again I have rarely
seen people try). The more the chaos, more deeper we go in and harder to come out.
Nevertheless, coming to the point of matching trading style / method to our personalitiy / traits is what we should aim first . But in my opinion
things should not end here, infact start from here. It is not impossible to be a multi facet trader. Yes it is not easier eit her, we need to find
different models / plans which may not be improvisation of our existing methods but altogether different. And this is what I call Research.
Looking out constantly to new things, finding them, testing, improvising, customising and then making it suitable for ourselv es or else then
rejecting if it does not match our belief on my trading style, I do it all, from being long on stocks (primarily contraria n stocks- holding
over 9 m - 1 year or beyond), do the momemtum plays, go directional with Index Futures, and also sometimes a raw specualtor by buying de ep
OTM stock options (aka jackpot options).
It has been a long journey friends, but I am happy that I could manage and still able to handle it quite effectively
Discipline comes from knowing what to do and then having the courage to do it when the time comes...
Most traders plan only for the probability side and that, to them, is always what they consider the winning side. This is the biggest mistake you
can make in trading. Instead, you must plan for the losing side ----------------------------------------------------------------------------------------------------The most important objective for me is:
1. Do not lose money : So the movement I am in trade i.e. I have TAKEN the risk, from the first review period of the position after a predefined
time interval , I start REDUCING the risk, reduce risk, reduce risk....
2. Do what you know: I trade only on FAMILIAR market conditions and not all the times. Infact most of the times I am not hold ing a position
but always have eye, mind and soul in the underlying instrument. And wait for THAT opportunity to strike big and strike hard.
3. Know what you do: Trade on simple and manageable plan/method including my Options holdings.
..............................
If you are a multi specialty trader (trading different conditions) here too, if you define 'Time' for your event to occur - viz, a breakout to happen,
range bound movement to continue or stop, volatility to continue/ increase/ decrease, a possible news event to occur etc, the n your decision
making will be in a controlled environment with specific thing likely to happen by SPECIFIC TIME.
Initially I also traded various conditions as stated by you and then carried positions from one condition to another and ende d losing or carrying
loss making trade longer. Till I refined myself to trade only 'FAMILIAR' conditions and wait for them. The opportunities are lesser, the profits
are smaller, but the losses are even smaller, and the kitty grows. For me it is better than being in the market all the times , profiting some, losing
some, and eventually heading nowhere at the end of the month.
This whole concept of setting max time and min time is very intriguing actually. How exactly do you determine how much time t o give every
trade to work out or not work out ? Was it through back testing data over a period of time or by tracking the ability to get impatient after a
particular point of time or any other method ?
Soln....For Intraday Traders....Be A Reluctant Buyer & Eager Seller

For Positional Traders....Be A Reluctant Buyer & Patient Seller
.................................................. ...........
I think over a period of time every trader develops a method which will give him a reasonable indication of what I discussed above. Now to
what extent the definition of time is accurate would depend some thought and analysis of circumstances prevailing at that poi nt of time. It will
all depend on the method one uses for trading, I had mentioned somewhere on this forum that I use just plain candlesticks (af ter using and
dumping most of the indicators, charts available), for me it is now a 'glimpse' of a candlestick chart which helps me tap the pulse of the
underlying. For you it could be something else.
The initial predictions of Time may not be accurate or may be partially right or partially wrong but over a period of time co nsistency will
The initial predictions of Time may not be accurate or may be partially right or partially wrong but over a period of time co nsistency will
increase. There will be a lot of heartburn when your desired direction and movement happens after you have exited at the end of your holding
period i.e. your defined Time. But with patience and practice one can overcome this.
Again, I have quoted somewhere on this forum : Treat trading decisions as per Indian legal system which states that - the law can afford to
acquit a guilty due to benefit of doubt /lack of evidence just to ensure that an innocent is not convicted. Similarly, in tra ding, we can afford to let
go a very high 'probable' opportunity due to some 'element of doubt/lack of compelling evidence' just to 'ensure' that we don 't pick the wrong
trades and lose.
guess, now I have to bring my part as I started the whole journey. I hope, it was not to provocative. Thanks for the post fro m you and thanks to
SG for his final word. ( I was hopping, that he once gives a comment on a topic which is discussed here in the trader Dan and I was hopping it is
this time )
For my part, I have learned with all this post's you made and so I have to say thank you to you and thanks to take the time t o write thoughts
down. If you learned only by watching us discussing that subject, so it has done its work also for you.
I do not value any strategy for what ever. For me, it doe's not make any sense a toll. For what should I value any strategy t o be nearest at any
thought's, which points in a direction which is not really valuable for me ( As I only can talk for me and not for others ).
..............................
There are trading plans for different market situations and I or you implement them when you think, that the odds are in the favor.
Timing the entries and placing the entries on probability is what I do and is what I was taught. Some times like this and som e times like that.
----------------------------------------------------------------------------------------------------------------on a trade thought process development
.................................................. ..........................
1. What is trading?
2. Who is a trader?
3. How much to put at stake?
4. Where to put the stake?
5. What is the process?
6. What are the skills?
7. What are the tools?
8. Show me the Data
9. Do not learn !
10. Practice defeat !
11. Special occasions, windfall opportunities is it trading?
12. The Report card
13. Reward yourself
14. Trading portfolio models
THIS WILL BE ANSWERED ONE BY ONE

--------------------------------------------------------------------------------------------------------------------
Trading in Financial World

05 July 2015
03:37 PM
In the financial world, Trading is defined as distribution or accumulation of wealth, in the end it is a zero sum game. Einstein said the energy cannot be created
or destroyed it can be transferred from one form to the other, in financial trading money is not created nor destroyed. It is just transferred from one to the
another.
Simply to define it, Trading is Cheating !!! If you get this one definition right in your head, you will go a long way in this profession. Once we have defined this
definition, now comes the next question, who do you think you can cheat?
Get into a real life scenario, think of people around you whom you would find difficult to cheat and those whom you can cheat easily. You will get the answer.
Yes will agree that it is difficult to cheat someone who is a bully, informed, smart, aggressive, but quite likely that you can cheat someone who is fearful, a
simpleton, a fool. Yes, there you are, you can cheat fools, and they are there in plenty. What is easier to do to pick a pocket or bend down and take out some
coins from blind mans bowl. I know I am sounding grose. The latter is easy, and we need to do it, because as defined trading is cheating. You will make little
from him but you will make it daily. Unlike pick pocketing where you can probably make more, but if you are caught, you will be thrashed and some day your
hand will be cut, then you cant even pick up the coins from the blind mans bowl.
So my friends, though I may call you one, in the market we actually arent, every day I am looking how to get your money and similarly you need to do the
same with me too
Cheat the fools, look out for them, keep searching, there are many every where and they always will be.
Who is a fool, does a fool remain sacrosant, i.e. does a fool always remain a fool or does he evolve and become smart. Like wise, does a smart and intelligent
guy remain so throught his life. The answer is a big NO.
There is nothing constant and everything changes with time, experience and the environment. Yes, the environment, this is the key word. The circumstances
around can make swap the fool and the intelligent.
As we go ahead we will try and explore and find ways / tools to handle different circumstances so that we remain smart, intelligent, unbaised and are not swap
with fools.
....................
What is trading?
How is stock or financial product trading (commodities, currencies, bonds, interest futures, derivatives, etc) different than conventional trading (like a small
time grocery store or a wholesale grain trader).
The conventional traders are
- Long only
- Non levered
- Flow with the trend (will buy umbrellas before monsoon and firecrackers before diwali to trade, and not viceaverca)
The financial product traders are

- Long, Short (simply to put - not sure what to do)
- Levered (Margin trading, derivatives, worse - trading Options, which is like trading a perishable commodity)
- Flow with or against the trend
You will find very rarely a conventional trader failing and very rarely a financial product trader succeeding.
....So the first step in trading is first be a convetional trader... a successful conventional trader and then try to reach out for mastery in financial product
trading.
It is difficult, but believe you me, even if you start tomorrow, with Non-levered, Long Only, Trend flowing method, you will make a good trader in far less time
than what one is doning, (Long / Short, Levered, With / against the trend)
When we come to asset allocation part (portfolio management) you will realise that the major allocation of the Wealth portfolio has to be built on the above
premise of a convetional trader and it cannot be simpler than that.
Who is a Trader
05 July 2015
03:37 PM
We all are in real life trading almost everything we can see and also what we cannot !
But who is a successful trader? He is like a Don (pls avoid laughing, though I am at this moment), who has a network of infor mers (khabari), henchmen
(executors) and advisors (right hand / left hand of the Don himself).
The Don himself does not do anything, he just directs. Similarly for a successful trader, he does not do anything, he directs . He builds his network (either
through people or through system in our case), this network tells him what, where and how much is the opportunity. The Don Trader decides when to
strike, he directs his henchmen to do it, so is far away from the action point (and hence can do course correction) including elimination of his own henchmen
if required.
The trader himself, like the Don is always underground and works discreetly, not attracting any attention from the common man . But his is at work always.
A successful trader may portray a cool and serene image (that is a smart coverup) but IMO he is quite a restless person, all the times, he has a wagering
mind. A mind which keeps on fluctuating, randomly and non - randomly. But the best part is he has a clear focus on what and how to act, his wagering mind
keeps on processing new information which keeps on coming all the times.
Multi TF trading portfolio helps to keep mind wagering, which is what is required. Because when you have some TF earning, the re are some TF which are
losing, (ofcourse overall you want to the whold portfolio to be positive and that is achived by proper allocation of funds - which I will write later)
A waggering mind creates, non emotion to the holdings, exit in profit or at loss does not create anxiety in the mind.
Hence such a trader will find opportunities in Bullish, Bearish and non moving markets.
Next we will come to more specific topic of Portfolio management - How much to put at stake and where to put the stake.
I think I will write first on the process, skills, tools and then about the portfolio management. Will also quote how I start ed and so on..
What is the process? Process of trading, portfolio management.
Technically speaking, managing money is a full time activity. And there are professional who do it for wealthy individuals (H NIs), but for a lot of non - HNIs,
this job is done by themselves.
It is not uncommon to see that common man does not manage is money the way it should be optimally been done, almost most of t hem will not do it.
Before coming to the risk profiles of individuals (which differs from one person to another) every individual has different g oals in life. Goals are defined as a
given thing achived at a particular time. Goals would include, marraige, buying a house, a car, a vacation, a jewelry, childe ren's education etc. And all beyond
these goals there could be some aspirational goals, like buying a yatch, a resort, a casino is Las Vegas, a private jet etc. Nothing wrong I would say to aspire
luxuries in life, infact only if you dream can you make it come true.
All goals, basic or aspirational have to be defined in monetary terms, that is what is it worth today. (We will discuss about NPV (Net Present Value) and FV
(Future Value) of money in the tools section, and how Excel can help us in simplifying this task)
Now comes the income and earnings and risk profile, these two define how much of the basic goals and aspirational goals can b e achieved. If earnings are not
much but risk taking ability is high, some more goals can be met. Conversely, if income is high and risk taking ability is le ss / moderate, still a lot of goals can
be met. So it is a permutation and combination of ones earnings and risk taking ability which can conclude how many of the pe rsons goals can be achieved.
It is quite likely that many of the to goals will have to curtailed or sacrifised because both earnings and risk do not suppo rt achieving those goals.
Ok now coming to Traders specific profiles, where we all fail (including me...when I started trading) was inability to define why I am trading.
We enter trading, without any financial objective, it is initially like a game, where you make money and lose money, (like a video parlour), then you start
believing that you have found a Money making machine and then suddenly one aspires for all unrealistic goals, without even bo thering about the basic goals.
I also presume we all have blown our accounts, not once but many times (atleast I have). And if this hypothesis is true, then where is the question of setting
goals, basic or otherwise. The only goal in such a case is to recover the lost money first and then recover the interest earn ed on that money. Infact, as a day
trader, who would have lost a large chunk of money in a year or two or three, still every day a day trader thinks of getting it all in that one day itself. Isn't is
like banging your head against a wall....
Why day trade, because, you want to be in the action, you think that you are losing opportunity if you do not day trade. And this feeling of losing opportunity
is where one gets hooked and allocate almost everything or all capital to this activity.
Is Day Trading Dangerous? Yes and No.

05 July 2015
03:38 PM
The biggest drawback of day trading is (especially for all of us who have resorted to it to recover losses and feel that we are losing opportunity every minute) is
it prohibits learning. It kills the student in you. You are a drop from the school. And dear friends, this simple fact, I learnt after many years, though I paid a
good amount of 'fees' to the market, I was not a student, Day Trading - Prohibits Learning....keep it in mind and memorise...
Yes day trading can be profitable, when...once you have learnt it by not doing day trading and learning how things work, when you build a system, know your
instruments, your personality.
The point what I wanted to make was on allocation of money for trading. Trading starts with how much to allocate, even before you start trading, then how
much you allocate when you make money after trading or and how much you allocate when you lose money by trading.
If this is done right, half the battle is won. Trading skills, method, systems all other thing will likely fall in place to then win the war.
.......................
I have a feeling that money management/risk management and position sizing is a very important aspect of trading successfully which most newbees miss out
on. My trading experience is miniscule as compared to many out here neverthless as a person who has started out in the field with an aim to make it a full time
profession, i thought i share my views to.
During initial days of my very short trading career, I found that I did make good calls and end up making profits most f the days, but one or two wrong calls
were enough to erode all my profits. Soon enough thanks to numerous threads on mm here I realised that controling the risk on your portfolio is an equally
important task in the whole process of trading and I made adjustments necessary. In the following days I did have bad days but even then collectively they fell
short of what I managed to lose on one or two days during the initial period. I was lucky to realise the importance of risk management, many newbees dont
focus on it. Rather they put their energies to find methods that ll give them 100 percent positive results failing to understand there is no 100 pc fool proof
method.
By the time they realise the importance of MM its all about unlearning what they learnt till now. So I guess the sooner the better. One should atleast have an
idea of what mm and position sizing is so that he can have a realistic chance of making it to the top league. Else he may not even survive.
Agree fully...I am glad to learn that you have a clear understanding so early, now you are prepared for the second half of the battle - finding methods,
systems, sharpening skills, which will give you edge of others in the market.
I will brush upon the skills part and the methods later as we go further.
Day Trading - Prohibits Learning....keep it in mind and memorise...
Yes day trading can be profitable, when...once you have learnt it by not doing day trading and learning how things work, when you build a system, know your
instruments, your personality.
............................
What do you need to learn, a good teacher / mentor and importantly environment.
Just think of standing in a crowded place in your city reading a book, and then reading a book in a public garden and then in a library and then reading a book
in a reading room boarding school at a school in Shimla, Dehradun, Mahableshwar.
In tranquility you not only learn by grasp the subject and you are always right.
Starting a trading career (full time / part time) with day trading, is like reading a book in a crowded place. There is lot of noise, the anxiety of losses, ecstasy of
profits, the emotions, happiness, everything that you should not have for a good learning, it is all there.
When you do not day-trade, and start with larger TFs, you get more time to think, react, learn, note things, register in mind and in a book too. Also you
develop a good observational skills if you just observe intra-day charts (though you should not day trade), develop - patience - the most important
characteristic of a trader. You can control the urge to jump in a trade immediately. You gain control of holding on to a profitable position and not exit in a jerk.
Hope this helps...I know probably there could be something I may not be able to explain in words, what I can do by talking, gestures and body language, but
that is a constraint we will have to live with. I am constantly being bothered now how I may be effectively be able to glide through the more concerned topics
to follow. But I appreciate and welcome questioning and clarification seeking, as I said these are my belief and practice,
I believe there are only two ways of making money in the mkts..
one is where u have a very high percentage of ur trades as winners..while datytrading , since u are trading a very small TF, u have to keep that win percentage
very high since trading smaller Tfs, u do multiple trades and subsequently pay a high cost..
the other way to make money is to 'let ur profits run', add to ur winning trades... "daytrading" by its very nature is not suitable fr this kind of trading..as
generally a daytrader would be out of his position before the close even though the trade may be in good profit.. u have to give some room to ur winners to be
consistently profitable.. and if u are 'daytrading', u cannot afford that luxary very often..
Ok, now as we go further in this thread, just a small recap of the above two trades, one taken yesterday and one today. For the benefit of non-options traders,
may I ask some options trader reader to state the payoff (risk, reward and the reason why the above trades where taken, which of the two trades were correct
1) From the beginning, 2) In the interim and 3) in the end. There is some strong, stong message I want to give (and this is for all traders - non-option traders
too). This is one trade secret or something which will give a new dimention to your thinking for any TF trading, especially for the starters and non-consistently
successful or experienced but struggling traders.
So, please some one dissect the above trade and then I will give you something that will change the way you trade.
--------------------------------------Ok, I will start again. I now have four sheets ( Time / Direction / Length / Time entry )
Ok let me explain this, when we decide on a pattern, entry point basis our method, charts etc there is one thing we are SURE of (at least in mind) about the
outcome likely to happen for the NEXT FEW MORE observation periods, e.g. if you are trading 5 min chart and a pattern suggests you something, you are sure
of that outcome say for a period of 10 min or at max 15 mins time horizon, it is not easy or the probability of predicting what could happen after 20 - 30 mins
or beyond is difficult to guess on the basis of 5 mins chart, in our given example.
So once we decide on an entry point (ideally it should be the point at which the movement will happen in your favour either continual or reversal) we decide on
the likely outcome of the movement within the DEFINED period of time. And this is the ONLY THING we can likely define. I do not know the length, but I
LIKELY know the direction and SURELY know the time by which it HAS TO HAPPEN. Now what happens during this time period could be either what I HAD
predicted, NOT what I predicted or OPPOSITE to what I predicted. In any of the three outcomes, I am exiting at the end of the holding period. I am happy to
earn, lose or exit at par the end of the holding period on the basis of my judgment rather than hold and ride the profits if there is a sudden move in my favour
and is likely to continue even after the holding period is over. This orientation is the BASIS for not holding and riding into major losses if there is a sudden
move not in my favour.
My decision and thinking till the end of holding period is only on the basis of pattern TILL THE TIME OF ENTRY. The new additions to the pattern, charts etc are
IGNORED as they bring in the noise and emotions and they invariably to give you a call to hold you positions.
I trade on simple and minimal trading plans and spend most of the time just observing (sometimes even feeling sleepy while observing) if I can't define the
time and the likely direction I stay put. Only when almost sure, would I enter, observe the movement during the holding period, adjust the positions and exit at
the end of the holding period.
But all this was learnt the hard way when a simple definition helped me in define my trading objective :
But all this was learnt the hard way when a simple definition helped me in define my trading objective :
...................trade condition..............
Risk - Would start to lose money either side of 5450 and 5650. I would quantify the maximum risk as maximum 50 points realistically.
Reward - (53 points of time-decay divided by 5 trading days) + (some dampening in IVs) = maybe a maximum of 15 points
Reason - Gap up and then back to 5550 - Creating a broad range of 5500 (decent Support on intraday charts) to 5600 for the day
With NF at 5550 around that time, the 5600CE-5500PE short strangle would have given lesser rewards given that they would have had lesser premiums. But
the BE points may just have been a bit further away.
This trade looked fine as long as we are above that support of 5500, below which this trade would have been in trouble. In the interim - at around 1 pm, we
would have been around 5500 and trending down.
By EOD we would have lost around 15 points on this one.
This is just the price action, since I have no clue on how the IVs moved intra-day.
Analysis: Yes, the first trade was profitable (but not from the beginning), infact at the day open till 1 hour it was negative to almost 26 points, but since the
holding time for this trade was till Tuesday EOD and review time was EOD today this much volalitliy has to be figured in. But in the end the trade was much
positive with 46 points. But is this the point....NO....
Ok, the second trade, was quite simple and though you have tried analyzing it for holding peirod till expiry, if you relook I had mentioned that it was an
intraday trade with closing by EOD today are review period of 1300, 1400 hrs and EOD. This trade focused only on time decay which would have been of max.
around 9-10 points at the EOD, had the IV remained constant.
This trade as correctly mentioned was almost in the positive territory since beginning and maginally negative occasionally, ranging from -2 points to + 7 points.
Then we had a downside post 1330 hrs and if the trade was held till EOD would have resulted in loss. But is this the point... NO ...
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
So what is it that I want to demonstrate here. Even for non-options traders this applies. Once I explain the motive to demonstrate these two trades, - I will
demonstrate live equity/stock trade next week, so it may be clear for non-options traders.
Why? because when I initiated a setup I had some 'idea' about to movement of the UL (let us say bearish in the first case) as per my decision making system,
but I could be wrong, could I be. Yes, we all do make wrong entry decisions, but then how do I ensure that my decision (say bearish) in this case is correct and
I am not caught in a wrong move upside. What if an upside move happens, 1) Immediately
2) In the interim period of my holding period?
How do than I cut my loss making trade? How? How? How much loss should I take? etc etc (We will talk about portfolio mangement and RM later), so I thought
why not take only the correct trades (you think I am insane to make such statement) Well I also thought so initially, but then I thought that I need to develop
something which will help me always to get into a right trade.
what is it I am talking about? No I am not talking about my decision making system, that is my system, yours could be different. I may, if I think appropriate,
may write on it maybe later, or maybe not.
How to then convert your loss making trade at initiation into profit???
What do you think, do I have any such method to take just the right trades or convert a loss making trade into a winning trade, what is your opinion....
if it is difficult for you to guess, then kindly refer to my earlier two example trades, which appeared to be market Neutral at initiation with my view also
mentioning something like that, but I had very specific view on the direction of the market, which was not disclosed...now you would say both the position were
good the first resulted in a good profit at the end of the day and the second was good till half time of the day...
In both the cases, what do you think would I have done with the entire setup, would I have kept my longs/ short (of respective trades) open through
out....????
....................................
. I repeat I had a specific view (but maybe since I could be wrong in my view) I had.....and then mid way .... so ended in substaintail gains at the end of the
day more than the respective setups could have given.
Options trading (covered, open, writing, options strategies) is itself a vast subject and I guess it may not practically be possible to teach A to Z on this subject
on such forums or atleast I am not capable of expressing myself in this forum as there are a lot of things you keep checking different numbers, graphs and not
just the graph / price of the UL. It is like flying an jet watching all those funny meters, which can't be done on paper.
Also not many may be interested in Options trading at this point of time as the basic prerequisite for trading them IMO is to have a consistently successful or
large stock trading background.
Like any trader, you have a view on the UL, bearish, bullish, sideways and in stock you can make money either in bullish or bearish movements (sideways is for
Options...so we will not talk about it here).
So there are only two views to profit, bullish or bearish (we are not talking about the speed of change).
................................................
It is just a plain view of the UL reaching a particular price up in case of bullish view and a particular price down in case of bearish view and by a 'specific time'.
For every system of ours, this is important that the view has to be till a specific time, either 10 mins, 30 mins, till EOD, for 3 days, a week, a month etc.
But since we are no God, can we exactly define the end of the 'specific time' or can we define that our entry is just the right time and move will happen exactly
after we have taken a position. Am I talking about catching the bottom or tops to take the best entry position - which by innate human desire we all want,
yes...to a large extent, but then we need a confirmation too that we have indeed caught the best entry position and that too WITHOUT incurring loss..so the
question is how do we do it,
When we arrive at a decision point (and say our view is bullish) we generally enter long, we generally enter at a point where the bears have just climaxed but
are the bulls ready to charge....
Though ideally we should have entered after a pause to let the climaxed bears, breathe easy and cool down and just as the bulls show signs of charging. But
most of the traders are not so patient to do so, and since we always want to be in the market, we take long position just when the bears have climaxed and
then hold on our position till the bulls start charging....this waiting period of waiting and hoping that our position will flourish is the culprit and lot of things keep
running in our minds during this time. We consider the time invested is too long and hence even when there is small up move, we tend to exit as we are
restless, since we were kept waiting for so long for the bulls to charge. Alternatively if the bears decide to march further down south, there are high chances
that the position is held on, since you are married to the position as you have been holding it for so long long time and the long holding period does not allow
you to exit even when you know that the movement is not in your desired direction
So though the best thing is to enter just when the bulls are ready to charge (in case of bullish view) or just when bears are ready to attack (in case of bearish
view), we can succumb to our urge to enter the market and 'Get into the Action' and 'Get the first hand feel' by ENTERING NEUTRAL POSITIONS. Yes ENTER
NEUTRAL.
So in the above example in both the position I have initiated the trades in Neutral Gear that means that the ignition of my car is ON and I am standby in a
Netural Gear.
................................
Actually , in both the trades I mentioned - and that was bearish, but since I did not for sure knew when that would likely be triggered, I entered Neutral - so I
Actually , in both the trades I mentioned - and that was bearish, but since I did not for sure knew when that would likely be triggered, I entered Neutral - so I
am in the market and already in the action..till the time the market were moving in a limited range, my setups were not in much loss nor in much profit. As
the time passed, and your conviction as per your system, charts and price action suggest that the desired movement has started, which can be anytime from
the initiation time to the intermediate time, I CLOSE THE LOSS MAKING POSITION from the NEUTRAL POSTION that I had at initiation. And then now I have a
directional position, as per the trend in the market.
So out of the two sides, say for example, I do not spend my time and energy to keep analysing, which side is right and then move to side, BUT I AM IN THERE
sitting on the fence all the times with one leg on each side, and swings my legs merrying in the air. The moment one side shows action, I pull out my leg from
the other side very fast .
How does this help...
- It meets the basic trader's instinct of being in the market all the times (and the Neutral position help you to be in the market, but without bearing any loss as
you are market Neutral)
- As you exit your loss making position because of a movement in your anticipation, you develop habit of exiting trades in early loss - another requirement to
be a successful trader.
- It helps to hold your positions for long time, since after an move in your direction, if there is a pause, you can reinitiate the opposite position and then then
again get back to the market neutral position, keeping the original position in profit.
- And most importantly when you are having a market Neutral position, and the movement subsequently happens in the OPPOSITE direction of your
anticipation, you can either exit the entire NEUTRAL position or exit your loss making position (the position which you originally wanted to hold and profit) and
continue with you NOW profit making position (originally which you did not anticipate to be in profit). So now you got it how to make your loss making position
run into profits. This is despite the movement happening in the opposite direction to your anticipation.
------------------------------------------------------------------------------------------------------
Concept of Pair Trading

05 July 2015
03:39 PM
Using concept of Pair Trading

............................................
Hope you have understood what I wanted to convey, the Options trade was just an example, hence in those two trades, I have ea rned, but the original set up
was exited midway and loss making trades where shunt out, holding just the directional profit making position and profiting f rom the momentum of the fall
(in this case) or in some other cases would be a bull run.
To make things simpler for stock traders, it is like, If I am bullish on stock 'A', I go long stock 'A' and at the same time I go short say, stock 'B' (assuming
they have be same Beta and are strongly correlated). And then I wait, from my initiation to the intermediate time (almost til l half time of my original holding
period) and just when the bull run starts during this period and I can see it on charts and price, I cover stock B and let st ock A run in the money. And, if the
bulls fail to take off till my holding period, i get out of both the stock. And conversley, if bears decide to take control i n the interim, I either exit both the
positions or cover the long stock A and continue holding short stock B.
Hope this help to convey my motive. Practice it, practice it, you can use it with your existing decision making system. And c onvert you loss making trades in
to winners.
Whenever anyone enters into a trade, be it plain options or spreads, strategies or plain stock and/or futures, 3 things are c an happen,
1. The move is in their direction
2. The move is opposite to ones logic for entering the trade
3. There is no move at all (as in it constantly keeps hovering near your levels and keeps fooling)
Now in all the three cases, if before entering any trade one has his mind set as to what he is going to do on all the three o ccasions(i started by writing it),
trades and trading will become more easier.
Only in the case of the no.2 and no.3 is where the max learning takes place.
Because its really sets one thinking as to what will i do if the trade goes against me. And there come all the trade managing fundas.
One immediate question that comes to my mind is another of trader's itches

- to do something more about the position before the review time.
Your EOD trade for e.g - correctly had review periods at EOD Friday till Tuesday. Would you have tweaked something in the trade had there been a gap d own
in your favor on Friday morning itself and by noon, the trade was clearly deep in money? Or would the tweaking either because of loss or gain happen only at
the review time, given your belief in what your system is telling for that given TF. Or are "level" based reviews better? Lik e a review at 5600 or at 5450 etc .
.........yes if you are targeting Absolute Alpha Returns, then you need to be constantly in the markets going long, going sho rt quite regularly, if the amount is
large then the TF becomes larger, but the position in the market is mostly likely always there, through the above Neutral Ent ry example you may choose to
be in the market all the times, from Neutral to Long, to Neutral to Short.
I also term is as a Spiderman- trade as you are out of one and then into another, just like that swinging spiderman from one building to the another
...............there are other better ideas to make more money and 'with equal amount or lesser risk or without losing money'
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,,,,,,,,,,,,
On the first part of this being an eye - opener, I would say that I developed this techinque as I found that once I had developed an opinion (essentially at the
resistance or support, I would be keen to take a reversal trade, in many such occasion the trend would continue after some ti me and then though it seem a
sure continuation of trend, since my original decision was reversal, I would not take a position in continuation of the trend as it was not what I had
anticipated,- through this technique, since I am already in a Neutral Trade, I could exit my loss making reversal trade (which was my main position) and
continue holding the trend continuing position as it ran into profits.
The above techniques given large room to accommodate, right decision making system, omitting error trades and hence would adv ise it to starters, till they
have developed a good strike rate system which gives high probability of right signals on entry.
. Even today, I am stuck on lot of occasion, I enter a Neutral Trade first - only then release the loss making trade out and continue holding the profit making
trade till the end of holding period.
On the second part, of reviewing the position at the end of review period, I can only tell that once you have done your tradi ng portfolio allocation properly,
(which is nothing but portfolio management - we will discuss later) I do not see any reason for me to jump into any intermediate review..........even if that
particular trading portfolio position goes into a deep loss (which generally does not happen - once you have rigid and dynamic decision making trading system
/ method.
I recollect mentioning somewhere on this forum that I am like a baker, baking breads to cakes, to cookies in different ovens, and for different baking
products, you need different temperature and time settings, I just need to open and check those ovens at those set time and n ot in between. As such when
the timer of different oven stops as per what is being baked inside, i.e. end of my holding period, I exit automatically.
One more method of Neutral trade entry is place two SL type entry orders (one short and other long) of the same stock just ab ove the current price of the
stock and keep on changing them in the range - band fashion (something like BB bands) where you have a line above and a line below the price line. At some
big price action (either up or down) your one order is triggered and that trend is likely to continue, so hold on. Additional ly, once your position is initiated in
this fashion of entry, you can then put a SL to this position with twice the quantity, that means that if your SL is hit, tha n you are out from the original
position quantity and now have a reverse position with the original quantity.
e.g. For Stock A, if the stock has fallen from Rs. 110 to current price is Rs. 100 and you have a bullish view now 'as per yo ur system' (especially a trend
reversal thinking), you can put a buy SL order of Rs. 102 (1000 qty) and a sell SL order of Rs. 98. (1000 qty)
Now if the stock rises to 102, you will automatically enter a long position at 102 for 1000 qty, then in such a case, since y ou have created a directional
position, you can set a SL at 99 with 2000 quantity.. so incase if the the SL is hit you are now short @ 99 with 1000 quantit y. And with this directional
position you can then again set a new SL....and so on till the time the chart, your system or price action suggest a strong a nd most certain direction of the
stock till the end of your holding period.
And even after you have a robust trading method / system many times, you feel that such entry is beneficial, I still do it ma ny times, even after so many
years in trading. This way the profits may be less, but almost certainly there won't be losses. You will need to practice thi s, which isn't that difficult. But you
will need patience with this method. If can control your losses you are still in the game and milking.
Am I worried after I initiate a trade, am I happy or nervous when I exit the trade, ? NO.
What makes me detached from the positions, is it because of good high success trading system? How can I do more research on m y existing system and how
am I able to refine it, do I refine it regularly. Or use the same system?
The answer to all this lies in how much I put at stake, how much I allocate to my that trading portfolio. So you may ask what is 'that' trading portfolio. Do I
have different trading portfolios, if yes, why and what are those, how are they build, what is the basis of funds allocation to them.
When I started I had one trading allocation yes 100% to one TF trading. No prizes for guessing the results, when you have suc h most skewed allocation and
that too without much proven or with just semi successful trading method. So post the results, (as I had .."In the dark, the eye begins to see".
......................
Trading is a job...a daily business and wealth cannot be created by doing a job or daily business...this is the first and for emost thing to remember.
Yes you cannot create wealth by trading !!!
Yes you cannot create wealth by trading !!!

Wealth is relative,- wealth for you may be different meaning for me.
How do you define Wealth, for someone earning a 10k a month, wealth could be 50 L, someone earning 1 L a month, wealth could be 5 Crs and for 10 L a
months the wealth could be 50 Crs, so wealth is relative term and hence I said that you cannot create wealth from trading.
So if I make 5 L a month from trading, and my aspiration of wealth is to have a worth of 25 Crs, can I make it from trading i tself in my workable life time.
Infact mathematically, it would take me another 41 years to do it (at 5 L a month). Yes workable life time, if you are surpri sed by this term than rethink,
what you are doing today, you will not be able to do after 5 years, those of your successful methods / models will not be foo l proof then, it would require
constant upgradation and pass survival and expiry tests. The health and agility will not keep upto the levels today. If you a re afraid than so be it...
So effectively saying I cannot accumulate 25 Crs just by doing the same thing for the next 40 years. Even if I redefine my we alth definition to half the
amount, it will take me 20 more years.
So how is wealth created, it is created by investing or trading your savings for longer TF (earnings minus expenses or tradin g income minus trading losses).
One more rule (I have mentioned this again on this forum). BIG MONEY IS MADE IN BIG TIME FRAME.
Now once you are clear of this definition, the next question is does the stock market provide me will all TF and different ri sks instruments are there different
assets I will have to study and deploy my savings for longer TF trading / investing portfolio. I am not sure about you all, b ut I found them all in the stock
market, where you have MF (diversified, index, thematic, contra, momentum, small cap, mid cap etc funds), direct equity - Index stocks, non index, small,
mid, large, penny etc .stock, Derivatives, Futures and Options. And everything mentioned above are standalone ingredients. If you can develop into a master
chef -then you can create any recipe mixing these ingredients
. Yes, I hence do not have to trade in bonds, or interest rate futures, or currencies or commodities to diversify my trading portfolio. I can do it all on the stock
market itself with various instruments and all within 9.15 am till 3.30 pm.
So for me it is a focused activity to understand, learn and master everything at one place and then create whatever I want, a bsolutely whatever I want can
be created. Hence for different risk, different returns, different volatility, different TF, it all can be created on the sto ck market using different products and
mixing them to suit my requirement.
And then wealth creation does not end in the financial markets alone, for some of your wealth you can invest in a start up PE , be an investor in a restaurant
run by your friend or a relative, create and run business that can be run by managers and without owners involvement and take stock of the situation every
weekend. Take up a retail franchise of brands - fastfoods and get managers to manage it. Buy properties and lend it, hire managers for it's maintenance and
rent collection etc, buy fleet of tourist cars and rent it, set up a company to run it and.......And keep trading still your core business, your daily job...your daily
involving business.
,,,,,,,,,,,,,,,,,,,,,,,,,,,
BIG MONEY IS MADE IN BIG TIME FRAME....with less volatile returns...trading income is feeder to the longer TF assets.
if allocation is done right, then you conquer the fear of trades going wrong (ofcourse you need to have a good trading method though first).
If the thought ever comes to the mind that for all this large money is required, then i just beg to differ, it is never too l ate to make a right start. You can start
this with any amount of money you may have, the success is exponential, and any target can be met.
Now enough of the gyan, let us come to practice (unfortunately today everyone wants results) so let us come to real life scen ario.
Say I have 1 L with me now and I want to buy a car after 3 years worth 3 L. This could be one goal, defined in financial term s (3 L) and a defined time ( 3
years),
........................
You have 5 assets to invest and the following are the risk return
Asset Expected Return (p.a.) Risk (defined as Standard Deviation)
A1.............10%.........................?
A2.............30%.........................?
A3.............50%..........................?
A4.............80%..........................?
A5............120%.........................?
If you invest only in A1, you will end up with Rs. 1.30 L at the end of 3 years (30 K returns and 1 L capital) for simplicity we are ignoring compounding effect.
Similarly if you invest fully only in A5, then you may end up 4.6 L at the end of 3 years (3.6 L returns and 1 L capital)
So how much you invest in the above assets, what should be the allocation, should it be constant through out, what is the ris k (Standard Deviation) and
Probability (0 to 1) of returns as mentioned above for each assets??
To simplify and make things easier for no math and stat readers. The asset allocation should be simply higher in high risk as set and lower in the low risk
asset, since you have time of 3 years, so even there is high SD in the portfolio you need not worry as you do not want the mo ney now, you need it at the end
of 3 years only.
Hence you could have started as
Asset ...Allocation
A1 ..........0 (0 k)
A2..........10% (10
A3..........20% (20
A4..........25% (25
A5..........45% (45
Total investment 1
k)
k)
k)
k)
L
At the end of the first quarter when you review the performance of the portfolio and depending on the returns of different as set you would make
readjustments, say now your total portfolio has increased from 1 L to 1.10 L after the first quarter, your readjustment would be as below:
Asset ...Allocation
A1 ..........0 (0 k)
A2..........10% (11 k)
A3..........20% (22 k)
A4..........30% (33 k)
A5..........40% (44 k)
Total investment 1.10 L
What have we done in the first review is reduced the allocation of A5 from 45% to 40%, reduction of SD from the total portfol io.
And so on...every quarter
After 2 and half years it would look like:
Asset ...Allocatioin
A1 .........45% (1.12 L)
A2..........35% (0.88 L)
A3..........20% (0.50 L )
A4..........0% (0 L)
A5..........0% (0 L)
Total investment 2.5 L (assuming this the worth of the portfolio then)
At the beginning of the last quarter it would be :
Asset ...Allocatioin
A1 .........70% (1.9 L)
A2..........30% (0.81 L)
A3.......... 0% (0 L)
A4..........0% (0 L)
A5..........0% (0 L)
Total investment 2.70 L (assuming this the worth of the portfolio then)
So effectively what is being done here is as the financial goal come near the high risk asset, with high SD are reduced as we cannot offered that much
volalility as we touch down. Hence what we started during a take off, it is opposite for a smooth landing....
Allocation of Different Assets

05 July 2015
03:41 PM
The above allocation for different assets is the way to reach your goals and for this purpose the first step starts with defining the goals, very clearly in time
terms and financial terms.
In the above illustration we have just considered a static investment of 1 L with out considering addition of funds in the entire 3 years period, which may not
be a real life case, we keep earning regularly from our short TF trading portfolio or through existing jobs (for part time tr aders), such income also may be
added at regular intervals to the goal oriented portfolio.
EXCEL helps us in many ways for allocation of such money. Also when I mentioned 3 L needed at the end of 3 years that mean, 3 L at today's worth. So what
will be it worth after 3 years (add inflation cost). Here you may use EXCEL functions of NPV and FV to arrive at actual money needed at the end of the time
period.
Coming to tools, EXCEL has all the utility tools one can want for Financial analysis and can be used in daily life. Teaching how to use Excel will be a subject in
itself, but just visit the Functions section of Excel and go through the Finacial section and statistical section (for stat oriented readers) and explore the use of
these functions, it will be an eye opener for many. Spend some time there and try to learn the uses. Thoda difficult aur boring lagega, but believe me it can be
a game changer for you.
Another tools in Excel is the 'Solver' Function, which gives you a best combination of given alternative as per the parameter s defined by you. Hence if you
feed in the SD, expected returns of multiple asset and denife your parameters of the portfolio, 'Solver' function will do the rest and give you the best
combination of allocation to be made to that particular portfolio. This is a great function. This is a must visit and use feature in Excel. (If you cannot see
'Solver', go to Tools, click Add-Ins, and in the Add In Available window, check 'Solver Add In)
As far as use of Excel is concerned I can just conclude is only if I could demonstrate it live, the uses and benefits, there is no other better way to do it. Since I
can't do it all on this forum, I leave it to you to explore.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
..............
So likewise there will be many goals for different time maturities and all these running concurrently, so the allocation for each of these goals will be made in
different risk assets expecting different returns.
When I talk about multiple trading portfolio especially the long term TF then it comprises of many such goals fulfillment object spread over 3 years to 5 years
and beyond. The short term and mid term TF trading portfolio are like core and satellite activity which act as rudder and turbo booster to reach the goal.
By Core and Satellite activity means that your primary concern is a steady return with limited risk but time and again you find opportunities in the market to
make a quick buck (with more risk) then you deploy some funds to capitalise on that opportunity, if you succeed, it help the entire portfolio, if you dont
(which may happen occasionally) then it does not create a dent in the entire portfolio.
It is very important to spend time on creating models as per your risk, skills, instruments you can invest and returns you expect from those investments.
I am a speculator and want to be the greatest of all, but not a gambler. I would not put my money on the table and hope that people will put theirs and then
see who wins the game.
.....................
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Trading is in no way similar to tossing a coin and hoping for a 50:50 chance of winning and losing. Neither it is exclusively about the method/system you are
using or exclusively how your are mentally build.
It requires a perfect combination of your personality and a self tested highly probable method/system.
If you don't have both with and in you, you won't ever make it.
Rest all is a slow poison
................................................
I want to make money but only if I see there is money on the table put by people who 'necessarily' want to make money. Against them, even if I have lower
order of cards, I will still win, when their impatience eventually 'packs' even though they may have higher order of cards in their hands.
In other words, I would play 'who blinks first loses' game with a night watchman in the morning. And yes every morning and with a night watchman only, no
other time of the day and with no one else.....And I know, infact you all also know (isn't that surprising) that there will a lways be a morning everyday, so just
wait....to play your game then.
Trading = Speculating = Best opportunity - Lowest Risk.
,,,,,,,,,,,,,,,,,,,,,,,,,,,
Everyday the basic objective is to make your battle arena a familiar one, (something like the Indian cricket team is favourite at home grounds, due to familiar
conditions / favourable playing conditions). Hence even if we keep on milking the market almost regularly, we should not (or rather cannot) reinvest the
profits in those same smaller TF trading again. This is to keep the volume constant. Hence in such a scenario, expecting exponential returns only by short TF
trading is incorrect.
Mechanical vrs discretionary methods

05 July 2015
03:42 PM
Mechanical vrs discretionary methods is a big debate. Both methods needs well defined entry / exit / SL / direction. The same method gives different results
when the number of lots traded increases. The human emotion factor goes up with increase in volumes and this forces many eye ballers to shift to mechanical.
Developing a good mechanical system is far more tougher than eyeballing. Simply because following the rules become tougher wi th mechanical. like today, my
system gave a exit for my shorts carried from yesterday at 5414... it gave a short at 5459 and an add -on short at 5478... sl came at 5522... I could have
easily avoided the add but the moment i try to second guess the system, i would defeat the very purpose of shifting to mechan ical. I enjoy trading stress free
and if that means bearing a loser... i will gladly do it... simply because i know end of the month i will remain positive.
lack of thinking during trading hrs is what differentiates mechanical from discretionary. Some times its the smart thing to d o and ley the law of average take
care of the profit.
--------------------------------------------This is absolutely right approach for mid and long TF tradings / investments. Incidentally, the decision making for my mid / long TF trades comes from some
very simple techniques based on EMA and couple of proprietary mathematical models based on relative strength and rate of chan ge of prices. These are purely
mechanical approach but the TF are very long ranging from 3 months till 6 to 9 months.
For intraday and shorter TF less than a week holding periods, the best thing I have is the fund allocation is always constant so there is no pressure on the
volume change. The profits are withdrawn and pooled for longer TF investments based on mechanical approach. These mid and lon g TF trades are non
leveraged or extremely moderately leveraged, hence there is no pressure in any terms.
(..Afterall quite an effort, time and money has been "invested" -read 'lost')
Also to some extent there is a hope that a trader feels that now he has a good experience of the market, has got hold of a sy stem which suits his personality
and things are working for him. And this hope creates an illusion that what is lost can be recovered and money can be made fr om the market.
But this illusion is sooner or later shattered by one act or the other. And then it starts all over again.
Given the above fact, I feel there should be a smooth transitionary phase when a trader moves out to look for alternatives ou tside ( On and Off will not work
for most misfit traders).
One thing that comes to my mind is confiding with someone who is very close to you, maybe a close friend and start discussing how you have messed up and
in what state you are. Yes I know the obvious response for people who are not related to trading will immediately and strongl y react and give hundreds of
reasons to explain that trading is gambling, but maybe they could help smoothen things a little bit.
Also, in trading profession there is hardly or no interaction with any physical being hence most of the traders spent their r ecent trading years in isolation, this
creates a rift between them and their society / friends / colleagues. Hence if a trader iniatiates a concrete effort to redev elop relationships with people
associated with his daily life, he could get some ideas on way forward for him.
I have also tried to figure out at times as to why dont people call it a day. the only reason I could think of is...
most of the individuals enter the market in an uptrend, when everyone around them is making money and the only discussion goi ng around in social circles is
stocks and how much money was made by x or y.
he then enters the mkt and for a while whatever he touches becomes gold,then comes the crash and he loses everything n some m ore.
after a thorough analysis, he finds that most of his trades were good, it was just the last one or two trades which brought t he loss.
Now he sets off again trying to rectify the previous mistakes and learns to put in a stop loss.
after maybe an year he realizes that due to the use of sl his win loss ratio is not as good as it was before and on balance h e is not making any money, maybe
loosing some.
then he goes on the never ending journey of buying books, learning technicals, visiting forums etc. but more often than not h is results do not change.
after a few years he finds that he is not much better off from the time he had started.
but by this time , he has invested so much in the form of money, effort and most importantly 'time' that quitting becomes dif ficult.
I am reminded of a small episode. many yrs back abc was a broker who had the biggest client base in Delhi. he had a trading room where there were atleast
50 traders/subbrokers sitting together. one gentleman who was sitting in that room from the past 3 yrs., suddenly got up one day, shook hands with
everybody and said that he was calling it a day. everyone was surprised as to what happened suddenly. his response was, " the bse sensex went up form 3000
to 5000, I did not make any money, so I thought maybe I am a bear and would make money when the mkt. falls, now it has come d own frm 5000 to 3000
and I am still breakeven. so I feel this business is not for me"
he just quit and never came back........ there are not many who can admit that they were wrong and move on in life.
In stock trading we know, -we dont know about future, but cannot not accept.
So We know -Markets all activity is running by loser's money.
Market have to pay NSE-BSE to maintain their building and staff.
Market have to pay thousands of brokers and sub-brokers to maintain their family
Market have to pay taxes also. And market to pay some winners.
Winner may be you also.
These all Gets money from market. Market have only one source to get money to pay all of them
and that is losers. So loser is must for stockmarket. Without loser market can not run.
Me and Stock Market

05 July 2015
03:43 PM
I am in this stock market for more than a decade and has seen most of the ups & downs and GONE THROUGH like everyone else.
Now let me ask you- few simple questions.
WHY ARE YOU IN THIS MARKET?
WHAT ARE YOU IN THIS MARKET?
WHAT ARE YOUR PLANS/BLUEPRINTS?
HOW ARE YOUR MONEY MANAGEMENT ABILITY?
If you can answer these to yourself... you will never be a quitter. These questions are to be answered whatever business you venture into.
In all trading activities ... emotions always play a big role. (Even today I am influenced by emotions.) But by controlling these emotions, understanding+
eliminating the causes of them you can always make a come back.
Accepting the defeats do not make you a tiny. But losing the fighting spirit will sure doom you... not only here... anywhere you go and do any business.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
I wish, like lot of other professions with passage of time, one may eventually develop skills to perform the task, even if no t at a pro level but still could manage
to do it reasonably well to sustain himself and his family. But not trading. Here more experience not necessarily is any para meter to ensure success. Infact a
trader lives by a day. No one is sure that a pro trader will always remain so. One bad day or a big wrong trade...and then the dominos' effect can just ruin
everything. So trading is not simple or easy as it sounds in terms of sustenance. A trader is a daily wager.
Most of us may not be succussful traders and this is a fact, whether it is you or me or both only time will tell, but it is for sure
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
.I call upon viewers to just state what are their strength areas (in terms of personality, skills, knowledge) and what profession they earlier have been , if they
were not in trading profession. This could touch upon that side and might give us ideas to build up TRADER in him.
over the years I have met maybe 2 or 3 naturally talented traders.Others r simply
a. compulsive trader.. he just looks at the screen and itches to do something..the thought of loosing never even once comes to his mind. he is constantly
thinking of the millions that are there to be made frm the mkt.. I think he needs professional help.
b. too scared.. after a few beatings, he becomes too cautious and is afraid of putting a trade.he looses good oppertunities a nd never realises that trading is all
about taking risks, not avoiding them.
c. plain ignorant... he dabbles with amounts that are not significant and his account keeps on alternating bet. green n red.
I feel a trader who falls in any of the abovementioned categories is bound to fail and would be better off if he leaves trading and takes up a job which is more
suited to his personality. but the most important factor is 'self realization till the time he does not realize that this par ticular vocation does not suit his
personality, he cannot move on in life. sadly, I have seen many traders, who even after wasting many precious years of their life,do not realize this.- for them
the 'holy grail' is always just around the corner. the simple fact that someone can maybe be a good accountant and not a good photographer eludes them.
Trading is addictive and like any addiction to be removed there has to be a proper method which if followed could reduce or eliminate this addiction I am not
doubting the ability and perseverance of traders but the fact is some of the 'traders' do not have that edge and THEREFORE cannot succeed in trading (This is
my opinion, their opinion could differ).
.................................
Until and unless if you do not learn to Read the markets, you are not going to make consistent money.
Comment from a Trader

05 July 2015
03:43 PM
If you don't mind I'm going to be very straight forward, and blunt even, but I hope you'll take it from a spirit of sincerity and genuine desire to help. It's going to
be a long comment, so I'm going to break it up into 2 or 3 comments.
Here's the situation as I see it: For the last few months, and possibly much longer, you've just been spinning your wheels while thinking that you are getting
somewhere. The reason for this is that you are going about learning how to trade in the wrong way, in my opinion. I say this because I've been trading much less
than you, a little over 2 years now, and yet because of the way I went about learning and what I focused on, last year I netted $150k while nearly quintupling my
account, without a single losing month, and while only risking a very small portion of my account on any single trade. Now there could be many reasons for the
difference in performance, but I think one of the main reasons has to do with what you are focusing on and how you are going about the learning process.
To try to put it as succinctly as possible, in my view traders that are focusing all their attention on "set-ups" and finding out which combinations of indicators work
are never going to become profitable. They are trying to follow the advice of trading books that say trading is simple and psychology is everything. So they search
for set-ups that 'work', and that can take the guess work out of trading. They want to be "disciplined" and have simple rules that guide all their actions. But there's
a few problems with this. Namely, while psychology is HUGE, it's not everything. And while trading is all about simple principles, actually having an edge is NOT
simple. It's a myth that you can have a couple simple price or indicator set-ups and make money consistently if only you are disciplined. That's a load of crap. It
keeps the dream alive for wannabe traders who never realize what it's truly about. Well let me tell you what it's truly about...
Trading is about being okay with ambiguity. It's about tolerating confusion. It's about sitting with discomfort and being at peace with it. It's about not having an
exact script of when to trade or not to trade, or what's really a high odds trade, and being okay with that. It's about exceptions to the rules. It's about
contradiction. It's about uncertainty.
And yet traders left and right want to make it simple. They want to reduce it to a few simple set-ups to trade with discipline. And yet the market is not simple. The
market is all about uncertainty, and complexity, and ambiguity. Simple set-ups could never capture that, and they can never give you a true lasting edge.
So what's the solution? Is the problem in the simple set-ups themselves? No, it's in how they're being used. The bottom line is, every trader needs to learn to
READ the markets. This means that simple rules will not do. There has to be a synthesis of different elements (whether they be price action, indicators, intermarket themes or whatever), and real-time interpretation must take place. It has to be all about CONTEXT. Once you can read the markets, and don't fool yourself
it is a very complex process, then you can choose to employ "simple" set-ups to enter and exit. But the real work will be in interpreting the market to see when
you should use which kind of set-up. Seeing a hammer or whatever near a support means nothing unless you've identified the broader picture and gotten a sense
of the kind of tactics you should be using, and what the odds are for different scenarios unfolding.
Now I know you, and most traders do this to a certain extent, but your main focus is on the set-ups. It's not on reading the market from minute to minute, hour to
hour, figuring out the odds of it doing this or doing that, adapting dynamically, and thinking of trade ideas from all your observation as the day unfolds. Rather, it's
waiting for some simple set-up to pop up and then taking it.
Now is it easier emotionally to have clear set-ups to wait for and trade in this simple manner? Absolutely. But who said 'easy' would make you money. If I've
learned anything, it's that the market rewards what is hard to do. It's hard to have ambiguity surrounding your market reads. It's hard being uncertain. It's hard
dealing with competing and sometimes conflicting signs. And yet, this is what it's all about. You have to stop trying to avoid this by needing things to be And yet,
this is what it's all about. You have to stop trying to avoid this by needing things to be clear cut. And is it hard to be disciplined when there's so much uncertainty
about what is the right trade to make? Of course. But instead of trying to avoid the uncertainty by looking for simple set-ups, or some straight-forward method,
train your mind to be able to deal with the uncertainty.
As for the learning process of how you go about doing this, it's all about being constantly engaged with the markets, trying to figure things out and learn from
experience. For me, for instance, what I did was each and every day take notes in a journal all about market action and what I think it means, and how I should
trade, and what is working and what's not. I didn't write a journal describing the trades I took, or what my emotions were during the day. It was all about market
action. And it was all my perception and interpretation. Day after day, week after week, making mistakes, wrong calls, being clueless as to what was going on, not
knowing how I should trade, not knowing if my views made sense or not, and yet I continued taking notes and learning. Then I would view charts and
combinations of historical intraday charts, and I'd note certain behavior. For example, I'd study trend day after trend day and try to notice what they had in
common and how I could have picked up on it in real time. Then I'd study range days. Then I'd study a price chart of the ES versus the Advance decline line and
see what the relationship was across many different days. Then I'd do the same with the ES and TICK chart. And on and on. Over time, this gave me a feel for the
markets, and a certain understanding of how certain days differ and many subtle signs and tells for each type of environment and context.
As for set-ups, I didn't use any predefined ones. I just formed trading ideas and then tried to get in at good trade locations. Even this, which is the art of
execution, is quite complicated and not straight forward. I started realizing that in some environments it's best to wait for pullbacks, in others I need to get in at
market or I'll be left in the dust. In some markets I can buy low and sell high, in other markets the opposite is in order. And so on.
I became consistently profitable in a timeframe of a few months by doing this. But of course before that I had read 30 or 40 books and so I had all the technical
background. I had also worked a lot on my psychology and personal issues. But all of this was in conjunction with a method of learning and trading the markets
that was mostly in opposition to what the general wisdom says about simple set-ups and exact rules.
Now of course you might say that everyone has their own style, some discretionary and some not. Absolutely. But even the purely mechanical traders are very
adept at reading markets, and are aware of all of the complexity and ambiguity inherent in it. Their system might end up being simple, but it will come about
through a very deep and complex understanding of markets. And usually this system will take the market environment (i.e. context) into account. It wont just be
simple mindless set-ups.
In the end, all of what I am saying is meaningless unless you come to a personal realization. Take a look at your trading career thus far. Do you truly believe that
if you just learn to focus and take all of your set-ups then your equity curve will reverse and you'll be a consistently profitable trader? Why would the world's top
institutions spend millions and billions on R&D when a few simple set-ups could make them all of the money. This doesn't mean that to make money you need
extremely complex mathematical models. Far from it. What it does mean is that you need extremely complex mental maps that take time and experience to
develop, and that will never develop if you spend the whole trading day simply waiting for set-ups to materialize. That just won't cut it.
Right now your learning curve is stagnant because you're not truly studying the markets. Your day is wasted in waiting mode. It's not in observing and absorbing
mode. Also, because you fear loss, you aren't willing to experiment. This means that you aren't making mistakes and failing regularly, which is what you need to
do to learn quickly.
So to conclude, based on all of the above, my advice to you would be to stop trading and make a mental shift. Realize what you need to do to become successful,
and it's definitely not staying on this endlessly unfruitful path being supported by the hope of future profits. You're just running in your place unless you change
your focus and your learning method. And if you thought the journey was tough so far, you haven't seen anything yet. Get ready for uncertainty and ambiguity like
you've never seen it before. But this shouldn't be scary. It should be exciting, because this is what trading is all about. This is why it's called an ART. And it truly
becomes one when you change your focus and your learning process. Then everything, including success, becomes possible. And until then, it'll be a distant dream
that keeps appearing to be so close and yet stays so far away.
So you need to re-align with a new thought system and then get on the simulator and trade. Take losses. Make mistakes. Be clueless. Don't be afraid of it. It's
okay, that's the only way you'll progress. And trust me, progress you will.
-------------------------------------------------------------------------------------------------------------------------See in trading an individual is not working, it is his money whom he wants to work for him and he puts money to work and loses in many cases. In trading apart
from discipline; emotions, risk and money management also play vital role.
Four things differentiate trading from other professions (I mean business and not jobs). One, the gestation period of a trade (buy and sell) is very small, two; you
Four things differentiate trading from other professions (I mean business and not jobs). One, the gestation period of a trade (buy and sell) is very small, two; you
can execute a trade in a fraction of a second (you always have a buyer and a seller at any point of time) three; you can go long and short and four; you are given
leverage which make the returns (+ / -) very volatile.
All of the above could affect 'discipline', while in other professions, you may not have all or most the above elements, hence the 'discipline' part will be more or less
get addressed. That is why we have so many people doing small businesses, running shops etc with whatever discipline they have and make a living. If you
introduce them to trading they may mostly fail.
To my mind there is no doubt that normal human beings should give up before trying, changing, unlearning, learning and adapting to become a consistently
successful trader.
I am coming from that school of thought wherein I feel that in other professions (be in a job or a business) apparent feedback is given (incase we are not suitable
for doing it) that you need to go. This is despite a lot of training, counseling and mentoring- we may still not be suited for the job. Infact if we are seeking a job,
we have to face interviews, tests and experience is taken into account before an employer hires us. This is not so in trading, here anyone and everyone is
'welcome'.
When I started to work, I was doing something else, and today I am doing something entirely different
( not related to what interests I had when I started working). It is like, I developed interests, enhanced skills to the new profession and was guided to the place
where I am today. Today, I mentor people to their interest areas, something like I was mentored into.
Even in case of businesses other than trading, we get feedback from people close to us, our friends, family our customers and accordingly take decisions,
sometimes to close it down.
But in trading, such interface without outside world is not there. It is limited to self (sometimes not even to close friends or family members) so there is no
feedback. So despite trying everything and improving here or there, there is no one who could say 'I have seen enough of you since long and despite all your
efforts, I think someone could do this job better than you' or 'you are fired'.
Hence the need to "fire yourself".
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,
AS A TRADER,u should not give up before trying, changing, unlearning, learning and adapting to become a consistently successful trader (about 5yr min time)
Do you like your job and you plan once to live from trading ?
Clear your mind about what you want ! Take your time and do not hurry about it.
Trading can be a lonely job,
Your success in trading can be honored by being happy with your self,
Finally it is just a question, how you organize your mind and your live.
,,,,,,,,,,,,,,,,,,,,,,,,
How long one can run a business that is unprofitable?
..question is easy to answer, once your capital is exhausted, your all known means of raising capital is exhausted, you are automatically thrown out by the
system or market from further conducting the business.
It is about the businesses tending to 0 state.
Any business in this state has only two options
1. study in depth to see chances of any survival exists

2. or to shut the shop to stop further erosion of capital
YOUR Realisation should be firm enough that skills and resources are sufficient enough to turnaround the business, and trying for the salvage value is a better
option than continuing efforts.
Having realised this, we must deliberate on new options to him/her/business how to maximise the salvage value,
.............................................
What differentiates trading than other conventional businesses is like what you mentioned about creditors, debtors, customers, human resources etc which is
applicable in other business and can create ample pressure to close (incase the business is not doing good), in trading all of the above are zeroed in you one
person i.e. the trader himself.
For a trader to define what is the reasonable limit beyond which he cannot continue trading is difficult to define. Because there is no formal process when this
business is begun.
I think one way to start evaluating your performance (here poor performance) is firstly acknowledging that the performance is poor and unacceptable. Second, list
down things which you plan to introduce (on the basis of your experience) to enhance the performance and give a time frame for reviewing if things have
improved.
Once you steadly monitor such reviews and your performance during this period a pattern will emerge. Say if you are constantly losing after each period despite
introducing things that you have learnt, then the message should be clear.
-------------------------------------------------------------------------------------------------------------------------------------------------------------See in trading an individual is not working it is his money whom he wants to work for him and he puts money to work and loses in many cases.
The difference between investor and other categories (trader, jobber, scalper etc) is how they treat the receivables. Investors do not make a living from
appreciation of the asset, they have other source of earnings which is their primary source. Investing is not a business.
While for the other category (traders, jobbers, etc) treats it as their primary source of 'income' and it is their business, their livelihood.
Stockmarket is refletion of the economy in a broader sense and longer TF. And people should be encouraged to participate in it because as the economy grows, the
compaines grows, the stock prices rise and so does the wealth of promoters and individuals (who participate in it).
The TRADERS r not interested in the economy, growth etc-, their primary aim is the movement (up or down) of the underlying. As long as there is a predictable
movement they are in it. And who creates this movement, it's them only. Fundamentals of a company, industry, economy does not changes every second, minute
or day or a week. But still the stock prices change every moment. Why?
So why are speculators and traders not banned in the market.
Because they provide liquidity. And also the revenue to the government in terms of taxes, so they will always remain. As years pass, new speculators and traders
will come, most of the NEW as well as old, will perish, someone who traded a decade ago is not in the market today, similarly only a handful of traders todays will
trade after a decade.
So traders will come and go and provide lubrication to the system always. Nobody cares if they profit, lose, live or die. In most cases they lose and die and you
have the next set ready to replace them.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
" Clarity of thoughts '-
" Clarity of thoughts '- In Trading, we have to accept responsibility for all our action, even it is a hard thing to do so.
- We have to conquer frustration and when we are frustrated. It destroys objectivity.
- If possible, we should not look back too much, as it is a poisonous emotion we experience all too often.
- Exude confidence in our self in an unshakable way, is may best we can do against many draw downs in live.
- Maintain prosperity consciousness is an other thing to do.
- If we have to go new ways in trading, why not write down what we want in our new live. We have to be specific
..........................
Having clear thoughts about this, may points some people in definite direction ,to stay in trading. ...Despite all efforts to train if a misfit trader doesn't come up the
curve (simply put it that he doesn't have essential ingredients),THEN he must quit ,earlier the better.
---------------------------------------------------------------------------------------------------------------------------------------------------------most of us think but do not act or vague thoughts come what will happen? The whole question is about uncertainity.
.......................as we grow up in life lot of our beliefs change, sometimes they take a 180 degree turn, only to realise that still we may not be right in our
thoughts.
So when I was young, I started with 'Nothing is impossible', a few years later, it changed to 'Something is impossible', then, 'Many things are impossible' and then
'Just few things are possible'. So let us be realistic with ourselves,
1) Hockey, Football, Cricket, Relay race ("Many" i.e. the team competing with many)
2) Table tennis, badminton ("One" competing with One)
3) Golf, Long jump, running race ("One" competing with Self)
In the first group, if I as a part of the team is good (say a Sachin Tendulkar) but my team fails to deliver, either ways I loose. If I am a bowler / (defender in
football) and my batting / (forwards in football) collapse, I am too gone with them.
In the second group, I am good, full of determination, but my opponent could be better or the best, so I have a limit to my excellence. I know the opponent, I can
plan my play according to his weakness and also win pysologically over him by using tactics.
In the third group, I am self competiting, and there is no competition, I fight against myself so I can put full effort, take credit or blame for success of failure on
my own and no one else.
So in all the above groups, though you are determined, the success not only depends on "YOU" but also on the environment. How and what others - be it your own
team members or your opponents or your own self behave during the contest. So the thought on firm determination necessarily leading to success may be more
bookish and motivatinal than in practice.
Coming to the Trading arena, this is one sport where all the above three group of sports are played together, jumbled, in random order, overlapping at times. So
at one point when there are 'equal' numbers or traders placed against each others, so it is a team game. But unfortunately, before you realise some of your team
members join the opposite team (aka match fixing) and you then are on the wrong side. Sometimes you think you know your opponents when you study the FII,
DII data, volume data and while most of the times you don't. Sometimes when you are injured and wounded from the above battles, you take trades which are
against the trend (despite you KNOWING it) so you have waged a war against none but only one i.e. you. So you are playing an independent sport.
In fact it is the 'determination' itself which makes it uneasy for us to quit a losing trade, a losing battle or trading per se.
.................................................
There goes a saying "In dark the eye begins to 'see'". In TRADING we start thinking to survival, act our best and get 'realistic' ideas in our mind which otherwise
do not come.
.............................................
Given this fact, and what we have seen since the start of the year 2011, the markets have suddenly taken a hair pin bend and many are still wondering why and
how this has happened. Since last one week, it seems suddenly there has been a knee jerk and I guess many traders would have been caught on the wrong side,
the swings were also large for inflicting large losses, including classic swing in the last half an hour on the trade today, down and than up 100 points on the Nifty
each side.
It is only that my mentality and sometime money management inability does not support me. And the moment I start losing grip on my money management, i
start disobeying my method. When I for 100% sure know as per my system I should have exit and take reverse positionBUT I still continue hold my original
position. I think my system is perfect but not my mental capacity, hence it is a frustrative feeling .
.................................
People looking for an adrenaline rush should not be in trading. I had the adrenaline rush after every winning trade when I first started. But then, when I first
started winning trades were something new to me. so along come the euphoric feeling that a winning trade would bring.
That is part of the mental part of trading. I've now been trading for 6 1/2 years. Winning trades are something I am now used to. It is just a natural part of my
job. I look for the high probability setups, and enter accordingly. The trade goes my way, and then I exit for a nice profit.
I don't have too many losing trades, but when I do, I also understand that is the small price of doing business. The reason I don't have many losing trades is that
over these 6 1/2 years I have put in the time and effort to develop a sound methodology and approach to the markets.
I respectfully tell anyone that winning trading as just chance that they do not know what they are talking about. They are part of the 90% losing group of traders
who uses "chance" as a cop out for their failures.
. The rush for me is in simply reading a set of charts, knowing when a market will reverse direction, and then watching it actually do that. It's human nature to like
to be right.
If you continue to trade, then the issues need to be addressed in sequential order:
1. Does your methodology win consistently for you? The answer will come by trading it on a demo account. If you see consistent gains over a large period of time,
then you have a winning methodology. The flip side is if you could not win consistently on a demo, then up to this point, you could have saved yourself a lot of
money.
2. Margin management is the next thing. Many traders fail, because they have an excellent methodology, but put too much of the equity in their account on a
trade, and as a result, the slightest move against them blew it up. If anything, under-margin, and then you can set your trade, walk away, and even sleep easy at
night.
3. Let's say you have the top 2 items working perfectly. You are now, here....at step 3. This is the intangible part of trading. It is the part that even the most
seasoned traders have to deal with. It is the mental part of trading.It has 2 basic parts of it and that is in controlling fear and greed. There is something that
changes when real money is on the line. Let me say without sounding like I am gloating. I knew I became an excellent trader, not when I developed a super
methodology, or developed the knack to forecast the markets. I became an excellent trader when I knew that the emotional part of me was absolutely no different
regardless if I had a winning trade or a losing trade. It got to the point that my wife can't even tell by my overall demeanor if I am having a good day / week or a
bad one. In 2004, when I started up to the latter part of 2007, she knew how I was doing because it showed. There was no hiding it.
I'm saying all that to show one basic thing. That is to become a good trader, there is a due process involved. It is like any other job. If you hold a high position in
your current job, it is because you earned it by paying the price, doing your due diligence, and by constantly learning and refining and going through all the
necessary procedures to get there. Trading is no different, except it pays much more than a job working for someone.
If you find this inspiring, may it inspire you to proper action, and by taking the bull by the horns and steering the course towards being a great trader. I hope you
don't just read it, get a great tingly feeling, and then go about business as usual. No one becomes an excellent trader without; 1. developing a sound
methodology; 2. Develop proper margin management skills; 3. Controlling the mental part of trading. If you. personally, are not convinced the 1st 2 are in place,
then please, so yourself a favor and stay out of the markets. The 3rd part will be developed over time, which is why I so strongly suggest to under-margin your
trades.
trades.
Trading takes more effort than a gamblers' mentality or a game of chance. Due diligence, lots of work, and constant refinement of those skills is what it takes, and
I assure you, it has nothing to do with chance or gambling.
The business part comes with the seriousness of how I have to approach it and treat just like a job that I have to punch a clock. This pays much better than any
job I could have had punching a clock. I also realize that anytime I report to "work", I have to be mentally motivated, and stay within the psychological
parameters.
Watching the charts and making determinations which way price will go is the game. Making trading decisions is the business. ...it is the principle of it. If anyone is
going to do well in trading, they have to take it serious. This has to be a serious profession
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
A man takes a small hammer and keeps on hitting a big rock. After 100 strikes, the rock finally breaks. The 100th strike was not the most powerful. The damage
was done by the 99 consecutive blows and the last strike was just another blow that got the desired result. Now imagine the man's mindset after 99 blows...
What if he just gave up after 99. He thinks he is not strong enough to get the job done. The task he set out to achieve is simply not feasible. He tried his best and
maybe he just needs a bigger hammer...
It happens to most of us in trading. We all know that probability of a trade going bad is 50-50 no matter how strong the signal is. If we follow a system that gives
a 80% strike rate, it just means that over a series of 100 trades we can expect 80 of them to go our way. But what if 10 trades fail back to back. Will we be able to
take the 11th trade with the same system with the same conviction??
Saurav and Sachin, both legendry batsman, with proven track record and years of successful cricketing years behind them, but this is where the similarity ends.
If you ask me today, Saurav will exit by hitting stoploss (and not only a stop loss, it is a catastrophe stop loss), while Sachin may exit at the top (setting trailing
stop losses and exiting at the best price).
Quiting trading after nothing is left is not a decision, it is complusion, many traders are asked to quit (forced) since they do not have money to trade. The best
actors, players retire in their best form and not when their times are bad after a successful career (eg. Saurav) It good trade, u quit at top, - making good money
on table.
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What is the basic and important skill of a trader?

05 July 2015
03:46 PM
What is the basic and important skill of a trader?

a) Decision making
b) Discipline
c) Asset allocation
d) All of the above
e) None of the above
Ok, I would say e) None of the above (see I am asking the 'basic' skill).
So what is the basic skill, it is something that we have learnt primary school -Math - yes elementary and basic math. Not even the high school stuff or algebra,
geometry, a simple arithmetic.
But this arithmetic has to be on the finger tips and so good that you should be able to calculate (addition, division, multiplication and percentile functions)
without a calculator (yes rough estimation will do).
We all focus on trading activity and the decision making process, trading method, system, discipline, the art and the science of trading, but most of the traders
miss out on simple calculations of numbers i.e. how much is being allocated, what is the risk in a trade (for some, how much is the reward again quantifiable),
how the loss would affect that particular trading portfolio and the overall portfolio etc .
The best way to get out of this complication and to have a common standard (as mentioned in the earlier post that every day our effort should be create a
stable and familiar trading arena (even though there will be different movements every day) so that we can stick to our plan.
IT IS 100. A HUNDRED. This is the measure of everything, absolutely everything. Once everything is related to 100, managing large volumes of trades also
becomes difficult. What is 100. It is nothing but defining EVERYTHING in PERCENTAGE TERMS. EVERYTHING !!!!
So if my wealth is 50 L and I decide on 5 TF trading portfolios and the allocations are as say, (Allocations are basis the ri sk, volatility, expected returns,
leverage - non leverage and are derived with objective of meeting different financial goals)
P1
P2
P3
P4
P5
:
:
:
:
:
20 L
15 L
10 L
3L
2L
Total : 50 L
Now if I take portfolio P5 of 2 L, I calculate everything taking 2 L as 100. So if this is my intraday portfolio, and say, I am ok with a risking 10 k on a trade and
30k per day on his portfolio (the risk amount depends on the 'expected' volatility on the given trade or given day). Then the calculation is done as 5% risk per
trade and 15% risk per day. All the calculation are done on % basis abosuletley. And this is done for all TF allocations (dif ferent risk) but the measure is in
terms of %.
All this culminates in the total portfolio, which can be then diffidence on weighted terms as per risk taken (again in % terms) on the total portfolio and the
returns also need to be measured in % terms for invidivual as well as total portfolio.
Advantages...it takes makes calculation faster and easier to grasp the activity on the ground instantly, helping to take faster decisions. It takes away the
emotionality when you trade big trades
.................................................. ........
1) Look at the total allocation to the intraday trade to the total portfolio (2 L out of 50 L i.e. 4%)
2) Why is this allocation made for short TF trades ? - With 'expectation' of extra ordinary returns,
3) Why 'extra ordinay returns? - So it can have meaningful effect on the entire portfolio.
4) What is the cost of 'extra ordinary returns'? - More 'Risk'.
5) Hence selection of more risker instruments, primarily (as Jagan mentioned) Options.
6) How many trades are optimum for intraday trades? - I may sometimes takes as low as 2 trades in a day. Hence, I mean that it is not necessary that for
intraday traders to keep on trading with 10 - 15 - 20 trades daily, it can be done with a good 5 - 6 trades also (which could be a combination of 5 m, 15 m, or
30 m TFs)
Coming to point 2) of trading different quantities of trading capital, one thing what you have suggest can be done, also, alternatively the other way to do by
changing the trading TFs along with volatility. The risk per trade (in the above example of 5% etc) again is not static, it depends on the expected volatility on
that given day and this number can easily vary anywhere from 2% to even double digits. I define this number at the EOD of the previous day for next day's
trades. In most cases this number does not change in the day. But on some unexpected occasions, during 'the Interval Session' (will write on this later if
appropriate then) this number can be revised either upwards or downward for the remaining period of the day.
The idea here is to be rigid with your maths, your definition of numbers (risk) amount allocations, volume per trade, etc, this has to be static, not tweaking
around during the trading time (and for all time frames). And yes during the mid review (aka Interval Session) these can be r evisited, if necessary.
.................Yes, there won't be difference in the risk taken if I am trading intrady either Options, Futures or stocks (margin trading - leveraged). As long as
the instruments are highly leveraged the risk will be more and hence the Risk per trade / day will be similar. Just for Options, since there is element of IV, and
faster decaying (higher Theta / Price) as we go in the month, the risk increases.
I can still trade (intraday) in Futures or leveraged stocks but Options give me more options to setup trades on the basis of IV and milkling Theta (by writing)
and also gaining from directional movement of the UL.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,
my illustrative Neutral trades was primarily dealing with impatient behavior, which we as traders exhibit (pro - occasionally and novice - regularly) and are
impatient to get into a trade, hence during such impatient movement or indecisive occasions (when your system tells yes, but conviction is low) then you start
Neutral and then wait to things to unfold, either in your favour or otherwise.
How do we differentiate sideways market from trending market. Eyeballing the chart is the best way. But to have a system in place... we need a criteria which,
if filled, is officially sideways. That is when we shift our mindset from trend-is-our-friend to fade-the-extreme.
. How to define sideways market ?
To an untrained eye, keeping it simple is the best. To a trained eye, there is always a missing piece of info that could help in avoiding a failed trade
.............After a lot many years, I came to a conclusion that there is no indicator which will foretell you the timing of the desired movement. Until I started
'feeling' the pulse of the market. No not through news and impact of global developments etc, but purely on the basis of simple charts for different TFs. IMO
there is no other way but this 'unprofessional way' to time the movement.
there is no other way but this 'unprofessional way' to time the movement.
With all the indicators, formulas, and programming, codes we are just beating around the bush, just feeling that we are near the destination, which is not to
be.
Eyeballing is necessary and only an experienced eye can detect the move early and quite often precisely. And IMO this is the hard fact. You would be surprised
to know that I do not use any charts except of a simple CS charts (ofcourse of multiple TFs, simultaneously) and decide on th e entry and exit. To be precise,
for me it is just the THREE preceeding candles do it all, all other candles are only for purpose of knowing the primary direction of the trend.
...adding more to this topic of Risk per trade...(and I have mentioned also earlier, some to the highly speculative opportunities are the '2 mins trade' (I call it
'Maggi Trades', :-) ), enter at 3:29 pm previous day EOD and exit at 9:16 am next day BOD. Such setups basically a subset of well know 'Jackpot Options'
trades are focusing primarily only on gap up or gap down opening on the next day.
Here the opportunity is it to double or triple or multiply with any higher number (depending on the UL and how deep OTM Options you buy) and how much is
the gap up / down in your favour. But at the same time there is very very high risk of the UL not gap opening (so even flat opening will make your position
down by 5% to 10% instantly (again depending on the deepness of OTMs). And if the gap opening is 'opposite' to your judgement than you are instantly down
anywhere between 25 - 30 - 40 - 50%....
So in such 'Maggi Trades' the risk per trade will be extra ordinarily high. I have two options here, one, not take such trades (and let go an opportunity, even
though I am 'almost certain' that gap opening will happen) or two, risk only smaller amount of shorter TF trading portfolio. So, if I have 2L as my shorter TF
allocation, I may only put 50k for such 'Maggi Trades'. The risk per trade would be 50% (ie a loss of 25k) so the over all short TF portfolio it would be 25k / 2
L i.e. 12.5%, which I may be ok with
IMO, after the first skill of basic math, good ability to read and interpret the numbers, the second skill is of Problem Identification.
Why is Problem Identification necessary....
There is no activity in the world do in past, present and would be done in future which will be done right the first time. If you look around everywhere, and
when you see successful people, brands, companies, relations, products, cultures or anything, they have constantly refined to this level. No one start it right,
though the intentions may always be right. For us to be right, depends on, Internal - our ability to define rightness, capability to stick what we think it right
and External - environments willingness to support that it is right.
Without the ability (and willingness) to Identify the problem, there is all the likelihood that for a trader, even if he has a good strike rate and a good trading
system, he may at best be running on tread mill - running on the same place, thinking that he is going distances. If the problems are not identified, then it is
difficult to find a remedy or solutions to address them. I may not write more here, but what I can suggest is instead of read ing books on trading it would be
worthwhile reading some books on basic engineering / manufacturing books on problem idenfication. No need to buy such books b ut glancing a few chapters
or the foreword would kick start thinking activity in you mind.
Willingness to identify problem, is the first step. I can only but assure you that you may not really need any external help (if have just a basic IQ and
reasonable intelligence) that you 'YOURSELF' will be able come out with solutions to your problems, once you identify them
Your own data (which is your history) is the most important source of information, it is your DNA. Starting from this point c an help change the DNA for
betterment in future. If someone asked me how can I help him trade better. I will first look at his data, his history. The doctors, lawyers, ask about past
information before giving their opinion. The consultants, corporates hire, spend most of their time in data collection.
...I would have loved showing, problem identification and data collection techniques so you all could relate to it much better. I will see how I can do it here on
this faceless forum, with my limited ability on tech skills, with variety of trader- readers. ...The next step logical step post this is 'data analyzing', well Excel,
pivot and other functions can do it for, but you need to be hands on these,
....................................
Some generic flaws are:
1) Trading without a Trade Plan
2) Changing TF of trades
3) Taking a trade in vengeance
4) Not putting SL
5) Changing SL adversely
6) Adding to losing positions
7) Exiting from profits early
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Above are some of the very common flaws of failed trader. Sometimes there is an effort to correct these, and sometimes not. Given the human nature it is
difficult to change as you grow up and the older you get, more difficult for one to change. The upbringing, culture and our t hinking from our childhood makes
things difficult for us to change. And even if there is a change, it will be marginal w.r.t to the effort put in. So, is there a way out to profit from such flaws....I
always thought...Why change...why change...Can I make use of my core incompetency to trade profitably. Yes....is the answer...just by changing a
little....very very little and this is possible.
1) Professional traders - Traders, who have derived some techniques, methods have a TradePlan, MM, RiskManagement plans. They mostly stick to the set
rules, but since they are 'Professional traders', they again have to be in the market most of the times. Hence for different types of market conditions they will
have different trading methods, instruments, which they will keep on changing or altering to be in sync with the market dynamics. They primarily focus on
their 'CORE COMPETENCY' and occasionally try out different TP depending on the market conditions. They are mostly full time traders. And for such full time
traders, since it is their livelihood, they cut down on volumes during downturns (may also lose opportunities then) and increase the volume during a good
performance (may also take higher risk and trade where there actually may not have been good opportunity)
2) Profitable traders - They are not in the market most of the times. They mostly sit out. They laze around like a crocodile sunbathing on the banks, oblivious
of any activity happening around them. They wait for things to come to them and pounce upon them and they are out again. They can endlessly wait for a
desired opportunity. They will not go deep water or into the sea to catch fish, but wait patiently by hanging a fishing line from the banks for the entire day and
wait for fish to come and get hooked. They neither are careful of their core incompetencies or use their core competencies. T hey thrive on 'CHOR
COMPETENCY'. Just like a 'Chor' (thief) they do not go every night to steal, but are constantly tracking and noticing the movement of their 'target' make up
the entire plan, Plan A (pros)and Plan B (cons) and wait for the right time to strike.. It is necessary to define what we are focusing.
.............................................
Coming to the Core Competency part, each of us traders here (failed or consistently successful) have some or other core competency, viz...
1)
2)
3)
4)
5)
A good trading system (discretinary or mechanical)

A good intutive / gut feel
Ability to be patient (to enter late and to exit later when in profits)
A good ability to allocate money, RM, MM and TP
Ability to stand out from the market when we do not understand what is happening.
5) Ability to stand out from the market when we do not understand what is happening.
6) Having control over self only to enter trades where there could be a handsome profit and not just a small proft.
.........................................
But the idea is to IDENTIFY core competency. The first step begins with identifying...once you identify them, then can you find a solution...as I said the
solution is within you...Even if there in just one Core competency, you can sharpen it so much that you can milk the market with that one thing itself for
eternity. And similarly if you identify and focus on core incompetencies, howsoever many they are you can still use it in your favour by just a small tweaking
.................................................
Core incompetencies from the above post as below:
1)
2)
3)
4)
5)
6)
7)
8)
Target achieved in a day but still trading i.e. over trading

Seeing profit into loss, and still holding the position and not exiting
Vengeance / revenge / trading to recover losses
Past experience is used to exit the next trade in less profit / not able to hold profitable trades longer / early exit fro m profitable trades
Past experience of loss or fear of losing results in not taking further trades
Not following charts / methods and losing focus in between on the methods
Silly mistakes in placing orders and then praying if they go in loss
Switching methods / hopping from one to another trade
Disclaimer : Since I am addressing how to best use our flaws to profit, I am not mentioning how to correct them. The above are trader specific and hence
should not be construed as a trader personality trait which is necessary to trade profitably. If you do not have any or all of these flaws, please do try to
acquire them. You may be better off not having these.
1) Target achieved in a day but still trading i.e. over trading.
- Create noise, virtually. If you can play some music even better. See if you can enter your profit in an excel trade by trade (net profit) and once it crosses
your days target, the sound file should run automatically (simple macros can help google sound playing macros in excel, you will get many). You can play
your favourite song too once you reach your target and play it loud, let to whole wide world know about it.
- Just pull the plug of your CPU or press down the Off button of your laptop at that moment itself in a fraction of a second once the days target is achieved.
Rush for a shower (if at home) or for a leak in the loo (if in office)
- Dial a random number from your phone book of your mobile and start talking all good things and how you remember him or her. ( other purpose of PR with
friends/ relatives is also addressed by this)
2) Seeing profit into loss, and still holding the position and not exiting
- Silence is Goldenbut not always
Keep a small innocent looking toy on your desk ( a Noody or a Doreamon will do) once you get into this position, do not look at your screen, look at the toy
and start speaking to him loudly (do NOT be silent when you are mum, you will not act). Ask him why is he sad, make him answer and you speak on his
behalf loudly to yourself. Ask him what will make him happy and let him shout at you Get Out or rather WTF you are doing here, Get Out. Turn back to
your screen (no looking at chart or the price), just get out at the market price.
3) Vengeance / revenge / trading to recover losses

- At the juncture of taking a vengeance / revenge trade or trading to recover loss the atmosphere in the mind is quite intense. And you need to release the
pressure only at the right moment. Remember there a secret alarm bell button at a cashier counter in a bank and incase of any robbery attempt it has to be
pressed immediately which sounds off the nearest police station. In the same way, create a one key (hot key) function which when pressed will sound an
irritating alarm. You can use a physical bell too.
- The power of zero. If you still want to take a vengeance trade and you had decided to buy 1000 quantity of x instrument. The moment you are going to
enter this trade, keep the 0 key pressed for 2 seconds more and then press enter for order placement. What will happen here is your order will be rejected
since the order quantity you placed will not be 1000, but will be 10000000 or 10000000000.
- Play Double Cross - (This can be done easily with little practice). When you are at the verge of taking a vengeance trade, just at the last moment say it
aloud, Allah o Akbar, Jo bole sonihal, Har har Mahadev or whatever similar you have faith in and just enter an opposite trade to what you have been thinking
of i.e. if you planning to buy then place a sell order and vice versa. In the most of the most cases it will be a profitable trade.
5) Past experience of loss or fear of losing results in not taking further trades
When I was young and in school, we all had some crush on some or the other girl and during those days, talking to girls in th e school was not very common
(atleast in my school). It used to to take days, weeks or months to talk to some girl, though every day, the feeling was I will do it today, and some of us could
never ever talk to the girl. The situation is quite similar here too, there is a fear of unknown, we are carried away by all that could go wrong with us (either in
the girls case or the next trade)...ok since I am not going to offer remedy to this and we are discussing how we can reduce the effect of this flaw or benefit
from it, let me guide you to the Netural trade post I wrote early in this thread.
The only way out of this situation is to enter a trade (which we are otherwise prohibited - fear of the unknow, by our mind). So enter a Neutral trade. So if you
are an Options (directional) trader, by both Call and Put together and if you are a stock trader enter two stocks (if they ar e negatively correlated, better still incidently this is the most common hedge funds strategies to enter Netural with two stock negatively correlated). As soon as your direction is decided, you can
let go your non profitable position and hold the profitable position.
See what we are trying to do here is 'Entering a trade' and this is all what we want when we are facing this short coming, since we do not enter, we lose
opportunity to profit and more the heartburn. Hence even if we are entering Neutral, the fact is we have atleast 'entered' the market and that is what we
wanted......
most appropriately that we need to take away the blame from self. And that much is good enough to rest our mind. A stable min d will most likely take correct
decisions in the future. So what if the results maybe inconsistent, the mental frame is intact and ready to take on the next trade logically.
Just to give you more perspective, in cricket (we all love this game, don't we) when I was young and had a dream to play for India :-), I used to practice
batting and the first thing which was taught was the foot work..foot work..and foot work..come to the front foot, in the line of the ball...etc, there were strokes
which were all patented, and there was no shot out of the book. But look today, how the batting maestros play, Sehwag, VVS, G anguly, all great batsman, and
rarely they move their foot (sic), are they wrong or was I?? Today there are reverse sweep, paddle shot, late cut, (and yes t he helicopter, uppar cut, pallu
scoop, etc), all these are not the 'cricketing strokes'. But does it matter now, no, as long as it helps you and you benefit from it, it is ok.
In trading there is no many way of profiting and there is many way you can programme, code or create system for different type of market conditions and
eliminate human thinking.
There has been, is and always be human behaviour - rational and irrational which will run the markets and no automated systems, NOR an individual can
profit in all cycles of markets - and that's my word.
Change a bit from discretionary method to mechanical, just a little bit. Why? In such situations of past experience and current experience our mind keeps on
processing multiple and opposite thoughts simultaneously and what ever decision we take there after, if it results in a loss or profit we add it to the hard disk
of our head.
, it is better that the decision to hold or exit the position in less profit or to hold it longer should be done bit mechanically.
So, it can be done in a toggle manner i.e. if the earlier experience says exit (should have been written somewhere earlier before taking the current trade) then
you will hold the position, and likewise, (You may also choose to do the same as what was done earlier).
What we are actually doing here is freeing our mind from the additional stress (already it is processing so much for us, why bother it more with such issues,
especially when we are in PROFIT). I believe that there are so many questions and mysteries in the world and we need not try and solve each, infact life will
be better if some mysteries remain mysteries forever.
So keep a cool and stable mind, which can help next trade right.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
we were discussing..how to trade .The process begins first by identifying your shortcomings, and this is not very difficult. List them down on a piece of
paper and divide them in categories
. Did I say a piece of paper?
I remember almost close to two decades ago, I went to SSB interview (to join the IAF) after clearing the CDS (Combined Defens e Services) written
examination. During the week long interview, apart from the physical tests there were aptitude tests. In one such aptitude test, there was a practical situation,
some models of a village, some objects, the enemy, the army, ammunition, civilians, cattle,c etc...and there was some task which was to be done using
limited resources in a given time. It is a different thing that I couldn't join the IAF , but again Eureka.... I could now use it to trade. I learnt one thing that all
wars are fought on the paper and won on the field A worthless paper and a small pencil to scribble is good enough to make a p lan - a strategy - a tactic.
By planning on paper, I do not mean paper trade (incidentally I do not subscribe to the idea of paper trading - my opinion - others may disagree).
Coming to our point of flaws in trading, listing them down on a paper is the first step. Because only if you write, you will know and remember and if you
remember, you will try to address it. In the earlier posts, I mentioned not seek remedy to correct the flaws, you cannot eliminate them. They are our core
beliefs, values, which we cannot change, a little twisting is possible, but a U turn is not.
Discretion is a must. Simply because we are competing against humans.
But discretionary methods can create a lot of stress and demands a quite mature mind (non trading skills) to handle the situa tion. To practice trading for long
time using discretionary style requires a lot of patience, tolerance and self control capabilities. If not handled well, it could lead to anxiety, affect health
adversely and also lead to poor trading performance.
Using non-discretionary methods (formulas, mathematical equations, etc) may lead to a good strike rate (high number of wins) but not ne cessarily high profit,
it also could also lead to net loss, as a few wrong trades can nullify all the gains.
There are some hybrid styles, which use both the methods, exclusive use of non-discretionary method to identify opportunities and then using discretion to
take the final call.....................my personal experience and the most effective non-discretionary method (my belief and applicable to me), I use for longer TF
trades is based on SMA/EMA crossovers. Additionally a few mathematical equations based on relative strength of the stocks vis-a-vis the index. This gives the
macro guidance to understand the direction of the trade and stocks to trade.
Then use of discritionary skills (through VIX and CS chart of the UL) to decide on the entry timing. But these are used for mid and longer TF and not for
shorter TFs trades.
...........................pl understand the comments of the great trader
-----------------------------------------------------------------------------------------------------------------------------------------------------------Now i shall ADD comments from SAINT.
Not the theory ,but reality
............................................
Just about everyone knows the grisly statistics about options trading: 90% of all naked option players (no, that doesn't mean they trade in the buff, only that
they buy uncovered puts or calls) end up losing money. But hardly anyone knows the equally grisly statistics about equity trading: 80% of all stock investors
end up losing money.
But how can that be, you ask? Over time, the stock market is a sure thing, a guaranteed way to make money. It's so easy. All you have to do is buy good
stocks and hold them. Everybody says this, pundits, brokers, financial advisors, the media, the historical record itself. No one who simply bought and held the
Dow Jones Industrial Average or the S&P 500 has ever lost money over a 20-year time span. Right? Yes, right. Now go find me someone who bought and held
for 20-years. You should be able to find a few, about 20% to be precise. The other 80% lose money.
How does this happen? A couple of ways. Primarily, it happens because no matter how resolute people think they are about buying and holding, they usually
fall into the same old emotional pattern of buying high and selling low. Investors are human beings. Human beings naturally w ant to be in the winning camp,
and human beings naturally seek to avoid pain. When things are most euphoric in the investment world, at the top of a long bull market, these human beings
are in there buying. And when things are most painful, at the end of bear market, these human beings are in there selling. In fact, it's usually the final
capitulation of the last remaining "holders" that sets up the end of the bear market and the start of a new bull market. As S y Harding says in his excellent
book "Riding The Bear," while people may promise themselves at the top of bull markets that this time they'll behave differently, "no such creature as a buy
and hold investor ever emerged from the other side of the subsequent bear market." Statistics compiled by Ned Davis Research back up Harding's assertion.
Every time the market declines more than 10% (and "real" bear markets don't even officially begin until the decline is 20%), mutual funds experience net
outflows of investor money. Fear is a stronger emotion than greed. Most bear markets last for months (the norm), or even year s (both the 1929 and 1966
bear markets), and one can see how the torture of losing money week after week, month after month, would wear down even the most determined buy and
holder. But the average investor's pain threshold is a lot lower than that. The research shows that It doesn't matter if the bear market lasts less than 3
months (like the 1990 bear) or less than 3 days (like the 1987 bear). People will still sell out, usually at the very bottom, and almost always at a loss.
So THAT is how it happens. And the only way to avoid it is to avoid owning stocks during bear markets. If you try to ride the m out, odds are you'll fail. And if
you believe that we are in a New Era, and that bear markets are a thing of the past, your next of kin will have my sympathies.
But people lose money in other ways, too, even during the strongest of bull markets. Let's look at some of the more common trading mistakes to which people
are prone. Many of them are related, part and parcel of the same refusal to pay proper attention to risk management. If you r ecognize your own actions in
some of these, join the club. Over the years, I've committed every sin on the list at least once. Still do on occasion.
-- Letting small losses turn into large losses.
A whole myriad of mistakes accompany this one. Refusing to take a loss at all. Overbetting. Catching falling knives. Averaging down. Etc., etc.. At root, it's
probably because the average investor pays little mind to risk management. In a way, it's understandable. The majority of tho se in the market today have
only come into the market during the last 5 to 7 years. They have never really experienced a serious bear market. The only investing world they know is that
of an ongoing bull market, where it's ALWAYS okay to buy the dips, where a stock that craters ALWAYS comes back. But SOMEBODY bought UBid at 121. And
SOMEBODY bought eBay at 234. I hope it wasn't you. You should only be buying stocks that are in an ongoing uptrend (hopefully not TOO far along however),
or those that are bottoming out following a stiff correction. In other words, when you buy a stock it should be with the expectation that it will go up
(otherwise, why buy it?). If it goes down instead, you've made a mistake in your analysis. Either you're early, or just plain wrong. It amounts to the same
thing. There is no shame in being wrong, only in STAYING wrong. If a stock does not quickly begin to move in the direction you envisioned when you
purchased it, you should begin to question your reasons for owning it and you should immediately put it on a short leash. If it doesn't turn in relatively quick
fashion, get rid of it. You can always go back in later, when it really turns. This goes to the heart of the familiar adage: let winners run, cut losers short.
Nothing will eat into your performance more than carrying a bunch of dogs and their attendant fleas, both in terms of actual losses and in terms of dead, or
underperforming, money.
-- Refusing to take a loss at all.
I simply don't understand the way some people think. From whence came the idiotic notion that a loss "on paper" isn't a "real" loss until you actually sell the
stock? Or that a profit isn't a profit until the stock is sold and the money is in the bank? Nonsense. Your stock and your po rtfolio is worth whatever you can sell
it for, at the market, right at this moment. No more. No less. People are reluctant to sell a loser for a variety of reasons. For some it's an ego/pride thing, an
inability to admit they've made a mistake. That is false pride, and it's faulty thinking. Your refusal to acknowledge a loss doesn't make it any less real. Hoping
and waiting for a loser to come back and save your fragile pride is dumb. Your loser may NOT come back. And even if it does, a stock that is down 50% has to
put up a 100% gain just to get back to breakeven. Losses are a cost of doing business, a part of the game. If you never have losses, then you are not trading
properly. Most pros have three losers for every winner. They make money by keeping the losses small and letting the profits build. You should be almost
happy to take a loss. It means that you have jettisoned an underachiever stock and have freed up that dead money to put to be tter use elsewhere. Take your
happy to take a loss. It means that you have jettisoned an underachiever stock and have freed up that dead money to put to be tter use elsewhere. Take your
losses ruthlessly, put them out of mind and don't look back, and turn your attention to your next trade.
Overbetting.
This gets into the realm of money management. Diversification, the process of spreading your investment capital around in different assets and sectors to
feather the vagaries of the market, has gotten a bit of a bum rap lately. Some of the New Paradigm folks think the concept is "old fashioned." These tend to be
the same people who have every last dime in a handful of internet stocks. That's not investing, or even trading. It's gambling. Preservation of capital is
paramount. If you run out of chips, game over man. You may feel a bit envious the day your neighbor, who has put everything he owns into Zowie.com parks
his new Mercedes in the driveway next door, but you'll feel a lot better the day the repo man comes with the tow truck to take it back. Most professionals will
allocate no more than 2-5% of their total investment capital to any one position. Ten percent should be your absolute max. One more thing. I've checked the
U.S. Constitution and the Bill of Rights, and nowhere in either of them does it say that you have to have ALL of your money in the stock market ALL of the
time. Money management also pertains to your total investment posture. Even when your analysis is overwhelmingly bullish, it never hurts to have at least
some cash on hand, earning its 5% in the money market. You'll need it when you see that next "can't miss" stock but don't want to sell any of your other
"can't miss" stocks to raise the money to buy it. Your exposure should be consistent with your overall market analysis. As the market becomes more
overbought, overextended, and overvalued, your cash level should rise accordingly. Then as the market gets more oversold and undervalued, you can raise
your market exposure accordingly. Being ALL in the market or ALL out of the market sounds like a good idea, and it may work out wonderfully on paper, but it
rarely plays out so smoothly in real life and real investing. But you should still employ a sliding scale of exposure, based on your market analysis.
Bottom fishing/Catching falling knives.
Many of the daily e-mails I get are of the following type: "Nick, Zowie.com is down 23 points today. Time to buy?!!!" My answer is almost always the same.
"Put your pants on, Spartacus. No!" Don't ANTICIPATE bottoms. It's tempting to try to pinpoint an exact low, especially if yo u're working with indictors like
Fibonacci fan and time lines, cycle studies, regression channels, even plain old lateral support points. But it's almost always better to let the stock find its
bottom on it's own, and then start to nibble. Just because a stock is down big doesn't mean it can't go down even bigger. In fact, a major multipoint drop is
often just the beginning of a larger decline. It's always satisfying to catch an exact low tick, but when it happens it's usually by accident. Let stocks and
markets bottom and top on their own and limit your efforts to recognizing the fact "soon enough." Nobody, and I mean nobody, can consistently nail the
bottom tick or top tick. Those who try usually get burned.
-- Averaging down.
Don't do it. For one thing, you shouldn't even have the opportunity, because you should have sold that dog before it got to t he level where averaging down is
tempting. The pros average UP, not down; they got to be pros because they added to winners, not losers. And speaking of avera ging UP, there's a right way to
do it. And doubling your position is not it. Rather, you should add 1/2 your original stake. If other words, if you already o wn 100 shares and want to bolster
your position, you buy 50 shares. If you later decide to add more, you add 25 shares, etc. Why you should do it this way is t oo long to go into here, but that's
the way the math works out best for you.
Shorting bulls and buying bears.
Yes, there are stocks that will go up in bear markets and stocks that will go down in bull markets, but it's usually not worth the effort to hunt for them. The
vast majority of stocks, some 80+%, will go with the market flow. And so should you. It doesn't make sense to counter trade the prevailing market trend. If
you're worried about a short term pullback, simply cut back on your trading, take a few profits, and build up your stash of c ash. Let that money earn its 5% in
the money market until the squall has passed.
-- Confusing the company with its stock.
There are some fine companies with mediocre stocks, and some mediocre companies with fine stocks. Try not to confuse the two. This is, at heart, a
fundamental analysis versus technical analysis issue. Some stocks simply have excellent trading characteristics while others don't. Maybe it's a matter of
liquidity, or a fanatical message board following, or a daytrading clientele, or whatever. Take Amazon.com for example. Is th e company a good one? Who
knows? Not me. But the stock is. I wouldn't want to have to hold it for 20 years, but I sure don't mind trading it a few days at a time, the "right" days. That
sucker moves. Baby Bells are at the other end of the spectrum. Fine companies for the most part. Wouldn't mind owning one for 20 years. But you have to
pick your spots when you go to trade them, because a measly 3 point move in a single session is huge for a Baby Bell. Also remember this: even the stock of
a great company can go through a bad patch. IBM is a great company today, with its stock selling at 124, and it was a great c ompany five years ago, when its
stock was selling at 13.
Falling in love with a "story."
This is related to confusing the company with its stock. There are a lot of intriguing "stories" out there, but they don't always translate into instant riches.
Iomega was such a "story" stock. The story was that the company's Zip drive was going to replace the floppy in the world's co mputers. The stock ran straight
up to the sky to wait for the story to come true. And for the most part, IOM's story DID come true (many stories don't, witne ss the Y2K stocks), but the stock
gave back most of its gains anyway. Turns out it wasn't that much of a story after all. In other cases, the story comes true but the stock you've bet on isn't
the story teller. Witness the laser vision "story." A number of companies were hyped as the category killer, but only one, VISX, made its stockholders real
money. And how about satellite communications? Great story, eh? Tell it to those who loaded up on Iridium's stock.
-- Following the leader.
Just as money tends to flow into last year's top mutual fund (sure to be next year's underachiever), people tend to chase the high flying momentum MO-MO
stocks, succumbing to the buzz and getting in AFTER the stock has already jumped 80% and inevitably just before it drops 60% as the early buyers take their
profits by selling their shares to the "greater fool," you. Yes, you can make a quick buck chasing momentum, but you can lose it even quicker. You can never
be sure there's a greater fool coming in after you, and that could make you the "greatest fool."
Finding the Holy Grail.
Technicians regularly fall into periods where they tend to favor one or two indicators over all others. No harm in that, so l ong as the favored indicators are
working, and keep on working. But the analyst should always be aware of the fact that as market conditions change, so will the efficacy of their indicators.
Indicators that work in one type of market may lead you badly astray in another. You have to be aware of what's working now a nd what's not, and be ready to
shift when conditions shift. There is no Holy Grail indicator that works all the time and in all markets. If you think you've found it, get ready to lose money.
Instead, take your trading signals from the "accumulation of evidence" among ALL of your indicators, not just one.
-- Overtrading.
The Picks Port commits this sin on a regular basis, but that's mostly because of the nature of the beast. I have to be more short term oriented than I'd prefer
to be because you, my subscribers, tend to be more short term oriented than you probably should be. Daytrading, of course, is the epitome of overtrading.
Most people just are not equipped, emotionally, intellectually, or mechanically, to day trade and statistics tell us that most are not successful at it. If you are
not making money at daytrading but keep on doing it anyway, you should examine your motives. If it's the action you crave, ta ke up skydiving. It's safer and
cheaper.
Excessive tape watching.
I get a kick out of people who insist that they're intermediate or long term investors, buy a stock, then anxiously ask whether they should bail the first time
the stocks drops a point or two. Likely as not, the panic was induced by watching the tape, or hearing some talking head on CNBC. Watching the ticker can be
fun. It can be mesmerizing. But it can also be dangerous. It leads to emotionalism and to hasty decisions. Try not to make tr ading decisions when the market
is in session. Do your analysis and make your plan when the market is closed and the White Noise of the television and the ticker is absent, then calmly
execute your plan the following day. You have your stop and your target. So go take a nap, or go to the movies, or mow the la wn. The only time you should
execute your plan the following day. You have your stop and your target. So go take a nap, or go to the movies, or mow the la wn. The only time you should
be scrutinizing the tape is when you're looking for an immediate entry or exit point for a trade. Otherwise, do your blood pr essure a favor and tune out.
-- Being undercapitalized.
If you have less than $50,000 to invest, you'd probably be better off in a mutual fund rather than trading individual stocks. To get proper diversification with a
fully invested exposure you need at least 10 stocks. You do the math.
-- Letting the tax tail wag the stock dog.

Don't let tax considerations dictate your decision on whether to sell a stock. Pay capital gains tax willingly, even joyfully. The only way to avoid paying taxes
on a stock trade is to not make any money on the trade
Relying on gurus.
I'm spitting in my own rice bowl here, but you should not be letting some self-appointed market "gooroo" dictate or dominate your trading decisions. The most
you should expect, or accept, from folks like me are a few trading ideas, a little technical analysis tutoring, and a bit of guidance in maintaining a solid trading
discipline. You should not think of a market letter (ANY market letter) as a substitute for a personally managed portfolio. N o one knows or cares about your
personal circumstances like you do; how much money you have to invest, your tolerance for pain, your goals, your most suitable and comfortable time frame,
etc. And you should be doing everything in your power to make Nick's Picks unnecessary and irrelevant to your trading, to lea rn enough not to need the likes
of me anymore. Read some books. Take some courses. Buy some decent charting software and arrange for a data feed.
-- Thinking this market stuff is easy.

Don't confuse genius with a bull market. It's not that hard make money in a roaring bull market. Keeping your gains when the bear comes prowling is the hard
part. Don't get cocky, but don't grovel either. You're not as smart as you think you are when everything is going great. But you're not as dumb as you think
you are when everything is going to hell either. The market whips all our butts now and then. The whipping usually comes just when we think we've got it all
figured out.
-- Thinking rather than looking.
One thing you should be thankful for is that you don't HAVE to come up with a reason for WHY the market is doing what it's doing. The talking heads on CNBC
do because that's their job. I do too, because I know you expect it of me. But you don't. Just follow your chart work and let someone else do the pontificating.
After all, who REALLY knows why stock ABC goes up 5 points on Monday while stock XYZ, in the same business, goes down 5 points? That's the great thing
about technical analysis. You don't have to know. The price action is THE TRUTH. It's all you really need to know. Price doesn't lie. Price doesn't alibi. Price
never complains and never explains. It is what it is. When XYZ goes up $5 on heavy volume, let Joe Hairdo on CNBC jabber on about what it all means. We
KNOW what it means. It means XYZ went up $5 on heavy volume.
............................................
Your fantastic success reinforces my belief that an analytical background is most suitable for a Technical trader - helps in the assembly of otherwise isolated
components and also troubleshooting, refinement of the assembly and one or more of its individual components.There are external indicators that are as
powerful (& on a given day more powerful) than the indicators on the charts.
Many traders quickly come to acknowledge that despite being familiar with winning strategies, systems, and money management techniques, trading success
is dependent on your psychological state of mind. If you're a trader just starting out, where do you find the initial confidence to pull the trigger? How do you
deal with the down times without digging yourself deeper into the hole? If you are in a hole, how do you work your way back o ut? How do experienced traders
push through the ceiling of profitability that caps their initial trading years and make a truly fabulous living?
Trading is a performance-oriented discipline. Stress and mental pressures can affect your ability to function and impact your bottom line. Much of what has
been learned about achieving peak performance in both business and sports can be applied to trading. But before looking at some of these factors, let's first
examine the ways that trading differs from other businesses.
Intellect has nothing to do with your ability as a trader. Success is not a function of how smart you are or how much you hav e applied yourself academically.
This is hard to accept in a society that puts a premium on intellect.
There is no customer or client good will built up each day in your business. Customer relationships, traditionally important in American businesses, have little
to do with a trader's profitability. Each day is a clean slate.
The traditionally 8-5 work ethic doesn't apply in this business! A trader could sit in front of a screen all day waiting for a recognizable pattern to occur and
have nothing happen. There is a temptation to take marginal trades just so a trader can feel like he's doing something. There's also the dilemma of putting in
constant hours of research, having nothing to show for it, and not getting paid for the work done. Yet if a trader works too hard, he risks burn- out. And what
about those months where 19 out of 20 days are profitable, but the trader gives it all back in one or two bad days? How can a trader account for his
productivity in these situations?
If you were to invest time, energy, and emotion into developing a business venture and backed out at the last minute, it would be considered a failure.
However, you should be able to invest time and energy into researching a trading idea, and yet still be able to change your mind at the last minute. Market
conditions change, and we cannot be expected to predict all the variables with foresight. Getting out of a bad trade with only a small loss should be considered
a big success!
What IS the definition of a successful trader? He should feel good about himself and enjoy playing the game. You can make a f ew small trades a year as a
hobby, generate some very modest profits, and be quite successful because you had fun. There are also aggressive traders who have had big years, but
ultimately blow-out, ruin their health or lead miserable lives from all the stress they put themselves under.
Principles of Peak Performance
The first principle of peak performance is to put fun and passion first. Get the performance pressures out of your head. Forget about statistics, percentage
returns, win/loss ratios, etc. Floor-traders scratch dozens of trades during the course of a day, but all that matters is whether they're up at the end of the
month.
Don't think about TRYING to win the game - that goes for any sport or performance-oriented discipline. Stay involved in the process, the technique, the
moment, the proverbial here and now.! A trader must concentrate on the present price action of the market. A good analogy is a professional tennis player
who focuses only on the point at hand. He'll probably lose half the points he plays, but he doesn't allow himself to worry ab out whether or not he's down a set.
He must have confidence that by concentrating on the techniques he's worked on in practice, the strengths in his game will prevail and he will be able to
outlast his opponent.
The second principle of peak performance is confidence. in yourself, your methodology, and your ability to succeed. Some people are naturally born confident.
Other people are able to translate success from another area in their life. Perhaps they were good in sports, music, or academics growing up. There's also the
old-fashioned "hard work" way of getting confidence. Begin by researching and developing different systems or methodologies. Put in the hours of backtesting.
Tweak and modify the systems so as to make them your own. Study the charts until you've memorized every significant swing high or low. Self-confidence
comes from developing a methodology that YOU believe in.
Concentrate on the technical conditions. Have a clear game plan. Don't listen to CNBC, your broker, or a friend. You must do your own analysis and have
confidence in your game plan to be a successful
Analyze the markets when they are closed. Your job during the day is to monitor markets, execute trades and manage positions. Traders should be like fighter
pilots - make quick decisions and have quick reflexes. Their plan of attack is already predetermined, yet they must be ready to abort their mission at any
stage of the game.
stage of the game.

Just as you should put winning out of your mind, so should you put losing out of your mind - quickly. A bad trade doesn't mean you've blown your day. Get rid
of the problem quickly and start making the money back. It's like cheating on a diet. You can't undo the damage that's been d one. However, it doesn't mean
you've blown your whole diet. Get back on track and you'll do fine.
For that matter, the better you are able to eliminate emotions from your day, the better off you will be. A certain amount of detachment adds a healthy dose
of objectivity.
Trading is a great business because the markets close at the end of the day (at least some of them). This gives you a zero po int from which to begin the next
day - a clean slate. Each day is a new day. Forget about how you did the week before. What counts is how you do today!
Sometimes what will happen during the day comes down to knowing yourself. Are you relaxed or distracted? Are you prepared or not? If you can't trade that
day, don't! - and don't overanalyze the reasons why or why not. Is psychoanalyzing your childhood going to help your trading? Nonsense!
The third important ingredient for achieving peak performance is attitude. Attitude is how you deal with the inevitable adverse situations that occur in the
markets. Attitude is also how you handle the daily grind, the constant 2 steps forward and 2 steps back. Every professional has gone through long flat times.
Slumps are inevitable for it's impossible to stay on top of your game 100% of the time. Once you've dug yourself out of a hole, no matter how long it takes,
you know that you can do it again. If you've done something once, it is a repeatable act. That knowledge is a powerful weapon and can make you a much
stronger trader.
Good trades don't always work out. A good trade is one that has the probabilities in its favor, but that doesn't mean that it will always work out. People who
have a background in game theory understand this well. The statistics are only meaningful when looking at a string of numbers. For example, in professional
football, not every play is going to gain yardage. What percentage of games do you need to win in order to make the playoffs? It's a number much smaller
than most of us are willing to accept in our own win/loss ratios!
Here is an interesting question: should you look at a trade logically or psychologically? In other words, should every trade stand on its own merits?
Theoretically, yes, but in real life it doesn't always work that way. A trader is likely to manage a position differently depending on whether the previous trade
was a winner or a loser.
How does one know when to take profits on a good trade? You must ask yourself first how greedy do you want to be, or, how muc h money do you want to
make? And also, does your pattern have a "perceived profit" or objective level? Why is it that we hear successful winning traders complain far more about
getting out of good trades too soon than not getting out of bad trades soon enough? There's an old expression: "Profits are l ike eels, they slip away."
Successful traders are very defensive of their capital. They are far more likely to exit a trade that doesn't work right away than to give it the benefit of the
doubt. The best trades work right away!
OK. Realistically, every trader has made a stubborn, big losing trade. What do you do if you're really caught in a pickle? The first thing is to offer a "prayer to
the Gods". This means, immediately get rid of half your position. Cut down the size. Right off the bat you are taking action instead of freezing up. You are
reducing your risk, and you have shifted the psychological balance to a win-win situation. If the market turns around, you still have part of your position on. If
it continues against you, your loss will be more manageable. Usually, you will find that you wished you exited the whole position on the first order, but not
everyone is able to do this.
At an annual Market Technician's conference, a famous trader was speaking and someone in the audience asked him what he did when he had terrible losing
trades. He replied that when his stomach began to hurt, he'd "puke them at the lows along with everyone else." The point is, everyone makes mistakes but
sooner or later you're going to have to exit that nasty losing position.
Feel good" trades help get one back in the game. It's nice to start the day with a winning scalp. It tends to give you more b reathing room on the next trade.
The day's psychology is shifted in your favor right away. This is also why it's so important to get rid of losing trades the day before. so you don't have to deal
with them first thing in the morning. This is usually when the choice opportunity is and you want to be ready to take advanta ge of it.
A small profitable scalp is the easiest trade to make. The whole secret is to get in and get out of the market as quickly as possible. Enter in the direction of the
market's last thrust or impulse. The shorter the period of time you are is the marketplace, the easier it is to make a winning trade. Of course, this strategy of
making a small scalp is not substantial enough to make a living, but remember the object is to start the day out on the right foot.
If you are following a methodology consistently (key word), and making money, how do you make more money? You must build up t he number of units traded
without increasing the leverage. In other words, don't try going for the bigger trade, instead, trade more contracts. It just takes awhile to build up your
account or the amount of capital under management. Proper leverage can be the key to your success and longevity in this business. Most traders who run into
trouble have too big a trade on. Size influences your objectivity. Your main object should be to stay in the game.
Most people react differently when they're under pressure. They tend to be more emotional or reactive. They tense up and judgement is often impaired. Many
talented athletes can't cut it because they choke when the pressure's on. You could be a brilliant analyst but a lousy trader. Consistency is far more important
than brilliance. Just strive for consistency in what you do and let go of the performance expectations.
Master the Game
The last key to achieving mental mastery over the game is believing that you can actually do it. Everyone is capable of being a successful trader if they truly
believe they can be. You must believe in the power of belief. If you're a recluse skeptic or self-doubter, begin by pretending to believe you can make it. Keep
telling yourself that you'll make it even if it takes you five years. If a person's will is strong enough, they will always find a way.
If you admit to yourself that you truly don't have the will to win at this game, don't try to trade. It is too easy to lose t oo much money. Many people think that
they'll enjoy trading when they really don't. It's boring at times, lonely during the day, mentally trying, with little structure or security. The markets are not a
logical or fair playing ground. But there are numerous inefficiencies and patterns ready to be exploited, and there always wi ll be.
We have outlined four major hurdles when it comes to learning from our own mistakes. FIrstly, we often fail to recognize our mistakes because we attribute
them to bad luck rather than poor decision making. Secondly, when we are looking back, we often can't separate what we believed beforehand from what we
now know. Thirdly, thanks to the illusion of control, we often end up assuming outcomes are the result of our actions. Finally, we are adept at distorting the
feedback we do receive, so that it fits into our own view of our abilities.
Some of these behavioral problems can be countered by keeping written records of decisions and the 'logic' behind those decisions. But this requires discipline
and a willingness to re-examine our past decisions. Psychologists have found that it takes far more information about mistakes than it should do, to get us to
change our minds.
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SAINT on money management/stop/trade management

05 July 2015
03:47 PM
Stops :
Whenever there is a trade that we get into,we put in a stop.The stop is that area where we say,"Enough is enough!"The stop is not put in after one has lost 80%
of our portfolio and one has given up with life.I see it quite often here where one gets in on a tip because someone says so, and then take a huge loss and then
say that the trade was stopped...........A stop is a predetermined level,put in BEFORE the trade is got into,the word BEFORE being an important word.I hope I do
not sound lunatic when I say this:
BEFORE the trade,BEFORE the trade,BEFORE the trade,BEFORE the trade,BEFORE..............
That stop that one has determined BEFORE the trade can be a mental stop.A mental stop is one that is not exactly broadcasted to the broker,etc.........it's a
technical level the break of which one does not stay in the trade any longer.Now,the irony of this mental stop is this:Please DO NOT keep the mental stop in the
mind.WRITE DOWN the stop.........If one entered SATYAM at 650,with a stop at 620,and a potential target of 750,write it down.
SATYAM,entry-650,stop-620,tgt-750,rew:risk=3.33:1,etc etc
If SATYAM hits 620,that is it,one is out of that trade.One either looks elsewhere,or plans a reentry into Satyam,.........but what one
never,ever,ever,ever,ever,ever,ever does is to let the stops get blown through,then hold it,pray to God,run to the nearest te mple,church or mosque,pray even
harder,and then try to strike a bargain with God if HE manages to pull the stock back up,beat the chest,shout at one's wife,h ave sleepless nights,all the while
allowing it to slide,all because one wants the stock to get back to breakeven.
Trading is a profession.It's a business.It is not a place where one hopes to strike lucky,you could ,maybe once,maybe twice.. .....but the person who does not
have a strategy ,a plan ,will in the long run come to ruin.As the famous saying goes,"Plan your Trades and Trade your Plan."
A predetermined written down stop is vital for long term success,it is vital for our mental balance,and only a disciplined tr ader adhering to his/her plan can see
the multiplication of wealth,and a regular flow of profits.
Once again,to re-stress......a stop is planned and written down BEFORE the trade!!!!!!!
I apologise for sounding like a broken down tape recorder on this one.......but I do hope that as a beginner to trading,one d oes realise its
importance.(24.7.2006)
STOPS :
There are many types of stops,.......the ones that come to mind.
a.INITIAL STOP
As described many times,this is the stop that we put in before we even put in that trade.This stop can be placed with your br oker if in intradays,else,a written
down exact point after which no more nonsense is going to be taken from this trade.
b.TRAILING STOPS
As the stock moves higher,we use trail stops.Again,there is software that does it,of which I have no idea.There are very many methods that does it using
pivots,or moving averages,or two-three previous bars break method,etc
Whatever the method used,the most important point is that once the trade moves in the direction required,the stop has to move up to breakeven first,and then
upwards,till stopped.
c.TIME STOP :
When the trade does not go your direction in that specified time,and money could be deployed elsewhere,and the initial stop i s also not taken out,one employs
the time stop or boredom stop.
So,that covers that.............the moment we get into a trade,and the trade never sees green,and hits our INITIAL stop,that' s it.We are stopped out.The trade
goes in our direction.We apply TRAIL stops.After getting into a trade,and nothing exactly happens,and that wasn't part of our strategy,then we could employ a
TIME stop.
Whether we take a TIME stop or not is our call to make...........but no compromises if the INITIAL stop is hit.We are out,and that's that.
A Stop-loss Order is an order placed with your broker to buy or sell once the stock reaches a certain price. A stop -loss is designed to limit an investor's loss on a
security position. Setting a stop-loss order for 10% below the price at which you bought the stock will limit your loss to 10%. For example, let's say you just
purchased SAIL at Rs.50 per share. Right after buying the stock you enter a stop -loss order for $45. This means that if the stock falls below
Rs.45,your shares will then be sold at the prevailing market price.
Positives and Negatives
The advantage of a stop order is you don't have to monitor on a daily basis how a stock is performing. This is especially whe n some other commitments prevents
you from monitoring your stocks for any period of time.
The disadvantage is that the stop price could be activated by a short -term fluctuation in a stock's price. The key is picking a stop -loss percentage that allows a
stock to fluctuate day to day while preventing as much downside risk as possible. Setting a 5% stop loss on a stock that has a history of fluctuating 10% or
more in a week is not the best strategy: you'll most likely just lose money on the brokerage you'll pay for execution of your orders.
There are no hard and fast rules for the level at which stops should be placed. This totally depends on your individual inves ting style: an active trader might use
5% while a long-term investor might choose 15% or more.
Another thing to keep in mind is that once your stop price is reached, your stop order becomes a market order and the price a t which you sell may be much
different from the stop price. This is especially true in a fast -moving market where stock prices can change rapidly.
.................................................. ...
MONEY MANAGEMENT :
Basically,we use money management rules to restrict how much the market can take away from us.Certain rules that we follow wi th discipline.Rules that are
written and implemented trade after trade,again and again.Rules that help us to stay with the trend and to let profits run as long as possible.Rules that trigger
off small losses as compared to the big profits.
Like a warrior,this is the Code that a trader swears by,and adheres to,come what may.
If his stop is triggerred,he is out,he does not sit there reasoning that the economy is growing 15%,and the fundamentals of t his company is great,and that it is
expecting good earnings............If the stop is hit,that's it.He/She's out of that trade.All thought therefore goes into th e trade BEFORE the trade.No more
thoughts after the trade has been set in motion.
The mind is set into "NOW" mode,no more planning ,no more thinking.When the stop is hit,the trader is out,...........and that 's that!
But,there is more to money management other than stops........stops is an aspect of it.But there is more.....
But before getting into it,just noticed that there always is this great amount of blabber about the number of wins a trader h as had,etc etc...............So before
getting into things,felt that we all should realise one thing.We are in this business to make profits,we are NOT in this busi ness to win.......you can have a Batting
Avg of 95% and lose out when you look at profits and losses.You can have a Batting Avg of 30% and come out with stupendous pr ofits by the end of the month.
How is that possible?Well,presume you make an average of Rs200 per trade for 19 trades,and lose Rs5000 in the 20th trade,well ,you are sitting pretty with a
95%batting avg and a loss at the end of the month.
Presuming that you have made losses in 14 trades,an average of Rs 400 per trade,and we made Rs10,000 in the other 6 trades,we ll,we are sitting with a profit
at the end of the month although we have been wrong 70% of the time.
So,it's not about about the number of wins that one makes,it's all about making profits............and that verily is the hea rt and core of money management.
MONEY MANAGEMENT
We look at a trade,yummy,yummy trade..........a beautiful clean sideways pattern just itching to breakout.Our plan is to buy the breakout and ride the
trend ,trail stopping upwards at every pivot low.Cool.So far so good.We now need to ascertain how many shares we plan to buy. For example,the stop is Rs20
away from our entry point.Right,do we buy 10 shares(which means we lose Rs 200 if stopped),or do we buy a 100 shares(which me ans we lose Rs 2000 if
stopped),or a 1000 shares(which means we lose Rs 20000 if stopped)?
The amount of money lost if stopped is the risk on this trade.Don't let it get past 2% of your equity.Which means,first calcu lation is:How much Capital do I have
in my trading Account?(trad acct only,not the worth of your house and car and jewellery all put together).
Let us say that I have 10 lakhs in my trading account,that means the maximum risk that I can take on any single trade is :2% of 10 lakhs=20,000.
Which is to say that if I enter into a trade,and the trade goes against me,I will lose Rs20000.
So whether you paid 2.5 lakhs for that stock or not,you are not risking 2.5 lakhs,but Rs20000,as that is where your stop is.
Now must it definitely be 2% of the capital...........not necessarily.Can be anywhere between 0.5 -2%,but no more than that.I personally use 0.75% of my capital
as a stop loss,but that is something you have to tweak to your comfort levels.But,to stress again,no more than 2%!
So,therefore,first I look at my trading capital at the end of the month.I then assess how much my risk would be the next mont h.For example,let us say I have
10 lakhs at the end of July.Let us say I take 1% loss in each trade.Therefore for the month of August,I would be risking Rs10 ,000 per trade(to reiterate,that
means the amount lost if stopped out).
Now I have my ups and downs in August,and landed up in August with an equity of 10.5 lakhs,now my risk in the month of Septem ber would be 1% of
10.5lakhs=10,500 per trade.
So too,if my equity had dropped that month to 9.5lakhs,then my risk of 1% for the following month would be 9,500 per trade... ...........so on so forth!!
Right,I now know my trading capital,the amount of percentage risk that I am willing to take,and the amount of money risked fo r the following month at the end
of each month.........now how do I calculate share size:
Share Size=(% risk xtrading capital) divided by (entry -predetermined stoploss)
So,therefore,we look at our charts,we get our entry point let us say 200,and our stop loss is at 175.Now presuming our capita l is 10lakhs,and our percentage
risk per trade is 1%.
Therefore,Share Size=(1% of 10lakhs)divided by (200 -175)

=10,000 divided by 25
=400
Therefore in the above example we would buy 400 shares with an entry at 200 with a predetermined stop loss at 175 .The max.we should lose in this trade if
stopped would be Rs10,000/=
The 2% rule for assessing position sizing is vital,but there is more to be done.We'll go through the rest.this is the most im portant part for a trader,and should
always be the first chapter.
however accurate your stop is,and however much you give it room,it can still happen.
Now comes the problem,..........let us say we entered a stock at 50.The previous pivot low was 45.You decided to give it some room to wiggle,your stop is at
44.5 or slightly lower.Great,so far so good,all systems go,everything in place.
Now the stock corrects almost after you buy it(common phenomenon,my friend,happens to us all,can be rather irritating and fru straing,but that's part of the
game!!)..........and it comes to 45,and falls through 44.5.
Now the dilemma is this.......is this a false breakdown,or a shake-out bar,etc,or is it a genuine move down.Now many people have different ways to deal with it.
Mine is simple......I exit!!
Why?Because this move could go down to 40,35,etc and I would be left with a huge loss in my account,left with a feeling of re gret,and the would've-should'vecould've syndrome.
So,I am very rigid about the stop loss,....... and am certainly out if it hits.Would be waiting on the sidelines though for a n opportunity to reenter.
........................................
MONEY MANAGEMENT:
MONEY MANAGEMENT:
We have therefore gone about the importance of stops,and how vital it is for trading success.We have realised that we are goi ng to be laughing our hearts out to
the bank,so long as we take small losses,and let our profits ride.In short we look to make big gains,at the risk of many smal l losses.
We have also discussed that there are many methods of placing stops....the important thing is to have stops and the disciplin e to adhere to them.So like we
discussed,we place our stops just a bit below the previous pivot low,and trail stop upwards.
We had discussed the other day that the maximum risk per trade is2%preferably lower.And yes Pranay,.......if you are comforta ble with a risk of 1% as stated in
the other example,yes,that would be 1% per trade.And to go over it again,presuming that my trading capital is 10 lakhs(yes Ge r06,by that,we mean the money
that you have set aside for your trading.If you do derivatives and equities,calculate them separately.By trading capital,we a re not talking net worth....simply the
money put aside for trading).................first we calculate how much we are willing to risk.
Therefore,if we are willing to risk no more than 1% per trade,that would mean 1% of 10lakhs,ie Rs10,000/= per trade.And there fore if our stop loss is Rs 20
away from our entry price,we can therefore buy 10,000 divided by
20=500 shares.
However juicy the charts look,if our stop is Rs20 away,and our risk is 1% on 10lakh portfolio,then that's that,500 shares.... ..no more no less.
Now coming to Pranay's valid doubt............for one trade,we plan to risk no more than 1%.Therefore,for 25 trades,we would be risking 25% of our
portfolio,right? NO..........Therefore another condition that has to be met.Else,we would be right about placing our stops an d right even about share sizing,but a
huge market move taking all stocks down would trigger all our stops.
And with it,a sizeable chunk of our portfolio..........
MAX RISK
Now we come to another major part of money management that must be looked into...........just as how crucial having a predete rmined stop is and proper share
sizing,this part is vital for the survival of our trading account and therefore our survival as traders.
If we were to risk 2% per trade and we get into 20 stocks,a move down would trigger all the 20 stops,........we have put prop er stops,great.................we have
taken small losses,great.....and yet,our account is down 40%.If our trading capital was 10lakhs,well 4 lakhs has vanished int o thin air!!This is
unacceptable........and unpardonable as far as the trader is concerned.
We therefore have another set of percentages in place so that we are protected from market movements..........now what that p ercentage is basically comes
back to the individual trader and his comfort levels.There are many absolute truths in the world of trading,but no absolute m ethods,all relative to what our
psyche allows us.
For example,I believe that a 2% risk is just too much to bear,I am on the other hand comfortable with a risk of 0.5 -0.75%......so there are as many methods as
there are traders.Basically tweak to your individual comfort levels.
Now what are these percentage rules of max risk that I am speaking of?
1.In an intraday position,take no more total risk than 4% in that day.Which means that I would take no more than 4 trades at the same time.Why?Because I am
risking 1% per trade,and if I take more than 4 trades,I would be risking more than 4% in that day.
Therefore,I enter into TISCO with my stop loss at the previous pivot low at a risk of 1%.Then,I see a great setup in RIL,same thing as above.Now I see a great
trade in ITC ,I grabbed that as well.Then a beauty in ACC.Now I have 4 trades running simultaneously,and I risking 4% as of n ow.I then see a great play in
SBI......But my rules prevent me from taking that 5th trade,however juicy that set up.
Now I get a great move in TISCO and ACC,and that gives me the opportunity to raise my stops in the two to breakeven.Now I can take SBI if it still looks
great........if it has already run off,well,nothing can be done about it.Missed money better than lost money!!
Also make sure you have your max percent loss in a week after which you wouldn't trade any more,and your max percent loss in a month after which you are no
more than a bystander.If I lose 10%,that 's it....I am out for the month.Many put that figure to 6%,or 8%.........once again, your comfort levels.
2.In a swing position that may last up to 4-5 days,once again similar rules come into play.I basically take a max risk of 6%.......now why these
figures,well,basically no real reason except years of toying around and tweaking it to comfort levels.As said before you will have to do the same.
So,here again,a risk of 1% per trade allows me to take 6 swings that week.Every time I am able to raise my stop to break even ,I am allowed another trade.Else
that's that.......
3.In a position trade,that can take up to weeks to months,I tend to take a max risk of 12%,meaning that if you are taking a 1 %risk per trade,max number of
stocks that can be got into is 12.And then,once you get to breakeven stop in a trade,you are allowed to get into a new positi on,or add to the previous position.
If you are the type that can take on a bigger amount of risk,fine........but total portfolio risk no greater than 20%.Greater than that,think you would be fishing
for trouble.So careful on that one.
It is very important that these rules are in place...........very,very important!!The percentages you as the trader will have to work out.But you MUST have a
stop,you MUST adhere to them,you MUST have a risk per trade and share size accordingly,and you MUST have a max risk that you are willing to take,after
which you are going to pull the plugs.And you MUST have a point where a bad day or month is accepted as it is ........and all trading comes to an end.If you are
out on the 15th day of the month,that does not mean that you sleep and watch TV for the rest of the month.......You come to w ork as in every other day,you
paper trade,and you do it till the end of the month.Your first trade would be the first day of next month.
Discipline is discipline,and rules are rules............These are like commandments in the Holy Scriptures of the Trader.Not observing them is sacrilege,a
blasphemy.They,once drawn up,MUST be followed at all cost..
Money management is the process of analyzing trades for risk and potential profits, determining how much risk, if any, is acc eptable and managing a trade
position (if taken) to control risk and maximize profitability.
or entry method. But traders ignore money management at their own peril.
The importance of money management can best be shown through drawdown analysis.
Drawdown
Drawdown is simply the amount of money you lose trading, expressed as a percentage of your total trading equity. If all your trades were profitable, you would
never experience a drawdown. Drawdown does not measure overall performance, only the money lost while achieving that performa nce. Its calculation begins
only with a losing trade and continues as long as the account hits new equity lows.
Suppose you begin with an account of 10,000 and lose 2,000. Your drawdown would be 20%. On the 8,000 that remains, if you sub sequently make 1,000, then
lose 2,000, you now have a drawdown of 30% (8,000 + 1,000 - 2,000 =7,000, a 30% loss on the original equity stake of 10,000). But, if you made 4,000 after
the initial 2,000 loss (increasing your account equity to 12,000), then lost another 3,000, your drawdown would be 25% (12,00 0 - 3,000 = 9,000, a 25% drop
from the new equity high of 12,000).
Maximum drawdown is the largest percentage drop in your account between equity peaks. In other words, it's how much money you lose until you get back to
breakeven. If you began with 10,000 and lost 4,000 before getting back to breakeven, your maximum drawdown would be 40%. Keep in mind that no matter
how much you are up in your account at any given time--100%, 200%, 300%--a 100% drawdown will wipe out your trading account. This leads us to our next
topic: the difficulty of recovering from drawdowns.
Even worse is that as the drawdowns deepen, the recovery percentage begins to grow geometrically. For example, a 50% loss req uires a 100% return just to
get back to break even (see Table 1 and Figure 1 for details).
Professional traders and money mangers are well aware of how difficult it is to recover from drawdowns. Those who succeed lon g term have the utmost respect
for risk. They get on top and stay on top, not by being gunslingers and taking huge risks, but by controlling risk through pr oper money management. Sure, we
all like to read about famous traders who parlay small sums into fortunes, but what these stories fail to mention is that man y such traders, through lack of
respect for risk, are eventually wiped out.
Guidelines that should help your long-term trading success.

1. Risk only a small percentage of total equity on each trade, preferably no more than 2% of your portfolio value. I know of two traders who have been actively
trading for over 15 years, both of whom have amassed small fortunes during this time. In fact, both have paid for their dream homes with cash out of their
trading accounts. I was amazed to find out that one rarely trades over 1,000 shares of stock and the other rarely trades more than two or three futures
contracts at a time. Both use extremely tight stops and risk less than 1% per trade.
2. Limit your total portfolio risk to 20%. In other words, if you were stopped out on every open position in your account at the same time, you would still retain
80% of your original trading capital.
3. Keep your reward-to-risk ratio at a minimum of 2:1, and preferably 3:1 or higher. In other words, if you are risking 1 point on each trade, you s hould be
making, on average, at least 2 points. An S&P futures system I recently saw did just the opposite: It risked 3 points to make only 1. That is, for every losing
trade, it took 3 winners make up for it. The first drawdown (string of losses) would wipe out all of the trader's money.
4. Be realistic about the amount of risk required to properly trade a given market. For instance, don't kid yourself by think ing you are only risking a small
amount if you are position trading (holding overnight) in a high -flying technology stock or a highly leveraged and volatile market like the S&P futures.
5. Understand the volatility of the market you are trading and adjust position size accordingly. That is, take smaller positi ons in more volatile stocks and futures.
Also, be aware that volatility is constantly changing as markets heat up and cool off.
6. Understand position correlation. If you are long heating oil, crude oil and unleaded gas, in reality you do not have three positions. Because these markets are
so highly correlated (meaning their price moves are very similar), you really have one position in energy with three times th e risk of a single position. It would
essentially be the same as trading three crude, three heating oil, or three unleaded gas contracts.
7. Lock in at least a portion of windfall profits. If you are fortunate enough to catch a substantial move in a short amount of time, liquidate at least part of your
position. This is especially true for short-term trading, for which large gains are few and far between.
8. The more active a trader you are, the less you should risk per trade. Obviously, if you are making dozens of trades a day you can't afford to risk even 2% per
trade--one really bad day could virtually wipe you out. Longer-term traders who may make three to four trades per year could risk more, say 3 -5% per trade.
Regardless of how active you are, just limit total portfolio risk to 20% (rule #2).
9. Make sure you are adequately capitalized. There is no "Holy Grail" in trading. However, if there was one, I think it would be having enough money to trade
and taking small risks. These principles help you survive long enough to prosper. I know of many successful traders who wiped out small accounts early in their
careers. It was only until they became adequately capitalized and took reasonable risks that they survived as long term trade rs.
10. Never add to or "average down" a losing position. If you are wrong, admit it and get out. Two wrongs do not make a right.
11. Avoid pyramiding altogether or only pyramid properly. By "properly," I mean only adding to profitable positions and estab lishing the largest position first. In
other words the position should look like an actual pyramid. For example, if your typical total position size in a stock is 1 000 shares then you might initially buy
600 shares, add 300 (if the initial position is profitable), then 100 more as the position moves in your direction. In additi on, if you do pyramid, make sure the
total position risk is within the guidelines outlined earlier (i.e., 2% on the entire position, total portfolio risk no more that 20%, etc.).
12. Always have an actual stop in the market. "Mental stops" do not work.
13. Be willing to take money off the table as a position moves in your favor; "2 -for-1 money management1" is a good start. Essentially, once your profits exceed
your initial risk, exit half of your position and move your stop to breakeven on the remainder of your position. This way, ba rring overnight gaps, you are
ensured, at worst, a breakeven trade, and you still have the potential for gains on the remainder of the position.
14. Understand the market you are trading. This is especially true in derivative trading (i.e. options, futures).
15. Strive to keep maximum drawdowns between 20 and 25%. Once drawdowns exceed this amount it becomes increasingly difficult, if not impossible, to
completely recover. The importance of keeping drawdowns within reason was illustrated in the first installment of this series .
16. Be willing to stop trading and re-evaluate the markets and your methodology when you encounter a string of losses. The markets will always be there. Gann
said it best in his book, How to Make Profits in Commodities, published over 50 years ago: "When you make one to three trades that show losses, whether they
be large or small, something is wrong with you and not the market. Your trend may have changed. My rule is to get out and wai t. Study the reason for your
losses. Remember, you will never lose any money by being out of the market."
17. Consider the psychological impact of losing money. Unlike most of the other techniques discussed here, this one can't be quantified. Obviously, no one likes
to lose money. However, each individual reacts differently. You must honestly ask yourself, What would happen if I lose X%? W ould it have a material effect on
my lifestyle, my family or my mental well being? You should be willing to accept the consequences of being stopped out on any or all of your trades.
Emotionally, you should be completely comfortable with the risks you are taking.
The main point is that money management doesn't have to be rocket science. It all boils down to understanding the risk of the investment, risking only a small
percentage on any one trade (or trading approach) and keeping total exposure within reason. While the list above is not exhau stive, I believe it will help keep
you out of the majority of trouble spots. Those who survive to become successful traders not only study methodologies for tra ding, but they also study the risks
associated with them. I strongly urge you to do the same.
.................................................. .................................................. ...
Now that the market is in a short term downtrend and stock tip threads have mostly disappeared I think it is a good time to d iscuss what is really important in
Now that the market is in a short term downtrend and stock tip threads have mostly disappeared I think it is a good time to d iscuss what is really important in
trading - Position Sizing / Money Management Strategies. I Would like to hear/discuss the different sorts of position sizing strategies experienced traders here
use for stock trading.
For new traders:
"Position Sizing" is the way you determine the number of shares of a stock you would buy when you decide to initiate a trade (and also how many shares you
would continue to hold throughout the duration of the trade). It also decides how much equity will be allocated to a single p osition. Position Sizing is used by
everyone even though they might not think about it (usually traders just buy 100 or 50 shares or any number that they are com fortable with or can afford). But
good position sizing is what makes or breaks a trader, it is the strategy that keeps a trader in the business longer. It turn s a mediocre trading system into an
excellent one (but won't help a losing system).
The most popular/recommended position sizing strategy is to risk not more than 2% on any single position.
New traders - make sure you go thru' previous threads in "Risk & Money Management" section of this forum, there are good posts on risk & mo ney mgmt by
Traderji & CreditViolet.
Books on position sizing:
Trade Your Way To Financial Freedom by Dr. Van Tharp
Portfolio Management Formulas by Ralph Vince
The Mathematics of Money Management by Ralph Vince
The Trading Game by Ryan Jones
My Strategy:
I use a combination of percent risk & percent volatility strategy. Here are the rules I use:
- My main aim is to ensure that I stay in the business longer so my trading system gets a fair chance to realise its potential.
- No position should be greater than 10% of my total trading equity
- I don't risk more than 1% of my total trading equity on any single position
- I make sure my positions are "volatility balanced". In other words I make sure that all my positions fluctuate approximately the same each day in the market. I
do this using Average True Range of the stock.
Example:
Say I am planning to buy HINDLEVER, here is what I would do to determine the number of shares I would buy:
Total Equity : 100,000.00
Max Equity for each trade : 10,000.00 (10% of total equity)
Risk Amount : 1,000.00 (1% of total equity)
Volatility Amount : 500.00 (0.5% of total equity. This is the fluctuation level per day per position)
Average True Range (10 Day Avg) : 5.63
Last Market Closing Price : 173.20 (For simplicity assume this is the entry price)
Stop Loss at : 163.40 (Will get out just below previous reaction low)
Number of shares to buy (percent risk model) = Risk Amount / (Entry Price - Stop Loss Price)
Number of shares to buy (percent risk model) = 1000 / (173.20 - 163.40)
Number of shares to buy (percent risk model) = 102 Shares
Number of shares to buy (percent volatility model) = Volatility Amount / Average True Range (10 Day)
Number of shares to buy (percent volatility model) = 500 / 5.63
Number of shares to buy (percent volatility model) = 88 shares
Number of shares to buy (based on Max Equity for each trade) = Max Equity for each trade / Last Market Closing Price
Number of shares to buy (based on Max Equity for each trade) = 10000 / 173.20
Number of shares to buy (based on Max Equity for each trade) = 57 shares
I will buy minimum number of shares determined from the above three models. So in the above case I would buy 57 shares.
So here is what I basically do. I am still trying to fine tune these things. The above parameters used are what I am currentl y using but I am in the process of
doing trial & error to come up with parameters that fit me well. I would now like to hear what the experienced traders here d o.
I sincerely hope that one realises the importance of money management ....... all the above is nothing but a start.It is vita l to position size properly,vital to have
a max risk,vital to have a point after which one pulls the plugs.........
Very,very important.........this is the Holy Grail of Trading,knowing which you have an edge over your rival,not knowing whic h,it's only a matter of time before
the market swallows your account with glee..
.................................................. ........
As we had discussed previously,a successful trader who trades the ongoing trend of the market is he who is able to stick with the present moment,the
"now".........it really does not matter what our intellect tells us where the market is going or not going,the fact is that i t really does not matter what we think
about the market........The reality is the market move in itself.
Our job as a trader trading the trends of the market is merely to latch on to a trend and stay out of the forecasting busines s.The problem with this latching on to
the trend business is that we don't get to go to a party and show off all our stock knowledge,fundamental/technical skills... .....In this business,we practically
shut our brains and follow the trend.So no glitz or glamour in this,.............nothing to really show off.But you do have b anking personnel running after you with
ideas on where you should put your money that is growing slowly and steadily in your account!
We therefore use price as everything,now some will tell you of the importance of Price and Time,etc...........as maintained b efore,Trading Truth has as many
paths to it as there are traders,and to each his own.
Now using price,trendlines to give us warning signals,and pivots that tell us to jump ship when that trend of that time frame is over,and some traditional tech
chart patterns,our job is nearly almost over.Coupled with a few indicators,and certain patterns to keep a look out for,we are about done....
Keep things as simple as possible.......I know that isn't a style statement these days especially amongst tech traders....... .do your experimentation,and once you
have things figured out,keep things very simple.
SPL TOOLS
05 July 2015
03:49 PM
..TRIX is a momentum indicator that displays the percent rate-of-change of a triple exponentially smoothed moving average of a security's closing price.
TRIX is a leading indicator and can be used to anticipate turning points in a trend through its divergence with the security price. It works best in conjuction
with ADX. ADX shows whether there is a trend whereas TRIX together with its signal line gives very good entry points...................
A chart pattern merely tells us where we might possibly go from here......if we get an ascending triangle after an uptrend,we accept the sideways
movement as nothing but a pause in its uptrend.We are therefore expecting a move out of this triangle to the up,and resume its uptrend.Can an ascending
triangle break down?Surely........well,this we call a failed pattern.So either way,it qualifies as a chart pattern
The beauty of any sideways movement,be it just some sideways consolidation,or a symm triangle or any of the triangles,is that we get to enter into the
stock at minimal risk with a stop just below the base formed.
So,use the chart patterns as a low risk entry point,instead of its predictive value in the future direction that it is headed........a breakout and a pullback
gives a great entry as we latch on to a stock threatening to take off.A failed breakout,.....no probs,we reverse directions,and short it to glory.Either
way,chart patterns come in handy,although knowing it is not an absolute necessity.
FAILURE PATTERNS :
Simply put,it is a pattern that heads in the reverse direction than what is expected.We expect a neckline of a H&S breakdown to be a bearish sign.We
expect a trough break from a Double Top to head south.We expect a Rising Wedge after an uptrend to break down.We expect an Ascending Triangle
breakout to head north.We expect a WRB breaking out of a consolidation to initiate a move to the up.We expect a WRB bearish candle in an established
downtrend to resume its downtrend and make newer lows.
A failure pattern is something that acts opposite to that which is expected.
An ascending triangle breaks down,that is a pattern failure.An ascending triangle breaks out,and then the next bar negates the breakout bar.That is pattern
failure.A wrb breakout from a consolidation that gets negated(negation meaning the low of the breakout bar is taken out),that is pattern failure.A neckline
breakdown in a h&s pattern reverts and goes back into the neckline,and takes out the high of the rt shoulder......that is pattern failure.So on so forth.
These are beauties to trade especially if one could go both ways in a trade............beauties because when everybody is looking for a breakout after a
consolidation,so are we all.But a negation of the bar sends everyone into the hope,pray mode.Negation of the breakout bar sends us into caution mode.We
are out of that trade if the low of the breakout bar is taken out.But as the majority hope and pray for something to happen,convincing themselves on how
great this company is,etc etc and the super fundamentals,and growing economy,etc,etc........we reverse positions and benefit from the move down.
Failure patterns break the expected move..........they SHOCK the trader trading the preceeding move.
Learn to identify them,and get out of a trade when you see them in action......and reverse the trade to great profits.(i use it extensively for trading)
n the example below,we have BOM DYEING giving us a sideways consolidation on the daily charts,before we get a WRB gap-up breakout that initiated a
move upwards.With every newer pivot high,we have been trail stopping upwards.Then we get a nice breakout bar to new highs,and an immediate slap
down negation the very next bar.
We have a Breakout Bar Failure......If you were in this trade,get out the moment the low of the previous breakout bar is taken out.If you weren't in the
trade but looked on at this mouth watering prospect of neat move down(all this if you could go short).........short the low of the breakout bar failure,and
enjoy the ride!(7.9.2006)
Countertrend Trader
05 July 2015
04:01 PM
Here i will discuss how a countertrend trader plays from STRATEGICINVESTMENTS - an 8yr old TA based with analysis on NIFTY and Reliance.In his own
words..............
Most of my decision making depends on sector analysis and the overall market conditions.
.
Trading is also like a schooling. There is not much difference between the two. People who trade without proper Trading -Schooling are bound to fail either
slowly or in one shot. Just imagine about a person who never goes to school or knows how to write or read and what will happe n if he tries to give any
competitive exam ? Same is with trading. People who don't have any fundamental & technical knowledge are bound to fail. Only few who are good in MONEY
MANAGEMENT will be able to save his money or they will loose money so slowly that they will learn the required skills before loosing the whole money. One
more thing, during the process of loosing money all will think that they are just one step away from making money (False Hope ) so they will come again into
the market with fresh money & energy with a hope of making money.
Just like every field is not suitable for everyone same implies to countrend trading. This field is not for everyone. So firs t check this thing, whether one is
suitable for trading or not? It requires lot of time, mind to analyse after closing markets, fast thinking or decisiion makin g is required during intraday, habit for
sitting long hours etc. One who is thinking of making money quickly or want to multiply his money many times are not in the r ight person.
Like in schooling we all learn almost all subjects (in just introductory form) till 10th then in 11th we start specializing o ne field like science / arts / economics.
In college that single field is also becomes more focused like till 12th if you have studied science then in college you will either go for MBBS, Engineering, B
Pharma, Maths etc. So till PHD one will just keep focusing on finer things. Same is with Trading. One should learn everything or just get yourself acquainted or
just get familiarize with all the fields of trading just like up -to 10th. Then move to the next step as per one's choice and keep going in depth till one attains
profound efficiency.
There are many books available on various threads on this site or on many other sites. I would like to recommend John Murphy' s Technical Analysis book or
Edward and Magee's book. Any one of them is sufficient for detailed introduction of all fields of markets. AFTER THIS JUST CH OOSE YOUR WEAPON AS PER
ONE'S TASTE. ..relative strength in comparison to NIFTY is imp tool .No one will find this whole process in any book. Ever yone will learn such tricks with
experience. So please just don't depend on books. I want to bring in your kind knowledge that no book is complete or perfect for trading. Like me many other
persons have gone through various books. Only those who have developed something on his own are surviving in this field. One very basic thing that I have
learned from my experience by watching positions continuously is that only equity's charts is not enough to reach at some con clusion about the stocks position.
Last thing. News is enemy number one of public. Don't use it for trading. Neither news nor tips. Use your own analysis. Anyon e can learn this if he has required
skills for trading plus time and devotion.
I am not used-to to keep NIFTY stop losses of 60 points approx I prefer SL of 5 to 25 points max. Even 25 is too much for me.
I am not comfortable with such stop losses. Generally I have to take twice or thrice a same position at same levels because o f constantly hitting of stop losses.
Even after correct observation the toughest part is to trade as per that observation
One more thing. Whether you are wrong or right but please never trade without proper STOP LOSS. Never. This is the best thing for new comers as well as for
advanced trader's. No one can be correct half a time.
I trade based on setup here but it doesn't mean that I will take them blindly on the day it occurs. Many times I don't trade them. It basically depends on many
criteria's like volume behavior on the trade setup day, price behavior near resistance or support or entry level, overall mar ket behavior, sector's behavior etc.
Sometimes I postpone the trade and sometimes I cancel it also. On weekends I try to locate the trades for the coming week and then trade them on weekdays.
One should know that stock market is a game of speculation and no one can be hundred percent correct in this. Even the greate st traders of all times were
wrong many times every month after month so I will advise all fellow members to use the STOP LOSS. This is the only way to ge t out from loosing trades
otherwise during market hours one will keep hanging to the loosing trades and keep praying instead of getting out. But one sh ould know that market is a
ruthless machine and it doesn't work with prayers.
A)DT 20.10.2013
1. NIFTY -No sign of weakness yet. Increasing freely with volume.

2. Its in resistance zone of 6133 to 6230.
3. R2 or next / last resistance level above this is R2 = 6357 (8th Jan 2008)
Price came near to it only on 5th Nov 2010 and made a high of 6338.50. Can be checked easily on Monthly charts of Index.
4. Volume is still not so high that one can say that it will breakout the resistance.
5. I still have bearish sentiments in NIFTY so I am waiting for right time to enter short. Not going to participate in bull r uns. If someone is taking long positions
in Nifty Futures than it is suggested to cover longs or tight the stop loss at the first sign of weakness which is expected s oon.
6. Market may move Upside for 100 or 150 more points so its suggested to wait for the right time to take short positions. Thi s is the time to wait and watch for
the right opportunity. Market is already in overbought position.
7. Sometimes Fundamentals come in and disturb the Technical things and this is the same time. Because of US sentiments market is getting support or
professionals are using it to take market high and create an UP wave so that when public becomes bullish they will take short positions and bring the market
down suddenly. Markets are dynamic and keep changing, so we will also keep analyzing markets on everyday basis and will enter short at the first sign of
weakness which is about to come soon.
Now about RELIANCE

8. Reliance is moving up and R2 is at 915 and R3 = 927. Just wait for the weakness in it. Energy Index is at almost resistanc e. So just wait for the right time
now. No positions at present.
B) dt 21.10.13
1. Range of Nifty and Volume(Volume slightly reduced but still high) both are reduced considerably thus confirming that fresh demand is less at this price and
some sort of selling also took place today.
2. I am still waiting for selling in NIFTY and hope it will come in the resistance zone itself. If no then I will check R2 bu t as stated by me earlier market is in
overbought condition so no buying from my side. Just waiting for shorting opportunity.
3. Reliance is at R2- 915 and may touch R3 - 927/930.
4. Now very interesting thing in the NIFTY chart that I have attached. Kindly see yourself and try to find the similarities b etween A & A', B & B', C & C', D & D',
E & E' and I am expecting G' with in a day or two or soon. It doesn't need any explanation. Check yourself the range, closes, closes comparison to previous
closes, changes in volume, next day's open etc.
7. It will be cleared in a day or two whether Nifty is going to break the Resistance Zone or not. Till now it has not shown a ny big interest in going up but there
7. It will be cleared in a day or two whether Nifty is going to break the Resistance Zone or not. Till now it has not shown a ny big interest in going up but there
are many intraday signs which are pointing towards its down side
C) dt 21.10.13
Nothing new to write today. Expecting Nifty to go down tomorrow. Have taken some short positions today. If I am wrong then I will be stopped out tomorrow.
If market behaves as predicted then I will add more tomorrow. Volume has decreased from 25 crores to 16.20 crores in last thr ee days. It shows demand has
decreased considerably. Not a supporting sign for going up.
Many important stocks are at exact resistance. Now if they cross resistance then Nifty will be up and stop losses of traders like me, who are expecting market
to fall, will be hit. And if those stocks take a downwards direction then Nifty will fall freely.
Today F' is made as per F. Now expect G' to be exact like G. Actually market's never change (Great Jesse Livermore said this) , so emotions of people are
always same. This was shown in chart at both places. Same condition, same emotions. If perception of people change only then the scenario will be changed.
D)dt 23.10.13I
I was not expecting G' to be same (or carbon copy) like G. Its just for understanding. My trade setup is / was not because of similarity between two. Its just a
coincidence. Today market might gap down and in that case I couldnt manage to get a good entry thats why yesterday I had take n around 40 percent of total
positions which I generally take.
Now please see in the attached chart that G' is similar to G but only in terms of range and in direction but the close of G' is above the middle which is not a
good sign for down. Volume has been increased from yesterday by approx 10 percent. In G market was closed in lower part of ra nge and that was a very good
down sign. Today bears missed a very good chance of taking market down and it is closed much above then expected.
1. I am still bearish in Nifty but now chances of increasing position is much less. Instead of closing down my position, I wa nt market to out me here. Market is
still overbought but now position has somewhat relieved because of today's dip.
2. Stop loss is now hit. I should have booked small profit but during market hours it was looking like it was going down like hell so because of greed no profit
booked. My fault.
3. Reliance has touched R2 915 (Made high of 915.50 on Monday) as said and never tried to go above that to touch R3 -927. Trade missed.
E)dt 25.10.13
Yesterdays close was 6178. Today market made a high of 6252 and closed at 6164 with a decrease of 1cr 20 lakhs in volume. It is clearly showing that market
is not interested in going up. If market was interested in going up then there must be a demand as soon as market rallied abo ve yesterdays high of 6217. But
there was no participation by smart money even above the yesterday's high. Price remained above for few hours (more than minu tes). Its a bearish
characteristic.
Second bearish sign is that price closed today below yesterday's price.
Third bearish characteristic is that volume has decreased from yesterday by about 1.20 cr. Take it in a context that price br oke yesterday's high and remained
there for much time. Hence it shows a weakness of bulls.
Fourth bearish characteristic is showing in weakly charts. I don't use much weekly chart . But there range is decreasing clea rly and market has today poked
above the high of 25th May 13 but closed below the low of last week's 6189. Weekly volume is also confirming that price is ta king very less interest in going up.
1st I am still having bearish sentiments so no longs. Only looking for shorting opportunity to take part.
2nd I was stopped out today in the Nifty but took position again at the time of closing.
3rd Relaince has closed at 884. This stock is enough to take market down alone many times.
F)dt2.11,13
1. Friday's Nifty high and close is 6333 and 6307. Short of just 24 points from 6357. Nifty is near all time high or say near the resistance zone. I have not
participated in long run. I am still waiting for short opportunity in Nifty and already took some light position on Friday in short direction. Nifty is clearly
overbought now and not ready to clear (in my views and I may be wrong also) the resistance zone of 6357 as previously mention ed by me. Last whole week I
have waited patiently and watched carefully for short positions. Also took some short positions on Monday and Tuesday only bu t they were sort of intraday
positions. I WANT TO SHARE ONE THING HERE THAT WHENEVER THEIR IS LOSS IN TRADE I BECOME INTRADAY TRADER AND SQUARE OFF BEFORE THE
CLOSE (if my stop loss is not hit already) AND IF THERE IS ANY PROFIT THEN I GENERALLY BECOME POSITIONAL TRADER.
2. Nifty is taking very less interest in crossing the zone as volume is not much high with free movements in upside. So no lo ng position. Range is decreasing
with no fresh volume. Friday had one of the lowest ranges and it was near the high. This is not the best way of breaking / en tering into new high zone. Means
bulls are not participating so just waiting for bears to participate now. Lets wait and watch.
3. For taking new short position (or multiplying current position) I am waiting for some weakness now. Nifty is not showing i nterest in going up but before
coming down it may go few more points so now watching it daily for shorting in real time.
4. Last time I missed position in reliance but not this time. Reliance crossed R2 and touched almost R3 @ 927 as mentioned ea rlier by me so took short
positions in Reliance at 926 with initial stop loss at 931 (931 was just for entry and can be cleared any time above 927 in r eal time) then shorted again at 925
and third position at 922 with final trailing stop loss of all three is at 918 now. All prices are in cash but took positions in futures three lots. Closing price of
reliance is 908 approx.
G) postportem of trade on 10.11.13
Took short positions at exact high in both Nifty and Reliance and multiplied them also.
Nifty's last close / low on Friday = 6140.75 / 6120.95. Never crossed resistance of 6357.
Reliance's close / low on Friday = 875.95 / 871.15. Never crossed 927 of resistance.
Hence one of the best trading week as per analysis.
Now trail stop loss or book profit as per one's style. Market has relieved from overbought position now but still far away fr om oversold. Nifty can get some
temporary support now as last Friday's low was between the zone of 6113 (29th Jan 2013) and 6133 (approx high of 28th,29th an d 30th May 2013). Very
slight loss in daily volume but major decline of (30 percent) in weekly volume but bcz of expiry and holiday it can be justif ied.
28th Oct to 1st Nov week = 95.2 cr volume (Also Expiry week)
5th Nov to 8th Nov week = 65.70 cr volume (Monday was holiday)
Reliance is now at support so just tight your stop loss or book profit. Weekly loss of about 45 percent in volume on back to back week in reliance suggests to
take caution. One more thing, reliance is at exact 50 percent retracement from 1st October 2013 low to 1st Nov 2013 high. 50 percent is a good level to get
support.
H)comments on trade13.11.13
I am expecting a bounce in Reliance and Nifty in the coming week. But they are not good for trading as per my setup. I missed whole of up-move from 6100 to
6335 in the anticipation of down move. Now I am trading only short side.I am a counter trend trader and for that I need price to reach near any support or
resistance zone. Then I watch volume and price behavior closely and if everything found ok then I trade.
Here both reliance and Nifty have moved away from their major resistance zone's and are quiet in the middle of range so can't say anything now about trading
opportunity. For me reliance's first target was 895 and second around 872 and next around 838.
For any new trade in reliance,

1st- just wait for another shorting opportunity around 905 / 915 / 927 again.
2nd Even some one wants to trade in upside then their is one good opportunity right now. It is to take long position with sto p loss one or two points just below
the Friday's low. Reason for going long is reducing volume on daily basis and highly reducing weekly volume and price is at e xact 50 percent support.
3rd for Nifty can't say anything about upside bounce level. 6230 is a good resistance zone for any approximation. Its in midd le of zone and for any trading
opportunity it should reach any resistance or support level. Till then Just wait .
If there is no clear sign for trade then one should watch market carefully instead of trading. There are many other opportuni ties in other sectors or stocks. Just
trade those instead of Nifty for the time being. Trade only when you are sure about your setup and probability is on your sid e otherwise idle.
For example Auto Sector is at major resistance zone since last two weeks. Its good to trade those stocks in down direction. I f one is wrong then loss will be
very less and if correct than can make a very good profit. I am attaching a chart for your reference.
Dt 13.11.13
Nifty is reaching about the support now. Shorting days are now over. Just trail your stop loss in short trades if any.
Now Nifty is almost at the support levels. Wait for confirmations. Nifty may get down even now but now these are not high pro bability trades as when it was at
6300+ levels. Also stop loss will not be near and safe. So either continue your current short trades by trailing stop loss or be neutral till change in direction.
One may miss 100 or 200 or 500 points down move in this way as I missed 250 points upmove from 6100 to 6350.
I update about the IDFC so now about IDFC(potential trade)
IDFC today's Close and Low = 101.35 and 99.80

IDFC is now at exact lower support line with increase in volume of about 25 percent so it is must buy from my side today and if anyone has already taken
position in it like me then trail your stop loss with no more than 2 points max then today's low or 97.20. If it gets hit the n don't forget to reenter again if it
bounces back.
Safe Trading - Pull Back Trading

05 July 2015
04:02 PM
Is there any other way of safe trading ???

Yes,Yes,Yes.- its pullback trade.
Many a oldtimer confuse its with swing . also cup& handle- handle bottom for going long.
Idea is when main direction is established , in 1st pull back u buy.
Pl see Siemens i recently traded 18.9.13 as pullback buy which gives me good money .The way it breaks 450 , it has strong uppotential , so when it come back
to 468/- i enter long to make an easy money.
Idea is THRUST-PULLBACK-TARGET =1-2-3 OR A-B-C.
This is known to many old trader as their bread & butter.Mcmohan of OTA fame popularises it.Also SAFETY IN THE MARKET in 2005 sold them as propiety tool
with guaranteed trade @ 45000/- with 2day training.But i prefer eyeballing as discreationary trader and see clearly in the context of Present market.
Landry of tradingmarkets.com once add upthrust , after pullback as his swing trading technique (creating a delhi based snakeoil vendor tv artist)
Many old school uses its variety in TREND channel trading ,as buying at support of trendline.
Modern players use also FIB as anticipatory trend turning pt for short term trade, with lower Fib value as stop .
Can be used as stand alone technique , provided market condition is neutral
Master trader as experienced by Mark CRISP also play in down trend for short, while it approaches higher pivot.
In india Midcap is ideal place to play.
.........................................
Concept of Constraint
.........................................
Market is an open place for earning by any means, - naturally i can not stop TV artist -con masters, but definitely i can switch off my home tv.
The weakness of completely bombarded by lie , can create u weak in your trade.A 7-8 yr experienced fundamental analyst upbeat on market , dont doubt me
to SHORT now.
As i paid the price in 2002 , when i thought their professors know - yes i learnt from So called Investment Banker- from CFA trainers first hand by paying hefty
fees- but i get easy money from market ,where this suited booted donate back to me. So called xcel programme has zero utility to market, unless u r a sell
side analyst.
Time is most constraint-so learn early my friend. Learn by paying - its cheap,compare to learn from market with losing trade.
A contrarian view must be read by trader, so that u know otherside's trader.
Why i join OTA XLT- to listen to young traders demand supply line idea?-NO to know how young intellectual think /use software- so that this old haggard avoid
trap as well as win against them.
New's constraint is KNOWLEDGE/experience - i have to beat them in my strength.
Next pivot will be broken or not, i am awaiting there to trade .
Its the understanding of high probability , here is the constraint of majority of trader.
..........................................
Why i use DATA ? so that i can decide emotionfree not the variable price/volume which change every 3min/15min bar- creating a flexible exercise , but not a
determined factor.
Yes Confidence also key- a variable mind is a poor decision maker. Afterall price can be predicted 2 way up or down- AND UNPREDICABLE.This up or down ,
must try to nullify - (unpredictable can not be nullified)- here lies the essence of trading. U play long where at least on theory , its not in a position to go down.
This i call high probability trade.
HOW we reach this situation. Mastery on TA gives 20% wt, FA around 15%, pychology 15%= total 50 % , yet 50 % is uncertain. So increase no of stock to
watchlist/sector to watch for.
Understand Correlation and Reciprocal in trend. Say Infosys ,result up , price move up,similar expectation in WIPRO-Tech mahindra . This is correlation.
Interest rate up /bank down;$/INR UP -NIFTY DOWN- Inverse relation . This helps to increase odd.
..............................
Believe me , u may be the lucky analyst who get the inside info ,for the company - but as observer ur strong buy, must be reflected in price . Some days back
in a trade of HPCL , i had no problem to make money with call of HPCL @205 strike , by seeing the price approaching by 200 , i know it shall reach 220 .(you
can also see in chart)
Some titbits
............................
To see imp pivot ,just use line chart on EOD - its crystal clear.
In resistance zone, use candle - is it Doji, small body? So momentum is less ,so at the first sign of Bearish Engulf ,JOIN short .Trade what u see.
2] Gap in EOD ,for unfilled price, has a strong reflection . Up GAP means strong greed,so when that gap ,trade in direction of Gap.
3] Difference between Correction & downtrend is retracment value. Higher the value , known as Down trend- Nobody can effectively tell it(mind it Nobody)- its
better to watch with cash, watching the downthrust -the speed at which its falling ,can give us some guideline for deep discount buy zone or after breaking
lower low pivot, arrival of bear trend.Best sign i found Good result of company,but No uprise in price= bear market starts
.............................
Sentiment indicator as well as slope of MA ,helps us to understand TREND.
IN uptrend market ,pull back buy works best. In volatile market- buy low sell high works better. In secular bull market(buoyant economy 10%GDP) only break
out works.
As a specialist learn how distribution works-its worth learning.
Some Useful Comments

05 July 2015
04:02 PM
Last person ,from i whom we can learn is ST ,our moderator. So some useful comments
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Bull trap is always layed when there is a bullish trend and people expecting market to remain bullish.Market made a bottom at 6000 and started a bullish trend
with the hope of Fed tapering getting delayed and BJP getting majority in 4 states. The market went up on opinion poll result s with a gap and after the actual
results there was another gap so the sentiment was clearly bullish. Most hardened bear would have expected that the uptrend w ill continue for some more time
and the market may go upto 5600-6700 in that momentum. There are no triggers but that was known before the election gap also. If you have heard different
analysts all were predicting 6700-7200 in near future....this is the ideal set up for a bull trap.
The downtrend started after the election results and all traders are not so good to change as per the trend and that is why p eople get trapped in a bull trap...if
all are good traders there will be no one getting trapped in any bull/bear trap.
But no issues, if you want to say that it was not a bull trap and all traders were savvy and everyone was expecting the uptre nd to end on election announcement
and the down trend to start then that will mean that we will have lot many less loosing traders than what they are in the mar kets....and that is a welcome so it
does not matter whether we call it by any other name.
But I see and agree with your point but everyone is not an objective trader in his views about the market like you and that i s why people get trapped in loosing
positions dont they ?.
It is much better to not to take any position ahead of policy decisions atleast in daytrading.After the decision is out, trad ing is on fact and not on
hope/guess/news..money can be made by trading after the announcement too.
After he became a trader himself, he knew what hard work goes into trading . He says he never drinks alcoholic drinks if ther e is trading the next day...but he as
a member of group of successful traders gets invitation for lots of parties where all his trader friends used to drink, stay awake till midnight and next day come
late to the market with heavy head,hangover, incomplete sleep , acidity and their whole day is wasted. Where as this trader u sed to go to the parties, with a
drink in his hand he will mingle with his friends, eat some salads and simple food and at 10:30 he would throw his drink in t he wash basin and go home and go
to sleep. This helps him to mix with his friends but he says trading is a serious business and I have to be in the market wit h full concentration and fitness next
day and he used to be fresh and fit where as his trader friends still recovering from headache and hangover and loss of sleep .
The above speaks a lot about that trader and his attitude towards his profession ie trading.
Nothing in trading world will tell us with certainty what is going to happen in future. But TA tells us what is the trend so what are the probabilities of price
movements, S/R so that we know what are support and resistances and that is all that is required for trading. Future need not be predicted ,no one can do it
with any consistant accuracy..
If we are in uptrend and the market dips to a support area, we buy with a stoploss so if the support holds and the uptrend co ntinues ( which has a strong
probability) ,we make 2R,3R or more by taking risk =R . If the support does not hold, we loose 1R ....
This to me is a holy grail in trading.
Why is trading difficult ?
Because :
1) Trading "with the trend" means "Buy high, sell higher". : That takes guts, to buy when the price has already risen. A retr acement may be a reversal.
2) Trading "contra" means "Buy while it is going down". : That takes guts too. You want to wait for a retracement/consolidati on before taking a decision.
Both the above are against common sense. That's why trading is so difficult, because you have to have very uncommon sense.
One way to tackle this problem is buy 50 % on breakout....and buy 50 % in the first dip after the breakout provided the trend is still intact....and ride the move.
just see 3 min or 5 min NF chart. Very clearly seen there.But for that one has to understand what is a trend, how it progress es, how it reverses. There is always
a definite chart point which tells you that the trend has changed.
.......................
Right from the beginning today, the advance /decline ratio was very good with over 3 stocks advancing for every stock declini ng. This also was supporting that a
big day is at hand.
Friday 20-12-2013 was a big trend upday giving 125 points move in Nifty Futures.On such strong trend days if one can identify possibility of a large range day
somewhere during the day, it is extremely profitable to take positions and hold till the end rather than trying to sell each rally and trying to buy each decline.
This " fancy dancing " succeeds 1-2 times but it has a danger of loosing good positions and market running without us on board and we traders chasing the
markets.In fact we not able to buy at lower prices and having to chase the market is also a strong sign that the market is in run away mode.
I always keep an eye on A/D ratio and midcap index...that gives additional confirmation that the trend is strong and durable. ..it helps to hold and add to the
positions.
Every trader must have few of such strong trend days encashed to the maximum to remain ahead in this game.
..........................................
If one can capitalise on 2-3 large trend days in a month and few sideways days....but with very low loosing days, then every week and definately every m onth
will end into profits.Keeping our loses small and latching on to big moves ( and not getting out early on these days) is the key to consistant profits.
Trading profits are like the water tank example we all studied in our school maths. The inlet taps ( meaning profits) should have higher capacity than the
occasional outlet taps and few cracks....( meaning losses) then the tank will never be empty.
Another point to note is when we book profits and the market does not give us an opportunity to enter again at lower levels b ut we have to enter at higher
levels than the level where we booked profits means that the market in in strong uptrend mode....so dont expect deep correcti ons.
......................................
Many asked questions about operators and manupulators. They are not aliens from some outer space...they are traders like us b ut they operate in cartel.Some
of the manupulations they do are as under :
1) Front Running : This is the most common and most simple manupulation.Operators have contacts with dealing rooms of brokers handling FII orders and they
get to know which institution is buying/selling what today. They then take positions in advance and when the institution orde rs hit the market, suppose it is a
large sell order, then prices drop and then these operators cover their short positions. Many will argue that FII brokers kee p strict vigilance and they are not
large sell order, then prices drop and then these operators cover their short positions. Many will argue that FII brokers kee p strict vigilance and they are not
allowed to communicate fron the dealing room but this is plain false...news always gets leaked with FII name and the qty whic h they want to sell etc...This is a
crime in US but in India it is a common everyday practice.
There are many others ...I will just name a few of the manupulations:
2) Circular Trading or "scrip chalana" in local parlance.
3) Insider Information. It is so rampart that in India 70% of big deals trading is on insider information.
4) Supporting the price : Do you know that some large industrial houses have separate dealing rooms to support the prices of their company stocks ?
5) Bull Traps and Bear Squeeze : The most remembered one was when a large bear operator who hammered a Petro company's stock before its public issue was
squeezed by the company management and forced to cover at huge loss . Many old timers will know this case.
6) Concentrated Hammering : This was more used when we had open outcry system at various stock exchanges located at different parts of the country.
Apart from the above, espionage, spreading roumers and many other types of manupulation takes place regularly.
But remember that the operators walk with the heavy boots and they leave their footprints in the sand by way of volumes. So j ust observe price and volumes.
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I have been fortunate to have worked with some brilliant and successful traders and also with many failure traders. Failure t raders fail not because of lack of
intelligence, hard work, discipline.....etc even they have all these...they also have strong will to succeed . Then why do th ey fail ??
I find that if I have to list down 2-3 important points which separate successful traders from the traders who could not succeed, I will list them as :
1) Successful traders have inherent sense of Reward/risk so they wait patiently for a trading set up which gives them a good R/R trade. There is no point taking
a trade with 10 points risk unless the set up is such that you are reasonably sure of making 15,20 or 30 points profits...if you feel that the trade does not have
that potential, they pass the trade...
2) All successful traders have what is called " controlled aggression" Some traders are aggressive everyday in all situations and some are controlled ( meaning
scared) in all situations. But successful ones become very aggressive when they see opportunity...else they are controlled.
3) All successful traders can sense when the trade is not going as per the plan and they get out not waiting for stops to hit . They are always in control of the
trade and not the other way round.
Thought of listing them down as we are going to start a new year soon.
Put down your trading plan on paper. List down what inputs are required...do you have them ?...if no how do you plan to get t hem....have a target which is
difficult to achieve but not too difficult and not achievable.....method, timeframe, capital, mm,discipline, trade setups.... all to be in full harmony ..
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We have to think why we lost today. If we followed the charts, there is absolutely no reason to loose...one could have shorte d a bit late and still made money. If
loss is due to non confirmation of trades, double trades ,loss of connectivity,because the position showing in outstanding po sition window etc, then ok, such
things dont happen too often...but if we lost because we held in hope, not reversed etc...then we have to take a hard look at out trading and remove any bias
from our minds...
.......................
1) The upmove builds slowly with lots of up/down....but the downmove is sudden. It is the nature of the market. The buying de cision is gradual...selling is
sudden, just like dumping the position.So upmove takes time to build, downmove comes tearing down, fast and ferocious.
2) If you are asking about daytrading, I use 5 min bars and I use the same chart for deciding the larger trend as well as tra ding the current moves. But market
gives plenty of indications before it makes a move. Today from 9:40 to 12:00 Nifty was attempting to go up but every attempt its strength was falling short.
Finally bulls gave up and that is where the bears seized an opportunity.
3) In trading entry is relatively easy but exit is difficult and exit is very crucial to the success or failure of a trader. The exit should be what we call "Just In Time
" in management terminology ,that means not too early, not too late. This is as much an art as it is a science. I use the fol lowing to decide my exit levels.
a) Supports/resistances of hourly, daily bars.
b) Previous swing highs/lows
c) TDST Power of 9
d) VWAP Bands
e) Large bars, End of move bars
f) The bounce we get from the low
g) Overlapping bars
So based on the above the exit is taken. Booking part profits at important support levels also is a good strategy.
1-2 small bullish candles in the belly of a strong bearish candle means more downmove.In fast downmoves, bring profit taking st op to the high of bar after new
low is made.
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We have to keep a stoploss at minor pivot high if we are in a short trade.Stoploss of high of the entry bar also works fine b ut as it gives low stoploss, the tradeoff is a few false trades .
You may consider selling 50 % quantity on pivot breakdown and sell balance 50 % on a rally up...as close to minor pivot high stoploss as possible...but the
trade-off is the market may run fast and you are on board with only 50 % short positions....it is like we cannot have the cake and eat it too...
..................................................
MA is not a holy grail...it is just a decision support system but how one manages his trade on MA that makes it a profitable system. There are few traders who
trade Swift which is a MA based system and make 10-12 % in a month....and on various scrips. 21 MA line is called a holy grail because in any time -frame the
market has a natural tendency to come near 21 MA and touch it before advancing/declining further....so just that nomenclature .
Swift is a pivot based system which uses MA to decide the direction in which we are going to take trades.So it is different f ro traditional MA based methods such
as MA crossover etc. Convince yourself about a system by backtesting before you start trading it. If you dont have confidence in the system which you trade, the
best system in the world will not make money for you. I dont trade Swift now as I have a much better and more profitable meth ods now...but the basics of
trading remain same.And Swift has some beautiful stuff in it.
For sideways days use some ideas from Pratap's VWAP method...it is worth its weight in gold.
........................
Whenever market changes direction during the day(assuming u trade in direction), you loose. Today market was unwilling to go below 6175-80 which was -1SD
level so short positions should be covered there as market tried 3 times to break that level and failed.
So main direction should be LONG in future.
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Sudarshan Sukhani is a short term( day trader) as well as swing trader ( 2 -3 days to 2 weeks holding ) .I find Sudarshan Sukhani very consistant in his views.
So nothing wrong if he changes his views depending on trend change in the markets.In fact that is a sign of a trader who adap ts to changing market conditions
and not saying I will keep buying no matter what market does.
.Every trader has to change his views as per market moves.
............................
comments on stoploss not triggering & low target trade:
Your trading reminds me of a real life example of one of my trader friends. He was a dare -devil and he will sell/buy 10000 no of shares and his profit target used
to be just 0.50 or 50 paise...so if he makes 50 paise it used to be Rs 5000 and that used to be in less than a minute. He wou ld always tell me..." yar Rs 5000 in
less than a minute is not bad....." I told him that I can mathematically prove that you will go bankrupt. How ?? Asked him if the trade goes against him then how
much he will loose....he said hmmm may be 3 or 4 Rs ...then I told hin that suppose you do 10 trades...70 % of them is right. ..so @ 0.5 you collect 3.5 x10000
=Rs 35000 on your successful trades and on 3 loosing trades you loose 3x3x10000= 90,000....and we are taking 70 % success rat e which is very high and not
considering brokerage taxes etc.....so you make 35000 on right trades and loose 90000on wrong trades in every batch of 10 tra des...and it is mathematically
certain thet you will soon go bankrupt......
Same thing happened..he actually went bankrupt and had to sell many of his assets to fund the continuing losses.....finally g ave up trading................This is a
real example....
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Further i SEE opportunity ???
Let us see some skill developed by trader - all maggie trader/market specialist can understand really order flow , flow with the trend - whenever strength in BUY
or SELL side order comes , Quickly they join in MOMENTUM of that direction and EARN.
at 3pt , yesterday's CLOSE, HIGH - LOW , also VWAP- somebody suggested similar idea @ imp PIVOT - support/resistance pt.
Most imp garbage i see idea behind sell at support expecting further down - as well as buy @ resistance , believing price will continue to move up(trend). Simple
idea of TRADE business - buy low, sell HIGH- so u r supposed to buy at low (support) and SELL at Resistance - not any other way . I am certain because of
vested interest SPECIALIST Market maker / broking industry through Writer/ pseudo academician develops the theme to make MONE Y - so that the fool must
buy at high & sell at low.
SO its momentum - but it changes or diminishes after hitting higher time frame pivot .
........so in shortest possible micro trade idea is momentum. The same gigantic idea - can be played played in higher timeframe - but easier is REVERSAL. So
question boils down to
which u may prefer vs what market is doing now , as well as going on in particular stock/instrument. Only 2 approach has soln
case 1] Define you- your comfort . IF u define u can handle MOMENTUM , pl learn to play trend continuation, breaking of 1st higher high is trend confirmation so join then - if wrong ( probabilistic event of a particular event simply get out as per your stop).....
Again Define you- your comfort IF u define u can handle Reversal , pl learn to play trend termination, - take action at OVERSOLD /overbought. Again activate
stop when (the random event of wrong trade)market /price goes against u.
So a mechanical system should be as simple as that - any of the two decisive idea.So based on observation trend continuation max strike rate is 2/5 and
reversal is about 0.7. - risk/ reward favoured former ie. trend continuation.So small stop is must whatever u choose.
Unfortunately we are never happy with simple system, instead search for holy grail. so we believe in both we can work - trend continuation as well as reversal
idea.......that is increase our strike rate by assumption that whenever price moves up - i will play momentum and whenever it fails or show Reversal - i will take
reversal trade. So theoretical devel0pment of Price cross MA or dual MA X developed to join both side of trade.But actually a s per event unfolds in future , due to
natural random factor some trade is RIGHT ,some trade is wrong.
So earliest we learn , loss trading is part of system, unpredictability is part of market - u only can manage trade - is better .
So we come to conclusion - the other factor MARKET is more imp. So we now believe /realised -MARKET CAN BEHAVE WHATEVER IT LIKES , MOMENTUM
(CONTINUATION) reversal OR SIDEWAYS - out of these 2 we shall join , either continuation or reversal - sit idle in 3rd(sideway).We r now FLEXIBLE - if
momentum shows , we join accordingly.
So our entire objective is what market is going to do by DECIPHERING price. So all price action theory develops - if...this- then THAT .
Soon we realise its not random - at some particular pt/ price zone market participants behave like herd , so as an individual i must take the action earlier t han
them and make money for follow up..........this i call Anticipatory Trend.
So based on chart- see right , think LEFT and what will happen this time at MOB - is actual opportunity.
Yes understanding economy / sector rotation /company result - all may be reflecting in price - only u should know =how to read it.
Pl study MARKET INTERNAL and keep u stoic in mind- with time u master your destiny.
OILMAN5
================
It is my firm belief that the market is not always random and in some periods of time, it is non -random because of predictable action of participants in the
market. It is for the trader to recognise this non-random zones and take advantage of the same.
---------------------------------------------------------------------------------------------------------------Trade only your own reading of the trend. No body on the earth knows what the market will do next.Bank Nifty closed 100 point s below the level where you
posted this. Trend is definately down and buying before market gives indication of trend change is sure way to loose money.Ne ver add to your loosing positions.
Dont depend on anyone's views(or hopes)....
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SGX indication was mentioned not as deciding the trend,(trend was down for last 2 days) , but to a person who was already ble eding with losses because of long
positions. And when the trend is down, SGX is indicating downmove continuing, and losses mounting, in my view keeping the pos ition against the trend on hope
of event and some action by RRR is not a very wise and prudent action.So was hinting to him to get out at the earliest opport unity.
But the person added more long positions on hopes, a very expected and highly dangerous course of action.Add positions also a dding to losses.Luckily the
market did not crash violently but if it had, then what would have happened to the trader ?
Never fight against trend nor av loss.
.........................
I still trade swing trades along with my usual daytrades and options trades but the difference is in early days I used to tak e a swing position and wait for it to
move in my favour.Used to hold on news, hope etc even hold and add to loosing positions ....but not anymore. Every trader goe s through this path and earlier
he accepts that he should get out of the trade if it is not working out and not hang on to it in hope, earlier he gets on his path of trading success. There is no
problem with the market moves, the problem is how we as traders react to these moves.
,,,,,,,,,,,,,,,,,,,,,,
Our mind plays games because we dont want to loose . That is where discretion comes in.The following might help in reducing t he mind influence.
1) Backtest the method and convince our inner mind that the method is profitable .
2) Have adequate capitalisation. Shoe string capitalisation is one reason for second guessing trades.
3) Make sure that we dont depend on the earning from trading to pay our monthly expenses....if we have to earn for expences, we will never be able to accept
normal losses which are given in this business.
4) Keep some amount aside ( like 30-40 K ) for continuous losses and drawdowns. You may never need it but it will give a solid comfort level .
5) Be prepared to loose some accumalated profits . Systems traders dont buy/sell on the lowest/highest tick.
5) Be prepared to loose some accumalated profits . Systems traders dont buy/sell on the lowest/highest tick.
.................................
After a vote on account which had lots of financial adjustments, the market did not go down much.This was the first bullish i ndication today. Looking at the
market movement my view is market will not go down much but till election we will see a steady rise with a few corrections in between. But market going below
even 6000 looks difficult now. If BJP comes with clear majority, then we may see a fast continuation of upmove after the elec tions. But till elections, I am not
expecting any big fall unless the external factors decide to do otherwise.
.............................................
The following methods work well in sideways markets :
1) Sideways market moves in upper and lower boundries , so sell near upper boundry,buy near lower boundry.
2) Any oscillator overbought/oversold areas.You may consider Stochastics, RSI etc
3) VWAP bands ( sell in resistance bands and buy in support bands).
4) TDST supports and resistances.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
I am not a big follower of totally mechanical trading systems mainly because I have not found a fully mechanical system with low drawdowns,small stoplosses
and high Reward to Risk ratio which I must have in all methods I trade. I always found that totally mechanical systems give m ediocre results.But there are many
who make a great success by trading totally mechanical systems and I admire them
.....................
To clear your confusion, let us see how the trend changes. Suppose we are in a downtrend, market keeps going down and at some point the last seller has sold
and there are no fresh sellers at that point and the market bottoms out. At this point it can go sideways and then either res ume its downtrend or reverse into an
uptrend. When the trend reverses, it always manifests itself on smaller timeframe of 1 min , then it manifests itself on 3 mi n, then 5 min then 15,30 min and so
on. So various timeframes will have various TDST or support/resistance levels. We trade the levels of our timeframe but at so me levels there are many TDSTs of
various timeframes which converge...and that point assumes major importance as support/resistance.
The lower timeframe TDST levels can be used for trading in the direction of larger trend. So suppose we are trading a 30 min timeframe, we can add long
positions on 3 or 5 min timeframes in the direction of larger 30 min trends. This way we can add with small stoploss and take advantage of 30 min trend with 3
min stoploss. This gives very good Reward to Risk ratio.Many times we trade on 5 min timeframe but finetune our entries with initial stoploss on 1 min pivot and
once the initial entry is successful, we manage the trade on 5 min timeframe.....same logic here.
,,,,,,,,,,,,,,,,,,,,,,
Dont use stochastics in trending markets. In strong trends it will show divergence and the market will go on trading higher.
Overide all your systems if the price is not acting right. " Bhav Bhagwan Hai " is the ultimate truth in the market.
Go back to your trading small till you get your gearing back.
,,,,,,,,,,,,,,,,,,,,,,
Bull market always builds in slow grinding upmove. Only in the last leg of the bull market we have euphoric steep rise and in this phase cats and dogs start
rising and every trader/investor with 2 months experience thinks that he is born to become new Warren Buffet or Michael Marcu s and the blow off phase sows
the seeds of next severe multi -year bear market. This sequence continues with predictable pattern.
..........................
The rally is fuelled by FII buying. So slowing of FII buying will change the current trend.
.....................
Dont fight the momentum and trend. Most money is lost trying to figure out market tops and bottoms
Join the trend on a small dip and keep stoploss.....that is the only way to catch such galloping markets.
............................
Over the years I have learnt that charts and patterns dont move the markets. It is the money which moves the markets...charts are only pictorial
representation.So as long as the money inflow continues, market trend will not change.
,,,,,,,,,,,,,,,,,,,,,,,,,
Markets dont reverse suddenly.....before reversal we will have a dip, then market will try to go near the top but will lack s trength and buying power....and then
they reverse. So we are some days away from reversal....so dont keep waiting for reversal and shorting the markets.....It may be dangerous to our financial
health...
................................
I expect Nifty to trend higher because of the following :
1) FIIs buying bigtime.They wont buy this much at the end of the move. So the momentum is likely to take the market up.
2) Politicians have started sensing the change of weather .Some Congress ministers are resigning and joining BJP . This is ve ry important tell -a -tale sign as
politicians are smart people .
3) Nifty coming out of a long multiyear consolidation ...it wont breakout and go just 100 -200 nifty points up....some more upside likely.
4) Daily Nifty ( sopt) charts TDST is broken at 6331 indicating that Nifty is likely to go up . Looking at Sequential positio n, we have about 2 weeks uptrend still
left. Of course it wont continuously keep going up for 2 weeks, it will have its corrections but the direction will be up.
Having said all the above, we trade as per the market trends and not get attached to our analysis and views.. So if market tr end changes for whatever reason,
we have to change as per the trend. The trend is definately up as of now.
......................................
Some people have bullish bias and they think that the market will always go up. They fail to see that the uptrend is over and the downtrend has started and
keep holding the long positions in loss and when the market comes up on the next uptrend, they feel " look , I told you that market will go up."
A good trader has to get rid of these biases. He must be long in uptrend and short in downtrend. It is easier said than done though and we all have our bias but
we must try to reduce its impact on our trading.
----------------------------------------------------------------------------------------------------------------
Most traders here are daytraders or 1-2 days hold traders.For them it does not make a difference whether market is going to break 7500 or 7700....this range of
200 points is good enough for a daytrader to make money.And even position traders, what we need to trade is the current inter mediate trend...and not go on
thinking about whether the market will go to 6400 levels or not. Even if someone says 6400 level is coming....and in between the market takes a 250 points
rally....is it prudent to hold short positions with faith that 6400 is coming anyway so why cover.....that is a sure way of l osses.
Trade as per our system ( for that one must have a system in the first place....).and we will be fine...no need for predictio ns
Yestarday many systems gave sell below 7635-37 and that is good enough to trade.
.............................
Market fell because all had bought on expectations and on actual event happening, people came forward and booked profits.Last few days people made good
gains and they booked their gains.My Nifty target was 7500-7600 and I never thought that after rallying so much and when everyone is expecting upper
gains and they booked their gains.My Nifty target was 7500-7600 and I never thought that after rallying so much and when everyone is expecting upper
circuit ,8000-8200 etc market will rally that much in one breath,it needs a small pause and consolidation.
But I dont think this is a top of even intermediate uptrend.Lot more steam is left...but as traders it is right to sell and b ook profits. The market will give good
opportunities to buy again and ride the further uptrend.I expect huge foreign inflows into Indian equity markets as it is the most attractive in EM portfolio.The
markets will go up on foreign flows and Indian investor will not participate in the upmove...he will sell on every rally in u tter disbelief on stock markets going up.
[Yes, it is the typical "buy on rumors, sell on news" kind of scenario. People expecting 700 -800 pts move on this day do not take into account that we have
already had a nearly 1000 pts rally in last 2 months.
So, there was this 5% upmove to salute the decisive victory, and then the retracement to say "Well done, not let's see your p olicies before we make further
upmove"
...............You are mixing up.Every trader has analyst and trader in him. As analyst,one always thinks of probable extent of any move,how high or low it can go
but as a trader, I dont go by targets..meaning that even though I as analyst was anticipating move upto 7500 -7600 but if the market did not go to that level
and started drifting down from say 7200 and if there is a sell signal on the system, I will liquidate all long positions and go short.As a trader I will not have any
targets and will not wait for any target level to come to initiate any action.
Now though I am bullish in medium term...but as a trader I will not hold the long positions and wait in the hope that market will eventually go up.I will buy
again when the market starts going up but as long as it drifted down, I shortsold yesterday as daytrade and covered the short positions in the end. If on Monday
market shows weakness , will short again...if shows strength, will buy....so no targets in trader mode Analyst mode says that the market is taking correction but
fundamentals have improved and we are in a long bull market...but trader says,so it be ,but if the market is going down in co rrection, let me short and make
money....and when the upmove starts...we will buy again and make money on way up, why be on opposite direction of the market ? This works much better for
me ,than holding long positions in eternal hope of hitting the targets....
There is a huge difference between being a trader and being a market analyst.
(Analysts are paid by being right. On this basis alone I am not smart enough to be an analyst. Traders are paid by managing r isk. These two skill sets are a
world apart. In my experience, people who try to be traders by being analysts usually lose their grip at both ends of the rop e.
An analyst will be judged negatively by poor market calls. When wrong, a trader closes the trade and moves onto the next oppo rtunity. Hopefully, little harm
done! Being wrong is a fundamental assumption for a trader.
Analysts study industries, companies and economic conditions. Traders, at least most traders, study price and could care less what company the price
represents.
Analysts even technical analysts become heavily vested in the rightness of their opinions. Analysts gain reputational equity based on their correct calls.
Traders become economically vested by what they do with their losing trades. Traders gain capital equity based on their handl ing of losing calls.
When an analyst changes an opinion on a stock or the general market, it is called a revised forecast due to changing fundame ntals. When a trader changes an
opinion on a trade, it is called flexibility for capital preservation and survival.
One of the mental hurdles a novice trader must get past is the connection between being right on a market and making money in a trading operation. The two
are disconnected. It is hard to explain this concept to a non -combatant, but all front-line soldiers reading this blog posting know exactly what I am talking about.
......................
One of the mental hurdles a novice trader must get past is the connection between being right on a market and making money in a trading operation. The two
are disconnected. It is hard to explain this concept to a non -combatant, but all front-line soldiers reading this blog posting know exactly what I am talking about.
Very important for traders. One has to read these lines and understand the meaning to succeed as a trader.
I will give you an example from my own trading career. When I was a new trader, I was a very hard working analyst...I used to analyse
markets,charts...monentum,RSI,Stochastics,price action, Dow Theory, Gann, EW waves counting, Demark ,channels and I used to d o briillant analysis ...but I
was a loosing trader because after doing this analysis,I used to get attached to my market view,targets and refuse to give im portance to what the market is
doing and I was not giving importance of Reward/Risk in any trading decision....now after so many years, I am a much poorer ( lazy also) analyst but much
better trader now....
Arguing is not needed, just an add surely can be done or some adds. If a trader is successful with his target trading, then t here is nothing wrong in it. I traded
for a long time options only on pure STDV on bigger time frames (At least one day to even one month and more), which is fixed target and range trading. There
was nothing wrong with it, expect it is in many cases wait and hope the target must be reached or not reached, depending on t he option strategy used.
In the mean time I use other, much more flexible and dynamic options and hedge strategies, so the fixed target and fixed rang e trading is moved a bit into the
background, even still used to get certain ideas at certain levels in any market. Still: Today many option traders do trade p urely on such mathematical tools and
are happy with it. They even consider it as the holy grail and the absolute wisdom in option trading. Each personals choice.
Last 2 days dips are corrective and rallies are strong and impulsive.
This market is in bull grip. It pays not to fight the trend...the trend is up and we have to be on long side . This uptrend w ill end somewhere...but let the market
show us that the trend has changed.
..................................
Bears are very busy in shorting every dip in the market thinking that the bull market is over ,to find that market makes a ne w high.Then to "patch up" the short
positions they are selling puts of higher strike, or averaging by selling futures at higher level and covering the same on th e drop. In short they are trying to
trade small corrective moves and leaving/fighting the larger impulsive moves.
Traders started expecting correction...means market has lot more steam still left to go higher before it gives any meaningful correction ( meaning more than
100-150 NF points ).Correction will come when no one will expect it.
----------------------------------------------------------------------------------------------------------------------------- -------------------------
P A R T - - 3 SYSTEM BUILDUP AND APPLICATION

05 July 2015
04:04 PM
So i have discussed some good traders view / technique /approach which can improve one's trading. Also one can read -MY LAST THREAD' : REFLECTION ON
TRADING.
They will definitely help anyone , particularly my daughter - whom i want to bring in market. This thread is actually dedicated to her learning on market. So she
joins now (after xii) in BCOM (financial market) + Weekend BSE -Global Financial Market Course to learn ABC on market.
As a trader - market is the best teacher.Though i learnt heavily from
1) tradingmarkets.com
2) onlinetradingacademy
3) Meta-formula fame David Jenyns on trading mastermind
My past : played CHESS /Bridge in national level
worked as project coordinator
Mech Engineer with Finance Background + trained from BSE
Lectured Advance TA /trading @ corporatebridge
Worked in PVT/ CENTRAL GOVT / Govt-undertaking
NEARLY 10YR SPENT TO UNDERSTAND/EXPERIMENTAL TRADE -ON FUTILE INVESTMENT-TRADE. SUCCESSFULLY TRADE SINCE LAST 10YR .
So system build up & application shall reflect some imp observation /reminiscence.
Let us start . As we know - in trading 3 elements for analysis .
1] fundamental
2] TA
3] Psychology
u have to read them , assimilate them but money to be made by MM.
Market has to be understood in CONTEXT. Opportunity lies ,if u understand before others what may happen & act accordingly. Since its probabilistic ,
sometimes TIME will prove u correct - so hold/add. Other time ,market when proven u wrong -simply GET OUT, use stop.
Sabotage = selling winner & holding loser.
--------------------------------------------------------------------------------------------------------1] fundamental
,,,,,,,,,,,,,,,,,,,,,,,
since trading is a subject with greed,finance,invest and ofcourse maturity and adaptability.........i think a touch on finance /investment reqd.
...........................
in xii level........a/c , company , business r introduced also economics
so understand first.........debit/credit.
then ledger entry.......bank reconciliation statement
..........................
now learn balance sheet/profit & loss statement/cash flow. depreciation concept.
rule: asset=liability + owner's equity
..........................
go to the cost concept,how estimate r determined ,product price and value.
..........................
understand some people r ahead of others........search for opportunity
some can identify & risk analyst by nature.
......others r gullible, simply bombard by media.....and believe to follow.they r the source of food for all.concept of marketing story..........a brahmin, a
goat[ which he believes a dog due to self doubt,........ploy used by 3 thugs],an excellent teaching of panchatantra........u see in day to day life, media
hype........understand how news flow.
so see how company owner/ceo sees. basic idea of corporate finance.
budget concept .....forecasting .catch is assumption and actual performance checking
so when u understand this basic , look at macro economy.......govt has some agenda....what is it trying to implement.......so which sector /company may get
back up.
economic cycle concept......boom-recession, affect of interest rate on modern economy and rbi policy r must to know.........to develop know why attitude.
.................................................. ....
can u look little bit to understand theory of compounding.....to understand discounting/future cash flow?so now u know dcf model and p/e idea , just study
basic risk /reward analysis.combine all3, u have fair idea what should be the value of stock.
only 2 thing further. what is lying in future? perception of people.......read newspaper and price reflection.......u can now find sufficient opportunity
.................................................. .......
business: its an organized effort of individuals to produce and sell goods &services for profit.
so organised effort must be there.
type A: produce product and then sell . make profit out of it.
type B: provide service , get profit.......service industry.
...................
service & goods MUST SATISFY customers.so needs and wants of customer r key determinant.so understand this .....who r ur potential customer and what may
be needs.
.....................
let us try to understand production.
5factor
.............
1. land
2.labour
3. capital
4. info
5. entrepreneur : risk taker who start business, for a dream of profit.its his vision and practical application and ability to mold as per demand of position
...........................................
so now come resource............always consider its restricted or limited. understand......for any product production distribution and consumption. simple idea on
wheat.......can help u to learn commodity concept /economics
Big picture comes from macro economics.business is applied economics......so understand scarcity and opportunity cost.
skilled labour ,capital normally scarce.
OPPURTUNITY COST : is next
best alternative use of resources. say i am studying mba full time at 30 yr with 4lac /annum ......so tuition fee 2lac + 6lac , opportunity cost as 1.5 yr study
time 1.5x4lac=6lac to be considered for cost of education.
..............in business decision making tree , oppurtunity cost is very vital
...........................
back to basic: what to be produced and for whom?
back to basic: what to be produced and for whom?

what resources .......how to arrange
.........................so market economy [capitalism]and mixed economy
classic case in indian oil marketing company,[bpcl]r used in india
..........................
economic force : supply demand and equilibrium.........how price vary and percept of value is key theme.
for a company monopoly ,oligopoly[ a small number of big company controls ]r good for profit.
competition is ........company hates
............................
however due to free enterprise others r like to join.
growth of trade is policy a company. so any country's policy, present political boss , govt regulation .......+global concept is guideline
.........................
so for country's economic cycle ..........gdp, measuring growth,employment , inflation, balance of trade.....r key indicator
.... understand role of govt as regulator........rbi,sebi
....govt encouragement........to some industry
tax and law ......role as business supporter
lobbyist.......at election ,their flesh of pound after power equation........i dont have to name.
budget.........its relaxation /new c.d/vat
business law and ethics
business sustainability and growth
..............................................
understand environment at which a business work,adaptability to change with it.enemy other competitor has to be cut, gain more market share ......how much
concession for buyer's market.
first".....input ...........PROCESSED .........output
2nd' feedback.......strategy......to play aggressive if faborable, cut loss if danger.......if nomal just as per plan.........dont disturb system
slow but steady wins the race,.....motto.
............
fad....life style change of consumer
new technology
applied research....for development
global competition and oppurtunity
.....................
understand owner.......sole proprietor vs. corporate.
organisation chart of a company and its management principle
authority vs. responsibility
effectiveness
contingency approach.......as reqd.
goal....planning........purpose.....action to achieve.........feedback[review of performance]
.......rectification
......................................
scheduling and PERT r key tool
understand QC AND INVENTORY .......just in time.................
basic idea of marketing
.......................................
1. concept of utility:why buy?.....promotion of ideas,goods and services to create exchange against money to satisfy human needs. infact customer purchases a
utility.
time and possesion r imp element for buyer.
exchange........buy and sell
buying: buying means why at what customer buy and ready to spend how much ?
selling: transfer of possesion from seller to customer to create possesion utility
.....................
hence for physical distribution .........transportation and storage r imp.
..................
risk taking:
1. introduction of new product
2. competition
3.potential loss from bad debt
4. obsolence , theft
....................
gathering info through market research ........its verification and implement it in decision
................
marketing: when supply began to overtake demand ,producer know ..........they have to sell goods to consumer whose basic need is satisfied.so selling better
over the competitors..........sale depends on satisfying customer wants, advertising alone not enough.
.....................
market
...............
1.consumer market..........buyer r consumer
2.institutional market.....like hospital. Club, school.........spread the need
3. reseller market.........intermediaries like wholesalers.......who buy and later sell for profit.
.........................
relation with an industry .........where to use and product utility
consumer motives..........activity and interest.
so specialty goods ..........consumer or for industry ....have to be seen
..........................
marketing concept starts with market research , developing a marketing strategy with 4p i.e. product price place [distribution] promotion [publicity]
feedback study...........to understand where we lag , our strengthzone .........effectively addressing customer needs,........distribution chain.......is publicity
effective to improve performance
..............................
consumer concept: economic factor ........how much money consumer have.......their actual income and money avaiable to spend, disposable
income........softloan strategy of bank.
future income pattern............with demography........so the target audiance for market ,and finally make them buyer.
finally......rational motive vs emotional instinct[of potential buyer with cash in hand].........they shall buy today /tomorrow,if not then day after............this is
the concept , stockmarket....media,mf industry use .
on the otherhand industrial buy..........only after due diligence cost, reliability risk study
[just see how fii buy in indian market , getting out with profit]
product and pricing
..............................
products r finished goods ,focal pt of business & tangible,can be inventoried.services r deeds,both can be judged by performance with an opinion of customer.
company can start productline i.e. a group of products , develop additional product to expand product line or atleast keep up innovation/advances in the same
sector/industry group.
product differentiation: its the process of developing /promoting A product vs. similar product from other company.Object is to create spl image i.e. niche in
market.
PRODUCT LIFE CYCLE:
PRODUCT LIFE CYCLE:

...............................
INTRODUCTION GROWTH MATUIRITY DECLINE.
during introduction normally promotion occurs ,choose distribution channel carefully
during maturity products sale on its own ,need min promotion .........profitability increases.
in growth stage, to create brand loyalty more imp.
Later sales volume comes down ,competitive product launches ,consumers may switch to other brand ...........so the firm drops it from productline and try new
product , developed by own R&D.a business analysis is done to evaluate and quantify new product's potential , vs positioning of competitors in
market...........compare cost with alternate scenario/oppurtunity cost and firm's strategic objective.If all r promising........then only new one tobe developed, or
otherwise try for imitation of existing self or competitor's high volume product with a minor change.
For justification BEP has to be studied for viability with alternate scenario.
So use.......test the market.
commercialise the market............go for branding.develop brand loyalty.
have a good warranty. Then only comes pricing.
funny part of pricing is .........it is as the eyes of beholder , so customer has to perceive.
so the concept......potential customer who can pay/spend.for service........its need based.So demand and supply is more imp concept.In reality producer tries
to control pricing by perceived value of customer through advertising and relation maintaining.,so customers believe in greater value of product than its actual
one.
pricing objective...........depends upon profit motive,market share penetration ,survival, ethical concern and company image.
.......................
for calculation gross profit margin and BEP has to seen with different scenario.understand realistic cost.penetrating pricing vs higher price for higher quality r
entirely different concept........multiple unit discounting ,psychological threshold of customer to be considered.
then comes distribution channel........direct sale to consumer[mall concept] ,sell through dealer and through agent for industrial user.
door to door retailers and internet selling r new concept.
for inventory control, distribution centre has its role.
strategic management
....................................
STRATEGY requires thinking ,an ability to visualise future,analytical skill and to take well informed decision after collecting data and analysing info.Next come
its implementation.
Normally we say an issue is strategic ,when it requires top management involvement,commitment of major resources or an longterm impact.
design,planning and positioning model....................doing SWOT,thoroughing analysis of sector and then visualise and see from perspectives.
POWER MODEL :at micro level involve in bargaining, persuasion and confrontation.at macro level use power over its partners,joint ventures and network
relationship .
ENVIRONMENT MODEL :HERE WE COPE WITH ENVIRONMENT .strategy is a response to the challange/ situation perceived /imposed by external environment.
configuration model : AN ORGANISATION DO MOVE FROM A STATE TO ANOTHER AS PER REQUIREMENT , PLASTICITY IDEA TO TAKE ITS
SHAPE .......FITMENT .
ECONOMIC GOAL OF AN ORGANISATION
.................................................. ............
3STAGE.....SURVIVAL,PROFITABILITY AND GROWTH. firm has to survive first[also applicable to any budding trader]dont take it as granted.reckless shortterm
oriented decision,complacency.......quick fix idea to tackle larger root cause problem is the reason failure.
PROFIT TO BE SEEN WITH SUSTAINABILITY.PROFIT FROM CORE BUSINESS NOT BY A/C MANIPULATION.
GROWTH, PRECISELY PROFITABLE GROWTH IS AIM. IF COMPNY NOT ABLE TO GRASP OPPURTUNITY TO WIN OVER COMPETITOR,EXPANDING MARKET
SHARE,DEVELOP NEW PRODUCT ........IT WILL MARGINALISE.
................................................
STRATEGIC PLANNING:VISION AND MISSION...........FUTUISTIC VIEW AND STATEMENT
CORE COMPETENCE:TANGIBLE AND INTANGIBLE ASSET COMPANY HAVE & COMPETIVE ADVANTAGE OVER OTHER COMPETITORS
VALUE : CULTURE AND ETHICS.
STRATEGIC OBJECTIVE : TARGET IDEA TO MEASURE KEY PERFORMACES LIKE MARKET SHARE, CUSTOMER LOYALTY, QUALITY SERVICE HUMAN
CAPITAL ........ITS WORTHINESS
.................................................. ............
Business environment needs to be analyzed carefully before a strategic plan is prepared.2 environment..........remote and operating . remote environment
includes .......political factor, economic factor,social factor,industry factor.OPERATING ENVIRONMENT MEANS how a company sells its product/service
profitbly..........competitive position,reputation in labour market,credit worthiness,creditors view.operating environmnt is under the control of
company,........where as for remote environment it has to adjust.
DURING THE PLANNING STAGE IDENTIFY KEY ISSUE.............WEAKNESS OF PRODUCT/SERVICES.........WHERE LIES OPPURTUNITY .CHANGE NEEDED IN
COMPANY TO SUPPORT STRATEGY.........PRESENT SKILL AND RESOURCES.UNDERSTAND EFFECTIVE IMPROVEMNT...............some key issue r cost,
service,new market,products,expansion, acquisition,organisation structure, core competence,new technology,info system.
ANY STRATEGIC PLAN ALSO MAXIMISE PRESENT RESOURCES ,SKILLS AVALABLE ,TRAINING NEED TO FACE CHANGE, NEW VIEW OR ORIENTATION .....AND
OVERALL COMPATIBILITY.
STRATEGIC MANAGEMENT APPLIES TO VARIOUS LEVEL........CORPORATE LEVEL DECISIONS R MACRO AND COCEPTUAL IN NATURE ........LIKE CHOICE OF
BUSINESS , GROWTH STRATEGY ,CAPITAL STRUCTURE.BUSINESS UNIT LEVEL R MORE SPECIFIC........DISTRIBUTION CHANNEL ,INVENTORY LEVEL OF A
FACTORY.
.................................................. ........................
STRATEGIC IMPLEMENTATION................ITS THE KEY.TRANSLATE INTO ACTION.....TIMELINESS,RESOURCE NEEDED,X-FUNTIONAL COLLABORATION,DEMAND
IDENTIFICATION WITH ANNUAL OBJECTIVE .
SAY ........ANNUAL OBJECTIVE IS ..........to reduce employee attrition by 10%in the end of year,to reduce time ........from order receipt to order execution by
20%.to get quality certification within 6month.
FUNCTIONAL STRATEGY: SAY FOR PRICING ...........which segment to be targeted........mass market or premium product,how much price discrimination be
allowed in various customer segment......cost structure vs. actual pricing, discount factor.....for push sell,competive price or ........premium concept
..................
POLICY R THERE WITH CLEAR STATEMENT .........FOR OPERATION MANAGERS TO ENSURE DISCIPLINED DECISION MAKING WITHOUT NEED OF
INTERVENTION BY TOP MANAGEMENT..............METHOD IS STANDARDISATION......WITH DEFINED ACCOUNTABILITY.
ACCOUNTABILITY AND RESPONSIBILITY GOES TOGETHER.
ANOTHER FACTOR BY INDIVIDUAL IS CONFIDENCE.HOWEVER EFFECTIVE COMMUNICATION IS KEY TO IMPLEMENT STRATEGY
.................................................. ......
EFFECTIVE COMMUNICATION DERIVES FROM COLLECTIVE RESPONSIBILITY.......BY RATIONALISING COMPANY STRATEGY /CORPORATE STRATEGY TO STAFF
LEVEL,IMPLEMENTING THE PLAN ........WHAT SHALL HAPPEN [CONSEQUENCE] IF IT FAILS
CHANGE MANAGEMENT CONCEPT................SHARP DECLINE IN FINANCIAL PERFORMANCE..........CALLS FOR DRASTIC CHANGE ..........WITH A CLEAR VISION
WHAT TO BE DONE..PREFERENCIALLY PUTTING AN OUTSIDER AS CEO.
NORMALLY PEOPLE HATE CHANGE..........hence counceling/mentoring is given to fit old workforce before retrencment.
..........................................
strategic control...................suitable midcourse corrective measure is reqd as demand of situation ,internal or external.4aspect to be seen........
1]premise control.................whether assumption made at start hold good,if they r changed.........reevaluate........change plan and act accordingly.
2]implementation control...........overall strategy to be changed in view of new scenario[external environment]...........reqd milestone review.........fullscale
reassessment of strategy...........study major resource allocation.
3]strategic surveillance...............monitor broad range of event,internal /external ..........which may influence original strategic implementation.spl alert
concept to quickly fix the problem ..........firms strategy in unexpected event.....contingency plan.
4]lower level control.........with set performane std vs actual performance.......identify deviation and corrective measure in it.......without involving top
managment.following a budget allocated plan......however deviation to be regularised from competent authority.
.................................................. .....
.................................................. .....
EVALUATING AND REWARDING PERFORMANCE..............QUALITITIVE VS QUANTITIVE MEASURE,EXPECTATION VS REALITY.GIVE PRIORITY TO INDIVIDUAL
WHO R READY TO LEARN,WORK TOGETHER AS TEAM.............UNDERSTAND CORE COMPETENCE.
so milestone is fixed.........and try to achieve it.,......reward must be given for good performance.
........................................
ROAD AHEAD..................CLASSICAL STRATEGIC VIEW GIVE PRIORITY ON UNDERSTANDING INDUSTRY STRUCTURE, CAPABILITY OF A FIRM IN RESPECT TO
COMPETITOR.BUT PRESENT SCENARIO SUGGEST PRIORITY ON 1-2YR SHORT TERM OPPURTUNITY,.......WHICH IN NATURE BASICALLY REACTIVE.......MODERN
VIEW OF .....STAY FOCUSSED. hence an intermittent view on short term, independent of long term view r called for .acronym..........FAST
FOCUS..........LONG TERM POSITIONING,SPECIALISATION AND CAPABILITY IN CHOSEN FIELD.
ACCELERATE..........moving fast in small time frame.
STRENGEN...............to move faster, building trust,appropriate quick info to act right...network,remove administrative road block to improve speed of work,
TIE ........put it all together
.....................................
SUPERIOR DECISION MAKING SKILL
1.GATHERING INFO ON REAL TIME BASIS/EARLIER THE BETTER
2. DISCUSSING WITH OPEN VIEW WITH CORE COMPETENT PEOPLE.
3. TAKE A DECISION WITHIN A STIPULATED TIME ACT ON IT.
4.KNOW WHEN TO DECIDE AND DELIBERATE AND WHEN TO FREEZE.
5.A CLEAR FIXATION OF RESPONSIBILITY
.....................................
MODERN GROWTH OF KNOWLEDGE MANAGEMENT
2IDEA...........3S VS 3P
STRATEGY,STRUCTURE ,SYSTEM ........VS,....PURPOSE PROCESS...PEOPLE.
INSTEAD OF COMPLIANCE FOCUS ON COOPERATION OF PEOPLE.
..........MUST ESTABLISH A PURPOSE WITHIN COMPANY
GIVE PRIORITY TO INTERPRENAURSHIP MINDSET .......DO DEVELOP FULL POTENTIAL WITHIN INDIVUAL, HOWEVER HARMONY WITH COMMON STRATEGIC
GOAL.
SENIOR MANAGER SHOULD PLAY THE ROLE MENTOR.
....................................
study porter competitive strategy
..........understand modern concept of applied FLEXIBILTY in structural growth of an organization
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Fundamental Analysis
05 July 2015
04:06 PM
Fundamental analysis is the process of looking at a business at the basic or fundamental financial level. This type of analys is examines key ratios of a business
to determine its financial health and gives you an idea of the value its stock.
Many investors use fundamental analysis alone or in combination with other tools to evaluate stocks for investment purposes. The goal is to determine the
current worth and, more importantly, how the market values the stock.
Earnings
Its all about earnings. When you come to the bottom line, thats what investors want to know. How much money is the company making and how much is it
going to make in the future.
Earnings are profits. It may be complicated to calculate, but thats what buying a company is about. Increasing earnings gene rally leads to a higher stock price
and, in some cases, a regular dividend.
When earnings fall short, the market may hammer the stock. Every quarter, companies report earnings. Analysts follow major co mpanies closely and if they fall
short of projected earnings, sound the alarm.
While earnings are important, by themselves they dont tell you anything about how the market values the stock. To begin buil ding a picture of how the stock is
valued you need to use some fundamental analysis tools.
Fundamental Analysis Tools
These are the most popular tools of fundamental analysis. They focus on earnings, growth, and value in the market.
Earnings per Share EPS

Price to Earnings Ratio P/E
Projected Earning Growth PEG
Price to Sales P/S
Price to Book P/B
Dividend Payout Ratio
Dividend Yield
Book Value
Return on Equity
No single number from this list is a magic bullet that will give you a buy or sell recommendation by itself, however as you b egin developing a picture of what
you want in a stock, these numbers will become benchmarks to measure the worth of potential investments.
One has to observe all the ratios over a 3-5 year period and observe how they are increasing/decreasing.
One should also compare all with different companies of the same industry to get a good relative idea. For example the P/E ra tio can be compared to the p/e
ratios of other companies and p/e ratio of industry.
Another parameter is capital:Free reserves which makes the company a suitable bonus candiadate. Free reserves are out the the earnings of the company and
not revaluation of assets.
Stock prices are determined in the marketplace, where seller supply meets buyer demand. There is no clean equation that tells us exactly how a stock price will
behave, but we do know a few things about the forces that move a stock up or down. These forces fall into three categories: f undamental factors, technical
factors, and market sentiment.
Fundamental Factors
In an efficient market, stock prices would be determined primarily by fundamentals, which, at the basic level, refer to a com bination of two things: 1) An
earnings base (EPS, for example) and 2) a valuation multiple (a P/E ratio, for example).
An owner of a common stock has a claim on earnings, and earnings per share (EPS) is the owner's return on his or her investme nt. So, when you buy a stock
you are purchasing a proportional share of an entire future stream of earnings. That's the reason for the valuation multiple: it is the price you are willing to pay
for the future stream of earnings.
Part of these earnings may be distributed as a dividend, while the remainder will be retained by the company (on your behalf) for reinvestment. We can think
of the future earnings stream as a function of both the current level of earnings and the expected growth in this earnings ba se.
As shown in the diagram, the valuation multiple (P/E), or the stock price as some multiple of EPS, is a way of representing t he discounted present value of the
anticipated future earnings stream.
Although we are using EPS, an accounting measure, to illustrate the concept of earnings base, there are other measures of ear nings power. Many argue that
cash-flow based measures are superior. For example, free cash flow per share is used as an alternative measure of earnings power.
The way earnings power is measured may also depend on the type of company. Many industries have their own tailored metrics. R eal estate investment trusts
(REITs), for example, use a special measure of earnings power called funds from operations (FFO). Relatively mature companies are often measured by
dividends per share, which represents what the shareholder actually receives.
About the Valuation Multiple
The valuation multiple expresses expectations about the future. As we already explained, it is fundamentally based on the dis counted present value of the
future earnings stream. Therefore, the two key factors here are 1) the expected growth in the earnings base, and 2) the disco unt rate, which is used to
calculate the present value of the future stream of earnings. A higher growth rate will earn the stock a higher multiple, but a higher discount rate will earn a
lower multiple.
What determines the discount rate? First, it is a function of perceived risk. A riskier stock earns a higher discount rate, w hich in turn earns a lower multiple.
Second, it is a function of inflation (or interest rates, arguably). Higher inflation earns a higher discount rate, which ear ns a lower multiple (meaning the future
earnings are worth less in inflationary environments).
In summary, the key fundamental factors are the following: the level of the earnings base (represented by measures such as EP S, cash flow per share,
dividends per share); the expected growth in the earnings base; and the discount rate--which is itself a function of inflation and the perceived risk of the stock.
REF: Forces That Move Stock PricesOctober 8, 2004 | By David Harper,
.................................................. .....................................
Stock prices are determined in the marketplace, where seller supply meets buyer demand. There is no clean equation that tells us exactly how a stock price will
behave, but we do know a few things about the forces that move a stock up or down. These forces fall into three categories: f undamental factors, technical
factors, and market sentiment.
Fundamental Factors:In an efficient market, stock prices would be determined primarily by fundamentals, which, at the basic l evel, refer to a combination of
two things: 1) An earnings base (EPS, for example) and 2) a valuation multiple (a P/E ratio, for example).
An owner of a common stock has a claim on earnings, and earnings per share (EPS) is the owner's return on his or her investme nt. So, when you buy a stock
you are purchasing a proportional share of an entire future stream of earnings. That's the reason for the valuation multiple: it is the price you are willing to pay
for the future stream of earnings.Part of these earnings may be distributed as a dividend, while the remainder will be retain ed by the company (on your behalf)
for reinvestment. We can think of the future earnings stream as a function of both the current level of earnings and the expe cted growth in this earnings
base.As shown in the diagram, the valuation multiple (P/E), or the stock price as some multiple of EPS, is a way of represent ing the discounted present value of
the anticipated future earnings stream. (To learn about present value, see "Understanding the Time Value of Money.")
About the Earnings Base: Although we are using EPS, an accounting measure, to illustrate the concept of earnings base, there are other measures of earnings
power. Many argue that cash-flow based measures are superior. For example, free cash flow per share is used as an alternative measure of earnings power.
The way earnings power is measured may also depend on the type of company. Many industries have their own tailored metrics. R eal estate investment trusts
(REITs), for example, use a special measure of earnings power called funds from operations (FFO).
Relatively mature companies are often measured by dividends per share, which represents what the shareholder actually receive s.About the Valuation
MultipleThe valuation multiple expresses expectations about the future. As we already explained, it is fundamentally based on the discounted present value of
the future earnings stream. Therefore, the two key factors here are 1) the expected growth in the earnings base, and 2) the d iscount rate, which is used to
calculate the present value of the future stream of earnings. A higher growth rate will earn the stock a higher multiple, but a higher discount rate will earn a
lower multiple.What determines the discount rate? First, it is a function of perceived risk. A riskier stock earns a higher d iscount rate, which in turn earns a
lower multiple. Second, it is a function of inflation (or interest rates, arguably). Higher inflation earns a higher discount rate, which earns a lower multiple
(meaning the future earnings are worth less in inflationary environments).In summary, the key fundamental factors are the fol lowing: the level of the earnings
base (represented by measures such as EPS, cash flow per share, dividends per share); the expected growth in the earnings bas e; and the discount rate-which is itself a function of inflation and the perceived risk of the stock.
Technical Factors
05 July 2015
04:06 PM
Technical Factors: Things would be easier if only fundamental factors set stock prices!
Technical factors are the mix of external conditions that alters the supply of and demand
for a company's stock. Some of these indirectly affect fundamentals. (For example,
economic growth indirectly contributes to earnings growth.) Technical factors include the
following: Inflation - We mentioned inflation as an input into the valuation multiple. But
inflation is a huge driver from a technical perspective as well. Historically, low inflation
has had a strong inverse correlation with valuations (low inflation drives high multiples,
and high inflation drives low multiples). Deflation, on the other hand, is generally bad for
stocks because it signifies a loss in pricing power for companies. Economic strength of
market and peers - Company stocks tend to track with the market and with their sector
or industry peers. Some prominent investment firms argue that the combination of
overall market and sector movements--as opposed to a company's individual
performance--determines a majority of a stock's movement. (There has been research
cited that suggests the economic/market factors account for 90%!) For example, a
suddenly negative outlook for one retail stock often hurts other retail stocks as "guilt by
association" drags down demand for the whole sector. Substitutes - Companies
compete for investment dollars with other asset classes on a global stage. These include
corporate bonds, government bonds, commodities, real estate, and foreign equities. The
relation between demand for U.S. equities and their substitutes is hard to figure, but it
plays an important role. Incidental transactions - Incidental transactions are purchases
or sales of a stock that are motivated by something other than belief in the intrinsic
value of the stock. These transactions include executive insider transactions, which are
often pre-scheduled or driven by portfolio objectives. Another example is an institution
buying or shorting a stock to hedge some other investment. Although these transactions
may not represent official "votes cast" for or against the stock, they do impact supply
and demand and therefore can move the price.
these two dynamics: 1) middle-aged investors are peak earners who tend to invest in
the stock market, while 2) older investors tend to pull out of the market in order to meet
the demands of retirement. The hypothesis is that the greater the proportion of middleaged investors among the investing population, the greater the demand for equities and
the higher the valuation multiples.
Trends - Often a stock simply moves according to a short-term trend. On the one
hand, a stock that is moving up can gather momentum, as "success breeds success" and
popularity buoys the stock higher. On the other hand, a stock sometimes behaves the
opposite way in a trend and does what is called "reverting to the mean." Unfortunately,
because trends cut both ways and are more obvious in hindsight, knowing that stocks
are "trendy" does not help us predict the future. (Note: trends could also be classified
under market sentiment.)
Liquidity - Liquidity is an important and sometimes under-appreciated factor. It refers
to how much investor interest and attention a specific stock has. Wal-Mart's stock is
highly liquid and therefore highly responsive to material news; the average small-cap
company is less so. Trading volume is one proxy for liquidity. But it is also a function of
corporate communications (that is, the degree to which the company is getting attention
from the investor community). Large-cap stocks have high liquidity: they are well
followed and heavily transacted. Many small-cap stocks suffer from an almost permanent
"liquidity discount" because they simply are not on investors' radar screens.
MARKET SENTIMENT
Market sentiment refers to the psychology of market participants, individually and
collectively. This is perhaps the most vexing category because we know it matters
critically, but we are only beginning to understand it. Market sentiment is often
subjective, biased, and obstinate. For example, you can make a solid judgment about a
stock's future growth prospects, and the future may even confirm your projections, but
in the meantime the market may myopically dwell on a single piece of news that keeps
in the meantime the market may myopically dwell on a single piece of news that keeps
the stock artificially high or low. And you can sometimes wait a long time in the hopes
that other investors will notice the fundamentals.
Market sentiment is being explored by the relatively new field of behavioral finance. It
starts with the assumption that markets are apparently not efficient much of the time,
and this inefficiency can be explained by psychology and other social sciences. The idea
of applying social science to finance was fully legitimized when Daniel Kahneman, a
psychologist, won the 2002 Nobel Prize in Economics. (He was the first psychologist to
do so.) Many of the ideas in behavioral finance confirm observable suspicions: that
investors tend to overemphasize data that come easily to mind; that many investors
react with greater pain to losses than with pleasure to equivalent gains; and that
investors tend to persist in a mistake.
Some investors claim to be able to capitalize on the theory of behavioral finance. For the
majority, however, the field is new enough to serve as the "catch-all" category:
everything we cannot explain is deposited into this inexplicable category.
Summary: If one could work out a formula to give you a concrete answer on a stock, the
markets wouldnt exist and money wouldnt change hands. Bottomline is recognition and
understanding comes via experience and after years of trading. Beyond the figures and
the analysis one has to trust one s gut, and take calculated risks. That in my opinion is
the only way to understand the share price movements.
lower p/e ratio coupled with high book value is very good for LONG term investments.
Whereas if the scrip is a FANCIED scrip, even with high p/e, it may quote more. those
scrips may be good for short term. hence, companies with low p/e ratio which are not
fancied may take a long time to appreciate. but they are worth investing for long term
The Little Book That Beats the Market - Joel Greenblatt
Contrary to efficient-market naysayers, this engaging investment primer contends that
ordinary stock-market investors can indeed get better-than-market returns over the long
haul. Greenblatt (You Can Be a Stock Market Genius), a Columbia Business School
adjunct professor, touts a "value-oriented" approach that looks for bargain stocks whose
share price is cheap relative to the company's profitability. His version is a "magic
formula" that ranks stocks on the basis of two variablesthe earnings yield and the
business's return on capital. His Web site, magicformulainvesting.com, virtually
automates the procedure for novices. Greenblatt offers lots of statistical proof of the
formula's success, but emphasizes the importance of faith in seeing the investor through
inevitable short-term downturns: "It will be your belief in the overwhelming logic of the
magic formula that will make the formula work for you in the long run." He conveys his
ideas through a lucid if rudimentary and rather corny explanation of basic investment
concepts about risk, return, interest and business valuation. Although the fabulous
returns he touts seem too good to be true, Greenblatt's formula is a reasonable variant
of mainstream value-investing methods. Investors seeking a little more hands-on
excitement than the average mutual fund offers won't go too far wrong following his
advice.
Hallo, I accept the importance of TA in trading, but Funda is Funda, cannot be ignored.
When mkt goes up up & up i.e. because of Fiis Dealings also & same thing in case of
Down by their sell.
So i think FII net purchase & sale trend should also be considered.
--------------------------------------------------------------------------------------PEG is the ratio of the Price Earnings Ratio to the expected Growth of the companies
earnings per share.
PEG < 1 is a great Buy
A very high PEG means the stock is overvalued.
A PEG=1 implies fair valuation
Try 'Investment Valuation' and 'Damodaran on Valuation' by Aswath Damodaran.
It's an unfortunate fact that few investors can consistently beat the market. That's
because it often takes one or more of the following rare traits...
1)The vision to identify breakthrough products, leaders, and brands
2)The knowledge to spot an undervalued gem in a sea of glass
2)The knowledge to spot an undervalued gem in a sea of glass

3)The courage to buy and hold when others are running scared
Occasionally, you'll come across an investor with one of these valuable characteristics.
And it's likely that person does quite well. But almost no one I know of can offer all
three. That would take two very different possibly even fiercely competitive
approaches...
4) The courage to not get depressed when everyone around him is making money and
he is not (the investor is not envious).
What underlies every chart, every quote? - A COMPANY. Buy into that company my
friend, where you find some value, not just some figures & pictures.
Warren Buffet doesn't ever needs charts he buy & holds onto a stock as long as he finds
value in it. (And finding value is not bereft of arithmetic but it's a different kind of
arithmetic
Try www.indiaearnings.com. Registration required
The best things in life are said to be free and the same holds true for cash flow!
Investors love companies that produce plenty of free cash flow (FCF). It signals a
company's ability to repay debt, pay dividends, buy back stock and facilitate the growth
of business all important undertakings from an investor's point of view. In the past we
have given our readers a perspective on valuation parameters like price to earnings
(P/E) and price to book value (P/BV). While both these valuation parameters reflect the
present earning capabilities, they do not signal the future prospects.
How and what of FCF
The formula for calculating Free Cash Flow (FCF) is as:
Net Profit + Depreciation Capital expenditure Changes in working capital Dividend
FCF takes into account not only the earnings of the company but also the past
(depreciation) and present capital expenditures, capital inflows and investment in
working capital. Growing free cash flows are frequently a prelude to increased earnings.
Companies that experience surging FCF due to revenue growth, efficiency
improvements, cost reductions, share buy backs, dividend distribution (from
subsidiaries) or debt elimination can reward investors in the future. Better free cash
flows are therefore a reason for the investment community to cherish. On the other
hand, an insufficient FCF for earnings growth can force a company to boost its debt
levels. Even worse, a company without enough FCF may not have the liquidity to stay in
business
From a companys point
better FCF definitely indicates better efficiency on the part of the company. But what is
pertinent for investors to note is that simply assessing the FCF on the basis of its
absolute value is not prudent. It is imperative to also assess as to what components
have contributed to the same.
Let us take a hypothetical example of two companies, A and B, both of which have
garnered the same FCF for the current financial year.
Estimated free cash flow
(Rs) Company A Company B
Net profit 75 120
Add: depreciation / amortisation 20 5
Less: Capital expenditure 5 15
Add/ (Less): Decrease /(Increase)in wkg capital 10 (10)
Less: Dividend 20 20
Free cash flow 80 80
Prima facie although appearing similar, if you delve a little deeper there is a stark
difference in their performances. While company A, despite having lower earnings has
benefited by adding back depreciation and decrease in working capital, company B has
invested in capex and working capital. This indicates that while company B is investing
for future growth, company A is not sufficiently geared up for the impending challenges.
This also means that investors in company B can expect rewards in ..
From a sectors point of view
As explained earlier, cash flows are dependant on the capital expenditure and working
capital liabilities borne by the company. This however, differs as per the dynamics of the
sector in which the company is operating and should be seen in that light. While sectors
like banking require minimum expenditure on capex (as a % of their turnover) those in
pharma, engineering, FMCG or commodity sectors require to invest a substantial amount
in R&D and capacity expansions. Thus, you would find SBI trading at a very attractive
price to free cash flow valuation of 3 times, while an equally competitive Infosys is
trading at 40 times (due to lower cash flows).
trading at 40 times (due to lower cash flows).

FCF is not only a mirror image of the present but also a sneak preview into the future.
The implications of the components of cash flow may not be explained in the annual
reports, but is left to the investors prudence to diligently scrutinize the same and try to
read between the lines. The legendry investor Benjamin Graham once said, The
individual investor should act consistently as an investor and not as a speculator. This
means that he should be able to justify every purchase he makes and each price he pays
by impersonal, objective reasoning that satisfies him that he is getting more than worth
his purchase
What Is Free Cash Flow?
By establishing how much cash a company has after paying its bills for ongoing activities
and growth, FCF is a measure that aims to cut through the arbitrariness and "guess
estimations" involved in reported earnings. Regardless of whether a cash outlay is
counted as an expense in the calculation of income or turned into an asset on the
balance sheet, free cash flow tracks the money.
To calculate FCF, make a beeline for the company's cash flow statement and balance
sheet. There you will find the item cash flow from operations (also referred to as
"operating cash"). From this number subtract estimated capital expenditure required for
current operations:
Cash Flow From Operations (Operating Cash) - Capital Expenditure -= Free Cash Flow
To do it another way, grab the income statement and balance sheet. Start with net
income and add back charges for depreciation and amortization. Make an additional
adjustment for changes in working capital, which is done by subtracting current liabilities
from current assets. Then subtract capital expenditure, or spending on plants and
equipment
Net income + Depreciation/Amortization - Change in Working Capital - Capital
Expenditure = FCF
It might seem odd to add back depreciation/amortization since it accounts for capital
spending. The reasoning behind the adjustment, however, is that free cash flow is meant
to measure money being spent right now, not transactions that happened in the past.
This makes FCF a useful instrument for identifying growing companies with high up-front
costs, which may eat into earnings now but have the potential to pay off later.
What Does Free Cash Flow Indicate?
Growing free cash flows are frequently a prelude to increased earnings. Companies that
experience surging FCF - due to revenue growth, efficiency improvements, cost
reductions, share buy backs, dividend distributions or debt elimination - can reward
investors tomorrow. That is why many in the investment community cherish FCF as a
measure of value. When a firm's share price is low and free cash flow is on the rise, the
odds are good that earnings and share value will soon be on the up.
By contrast, shrinking FCF signals trouble ahead. In the absence of decent free cash
flow, companies are unable to sustain earnings growth. An insufficient FCF for earnings
growth can force a company to boost its debt levels. Even worse, a company without
enough FCF may not have the liquidity to stay in business.
Smart investors love companies that produce plenty of free cash flow (FCF). It signals a
company's ability to pay debt, pay dividends, buy back stock and facilitate the growth of
business - all important undertakings from an investor's perspective. However, while
free cash flow is a great gauge of corporate health, it does have its limits and is not
immune to accounting trickery.
Is Free Cash Flow Foolproof? Although it provides a wealth of valuable information that
investors really appreciate, FCF is not infallible. Crafty companies still have leeway when
it comes to accounting sleight of hand. Without a regulatory standard for determining
FCF, investors often disagree on exactly which items should and should not be treated as
capital expenditures.
Investors must therefore keep an eye on companies with high levels of FCF to see if
these companies are under-reporting capital expenditure and R&D. Companies can also
temporarily boost FCF by stretching out their payments, tightening payment collection
temporarily boost FCF by stretching out their payments, tightening payment collection
policies and depleting inventories. These activities diminish current liabilities and
changes to working capital. But the impacts are likely to be temporary. The Trick of
Hiding Receivables Let's look at yet another example of FCF tomfoolery, which involves
specious calculations of the current accounts receivable. When a company reports
revenue, it records an account receivable, which represents cash that is yet to be
received. The revenues then increase net income and cash from operations, but that
increase is typically offset by an increase in current accounts receivable, which are then
subtracted from cash from operations. When companies record their revenues as such,
the net impact on cash from operations and free cash flow should be zero since no cash
has been received.
Secondly, Cash Flow Statement can give an idea about cash-generation capability of the
business. Thus, it's helpful for those who are interested in knowing the liquidity position
of the organization like creditors or those shareholders who are interested in Dividends.
However, it's not really a tool of detecting fraud. We must remember that both Enron &
Worldcom used to provide Cash Flow Statement.
The gap between Cash Flow and Earnings has to be seen in light with that during the
previous financial years as well as the average for the industry. Besides, year end
window-dressing will certainly not generate any cash flow for the year but current year's
Cash Flow will certainly include cash generated as a result of window dressing which took
place at the end of the previous year.
A wide gap between cash flow and earnings may indicate that all is not well for the
company but one can't jump to the conclusion only on the basis of this gap that the
accounts have been
how to understand fundamental

.............................................
it depends on who u r......how u want to make money?
if u r normal mortal like me.......read the pro report prepared by good house....ofcourse
with pinch of salt
....if u could get info tank..........like arun kejriwal.........u must learn .....news based
play on high volume.
.....but if u a report preparation guy.....with cfa/mba......never trade.
u cant handle it.....instead buy on deep correction.....with conviction
...if your study right......money will double.....automatically.
........
but do we know real calculation.......and how to interpret........here my answer is
......most data r prefabricated with biased interest.......
yes i am doing it with first hand experience with audit/project interpolation/viability
manipulation ......so projection of future /profitability.......r actully a figure as desired by
ceo/cmd......for most of company.......only investors meet.....report.....r viable provided
u smell like detective.
.....last 2 quarter must be studied ....with business model and order in hand......ofcourse
how already it reflected in price......
yes it has subjectivity......thats why EXPERIENCE calls for.
in india...a report by etintelligence helpful
----------------------------------------------------------------------------------------------------One sector study(old) ,is given for ready reference
harma sector
.................................................. ...............
The Indian Pharmaceutical industry is highly fragmented with about 24,000 players
(around 330 in the organised sector). The top ten companies make up for more than a
third of the market. The revenues generated by the industry are approximately US$ 7.6
third of the market. The revenues generated by the industry are approximately US$ 7.6
bn and have grown at an average rate of 10% over last five years. The Indian pharma
industry accounts for about 1% of the world's pharma industry in value terms and 8% in
volume terms.
In the recent past, Indian companies have targeted international markets and have
extended their presence there. While some companies are exporting bulk drugs, others
have moved up the value chain and are exporting formulations and generic products.
India also offers excellent exports opportunities for clinical trials, R&D, custom synthesis
and technical services like Bioinformatics.
The drug price control order (DPCO) continues to be a menace for the industry. There
are three tiers of regulations on bulk drugs, on formulations and on overall
profitability. This has made the profitability of the sector susceptible to the whims and
fancies of the pricing authority. The new Pharmaceutical Policy 2006,with its new
lists,which proposes to bring many essential drugs under price control has been officially
a varied factor, has been stiffly opposed by the pharmaceutical industry.
The R&D spend of the top five companies is about 5% to 10% of revenues. Despite
growing at a CAGR of over 50% over the last four years, the ratio is still way below the
global average of 15% to 20% of sales. However, despite the relatively low R&D
spending, Indian companies are stepping up their research activities to make themselves
more self sufficient in terms of product development, now that the product patent
regime has come into force.
Key Points
Supply: Higher for traditional therapeutic segments, which is typical of a developing
market. Relatively lower for lifestyle segment.
Demand :Very high for certain therapeutic segments. Will change as life expectancy,
literacy increases.
Barriers to entry : Licensing, distribution network, patents, plant approval by regulatory
authority.
Bargaining power of suppliers : Distributors are increasingly pushing generic products in
a bid to earn higher margins.
Bargaining power of customers:High, a fragmented industry has ensured that there is
widespread competition in almost all product segments. (Currently also protected by the
DPCO).
Competition :High. Very fragmented industry with the top 300 (of 24,000 manufacturing
units) players accounting for 85% of sales value. Consolidation is likely to intensify.
Presently a mixed year for domestic pharma companies as after the global financial
crisis,the sharp depreciation of the rupee against the dollar had a huge impact on most
of the domestic pharma companies. While revenues were enhanced, those with
substantial foreign debt on their books had to book considerable forex losses, which
impacted profitability.
At the same time companies such as Dr.Reddys and Sun Pharma may be able to garner
exclusivity for certain drugs which bolstered revenues and profits.
Another problem which impacted the pharma sector was the stringency of the US FDA
while inspecting manufacturing plants. As a result many companies such as Ranbaxy,
Lupin and Sun Pharmas subsidiary Caraco were found guilty by the US FDA for not
complying with quality manufacturing standards. This impacted their performance . This
is a critical issue.
The European market posed a set of challenges for Indian generic companies. While
the UK was bogged with severe pricing pressure, the governments of Germany and
France undertook various healthcare reforms, which impacted the revenues of
companies having a presence in these countries. Further, the global economic slowdown
only worsened matters.
In the domestic market, its a decent year for the pharmaceutical industry with most of
the top players managing to clock a good growth. However, it was the chronic therapy
segment, which once again took centre stage relegating the acute therapy segment to
the background. While the former recorded a robust growth, the latter grew less on YoY.
MNC companies did well as compared to last year wherein they had performed poorly.
On an average, MNC companies were able to clock topline growth in the range of 10% to
15%. On the margin front, performance was mixed with only GSK Pharma managing to
expand margins on account of a superior product mix. Aventis also did well with exports
surging once again .
Prospects
The product patents regime heralds an era of innovation and research resulting in the
The product patents regime heralds an era of innovation and research resulting in the
launch of new patented product launches.
In the longer run, domestic companies would face fresh competition from MNCs, as they
would make aggressive new launches. However, the latter would most likely be subject
to price negotiation.
Drugs having estimated sales of over US$ 108 bn are presently to go off patent. With
the governments in the developed markets looking to cut down healthcare costs by
facilitating a speedy introduction of generic drugs into the market, domestic pharma
companies will stand to benefit. However, despite this huge promise, intense competition
and consequent price erosion would continue to remain a cause for concern.
The life style segments such as cardiovascular, anti-diabetes and anti-depressants will
continue to be lucrative and fast growing owing to increased urbanisation and change in
lifestyles. Growth in domestic sales in the future will depend on the ability of companies
to align their product portfolio towards the chronic segment.
Contract manufacturing and research (CRAMS) is expected to gain momentum going
forward. Indias competitive strengths in research services include English-language
competency, availability of low cost skilled doctors and scientists, large patient
population with diverse disease characteristics and adherence to international quality
standards. As for contract manufacturing, both global innovators and generic majors are
finding it profitable to outsource production. Currently, India has the highest number of
US FDA approved plants outside the US at 75 plus
The case for an MNC pharma company for retail investors as far as equities are
concerned stems from the fact that earnings visibility is relatively stronger compared to
domestic pharma companies.
Unlike Indian peers, risks regarding R&D is also absent. However, while MNCs, in
general, bring in a culture of professionalism, there have also been instances of Indian
shareholders getting an unfair deal when these very MNCs delist from the domestic stock
exchange or when they are taken over by another company . Now we shall understand
the various factors that should be borne in mind while investing in an MNC pharma
stock.
Consider various revenue streams for an MNC pharma company first. A global pharma
company establishes an Indian subsidiary with an intention of taking advantage of the
huge potential that the Indian market holds in view of its large population and growing
health awareness. Hence, it derives a major portion of its revenues from the domestic
market. The companys revenues from the domestic market are influenced by various
factors that are briefly discussed in the following paragraphs.
The most important aspect that influences an MNC pharma companys revenues from the
domestic market is its parents outlook and strategy for India. The parents view on the
growth prospects of the domestic pharma industry which is influenced by factors such as
rate of growth of population, per capita medical expenditure and health insurance
infrastructure in the country. It is pertinent to understand that global pharma major, as
the name itself suggests, have a worldwide presence. So, the parent will focus on those
subsidiaries that could make a meaningful contribution in the long term. Though the
contribution could be even less than 1%, consider the rate of growth of the Indian
subsidiary with the parent companys growth in revenues.
One of the ways in which parents commitment towards the Indian company can be
evaluated is by calculating the contribution the Indian arm makes to the topline and the
bottomline of the parent. This will help us know the relative importance the Indian
subsidiary holds for the parent. Another aspect that needs to be looked into is the core
segment-wise product profile of the parent. We must compare the Indian arms
therapeutic break-up with that of the parent. Here, one should check whether the Indian
arm has a similar therapeutic break-up as compared to its parent. The higher the
resemblance, the better it is for the Indian subsidiary. This also suggests that the parent
major is keen on the Indian market.
This apart, the parents R&D pipeline should also be looked into. This will help us know
the prospective launches in the future. The Indian arm could benefit immensely.
Further, an investor should also keep in mind that the global pharma industry is
consolidating. If the existing parent is acquired by another global major (like Pfizer and
Pharmacia), it will have a direct influence on the Indian arm. It could dilute the
importance of the Indian arm or result in an unfair deal for the domestic shareholders.
Given the fact that Indian subsidiaries market capitalisation is mini-scule as compared to
the parents market cap, the parent may be tempted to buyback and delist it from the
Indian stock markets. There have been numerous instance of this kind in the past and
Indian stock markets. There have been numerous instance of this kind in the past and
retail shareholders have no option but to participate in the buyback/delisting.
Finally, a very important aspect that needs to be looked into while evaluating the MNCs
parent is the existence of parents 100% subsidiary in India. In such an instance, what if
the parent launches new products through the other 100% subsidiary and not through
the listed entity? Shareholders will lose out significantly in the long term.
Once, we have made a detailed study on the parent, the next aspect that could affect
the companys revenues is the therapeutic segment in which it operates.
If the company generates a major portion of its revenues from the high margin lifestyle
segments like diabetes, cancer and asthma as compared to low margin traditional
therapeutic segments like anti-infectives and anti-biotics, obviously, the growth
prospects and margins of the company will be higher.
Revenues in the domestic market are also influenced by the prices fixed by the
regulatory bodies like the DPCO and NPPA. These organizations fix very low ceiling prices
for bulk drugs and formulations, thereby limiting pricing power. Although, powers of
these bodies is expected to reduce tremendously with the introduction of product
patents, there is an apprehension that they might survive in some form even after
product patents are implemented.
A companys product portfolio age is also a crucial factor that affects the companys
growth prospects. As a drug matures, its volumes decline. Thus, a company with a
relatively older product portfolio is likely to witness slower growth rates as compared to
a company that makes aggressive new product launches. Moreover, aggressive new
product launches also demonstrates parents commitment towards the Indian arm.
Outsourcing is the second avenue of revenue available for an MNC pharma company.
Here, the company can either manufacture its parents patented drugs or act as an R&D
base. An MNC pharma company can utilize the lowest cost manufacturing ability of the
Indian subsidiary for drugs sold globally. However, to get such manufacturing contracts,
the Indian arm will have to prove its cost effectiveness not only in comparison to its
fellow subsidiaries but also Indian companies specializing in the same. This apart, the
demand for the parents product is another key factor that could influence the flow of
revenues from this avenue. MNC pharma companies could also act as an R&D base for
its parents. This is in view of the fact that highly skilled scientist and research personnel
are available in India at a relatively lower cost as compared to other countries.
Moreover, they could also act as a clinical research center for the parent given the
availability of large number of patients with ethnic diversity at a much lower cost.
Key parameters to be kept in mind while investing in an MNC pharma stock:
Relative importance of Indian arm to the parent: As was mentioned earlier, Indian
arms topline and bottomline as a percentage of the global revenues and profits of the
parent should be calculated. This will give us an idea about the relative importance of
the Indian arm to the parent.
Parents R&D expenditure as a percentage of sales: In a regulated market, new drug
discovery research and product launches are key to a global pharma companys survival.
Aggressive new product launches can only be made if the company is committed
towards making R&D investments. This can be numerically measured by calculating the
parents R&D expenditure as a percentage of its sales. The higher this ratio, the more
committed the company is towards its R&D initiatives.
Advertising and sales promotion expenses as a percentage of sales: In the domestic
market, an MNC pharma company has to compete with generics manufacturers who sell
drugs at a much lower price as compared to the MNC. Hence, to justify its premium
price, an MNC pharma company has to undertake nation-wide product awareness
programs and also conduct seminars and conferences. Although these initiatives eat into
the companys margins, they are essential in the long term.
Market capitalization to sales: This is a very important ratio while analyzing an MNC
pharma company, as it will give us an idea about the markets perception of the
companys brand value. Higher the ratio, bigger the companys brand.
Other parameters: Apart from the above ratios, the usual ratios like operating profit
margin, net profit margin and P/E ratio should also be considered before investing in an
MNC pharma stock. As far as price to earnings is concerned for an MNC pharma major,
better earnings visibility (provided the parent is committed) and access to the parents
global expertise could result in a premium valuation compared to domestic pharma
majors.
There is a famous saying that while investing in equities, investors are actually buying
the business of the company and not the scrip per se. If this is the case, there are lots
the business of the company and not the scrip per se. If this is the case, there are lots
of complexities involved when it comes to picking a pharma company for investment.
Now an attempt is made to enable a retail investor to identify a domestic pharma
company for investment.
We know- Indian pharma companies derive revenues from the domestic and
international market.
Domestic market:The domestic market can be broadly divided into two categories i.e.
bulk drugs and formulations. Two key factors that have to be borne in mind are that the
Indian pharma market is highly fragmented due to the lack of a patent regime.
Therefore, pricing power is very less and any player can duplicate a product in a very
short span of time.
Coming to bulk drugs, they primarily represent the basic raw materials used in the
manufacture of a formulation. If the company is engaged in the bulk drugs business,
what the investor must look into is the extent of the Drug Price Control Order (DPCO)
cover on the companys products. DPCO is a government regulation that fixes the ceiling
prices for the bulk drugs. Thus, a company manufacturing drugs covered by the DPCO
loses its pricing power, resulting in lower margins. Therefore, lower the exposure to
products covered by DPCO, the better.
Another important thing to be looked at is whether the bulk drug company carries out
any contract manufacturing activity. In this case, the company acquires a contract from
another company for manufacturing its products, which will subsequently be sold by that
other company. But why contract manufacturing? Low labour costs and US-FDA
approved plants are advantages on which the Indian pharma companies can capitalize
and increase revenues.
On the other hand, if a company is dependent on formulations, the investor must
ascertain the extent to which its products fall under the National Pharmaceutical Pricing
Authority (NPPA) cover. NPPA fixes the ceiling price for formulations. Thus, as in the
case of bulk drugs, lower the exposure to products covered by NPPA, the better for a
formulations company. Here again the company could enter into a manufacturing
contract with an MNC.
Even in formulations, there are two broad categories i.e. lifestyle segment and
traditional segment. Lifestyle segment comprises of drugs that are used to cure diseases
that are linked to stress, urbanization and changing diet pattern and lifestyle of highincome level population. Major drugs in this segment are anti-diabetes drugs,
cardiovascular system drugs, gentio-urinary and sex hormones drugs, CNS drugs, antidepressants and psychiatry. These segments are not price sensitive and are less
fragmented.
The traditional segment, on the other hand, comprises of anti-infectives, pain
management and anti-biotics. This segment is highly fragmented. Thus, if a company
has higher exposure in the lifestyle segment, the growth prospects and margins of the
company will be higher.
International market:As far as international markets are concerned, as apparent from
the graph above, is broadly divided into three categories viz. generics, Novel Drug
Delivery System (NDDS) and developing a New Chemical Entity (NCE).
Generics are a bio-equivalent of a patented drug. Simply, if erythromycin is coming out
of patent, a company can launch the same erythromycin, but with a different
composition (end effect however, is the same). Every year, a number of drugs come out
of the patent regime. So, a company in India who does not have the R&D capabilities or
funds to invest in R&D launches the generic version of the drug that is coming off patent.
The advantage here is that the Indian company need not invest large sums in R&D.
However, legalities are very complex (like Para I to IV) and time consuming. When the
companys research is at a very nascent stage, it concentrates on the sale of off-patent
drugs.
Read in detail about Pharma R&D and its structure.
Starting from Para I to III, there is no restriction on the number of players that can
enter the market (competition is global in nature). Margins therefore, are not very high.
It is basically a volume driven strategy.
Gradually, as the company grows, it shifts its focus onto developing a new drug delivery
system for an existing drug and also challenges existing patented drugs by introducing
their bio-equivalents. A company files an ANDA for NDDS when it has developed a new
their bio-equivalents. A company files an ANDA for NDDS when it has developed a new
method or dosage of delivering a patented drug to the patient. When a generics
company challenges an existing patent, it is required to prove that the patent is not
infringed or that the patent is invalid. He is thus required to prove that his drug is bioequivalent to patented drug. If successful, the company gets a 180-day exclusivity
period during which it has the sole right to sell the drug in the market. Consequently, the
company enjoys very high margins during this period of exclusivity. However, the
litigation expenses are very high in such a case.
An investor has to put more emphasis on the total number of Para 4 ANDA filings rather
than the aggregate number of ANDAs filed. Further, the investor should look into the
long-term prospects of the company and not base his decision on the outcome of a
single legal suit, or a single blockbuster generic success.
Read in detail about New Chemical Entity: What is it all about?
Major aspects that need to be observed:
Government policies have a major influence on the domestic pharma sector. As can be
seen from the table below, due to the absence of a good health insurance policy, India
has one of the lowest public health expenditure as a percentage of GDP. Moreover, even
on the health infrastructure front, India has a long way to go as compared to other
developing nations.
For Country Public health expenditure as % of GDP, Per capita health expenditure ($)
and No of hospital are important data.
.................................................. ........
Management is the most crucial aspect for any companys success. While this is true for
every industry, it attains even more significance in the pharma sector. Being an
extremely specialized sector, it is very important that the management has the requisite
expertise and skills to handle the complexities involved it this business. Thus having the
right person at the right place is key to the success of a company. Watch out for this in
the annual reports.
R&D expenditure as a percentage of revenues is a very useful tool for evaluating the
companys R&D thrust. As product patents come into effect, only companies with high
R&D investment will survive. Thus, higher the ratio, higher will be the R&D focus of the
company and the better placed will it be to face the uncertainties of the future. Of
course, R&D has its inherent risks as well.
Last but not the least, keeping aside growth prospects, the sector has significantly highrisk profile due to the dynamism. Even erstwhile big names in the global pharma
industry like Burroughs, Knoll, SmithKline Pharma, Pharmacia and Hoechst, found the
going tough alone. Ultimately, they had to join hands with bigger players in a bid to
survive. Indian companies are still relatively small. If this is the case, a retail investor
has to exercise caution. So pick and choose
There has been a lot of hoopla about the need to invest in Research & Development
(R&D) by the Indian pharmaceutical companies to remain competitive after the product
patent regime is implemented in India in 2005. We feel the importance laid on R&D by
domestic pharmaceutical companies can be better understood by understanding the
global R&D scenario.
The Global R&D process:
It can be safely said that the pharmaceutical industry is more research-intensive, as
compared to the any other industry. One of the activities of research and development of
the companies is directed towards finding newer molecules as a cure for diseases.
The innovator company synthesizes a New Chemical Entity (NCE), which can probably be
a cure for a disease. The synthesis of a NCE takes place in the pre-clinical testing period.
The innovator company, after synthesizing a NCE, files an Investigational New Drug
(IND) application, prior to commencing clinical trials. The FDA grants patent to the NCE
at this stage.
The drug discovery process
As can be seen above, after the IND filing it takes around 10 years for a NCE to pass
through the three phases of clinical trials, attain the final FDA (Food & Drug
through the three phases of clinical trials, attain the final FDA (Food & Drug
Administration) review approval and post marketing tests to ultimately launch the
product. As already mentioned, the FDA grants patent to the NCE at the time of the IND
filing and the duration of such patent is around 20 years. In this context, a drug
ultimately enjoys patent protection after its market launch for only around 10 years, to
recover its costs.
After the expiry of a patent, generic companies immediately launch the products and
consequently, there is a sharp downward correction in the price of the particular drug.
The fall in prices can be as much as 90% depending upon the number of generic
manufacturers and the nature of the drug. The fall in prices also result in a fall in the
margins for the branded drug. The generic market has witnessed significant growth over
the years. While generics account for around half of the prescriptions in the US, it
accounts for only around 10% of the pharmaceutical market in the US in value terms.
The reason for the same is low realizations of generics vis--vis patented drugs.
Generics:
A generic drug has similar effects in terms of its rate and extent of absorption of an
approved product, which has to be proved by the generic company. In other words the
generic drug has similar effects in curing a disease as the approved product. The generic
approval process is called Abbreviated New drug Application (ANDA).
While filing an ANDA, the generic company has to choose one of the following four
options (referred to as paras)
Para I - The drug has not been patented
Para II - The patent for the drug has already expired
Para III - The patent for the product exists but the generic company wants to enter the
markets after the date of patent expiry passes.
Para IV - Patent is not infringed upon or is invalid
In a Para III filing the company acknowledges the patent of the approved drug and
intends to enter the market after the patent for the approved product expires and there
exists a scenario of falling prices for the drug, whereas in Para IV filing the company
claims that the generic product of the company does not infringe upon the existing
patent or the patent of the branded product is invalid and the company strives to win an
exclusivity of 180 days during which the margins for the product are very high. For
instance, recently Dr. Reddy's filed an application with the US FDA to market a generic
form of Eli Lilly's schizophrenia drug Olanzapine in the United States.
In all the generic filings, the FDA has 180 days to deem the generic application complete
and accept it for review, or incomplete and reject for filing.
In case of Para I and Para II filing, once the application is deemed complete, it is simply
processed for approval. In case of Para III the application is processed for approval,
however its approval status depends upon the products patent expiry. Apparently Para
IV filings are the most lucrative, tedious, time consuming and expensive of the above.
The approval process of the Para IV is as provided below:
Post 2005 scenario
After the patent regime is implemented in India in 2005 no company would be allowed to
launch products patented after 1995. In other words Indian companies will still be
allowed to launch NCE patented before 1995 in the market. As already discussed it takes
around 10 years for a NCE to be commercially launched, as a result of which the Indian
companies will have additional cushion in terms of time to gear up fully for the patented
regime
Already Indian companies have forayed into basic research and their success has so far
been very very limited. However, as it is said, the secret of getting ahead is getting
started and every small step by Indian companies will raise their probability to succeed
in the future.
Pharma Future Diagnosed
The Indian pharmaceutical industry has come a long way since 1970 when the
government introduced regulation in the pharmaceutical industry in the form of Drug
Price Control Order (DPCO) and more recently, through the price-monitoring agencyNational Pharmaceutical Pricing Authority (NPPA). These regulations were essentially to
control the prices of drugs in the domestic market. This has helped the industry in
providing quality drugs at reasonable prices. But with India now required to comply with
providing quality drugs at reasonable prices. But with India now required to comply with
the WTO regulation of providing product patents by 1st January 2005, the face of the
Indian pharmaceutical industry is about to change in the coming future.
Indian companies have traditionally concentrated on low priced generic drugs. They were
thus not able to obtain critical size and hence restricted their research expenditure to low
cost research activities such as reverse engineering of patented products. The R & D
expenditure in India as a percentage of sales was only 2% in FY00 as against 15% for
the global pharmaceutical majors. However, after 1st January 2005, Indian companies
will not be able to reverse-engineer patented products and will have to increasingly
invest in research to develop new products. There is hence an apprehension that Indian
companies might find it difficult to survive in the post-patent period. In this scenario, let
us analyse the various avenues open to Indian companies once the patent regime comes
into effect.
Licensing out an NCE:
Indian companies could use their expertise in chemistry and process development to
develop New Chemical Entities (NCE). NCE is a chemical molecule developed by the
innovator company in the early drug discovery stage, which after undergoing clinical
trials could translate into a drug that could be a cure for some disease. Synthesis of NCE
is the first step in the process of development of a drug. Once the synthesis of the NCE
has been completed, Indian companies have two options before them. They can either
go for clinical trials on their own or license the NCE to another company. In the latter
option, Indian companies can avoid the expensive and lengthy process of clinical trials,
as the licensee company would be conducting further clinical trials and subsequently
launching the drug. Companies adopting this model of business would be able to
generate high margins as they get a huge one-time payment for the NCE apart from
entering into a revenue sharing agreement with the licensee company.
For example, Dr Reddys Laboratory has licensed its NCE for diabetes DRF 2725 to Novo
Nordisk and received a milestone and upfront payment of Rs 334 m and its NCE for Type
2 diabetes DRF-4158 to Novartis Pharma AG for Rs 55 m during the financial year 2002.
The following table shows the major drugs licensed by Indian companies.
Innovator Company Licensed to Name of the NCE Segment
Dr. Reddys Laboratory Ltd. Novartis Pharma AG DRF-4158 Anti-Diabetes
Dr. Reddys Laboratory Ltd. Novo Nordisk DRF-2725 Anti-Diabetes
Dr. Reddys Laboratory Ltd. Novo Nordisk DRF-2593 Anti-Diabetes
Ranbaxy Ltd. Bayer AG CiproXR Anti-Infective
However, there is a risk of failure of the drug at any of the phases of the clinical trials
and could adversely affect the performance of the company. For instance, the phase 2
clinical trials of Dr. Reddys Laboratorys NCE DRF-272 (Ragaglitazer), being carried out
by Novo Nordisk, were suspended resulting in a loss of huge potential revenues for the
former, had it reached the commercial stage.
In the other option, Indian companies could instead of licensing out the NCE, carry out
the entire process of clinical trials, obtain the required regulatory approvals and launch
the drug in the market. The company would have the patent for such a drug and hence
be able to enjoy marketing exclusivity for a long period, in which time they are able to
generate large revenues. The margins in this kind of initiative are also comparatively
large. Ranbaxy Ltd. has taken lead in this field. Phase 2 clinical trials for its first NCE for
curing Urological disorders, RBx-2258 is being carried out at different centers in India.
Another molecule RBx-6198 is in its early discovery stage.
However, passing of the NCE through various phases of clinical trials takes atleast 8-10
years and entails huge R & D expenditure. It is estimated that on an average,
development of a new drug costs around US$ 400 m. Moreover, risk of the new drug
failing at any of the different stages of clinical trial is also extremely high and the
company could loose the entire R & D investment made by it on the failed NCE.
Contract Research:
The availability of highly skilled and low cost research specialists and scientists makes
India an ideal destination for many MNCs for outsourcing their research activities. Indian
companies could thus act as Contract Research Organisations (CRO) and carry out
research on behalf of the MNCs. Nicholas Piramal India Ltd. has recently established a
CRO, called Wellquest, for conducting research on behalf of foreign companies as well as
for generic research for Indian companies. Many bulk drug producers like Morpean and
Suven Pharma are also evaluating the possibility of venturing into this field, as the
margins are high.
Contract Manufacturing:
India has a cost advantage in the manufacture of drugs. The cost of setting up an FDA
India has a cost advantage in the manufacture of drugs. The cost of setting up an FDA
approved plant in India is almost half of that in the USA. With the government now
allowing 100% FDI, many foreign companies are planning to outsource the manufacture
of their off patent drugs to Indian companies and concentrate more in the development
of new products. For Indian companies, this is an area of large potential. Indian
companies have already started capitalizing on this opportunity. Nicholas Piramal Ltd.
has recently entered into an agreement to manufacture various Allergen Inc products.
Co-marketing:
One of the major plus points of the Indian pharmaceutical industry is its well established
marketing and distribution network. For a commission, Indian companies can capitalize
on their existing distribution network and enter into marketing agreements with other
companies that have a product but do not have the sales force required to market the
same. Wockhardt has entered into a marketing agreement with Bayer AG for the
marketing of the anti-diabetic drug Acarbose.
Generics:
Finally the Indian companies can continue to specialize in generic drugs and
formulations. A company can wait for the patent of a drug to expire and bring out the
generic version of the same. It is estimated that 15 of the 35 block bluster molecules will
be off patent by 2005. Moreover, there is increasing pressure on the US government to
reduce healthcare expenditure by enabling a faster generic entry in the markets. This
gives the generic companies the opportunity to flood the US markets with quality generic
drugs at competitive prices. The generic drugs business is, however, characterised by
low pricing and hence the margins are bound to be low. The following graph indicates
the value of the drugs likely to go off patent by 2005. However, it should be noted that
the generics sales would not increase by such high amounts as the generics are sold at
much lower prices as compared to their patented counterparts.
Indian pharmaceutical industry is highly fragmented with 23,000 players and no
company enjoys more than 7% market share. However, with the introduction of product
patents, many companies have started going in for Mergers and Acquisitions and thus
gain synergies in research and development, cut costs, sustain revenues and increase
market share. This will also help the companies in being better prepared once the
product patent is introduced. Recognizing this, Nicholas Piramal India Ltd. acquired
Rhone Poulenc in FY02 and the pharma business of ICI (India) Ltd. and Global Bulk
Drugs and Fine Chemicals Ltd. in FY03.
From this article, we see that there is a wide range of business models that Indian
companies can adopt in order to survive the post 2005 era. Thus companies that are
able to recognize their strengths and capitalize on the same are the ones that will
survive. Many Indian companies have realized this and are in the process of identifying
the business line that would yield optimum returns. From here on, success for Indian
companies in the pharmaceutical industry will be a factor of viable long-term strategies.
--------------------------------------------no 1..........understanding in fundamental ..........whether Money shall come in the
country.
No2.........if money comes , which sector.........which particular company??
no3.........whether u can make SWOT on that sector.....or if other good FA has
done for u,....but u can check that like auditor.
no4.......At what condition /visualisation major stake holder/promoter buy or selling that
counter?
...................................
Time again i have told.........past data......has no value in fundamental .So modelling
dont work in financial market,apart from M &A.
...........Fundamental helps to create a value zone.......which may be useful to buy at big
fall, provided u understand that fall is temporary.
PURPOSE IS SEARCH FOR CANDIDATE OF LONG HAUL.
YES ITS REQD........LITTLE BIT DIFFERENT MIND FRAME THAN SHORT TERM TRADE.
simplest literature........i think of MARK BOUCHER.......trainer of Fund Manager.
------------------------------------------------
Technical Analysis
05 July 2015
04:09 PM
2] TA
...................
Best writing on TA is done here by SAINT. Some exceptional trade idea with example in
Tradezone market given by ST.
I only add ,what may not given earlier in this thread.
ADX:
J. Welles Wilder developed the Average Directional Index (ADX) in order to evaluate the
strength of the current trend, be it up or down. It's important to determine whether the
market is trending or trading (moving sideways), because certain indicators give more
useful results depending on the market doing one or the other.
ADX is an oscillator that fluctuates between 0 and 100. Even though the scale is from 0
to 100, readings above 60 are relatively rare. Low readings, below 20, indicate a weak
trend and high readings, above 40, indicate a strong trend. The indicator does not grade
the trend as bullish or bearish, but merely assesses the strength of the current trend. A
reading above 40 can indicate a strong downtrend as well as a strong uptrend.
ADX can also be used to identify potential changes in a market from trending to nontrending. When ADX begins to strengthen from below 20 and/or moves above 20, it is a
sign that the trading range is ending and a trend could be developing
ADX is derived from two other indicators, also developed by Wilder, called the Positive
Directional Indicator (sometimes written +DI) and the Negative Directional Indicator (DI).
When the ADX Indicator is selected, SharpCharts plots the Positive Directional Indicator
(+DI), Negative Directional Indicator (-DI) and Average Directional Index (ADX). With
the Red, White and Green color scheme on SharpCharts, ADX is the thick black line with
less fluctuation, +DI is green and -DI is red. +DI measures the force of the up moves
and -DI measures the force of the down moves over a set period. The default setting is
14 periods, but users are encouraged to modify these settings according to their
personal preferences.
In its most basic form, buy and sell signals can be generated by +DI/-DI crosses. A buy
signal occurs when +DI moves above -DI and a sell signal when -DI moves above the
+DI. Be careful, though; when a security is in a trading range, this system may produce
many whipsaws. As with most technical indicators, +DI/-DI crosses should be used in
conjunction with other aspects of technical analysis.
ADX combines +DI with -DI and then smooths the data with a moving average to
provide a measurement of trend strength. Because it uses both +DI and -DI, ADX does
not offer any indication of trend direction, just strength. Generally, readings above 40
indicate a strong trend and readings below 20 a weak trend. To catch a trend in its early
stages, you might look for stocks with ADX that advances above 20. Conversely, an ADX
decline from above 40 might signal that the current trend is weakening and a trading
range may develop.
In my view, ADX is well explained in Alexander Elders book Trading for a living
The latest book by Ashwini Gujral("How to make money trading derivatives) also has a
comprehensive table on what all to do when ADX < 20, ADX 15-25,ADX > 30, ADX>=45
and ADX declining below 30. I have not seen Adx explained so specifically anywhere
else.
The Extreme Point Rule
Identify a trigger point at the extreme price on the bar the lines cross. If it's a bullish
crossing (+DI cross above -DI), you would wait for the price to rise above this extreme
price (the high price on the day the lines crossed) on a subsequent bar. If it's a bearish
crossing (+DI crosses below -DI), the extreme point is defined as the low price on the
bar the lines cross. You would then wait for price to break below this extreme price on a
subsequent bar before entering into a short position.
subsequent bar before entering into a short position.

,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
The truth is that the markets are not predictable except in the most general way.
Luckily, successful trading does not require effective prediction mechanisms. Successful
trading involves following trends in whatever time frame you choose. The trend is your
edge. If you follow trends with proper money management methods and good market
selection, you will make money in the long run. Good market selection refers to selecting
good trending markets generally rather than selecting a particular situation likely to
result in an immediate trend.
There are two related problems for traders. The first is following a good method with
enough consistency to have a statistical edge. The second is following the method long
enough for the edge to manifest itself.
A basic general principle was that once you master the principles of technical analysisthey remain the same for everything be is intraday or other type of trading only the time
frame is different, covering moving averages, supports and resistance, trend reversals.
Being successful at trading involves tremendous amount of dedication, motivation,
patience and discipline apart from a voracious appetite for reading and and of course a
certain amount of trading capital to pay for losses (akin to tution fees) in the markets.
. Many are drawn to trading, but few can trade profitability. The winning trader is a
special breed, a person who is highly motivated, but at the same time, he or she is
realistic and able to persist in the face of adversity.
To be successful it is necessary to use sound trading strategies, expose yourself to a
variety of market conditions, and hone your trading skills. Successful trading requires
talent, and there's no way to develop one's talents without extensive practice (which
involves losing money in the process).
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
basic concept..........price reflect all info.......is true.infact modern economists use this as
leading indicator for a country/economy.
study of past.......for predicting future.......here is click......it suggests psychology of
market participants..........nor the future behavior of them, so put current fad in
light ,how many old timers in market.........u understand the deviation. the model
suggests
.....condition being same its repeatable.....not otherwise.
pattern study..........its workable those who know it.......for others a storytelling
tool[analyst..or critics, i know it before...........aree.......yaaar.....how much u have
earned from market to comment]..........so study pattern failure............reason behind
it,on what...........condition of economy they r predictive.
.....................
yes key word is predictive...........i talk with some of my associate.........yes they
write..........this shall move up, this is risky........wait for long term signal........all thing
as they r guided to write..........as if editor suggesting.......this story.....u bring to
publish tomorrow...........situation is grim .........any tom ,dick , harry can tell.........fact
is when reincarnation of bull shall occur?.........i dont know.....
however........for daytraders..........its lovely market!!
-------------------------------------------first study maxim.........
1]price reflects definitely all known things..........and expected event,but not acts of
GOD........swiftly reacts.....to reach new equilibrium.
2]study of past........shows on similar type of info/condition how it may behave....based
on human participant on market.
3]prediction of price impossible..........early trend change allow u chance to earn by
trend continuity. those short players on nifty.......r still earning from jan'08.......though
definitely book profit and derisk.....as per their depth on market.
4]throw away why?........learn to react........think on probability
5] classical ta believes in pattern ,skill of analyst to read market psychology
5] classical ta believes in pattern ,skill of analyst to read market psychology

6] modern ta.....stresses on statistical interpretation of chance, programme generated
signal and condition of its validity.
why ta ?to guess future or to go with flow

both r different type of model
next.......can we predict swing low /swing high intermediate term,....or bias to be
confirmed by price action.
..........which timeframe shall i trade?
how a higher one and lower one help in decision making?
next a indepth study.........which indicator suits u
so this 4 basic pt ............must understand and apply in trade.
................................
so after this 1st level............learn trend or tradezone..........which condition exist in
market,......in near future,..........chance of transition.
so detail realisation is must..............for trend.........transition .........zone.
interrelation with news .........and moneyflow...............can u see this on chart?
...............3rd level
can u put this mathematically and program it?
answer........for me i am novice ....so an impossible event.
so i calculate, with if and but..........have no other alternative .......it takes time so i
trade on eod,.....and on past occurance of pattern.
then how can i improve.........by using blackbox tool of omnitrader,.....some scanner of
metastock..........and putting more money on winner.
yes some knowledge on volatility by unique study i have .
............................
for total novice...........study a tool called aroon......................from metastock and use
support/resistance.........for risk/reward...........u shall not search another occupation
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
position trade ..ONLY BREAK OUT FROM BASE...+ VOLUME...
ENTRY..ABOVE 8% OF BASE..MEDIAN LINE..
STOP LOSS ..LOW OF BASE...
Generally breakout occurs and just above the breakout people place their buy orders,
and short sellers place their sell orders. others have their covering orders.
So the breakout area is a high activity zone. More of a danger zone.
and by observation you will see most breakouts fail fast and the buyers get stuck. This
happens to the Darvas box theory followers more often.
-------------------------------------------------Small example
Look at what happened to breakout buyers on ..
(false breakout,then faded down all the way
Look at what happened to clever buyers who bought after breakout failed.
BUT IF YOU LOOK AT THE PEOPLE WHO WAITED FOR THE BREAKOUT TO FAIL
Hint buy on pullback at fibonacci support.
Normally over70% of breakouts fail and pullback is more successful entry.
You can filter out false breakouts using fibonacci techniques
DONT enter blindly on a breakout on impulsive thinking
Instead wait for beakout to prove itself.
drop down to a lower timeframe
enter only on a pullback at a fibonacci support.
YOUR CHANCES OF FAILURE MAY GREATLY REDUCE.
At the time of breakout the volume goes high and prices move with great force.
Momentum based strategies work here.
In the case of breakouts, one has to keep the 3% filter in mind apart from volume
,,,,,,,,,,,,,,,,,,,,,,,
Trading is a probability game so one should make sure that the odds are in one's favour
before making a trade. This can be done by using a confirming indicator like volume
before making a trade. This can be done by using a confirming indicator like volume
OBV- On Balance Volume is a running total of volume. It seeks to show if volume is
flowing into or out of a security. When the security closes higher than the previous close,
all of the day's volume is considered up-volume. When the security closes lower than the
previous close, all of the day's volume is considered down-volume.
Accumulation/Distribution- A portion of each day's volume is added or subtracted from a
cumulative total. The nearer the closing price is to the high for the day, the more volume
added to the cumulative total. The nearer the closing price is to the low for the day, the
more volume subtracted from the cumulative total. If the close is exactly between the
high and low prices, nothing is added to the cumulative total.
Chakins oscillator-The closer a stock or average closes to its high, the more
accumulation there was. Conversely, if a stock closes below its midpoint for the day,
there was distribution on that day. The closer a stock closes to its low, the more
distribution there was.
Chaikin Money Flow -Developed by Marc Chaikin, the Chaikin Money Flow oscillator is
calculated from the daily readings of the Accumulation/Distribution Line. market strength
is usually accompanied by prices closing in the upper half of their daily range with
increasing volume. Likewise, market weakness is usually accompanied by prices closing
in the lower half of their daily range with increasing volume.
In all of the above one is supposed to compare the volume advances/declines to prices
though in chakin oscillator, one can look for divergences with A/D lines. It is obvious
from the above that the accumulation distriubution was an improvement on obv which in
and Chakins oscillator an improvement on Accumulation/distribution
The money flow index is like the RSI of volume
Volume oscillator is like the price oscillator:In rallies vo should rise. When it reverses from obt condition, indicative of some
correction. When prices move sideways or decline, volume shld contract. The difference
between V and P Osc is that an obt V reading can be and often is associated with an
oversold mkt. Volume expands during a selling climax. It is a well known technical
characteristic that an increase in price associated with declining volume is bearish.
Since volume precedes price and everything depends on How u can READ it.
The significance of accumulation/distribution lies in its insight into the activities of the
distinct groups of professional and amateur traders. Amateurs as a group are more likely
to influence the opening price of the market since these amateurs base their first trades
on the financial news they have read overnight as well as on the corporate news that
was issued by their favorite companies after market close. But as the trading day wears
on, the professionals determine the day's ultimate results. If the professionals disagree
with the amateurs' bullishness at the open, the professionals will drive prices lower for
the close. When the pros are more bullish than amateurs, the pros will drive prices
higher all day and into the close. As indicators for future trends, the activities of
professionals are generally more important than that of the amateurs.
,,,,,,,,,,,,,,,,,,,,,,,,,,,
3 indicators moving in our direction is ideal
1] price..dual ma x
2] momentum
3] money flow +
trading has a random element..also.. trend factor...
known event..+ expected result ..is always discounted in price...
so u have to know..how to react in unknown...
ta ..visualisation..gives..fair idea...how MAJORITY MAY SHALL BEHAVE...
nothingmore, nothingless...
alterative scenario..must be in yr plan.....
alterative scenario..must be in yr plan.....

if u apply ta in this context...u shall be always successful...
Q1]...TA AS PREDICTIVE TOOL....

no hardly 40% times correct...
ta as probabilistic model...definitely workable....
Q2] MOST IMP INDICATOR....
PRICE...
Q3] OTHER..HELPING HAND...IF ANY...
VOLUME...MOMENTUM STRENGTH
Q4] WHAT ABOUT PATTERN....
its subjective....experience helps...
q5]what about support/resistance..trendline....
THIS ARE TOOLS TO 'SEE' HOW OTHER TRADER SHALL BEHAVE...
so its purpose is to prepare trade strategy...
Q6]WHAT ABOUT MA...
better use it as a confirmation tool..., better is ma..X..
q7]divergence study....is it useful ?
without it u shall be aprilfool soon...
8]HOW TO STUDY STRENGTH?
correlate..expected...vs. ACTUAL...ANSWER lies there...
9]how can i learn better ta...
USE SOFTWARE.. TO SCAN...
SEE CHART....NEVER BE A PARROT
WITH AV INTELLIGENCE..LIKE ME IT TAKES..3YR STUDY+2YR PRACTICING

expect another 2yr to mastery...
socalled callgivers...day time frame...suggest..for breakout...
elliot wave...predictive model ...most rubbish...
i use it to book profit..never for entry...
oversold zone..bullish candlepattern...NORMALLY SUCCESSFUL
but those who use sector rotation...
higher comparative strength with ..NIFTY...ALWAYS MAKE PROFIT....
however concept of buyer strength VS. seller stength...
based on that WHO is winning...and JOIN WINNERS SIDE
NORMALLY GIVES PROFITABLE TRADE....
Some Titbits
05 July 2015
04:11 PM
To see imp pivot ,just use line chart on EOD - its crystal clear.
In resistance zone, use candle - is it Doji, small body? So momentum is less ,so at the first sign of Bearish Engulf ,JOIN short .Trade what u see.
2] Gap in EOD ,for unfilled price, has a strong reflection . Up GAP means strong greed,so when that gap ,trade in direction of Gap.
3] Difference between Correction & downtrend is retracment value. Higher the value , known as Down trend- Nobody can effectively tell it(mind it Nobody)- its
better to watch with cash, watching the downthrust -the speed at which its falling ,can give us some guideline for deep discount buy zone or after breaking lower
low pivot, arrival of bear trend.Best sign i found Good result of company,but No uprise in price= bear market starts
.............................
Sentiment indicator as well as slope of MA ,helps us to understand TREND.
IN uptrend market ,pull back buy works best. In volatile market- buy low sell high works better. In secular bull market(buoyant economy 10%GDP) only break
out works.
As a specialist learn how distribution works-its worth learning.
Scenario Preparation : is main tactical tool for a trader. At a particular market condition ,on a particular what shall I do ?
if price moves up - quickly , shall i chase or allow missed bus? Answer is use PULLBACK.
If price goes there (down value ,but no more falling -I shall buy)- this written idea is known as trade plan.
.................................................. ........
Defining timeframe u predict , time available to trade, Time & place to study for Market- r strategic factor.
Your flexibility /confidence comes with experience .Nuisance of market only can be understood watching 10000hr of chart,if not more.
I used a software OMNITRADER to play last 1 yr data ( suppress rightside and then predict bar by bar 1 bar at a time ,) to convert a random event in certain
predictive mode.
Your memory bank ,must know HOW to react quickly on a particular condition.
Some trading firm(Capstone) propiety trade on orderflow data /also train on simulation .
But they have very strong RISK Management dept- hire & fire is motto. (to save ur job ,u have to perform -no luxury)
Since as a normal isolated trader ,u r urself Risk manager- Highest priority given to Risk management.
1] daily loss limit,
2] % loss limit per trade
3] portfolio loss limit
4] No of position
.....................................
A criteria must be fixed to LEARN - so a fund as well as time.
Since position size can easily be programmed /calculated - its should be part of discipline or mechanical.
Since Trading heavily dominated by psychology (atleast i believe)- use PMA .some stress buster-Here Markets & After HR- an excellent thread in traderji.
Visualization or scenario preparation for next day, really helps in market hr, Deer stiffness by night head light (analysis paralysis)- must not be there for a
trader.If u r parttime trader, main tool/time is study at weekend.& play on daily as per set up & plan ,prepared by u.
In india garbage company r more-Jamit05 is doing a good fundamental work. I use equitymaster, as they scan out bad management.Normal volume
filter(500000daily & >100/-, also help to filter out trap of operator.
When u reach the level of Expert , pl learn a tool called Market Trap , to use it in other way. Many a time , many a things r told /shown in price to lure
investrader - (they r the food)
.................................................. ......................................
To cut shot i am putting in black & white.
1] as a trader , stoploss must
2] Risk management no 1 for trade system
3] Position size should be mechanical , u can improve it add winner, in position trade.Intraday single position -total entry,total exit.
For Swing - half exit at 1st target better
4]Momentum is a good tool for intraday as well as position. Wide rangeBar, nothing but momentum. Avoid trap of exhausion bar at top.
Swing is actually counter trend , against momentum & direction , so slow -dozi/small body at zone -keep alert.
5] Trend must be seen weekly first, then daily. Below it loses its strength-( a big order of 20000 in india can create a trend variation on intraday)Avoid to trade
against weekly pivot ,unless u r assured of brakeout this time.
Daily chart support/resistance r good for trading zone in Indian market.
Result creates disturbance - good result moves up prices to higher level (R3) ,similarly bad result to Lower support (extreme down support value)
6]Price reflects emotion of participants=novices.Take best measure to stop ur emotional reaction to market. This we learn from experience.Disciplinedtrader.com
given some tool to control
- basic idea is i shall not react to market. i shall not abuse myself for wrong. I shall not afraid to take at support. I shall book profit at my target. I must not use
hope in trading.I must potential trade before(tradeplan action guideline). I shall put chart to keep by record my reason of winning as well as losing trade.
7] i must spend time to change , behaviorial problem if any.
Entry -exit & reason ,as well as set up validity must be checked in present market context.I must create a strong mind so that other's talk cant influence my
trading decision.Market earning will guide , whether i am in right path or not.
----------------------------------------------------------------------------------------------------------------Reflection on Pattern
...................................
As price study -core of TA , combination of many bars also may say u something.So knowledge of same must be part of system .
1] single bar - just see any candle.
its wick on top, at high will burn down the candle , to bring the price Lower.
Its TAIL will help the baby monkey to moveup . So tail is a pt of buy interest.
Breaking of previous wick(top)- suggest upprice BIAS.
Similarly breaking of UPpivot- suggest uptrend tendency.
Hammer at bottom has Strong BIAS to turn reversal.
2] COMBINATION BAR
morning star at support zone - gives strong upbias. Also 2 bar pattern BULLISH ENGULF.
similarly Evening star at Top, in a Resistance zone - a deadly combination for short. You may play with Bear engulf also.
.................................................. ........................................
OTher Price Pattern
IF u see many a chart - u see DOUBLE TOP, TRIPLE TOP, HEAD & SHOULDER,SHOULDER -HEAD & SHOULDER - ALL R SIMILAR .
1] AFTER making twice attempt of High - price is falling
2] after making thrice attempt of similar high-price is falling
3]AFTER making twice attempt of High, 2nd one less than first, - price is falling
4]after making 3 attempt of high, out of which 2nd one is BIGGER attempt-price is falling
So u should be ready for SHORT , as they r forming. Now You the great programmer -plans to automize it. Do u know after a strong move up, This pattern may
look like a TRIANGLE /Pennant , also a FLAG pole attached - big pictures of many Bars - gives it a strong CONTINUATION pattern.So context is imp . Whether to
long or short? Just see the HR chart- any break out on day , must be created in HOURLY chart first.word can not express it. Picture is 1000 times powerful.If u
can spend some chillers, u may get to SEE video of trade /advance TA through CorporateBridge- to replicate similar trade.
can spend some chillers, u may get to SEE video of trade /advance TA through CorporateBridge- to replicate similar trade.
,,,,,,,,,,,,,,,,,,,,,,,,,,
role of indicator in delivery based trading
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,
1]why we take delivery.........because long haul will give better risk adjusted return.
2] higher timeframe is showing strong uptrend bias.
3]our aim is always buy in temporary fall , to catch better long term trend continuation.
.............
Indicator mostly give confidence to a trader..........a trader is nomore slave of indicator.........if he/she can read price properly.......what is expected to happen.
i]MA in weekly chart solve pt2
ii]support pt reversal buy solve pt1
3rd factor reqd some judgement + lower timeframe exhausion dimination.......apart from some fundamental clarification know ur stock.
...................so this normal use of them.
but u may use indicator.........as preliminary scanner.........for some timesaving device.
most imp use of indicator research...........is not indicator itself, but time spent on research.........so their uselessness and clarity of pure price study +
amalgamation of various time frame picturesque...........
No doubt........support, MA , Fib,reversal bar, any momentum tool to understand reversal at bottom ...........i found them with some use.
................
views r personal and it takes more than 10 yr to reach this view
------------------------------------------------------------------------------------------------------------
Oscillator - Overbought/Oversold conditions

05 July 2015
05:08 PM
I would like to share an important phenomenon regarding oscillator overbought/oversold conditions. Whenever an oscillator lik e Stochastics,( or even RSI,ROC
etc ) stays above the overbought limit for more than 5 bars without taking a dip from overbought to neutral zone....the marke t has a lot of steam left further
to go up, market then continues upward journey,then comes down,then goes into overbought zone again but shows negative diverg ence and then only it
comes down...till then it keeps making higher tops. This is a very strong bullish signal to trade.....
Mirror image for oscillator staying in oversold region for more than 5 bars...
The above phenomenon was what was happening towards the later part of the session yesterday (26 -06-09).... I traded this observation yesterday and
thought I will share with all....
I am posting Bank nifty fut 5 min chart of 26-06-09 which is used for day trading.....the top panel is a stochastic oscillator....I have marked 80 and above as
overbought zone
The market goes from overbought to oversold and so on so forth in a trading or sideways market environment...so selling in ov erbought and buying in
oversold zone is a good strategy....but somewhere markets start trending and that is where the trouble starts for our oscilla tor trader.
Observe in the chart that when market stays in overbought region for more than 5 bars ...it is extremely overbought and selli ng it is incorrect....market needs
to dissipate this overbought reading and till then it will blast off on the upside and our oscillator trader will keep on sel ling in a market which is blasting
off ....The correct action here is BUY....not sell...
.................................................. .................................................. ..................
Slow line is basically the moving average of the fast line...done for smoothing...so if you are a very aggressive trader...st art counting from fast line...if you are
a bit relaxed type...start counting from slow line...the aggressive trader counting on fast line will have more trades,early entries but also more
whipsaws.....part of the game we are in....
To understand the correct way of trading on oscillators let us study the Nifty futures 60 min chart.The stochastic oscillator is doing a great job till May
09end...calling each top and bottoms and our oscillator trader is on a high and feels that he has figured out everything in t he markets and he is on his way to
top the next batch of Market Wizards......But market has its own ways...we all know that.... All of us have been there....
The problem areas for the oscillator trader are as under :
1) Up trending market from 27-5-09 ,1:00 bar to 2-6-09 ,11:00 bar
2) Up trending market from 9-6-09 ,3:00 bar to 12-6-09 ,12:00 bar
3) Down trending market from 12-6-09 ,3:30 bar to 16-06-09,12:00 bar
4) Down trending market from 17-06-09 ,3;00 bar to 18-06-09 ,3:30 bar
If he can handle the above 4 markets successfully,our oscillator trader is the king....
Let us see how he can handle these periods...I will explain first two cases,rest 2 are mirror images...
1) 27-05-09 ,1:00 bar onwards.....
On 27-5-09 at 1:00 bar the stochastic oscillator goes into overbought zone and that is a mouth watering trade for our trader friend t o go short ( most will
trade like this and repent later ). He goes short and gets killed in the subsequent market acyion.
The Oscillator Entry Qualifiers For Short Tradeare as under :
1)
2)
3)
4)
5)
6)
The oscillator should have gone to overbought zone.

Wait for a bar where the oscillator flips...ie comes out of overbought zone and comes in neutral zone....
In doing step No 2 the oscillator should not have stayed in overbought zone for 5 bars and more
Wait for a downclose ( meaning close less than earlier day's close)
Ensure that by that time oscillator does not go very near oversold region
Sell when the low of the downclose bar is broken on downside.....
If you observe all 6 qualifiers you will see that there was no shorselling opportunity in this uptrend.....our trader friend is home safely....and made money in
longs....
2) 9-6-09 ,3:00 Bar onwards
Oscillator went into overbought territory and stayed there for 9 bars.....so no shortselling ideas to be entertained....
Here the market will move to neutral zone,dissipate the extra bullish pressure ,then go to overbought region,fulfill all 6 qu alifiers,give negative divergence and
then change its direction to down...let us see what it did...
Come to 12-06-09 ,12:00 bar...after dipping into neutral territory the oscillator has gone to overbought zone again....it stayed there only for 1 bar.....next bar
1:00 it dips again into neutral zone,gives a downclose...Now all qualifiers satisfied...the low of the 1:00 bar cracked in 12 -6-09 , 3:00 bar and that is an ideal
sell entry....mkt never looked up after thatAlso note the classic negative divergence here,the mkt making new higher top osci llator making lower top....all
perfect...
The other two are mirror images in downtrend.Our friends can easily figure them out well .....
With this i am moving out from TA to psychology- the most important topic
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,
No one can identify the trend or sideways day at the beginning of the day...but as the day progresses, in first 40 -50 min it is clear that whether it is a trend
day or sideways day which we are trading.On first rally and decline, market gives indication of trend/no trend. -ST
with this comment , i start most imp aspect in trading ie. be ADAPTABLE OBSERVER- TRADE DECISIVELY WHEN U VISUALISE A MOVE , BUT BE READY TO BE
with this comment , i start most imp aspect in trading ie. be ADAPTABLE OBSERVER- TRADE DECISIVELY WHEN U VISUALISE A MOVE , BUT BE READY TO BE
WRONG.
To create this is NOT easy- yes i am trained to do like that . Some of those Pro material will be given here.
----------------------------------------------------------------------------------------------------------------------------- --------------------------------------------
TRADE PSYCHOLOGY
05 July 2015
05:09 PM
TRADE PSYCHOLOGY
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
For trading market, price reading & YOU this 3 factor u have to learn & master . The 3rd is most important. YOU factor comes from trade psychology . Actual
long haul a trader wants to trade , he has to give atleast 50% weightage to psychology.Better u r a trader, more systematic-disciplined u r, less weightage
should be given.
There is major flaw for trade learner, they dont give proper time & effort to master it.Financial novices fail in market because of simply this reason. So many a
failed trader with psychology/clinical psychology background made a through study of av trade-learner ( mostly miserably failed trader) and become
successful as trade coach. Yes read them , its partially helpful. To name a few.
1] MARK DOGLOUS- TRADING IN THE ZONE,DISCIPLINED TRADER
2] VAN THARP- WAY TO FINANCIAL FREEDOM ,PEAK PERFORMANCE COURSE,SUPER TRADER
3] ARI KIEV-PSYCHOLOGY OF RISK,MASTERING TRADING STRESS,WAY TO WIN
4] Dr elder- COME TO MY TRADING ROOM,TRADING FOR A LIVING,ENTRY & EXIT
5] Dr Johnson-FROM PAIN TO PROFIT
6] Dr STEENBARGER-ENHANCING TRADER PERFORMANCE,DAILY TRADING COACH
Two lady trainer/psychologist
7] Adrianne Togharie- DISCIPLINE-DISCIPLINE
8] RUTH BARRON ROOSEVELT
Comments : Start pt is one , higher u move in number, better is the quality/maturity of trainer.The last 2 lady help basically stick to business ,throwing
unnecessary psychological burden.Best trader whom I have met, suggest DONT GIVE THAT MUCH WEIGHTAGE TO PSYCHOLGY .IT COMES AUTOMETICALLY ,IF
U R SYSTEMATIC,RULEBASED TRADER.ENTIRE GAME FOR MAKING MONEY,.U SHOULD HAVE SOMETHING NATURAL , SMALL CAN BE FINETUNED.
OTHERWISE THIS TRAINERS WOULD HAVE BEEN TRADERS.
There is another approach- read from best trader, particularly when they have given insightful thought. Best one is PHANTOM OF PIT.Followed by WAY TO
TRADE BY john piper.
3RD ONE = MENTAL FITNESS FOR FUTURE TRADER- NORMAN HALLETT
Book by Curtis Faith WAYS OF THE TURTLE, TRADING FROM GUT.
Views from LINDA,,Victor S.WISDOM from experienced trader/mentor published in net.
There is another imp concept EMOTIONLESS TRADING. THEORITICALLY we should aim it.
.
By going detail in psychology helps u, how to tackle market uncertainity,when NOT to play. It helps to implement TRADING AS BUSINESS, EXECUTION AS A
JOB.Clarify importance of decision making within fierce battle ground between bull& bear, and when to play for survival, when to shift to play for big win.
The fitment of what style u choose as trader, intraday-day trade-swing- intermediate position ,position for long haul- depends naturally on your personal
trait,as well as time/correct knowledge availability.
PSYCHOLOGY HELPS U TO UNDERSTAND WHERE U R NOW.so u can plan ur behavior modification to be a right trader ,with suitable style. It definitely helps to
eliminate your lifes valuable time if trading dont suit you.If u r not keen to read/watch price attentively- an easy going personality DONT WASTE TIME.
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since i am now seeing trading as an intellectual persuit, and trying to solve from angle of psychology-view may be different /little bit difficult to follow.But those
who have followed Journey of a trader' and REMINISCENCE OF TRADER' and his self reasoning /analysis on trade - easily find the truthfulness in it .
PURPOSE IS MOST USEFUL.this gives clarity . in layman's term it may be vision.
With strong purpose , u can sustain trader in you.
Next comes trading as business. The paper trade/small a/c size trade/application of ta-fa -news play ALL THESE IS PREPARATION FOR LONG HAUL. R U FIT
FOR TRADING BUSINESS IN OWN A/C????
the basic aim of the paper trade/small a/c size trade/application of ta-fa -news play
IS PREPARE PSYCHOLOGICALLY. throwing out euphoria trap, learning execution while losing (getting out early-lose booking should not deterent ) as well as
develop an habit to ADD WINNER EARLY TO UTILIZE MOMENTUM .COMMON SENSE SUGGEST HOLD WINNER, but trade mastery is nothing but add winner.
pl understand simplicity in principle, but complex in practice - thats why its a skill- skill to make money.
first survival- THROW LOSER EARLY.
maturity-HOLD WINNER
TRADE TO WIN= ADD WINNER or leverage play.
probability of a trade going right at start in mind is very high,but actually NOT THAT HIGH. BUT WHEN IT SHOWS UP (considering long trade )- price is telling YOUR MARKET READING IS RIGHT,confirmation comes- so use momentum to earn more.THEN WHY NOT ADD IN ACTUAL HIGH PROBABILITY TRADE????
there r two types of data- one u easily see .MECHANICAL DATA-PRICE AND VOLUME , u study it , just like other 40lakh indian . THEN U SEE A BUY OR NO
ACTION , when many a interprete SELL,
YES IT BECAUSE OF INTERNAL DATA. from your past experience , your mind strongly suggest a bias to move up NOW. AT REACHING A THRESHOLD ,UR BRAIN
A COMMAND -BUY NOW.so you execute directly or indirectly hrough dealer/rm. NOW AFTER ENTRY , U EXPECT TO MOVE UP, but goes down some tick,
remembering you, it may go down- so u place STOP TO KEEP U IN SURVIVAL MODE. SUDDENLY SOME NEW BIG BUY ORDER GOT EXECUTED- PRICE GOES 4
TICK UP - u consider you have the skill to entry right......................
TIME WILL TELL AFTER EXECUTION (BUY-SELL BOTH) ATLEAST 100, IF NOT THOUSAND - HOW MUCH PROFIT U MADE , BE IN PAPER TRADE OR IN REAL
TRADE - YOU HAVE NECESSARY PRE REQUESTEE TO BE A TRADER. this i tell BACKTESTING -not a foolish report generation for strategy preparation or
confidence building.Pl play a game of predictability -by bar by bar with a 1yr back data, with buy/sell /dont do anything - this helps to react RIGHTLY ON
MARKET.
ASKING NOVICE QUESTION, LIVING WITH EMOTION NO WHERE CAN MAKE U A TRADER.SO after 1st cycle on market or completion of blow out of a/c , pl see
your internal data, by ASKING QUESTION
why i have taken the trades? how many of them moneywise right ?how much i am emotionally involved during the trade? reason of getting out- that time
market condition .
WHAT IS THE SUPERIORITY OF TRAINING ? TO DEVELOP A SKILL TO ACT WHEN TIME COMES. IT IS THE CONTINUITY OF TRAINING LIKE MILITARY REGIME
FOR LONG- CREATE THE WORD - prepared.
TA IS BASIC LOGIC FOR TRADIG.
ITS THE PREPARATION MAKES U A TRADER.
then only comes APPLICATION . do u understand how tough wwf fighters r trained for long entertaining fighting business. U R THE SAME GLADIATOR IN
TRADING. SO TRAIN ACCORDINGLY. time again in past ,i have shown my skill to trade now,- but no more , as i dont require anything to show.NOR I BOTHER
FOR TARGET OF RETURN %.if market offer opportunity i trade, and book profit at predefined target.
YES 1ST 10 YR IS REALLY HORRIFIC , AS I LEARN A LITTLE ONLY TO SURVIVE
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RATIONALITY VS ILLUSION
05 July 2015
05:10 PM
A TRADE LEARNER THINKS /PLANS BOTH R LEARNING /STARTING PT. A novice is totally on illusion . Read SMART TRADER- u understand state of
RATIONALITY- the thought process BASED ON REALITY.
AFTER 4YR- YOU ASK AND ANSWER THIS SAME QUESTION
] why u r trading?- FOR MONEY ,NOT FOR THRILL, NOT TO PROVE ANYTHING IN LIFE LIKE DECISION MAKING SKILL , NOT TO KNOW what is trading, not
because let me try attitude, but because confident optimistic view I CAN. I MUST REQUESTEE TIME AND MONEY TO TRADE.
2] how much rate of return u plan- YOUR PAST TRADE RESULT/UR PORTFOLIO SHOULD BE GUIDELINE-NOT AMYTHING ELSE. no illusion ,imaginary peep
show.objectively 20-50% return possible, higher than that a born liar. LIE has no place in trading. u earn more that by luck, ur risky trade turns into probably
succeesful trade. ITS THE MARKET WHICH GIVES. YOUR CONVERSION MECHANISM MAKES THE RETURN.UR PLAN MUST TEST GROUND REAL
OPPORTUNITY .for intraday 4-5 opportunity a day . for swing -2/3 opprtunity a week. for position 3-4 opprtunity a month. RETURN EXPECTED -1/2 % A DAY ,
3-5 % A SWING, 10-15% A POSITION .PSYCHOLOGICALLY PREPARE UR MIND FOR THIS RETURN .
3] your inherent skill, by which other experienced trader loose against you.- THIS IS VERY IMP. I WAS A CHESS PLAYER,SO ADAPTABILITY , SUDDENLY IN
SURVIVAL MODE, IF FOUND WEAKNESS IN OPPONENT'S MOVE -MAY SWITCH TO AGGRESSIVE PLAY. YOU MAY BE WELL ORGANISED , MAY BE GOOD AT
OBSERVATION- THATS YOUR SKILL.you may enjoy car-race in computer game- maggie trade u should aim, indicator based entry/exit u should trade. you r
lawyer - going for analytical argument- news play should be planned for. you may be good swimmer- so skill is your zone , go for system based mechanical
trading.
you may be fish-catcher by hook, simply u can play long haul positional play - wait for price come near u, and buy - slowly take up and grab big profit out of it.
THATS WHY ROLE OF PSYCHOLOGY PLAYS HERE TO MAKE A SUITABLE TRADER WITH NATURAL STYLE.
OH U THINK , U HAVE NOTHING, JOIN AS TRADE PUNCHER- soon after thousand of trades - u shift to RM- now give call - and take actual trade against it. YOU
R A SUPERLATIVE TRADER. THE DAY U THINK ,U KNOW MARKET U R GONE.
4] your acquired skill - time spend to learn- THIS IS BASICALLY PATIENCE GAME,KEEP ON TARGET/MILESTONE TO LEARN
5] how u cope up with earning ? - yes it may go to head(euphoria)- WRITE JOURNAL ,DONT TALK ABOUT RIGHT TRADE , INSTEAD VISUALISE
6] how u face psychologically the losing trade/ loss in your portfolio- CREATE IT MIND ITS PART OF BUSINESS, THATS WHY PRACTICE ENTRY AT LOW , WITH
STOP. ULTIMATELY WINNER SHALL COME AS PER PROBABILITY -PORTFOLIO MOVE UP. ALSO IMPROVE YOUR KNOWLEDGE ON ECONOMY
,,,,,,,,,,,,,,,,,,,,,
Psychology on trading
1] characteristic of highly successful people
2] imp of right attitude
3] Why discipline & understanding discipline
4] Achieving self discipline
5] understanding reality of price & how it affects our psychology
6] IMP of rules to avoid self sabotage
7] finding your weak pt- creating a method
GOING DEEPER IN PSYCHOLOGY
8] BODY MIND BRAIN
9] META MESSAGE
10] CONTROLING YOUR EMOTION
11] ANCHORING SUPPORT FOR POSITIVE CHANGE
12] POWER OF BELIEF
13] ACHIEVING THE RESULT
14] ALIGNMENT
SPL TECHNIQUE
15] MEDITATION
16] HYPNOTISM
17] EFT-EMOTIONAL FIELD TECHNIQUE
..........this is how structurally trained in OTA
SUCCESSFUL PERSON
05 July 2015
05:10 PM
1 STRONG SENSE OF PURPOSE.consistent winner identify first what i want ,then try to achieve that. Stick with perseverance & p ut well defined effort
2 PROPER GOAL SETTING-SMART , achievers visualize outcome clearly.Have emotion of winning I KNOW I CAN.
3 POSITIVE ORIENTATION- EXPECT TO SUCCEED . take strength from past achievement - so more confident.psychologically believe failure is Temporary - learn
from it.
4 ROLE MODEL ATTITUDE AT START trust . achiever studied success of others successful, then try best to copy .
5 SELF ASSURED. STRONG GUT BELIEF.
6 GOOD ABILITY TO PLAN & ORGANIZE. Methodical . prioritize , break the goal in parts , with detail in time
Approach to accomplish. Prefer one work at a time.
7 NECESSARY EDUCATION/LEARNING- spend heavy time to learn with clarity , go into crucial detail.
8 PATIENCE- understand strong value of preparation.all good achievers have strong patience.
9 PERSEVERANCE- resilience & stubborn to perform.
10 ENJOY WHAT THEY DO- enjoy the process and have passion.
.................................................. .................................................
FAILED PERSON
Undisciplined.dont know what they want -poor clarity .driven by impulse.often No direction -poor decision maker.constantly change & find soln outside may
start many project without full commitment ,so cant finish.
VAGUE GOALS,may be achievable. Not ready to put extra effort.believes Reason. Say - i think i can do.
They dwell in past , while facing problem , they believe soln may come from outside.Failure creates an avoiding attitude.
Have resent in mind.They have habit of blame,excuse,badluck. Dont understand success reqd - intensed focus & perseverance.
UNDISCIPLINED develops self doubt.
SCATTERED IN MIND ,as well as poor priority concept. Waste time on trifle.having habit of chasing illusions.
LOOK FOR SHORTCUT. UNDERESTIMATE TIME TO BE SPENT FOR LEARNING
Attitude of getting now. So minor distortion create deviation for them.
Undisciplined belief in quickfix.- has panic in mind.so they r quick quitter.
Develop stress,boredom due to work
.................................................. .................
note :this is based on successful traders and failed trader ,given the test and followed path of trade journey
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You may have a goal clearly in mind, but it must have three important characteristics:
1) Your goal must be realistic.
2) Your goal must be attainable.
3) Your goal must be measurable.If you want to be a successful trader, the first thing that you need to do is to set your tra ding goals.
...........an important message even in Larry Levins "Secrets of Emotion Free Trading", which has been a good reference for m e.
Just as important as setting specific goals, you must visualize yourself successfully reaching those goals each and everyday. If you cant see yourself in your
minds eye as a success, there is no chance you will become successful. It just wont happen!
Not only must you have a goal and a plan to execute on the goals for trading, you need to think of your successful future and imagine how it is! Envision it.
Break that goal into achievable milestones, like that in a project plan, like building a house. You need land, you need money , you need an architect to design it
for you, you need to have the resources and time to manage and monitor its progress.
For example, you may say to yourself, that you want to see Rs 2500 credited into your bank at the end of each week as a goal for the very short term and this
is what you will do:
- I will paper trade my trading method for a week or a month and see whether it delivers Rs 2500 per week?
- Then I will do real trades for a week and evaluate the results.
- Did I achieve Rs 2500 at the end of the week? If not, why?
- Analyse, paper trade, real trades, evaluate...and repeat this cycle till your goals are met and then set a new goal with a wh ole new thinking behind to take the
progress to the next level.
Its important that you are always in control!!! In control of what? You cant control the market............There is one contr ol you have. You can decide when to
enter and when to exit. Thats the maximum you can do.control yourself!!
So you can only TIME your entries and exits and the amount of money that you play with.. You would do things in your best int erest by timing your actions
like :
- Not risking more than 2% of capital as loss in any given trade.
- Exiting profitable trades, once a target profit is made. And not running after the profits.
- Always working with stop losses so that you dont lose large amounts.
REMEMBER -A person with good self-discipline but a poor trading method will outperform a person with poor self -discipline but the best trading method
currently available.
We all want those huge winning trades. But one thing we must all remember is we cant control what the market will do, so we must be prepared for whatever
it does do. Thus, if we have a good winning run of 60 points when our objective was 75, we must gracefully exit before these profits evaporate even if that
means missing out on a big winner. Thats the discipline that we need!
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Application of trading psychology
..............................................
Keep INSPITATION with you.
#1. Do a written reflection + analysis of each trading month of 2013 to note wins, lessons and improvements. Pretty amazing h ow powerful this exercise is.
#2. Then create your execution plan, month by month, with key milestones and rewards for winning. This gives you a decision -matrix to say a huge NO to all
the distractions that get you off the activities that will ensure 2014 is your best year to date...
Building the big picture : Your vision and objectives for the long term
Evaluating whether you are ready for trading ?
What is your journey so far?
Common sense about trading-Risk and Money management, the basics
Trading methods pluses and minuses

Build your trading strategy
Start your pilot trading
Review and Scale up.
examine your fears, uncertainties and doubts about where you are to identify your emotional dilemmas and work through these l ike a professional
approach.Review the progress month on month based on the business objectives and apply course corrections whenever needed.
SUCCESS FACTORS
05 July 2015
05:11 PM
Success Factors - Learning to take a loss

Trading is not about always winning. Winning and losing are opposite sides of the same coin. You need to accept losses exactly the same way as you would
accept your gains. Trading is the aggregate sum of winnings and losses which ultimately makes money for you.
Once you implement a good risk and money management strategy, you will learn that when you win you will win more than what you lose, when you make a
losing trade.
Larry Levin says in his book "The Secret of Emotion Free Trading", Your losing trades do not diminish you as a person. You are not your losing trades. You are
also not winning your trades either. They are simply by-products of the business that youre in. In other words, your gains are the outcome of market
movements and your risk management system.
"Losing trades are part of trading. The most successful traders in the world have losing trades every day. They do not get caught up in thinking that the losing
trade is part of them. They realize its just part of trading, and the sooner they get rid of the losing trade, the faster they can look for the next opportunity to
find a winning trade. YES -This is easier said than done, but nevertheless, its still the reality of how to make money in trading."
Mark Douglas, author of The Disciplined Trader states, Execute your losing trades immediately upon perception that they exist. When losses are predefined and
executed without hesitation, there is nothing to consider, weigh, or judge and consequently nothing to tempt yourself with. There will be no threat of allowing
yourself the possibility of ultimate disaster. If you find yourself considering, weighing, or judging, then you are either not predefining what a loss is or you are
not executing them immediately upon perception, in which case, if you dont and it turns out to be profitable, you are reinforcing an inappropriate behavior that
will inevitably lead to disaster. Or, if you dont and the loss worsens, you will create a negative cycle of pain,that once started will be difficult to stop.
Keep in mind that fear is really the only thing that keeps us from learning anything new. You cant learn anything new about the nature of the markets
behavior if you are afraid of what you may do or cant do that is not in your best interests. By predefining and cutting your losses short, you are making yourself
available to learn the best possible way to let your profits grow.
If you can change what these losses mean to you and realize that getting out of a losing trade as soon as you define it as such, you will be able to release
yourself from the stress that those losing trades probably cause you now. This is why learning to love taking a loss is so important. It puts you in a much better
position to take the winning trades."
Not feeling good about a loss is a natural and instinctive reaction to a loss much like the joy of winning. We need to temper and control both of these feelings as
we begin to trade.
What can you do about it? Accept the two events with the same calm attitude. Learn to switch off MIND when you trade so that you dont get wild emotions
while trading. Take a break, DO anything that calms you down when a loss upsets you.
Time and patience will make you a TRADER
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TIMING & MONEY
We set out with a clear goal that we want to earn 10000 rupees a month and deploy Rs 100000 as capital. Will we meet our objective?
The answer is No!!
What you make or lose in each trade is a function of your capital deployed, the capital deployed each trade, the risk that you take and when do you decide to
exit your trade.
THERE IS OTHER FACTOR - HOW MUCH MARKET ITSELF IS OFFERING. IT MARKET IS ROAMING WITHIN +/- 3% ZONE , U R PLANNING 8% RETURN , THATS
NOT POSSIBLE.
RETURN ALSO IS A FUNCTION OF POSSIBILITY. THIS SIMPLE IS NOT KNOWN TO ACADEMICIAN.SKILL OF TIMING MAKE YOUR MONEY , SO WE USE PRICE
READING SKILL TO UNDERSTAND MARKET. GIVE IT A NAME- UPTREND-DOWNTREND-SIDE WAYS, HIGH VOLATILITY -RANDOM OR UNPREDICTABLE accordingly we shall apply some setup.
WHY PROBLEM THEN??- MOST OF US FROM OUR SERVICE CONCEPT /HOW WE BROUGHT UP-have ideas about the amount of time it takes to make a certain
amount of money. These ideas do not apply to trading AT markets. You can win and lose in minutes, because of big moves that happen in your trading direction
or against it.
Once you study your trading pattern and the actual profits that you are making, you can test and scale up your parameters - capital and capital/trade. You can
study the patterns of your particular trading method and adjust them with market condition, varying capital deployed per trade and utilizing your trading
discipline so that the trading can be scaled up (or down).Remember that you can have 2 winning trades followed by a losing trade or sometimes no trades for a
long time, based on your trading method. A trade may complete and meet your target in 5 minutes or 2 hours. There is no way of predicting when the trade will
complete.
Do not attribute any emotions to the way the market treats your trade or how quickly/long it takes. The only outcome that you can control is the losses that you
suffer in a trade and the time when you exit a winning trade. Thats it. Follow the discipline to treat these two outcomes and you will have consistent results.
Remember, acting in your own best interest to protect yourself is much more important than finding winning trades. Dont get caught up in thinking the market
must keep going if it moved this far, this fast. It doesnt have to do anything, no matter what it just did. Keep yourself prepared for whatever it does and youll
have a much better chance to be profitable.
In aggregate, u Win more and Lose less - that is really trading business is all about.
2 OTHER RULE FOR TRADING

05 July 2015
05:11 PM
2 OTHER RULE FOR TRADING-Never get emotionally attached to a trade AND Trade what u see,in price at your timeframe. .......u trade intraday momentum, so
5 min. move up quickly ,u must join
U trade swing low buy , so price coming to that low, u must take the trade.If quickly coming to that swing low affects u to be fearful , U R EMOTIONALLY
INVOLVED IN TRADE, pl throw away this amateurish MISTAKE.
Its 9.am and the premarket trading has started. The trend seems bullish and your overnight indicators seem to suggest that it would be wise to enter a long
(buy) trade. And you do that exactly 5 minutes after the market opens. The trade goes up 10 points, but then gets stuck there for the next half an hour and
then starts dropping. You average the trade with another buy, because this is the REAL winning trading for you today. But then you are forced to take a loss on
your new stop loss, loosing twice of what you had planned- u r nothing but a NOVICE WHO IS SUPPOSED TO LOSE.
The message i want to convey is clear-. You entered, it because you believed, that it would reach its target, but if it doesnt, be ready to exit it as per your
predefined rules. Do not move the goal post while the trade is in progress.
It is important to understand that just because you think something will happen in the market does not mean it will. Similarly, even if you do find a very
obvious and perfect looking setup, you should always remember that the market is a dynamic and constantly ebbing and flowing arena where anything can
happen at any time.
there is no SURE thing in the market.

Rather than allowing yourself to become emotionally attached to any trade or any idea about what the market might do, you need to learn detachment from
your trades.
all the while keeping in mind that you must constantly manage your risk even on trade setups that look perfect. Always make sure you are trading according
to the concepts of your trading method and rules, and not just on a whim, if you are a price action trader then follow the trail left by price instead of getting
off track and giving into what you think the market should do or might do.
fully understand exactly why you need to only trade what you see instead of what you think,........doing it not so easy.some helpful tips Stop and ask yourself before each trade what I am doing?, what is the setup?, does it meet my trading plan criteria?, am I acting logically or
emotionally?, am I controlling myself or is the market controlling me?, is there a setup or am I am just making one up? These are all good questions to ask
yourself before you enter any trade, doing this will make you think deeper about what you are doing and if a trade is warranted or if you are simply acting on
emotion.
If you are trading a specific trading strategy, like price action, make sure each trade you take is in accordance with the concepts that you have learned in. Ask
yourself any or all of the above questions before every trade that you take, until it becomes second nature to only trade what you see. Eventually you will
develop a refined discretionary trading perspective that will allow you to almost instantly look at a price chart and spot price action setups.
Always remember the more flexible you can be, the more successful your trading will be. In fact, the amount of money you make trading will be in direct
proportion to how flexible you can be.
Being an active loser (as well as an active winner) is the only way to be successful. Again, the temptation to not cut your losses is always there. But it will do
nothing but get you in trouble. Successful traders know that cutting your losses early by HABIT- is the 1st law of survival.
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WHY IT IS EASIER SAITH THAN DONE THE LAST POST????
BECAUSE OF OUR SELF IMAGE - TRADING EXECUTION IS NOT THAT EASY ,BECAUSE WE HAVE TO BREAK LOT OF BARRIER -WRONG IDEA FROM COMMON
LIFE, WRONG IDEA OF INVESTMENT,WRONG IDEA ON TRADING. TRADING IS DECEPTABLY SIMPLE - BUY LOW,SELL HIGH , but price, market, market
participant and mood of crowd -all 4 variable make it really difficult to guess , more difficult to implement.
Coming back to self-image since we now think from psychological pt of view-
We all have a picture of ourselves in our subconscious. This picture is called the self image. The self-image controls everything we do in life. It is what we
believe to be true about ourselves. It may not necessarily be true, but it is what we believe to be true. Our self-image has a stronger hold on us than you could
ever imagine. A good example is someone trying to lose weight. Many times people have the picture of themselves as an overweight person. They attempt to
try and lose weight using willpower. They go to the gym, try and eat healthier foods and avoid fatty foods. All that is great. But the reason most people cant
lose weight (or they gain it right back) is because they have that powerful picture of themselves as an overweight person -unless u think your image of thin &
healthy person who runs daily & its YOU- u cant achieve this.
The same is true about whether you deserve to make money as a trader. If you have a self-image that states it isnt right to be able to make money so quickly,
then you will be fighting a losing battle against your powerful self-image-SO CREATE A DREAM OF BIG MONEY -BIG HOUSE.Just like the person trying to lose
weight, you will only become successful when you have the correct picture of yourself. The picture must be of a person who is deserving of making money in
the trading environment.VISUALISE THIS PICTURE DAILY.
Self esteem is your opinion of yourself. High self esteem is a good opinion of yourself and low self esteem is a bad opinion of yourself. Self esteem is crucial and
is a cornerstone of a positive attitude towards living.
It is very important because it affects how you think AND act . RICH BILLIONAIRES TRAIN THEIR SON TO CREATE AURA , CONFIDENCE BOOMING PICTURE TO
RUN BUSINESS.
Low self esteem means poor confidence and that also causes negative thoughts which means that you are likely to give up easily rather than face challenges. In
addition, it has a direct bearing on your happiness and wellbeing. SOME TIPS
1] Do what you love.
Everyone loves to do something, when you indulge yourself in what you love, you improve the way you feel about yourself. You improve your self image. Think
about this in the context of your trading.
2] Acknowledge your strengths
There is no one who has no strengths. Everyone is good at something, know what your good at and give yourself a pat on the back. Do things that bring this
quality out into the open. Excercise it, make it stronger. It will give you the confidence to do other things including trading much better.
3] Dont put up with crap.
There is no reason you should tolerate other people being mean to you. Even if they say they are doing it with love. Make sure people know they should be nice
to you and if they refuse, walk away from them. This is important in the context of people thinking that you will only lose money in trading. Only you know that
if you trade smartly, you will be the winner!
4] Do your research
self help books are a waste of time in the sense that only person who can change you is you. CHANGING is really hard as it IS boring & INFIGHT IN MIND. SO
read biographies of people you respect, people who do positvive things and attain huge success. Look for a mentor WHO can help you. Its worth the money and
time spent.
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TRADE RULE TO LIVE BY; presently i use simple rule SET
s = stop ,e= entry, t= target .........this way it control by greed looking objective , as first i think STOP pt, so when price comes there i enter, automatically my
buy low philosophy get satisfied and at target book 50% - so easily i manage trade.
.................................................. .............................
The only thing that you can exercise is self control through your trading rules and self discipline.Trading rules are the collection of the trading method and the
rules that you apply on your trades using that method.
No matter what type of trading youre doing (swing trading, day trading, long-term trading), youll need to come up with your own set of rules to keep your
trading structured. The problem is most people dont want to make up their own rules, because if they did they would have to take responsibility for their
results. And, as we all know, most people dont want to take responsibility for their action. But, as we all know, the only way to be successful in trading is to
take 100% responsibility and act in our own best interest.
take 100% responsibility and act in our own best interest.

Here are some samples :
- Every trade is a pair. A trade order and a stop loss order (manage the risk)
- Stop trading after 3 losing trades and step back to analyse (never dig your own grave)
- I will exit each trade whenever it makes 30 points profit.
I will use the valid signal that my trading algorithm gives (or the method that I decide to use)
- Avoid or reduce the trades in high volatility days.
- Enjoy trading and take responsibility for each of the wins and losses in all your trades.
....................
Its important to separate the outcomes of the trades from the fact whether your execution was flawless or not. Many a time we mix the two up. Its important to
keep the review process after trading hours and not mix that up with the outcomes during trading. Outcomes are the result of market movement and we dont
control that.
So there is no point beating yourself up with the results of unsuccessful trades. Fix that only in reviews of your trading method after market hours and treat
that as a different corrective step.
Well defined trading method rules and flawless execution are part of your daily operational success. The review of the outcomes is a post trading exercise
meant to fix issues in your trading method. Keep the two separate always!
A trade learner always have problem with his emotions and doubts about his trading methods. He has to work himself to fix these. - use a trading compliance
worksheet to track your trades.
EMOTIONS THAT YOU NEED TO MANAGE

05 July 2015
05:12 PM
Emotions that you need to manage Greed

Rules of EMOTION FREE TRADING says...............
When you enter a profitable trade, you need to have a clear exit rule. If you dont, you will have inconsistent results. The markets are always moving when they
are open, and go against or with you in a trade without notice. Therefore, its important that you exit a profitable and an unprofitable trade with the rules that
you have set up.
The three simple ideas of getting in, getting out, and not trading become even more difficult because there is variability. Only you can decide when to end it.
In a profitable trade, you need to decide when youve made enough. Many people get caught up in thinking that there is never enough, no matter how much
theyve made in the trade. If theyve made a Rs 1000 profit, they get upset with themselves that they didnt make Rs 2,000. If theyve made Rs 2,000, they
want Rs 5,000. A truly greedy person can never be satisfied. No matter how much they have in a trade, it will never be enough.
On the other hand, with a losing trade, a greedy person will not want a losing trade to exist because it represents failing. So this person may act as if it doesnt
exist by convincing themselves the market will come back and reward them with a winning trade. These are very dangerous characteristics for any trader to
have. Without question, these traits will put you on the road to failure faster than you can imagine. A truly greedy person cannot succeed in the trading
environment
The market simply does not care at all about you or if you win or lose money, the market does not know you exist, and it doesnt get emotional about you. Yet,
most traders get emotional about their trades and about the market, thus they are letting a non-living entity control their behavior instead of controlling it
themselves. You will not make consistent money in the market until you learn to control your emotions and reactions to the market.
Once you learn to trade only what you see on the price chart instead of what you think, you will be well on your way to becoming a consistently profitable trader,
because trading what you see and not just what you think means you are controlling yourself instead of being controlled by the market. The key is to
consistently trade only what you see and not what you think or feel, this will help to keep you from giving into the emotions of revenge or greed after a losing or
winning trade. Traders who consistently trade only what they see on the price chart and not what they think might happen, along with managing their risk
effectively, are the traders who make money in the markets. When you learn to trade with high-probability price action setups while simultaneously controlling
your emotion and risk, you will be in an even better position to make money.
Unfortunately, because traders may be trading with the thoughts of what they will do with the money that they win while they are trading, they can face severe
emotional distress, because the market doesnt care or want to know about what happens to you or your trade!
The answer then lies in the fact that separate the thinking of what you do with your earnings(dream) or losses from the market from the actual act of trading.
The two are completely unrelated .
solution comes BEING OBJECTIVE
PL READ Larry Levins "Secrets of Emotion Free trading"
Its good to be objective with your trading method, rules and the discipline that you are following.
BUT never try to be objective or predetermine the direction of the market based on your thinking,..............
The fact is that analysis IS based on events of the past and they predict an outcome IN YOUR THINKING. But the future has no connection to the past. It WILL
BE result of events that happen in a time that has not yet "happened". Never say OR BELIEVE, that the market cannot move in the opposite direction or it
cannot move 100 points in the direction of your trade.FACT IS It can and will happen when you least expect it.
What you need is having in place planned actions based on your rules when such events occur(WHAT IF SCENARIO). Thats it. This will allow you to have a
sound nights sleep everyday!
If a trade behaves the way your trading method predicted, well and good. But if it does not, please get out of a position based on your trading rules.
Mark Douglas, author of The Disciplined Trader states there are seven characteristics of an objective person. Here they are so you can recognize it :
1) You feel no pressure to do anything.
2) You have no feeling of fear.
3) You feel no sense of rejection.
4) There is no right or wrong.
5) You recognize that this is what the market is telling me, this is what I do.
6) You can observe the market from the perspective as if you were not in a position,even where you are.
7) You are not focused on money, but on the structure of the market.
If you can see any of the above qualities in yourself, youre on the right road. Again, you need to release yourself from the need to be right. To be a successful
trader, you dont always need to be right, but you always need to be objective.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
just to re-inforce, always follow the rules.
Unless you decide to change yourself, modify behavior , use strong self discipline to control emotional urge- you will never change your losing trader status . So
avoid tips -emotions -blind expectations.
In my experience mentoring traders win,- I have seen traders make a lot, under controlled behavior guidance -again with freedom make some losses- and thats
why many a prefer mechanical rule based trading.
If you dont follow your rules and your trade is a winner, thats luck. And a one off event. pl follow -thin cutting edge of safe trading-in iron clad discipline.
SOME NO RULE
Never trade when you are not in a calm state of mind. You must be always in a position where you follow and execute your trading system flawlessly. If you
have had a fight at home or passed through a trade that caused you to lose, do not make a wild move and get into a wrong trade. Just switch of the computer
and take a jog or a walk or play with your kids .If you dont trade, you never lost money because of that.
Greed and fear are part of the emotional baggage . They are the result of your internal ingrains, value system, emotional make up and need to be kept out of
your trading thinking. They can cause you to take irrational decisions and go against the rules that you have.
Work on keeping these emotions away
.........................................
Your success is determined by only one person, and that is you! Own up and take responsibility for your actions and act to your benefit always.Dont wish that
the market will suddenly come back to you after a losing streak. Always be just prepared for positive and negative outcomes through your trading rules.
---------------------------------------------------------------------------------------------------------There is another approach- read from best trader, particularly when they have given insightful thought.
So i am giving some view from a trader called Nicholas Darvas,-. who ignores tips, financial stories and brokers letters.His 1960 book, How I Made $2,000,000
In The Stock Market grabbed the attention of thousands of investors around the globe.
The dazzling upward momentum stock profits that made Darvas a millionaire were impossible within such ivory tower frameworks as the Capital Assets Pricing
Model (CAPM) or random chaos theory model................. he had a financially well-trained mind.He majored in economics at the prestigious University of
Budapest. He was a gifted student. He was a meticulous note taker. He applied his intellect to ferreting out the secret to success in the stock market.
Budapest. He was a gifted student. He was a meticulous note taker. He applied his intellect to ferreting out the secret to success in the stock market.
I decided I had been missing a good thing all my life. I made up my mind to go into the stock market. I have never gone back on this decision. -Nicholas
Darvas
A startling number of do-it-yourself (DIY) stock investors perish in market. They lose everything.They are wiped out.A big part of the reason that I am so
inspired by the Nicholas Darvas story is that he faced these exact same problems all starting stock investors have endured. Consider the following barriers to
your success
PROBLEM 1: IGNORANCE.
The first problem that Nicholas Darvas faced was his own ignorance. He knew nothing about the stock market.
He made his first profit in the stock market by sheer luck. This set Nicholas up with a false sense of confidence at the very beginning.
This over-confidence would lead him to some of his most terrifying and truly dangerous losses.
Do you brag about your trading at social events? Deep down inside do you feel that you know less than you should about the markets?
Do you feel inadequate as a stock or stock option trader?
PROBLEM 2: MISGUIDANCE.
Nicholas decided to ask around to see if rich people he met knew the right stocks to buy. He ended up buying into companies with names he couldnt
pronounce with products in industries he was unaware of.
He quickly discovered that asking people Do you know a good stock? is a very bad idea.
He eventually learned that this approach to the stock market NEVER works!
Do you seek out gurus on the internet to find out what they are recommending? Do you have a tendency to buy the recommendations just because you feel that
the guru is particularly gifted?
Maybe you watch Mad Money with Jim Cramer on CNN? Hes a hoot!
At the same time have you noticed that your account size stays the same or shrinks?
PROBLEM 3: INCOMPETENCE.
Mr. Darvas concluded that neither he nor people he met in his daily routine knew the secret to the stock market. He wondered if having the right broker was the
key to success.
After all, such people dedicate their daily activities to stocks.
His first broker was a little man spouting important sounding statistics. The little broker forcefully explained why a gold mining stock he found on the
treacherously infamous Toronto Stock Exchange (TSE) should double over a specific period of time because of the ore reserves it controls.
Nicholas buys on the brokers recommendation. As the stock drops Nicholas becomes aware of the mans incompetence.
Nicholas concludes that brokers do not know the secret to making a fortune in the stock market. How many times have you been led into a bad stock or stock
option play because of a trusted broker?
.
PROBLEM 4: OVER-DIVERSIFICATION.
Nicholas Darvas began jumping in and out of the market very fast. He became content with small profits rather than seeking out large windfalls.
This created a new problem in that he routinely owned small amounts of too many (25 to 30) stocks.
This made the monitoring and control of his portfolio too difficult. It also made brokerage fees deplete his account just that much faster.
Are you a newsletter junky? Do buy everything the newsletter editor recommends?
Do you sometimes stop what you are doing in your regular day? Are you frozen by a cold surge of fear that you have way too many positions handle?
Over-trading is a major reason stock investors fail.
PROBLEM 5: EMOTIONS.
The next headache Nicholas faced was that he developed a liking for certain stocks. This meant that he was more reluctant to sell than he should have been
when the market went against the stock.
Having pet stocks induced him to let losses grow out of control.
Do you have that certain stock that you love to chat about with strangers you meet while waiting in the bank teller line? You know the stock hasnt performed
particularly well but you love it anyway.
PROBLEM 6: GAMBLING.
His obsession with making a fast buck in the stock market compelled him to over-trade. He was soon losing $200 a day.
Do you dart in and out of the market chasing small profits?
PROBLEM 7: ADVICE.
The first solution Nicholas turned to was a series of Canadian stock investing advisory service newsletters. He soon learned that advisory services made their
money by making speculation sound very easy.
Nicholas Darvas also found that urgency helped advisory services supply their subscribers need for action.
He would rush to order recommended stocks.
They would invariably fall in price.
Hence this solution created another problem.
Do you get a surge of excitement when you read the recommendations of a major investment newsletter to which you are subscribed?
How often do those stock plays really work out?
When you look carefully at all of the recommendations you received over the prior year do you find that you missed some of the better stocks? You finally admit
to yourself that you ran out of money chasing every deal that came in front of your face!
PROBLEM 8: TIMING.
He realized that his real problem was that he did not know when to enter the market. After his first year his $11,000 grub stake was down to just $5,800.
Nicholas quickly learned that timing in the stock market is everything!
Are you confused about timing? Do you listen to one guru who says,
Never time the market only to be confused by another who says that the first guru, is a top market timer? Deep down inside do you sense that timing is
everything but admit to yourself that you simply dont know enough about the subject.
PROBLEM 9: TIPS.
Nicholas seeks out a broker who recommends fundamentally safe stocks. He soon realizes that there is no such thing as a fundamentally safe stock.
Yet he still doesnt understand that the advice is never valid economic evidence. It is just another tip.
Do you have friends who call you to talk about stocks? Do the stocks they are tracking ever work out as a group?
Do they hold you back? Do you listen to them anyway?
Do you have a broker you trust? Does his or her tips give you a net profit?
Socrates showed that the student must find the solution from within to gain true wisdom. This Socratic method also applies to investing and trading of any
market.
PROBLEM 10: IRRESPONSIBILITY.
Over time Nicholas falls into another trap. When he wins he pats himself on the back.When he loses he blames his broker.
I once knew a clever con artist.He robbed people of millions through a multi-level marketing scam finally ran out of steam the peasants came at him with
pitchforks and torches.He stood in front of them.
He outstretched his arm. He pointed his index finger at the angry mob.
I was astonished as I watched this convicted white collar thief boldly declare,
When you point the blame at somebody there are three fingers pointing back
As much as I despised the actions of this brazen fraudster I realized that he was right.
People who are in denial of their mistakes can never learn can never move forward!
I thought to myself,
Who was it who happily handed over thousands of dollars to this charismatic and impressive con-man in the first place?
We all had.
And I could tell that other families would never learn. They would pin the blame on the perpetrator of the fraud without realizing that they had not done their
proper due-diligence......... I took away perhaps the most valuable lesson of my investing career. I began the practice of taking full responsibility for outcomes in
my life.
This was the moment that my financial life began improving for the better.
PROBLEM 11: ILLITERACY.
Nicholas sets up an account with his first New York broker.
He cant understand all the technical words the broker uses.
This makes it impossible for Nicholas to effectively evaluate the information he is hearing.
For fear of revealing your ignorance do you act as if you understand financial concepts when you really dont?
Deep down do you often know that you dont know enough finance to really understand the stock market?
PROBLEM 12: DISCERNMENT.
He decided that there must be higher priced stocks with as powerful returns as he had experienced in his first a Canadian mining penny stock. His problem
He decided that there must be higher priced stocks with as powerful returns as he had experienced in his first a Canadian mining penny stock. His problem
was to figure out how to discern which ones they were.
Do you go back through your charts and find stocks have skyrocketed that you ignored?
Arent those the stocks that you would have made a killing on?
How can you find those?
PROBLEM 13: CHURN.
Nicholas Darvas enters into phases where he jumps in and out of stocks quickly in three transactions in February of 1956. This leads to a loss of $461.21.
He realizes that if he would have stayed with the original stock in the first transaction that he would have had a profit of $1,748.75.
These were all high priced well-known stocks.
He comes through the end of the then greatest bull market in history at the end of 1957 with just $889 profit to show for his efforts.
Do you really follow the trend? Or do you get nervous the more profit accrues in a stock you finally make money on?
Do you sell out only to watch it double or triple from your exit point?
PROBLEM 14: INSIDERS.
Darvas starts reading the Security Exchange Commission Insider Transaction Reports. He reasons that a stock is a buy if insiders are also buying.
This tactic does not work.
He finds that insiders may know their company but they do not know the stock market. Like everybody else they often buy too late and sell too soon.
Have you ever bought an insider stock that the CEO is pumping millions of his or her hard earned cash into? How often have these stock plays made money for
you?
PROBLEM 15: OVER-CONFIDENCE.
Nicholas turns to a regimented filter of fundamental factors he organizes into a table. He believes that this will make him an expert in finance.
As it turns out this intellectual crutch makes him an over-confident investor and a wreck waiting to happen!
He loses $9,000.
The shattering effects of this psychological blow are crushing.
He had not been a wild gambler.
He had labored long and hard to find a stock called JONES & LAUGHLIN he was sure would soar. It failed and so had he.
He had been as cold and scientific as possible.
Yet this approach was also flawed.
Worse, it led him into FALSE-HOPE
Have your attempts to document factors you believe to lead to the next hot stock been a failed mission?
PROBLEM 16: FEAR.
He notices a stock he has never seen before. It is consistently rising.
It is TEXAS GULF PRODUCING. He buys it.
But he expends vast amounts of energy monitoring it constantly like an overprotective parent. He is so fearful of loss that he spends an excessively unnecessary
amount of time monitoring the stock.
This wasted energy holds him back.
Is this a scenario you have been through?
PROBLEM 17: JUDGEMENT.
Nicholas Darvas buys into the very top of the market for some stocks. This teaches him that he has a judgment problem.
He cant judge when the stock is topping out.
It will be the end of the road if he doesnt find a solution to stop the account bleed when a stock drops. Otherwise his stock fortune will turn to dust.
PROBLEM 18: SIDEWAYS.
Darvas notices that stocks spend a lot of time moving sideways. He knows that this is the key to both timing and risk management.
But he struggles at first to determine the appropriate range of the sideways movement.
In a sideways movement he doesnt know if the stock will rise and give him a profit or fall and wipe him out. He realizes that sideways movement is as big a
problem as the Sargasso Sea was to medieval sailors.
PROBLEM 19: RUNAWAYS.
Nicholas determines that it is best to buy stocks that are already on the rise. He orders his broker to call him when a watch-listed volume mover stock rises
above the technical resistance level of its box.
He finds that the stock is well above his ideal buy level by the time the broker calls.
How many times have you spotted the right stock only to have it skyrocket while you couldnt pay attention to the market?!
PROBLEM 20: ACCURACY.
Nicholas realizes through trial and error that his accuracy in finding a rising stock will be no better than a coin flip. He realizes that he must make more money
on his profitable trades than he loses on his unprofitable trades.
Have you ever used really wide stop loss orders because an expert told you that the stock was extremely volatile?
Did they ever remember to tell you when the right time was to sell? Do you ever wonder why you get hammered?!
PROBLEM 21: OVERCROWDING.
The high cost-per-character nature of telegrams limits the amount data Darvas can receive.
He couldnt follow his stock with just the daily closing price. He eventually finds that he needs to know the daily high and low share price for each of the 5 to 8
stocks he can follow. Finally he adds the close of the Dow Jones Industrial Average.
He fears that volume quotes will overcrowd his daily analysis.
Do you have a sinking suspicion in the back of your mind that you have too much information hitting you in this new communication age of the internet? Is this
also conspiring to hold you back?
PROBLEM 22: ALL-IN.
Wall Street will teach you to paper-trade. Sneaky, sneaky, sneaky
This is no different than free slot play for Las Vegas tourists.
It hooks them into the machines up and down the strip. It also hooks a vacuum hose to each gamblers bank account.
Nicholas found that paper-trading was no different. The emotions he needed to learn to deal with would emerge only when he had skin-in-the-game.
Facing those emotions took a lot of courage.
Nicholas starts taking pilot positions so that he can feel the stock. But he goes all in at the beginning.
This nearly wipes him out.
PROBLEM 23: RANDOMNESS.
Sometimes some of the stocks Nicholas owned made inexplicable drops in price. This is the first time he realizes that he has to figure out solutions to his
problems by himself.
Advisory services and brokers can no longer help him. He knows at least as much as the experts.
He musters up the courage to
THINK INDEPENDENTLY.
He pours through the data and arrives at an amazing conclusion concerning erratic adverse stock price movements.
PROBLEM 24: EROSION.
Nicholas Darvas quickly realizes that buy-&-hold strategies dont work. Returns are too deeply eroded on price downturns. He considers such investors gamblers,
with the eternal hope of the turn of the lucky card. How much more confusing can the markets get?
investors. A buy and hold strategy today is financial suicide .
PROBLEM 25: FADS.
Nicholas notices that stocks fall in and out of fashion. In his day GENERAL MOTORS and CHRYSLER were relatively small firms.
But they represented the future!
Today these companies represent corporate hubris of overdeveloped industries with little growth opportunity.
What stocks, giving the same signals Nicholas saw in the 1950s, are out there waiting for you right now? How can you spot them?
PROBLEM 26: NEWBEE AGAIN
In a few days of trading, he threw overboard everything he had learned over the past six years. He did everything he had trained himself not to do.
He talked to brokers. He listened to rumors. He was never off the ticker.
It was as if the GET-RICH-QUICK demon had gotten hold of him.
The first thing that deserted him was his SIXTH SENSE.
He did not feel anything.
All he could see was a jungle of stocks running up and down devoid of rhyme or reason.
Then his INDEPENDENCE went.
He gradually abandoned his system and adopted the attitudes of others.
He gradually abandoned his system and adopted the attitudes of others.

He was following the crowd.
His reason forsook him. Emotion completely engulfed his thinking.
And Nicholas Darvas incurred some of the biggest losses of his lifetime.
This is a very common real life nightmare story I hear from many students.
How can you correct this and insulate yourself as you invest over the coming years in the stock market?
PROBLEM 27: SUCCESS.
As the sum value of Nicholas Darvas stock trading accounts mushroomed into the millions he faced a serious problem. He had to face the fact that his
STOP-LOSS would no longer be practical. No trader or specialist would absorb such a large order quantity of stock in a matter of seconds.
His unique approach to the problem can be more effectively applied today through a core passive portfolio.
Do You Want To Avoid Or Fix All These Problems?
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,
Now we go to find solution as seen by him.
SOLUTION 1: EDUCATION.
Nicholas made a strong stride forward in his development as a stock investor when he began monitoring the financial columns in The New York Times, The New
York Herald Tribune, The Wall Street Journal ....... later prove to be a major source of information that would make him a success in the stock markets.
This solves problems of ignorance, incompetence, and illiteracy.
SOLUTION 2: PRICE.
Nicholas Darvas eventually realizes that the movers are the stocks that save him. These are shares that simply seem to be rising in price consistently over time.
This solves problems discernment, insiders, over-confidence, and overcrowding.
SOLUTION 4: VOLUME.
He notices that the best movers have dramatic increases in trading volume before and when they rise. This is especially so for dignified stocks that trade quietly
for many years then suddenly go wild.
If a long inactive stock suddenly becomes active in terms of dramatic increases in volume he considers this unusual and begins to watch it.
If it increases in price he makes a pilot purchase using a buy stop order combined with a contingent stop order.
SOLUTION 5: DEDICATION.
Nicholas sits with his stock tables of price and volume every evening. He dedicates himself to finding volume movers that will rise.
This has the surprising effect of focusing his energy on identifying and tracking a few stocks. He upgraded from spraying the market with a shotgun to trading
stocks with the precision accuracy of a sniper rifle.
This solves problems over-diversification and irresponsibility.
SOLUTION 6: BOXES.
Darvas noticed that stock prices on the rise dont go straight up a 45 degree slope. They move sideways.
Then they rise (or fall).Then they move sideways again.Then they rise (or fall) again.
He called these sideways periods boxes. These boxes allowed Nicholas Darvas to precisely time entry and exit as well as manage risk.
This solves problems discernment, insiders, over-confidence, and overcrowding.
SOLUTION 7: CONTINGENCY.
Darvas solves his runaway stock problem with a special contingent order to buy his stock when the price rises above the technical resistance of the box.
Through his box theory he can finally see the exact point at which a stock is worth testing out. But if he waits until the end of the day he often finds that it is
already too late.
He develops a standing buy stop order approach to solve this problem.
This solves problems gambling, timing, insiders, over-confidence, runaways, accuracy, and over-crowding.
SOLUTION 8: INSURANCE.
Nicholas Darvas solves his problem of being wrong 50% of the time with an initial stop loss order. This is a special contingent order to sell his shares when the
price falls below the technical support level of its box.
This solves problems misguidance, gambling, judgment, accuracy, and erosion.
SOLUTION 9: PILOT-BUY.
Nicholas Darvas decided at least for himself that paper-trading stocks was worthless. On the other end of the spectrum he learns that going all-in at the
beginning results in massive losses.
Because of this he starts making pilot-buys of VOLUME MOVER stocks that fit his system.
This solves problems over-diversification and all-in.
SOLUTION 10: AVERAGES.
He eventually discovers that mysterious price drops coincide with collapses in the market averages. He begins to track whether or not the general market is
STRONG or WEAK.
He discovers that such general market analysis defies erudite analysis. He resolves this problem by keeping his analysis intuitively stupid-simple.
This solves problem randomness.
SOLUTION 11: EARNINGS.
Once Nicholas is completely out of the baby-bear slide of 1957 he notices that some stocks resist the decline. He carefully studies those stocks.
He notices that the earnings trends of these stocks point sharply upward.
This solves problems discernment, insiders, and over-confidence.
SOLUTION 12: INFANTS.
Nicholas pays close attention to new infant industries.
He keeps it simple-stupid here too. He doesnt pay any attention to company products.
He simply looks for rising share prices. This is preferably but not necessarily on rising earnings and expanding volume in those sectors.
This solves problems discernment and fads.
SOLUTION 13: LEVERAGE.
When Darvas knows he is right he ramps up his returns with margin. This is a form of leverage.
Options did not exist then.
Today traders rarely trade stocks on margin. They dont need to.
They use options.
This solves problem runaways.
SOLUTION 14: FIREWALL.
Darvas reaches a point where he decides to never add to his market funds from his show-business income. This places a fire-wall between himself and complete
ruin from the markets.
This solves problem emotions and gambling.
SOLUTION 15: SOLITUDE.
Then one day, as he sat in the Plaza Hotel AFRAID to make a telephone call, he suddenly realized something.
When he was abroad he visited no boardrooms, talked to no one, received no telephone calls, watched no ticker.
He had operated on the basis of his telegram, which gave him his perspective.
It showed him the way that stocks were behaving.
There were no other influences, because he did not see or hear anything else.
In New York there were interruptions, rumors, panics, contradictory information, all floating into his ear.
As a result of this his emotions became involved with the stocks and the cold, clinical approach had gone. He gave instructions to his brokers to never
telephone him or give him information of any sort on any pretext whatsoever and his weekly edition of Barrons.
The only communication he wanted from Wall Street was his usual daily telegram.
This solves problems misguidance, incompetence, emotions, gambling, novice, tips, advisors, churn, and herding.
SOLUTION 16: DIVERSIFICATION.
His capital to trade was now too big. His own orders would hurt his profits by adversely moving the stock price against his position.
He engaged in a form of reverse diversification.
There was only one thing to do: he decided to divide his funds into two parts.
Once he had made up his mind to do this, selection was comparatively easy.
He had only to decide among four stocks:
ZENITH RADIO
LITTON INDUSTRIES
LITTON INDUSTRIES
FAIRCHILD CAMERA
BECKMAN INSTRUMENTS
There was only one way to do this let their strength in the market be the judge. He makes a pilot buy into all four of them on May 13, 1959.
This solves problem success.
SOLUTION 17: LIQUIDITY.- DONT TRADE MICRO CAP
SOLUTION 18 : TRANQUILITY.
His system evolved to a point where even Nicholas mistakes were no problem. They did not make him upset anymore.
His mistakes could no longer make him unhappy.
If he was right, so much the better. If he was wrong, he was sold out.
This now happened automatically as something apart from him.
.
BE FOCUSSED & SKILL THE MASTERY ..........READ SIMILARLY JESSE LIVERMORE & PHANTOM OF PIT
.
Remember Nicholas stopped tracking numerous stocks.This forced him to focus on less than 10 stocks at a time.
....... focus on nothing but the price action of the stock.He could no longer be misled by rumors or tips.
Inside you will learn to isolate yourself mentally. You will learn to sterilize your analysis from the harmful opinions of others.
Independent thinking then emerges from courageous introspection and analysis within you i call MASTERY.
U can see that his development as a masterful stock trader evolved no differently than learning to drive a car. Student drivers can be taught how to use the
accelerator, the steering wheel, and the brakes.The student has to break away at some point and independently develop a feel for driving.
By applying these core principles discovered by Nicholas Darvas you will become more masterful in your stock trading..
Trust me when I tell you that you dont want to go against the white collar ninja stock assassins I have trained for these markets. You need to pull your
knowledge and skills up.Then you can operate on an even playing field.
Over time your training and persistence will allow you to tilt the field a
little in your favor. Then the money will flow to you rather than to the pros
------------------------------------------------------------------------------------------------------------------------------------------------------
SYSTEM BUILD UP AND APPLICATION

05 July 2015
05:13 PM
3 elements for analysis .

1] fundamental
2] TA
3] Psychology
are given .................and now i am moving towards comments on use them
.................................................. .................................................. ...
now u should have a system -for all condition of market..........like SAINT in time variation factor ,considering trend u trade & make money- get early out in
wrong trade.
Or U may be great judgemental trader like ST, understanding imp pivot -price bias,how price is unfolding its futuristic behavior-so join accordingly(this i call
formless trading -ultimate goal of a trader)
U must have a comfort level on stop/lot size-also greed/fear controlled personality.
U must have a list of stocks/instrument to follow- where by watching/playing day in/out market speaks to about imidiate intention.Also you know which HIGH is
too high=so unsustainable & ready to short.
similarly no problem to judge nifty 5200 is unsustainable bottom ,so can cherry pick-u write trade diary to keep u fit as a trader- as u know complacency kills
even the best.
Ofcourse u enjoy the life ,- as u got the fruit of trading -an independent pvt trader with total freedom.
Your system of trading may look different to others - but definitely it is money generating as market condition, approach to trade, condition to entry/exit as well
as risk percept-all r syncronised with a single factor -U
u may have a plan to give it to dearer provided they can handle- or to earn more to live in luxury.
Be on guard ,market condition may change , u may have to shuffle to bring one old trade system -just like old wine in new bottle.
All of us only 4 condition exists-1] up /down trend condition
2] volatile condition 3] low move -consolidation before directional move
4] Range play
IF U COULD DECIPHER PRICE FOR THESE CONDITIONS - with little judgement what comes next- this Earth is nicely living place- afterall thats why u r an expert
trader.
MY COMMENTS:
I use extensively economics to understand broad condition.
Chart is my strength zone - i use it for short term trade.
I use price flow /orderflow to small scalp momentum trade- this thing comes with experience & trial & error. Many an indicator study, infact their failure by
price(as price is supreme)- taught me understanding of price behavior.
By studying price at IMP support /resistance particularly if their is pivot- can tell future direction of market.
U make money by money management/ getting out early from wrong trade.
Confidence-discipline-first hand knowledge(experience) counts.Novice can never hold money from market.
Reversal is easier to trade provided it suits your personality.
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HINTS ON MY SYSTEM WILL BE GIVEN NOW
method checklist
intraday -momentum
swing -countertrend
position-both fundamental+ ta bias
OUT OF THIS WHICH HAS MORE SUITED ie. by which style actually u made money
............................................
WHERE U R MASTER?- SOME PARTICULAR STOCKs ,or some sector, some technical pattern
What is ur threshold for booking stop?How u define HIGH Probability in a trade ,before u enter- what mitigation plan if otherside low probability event actually
happens.
..............................................
What is your plan of learning/behavior modification plan in everchanging Market condition (which may change some characteristics even within a week)
How do u capitalize sector rotation of fund flow?
Something as a multi variate trader , i should emphasis.
1] Gap - to understand greed/fear of partcipant
2] After gap fillup , rational reaction by traders, continuation in gap direction or just opposite (exhaustion GAP)
3] In support zone-bullish engulf helps to take a reversal trade, whatever may media/fund manager say.
4] In an imp Resistance zone Price is not falling (holding)- it has high probability to break out. Buy nearby that zone after 1st pullback.
5] IN bearish scenario, a stock is not falling- that is the candidate for long haul
6] Studying individual 50 stocks of Nifty fundamentally/sector wise- helps how money is rotated in range market.
7] It takes good amount of time to master mindbeast (greed-fear-hope)
8] Discipline is the best approach for stop & position size management.
9] Uncertainity is the governing principle of market, so u have to be flexible in choosing suitable strategy (from multiple strategy depending upon market
condition)with highest level Discipline for stop & position size management.
10] beware-Pro get frustrated by booking profit early-live with it.
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SYSTEM DEVELOPMENT HINT

05 July 2015
05:15 PM
market condition trend UP or DOWN........use simple 2 MA cut ,5/20 very good

market condition TRADEZONE........use stockastic/%r
market condition volatile......USE EOD break out/ momentum scanner...... play for intra day.........dont worry on confirmed d irection bias ..If u r not earning ,
then simply this market volatility/unpredictiveness DONT SUIT U.GET OUT FROM MARKET,join only at low volatility directional break.(i have studied/prepared
about 2yr for this condition , in other market actual simulated past data , in a software OMNITRADER, where u can hIde data of right side/predict bar by bar &
can see /compare vs. price actual blossoming)
CAUTIONARY NOTE:
any personal disturbance /other priority .......dont trade.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
TO solve it ,i am giving 2 variables....market condition and trade set up.
Third where u fit , u should do yourself.
Market condition : 1] slowly up moving.......see 50dma uptrend, buy and hold easiest to play.normally country economic condition upswing
2] After continous upmove for some yr, media hype straight line index projection,analyst suggests 3yr projection ,forward looking p/e ,big enterpreneur r
confident of capex and plans growth rate geometrically, WHILE economy moneyflow sustainability NOT possible,bear market starts.......shrewd traders join
short in intermediate term downtrend.
Tool...10dma rapidly cuts down 100dma .
3] Market is rational , fluctuate within range, ......small target swing traders earn heavily,,,,
TREND is your friend... TREND TRADER goes back to market as snake oil vendor and teach the fools 'buy low sell high' ; ta ' d cf, cagr, They sell ...once upon a
time....but fact is THEY dont suit in PRESENT market.
4 ] Market is efficient ........haha...present market,
a suffiently knowledgable -flexible with objective mind can earn here.HE knows to programme but takes trade what he likes, a strong filter .may be
advance/decline signal & moneyflow .
By the way......market reversal at pivot a major right set up bias for intra day candidate.
.................................................. ..................
2]TRADE SET UP
a] flow with trend ....as per ur suitable tactics, see HIGHER HIGH in price
b] a pre determined reversal pt , confirmed by reversal bar
c] break out of certain narrow range, supported by 2 x av traded volume
d] unsustainable parabolic rise , so distribution started with higher sell volume..........short candidate
.................................................. ............
scanner - pattern seach - volatilty study .........this r extra, basically confidence build up measure.
HOPE it helps to right initiation
Just for a thought
...........A stock in a persistent downtrend is providing a feedback signal that investors overlook when they go bargain hunt ing among stocks. The downward
trend in price indicates that the majority of participants in that stock are voting negatively about the stock. They believe that the future financial performance
of the company is, or will be, in decline.
Sophisticated investors are always looking to the future and their expectations about the fundamental performance of the company will shape their decisions to
buy or sell the stock. The major holders of a stock and the other members of the inner circle know what the downtrend is forecasting. The members of the
inner circle surrounding the market for the stock are more knowledgeable about the company and its financial performance and they are probably more
sophisticated investors. The belief that the market is efficient and that all participants in that stock get the same information at the same time and correctly
evaluate that information, just does not hold up in the real world. The sophisticated investor knows that the major trend of the stock price is very important.
He tends to rely on the signals generated by the major trend of the stock price in the market. He is always alert for indications that the trend may be changing
direction or strength.
It is especially important to consider how the financial media tends to reinforce the feedback loop. A stock that is going down in price will call forth explanations
for the decline by the media because the media knows that their users want to know why the decline is taking place. These explanations may be delivered as
established fact when they are nothing more than educated guesses.
Experience shows that downward price trends are usually more dramatic and volatile than the up trends. It is also true that both up trends and downtrends are
the result of a random process. This does not diminish the value of watching the price trends of a stock. A stocks price trend is actually a summation of the
votes by buyers and sellers. In order to get the true meaning of the major trend it, is necessary to dump out the short-term noise in stock prices.
.............................
what price is telling
.................................................. .........................
Price low.........telling to buy; price high telling to sell. Problem is howmuch high is too high..........so far momentum exist,greed exists.......price shall move
up.So study momentum at TOP ,to guess right side of chart.
FOR low,........unless HOPE is coming, low shall go down to further low,Saucer formation is Important.
If u know valuation, valuation + sentiment = price, Problem starts with future growth .........believe me after studying 4yr on this financial model,
ithink .........its gimick to get job of analyst, to prepare buy side report.So far one is NOT in industry........his value o f assumption is O.Its just like 8 yr old girl
telling on childbirth & pregnency.with the same data, with similar model they spoonfeed to calculate.........with O knowledge on Enterpreneurship, comments
BUSINEES HOUSE,without understanding........most business strategy r hidden from public eye. In the language of Auditor,..... .....its the transfer of
money...decides the result/statement .........not vice versa.Corporate moral is a bookish word..........have u seen comment o n phonetapping?
Its luck...........our work ethic is good,........a man Raunak.........thinks Right..........and spread knowledge.
So use all ur judgement ;......what price is telling ? simple MA 1week tells a lot.Trend VS random factor
Pl use 2MA...........suddenly u may get a BIAS,............u can decipher 3 candle.........further visibility.In top or botto m search for change.........and its
probability,........in between.........only for momentum.PL use only this much for price.
Price also suggest...........presently greed driven or not.
,,,,,,,,,,,,,,,,,,,,,,
So u have to see tick chart-real time-see nifty future current month.
Any std trading platform have it.
Do anybody know reversal coming ? ..........only after seeing 2 bear fall on screen .......one can feel the pain at the start of bear move,..........so similar
conditioning 3rd time onwards one can play based on hindrance.
Yes its not available in any trading books/not even in spl bear market course for pro by Hedge fund trainer.
...........so next time onwards take trade against your feeling , its probably big winner.
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Role of media
.................................................. ...................................
Media normally we consider for INFO.............is basically a tool for marketing in finance industry.Normal gullible people dont understand abc of
finance...........so get attracted by it on its AD,sometimes after being cheated ..........create bloc against it.
IN marketing technique...........interest has to be hyped also repeated.............after sometime,..........those who READ,. .........may make believed by it......A
powder can not change ur colour,a shampoo can make a little outshine to hair,.........all knows it,it is the food + natural color.........MORE IMP.
ALL CINE STARS,use wiggs /make up...........as per requirement of role,.............but fashion may be created.........by hyp e .........and young boys & girls(read
NOVICE/FAN) may follow it ....Director/make up decides casting/role play.Role demand as fix....... make up, looking original. Similarly ur thorough knowledge
on market may only TRAIN u to understand..........what is HYPE , by financial media.
Another case, not understanding NEWS...In normal news , is info of past considering current affairs, but in gossip........... ..of a company buy back, take over, a
new product successfully tested.............now to be launched...ibasically NEWS.
So in rumor state.........if u could get,.........decipher it, based on your experience with higher chance of happening is RE FER as NEWS,
So in rumor state.........if u could get,.........decipher it, based on your experience with higher chance of happening is RE FER as NEWS,
Since stock market forward looking,..........thats why RESULT is meaningless,.........but forward guidance is NEWS.
Since operators /MF makes money out of new comers MISTAKE, heavily advertise before SELL......all things look excellent future..............READ forward
earning of 3yr.
AND similarly when they BUY....suggest market is too risky,............U should WATCH and WAIT(they tell in media)......actua lly let me complete my buy)Many a
times CEO also join in them by lure of making easy money ......and cycle goes on as if eternal truth.
So form part of system- around market top.....excessive hype by media,........ pl sell PORTFOLIO.
Businessline /Business std...........certain publish better economic report and ET sometimes write company sp RUMOR.
TV channels........r worst type,.............infact very easily opp. direction play is possible ,if u have RIGHT skill of exe cution.
Unfortunately in INDIA ,most technical analyst coming in MEDIA , are not passed CMT,(they r hype type- get paid for it) so ethics dont apply to them(quacks).
We create hulla-bulla in media for........forgy DOCTORS/ pilots/food adultration...........but not against TA/media hype,.........and operato rs use them as per
game plan.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
A simple search of 3%up + double volume.............search shall give u 2% candidate for next day.........
A known resistance pt, last higher top........coinsidence with bear -engulf by candlestick..........a good candidate for short.
,,,,,,,,,,,,,,,,,,
Most imp thing in market..........for you ....its U. nobody else.
Question first What u want from Market,..........what u want in life.........
Next.........how much Priority u give to learn to trade....... initially it should be100%..
Slowly when baby trader is born....allow it survive.........with min FRICTION with other part of LIFE/dream.Slowly it must gr ow as per your COMFORT level,
A routine schedule....to search for oppurtunity,.....a Time to relax, stress free....
......A time to write Tradelog.......analysis ..........Discipline to isolate u-the newborn trader..........from others .
To stop distraction.....use of shield must be practiced.
Actual trading ie. execution should be LESS ...Follow ACE...
Analyze .....Confirm by price.......Execute .......
Be independent.........that is natural structure in YOU,....its a solo game.
Be keen observent,.....react with deadly accuracy. Understand probability and least risk concept,.........get out of media hy pe.
do u ask anyone for market condition,what to do now..............DONT TRADE.
MY TRADING SYSTEM
05 July 2015
05:15 PM
I am asked to give ur system, i say already given .Others say- that is set up,- we want CLEAR System ,no hanky panky. Ok i am trying.
No1 part of any system is I -, no 2 element MARKET ,
no 3 is -SYNCRONISATION WITH MARKET
LET ME DEFINE -I, from a background of chess/bridge so prefers complexity. Good experience of project management ,so understand value of Tim e,
opportunity & risk involved.Naturally faced lots of uncertainity , as a trouble shooter - accustomed to find out optimum solution on table/as well as at field
under constraint.
So definitely 2 minute maggy' trade r not for me.
I hate to lose, so STOP loss must be put, if i dont watch screen. Also back up person must be there to apply STOP ,as well as EXIT.
Since some positions r nice to run in favour, i have to take care NOT TO GET OUT EARLY from them.So after 50% value ,small ta rget book , other to be allowed
to run , depending upon nifty condition.
comfort level- another imp tool . Normally intraday loss of 10000 ,i am comfortable. Though occasionally i 50000 dailly loss ,also 2lakh los s in F&o av a month.
So i have to absorb it.(plan to bring down to 100000/-)
A position size of value 300000/- & add another 300000/- preferably i play ( in fabourable condition of market). At volatile /range bound - i dont add.
Preferably in small time swing trade , max position 4 @ a time.
In intermediate term position trade , some of PART position may be hold , as per predetermined SAR pt ( each value not more t han 1 lakh) - max 8 no in
strong bull market , normally 2, and o - in bear or Volatile market.
spl tips- i cant tackle long as well as Short, so before short play , my portfolio ,100% shall be in cash.
So i have 2 a/c with 2 brokers for trade.
...........................
depending on market volatility & understanding of market , i define position size.
Experimental Trade - value 1lakh. Dont understanding market = o position.
Busy in other part of personal life , no new position.
Long market - normally 2 position ,4 max.
Bear Market - normally 1 position , trade size - bigger. if initial trade Right.(pref Nifty put)
.....................................
At market high - priority to observe market. No new position - Try to learn .
At imp low - priority to take new position on defined good stock ,

- large or mid cap.( Max 4)
If not clear on market , study fundamental of company to understand whose result r showing better in last Quarter. Whose tech nical r stronger compare to
Nifty(shining the blade )
So major risk management- sit on cash
.................................................. ............
How to find opportunity
1] by observing basic fundamental list of about 100 stocks which was traded in past with RIGHT or Wrong - not inventing new stocklist ( never to new issue)
2] Sector which r showing strength as per RSC in metastock monthly scan with nifty
3] For intraday trade ,stock which is shown some wide bar activity yesterday without known published reason. So play against or FOR the momentum with 1%
quick move, at predefined entry - based on last night analysis.
.................................................. ...............
General observation on market :
Imp support /resistance on weekly chart for predefined list. Price behavior in hr chart ,near to that value.
News on economic event/ national event which may affect market.
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My Swing Trading system
...........................................
Normally its for nifty and some of defined stock which behave similar to nifty.
Also when nifty defined no fall zone, extra long position can be taken on midcap ,whose last quarter result not bad.
1] for nifty ,it must be imp lower pivot .for long
2] FOR short- at new high ,also divergence suggests fall , candle suggests no further up momentum. After initiation of position ,confirm of trade direction ,add
PUT on current month . for STOP ,predetermined written stop .
3] Stock short - must be in Resistance zone ,not at NEW high.In candle - doji or engulf bear . Also max 2 days or hitting time stop on 3rd day. Stop = 1.5 atr
So 1oo% profit book on 3rd day or 100% get out . No hope factor. In case of right for short . Also find other short candidate , who r hitting resistance with
similar candle pattern.
4] For Long stock - as its my bread & butter, i take main position in deep support ,after favourable candlebar. Also may play pull back buy in an ticipated
upswing on particular pattern. i prefer W.
5] Rarely on quick formed continuation pattern like pennant/triangle - in case of strong bullish market visualisation also take quick long break out style
trade.(only on particular stock whose behavior i have seen years before - so i assume to know this stocks DNA, though market may prove Wrong on that trade)
6] Out of long swing -some r converted to intermediate under bullish scenario. Normally at 25 -30% profit i book , and then may allow 20% to run( not
presently as market dont suit now)
.................................................. .................................
So i have no independent position trade, however on a strong fall , i may reenter ,in some known profit booked stock at prede termined anticipatory trend
change pt(imp pivot). i use normally line chart to find imp pivot . Also zigzag tool & mechanical pivot finder in omnitrader.
.................................................. ..
So entry /exit/stop / position size as per market is defined.
where is my discreation???
Ans: Its on trend understanding on Weekly / then Daily. In daily i use 21DMA , to define latest trend.
Its on correlation and reciprocal relation . i am not from banking sector/finance -so dont trade them other than intraday in very stock setup(high probability).
I trade Energy /FMCG /pharma/oil sector/hotel/
Apart from past successful stock with known fundamental i trade(min criteria where i know more than analyst)
Favorite pattern - reversal candle at support/resistance
TRAP TRADE : bull trap/- sell just above resistance -when trapping is formed.(price starts going down)
Buy below support (about 5% below lower band on bollinger ,if it matches with old imp support. - when price moves up ,after eating most of the stop.
Excessive preference to trade W.
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..........................
1] Being discretionary,no 1 element of the system is myself.So i have to protect & keep me in less emotional environment for decision making.
2] Psychologically i have moderate success from market, so must protect Overconfidence trap,No big position 1000000/ -play.(limiting to 3lakh-6lakh)No more
leverage.
3] No psychological trash reading , as i have my system suits me only to follow it.I must listen to discipinedtrader to keep calm & NOW state.I must read my
system at weekend, must listen once a week view on Nifty from an expert pro trader(this helps me to keep balance)
4] I must write/study last week's trade ,with reason of exit/entry - so that i am not deviating from system
5] At weekend , must study weekly chart to understand long term(3month) view on market.Then see Daily chart of some known sto cks, I must find bothside
5] At weekend , must study weekly chart to understand long term(3month) view on market.Then see Daily chart of some known sto cks, I must find bothside
opportunity of potential trade, but trade as per nifty on Monday/Tuesday.These r for swing type opportunity.
6] Position size should not be more than 300000/-in one stock.Intraday to be played only on strong momentum - known stock-familiar set up. NOTHING
NEW,market is not a place for experiment.
7]On Tradeday evening, EOD study to see , position management- excellent new setup ,where price comes to deep demand zone.Also to book some % profit(if
going to target). EOD search for GAP fill, price behaves how in IMP pivot of known stock. IS it gives opportunity for next da y?
8] Morning opening study to see various impact, also to enter if potential entry seen before.
9]Some Imp fundamental news ,like policy matters, RBI,banking,construction etc & as well as big new Order to some known compa ny which may help increase
profitability
10] Risk management should be no 1 governing principle . Potential trade must have high probability . ODD in favour must be c hecked by context & location in
writing.
----------------------------------------------------------------------------------------------------------------------------- -----------------------------------------------So to apply option for speculation , we have to understand some key themes on market, -nifty + stock specific up/down move. To understand present state
(whether accumulation or distribution?)- what type of momentum is coming?
- yes entire money making on this 2 query solving
1]present state(base study) -whether accumulation or distribution?
2] what type of momentum is coming?-rally or drop
BASE = A ZONE WHERE SOME PRO R BUYING & SOME R SELLING , MAINTAINING A BALANCE
RALLY = UP MOMENTUM , DROP = QUICK FALL OF PRICE (down momentum)
- somebody also believe momentum= strength of trend
.................................................. .
2 approaches i find useful to solve this problem
a) micro detail study of HR- DAILY chart
b) Studying economic Fundamental /news - in relation to price
,,,,,,,,,,,,,,,,,,,
-a stock's expected return /risk is directly related to its SENSITIVITY analysis on some factor
a) inflation
b) interest rate
c) productivity
d) new order flow
this factors can be called INPUT data
Various Pricing Models exist . Also BUY/SELL programme/algo created -if this, then expected Price variation that- SO BUY or SELL , using arbitrage pricing
profit model. ( mean value of price justified , but news impact will create a NEW acceptable price) - so sell now if news is interpreted negative.
.................................................. ..............
So at a small range of price(a zone of indecision)- actually i am studying like all big fund managers - what side will be the FUTURE move ?- up or down
......................
So we try to see in chart , by institutional money flow a strong basing= accumulation was created in Past.Similarly by strong sell by FII/DI strong pt of sell
zone= DISTRIBUTION was created in Past.
But what about NOW at NEW TOP??????
So we r studying each Fundamental factor (input data) to decipher in our price model or buy/sell decision making approach.
So in HR/day chart i see DEMAND from NEW FUND absorbs SUPPLY by old profit booking traders. Yes this NEW fund must absorb SUP PLY at TOP , for
continuity for new top or STRONG uptrend
.................................................. .................
So at BASE i study - how the TOP can be broken, the way price is moving towards the TOP line. If after quick approach , it comes down sharper , i know Break
out NOT possible - so its actually DISTRIBUTION
higher LOW is key theme for understanding of ACCUMULATION.
Similarly at imp bottom , LOWER HIGH is forming price is under distribution - and if LOWER line of BASE from Strongly showing big buy order ie. PRO Buyers r
absorbing SELL -so UPMOVE is expected to start.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Very quick upmove on previous instances ,also gap up in past - suggest UPBIAS in present context.
Similarly lowering value , Doller/inr coming down is positive.
Commodity price coming down -good for over all INDUSTRY ,who use it as RAW material ( but steel price down is BAD for STEEL producing industry like SAIL)
LOWER employment data affects economy , as well as business confidence =so BAD for market
GOOD confidence by Consumer, increase in money by employees , improve CONSUMERISM so good for market sentiment
.................................................. ............
Remember- its the EXPECTATION vs ACTUAL data publication that we r searching/evaluating ,as expectation is ALWAYS build up in price. So any major
deviation has only PRICE IMPACT.
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RALLY must be followed by another Rally to get continuation impact.So far demand is absorbing supply in a zone ANOTHER new HI GH is awaiting. You can
understand it in TA from ST's excellent observation , strong price momentum will not be diminished , by single Stockastic' Di vergence
SO at pullback , you CAN join again to BUY
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
DARVAS BOX(a break out style trading) was developed on better economy on this concept.So its SLOPE within a BOX - a zone of accumulative congestion) is
very IMP.How demands exceed supply - actually u r seeing in HR/day chart.
ORDER FLOW study is imp tool to understand Reality . Thats why ORIGINAL brokers/Big funds use hidden order - wrong order on top/bottom price to distract
TA indicators.(opening price manipulation also they use)-but good observers of about 10000hr dont MISS , they know WHAT to SEE-whether its accumulation
or Distribution THIS TIME. (thats why live data has high Cost- it helps to decide)-which side NEW order is coming BUY or SELL side????
,,,,,,,,,,,,,,,,,,,,,,,
Understanding orderflow
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
INPUT DATA as already mentioned in new info release , will put through computers/EXCEL model - after determining its +/_ impact ,as perceived by Fund
Manager/portfolio managers- (may also ALGO.black box buy/sell signal)- will press from his FUND a sp AMOUNT of MONEY to buy at a sp price , also MAY sell a
particular share/ sector holding depending upon NEWS interpretation for a sp quantity at a particular price.
THESE ORDERS - sent from a terminal will go to EXCHANGE and processed , creating an INVENTORY or stack of BUY/sell order of a particular sto ck at a
particular price.THEY r normally LIMIT order.
Now if INSTITUTION , whether indian or FII r investing mode ie. bring money & belief of price move up, THEN demand of buying new quantity , SHALL exceed
supply given by present share holder , and PRICE shall show DEMAND absorb supply in this price zone ie, ACCUMULATION.
Due to evaluation of economic report/announcement of new sector policy, sudden good opportunity may be seen by them, so even at Price top, MONEY may
come & drive TOP to HIGHER TOP- causing a break out trading case.
Also there r UNFILLED demand or pullback buy strategy , by which PRICE when again comes back to that level (provided economy dont change much) - WILL
buy it again - as per Unfilled order theory(dont miss the bus this time) OR let me make a profit like last time .
So each time price come back to OLD imp buy zone after strong SELL OFF - some new buy order or Old pending order will create a DEMAND , so sharp move of
up momentum(increasing accelerated DEMAND)
So 3 types of DEMAND r studying by deciphering the price
(1) old strong demand zone - SUPPORT, v-bottom; W -bottom
(2) Imp pivot - expected price turning pt on pullback - essentially some RALLY base RALLY - strong continuation pattern in past like Symmetrical trianglepennant pattern,ascending channel .
So buy on 1st pull back strategy
(3)New accumulation ZONE for break out( a bear Engulf sure sign = break out not possible)
(3)New accumulation ZONE for break out( a bear Engulf sure sign = break out not possible)
So identifying inside Top Resistance zone DROP base rally- how it is absorbing sell order - suggest us STRENGTH of up-momentum . SEE the slow while Nifty
was approaching 6300 ,before declaration of Dec'13 -5state election result. SO SHORT was AWAITING. Fools think it accumulation (actually strong
Distribution - find out by experienced as well as counter trend trders)-macro economic data, currency -commodity price DONT suggest for break out play that
time.
So for break out, it will be RALLY base RALLY THIS TIME.
so for break out ACCUMULATION must be supported by macro economic data, currency -commodity price
So u have to see 1st -institution have extra cash to buy, in a mood to buy( sentment is positive , seeing better for longterm ecenomy)
Counter Wt FII r not in sell mode - to go out ie encashing big sell opportunity.
A model/method to get present value - now input/new macro data should be +ive, so SENSITIVITY analysis gives positive correlation ie. NEW valuation shall
be up for sector.
Rallying momentum on price should have Up inclination in Hr chart.Basing time should be less , so that its NOT distribution. Previous DROP from the UPpivot is
not STEEP- so absorbing supply is reflected in price.
Similarly for distribution , key thing i search Lower HIGH.
On chart Divergence study in momentum indicator very useful.So i get BIG FUND r selling NOW. Quarterly result impact on price -an Imp observation pt.How i
am seeing CURRENT business cycle , as well as NEXT 2 quarter. I use Capitalmarket/equitymaster to be little bit informative -(dont use their interpretation use raw data , interpretation by self only)
If doller/inr in supply zone - market has to fall , because of Inverse relation. Global fund flow impact also to be seen.Profit booking by gold sell , is go od for
Equity.
Upgrade of country/economy is also good.
GDP not moving up= distribution is expected
Interest rate Hike= distribution is definite
Taxation on a sector= negative for that sector
inflation higher= bad for general economy , so bad for Nifty
Rain GOD is good = money shall come to Rural india , so after October consumerism is good , hence better for FMCG
,,,,,,,,,,,,,,,,,,,,,,,
Pl go through this thread from start , u will understand what i want to say. confused???
yes again i try to make it little simpler.
1] u have to create the reason why u would succeed as trader, as well as what type of trading suits u???
a] Maggie trader-momentum
b] Quick nimble trader
c] Actual swing trader
d] Intermediate positional trader
FOR C & D you should have basic fundamental/economy understanding.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Any time trader has to analysis before doing EXECUTION, so what to analyse???
1st u have to think from perspective of Intermediate positional trader( whether u like it or not) -must see weekly chart to decipher NIFTY.First see what is
TREND- let us use what saint has given us. HIGHER HIGH-HIGHER LOW= UPTREND, LOWER HIGH-LOWER LOW= DOWN TREND, SO HIGHER LOW - CHANCE
OF GOING UP, LOWER HIGH- CHANCE OF GOING DOWN.since trend define may not be that easy i use MA 50, in weekly chart MA10 .
Trend change = when 5 cut 20 in daily chart, in tells how weekly bias is changing vis -a-vis monthly price.Alternately 5day divergence with 20 = showing
STRENGTH of trend.
Use trend till it exists until it bends @ END. Here comes TURNING PT theory - counter -trend has to be taken in one timeframe lower as it reaches an
exhaustion pt- colloquially told as OVERSOLD/overbought pt.
All good countertrend trader wait patiently to SEE the divergence there and at the 1st sign of NEW start of counter -trend join it NEW trend.So extensive detail
they study price exhausion , divergence and they join on ANTICIPATION , or after price/indicator confirmation depending upon their system/confidence. As by
nature , counter trend move has less mobility - so small target . However after sometime , its known to the trader , that MOMENTUM is coming , where he has
joined early - now bigger position 0R HOLDING gives him more money.In a different language , say Market fall stops = so against main trend h e initiates BUY ,
after seeing higher pivot breaking in lower timeframe , he understand by Price deciphering NOW main trend is UP. So he joins /pyramids with UPTREND by
playing with TREND.
SO use of trend & countertrend( anticipatory in nature) is the ultimate understanding of a trader.Next is support/resistance and ANTICIPATORY
SUPPORT/RESISTANCE and watching how pivot is breaking.As a countertrend trader this anticipatory support/resistance is crucia l.Many a FIB believer thinks of
magic %number, many a candlestick specialist believe in SHORTTERM price predictibility.
DO whatever u like - but think of it to improve ur trading skill .
MA or dual MA X developed to join both side of trade.But actually as per event unfolds in future , due to natural random fact or some trade is RIGHT ,some
trade is wrong.
So earliest we learn , loss trading is part of system, unpredictability is part of market - u only can manage trade - is better .
So we come to conclusion - the other factor MARKET is more imp. So we now believe /realised -MARKET CAN BEHAVE WHATEVER IT LIKES , MOMENTUM
(CONTINUATION) reversal OR SIDEWAYS - out of these 2 we shall join , either continuation or reversal- sit idle in 3rd(sideway).We r now FLEXIBLE - if
momentum shows , we join accordingly.
So our entire objective is what market is going to do by DECIPHERING price. So all price action theory develops - if[COLOR="rgb(139, 0, 0)"] this[/COLOR]then THAT .
Soon we realise its not random - at some particular pt/ price zone market participants behave like herd , so as an individual i must take the action earlier t han
them and make money for follow up..........this i call Anticipatory Trend.
So based on chart- see right , think LEFT and what will happen this time at MOB - is actual opportunity.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
So A trader , however experienced he is at NEW market condition , again a become learner.

.................................................. .................................................. ..
So if one is seen sufficient, depending upon level of that country's depth may find some thing workable for market.
1] basic stock idea - a company will prosper if normally management GOOD, has good Order book at hand, Debt is not troublesome, sector scenario is not bad.
2] as present price always reflect Near future- if one find some better HIDDEN prospect, that stock is a buy candidate, and at suitable dip, one is acquiring that
stock.
3] Alternaterly when growth prospect is BRIGHT,& Big Fund is chasing ,u can play -buy on top.
4] But when u get strong bear market or financial problem in a country, - bottom fishing to be done in VERY good growth company- irrespective of its sector.
Dont sell them in start of bull run - HOLD & get money for ur patience.
...................................this i say COMMON sense on market, must be adhere by all traders , except hard core Maggie trader. Maggie trader= quick
momentum intraday trader.(they r master in order flow study,Mostly use indicator based mechanical system for entry -exit.)
...............
with this i am completing my journey from NOVICE to PRO - yes it takes 20 yr to reach here.
----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------
SOME COMMENTS FROM PROFESSIONAL TRADER'S

PREPARATION MATERIAL
05 July 2015
05:16 PM
1] pro makes money -because they lose less.Novice lose because of HOPIUM
2] pro knows market prediction not possible,only high probability turning pt,he can pin point.they take position,but get out early if wrong.Novice fears ,and buy
after upmove ,actually when pro r ready to book profit
3] PRO study risk/reward relationship in chart.Novice search with his greedy eye,biased to win/money........react emotionally
4] Pro get out/get in EARLY,before media hype.......novice listen to TV,act late to lose
5] pro creates a plan,then execute as per plan,with if.........then ACTION...........
NOVICE ask/think then trade,never proactive.
as a new learner,answer first why u will make money,........others shall lose against as a trader. Being a BULL u have to pre dict fall of BEAR,as well as CHARGE
early to take credit from OHER bulls.
Understanding SUPPORT/resistance dynamism and money flow in terms of GREED/fear ,only a baby step. then follow economic event s predictives & its reaction of
price in stocks/commodity.
Next learn ,higher time frame bias.
If u want to become a technical trader/........understand which ta tool u shall master, what condition of market ,u bet in ma rket.
Write the trade...........reason behind winner/loser,this analysis helps
As a trader,choice & syncronisation of Timeframe Supreme importance.
From 4-5 yr regular earning from to switch to PRO level, u reqd to evaluate.........ur decision making system(how robust they r..... .how good ur discipline habit)
why u make money against others (ur edge)..........ur skill to play BIG on winners.
can u predict,market in bull trend or in exhaustion mode..........if YES, big money awaits for u
Pl learn to play contrarian against news.
...........................
Understand first fundamental of a stock, use it vis--vis price movement to understand fundamental reason of price move. Understand overvalue on top &
undervalue at relative bottom and never believe projection by fundamentals (totally wrong) but use market internal study to t rade.
Price= present value , future price= perceived value. As a buyer of stock u r believing to encash in mistake of lower perceiv ed value or panic mind of seller
TA EMPHASIS: MARKET ACTION DISCOUNT EVERYTHING. PRICE MOVES IN TREND. HISTORY REPEATS ITSELF.
AS PER DEMAND/SUPPLY THEORY , aim of new price= keeping demand/supply in balance. Other things being equal, At lower price ne w buy brings price up. So at
low when price is out of balance , more buyers expect to buy initiate a position.
Trend is behavior in group. trend= move in a direction.
SURGE,THRUST, IMPULSE= MAIN DIRECTION
CORRECTION, RETRACEMENT= OPPOSITE DIRECTION SLOW MOVE
PEAK- TROUGH ANALYSIS OR LEVEL OF HIGH/ LOW PIVOT DETERMINES TREND DIRECTION.
MA STUDY ,dual MA cross same purpose .
Here I am introducing 3rd approach = trendline , as I prefer close price to see behavior in intermediate term .
Basic idea of trendline(TL) its angle /slope shows strength . however a very steepline can not be sustained.
Normal chart reflects present data + past. Now based on your experience on market u have to forecast future price movement. L ine chart helps in higher
timeframe and candle in short term. always study nifty & sector index.
If market direction not definite=dont trade.
Use TA to find stock ready to move now , preferably in direction of nifty.
1] dow theory - its the observation of price reflects economy. Use improvement in price for sign of economic development
2] Livermore- pivot is king , know how to predict.
3] GANN- support/resistance and timing can be applied in market
4] elliott- theory of moving with up/down wave. 1-2-3-4-5 -a-b-c.Understand impulse/reaction & fractal.
5]1950-60 theory on investment- buy & held era. bad days of technical traders, so most TA tools r developed then. Not available to public.Actually buying hig h on
top & holding gives strong return . So MA based trend trade idea used as secret.Common people believe in fundamental.
6] Cycle theory on market - seasonality , MA-X with MACD developmemt.
understanding ROC or momentum. Hurst theory on price band,
7] Breakout trade system- darvas box, turtle idea
8] Age of zone trade- Stochastic tools /William% R- , short at resistance.
9] Understanding strength of trend - ADX, RSI - use of ta tools.Trading mechanically is more imp.
10] ERA of pattern- price reflects company/economy-let us try to speculate (TA expansion). Use of software .
11] Chaos theory - fractal, randomness as well as trend both exist in market. Its the psychology more imp.
12] Multiple time frame analysisHigher time frame has strong bias .Use it.Pullback is better method for entering trade.See vo lume integrity.
13] Money Management is king .You cannot predict. Give priority to personality. Develop own indicator. Take trade as per your system. When wrong get out
early .
14] Volatility or unpredictability:last coinage in modern market. ATR, historical volatility. use of it in Option.
15] Modern theory-price is king. just study price action.How price is unfolding with event.understand sequence....repetitive nature within pric e
reflection.Speculative Trading is more an art, study past trade.Understand present context.How money is coming in/flowing out of system?Use swing concept
Thrust concept. Use nightly preparation and plan to relax .
In order to understand probability of particular directional move complex evaluation is done - naming ODD enhancer
i)risk /reward
ii) how price is reaching there
iii) how many times price have comeback there
iv) how sector/nifty showing strength or weakness
v) how price behave last time coming to similar zone
vi) Nifty vs $/inr inverse relation
vii) whether exist another strong buy level just below present level or if there is another strong short position exists as l evel on level
viii) media hype is against the direction u want to trade.
ix) higher time frame bias - intraday buy must be in daily demand .
x) defining location - short must be on top, long must be at bottom + u must be trade against novice , novice buy= u sell, novice sell=u buy
........................
here i try to give 2 system , mostly on intraday.
1] start after market hr, SEE todays candle , extended candle or pin bar.
(a)Extended candle - by its colour itself showing a bias. But trick is over extended top, will call for Reversal.
(b) Pin bar- normal pin in bottom calls for reversal , inverse pin similar to inverted hammer , play plan for SHORT.
LOCATION- MUST BE 20-40 DAY TOP for short, bottom for long. THIS LAST 20 -40 DAY HIGH-LOW RANGE CAN BE IN 0-100 FIB . TOP 25% FOR SHORT, BOTTOM
25% FOR LONG.
when price in that zone u zoom in , to imp pivot low there for LONG entry, similarly when price is @ TOP 25 -fib zone- check for IMP high pivot for short entry.
THIS to be checked in HR chart.And on 1st time price reach in that zone ,only react with previous bias ie. to take the trade zone must be fresh.
THIS TO PLAYED IN NIFTY OR NIFTY 50 HIGH VOLUME STOCK, ALWAYS WITH STOP.POSITION SIZE MUST BE BASED ON UR LOSS AMOUNT PER
TRADE.REMEMBER DAILY TERMINATES @ WEEKLY SUPPORT/RESISTANCE.
so when price go inside a weekly resistance - plan to short, dont foul .
so when price go inside a weekly resistance - plan to short, dont foul .

ODD Enhancer- nifty bias Up, play long in sector /stock of imp BUY zone.
(2) TRAP PLAY PLAN- HERE ENTIRE GAME PLAN IS PLAY WITH OPERATOR/MF-FII.NORMALLY THEIR BUY/SELL R REFLECTED AS GIANT FOOT -PRINT IN
WEEKLY/MONTHLY CHART WITH STRONG VOLUME OF BUY/SELL AND QUICK START OF DIRECTIONAL MOVE , NOT POSSIBLE BY INDIVIDUAL. so refl ection
comes in weekly chart/monthly chart. Just open and mark strong imp pivot/supply demand zone . WAIT patiently , assume last ti me big earner/fund players
again participate in similar fashion(mind it-its an assumption)- TRAP IS MEDIA HYPE TO TRADE AGAINST OPPOSITE OR BROKERAGE REPORT PUBLISH TO DO
OPPOSITE- YES ANY OF THIS PAID WRITER/RUMOR TELLER MUST COME IN MEDIA -to supply fools money . TIME & IN MY 20YR OF TRADE/INVESTMENT I GOT
THE CALL - SIR ' A le lo- acha chalega'- isme mandi hai----this value is extended,----------ACTUALLY I HAVE NO PROBLEM TO TRADE AGAINST . infact trading
against news of popular media is highest strike rate i have seen .
SINCE THIS R TRAP TRADE -PL GIVE SOME TIME FOR ACTUAL TRADE TO MATURE ,ALSO KEEP SOME PRICE CONFIRMATION ENTRY
.................................................. ......
to improve money management
best principle of trading is SET ,

s=stop
e= entry
t= target
........................................
when u think of stop first, many greed driven potential trade nullified, as for stop placing price try to bottom down first, considering long entry.
,,,,,,,,,,,,,,,,,,,,,,,,
Set & forget is mechanical entry , strongly associated with neutral mind trader
BYE BYE(if u like ,print it -learn to apply it , u should make money)
OILMAN5
OPTIONS
05 July 2015
05:17 PM
What are options?

An option is a contract, which gives the buyer (holder) the right, but not the obligation, to buy or sell specified quantity of the underlying assets, at a specific
(strike) price on or before a specified time (expiration date).
The underlying may be equity stocks/ stock index.
Important Terminology
Underlying - The specific security / asset on which an options contract is based.
Option Premium - This is the price paid by the buyer to the seller to acquire the right to buy or sell
Strike Price or Exercise Price - The strike or exercise price of an option is the specified/ pre-determined price of the underlying asset at which the same can be
bought or sold if the option buyer exercises his right to buy/ sell on or before the expiration day.
Expiration date - The date on which the option expires is known as Expiration Date. On Expiration date, either the option is exercised or it expires
worthless.Normally last Thursday of a month.
Exercise Date - is the date on which the option is actually exercised. In case of European Options the exercise date is same as the expiration date .
Open Interest - The total number of options contracts outstanding in the market at any given point of time.
Option Holder: is the one who buys an option which can be a call or a put option. He enjoys the right to buy or sell the underlying asset at a specified price on
or before specified time.On theory , His upside potential is unlimited while losses are limited to the Premium paid by him to the option writer.
Actually in a month(due to poor liquidity)- a particular amount move is possible.
Option seller/ writer: is the one who is obligated to buy (in case of Put option) or to sell (in case of call option), the underlying asset in case the buyer of the
option decides to exercise his option. His profits are limited to the premium received from the buyer while his downside is unlimited.(Actually because of less life
the move against him is practically limited)
Option Series: An option series consists of all the options of a given class with the same expiration date and strike price.
What is Assignment?
When the holder of an option exercises his right to buy/ sell, a randomly selected option seller is assigned the obligation to honor the underlying contract, and
this process is termed as Assignment.
What are European Style of options?
The European kind of option is the one which can be exercised by the buyer on the expiration day only & not anytime before that.But like stock its tradable.
What are Call Options?

A call option gives the holder (buyer/ one who is long call), the right to buy specified quantity of the underlying asset at the strike price on or before expiration
date.
The seller (one who is short call) however, has the obligation to sell the underlying asset if the buyer of the call option decides to exercise his option to buy.
Example: An investor buys One European call option on Infosys at the strike price of Rs. 3500 at a premium of Rs. 100. If the market price of Infosys on the
day of expiry is more than Rs. 3500, the option will be exercised.
The investor will earn profits once the share price crosses Rs. 3600 (Strike Price + Premium i.e. 3500+100).
Suppose stock price is Rs. 3800, the option will be exercised and the investor will buy 1 share of Infosys from the seller of the option at Rs 3500 and sell it in
the market at Rs 3800 making a profit of Rs. 200 { (Spot price - Strike price) - Premium}.
In another scenario, if at the time of expiry stock price falls below Rs. 3500 say suppose it touches Rs. 3000, the buyer of the call option will choose not to
exercise his option. In this case the investor loses the premium (Rs 100), paid which shall be the profit earned by the seller of the call option.
What are Put Options?
A Put option gives the holder (buyer/ one who is long Put), the right to sell specified quantity of the underlying asset at the strike price on or before a expiry
date.
The seller of the put option (one who is short Put) however, has the obligation to buy the underlying asset at the strike price if the buyer decides to exercise his
option to sell.
Example: An investor buys one European Put option on Reliance at the strike price of Rs. 900/-, at a premium of Rs. 25/-. If the market price of Reliance, on
the day of expiry is less than Rs. 900, the option can be exercised as it is 'in the money'.
The investor's Break even point is Rs. 875/ (Strike Price - premium paid) i.e., investor will earn profits if the market falls below 875.
In another scenario, if at the time of expiry, market price of Reliance is Rs 920/ - , the buyer of the Put option will choose not to exercise his option to sell . In
this case the investor loses the premium paid (i.e Rs 25/-), which shall be the profit earned by the seller of the Put option.
How are options different from futures?
The significant differences in Futures and Options are as under:

Futures are agreements/contracts to buy or sell specified quantity of the underlying assets at a price agreed upon by the buyer and seller, on or before a
specified time. Both the buyer and seller are obligated to buy/sell the underlying asset.
In case of options the buyer enjoys the right and not the obligation, to buy or sell the underlying asset.
Futures Contracts have symmetric risk profile for both buyers as well as sellers, whereas options have asymmetric risk profile.
In case of Options, for a buyer (or holder of the option), the downside is limited to the premium (option price) he has paid while the profits may be unlimited.
For a seller or writer of an option, however, the downside is unlimited while profits are limited to the premium he has received from the buyer.
The futures contracts prices are affected mainly by the prices of the underlying asset.
Prices of options are however, affected by prices of the underlying asset, time remaining for expiry of the contract and volatility of the underlying asset.
It costs nothing to enter into a futures contract whereas there is a cost of entering into an options contract, termed as Premium.
Moneyness of an option can be Explained in 3 terms- In the Money, At the Money and Out of the money Options.
An option is said to be 'at-the-money', when the option's strike price is equal to the underlying asset price. This is true for both puts and calls.
A call option is said to be in-the-money when the strike price of the option is less than the underlying asset price. For example, a nifty call option with strike of
6900 is 'in-the-money', when the spot nifty is at 7100 as the call option has value.
The call holder has the right to buy nfty at 6900, no matter how much the spot market price has risen. And with the current price at 7100, a profit of 200/- can
be made by selling at this higher price.
On the other hand, a call option is out-of-the-money when the strike price is greater than the underlying asset price. Using the earlier example of Sensex call
option, if the Sensex falls to 6700, the call option no longer has positive exercise value. The call holder will not exercise the option to buy nifty at 6900 when
the current price is at 6700. He rather loses premium.
A put option is in-the-money when the strike price of the option is greater than the spot price of the underlying asset. For example, a nifty put at strike of 7400
is in-the-money when the nifty is at 7100. When this is the case, the put option has value because the put holder can sell the nifty at 7400, an amount greater
than the current Sensex of 7100.
Likewise, a put option is out-of-the-money when the strike price is less than the spot price of underlying asset. the buyer of put option won't exercise the option
and allow to lose premium.
Options are said to be deep in-the-money (or deep out-of-the-money) if the exercise price is at significant variance with the underlying asset price.
What are Covered and Naked Calls?
A call option position that is covered by an opposite position in the underlying instrument (for example shares, futures etc), is called a covered call.
Writing covered calls involves writing call options when the shares that might have to be delivered (if option holder exercises his right to buy), are already
owned.
On theory, A writer writes a call on Reliance and at the same time holds shares of Reliance so that if the call is exercised by the buyer, he can deliver the stock.
Covered calls are far less risky than naked calls (where there is no opposite position in the underlying), since the worst that can happen is that the investor is
required(may think alike) to sell shares already owned at below their market value.
----------------------------------------------------------------------------------------------------------------------------- -----------------What is the Intrinsic Value of an option?
The intrinsic value of an option is defined as the amount by which an option is in-the-money, on the immediate exercise value of the option .
For a call option: Intrinsic Value = Spot Price - Strike Price
For a put option: Intrinsic Value = Strike Price - Spot Price
The intrinsic value of an option must be a positive number or 0. It cannot be negative
........................................
Explain Time Value with reference to Options.

Time value is the amount option buyers are willing to pay for the possibility that the option may become profitable prior to expiration due to favorable change in
the price of the underlying. An option loses its time value as its expiration date nears. At expiration an option is worth only its intrinsic value. Time value cannot
be negative.
What are the factors that affect the value of an option (premium)?
There are two types of factors that affect the value of the option premium:
Quantifiable Factors:
underlying stock price,
the strike price of the option,

the volatility of the underlying stock,
the time to expiration and;
the risk free interest rate.
Non-Quantifiable Factors :
Market participants' varying estimates of the underlying asset's future volatility

Individuals' varying estimates of future performance of the underlying asset, based on fundamental or technical analysis
The effect of supply & demand- both in the options marketplace and in the market for the underlying asset
The "depth" of the market for that option - the number of transactions and the contract's trading volume on any given day.
----------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------
What are different pricing models for options?

The theoretical option pricing models are used by option traders for calculating the fair value of an option on the basis of the earlier mentioned influencing
The theoretical option pricing models are used by option traders for calculating the fair value of an option on the basis of the earlier mentioned influencing
factors.
The two most popular option pricing models are:
Black Scholes Model which assumes that percentage change in the price of underlying follows a normal distribution.
Binomial Model which assumes that percentage change in price of the underlying follows a binomial distribution
. The fair value/ theoretical price of an option can be known with the help of pricing models and then depending on market conditions the price is determined by
competitive bids and offers in the trading environment.
An option's premium / price is the sum of Intrinsic value and time value .
Therefore, any change in the price of the option will be due to a change in the option's time value, as well as change in value of underlying asset, change in the
volatility of the underlying, the time to expiry, interest rate fluctuations, dividend payments and to the immediate effect of supply and demand for both the
underlying and its option.
----------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------Explain the Option Greeks?
These Option Greeks are:
Delta: is the option Greek that measures the estimated change in option premium/price for a change in the price of the underlying.
Gamma: measures the estimated change in the Delta of an option for a change in the price of the underlying
Vega : measures estimated change in the option price for a change in the volatility of the underlying.
Theta: measures the estimated change in the option price for a change in the time to option expiry.
Rho: measures the estimated change in the option price for a change in the risk free interest rates.
What is an Option Calculator?
An option calculator is a tool to calculate the price of an Option on the basis of various influencing factors like the price of the underlying and its volatility, time
to expiry, risk free interest rate etc.
It also helps the user to understand how a change in any one of the factors or more, will affect the option price.
----------------------------------------------------------------------------------------------------------------------------- -----------------------------------------------
Why do I Invest in Options? What do options offer me?

05 July 2015
05:18 PM
Why do I invest in Options? What do options offer me?

Besides offering flexibility to the buyer in form of right to buy or sell, the major advantage of options is their versatility. They can be as conservative or as
speculative as one's investment strategy dictates.
Some of the benefits of Options are as under:

High leverage as by investing small amount of capital (in form of premium), one can take exposure in the underlying asset of much greater value.
known maximum risk for an option buyer
Large profit potential and limited risk for option buyer
One can protect his equity portfolio from a decline in the market by way of buying a protective put wherein one buys puts against an existing stock position.
Hence, by paying a relatively small premium (compared to the market value of the stock), an investor knows that no matter how far the stock drops, it can
be sold at the strike price of the Put anytime until the Put expires.
How can I use options?
If you anticipate a certain directional movement in the price of a stock, the right to buy or sell that stock at a predetermined price, for a specific duration of
time can offer an attractive investment opportunity.
The decision as to what type of option to buy is dependent on whether your outlook for the respective security is positive (bullish) or negative (bearish).
If your outlook is positive, buying a call option creates the opportunity to share in the upside potential of a stock without having to risk more than a fraction
of its market value (premium paid).
Conversely, if you anticipate downward movement, buying a put option will enable you to protect against downside risk without limiting profit potential.
Purchasing options offer you the ability to position yourself accordingly with your market expectations in a manner such that you can both profit and protect
with limited risk.
Individual investors might wish to capitalize on market opinions (bullish, bearish or neutral) by acting on their views of the broad market or one of its many
sectors.
The more sophisticated market professionals might find the variety of index option contracts excellent tools for enhancing market timing decisions and
adjusting asset mixes for asset allocation.
Investors of equity stock options will enjoy more leverage than their counterparts who invest in the underlying stock market itself in form of greater
exposure by paying a small amount as premium.
Investors can also use options in specific stocks to hedge their holding positions in the underlying (i.e. long in the stock itself), by buying a Protective Put.
Thus they will insure their portfolio of equity stocks by paying premium.
What are the risks involved for an options buyer?

The risk/ loss of an option buyer is limited to the premium that he has paid,the buyer of the option will pay premium to the options writer in cash at the time
of entering into the contract.
How can an option writer take care of his risk?
Option writing is a specialized job which is suitable only for the knowledgeable investor who understands the risks, has the financial capacity and has
sufficient liquid assets to meet applicable margin requirements. The risk of being an option writer may be reduced by the purchase of other options on the
same underlying asset thereby assuming a spread position or by acquiring other types of hedging positions in the options/ futures and other correlated
markets.
----------------------------------------
An option is a contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset (a stock or index) at a specific price on or before
a certain date.
An option is a derivative. That is, its value is derived from something else. In the case of a stock option, its value is based on the underlying stock (equity).
In the case of an index option, its value is based on the underlying index (equity).
Options vs. Stocks :Similarities:
Listed Options are securities, just like stocks.
Options trade like stocks, with buyers making bids and sellers making offers.
Options are actively traded in a listed market, just like stocks. They can be bought and sold just like any other security.
Differences:
Options are derivatives, unlike stocks (i.e, options derive their value from something else, the underlying security).
Options have expiration dates, while stocks do not.
Stock-owners have a share of the company, with voting and dividend rights. Options convey no such rights
...............................................
When you buy a Call option, the price you pay for it, called the option premium, secures your right to buy that certain stock at a specified price, called the
strike price.
Put options are options to sell a stock at a specific price on or before a certain date. In this way, Put options are like insurance policies.
If you buy a new car, and then buy auto insurance on the car, you pay a premium and are, hence, protected if the asset is damaged in an accident. If this
happens, you can use your policy to regain the insured value of the car. In this way, the put option gains in value as the value of the underlying instrument
decreases.
If all goes well and the insurance is not needed, the insurance company keeps your premium in return for taking on the risk.
..............................................
In the money:
Call option - underlying instrument price is higher than the strike price.
Out of the money:
Call option - underlying instrument price is lower than the strike price.
.........................
Intrinsic value is the extent to which the strike price of an option is in-the-money.
Time value, occasionally known as extrinsic value, is defined as the amount by which an option's price exceeds its intrinsic value; time value declines over
time it is less and less relevant as expiration approaches. In fact, upon expiration, an option can be worth only its intrinsic value.
The deeper an option is in-the-money, the more intrinsic value (and less time value) it has
The deeper an option is in-the-money, the more intrinsic value (and less time value) it has
Put Options
Intrinsic value = Put Strike Price - Underlying Stock's Current Price
Time Value = Put Premium - Intrinsic Value
ALL options eventually lose ALL of their "time value."
ALL "Out-Of-The-Money" options expire worthless.
Markets only "trend" 1/3 of the time; they move sideways the other 2/3.
-----------------------------------------------------------------------------------------------------------------So to apply option for speculation , we have to understand some key themes on market,-nifty + stock specific up/down move. To understand present
state (whether accumulation or distribution?)- what type of momentum is coming?
- yes entire money making on this 2 query solving
1]present state(base study) -whether accumulation or distribution?
2] what type of momentum is coming?-rally or drop
BASE = A ZONE WHERE SOME PRO R BUYING & SOME R SELLING , MAINTAINING A BALANCE
RALLY = UP MOMENTUM , DROP = QUICK FALL OF PRICE (down momentum)
- somebody also believe momentum= strength of trend.
To understand basic ,as well as application, some option traders helped-. Dan,Aw10, Pratap, traderji -kudos to them.
.......................................
1] option can be used for leverage
2]option can be used for hedge
3] complicated ( mathematical)option can be used for arbitrage (due to greed value of option reached a unsustainable value- typical optiontrading software
r used to find return)
......................................
At resistance holding , for reversal trade ,we can simply underwrite call, also we can buy PUT , if we find high probability of price reversal.
similarly At support breaking , for breakdown trade ,we can simply play with put option.At support holding ,we can simply underwrite put.
.....................................
However before doing anything following steps r must , say BUY CALL.
Buy Call -Break Even Analysis
Buy Call - Risk & Return
Buy Call - Entry & Exit
Sell Call - Payoff & Graph
yes without doing this not do even a paper trade.
....................................
Similarly all 4 case , buy put/call or underwrite put/call to be seen at appropriate level , when high probability exists.
Next u add , interpretation of open interest & VIX.
Remember basic:Bullish option strategy-Buy a Call=Strongest bullish option position.
Loss limited to premium paid.
Sell a Put =Neutral bullish option position.
Profit limited to premium received.
Bearish option market trading strategy-Buy a Put =Strongest bearish option position.
Sell a Call =Neutral bearish option position.
---------------------------------------------------------------------------------------------------------------------------Remember slowly i am building block as option trader.To make money in any trading stock, options), very first thing to know is the direction of the
market.U Can't make money by buying something, when market is falling. So very first thing you need to learn is to identify the current trend of the market
(up, down or sideway). Better u are in this, solid is your foundation.Once u know the direction of market or stock that u want to trade, then choose
appropriate option strategy for this.
There are 6 basic risk graphs in core option and stock strategy. All other strategy is just combination of these 6 basics. They are Buy Stock/future, Sell
stock/future, Buy Call, Sell Call, Buy Put, Sell Put. Spend as much time as required to understand them on parameters I am going to mention in next point.
For any strategy (including the 6 basic one), know how they are constructed, what is max risk, what is max reward, where is BREAK-EVEN
point, How the risk graph looks like at expiry, suitable market condition favourable for these strategies. Once, you should be able to draw
risk graph without any option analysis tool, then u pass out from this stage.Understand the concept of option pricing, intrinsic value and
time value, the factors that affect option premium. Focus on not the theory, but how change in those factors will affect the premium(incase
of ITM/OTM). Watch them in real life, experiment with them using option calculator.
At advance stage, u can look at transition of risk graph from now to final stage at expiry, various option Greeks etc., various strategies that are combination
of 6 core strategies. This is the stage, I will advise one to start using a tool/option software and transit to a PRO option trader.
There are different approach to get above (read books, take mentorship, play in market and learn the hard way,If u read wrong book, go to wrong person
for training, do wrong course, you will be just wasting your resources (time, money, energy etc.).
some hints r- use youtube, optionalpha,optionseducationdotorg,optionprimer- all of u know -how to search/google.
Remember, this doesnt make you a trader still. Option Trading involves Money mgmt, psychology, risk mgmt, system testing etc.
There are five option Greeks, the Delta, Gamma, Vega, Theta and Rho.
The five Greeks are for Delta,
for Gamma,
V= Vega,
for Theta and
for Rho.
Delta is a measure of an option's sensitivity to various changes in the underlying asset's price. The Gamma is a measure of the delta's sensitivity to various
changes in the underlying asset's price. The Vega is a measure of the option's sensitivity to various changes in the underlying asset's volatility. The Theta
measures the option's sensitivity to time decay. Finally, the Rho measures the sensitivity of an option to various changes in the risk-free interest rate.
Delta = Amount of Change in Premium for 1 Rs. change in Nifty. So delta = +0.4 means the option price will change by 40 paise for each 1 point move of
nifty.
Calls have +ive delta i.e. call premium increases by increase in nifty. Puts hace -ive delta.. cuase their premium drops as market goes up..
ATM options have delta = 0.5
ITM options have delta > 0.5
OTM option have delta < 0.5. Far OTM options have delta near 0.
Due to +change in underlyings,As option gets more and more ITM, its delta will start increasing.
Gamma = Show the spead of change in delta. To keep it simple. Just forget about it for the time being. Generally its value is like 0.002 i.e. 2/1000 of a
Rupee i.e. 2paisa
So delta is key
Theta = Rate of premium decay for each passing day of options life.
Theta = Rate of premium decay for each passing day of options life.
So if theta is 3, means, on each passing day, option premium will change by 3 rs.
For long position, theta works -ively. and for short position theta is +ive
As we approach towards expiry, the time premium eventually goes toward 0. Theta shows us at what speed it will go towards 0.Again to keep it simple.
Calculate the time premium that u are paying in the option.. and divide that by days left.
Option premium has 2 parts = intrinsic value or real value and time value(percept) or value of air around that option.
example = mkt at 6535, 6500 call option is trading at 64 rs. So the intrinsic value = 6535 - 6500 = 35 rs.
Whatever u pay beyond real value is time value i.e 64- 35 = 29 rs.
So if remaining life is 10 days.. i.e. roughly u will loose 29/10 = 2.9rs everyday
Ideally time decay follows expotential curve. but for above calculation , we follow linear curve.doesn't make much difference..in real trading.
Vega = Reflects the impact on premium due to change in underlying volatilty. so let me try to make it simple.
When expected volatility in remaining life of option is high, then option seller wants more money. so premium goes up. Option premium depends on what is
gong to come (i.e. right side of the chart)
not the left side.. hence lets use our judgement to find if mkt is going to go thru big swings in next few days or not. (election result, economic news,
company result etc are typical events that result in higher volatility).. In such scenario.. the time value calculated above will go up.. so the 64 rs option
might start going for 80 rs.. i.e u are paying 80-35 = 45 rs for remain 10days of time.
that gives us theta of 45/10 = 4.5 rs.
So if you just practice above simple calculations.. without going into the complexity of vega, u can find out if option is fairly price (i.e u are paying decent
money for per day of time). or it is
exorbitantly high money that option write is asking from you.
With practice, u can find out the typical time premium / day.
Volatility is important concept in option but it gets reflected in time premium. So to keep it simple, just focus on time premium and understand it as best as
possible.
Rho = forget it. Doesn't make much difference,because it has minimum effect on pricing. And Interest rate don't change everyday.Also somebody takes
futurevalue to nullify it.
To summarize, just understand Delta and Theta first / their movement with respect to ITM/OTM/ATM..
Then look at Gamma / Vega / Rho (when u have excess time....)
so what underlyings, whatever model u use and get the price, real market price of option can still be different form that. So as a trader, we need to live in
reality and use the pricing concept to understand what is going on.. and what shd be our trading decision / which strategy(4-buy call/put or underwrite)
should fit well etc.......then u will know that there are time when buying option is wrong (low volatility ahead upto expiry) and there are time when selling
option is wrong .
Think the important consideration for options system is the selection of strike and right strategy.Keeping TA to form the view about the market and get
trading bias ,then TA's job is over and you have to wear the Hat of option trader now .
-------------------------------------------------------------------------------------------------------------------------so at low volatility times- u plan to join break out side with OPTION. For upside with Call option , preferably at the money - when momentum goes down ,
sale & book profit.
.................................
Heres an introduction to the VIX, THE VOLATILITY INDEX. The VIX is a volatility index that determines
what option prices imply that our volatility is. This is an expectation of volatility in the market.
...............................
Fischer Black and Myron Scholes created a valuation method for options that is called the BLACK SCHOLES METHOD. Theres yet another called the
BINOMIAL MODEL. you can get to the price using these parameters:
1. Stock Price
2. Strike Price + Is it a call or put
3. Time to expiry (days)
4. Implied Volatility
5. Risk Free Rate of return
6. Dividend Yield
The idea is to ascribe a number to the chance that the stock or index will go above the strike price, using the above parameters. It uses some flawed
assumptions like a bell curve and a normal distribution, which hardly ever is the case in reality,
For example, a Nifty 6100 call option expiring Feb 2014 was trading at Rs. 86 in january282014, when the Nifty was at 6040. That means someone was
willing to pay Rs. 86 to be able to buy the Nifty at 6100 till Feb 262014. So his break-even price is Rs. 6186.
But why 86? Since the Nifty is at 6040 on january282014, how does he come about to the figure of 86 rupees? Why does it go up to 140 when the Nifty
goes up to 6100?
The TIME TO EXPIRY is the amount of time we have when the stock will be volatile. A Feb 6500 call
bought on the 1st of the month, when there is nearly the whole month left, will be priced higher than the same call bought 1 day before expiry. Because the
Nifty can go up 0.4% a day (on average), and
within 20 days it will move from 6100 to more than 6500, taking the call in the money. But if the call expires tomorrow, a move from 6100 to 6500 is far
less likely.
.... the RISK FREE RATE, used to calculation the cost of the opportunity, which you can assume around 10% nowadays, per year.The DIVIDEND YIELD has a
small impact on the cash flow, and is not very relevant when at the tiny 1% or 2% levels Indian stocks seem to see. But you can plug it into the formula to
see how it impacts option prices.
IMPLIED VOLATILITY- Essentially, it is how volatile you believe the underlying stock will
be. The more volatile the expectation, the higher the price of the option.
The IMPLIED VOLATILITY figure will reveal how volatile the stock is expected to be in the days left to expiry. To keep it less complex, implied volatility is
quoted as an annual percentage. So if I say an IV of 40%, that means the stock might be expected to move with a volatility of 40% a year.
This doesnt mean the stock will move up 40% or down 40%, but that 40% is the mathematical estimate of the variance of prices expected in a year.
Should you expect a 10% or a 40% move?
The answer you are most likely to hear is: Look at the stocks history and find out how it has moved over the last year/quarter/month. Use that volatility
figure to calculate the option price.but I would double any number that it threw because its bound to be wrong
-Historical volatility has very little to do with implied volatility, in the real world. Because the past (unlike TA assumption)doesnt tend to repeat in the
immediate future and such assumptions can lead to disastrous results.
For instance, if in April you look at the Feb+March volatility patterns and assume that for April, youre toast. Why? Because April is usually results season,
and if the stocks announcing results, its likely to be more volatile. If insiders know certain results or events they can buy options and raise their prices, and
it will increase the option prices, and probably show implied volatility to be higher than historical volatility, rightfully so. (Theres an event!).
HOW DO YOU USE IMPLIED VOLATILITY?
Now the idea isnt to price options its to look at option prices and figure out what the implied volatility is. And then, not to compare against historical
volatility, but to compare the implied volatility against the IVs earlier, or against the IV of other options, or perhaps other stocks. A comparative implied
volatility figure gives us a better picture than historical moves.
Certain stocks are more volatile than others, and indexes, being a collection of stocks, tend to be less volatile than the stocks themselves.U have to another
termVOLATILITY SMILE.
VIX- Its simply a MARKET-SOURCED WEIGHTED AVERAGE OF THE IMPLIED VOLATILITY ON NIFTY OPTIONS.they take about seven strike prices around the
current Nifty prices (Calls above, and puts below, so only OTM options) and weight them according to price and strike. Then they calculate (mathematical
current Nifty prices (Calls above, and puts below, so only OTM options) and weight them according to price and strike. Then they calculate (mathematical
term follows) the square root of the variance and normalize it for 30 days.The VIX isnt useful in isolation. A VIX of 22 doesnt mean that there will be 22%
volatility in the index (less than 2% a month). We know that indices move more than 2% in a week! Volatility assumptions are dangerous
VIX can of course be compared to the past VIX data; and in general, we know that markets price
volatility higher on the way down than on the way up (i.e. people tend to pay more for Out-Of-TheMoney options when the markets falling than when its
rising).
Youll notice that the VIX was going down as the market was rising in 2012. At times when the market fell, the VIX rose.
This translates to: Options get relatively more expensive when markets dip and relatively less when markets rise.. I believe our regulators have wanted to
see stability in
prices, but markets are not built for stability - they are built for extremes of fear and greed interspersed with times of low volatility. We dont know how long
those low-vol times will stay but the volatility will come back and come back fast.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------If you have access to the historical range of IV values for the security in question you can determine if the current level of extrinsic value is presently on the
high end (good for writing options) or low end (good for buying options).
Call options are more expensive the lower the strike price. With calls, the lower strike prices have the highest option prices, with option prices declining at
each higher strike level. This is because each successive upper strike price is less in-the-money .
......with puts the option prices are greater as the strike prices rise. For call options, the delta values are positive and are higher at lower strike price. For
put options, the delta values are negative and are higher at higher strike price. The negative values for put options derive from the fact that they represent
a stock equivalent position. Buying a put option is similar to entering a short position in a stock, hence the negative delta value.
.................................................. .................
SOME TERMS TO CLARIFY STRATEGY
1]Bull Spread (Call) Strategy on Nifty
In this strategy, one expects markets to go up.
A bull call spread is constructed by buying a call option with a low exercise price (K), and selling another call option with a higher exercise price.
Often the call with the lower exercise price will be at-the-money while the call with the higher exercise price is out-of-the-money.
Both calls must have the same underlying security and expiration month.
Example:
Date: July 5th 2011.-Nifty Current Value: 5630
Sell (write) one lot of 5800 Call (28 JUL 2011 expiry) at a premium of 35.
Buy one lot of 5600 Call (28 JUL 2011 expiry) at a premium of 120.
95 Rs (35 - 120) per lot is debited from your account entering the above position. You will make profits if Nifty ends expiry above 5695 (5600 + 95)
Below are the various profit/loss scenarios at expiry
Nifty ends above 5800 - You will make profits of 4000 Rs
Nifty ends between (5695 - 5800) - You will make profits ranging from (0 Rs - 4000 Rs)
Nifty ends below 5695 - You will make losses ranging between 0 Rs to 4750 Rs.
..........................
Note : normally due to nifty price volatility,you will get opportunities before expiry to exit the bull spread strategy with decent profits even if Nifty does not
rise above 5695.the gap between write and buy contracts is 200 Points in Nifty.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------2,Options Strategies - Bear Put Spread
Bear Put Spread is employed when the Option Trader thinks that the price of the underlying security will go down in Near Term.
In this Strategy:
Buy 1 ITM (In the Money) Put
Sell 1 OTM (Out of the Money) Put
Buying a higher striking in-the-money put option and selling a lower striking out-of-the-money put option of the same underlying security with the same
expiration date.
3.Bear Spread - Call Strategy (definition)- one expects markets to go down. The strategy balances profit and risk.A bear call spread is a limited profit,
limited risk options trading strategy that can be used when the options trader is moderately bearish on the underlying security. It is entered by buying call
options of a certain strike price and selling the same number of call options of lower strike price (in the money) on the same underlying security with the
same expiration month.
Example
ate: 28th July 2011,Nifty Value: 5485

Sell (write) one lot of 5500 Call (25 AUG 2011 expiry) at a premium of 103
Buy one lot of 5700 Call (25 AUG 2011 expiry) at a premium of 32.
71 Rs (103 - 32) per lot (3550 Rs) is credited to your account entering the above position. You will make profits if Nifty ends below 5571 (5500 + 71) at
expiry (25 AUG 2011).
Below are the various profit/loss scenarios at expiry
Nifty ends below 5500 - Fixed profits of Rs 3550
Nifty ends between (5500 - 5571) - You will make profits ranging from (Rs 3550 - Rs 0)
Nifty ends between (5571 - 5700) - You will make losses ranging from (Rs 0 - Rs 6450)
Nifty ends above 5700 - You will make fixed losses of Rs 6450.
As a smart trader, you will get opportunities before expiry to exit the bear spread strategy with decent profits even if Nifty does not stay below 5571,the gap
between write and buy contracts is 200 Points in Nifty.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------4. Options Strategies - Long Straddle
Long Straddle is employed when the Option Trader is Neutral on the price of the underlying security but very bullish on the volatility.
In this Strategy:
Buy 1 ATM (At the Money) Call
Buy 1 ATM (At the Money) Put
profit starts in this strategy..after crossing break even.
Normally for event based , where high price movement is assured , this technique can be applied. alternately for same scenario u may apply
4(a) LONG STRANGLE-Here strikes r selected out of money, so option buy price(both put+call)comes down.But nifty must move substantially to make
strangle profitable.
Further improvement by choosing -4(b)Short Put Butterfly
Short Put Butterfly is employed when the Option Trader is Neutral on the price of the underlying security but very bullish on the volatility.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
5.SHORT STRADDLE- NEUTRAL MARKET ,SHALL BE REMAIN RANGEBOUND.we underwrite both call+put at the money premium. Since its highly risky , we
modify to SHORT STRANGLE- to earn premium with lowering risk, we underwrite OTM call+put ,at suitable out range ,where i expect reaching Nifty is rare
event.
This also can be improved with LONG BUTTERFLY.here we underwrite at the money Call+put, but buy OTM call ,& put at 400 value, so we are considering
This also can be improved with LONG BUTTERFLY.here we underwrite at the money Call+put, but buy OTM call ,& put at 400 value, so we are considering
nifty will be 800 range ,and we get some money. (both ATM underwrite, and buy OTM call+put )
.......................
Whatever strategy u choose , pay-off dia, various scenario, chance of its happening must be checked- also u must be comfortable with it
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------As mentioned in 4 /4(a)-above,Special Market Strategies work best in those times when you are expecting a BIG move but are uncertain as to the direction
of the move. This is specially true during times of the Union Budget, company results, etc.
What are Spreads ?

Spreads are Limited Risk / Limited Reward strategies. They can be constructed using either PUT or CALL options.
They are directional strategy - Bullish or Bearish
It involves 2 options trades - Buying Option at 1 strike and at the same time selling another option at different strike price.
Spreads are classified using
1) Bullish Spread - (eg - buy lower strike option, Sell higher strike option)
2) Bearish Spread - (eg - buy higher strike option, Sell lower strike option)
Cost of the trade = Difference of premium that u pay for buying first leg minus the premium u collect for selling other leg.
Maximum Risk = LIMITED. Cost of trade that is calculated above.
Maximum Reward = LIMITED. Difference of the two strike prices minus the money that u have paid to open this trade i.e. cost of trade. (Naked option
buying, theoretically, has Unlimited reward..but in reality there is nothing called Unlimited. There is a limit to which stock can rise during the lifetime of the
option.
btw- forget itm/otm/atm stuff.. just keep the lower/higher based relationship in mind and you will not get confused. When u buy stock, you are bullish.. so
u buy at low and sell at high.
Nature of initial cash flow
1) Debit - where your acct is debited while opening the position (eg - for bullish spread, Buy lower Strike CALL and Sell higher strike CALL, or for bearish
spread, Buy higher strike PUT and sell Lower strike PUT )-initially debit concept is helpful, because of limited risk.
2) Credit - where your acct is credited while opening the position (eg - for bullish spread, Buy lower Strike PUT and Sell higher strike PUT, or for bearish
spread, Buy higher strike CALL and sell Lower strike CALL)
EXITs is something that depends from trader to trader hence there is no single correct solution for it. But prepare in advance for any eventuality(scenario
preparation). Once we are in trade, emotions start impacting our decision making capability hence it is better to think about them right now when there is
nothing is at stake.
Otherwise standard way of interpreting OI is
- If price increases and Open Interest increases, then their is strength behind the price move higher.
- If price decreases and Open Interest increases, then their is strength behind the price move lower.
............................................
Bearish strategy
Bearish Market Strategies work best only in strongly trending bearish markets.
1.Buy a Put
Strongest bearish option position.
2.Sell a Call
Neutral bearish option position.
Option overvalued, market flat to bearish.
3.Buy Vertical Bear Put Spread
Buy at the money Put & sell out of the money Put.
consider limited fall in the market ,before expiry
.........................
Bullish Market Strategies work best only in strongly trending bullish markets.
1]Buy a Call
Strongest bullish option position.
2]Sell a Put
Neutral bullish option position.
3]Buy Vertical Bull Call Spread
Buy Call at the money & sell Call of higher strike price.
Maximum loss limited to difference between buying a Call and selling a Call of higher strike price.
Small debit, bullish market. infact starting pt of earning through option in bullish market.
..................................................
Since the market moves sideways 2/3 of the time, we have option trading strategies for flat or trendless markets:
Strangle
Sell out of the money Put & Call.
Maximum use of time value decay.
works in Trading range market with volatility .
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------DAN has rightly said- before u become an option pro- pl answer this question
What kind of option trader do I want to be?
- Direction of the market.
- Volatility in the market.
- Time frame of our option trade.
- Choosing the strategy.
- Margins for the strategy.
- Choosing the strike level/s.
- How to implement a strategy.
- Entering the market.
- Adjustment of our option trade.
- Stop loss of our option trade.
- Exit strategies for our option trade.
- Money management and risk reward ratio of our trade.
All of you who happens to be in option trading know that problem: What kind of option strategy should I use and On what kind of parameters / criteria
should I build up my decisions which r practically implementable for me? Do present market context support me to implement ?
the objectives should be
Regular Income
Minimum Risk to the Capital
Regular Opportunity for trading
u must have a simple trading plan with payoff & various strike, prepared before you enter an option trade.Also be ready to change , as new condition of
market evolves.we should have knowledge about what kind of order possibilities we have to enter or exit a trade in the market. As we now have an idea
about the different ways we can implement a whole option strategy in the market.
Basic of structurally choosing strategy, as well as directional hints r given above, only i can add some hints.
1] ADX shows strength - use it in directional trade.
2] bollinger band gives 2sigma holding support pt,with 95% probability - may use it for underwrite.As BB visualise present volatility - can be used for
judgmental bias for volatility, as well as when low volatility ends ,-whether expiration can be build up within present expiry.
3] use break even pt extensively in option plan & very clear about ODD in your favour or not. Software helps not only time but for visualisation(u have to
fight best here)
=============================================================================================
Options - A WORD OF CAUTION

05 July 2015
05:23 PM
A word of caution
...........................
As per TNSN2345-.. the first step in trading is first be a conventional trader(use TA/mm/stoploss)...from a successful conventional trader then try to reach out
for mastery in financial product like OPTION trading.
It trains then your mind Risk/reward - reason behind potential trade,if trade behaves NOT correct -how to take RECTIFICATION . Then mathematical analysis
with scenario preparation will be EASIER to implement , as well as then u will be trained to quicker action , based on time s ensitive product - also with
leverage product ,U MUST derisk better.
It helps-How to convert your losing trades into winners
- Capital guaranteed trading.
Yes in OPTION ,ur outlook has to be changed.

So for simplicity ,when we start from stock trade,we have only two views to profit, bullish or bearish . It is just a plain v iew of the Underlyings reaching a
particular price up in case of bullish view and a particular price down in case of bearish view and by a 'specific time'. For every system of ours, this is
important that the view has to be till a specific time, either 10 mins, 30 mins, till EOD, for 3 days, a week, a month etc.
But since we are no God, we can't exactly define the end of the 'specific time' nor can we define that our entry is just the right time and move will happen
exactly after we have taken a position.So we need a confirmation too that we have indeed caught the best entry position and t hat too WITHOUT incurring
loss..so the question is how do we do it.
When we arrive at a decision point (and say our view is bullish) we generally enter long, we generally enter at a point where the bears have just thrown out
but are the bulls ready to charge ?generally no. Though ideally we should have entered after a pause to let the exhausted bea rs, breathe easy and cool down
and just as the bulls show signs of charging.
But most of the traders are not so paitent to do so, and since we want to be in the market, we take long position just when t he bears have climaxed and then
hold on our position till the bulls start charging....this waiting period of waiting and hoping that our position will flouri sh is the culprit and lot of things keep
running in our minds during this time.......hence even when there is small up move, we tend to exit as we are restless, parti cularly we were kept waiting for so
long for the bulls to charge.
Alternatively if the bears decide to march further down south, there are high chances that the position is held on using hope, since you are married to the
position as you have been holding it and pray- the holding strategy does not allow you to exit even you know that the movement is not in your desired
direction.
Best thing(theoretical plan) is to enter just when the bulls are ready to charge (in case of bullish view) or just when bears are ready to attack (in case of
bearish view), in actual we can succumb to our urge to enter the market and 'Get into the Action' and 'Get the first hand feel'
This can be controlled /modified by ENTERING NEUTRAL POSITIONS. Yes ENTER NEUTRAL.
So by a 2way trade( like writing AT THE MONEY -call & put) I initiate the trades in Neutral Gear that means that the ignition of my car is ON and I am standby
in a Netural Gear. I may have a view, but since I did not for sure knew when that would likely be triggered, I entered Neutra l - so I am in the market and
already in the action.....till the time the market is moving in a limited range,(small range bound market) my setups were not in much loss nor in much profit.
As the time passes, and conviction as per my system, charts and price action suggest that the desired directional movement has started,crossing an initiation
period , I CLOSE THE LOSS MAKING POSITION And than now I have a directional position, as per the trend in the market.
So I do not spend my time and energy to keep analysing, which side is right and then move to that side, BUT I AM IN THERE sit ting on the fence all the times
with one leg on each side, and swings my legs merrying in the air. The moment one side shows action, I pull out my leg from t he other side Quickly.
this Netural position help you to be in the market, but without bearing any loss as you are market Neutral,As you exit your l oss making position Quickly. you
develop habit of exiting trades in early loss - another requirement to be a successful trader.
- It helps to hold your positions for long time, since after an move in your direction, if there is a pause, you can reinitiate the opposite position and then again
get back to the market neutral position, keeping the original position in profit.
Most important: when you are having a market Netural position, and the movement subsequently happens in the OPPOSITE direction of your anti cipation,
you can exit your loss making position (the position which you originally wanted to hold ) and continue with you NOW profit m aking position (originally which
you did not anticipate to be in profit). This is how due to Flexibility ,original loss making directional bias,can turn into profits. This is despite the movement
happening in the opposited direction to your anticipation.Thus the original set up was exited midway and loss making trades where shun out, holding just the
directional profit making position and profiting from the momemtum of the fall or in some other cases would be a bull run.
So flexibility ,thinking out of box is key theme for option trader.The above techinques given large room to accomodate, right decision making errors and hence
would advise it to starters, till they have developed a good strike rate sytem which gives high probablity of right signals o n entry. Even today, I am stuck on
lot of occasion when my system though it me some indications and I do not have conviction on that indication, I enter a Netur al Trade first only to then
release the loss making trade out and continue holding the profit making trade till the end of holding period.
.................................................. ...
With a comment from Xray27, i am concluding views as option learner. Enough hints on how to trade option given -(personally i trade directional bias)
TOP 10 TRAITS OF SUCCESSFUL OPTION TRADERS
1.They Are Properly Capitalized
2.They Have A Low Tolerance For Risk:The best options traders will only trade when there is a low risk high reward scenario.
3.They Trade Only When The Market Provides An Opportunity
4.They Have A Trading Plan
5.They Have A Risk Management Plan

6.They Can Control Emotions.
7.They Are Incredibly Disciplined
8.They Are Focused
9.They Are Committed: Options trading takes a great deal of commitment. Any time you have your hard earned money at risk, you should be trying to get the
most out of your investment
10.They Have Back Tested Their Strategy
------------------------------------------------------------------------------------------------------------------basic idea of timing
.................................
first idea on TA ,which price i shall buy or sell. ALL other price r nono zone.
1] expected pt of reversal , at top ,u sell. At bottom we buy. Tough part is both top/bottom r vegue, nearly impossible to pr edict. So use fundamental concept
1] expected pt of reversal , at top ,u sell. At bottom we buy. Tough part is both top/bottom r vegue, nearly impossible to pr edict. So use fundamental concept
with conservative estimate + discounting factor= valuation ,normally buy pt. When price due certain scenario comes to that low pt, u must BUY.
Many chartist use strong support2 as this pt.
2] optimistic estimate ,with future cash should give u TARGET to sell. u must sell if price reach this zone. Again chartists use long term Resistance use this as
target to sell ,in projection of price.
3] unfortunately this top/bottom is not so easy , so comes trend trading- here we believe MOMENTUM shall maintain. Break out/euphoria is other name to
follow.use of 2ma, one short like 5, another 20 , also pair like 10/50 are very good to show with x -strength of momentum. simple profit book = when cuts
down shorter term ma.
4] those who believe in long term trend condition due to economy/country condition, may use pull back buy, to take position and then hold for longer term.
this trend trader always miss initial , but holding long made good money.
......................................
a good trader should stick to a style, or may switch ,if he can find out present market suit which style of play(i use the word proactive)
-------------------------------------------------------------------------------------------------------------------Recently there is a debate -all we know -what it is.
The same person has created in past a scenario ,when SAINT comes out........force to quit.
without going to pain of moderator , some of my observation i am putting .
1] In latter case - i have shown my daughter , there will be a trouble brewing , she ASKED why?- i told -thats why i am a trader.
One person rightly points out - negativity will run its shadow , temporarily closing of that thread & incident proves that beyond doubt.
WE AS TRADER ,DO BEST TO PROTECT FROM NEGATIVITY. NEXT OTHER IMP THING IF FOULS, we must not trade.
when our soul searches for cheap clap/ someone for easy money - the person can never be a good trader. I have seen enough of this media hype trash , who
can fool lots of news hungry gullible fools on market - but dont earn by trading. Infact they r afraid themselves to click in own a/c in seven digit fig.Nine digit
fig FM avoids to play even 3% profit , - commenting in parties they ethically dont trade from research( but put voucher to claim 8000/- )
What i mean to say -traders r different breed. The budding one ,if ever tries to get Forecasting as target for next day/3day/10 day etc. - CAN NEVER BECOME
TRADER.
INFACT our moderator tries his level best to bring novices out ,so new learner must not even think . I remember a recent Beng ali Horror film - where with
music(flute) a lady ( blue color nishi paowa) calls and people at night follows at night and forest only to die.
Finance industry create the trap same way, - consider financially illiterate can understand intricacy of business/forecasting/valuation/price action reading as
well as mastering psychology within 6month. So they come and loose the shirts.
I am the same person who commented , after 1st 10yr i would tell anyone -dont come here ,IT TAKES REALLY 10000HR.I am the same person - who tells
daughter ok,come here, but before understanding deciphering PRICE , pl go through basic (Bachelor in Financial Market 3yr cou rse + 2yr BSE Global Financial
Management Profession course)
To understand basic i spend 3yr- through ITM/BSE.
BHAO BHAGAWAN CHE- it takes time to assimilate it in blood.
2] 4yr back , i get an opportunity to train some analyst on TA/ trading. Really a futile exercise ( so recently a call from B SE to lecture on course of stock
trading , i avoid)
They always think on target , linear forecasting- without understanding basic event of Probability/uncertainity. i tried my level best to tell them - think
differently. BELIEVE IN BASIC THING.MACRO ECONOMY , MONEY FLOW , AWARE OF GREAT RISK CONTROL and habit of writing /learning f rom winning/losing
trade.......but they r born to become analyst/credit analyst/risk manager.
ADAPTABILITY TO WEAR VARIOUS HAT , - TO TAKE RISK WHEN OPPORTUNITY COMES, wait for high probability/low risk event as well as reading price
RIGHT - NOT TO LISTEN TV NEWS, I find difficult to train.
Yes i agree when to play on break out, when to join on pullback -is not at all easy for trade learner in reality. Unless u r strong in Macro economy or growth
potential of company - u will mistake . but u r ready to make mistake , activate STOP, write the logic as assumed vs. as actually happened -, u r in RIGHT
path of journey- u become a trader oneday .
some q & A
q1] what shall be nifty closing tomorrow?
A- i dont know.
q2] what shall be nifty closing this week?
A- i dont know.
q3] what shall i buy today?
A- Anything that moves in a particular direction. Name of company unknown unless market opens.
q4] which sector i shall buy this week?
A- the sector which has shown positive bias on Monday. Not last week
q5] why the hell i learn from u, when u dont this basic answer?
ANSWER: I AM A TRADER , I DONT KNOW BEFORE MARKET OPEN, BUT WITHIN 15MIN OF OPENING BY DECIPHERING PRICE , I KNOW WHERE LIES
OPPORTUNITY TO MAKE MONEY.
I HAVE NO BLOCK ,IF NIFTY SHOWS UPBIAS I TRADE IN HIGH BETA STOCK LONG. IF NIFTY SHOWS DOWNBIAS I TRADE IN HIGH BETA STOCK SH ORT.IF
NIFTY SHOWS NO BIAS, I CONCENTRATE TO FIND SWING CANDIDATE AT SUPPORT FOR LONG ENTRY.
DEPENDING UPON STRENGTH OF MARKET IN WEEKLY CHART , I SHOW U TO PLAY FOR 1000 OR 10000 SIZE, -WHEN NOT UNDERSTANDING/CLARITY IN
MIND WHAT WILL HAPPEN NEXT , I SUGGEST NOT TO PLAY.
...................................
READERS MUST understand - clarity, its not simple forecasting but direction bias we search as trader. All traders must work on his strength zone.
(just like all analyst give stress on talk,after personal experimental failure ,get money by selling newsletter )
note: views r personal NOT to hurt anyone
----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------
What is Sector Rotation

05 July 2015
05:25 PM
Detail is ton worthy writing ,only hints r given. (No fund manager tells it, as its their bread & butter)
1] Market up starts with banking sector.
2] Cement/steel - 1st sign of economic boom. followed by infra structure.
3] when transport works , infra structure ok- Power sector moves.
4] then starts consumerism - FMCG etc. Common people think of bull market .
5] official growth factor data publish - future looks bright . hotel/tourism moves.
6] With money flow automobile sales up- the sector moves up.
7] All looks good - service provider IT/pharma moves & shifts money as doller appreciated. So safe money starts to move out- dumping to fools.
8] money moves from stock to fixed/Gold etc .
9] Report some problems by media- common people understand , though some corrected - still continue slow price fall.
10] people understand recession/inflation - but broking is still ok( as short possible)- Pharma fund / FMCG in demand as defensive -all r dumped.
...........................
Again a good hope brings up some yrs later.
IF U LOOK SECTOR ,AS MENTIONED IN NSE/BSE AGAINST WEEKLY CHART OF INVERSE CORRELATION up vs down - u can get , this intermediate term trade
plan .
for intraday it not suits, some think misnomer - pair trading , for upbias buy/ equal value down bias SELL .
Hope it helps.
Learning to Day Trade

05 July 2015
05:25 PM
Learning to day trade

..............................
Most books as written r bakwas. Real day trading is not that easy nor complicated.Only psychological aspect is difficult for neolearner. 2 methods which i use
extensively ,copiable i explaining.
1] Its momentum , basically Orderflow technique, on a known stock in a particular MOB , disequilibrium by buyer/seller - so a trade opportunity.
Example : Thursday trade on Reliance from 851- 857.
2] Its basically Nifty based ,biased trade,- based on % study. Quickly u can see ,if nifty moving ,who r showing strong intraday bias -SIMILAR TO NIFTY. NOW
TRADE IN THEM FOR ABOUT 1% MOMENTUM MOVE.
.............................................
other technique : price action study= how its breaking imp high/low. Mark 5day high/low - how quickly price is reaching , then its holding or immediately
coming down , if immediately coming down ,TAKE REVERSAL TRADE, IE. SHORT AT HIGH, BUY AT 5DAY LOW. ( u may use 10day high/low also)
MIND IT I DONT TRADE ON BREAK , BUT ON 1ST TIME REACH AND REVERSE IN IT. thats all my intraday trade technique.
the failure of this technique, this 5 day high/low break shows me strong momentum ,so which i can capitalize on suitable swing play on pullback, particularly if
happens after 0230 pm.
hope it helps to intraday stock trader
----------------------------------------to learn option to become a pro only option trader, following basic approach may help.
1] attend advance option @ bse-2day
2] listen follow finideas utube or join their course,basic + greek ,they also guide how to use software .
3] follow course material of OTA, xlt option course from ebay
.............................
read some good article given in traderji.
remember - 1st understand scenario, then TA hat, then only option strategy HAT to take a potential trade.NEVER learn from below 5 yr experienced option
trader, never take a low probability trade,master pay-off curve.
---------------------------------------BSE course :It starts with a quick orientation of the basics and moves to simulated strategies and actual derivatives technicals on volatility and greeks, an
insight into the market dynamics and equipping them with the knowledge to pricing for derivatives. These skill enables identification of arbitrage opportunities
equiping the participants with a series of combination strategies.The Program also illustrates hedging strategies in lucid detail taking actual cues from experts
who are consultant of fund managers.
Day - 1
Futures Basics: Futures Product Specifications, Open Interest, Mark-to-Market Margining
Option Basics: Concept, Time Decay; Strike prices Basic Put-Call strategies
Strategy: Futures: Stock and Index Futures, Basket - Pair Trading,
Synthetics: Synthetic Call and Put strategies, Synthetic Futures Strategies
Strategy: Spread Strategies; Exotic Strategies; Covered Call Strategies
Day - 2
Pricing: Futures Pricing: Cost of Carry, Expectation Hypothesis, Fair Value Pricing,
Option Pricing: How to leverage it for derivatives trading, Put-Call Parity,
American and European Options Pricing, Dividend and non-Dividend Paying Stocks
Arbitrage and Hedging: Futures - Futures and Cash - Futures; Options Arbitrage
Hedging: Types of Risk: Basis Risk, Systematic and Unsystematic Risk.
Utilities of a Hedge for Mutual Funds Cross Hedging; Protective Put, Fencing Strategy,
Portfolio Hedging Strategies, Tailing the Hedge - Case - Live Portfolio Strategy
Greeks: Delta Neutral strategies, Delta - Gamma neutrality, Delta v/s Time; Delta v/s Volatility; Gamma v/s Time and Volatility, Vega, Theta and Rho; Volatility
Trading Strategies.
Forecasting using Options and Futures: Put - Call Ratio; Volatility Forecasting
Futures: Forecasting Strategies: Open Interest - Volume and Price Patterns,
Volatility Index
.................................................. .....................
Course from FINIDEAS - a surat base ex-bse trainer to make option simpler in hindi
What are call & Put Options?
Option Pricing & Option Greeks
Delta
Gamma
Vega
Theta
Rho
Open Interest Theory
Dispersion Theory
Volatility Sigma Range
Volatility Smile & Skew
...........................
Strategies Included
Bullish Strategies?
Bearish Strategies
Ratio Spread Strategies
Straddle & Strangle Strategies
Butterfly Strategies
Condor Strategies
Calendar Spread Strategies
Put Call Parity
Book Building Strategy
Short Gamma Strategies
Low Delta Short Gamma Strategy
this will be shown in software in live data, so high probability event can be traded as it occurs.
----------------------------------------------------------------------------------------------------------------when u have learnt them ,easily we can follow various concept
when u have learnt them ,easily we can follow various concept

no1- what type option trader ,u want to be and on what condition of nifty/stock that happens in india.
spread strategy easily playable.
if u could find out some event may not happen,very low probability - practice underwrite option.
pl use any software or good platform like IB where strategy can be checked .
mind it - option can not be applied everywhere,-actual price move within expiry definitely limited.
AT support/resistance or imp pivot futuristic scenario preparation helps.
normal expectation by participant in form of implied volatility mostly wrong -learn to trade against it, ie. high IV sell option ,low IV buy option.Use volatility
expansion -contraction cycle.
EFFICIENT MARKET WHICH NOW COMING TO INDIA, will provide great opportunity to swing based option trader.
ROLLING CONCEPT IN OPTION to be learnt last ,after profitable strategy implementation.
INTRADAY option is very easy to convert from successful intraday trader- simply define the day quickly , UP PLAY CALL,downday -use put , last week ,we get
excellent opportunity both put and call respectively, formation of trend = use option.
but if u r not already a successful intraday ,nor a swing - trying in option will bring bigger loss, - math base arbitrage or delta neutral strategy u can try ,
provided gone through 6 month software based paper trade.
warning : OPTION IS A WEALTH DESTRUCTION TOOL
-------------------------------------------------------------------------------------------------------------------

To Be A Trader-20yrs

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To be a trader - 20 years' journey from novice to pro novice

SOLILOQUY-here i express my past in the context of trading

CAN ONE LEARN TRADE ?

so r u ready to learn further?

now the gambler...2000..again see..bottom fishing...

but watch tv patty..price quote.....

A 40000..SALARY..TRY TO GET 50000...RISK TO LOSE..30000..THAT MY LOSS LIMIT...BETTER PLAN...

no i am not good trader,,,simply..market.. favours me..i am simply lucky

SO A BABY TRADER IS BORN AFTER CONCEIVE[ TA+FA]

DIARY WRITING A MUST FOR ANY TRADER..HERE I LAG.

FINANCIAL RISK/ TRADING

FINANCIAL RISK/ TRADING

Proper position sizing

It is optimism that is the enemy of the rational buyer.

therefore I will do thus and so."

the trend as well as the important support and resistance points

so i open my material ...start copy paste...

So whilst fundamental analysis may provide a theoretical stock value

affecting supply and demand at that time.

style of broking house

Trade Element - SOFTWARE

I CHOOSE..METASTOCK...OLD PRO KNOW..IT CAME .. 1993..DALAL ST. ADVERTISE

my job is complex..new place..new idea..i have to..learn..OFFICE WORK FIRST..

those who firmly believe in pattern..i remind pattern smasher..introduced india..by

Using Fundamental Analysis

Using fundamental analysis,,,

some more thought

5]no ifs & but in competition..

2001-02 come back as day trader..

many help available @traderji.com

5] personality& trade analysis

1] TREND AND NON TREND BOTH EXIST IN MARKET

What may work in indian stock market

What may work in indian stock market

4. Lose your ego.

1. Loss of opportunity is preferable to loss of capital.

8. 'You are only one trade away from humility.'

IF BELOW 30, ENJOY AMATEUR STATUS..NEVER DREAM BIG...

AT WHAT STOP LOSS STYLE...STOP % ..YOUR OVERALL RETURN IS GOOD

here actually pro beats amateur easily

Stock Scan Model

stock scan model

SYUDYING YOUR MISTAKE

time to observe[search mode] and right time to implement[execution]

and see the ploy/decoy..so called news trap and marketing/gimic...

hence choice of a higher time frame necessary to act...

The eureka moment causes a new connection to be made in your brain.

Then comes stage four

Stage Five - Unconscious Competence

But there are two key issues you need to appreciate

It is not a set and forget approach.

1. select the stock

mid-cap or blue chip stocks only

This last point regarding volatility is crucial.

The 24 Most Important Rules Of Trading

Which is "easier" and which is the right choice?

Here is copy paste -check usefulness of them

TRADE theme...DAYTRADE VS SWINGTRADE VS POSITION

INVIDUAL SENSE .. OF BULLPOWER ..BEAR POWER..MUST..

DONT JOIN IN all 3 VENTURE......observe other in brokers office.

remember market mode = trend + cycle