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Old 15-03-2015, 07:04 AM
oilman5 oilman5 is offline
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Default trade learning in a professional way-views & wisdom

Hi,
as to give clarity on Trading , i shall put my views - which will build up slowly to become a trader.
The aspect will be I - though u can change it in your way.

Many of old post , in a structured way , in the context of market, learning aspect, psychology ,Trade system basic ,facing uncertainty- from advance learner to Pro's approach will be given.
Chosen to write here- as controversy shall be filtered. U r a good Pro, a system u have- may not any utility to U.

But transforming from Novice/learner to Advance learner to Semipro then as trainer/ Pro - after looking back on various aspects ,where i lost a many years

a view to save your time(not to go to blind lane) with hints shall be given. As pure spoon feed , i dont believe , no chart shall be posted - u have to put effort/time.
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Old 15-03-2015, 08:37 AM
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No 1 thing= trade psychology
no 2 thing = Market and its analysis to search opportunity /threat
This can be done by SENTIMENT ANALYSIS/MONEY FLOW/ TA + FA
yes this 4 are independent of each other, say a stock is good technically + fundamentally , but big fund wants to get out due to money redemption, so price shall fall now.

4 matter we must know to understand market-
i) market cyclicity - greed/fear cycle
ii) economic cyclicity -demand-supply/production-economic growth, it is lagging the market cycle by around 6-9month
iii) political whimps/favours - nexus with big business house + funding institutions
iv) build up expectation factor/ trap creation by operator + media hype

u have to a little 1st hand knowledge in them,later by deciphering price u can understand it- while its happening.

No3 thing -TRADING SYSTEM THAT SUITS U.

a novice can not be a trader, maxm a tradelearner. Basic a novice thinks - an entry,exit, position size, stop trigger+ add on winner -makes a trader, entirely Wrong - a trader is more a synchronized person to EXECUTE WHAT TO DO WHEN AS PER SITUATION OF MARKET - VOLATILITY,UP/DOWN TREND ,SIDEWAYS CONDITION + APPLYING SECTOR ROTATION. Just see recent work of CV(jj)-mind boggling effort he has put to come that level.( once he stated - psychology -its nothing,he had achieved to that level)- and thats why he trades in leverage product option/future.

2 basic approach - swing or momentum , has to be dealt first in great detail , when swing occurs ,at which condition of market, - what type of money flow creates MOMENTUM.
How u have to change them ,as per volatility of present market.
Yes u have to create/play atleast 3 yr in small a/c , to decide u r not one trend wonder,
Comfort level to play big - no adrenalin rush .

A good trend trader is nothing but see big picture of continuity , when new trend starts.
A counter trend trader, understand limit/extended limit pt of the move -so take opposite -small position first ,then add at the proven sign of reversal.

Holygrail of trading = nothing but maintain serenity ,good risk manager, taking trade as per set up + market condition,+ skill to add on winner
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Old 15-03-2015, 09:24 AM
oilman5 oilman5 is offline
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No 1 thing-psychology
..............................
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 necessity .
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.

one has to cultivate this 4,....thats why behavior modification.

Soon other 2 factor......mother of any venture,......time management and knowledge comes.

now comes another exceptional quality PERSISTENCE......its unique in trading field, insistence to comeback for fighting for another day.
.............
Pros know when not to come back, when to accept challenge.......So av joe must realize that- Pro is superior , also know flexibility.

now as a new venture ......reqd balance confidence ,,,,,that is called for. To create this balance confidence.........we normally follow some back testing, what works in past.....those in advance stage , 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]

actually change of market condition always keep a trader on toes ........here a master fights against 2,.....other master traders and market.but novices has to fight on self,which system to choose,whether to take a trade, a dilemma to trigger stop - all r distractor of time.

any personal disturbance /other priority .......dont trade.
do u have ask anyone..............DONT TRADE.

another is transforming knowledge of other field's experience to trade arena.
I an ex-chess player ,prefer strategic thought.
while learning trading ,chess model helps......as it teaches unpredictability, skill of opponent[adversity]lucky if opponent accepts gambit/trap.........oppurtunity backed by price confirmation.
.........................
in learning from GM.............similar in trading, read Livermore,Gann,elliot wave as strategic guideline to market cycle with human relation,Larry william,great lady Linda.
STRATEGIC thought process development.......Van THARP,Dr Elder
Tactical planning ......WAY TO TRADE.....by John piper.
Tactical implemenation ....Joe Ross
Complex strategy..........dynamic trading
technofundamental trading ........Mark Boucher
...................
taking trade coaching.......tradingmarkets,com and online trading academy
those who love TA.....tony plummer 's analysis is extremely readable.
those who love psychology........Mark doglous.
..........
i personally feel .......any trader .....has to develop on volatility market concept in india.
as computer as essential.......is a good tool for scanning to find set up/condition to trade quickly.
btw........survival and obvjectivity if not,............no need to study......as trading itself is harmful for that person.
..........here KEY is concept build up.A hint .....read cfa book to understand fundamental
LISTEN to BSE course lecture........what they want to see in future.
ALSO sharpening ur skill , if u r a programmer , practice more programme for further objectivity.......for execution ........bigger size position.
also future long term skill to learn.......holding winner, add if possible.

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 oppurtunity.
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.

...................................
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 placement boys r taken on av 40lakh salary.......to teach them in 3-4 yr, with may give return of 25-30% later.AND there 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.
the back ground writing at traderji...........a compilation clears essential requirement,tools very well.
read JJ .....wisdom dump & UASISH..........so MODEL is before u.
KNOWLEDGE ...behavior modification........fitting what works for me......fine tuning comes last.
u know probably..........active.......IIM produce good investor , as their professors r failed trader.
understand reality........street fighting......only be learnt at street , by fighting only.

understand difference of predictabiliy vs. speculative.......
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.
.....................................
Quality: patience, persistence, self confidence,
Acquiring Correct Knowledge: what is market,use of multiple timeframe, understanding volatility, risk management
A typical trading software - its basic idea to develop objectivity to convert your understand of market into money opportunity
What is playable by ur comfort level: reversible, continuation or trend , buy low-sell high range maket.
SKILL building : watching nifty chart & your stock list chart daily, - developing price action study vis-a-vis NEWS based reaction.Use of leverage when ur strike rate > 50%,
Copying PRO, taking guidance of a MENTOR
Mechanically doing money /postion management
Define your EDGE.
Use of TRade journal and creating STOIC mind -
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,,,,,,
after seeing immensly indian market this i find useful as follows
1] some candlesticks like bear engulf/bull engulf, doji, hammer helps in short term price prediction
2] Understanding inverse $/inr with nifty helpful
3] MA shows some continuation bias in trend following scenario.
4]william% r helps me to understand reversal in sideways market.
5] Pivot , particularly breaking pivot, as well as gap move - helps to understand strength of momentum.

BEHAVIOR MODIFICATION- it takes time as its a transformation, psychology & money management -comes under it.
TA TOOLS R VERY EASY- STD BOOK explains well.
candle
line chart
momentum
up trend/down trend -side way market.
MA SLOPE FOR TREND,2ma to understand trend strength, overbought-oversold , divergence,aroon,william%r, wrb,high volume - momentum, gap to measure emotion.

ACTUALLY TRADING STARTS WITH FACTAL CONCEPT, MULTIPLE TIMEFRAME,understanding accumulation-distribution ,trap by media.
FUNDAMENTAL IS ACTUALLY a filter ,which to trade,and when to hold for long haul.
SOFTWARE CREATES OBJECTIVITY AND BETTER EXECUTION.
PROBLEM IS EMOTIONAL CONTROL . U MUST HAVE A PLAN BEFORE TO ENTER , AFTER EXIT HABIT OF WRITING TRADE JOURNAL- which will be studied once ina month ,to check ur improvement.
Confidence + competence ,help with fitment of a trader with a particular style and its syncronisation with market = successful trader

where u can guess the direction ,the direction = choice of your timeframe.Say after watching price/pattern ,u can tell within 15 min price shall move up. then u can be a 15 min. trader, if u can tell within 1hr -it shall move up , then u can be 1hr trader.If u can tell within 1day it shall move up, u can be 1 day trader, if within 1 week it will move up, then u be 1week short term trader. THIS IS A SKILL ,WITH PRACTICE IT COMES- until this u r novice. STOCKLIST = IN THE STOCKS WHERE IT CAN BE DONE BY U.
u may be right only 5o% time, thats ok- stop loss ,be ready to be hit for 50% time.

Without this also u can trade, using TREND FOLLOWING- MOMENTUM OR PULL BACK ENTRY ,with small target. SMALL TARGET AS i give space to understand from confirmation by price.
u have to search market opportunity , where nobody should disturb ,preferably EOD about 2 hr a day.
A good pro does about 4 hr- also live on present ,ie. take what is offered by market.
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  #4 (permalink)  
Old 15-03-2015, 10:10 AM
oilman5 oilman5 is offline
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no 2 thing = Market and its analysis to search opportunity /threat
This can be done by SENTIMENT ANALYSIS/MONEY FLOW

JJ has done excellent in following thread, nothing to add.
http://www.inditraders.com/futures-o...-new-post.html

Actual moneyflow may also to be seen $/inr relation,- if dollar value is increasing, nifty may go down is actually FII is selling . Similarly if FII r buying , dollar coming ,so rupee value should appreciate, -create NIFTY UPMOVE.

Fundamental analysis

accounting principle
profitability of a company
project execution skill
relevent law and compliance
product cost concept
valuation of business
principle of marketing
motivation principle to retain good employees
forecasting idea ,social fad and trend
macro economy and govt policy

EIC(economy-industry-company) model implementation

INVESTMENT PRINCIPLE
................................
how to utilise better return in future..........risk mitigation principle,valuation for a sector........which principle to be followed..........how demand/supply of product shift valuation ,
when to be contrarian.

What i understand........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.......and which i have seen some years ,i see.

i have poor understanding on export/import......here i lose,also in media sector........so i avoid them.

.................................
So equitymater and capitalmarket i study for fundamental. Once i gave a detail review on Pharma - to understand basic of a sector.
Somebody prefers various Model to find valuation ,based on FCF ,but do sensitivity test.

Remember : use money to leverage this valuation are prepared by academic,not TRADER.
Good undervalue = buying opportunity ,
All lose making when turns profit, takeover candidate= buying opportunity
TRADING & INVESTMENT R 2 DIFFERENT ASPECT, BY HOLDING LOSS-NEVER BE AN INVESTRADER. INVESTMENT SHOULD NOT BE CASHED BEFORE A YR.
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Old 15-03-2015, 11:56 AM
oilman5 oilman5 is offline
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ANOTHER TOOL TO DO ANALYSIS -TA
.................................................. ....
A controversial topic, liked by novice trade learner. I tried to learn 1991-97,- from available literature /books -plotting manual close value on graph papers, understanding trend/trendline - Donald Casidy ,Magee written books. But later reading by PRING on market momentum/TA explained and Tony Plummer -psychology on TA actually gives me a jump.I still remember my game on 2000-2001 on Metastock as a toy
But only when i did a course from tradingmarkets dot com, famous trade mentors that time- i could understand what is what- as i have american market data, where they teach, i can see it in metastock (they used TS) - so patterns r easy to remember.
Another lucky break came, when i met accidentally Mr D Mahinder(father of Rahul Mahinder-Metastock data seller in India)- who shows what is possible, - a kolkata based vendor ,gave me how to learn Metastock hard copy-with syncronisation in indian market, who knows from chess how to play new move, going to unchartered territory.
So theoritical knowledge , practical guide on how TA work , its application on indian market - a place to practice in Gujarat Dabba market -2002-03 hooked me EOD studied -intraday partime trader . On regular basis , i spend a good value on learning ,starting with
Sandeep Wagle -TA & mechanical trading, Hitendra Vasudeo -momentum trading, later with onlinetradingacademy(which then taught orderflow and 1-2-3 pattern ). Swing trade i shift to learn From a dvd course of Landry (2006) + candlestick from Steve Nison
My trading skill further improved when i could read trend-dynamics -a course which take about a yr & half.(So 2007 end ,and early quarter of 2008- i am a good discretionary trader- conceptually expressed many a thing in traderji.
Soon i try to put some idea for mechanically trading, using metaformula dot com,but failed.
Also learnt 2yr for financial market course from ITM,- which improve little bit of doing valuation personally- so useful for longer term trade. Spent 6month time to learn Elliott.
Further keeping up, bring me in touch with some good traders + 2010 onwards with OTA.

Also prepared some applied course for PROs, in trading aspect.

Some of its imp feature i may put now.

MOST IMP ASPECT OF TA IS DESIGNING A TRADE SYSTEM, not the analysis.

TA is really a vast subject , most of which is trash. Which may be useless for me, may be
very useful to U.
Stick to basic. STOPLOSS and position manage is more imp.

Break out is nothing but spl condition of continuation thrust.
REVERSAL .......another strong principle on trading
........................
governing guideline behind this principle to be understood.............and when they can shift to HIGHER TIMEFRAME.THIS i call mastery in trading.

SAY.....intraday profit......3%.........can i convert to swing , may get 8%.
SAY positional profit........20 % in month 1, can i convert to 6 month HOLD........50% return
Similarly........a quick fall of 4 % , must be stopped out,.......as otherwise it has potential big loss of 25% in a month.
Market is reflection of human mind,.........so chart should primarily to understand that,then at higher side,......whether continuation possible...if WHY.if not reversal......why ???
similarly at bottom cycle .......question what u see , then can it be a money making oppurtunity for me.
MEDIA hype has to be neutralised.......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.

variability of cyclicity ,time factor of completion of wave or ew........r itself variable ie. subject to market ........ie prediction can be easily proven WRONG by market........so they r not valid method of trading, but good to lecture & analysis.
........due to ur reactive nature, forward looking consideration , probabilistic scenario u can many a time WRONG in market..........so comes stop loss.
ENTRY set up has to be understood in the context of MARKET , sector rotation & moneyflow.........not vice versa.
CONCEPT of EXIT........is concept of maturity .......so it can be learnt with experience.

technical trading :
some signal generation is part of indicator's usefulness. but first decide what u shall do with that signal.
here is the question first..........indicator shall be used for mentioned purpose.
WHETHER TREND EXIST IN MARKET?
what is MY defn of uptrend.........what condition its no longer up trend?
similarly for down trend......remember down trend slope is steeper.
.............
if no trend , ITS VOLATILE OR TRADEZONE MARKET.........HOW I AM DEFINING THEM
for trade zone.......BUY at support philosophy should be used.

now u define momentum strength............volume accln is quite helpful ,volume spike study also to be seen .
any one ,maxm 2 momentum tools to be used.
next come UNDERSTANDING of distribution..........its a key tool. it can save u from bad decision easily.
.........................
sometime i also study DIVERGENCE for positional pick up.
at support strong spike ......i find very useful.
previously i use aroon for...........trendliness......but no more useful.
........................
FIB has its utiliy.......but for me no rational logic, may be a biasedness of trader.
i have some pattern biasness , but they r subjective.
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.
.................................................. ...............
so 3 force co exist in market...........trend, reversal tendency, fractal [random factor]...........u as an observer who is dormant NOW.....also who is favorite
HIGHER FRACTAL.......define as highly efficient market.
ur duty is who will rule soon ie. near future...........
if u believe in trendiness.........that occur around 4 month in indian market.......other 8 month NOT GOOD.

IGNORANCE is highest risk, MOOD swing next,OVERCONFIDENCE then.
..................................
basic thing .....2 approach......comparative and absolute.
in absolute u see a stock ,its state & behavior.......in respect to range/trend/break out/reversal.......suitable leading indicator may be used .
past study.......leftside analysis........helps to develop what may happen.
Next is comparative.......so how nifty behaving with other global index/then which sector of bse showing better strength.........preferably weekly trend .
then only outperformer of that sector.............here METASTOCK helps me ,as this comparative analysis can be done easily .
also basic scan for choosing stock can also be done.

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]
When looking at charts on a stock everybody is looking at what the big patterns
are… Obviously understanding what the big patterns mean is extremely
important. When I’m talking about patterns, I’m talking about things like double
tops and head and shoulders, Patterns are great because it’s a bigger picture but they’re made up of individual smaller components, which are the price points either through the day or if you are looking at a weekly chart, the weeklies.
What those individual components really do is point specifically to where the market sentiment is. And when you look at that sentiment over a sustained period of time, it gives you the trend from which you can then base your investment decisions
This is about being able to identify the overall trend based on the specific
sentiment as to where the buyers are at on a particular day. Are the buyers in
control of the day or is it the sellers that are in control?
Now you can’t have a buyer without a seller. The issue then becomes the
dynamic of price. If you’ve got two people, one is set on the sell side and one on
the buy side, and the seller is looking for say 100/- for that stock and the buyer
is only prepared to pay 98/-...
…the question is, will the buyer come up and pay 100/-or will the seller come
down and take 98/- Well that then depends on the dynamic within the stock,
the appetite for the buyer to really want that stock in that portfolio or the seller to
want out.
So let’s say you’re looking at the company that you’ve got a fairly bullish
expectation on, the buyer is more than likely to want to come and step up and
pay a little bit more.
Sellers are quite happy to sit back and wait ie not accept a lower price – and that sort of
dynamic then contributes to price actually moving up.
Once you understand that dynamic of what’s going on, the willingness of the
buyers to pay more / the willingness of the sellers not to accept less, you then have
a very, very good gauge on the sentiment on the individual price day.If sellers r willing to accept less value, with new sellers coming ……hammering the price down.
This allow you to make a more rational investment decision, which is based
on the actual momentum within the market.

learn to play in atleast 3 types of market.......trend UP /DOWN ; VOLATILE , SIDEWAYS market.........mixing of them can be learnt later.
use very simple indicator..........but master over it.understand......price variation can be reflected in them.......so that......by seeing change in Indicator........u can develop to predict Right side of chart.
MA- X simply suggest trendliness, momentum tools use for strength.......support/resistance breaking tells us about future of a stock.

In short term trade ,we search for bias ........bias for direction. imp is pivot.........pt of conflict.......known seller /buyer may take position to test market........based on their system.........actual system of earning is ........how bull/bear is losing battle ......so comes Oppurtunity........say yesterday,,.....upside conflict at Nifty 8280.......tells me many 3% probable upside trade exist , which has potential to go 8% ........they r to be taken.
Remember the flowers idea.........its the continuity ........breaking of higher pivot.......potential trade exists.
problem is in daystyle ........many may buy there,where as higher timeframe players r actually fading............so unless u know beforehand who may win..........mostly u shall in loser side,including self.
so u have to add some filter say simple 20dma with a some 1/2 hr price bar for continuation + volume accln filter..........u see winning trades r looking at u.

1]learn to use charts and technical indicators in a clear, simple and concise manner to improve your trade entries and exits
2]Further refine your ability to use S&R lines, trend lines, candlesticks, continuation patterns and more.
3]Learn how to truly understand and use Indicators for what they were designed
4]Learn how the new cutting edge TotalView.Fibonacci numbers and ratios point to specific turning points in the markets' movements. Learn how to use Retracement, Extension and Projection Analysis to maximize your profits and tightly control the losses.

Use of IMPACT TA ,including GAP + Understanding the Market from Economic Data Releases and Sectors Rotation will be done.
•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


In trading/trade learning structured approach is more imp.
1] some candlesticks like bear engulf/bull engulf, doji, hammer helps in short term price prediction
2] Understanding inverse $/inr with nifty helpful
3] MA shows some continuation bias in trend following scenario.
4]william% r helps me to understand reversal in sideways market.
5] Pivot , particularly breaking pivot, as well as gap move - helps to understand strength of momentum.
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Old 15-03-2015, 12:56 PM
oilman5 oilman5 is offline
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No3 thing -TRADING SYSTEM THAT SUITS U
.................................................. ............
trading system is an implementation of trading business. business is more strategic, its tactical implementation is we r exploring, based on knowledge and experience.
A system implementation must controlled through trade-journal a closed loop to control impulsiveness in trading.
Trade journal is very imp tool for a trader.Trading & Analysis – Intraday, Swing & Position.......wherever u do , pl write in detail & read in weekend.
Personal Trading Plan will help you tackle one of the most challenging obstacles faced by new and experienced traders: how to develop a decisive trading plan. You’ll learn to develop an honest personality profile of yourself and tailor your trading plan to consider your skill level, risk tolerance and other important factors. Finally, you’ll learn to develop a consistent trading routine and review process of your trades.
learn:
• How to establish your business and Trading Goals
• Advanced Money Management strategies
• How to properly critique your own performance and adjust your trading plan on market condition.
Strategic aspect= let profit run/ exit loss early, also adaptive time frame concept and cyclicity of market.Time factor of completion of wave ,r itself variable ie. subject to market ...hence prediction can be easily proven WRONG by market.
forward looking consideration , probabilistic scenario u can many a time WRONG in market..........so comes stop loss.
ENTRY set up has to be understood in the context of MARKET , sector rotation & moneyflow.
development of a portfolio- a list of stock and condition to trade.

for advance level...........STATOR.......is a good trade management software
for metastock user JBL is ok, but u can make a template easily like that.

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 don’t understand that you can greatly increase your returns by
having some definite risk management rules .
Just by having a stop loss in place, you’re limiting your downside risk before you
do anything else.
Once you’ve 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 you’re doing or the
instrument that you’re trading or the approach that you’re 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 stop at might be below holding support.
If you have a stock that has been falling down, say it’s consolidated around about
100/- and it started to move up and you’re 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 you’d want to get out. That’s just one methodology.
When you’re 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 I’ve had a look at those last ten or so days, I identify the most volatile day – anywhere there was the largest trading range. Once I’ve 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 I’d 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 you’re going to get consistent
results.
So it’s 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 process you will get consistent results – good or bad.
But at least you’ve 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. Let’s say you have
500,000/- to trade with, the most you’ll 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 they’re first
starting out.
So to give an example, you might use a 5% stop loss, you’re not going to risk
any more than 5% on your trade, so if you’re buying into it, a 100/- stock that
means if the share price falls to 95/-, that’s where you’re going to be getting out
- that’s 5% less than your entry price – no emotion or doubt, just an exit out of
the trade.
Again, you’re 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 you’re doing the same
thing every time you trade.
best way i can describe a trade system, which give consistent return........as a model simult display of a GM against av chess player,.......its many time done in india, in big city.
Concept is famed player,GM plays against a lot chess enthuastic 20.....50 ......100 in clock , normally 1st move WHITE,.......walk and give move.....and play simultaneously. HOW?
YES he has many yr preparation on that line.......with all known variation in brain , at least 15 move opening ,within a minute.2nd he has tremendous pattern recognisation capacity.In middle game he is tactically superior to all his opponent.Position understanding of his .......is far superb.When he walks before a board , he simply can concentrate posion at hand, find a superior move[dont waste for the best one]...move way to next board , play similarly,,,,,,,,and continue.HE may lose 1-2, 2-5 may be drawn,but most others r definitely WON by him. He concentrates against strong opponent , think and use end game knowledge .......play AS PER DEMAND OF SITUATION.
.........He never bother for a particular table move, just play .......best of his callibre ,coolly.
THIS is the way fund manager trade, ........as per position/time demands......single trade never distract..........he knows superiority of his system........knowledge,application,calmness.
basic clarity of a trader.....a model for job fitment......pentagonal peg and 5sided hole.

read Livermore,Gann,elliot wave as strategic guideline to market cycle with human relation,Larry william,great lady Linda.
STRATEGIC thought process development.......Van THARP,Dr Elder
Tactical planning ......WAY TO TRADE.....by John piper.
Tactical implemenation ....Joe Ross
Complex strategy..........dynamic trading
techno-fundamental trading ........Mark Boucher

BAND/range/zone is a concept useful ,also TREND/continuation. Next comes momentum thrust/break out........naturally if excess, reversal is expected.
Normal small price variation is random zone, quickly doing it with unpredictable nature we use the word "volatility'
this 4 [band/trend/momentum thrust/reversal] + 2 [random move/volatile]......are six thing only we deal,.......through chart.......we try to predict on right side. for a common trade learner last2 random/volatile........is to say smaller or bigger uncertainity.

Trading System :
The way to avoid this is to build a trading system or process. The consequence of
having a trading system or process is that it enables you to have a very black and
white, non-emotional approach to trading.
With the trading plan we have a series of check list. The first three or four are absolutely non-negotiable.
By having a series of questions within your trading plan, you are looking at each
individual component of the trade in an objective way. You arrive at either a yes
or no answer. Once you have four, five, yes or no answers in place, you’re then able to read that in a way that says yes, there is a trade here or no, there isn’t.
We’re talking about the trade set up, what your specific entry triggers may be to
get into the trade, the points of confirmation by price /volume that you are looking for.
When all those ducks line up u shoot……….thats you’ve got a trade.EXECUTE.
Whereas if you’re thinking emotionally and a stock is really running hard – and
you think you should get in now before it’s too late – that’s very much a random
approach to the market. As a consequence, you’re going to have much more
random results in the overall performance of your portfolio.
It then almost depends on what sort of mood you have… whereas
you should be working towards having consistent results day in and day out by
having a mechanical, very robust approach to picking your stocks irrespective of
your frame of mind. The check list system works regardless of how you are feeling. It will force you to get the facts out on the table and study them as objectively as possible.

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 you’re trading is just as risky because
you’re going to get smashed in the market anyway.
By learning and having a fairly robust trading plan, all we’re doing then is
leveraging off our ability to pick stocks correctly.
Let’s just say for argument’s sake, 6 times out of 10, you know you’re going to
pick a winning trade that’s going to make you 15%. And 4 times out of 10,
you’re going to pick a bad trade that’s going to enable you to lose 5%.
On the basis that you’ve got good risk management on your downside with your
stop loss constraining any loss to 5%. But when you make money, you’re letting
your profits run quite hard. So why wouldn’t you introduce a factor of gearing?
Gearing with a margin loan,futures, option etc.
All you’re really doing is amplifying your upside, your downside you are
constraining to 5% still. So if you’re 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 you’ve 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%, you’re 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 there’s 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. That’s the area that’s not as rosy. It’s 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 you’re ready for a fall. And if you’re 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 you’ve 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 that’s 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= stock sp play @ resistance and support

learn to play in atleast 3 types of market.......trend UP /DOWN ; VOLATILE , SIDEWAYS market.........mixing of them can be learnt later.
use very simple indicator..........but master over it.understand......price variation can be reflected in them.......so that......by seeing change in Indicator........u can develop to predict Right side of chart.
MA- X simply suggest trendliness, momentum tools use for strength.......support/resistance breaking tells us about future of a stock.
future of NIFTY and MONEYFLOW.......comes before everything.
effective risk management= where to put stop....../when not to play

Next -how far smoothly i can trade and can it be transferred to others.......or otherwise unique to self.
trading system cuts out sensitivity in trading and develop objective view.so price speaks where is opportunity ?-what may happen now- so simplify execution.......Next various scanner search /give u oppurtunity in real time,.......just like a sharp shooter fights against sword champion from a distance.......... SO WINNERS R EXPERIENCED ........mind it many extra night they r awoke to prepare THIS SYSTEM WORKABLE in market.

1] oppurtunity shall always come in market, play when it comes.
2] what suits you naturally ? bull/bear/volatility
3] time frame u have mastered .........its absolute imp.
4] What u think , u plan to execute........trend following OR trend reversal .....absolute must to earn consistently.
dont look back investment , if u plan to trade.
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Trading system in tactical aspect
.............................................

Based on 1st hand experience on market, it takes about 3yr to finetune it.
trading offers great number 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.

1st principle
..................ABC
A ACTIVATION ...TRADE ENTRY
B BELIEF .. if trade continue as wishes ok.
C CONSEQUENCE , If price turn opposite get out.


hence a system of timing must have
1. set up condition- set up should be repeatable ,workable in present market
,risk/reward >2 with higher probability of .7 of happening
2. entry
3. exit...profit target - predefined , may book early if market condition vary
4. exit ..contingency plan- immediately cut off loss.


Can be break down for as per DIFFERENT CONDITION OF MARKET
..................................................
1. RANGE BOUND MARKET PLAY PLAN
after bounce in support ..price just starts moving up.
or after long fall, weekly chart engulfing bull i use for entry
in rangebound market...willium%r at oversold zone good indicator
2. TREND MARKET PLAY PLAN

u have to define entry characteristic .
1. entry after break out over longterm resistance zone
2. sector starts moving up..stock has good rel strength comparison within sector.

3. MOMENTUM BASED INTRADAY BREAK OUT PLAY PLAN

its the directional bias...where most waiting watchers r ready to join.
price higher high break out concept.
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
4. -MOMENTUM / AT TOP QUICK SHORT PLAN
this condition to be created by media..rumor of market shall go up ..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]
NOTE -hold ing portfolio creates a conflicting trade..better sell holding first.


Some other comments:You have to put indicators in context. They’re 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.
to achieve success in speculation—through hard work, persistently hard work. If there is any easy money lying around, no one is going to try and give it to me—this 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.
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.
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.
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 different name].he knows how far he understands...his limit..so now practice on regular basis[system]

and follow it diligently[discipline]
HENCE THIS KEY WORDS I THINK IN THE LIGHT OF IMPLEMENTATION BY U.

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.
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 thoroughly-considered 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 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?

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 -its immaterial ,most important is sitting down and doing it day 1-2-3 and daily.)
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.

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?
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.
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.
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.

* 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 re-evaluation. When things come unglued, back up as far as necessary to regain your footing.
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, you’ll have a deeper and more rational perspective). This is more than just the reason for the trade.
At the end of the day, review your decisions. Did you make good trading decisions, i.e., did you follow your rules or not?And then you write down your detailed plan for the next day .
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
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, 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 moves—or 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 encounter—again and again—those 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 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 practice—and especially the direct experience of knowledge-in-practice—are 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.
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Old 16-03-2015, 01:36 AM
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So after a little doze on psychology ,MARKET ANALYSIS BY SENTIMENT INDICATOR/MONEYFLOW + FA + TA ,we r trying to amalgamate them with a concept called TRADEWHEEL.
trading wheel= understanding risk management, market uncertainity,ur price reading skill, position management,confidence, flexibility, Discipline & writing tradeplan before/writing trade journal after with reason of profit/loss book MAKES u a trader .
3rd element on trading - trading system for U , actually takes strength from other 2.
U factor has to be tackled by PMA - positive mental attitude to be practiced to become stressfree,- reading good quotes,exercising .
DISCIPLINE (OBEY COMMAND)-helps to follow risk management, keeping EFGH(ego-fear-greed-hope) out of trade.
Since futuristic model , depends on uncertainty - STATISTICS -representing data to get objectivity and otherpart PROBABILITY HAS TO UNDERSTOOD PRESENT CONTEXT -the time frame u trade.
where u can guess the direction ,the direction = choice of your timeframe.Say after watching price/pattern ,u can tell within 15 min price shall move up. then u can be a 15 min. trader, if u can tell within 1hr -it shall move up , then u can be 1hr trader.If u can tell within 1day it shall move up, u can be 1 day trader, if within 1 week it will move up, then u be 1week short term trader. THIS IS A SKILL ,WITH PRACTICE IT COMES- until this u r novice.
RISK/REWARD -SIMPLY PRICE TO ENTER- STOP PT/ 1ST TARGET U PLAN TO ACHIEVE WITH HIGHER PROBABILITY

NOW we do analyze EOD chart ,based on this, and keep a candidate to trade nextday, using CONFIRMATION BY PRICE ON MARKET i enter, if price confirmation is not there- simply i dont take the trade.
..................................................
Bull phase,bear play -sideways ,volatility all r part of market phase.Bull market/bear hug = trend game plan. Volatility special condition to play -entirely different skill is reqd.
Dont play in FOREX, but learn in simulation,use free seminar- it create an warrior out of u,to be a stock trader in indian market.
why i dont trade in forex? i am not comfortable that high Leverage,nor that small move, also since big fund can play easily against me. Moreover actual both the currency reflection is actually reflection of their economy where i am novice ( i only know indian economy)
Why i dont trade Commodity ? again leverage problem, sudden extra news flow may quickly change scenario. So only commodity i understand is crude oil- no metal,no agri product.
Why i trade stock? its my battle ground - year after year,like my childhood learning in indian market from 1991- i enjoyed,day in day out participated -fought courageously -lost a many won a little about 10 yr, So i know its every corner -upmarket ,down game, trap by broker, my foolish call taking/TA practicising/academic valuation , largecap- midcap, specific sector moving up/down - the lies from media.
The rules of the game, slowly fit with change in market condition.3 condition for market - trend -trend termination and reversal ,clarity of sector rotation -clarity on how traps r created , later syncronised with heavy dosing of study on trade-psychology.An opportunist to never die attitude, highest perseverance to learn , spending about 20% profit on learning-may have toll on health-but is survived by bless of ladyluck and early study on statistics.
- THROW OUT ALL GARBAGE ,FILTER ONLY THE ESSENTIAL -ENJOY TRADE.
odd enhancer = understanding risk & mitigating it by not participating when its high , also to understand high probability set up.
In banking system,also in project management they taught -dont put a wrong person, same like buying at NEW HIGH.btw - if u could visualise - 3yr up move ,the first 3month is not at all high,its the best buying opportunity.So reference timeframe is very imp for ur style of trading. Time again i have told , 2min maggie trader -profit is good to see by 15min trader,-a good observing pt for hr chart trader. Strength of hr chart is observing pt for normal swing trader. The higher timeframe trader has the luxury to see now what happened in DAY ,end of week basis- only to understand -shall the trend CONTINUE or its nothing but a random event. So how easily intra day high is braking helps us to follow swing trade,-So how easily 3day high is braking helps us to follow longer positional trade,-So how easily important resistance is braking helps us to follow longer investment style trade,-ESSENCE MULTI VARIATE TRADER.
a curve- bigger zone-suggest a play of small support /resistance for small swing, break of gives different opportunity for long haul(higher time frame)

Similarly in bigger time frame(3month) curve ,we play lower end for entry ,and upper for exit(short)
................................
This events' probability enhances with bollinger band/ imp MA line ,previous swing pt, also by FIB retrace value.
Only in new high/low this r NOT available, so u have trade on experience or divergence study.

Let us understand academic analysis of trading. In smaller timeframe, we always have equilibrium , which may vary by itself in price ,due to demand/supply driven by greed/fear and money power.
If this value showing a continuity , we can make profitable guidance.
so first this trend attitude in price, or its a random factor to be clairified by reading the price itself.
Next comes higher timeframe factal, so in Hr/DAY/WEEK chart with less emotion we make study ,the same theme on continuation or one day wonderer.

Also we know ,basic of a profit motive,must decide to book at higher price, so buy/sell is complete cycle- impulse then Reaction,direction & strength -both r variable,depending upon present market as perceived by participant.
So we have mean reversion theory-what goes up -must come down.
A value zone= equilibrium,+- sentiment ,upper sentiment -sell zone to book profit,lower sentiment=oversold -buy zone.
boillinger band is simplest form of it,preceded by HURST cycle.

In stock,as direct demand/supply ,is less variable than Result ,so there is method to find VALUATION . Mr Damodaran has done pioneer work on it ,and given free. FCFF model helps.
So in reality u can get a value,however abstract it may look ,but it will be a skeleton. Now u add SENTIMENT . U can get some rational value, now based on ur observation on market(now fear/greed/hope eye) - u know which low is valid low, and which High is reversal one.
Another factor -conditioning of market.
Up market-upday continuation
down market- downday continuation
Sideways- up down both have random occurance atleast by your eye, so nullify when its not up + when its Not down= sideways.
Based on these 3 condition , high pt for SELL or BUY at low itself vary . BUT an experience trader can tell ,with high probability .
In 2011 ,while preparing a course for appliedTA, and how to trade as PRO - i was shocked to the data - 70000 man power r for sell side (analyst who do give call u to buy,so Institution can sell)
Then i ask to who does BUY side REsearch?
Answer is only the Fund Manager himself.
He has actually a kothari of senior analysts ,from whom he takes feedback , but real pick up -valuation check ,assumption to economic surrounding done by himself. DEcision to Buy may be implemented by Professionally paid executioner,-who buy/sell without question maintaining confidentiality ,but gives him feedback postbuy scenario.
Yes they buy normally at imp support. The so called PMS fund managers only know some stock/sector and made money basically by luck.
A tremedous amount of study is required to know applied TA/FA ,but more difficult to learn stoicism ,and follow trading discipline.
Once u understand basic,slowly with experience things follow afterwards in right order.
Some thing pl Remember.
1] u require a basic knowledge -how market work(nor u expect to know)
2] an Edge where u guess before others right side in price,and manage to allow trade management by holding Winner,and selling losers early.
3] A time must be spend ,mainly non market hr, based on objective data.
4] Once opportunity generated ,u have to take it (maxm u may wait upto price confirmatuion)....No ifs/but exist in trading ,a decisive responsible person can only be a trader.
.................................................. ........

News trading

Many a year back ,i prepared and gave for professional - structure only i am mentioning .

1] news- which has >5% prfitability improvement or >10% EPS value increase. This has only price impact, others r irrelevent.
2] The explanation/justification published by MEDIA only hype to please individual intellectual = not news.
3] news at top(in price) = to get out by broker/fund managers(by providing tips in real sense to media persons). Time again ,opposite i have seen on comments by fund managers.
4] middle level fund handlers can talk anything to get few extra bucks.About 70000 (2011 data) analyst talk on reality to sell side to lure gullible newcomers in market(avoid TV channels)-If u get info from mass marketed media, definitely U R THE CRAB(may survive somedays) ROAMING AROUND,eaten by suitable hunters.
5] unexpected news has PRICE impact,creating harmonic wave with dumping effect. Some times people r slow to react, here lies opportunity for U.
6] Pl understand some times NEWS r implanted to trap .
7] Budget ,unexpected results r EVENT ,so tradable by experienced trader to make money based on expected reaction from public.U should have economic knowledge to decipher impact earlier ,the better.
Volatility is high ,when both bull/bear could not clearly understand whether this is favorable.
8] no impact by news= market already discounted, new participant r very less in number.
fundamental news , written on price chart ( weekly) , should make u a better news trader.For smaller swing/day trader- news create IMPULSE to trade by momentum.
9] NEWS trading is possible -only the persons with highest level mentally cool , but calculated fast the impact.Academics can not trade it. There r specialist event trader,like result calender/budget/election/rbi announcement,but dont trade on anticipation. Chart has no relation in news trade, if good =new money comes,if bad =dumping stock so price falls. Bhao Bhavwan Che- if its shown price is increasing so logically buying is correct action
10] Read correct data ,not cheap free info ,chances are they r published in vested interest.
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Old 16-03-2015, 04:01 AM
oilman5 oilman5 is offline
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CONCLUDING REMARKS
...................................
Trading must start with keeping it simple .A learner should start with a basic trading software,Simple MA,2ma to know on market trend.when he understands strength of trend changes ,so introduce ADX,( i prefer aroon). this can be done by 2ma also ,- it helps to understand- Convergence show-TREND DIMINISHING,FLIP BY LOWER MA- OPPOSITE TREND START, CRISS-CROSS = NONTRENDING MARKET(so we plan to trade buy support/sell resistance now with lowertime swing). u have to use an oscillator to understand oversold/overbought -when to reverse(i use william%r) -channel ,accumulation/distribution -swingplay r useful in rangebound market.
When trend changes ,precede by zone of indecision-study in great detail.
From a charts perspective,the major trend is seen by looking at the monthly charts.The intermediate trend from the weekly charts,and the near term trend from the daily charts.
For trend,use higher timeframe bias,use impulse.An impulse-wave formation, followed by a corrective wave, form an Elliott wave degree consisting of trends and countertrends.
Soon with 1st level experiment with TA,its failure- u distinguish in particular level buy/sell works at particular market macro condition(sentiment analysis useful-p/e chart, advance/decline ratio) . So we find SUPPORT/RESISTANCE , condition for breakout or reversal this time.pivot ,wrb r helpful add-on.
some biases r called for-so we utilize pattern- V /^,SAUCER and INVERTED SAUCER -they can be used with nr4/nr 7 set up.Some counts on complexes so use ELLIOTT TERMINAL PT/TD SEQUENCE COUNTER TREND ENTRY. others use simple M/w or its variation triple top/bottom.
Master specializes on TRAP BOTH BULL/BEAR ,as well on SUDDEN REVERSE AFTER WEDGE .ALL OF THIS CAN BE IMPLEMENTABLE ONLY AFTER PURE PRICE ACTION STUDY BAR BY BAR.
USE OF HIGHER TIME FRAME BIAS/IMPULSE DIRECTIONAL TRADE-MAKES GOOD MONEY. when u know this /apply to earn atleast 2 yr month by month -SWITCH TO F&0 for leverage, - u have ur own bank to syphon off money from market.
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

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.
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.
Loss limited to premium paid.

Sell a Call =Neutral bearish option position.
Profit limited to premium received.
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.

..here 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.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.
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.
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.
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.
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.

To summarize, just understand Delta and Theta(including volatility effect) first / their movement with respect to ITM/OTM/ATM.... real market price of option can still be different , So as a trader, being in reality use the pricing concept if opportunity exists as per our TA knowledge, then which strategy(4-buy call/put or underwrite) should fit well now. Think the important consideration for option is the selection of strike and right strategy
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.
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.
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.Should you expect a 10% or a 40% move?
- Look at the stock’s history and find out how it has moved over the last year/quarter/month. Use that volatility figure to calculate the option price- it’s bound to be wrong.Historical volatility has very little to do with implied volatility, in the real world. Because the past (unlike TA assumption)doesn’t 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, you’re toast. Why? Because April is usually results season, and if the stock’s announcing results, it’s 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. (There’s an event!).
HOW DO YOU USE IMPLIED VOLATILITY?
Now the idea isn’t to price options – it’s 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 term-
“VOLATILITY SMILE”.
VIX- It’s 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 term follows) the square root of the variance and normalize it for 30 days.The VIX isn’t useful in isolation. A VIX of 22 doesn’t 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 market’s falling than when it’s rising).
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.Option markets are built for opportunity in extremes of fear and greed, interspersed with times of low volatility -high low volatility cycle will stay .
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.
if u r more inclined to option,limited upmove is expecting , may play
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.
SIMILARLY WHEN WE R MILDLY BEARISH, we may play
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.
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.
Bullish Market Strategies work best only in strongly trending bullish markets.
1]Buy a Call
Strongest bullish option position.
Loss limited to premium paid.
2]Sell a Put
Neutral bullish option position.
Profit limited to premium received.
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.
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)
.................................................. ..........
i personally feel ,from own experience ONE SHOULD STUDY MARKET CONDITION NOW mode(not past),decide what may happen NEAR FUTURE,- take position -TRADE MECHANICALLY WITH ENTRY /EXIT .....traders donot have to think whether the market is going up on short covering or any other reason,our job is to read the market correctly,position ourself to take full advantage of the move and take our profits when market tells us that the move is about to end or ended.....reasoning part we leave to the analysts.
What is Sector Rotation?


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.

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)
Scanner - pattern seach - volatilty study .........this r extra, basically confidence build up measure.


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.

Just for a thought
...........A stock in a persistent downtrend is providing a feedback signal that investors overlook when they go bargain hunting 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 stock’s price trend is actually a summation of the votes by buyers and sellers.
...........................
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] then why the hell i learn from u, when u dont know 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 SHORT.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.

Most imp thing in market......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 to survive.........with min FRICTION with other part of LIFE/dream.Slowly it must grow as per your COMFORT level,
A routine schedule....to search for opportunity,.....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.

bye bye

Last edited by oilman5; 16-03-2015 at 04:15 AM. Reason: typo
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