surviving "heavy loss" phobia

4 things that can help u protect yourself from crippling effects of "heavy loss-phobia"

a. sound trading system which goes right around 7 times out of 10 and has well defined point (call it stoploss or SAR) where it auto signals reversal.

b. psychological strength to stick to the method.

c. enough buffer funds to keep you going in case of those 3 odd failures or unforeseen situations including circuits.

d. continuously improving the trading system.

e. not trading your own trades. asking someone to trigger those on your behalf so that you are psychologically free to focus on trade signals without bias. not counting lost pennies everytime of those 3 out of 10 trades.

how and from where i learnt options

( in answer to a question)

see, i just studied options in a simple way. 

i learnt the basics from various websites thrown up by googl e.  first i learnt the basics from there and then i tried to learn strangle, straddle etc. but soon i realized that those advanced combinations are for deep pocket fii/dii/hni's....besides being complicated and risky.......and foolhardy. 

then i realized that even plain options are very powerful if only one's fundamental method is strong and well developed. so, i just focused on and learnt the basics of options thoroughly. i learnt their behaviour by continuously monitoring them in different situations. 

i realized that learning a tool very very thoroughly revealed powers of it which are much potent than the complicated combinations of the same. 

complicated strategies are only an alibi for lack of a sound basic method.

....and all this i learnt using my own head....with a lot of trial and error and hell lot of practice using just the fundamentals of the idea/concept behind "options".

and while i was on this grand exciting journey or reinventing the wheel of options, i came up with some original and powerful new ideas, tactics, strategies and insights.

fundamentals of anything has the seed of all advanced greenshoots. 

i tried many websites and a few ebooks on options but all seemed to confuse me beyond the basics. just like you can catch the truth behind a person from his body language, you can see thru a book from its word-language.......and these books were definitely lacking "self-confidence" and conviction about what they were preaching. and all were the same as far as the basics were concerned.

best wishes

operator truths every trader should know

- in day trading or short-term trading 1-2% people make the other 98% play.

- they know things beforehand....amazing....but not for them...call it insider information or whatever.....they bloody know all the crucial info....in toto...!!!

- they have got super powerful computers, software and networks (highly guarded with access denied to outside the coterie). they have links and access inside not only one or two but all the principal companies of all sectors across countries across continents. afterall, the money is one only....you can trace the roots of almost all the money to a handful of banks and entities.

- they have got practically unlimited money at almost zero interest! (how about that facility)? actually, they are the insiders, everyone else on the planet is the outsider!

- they don't worry about developments and news. they know the developments and news beforehand. many of them, they shape themselves. those which they don't know or can't influence don't effect them much. do you think governments anywhere can take any decision which is contra to their interests?

- businesses are as much as for the profit from the manipulation of stocks than from the profit from the primary production and distribution.

- operators don't buy options, they only sell (write) them.

- they don't choose which options to sell. they sell any option and as many of them which retail traders are willing to buy. only thing they control is the premium. they put much higher premium in the direction they don't want to go. this way they control the volumes in a particular direction.

- operators don't decide on the time of squaring the option. that is decided by the retail operators who bought it. they square the option and as many of them which the retail operators wish to square off. again, the only thing operators control is the premium at the time of squaring off. they put higher premium on the side which gives less benefit to the retail operator.

- the money is made by the operator not at the end of the series but continuously and non-stop at every second of the trading day in every single trade....they keep making money drop by drop, second by second....it is a myth that operators make a killing in big shots.....they don't....they keep making money by bleeding non stop without much ado....just like rivers are formed by drop by drop melting of snow over vast stretches of glaciers.

- operators are there because retail traders are there and in that proportion. otherwise, operators would have been forced to work only as VCs (venture capitalists).

- operators control/move market in 4 ways
a) actively buying
b) actively selling
c) refusing to support buying
d) refusing to support selling

- when they want you to participate, they don't move the market fast. and when they don't want people to get on board and still want to change the levels/altitudes of the market, they move it very swiftly by controlling bid prices and accepted prices......obedient army of computer networks do that.

- it is extremely difficult and impractical for a retail trader to trader after considering all factors at play. they can't. even otherwise they will go mad doing that. they have to find a tactical and smart and clever indirect way.

- operators don't like smart, clever, stable, silent traders.

- never panic....fear switches off the mind which alone can take on the mighty operators.

- if you don't have your own knife and fork to trade, don't sit at the table.

cross acround the trader's neck

lessons so far from 10 experimental trades :

1. the criteria is ok / promising and needs tightening/refining. 

2. intraday alone is not enough...can never be enough.......what about rallies where movements mostly happen in gaps?

so, btst/stbt (overnight trades) is a must alongwith intraday trades to make decent money. otherwise, despite risk and stress, profits are likely to be proportionately less.

intend to start overnight trades also alongwith intraday ones w.e.f next week.

3. buy at or "somewhat" in the money options when less sure or when taking a trade against the trend (ofcourse at the signal of the method). and when reasonably sure or when taking pro-trend position, take deep in the money option.

4. deploy ur money in 2 stages....one after 10am (whenever signal comes as per the method), second around noon when the real "game" is played......will incorporate this in trades w.e.f next week hopefully.

5. use mutliple indicators / logic to identify market bluffs and traps.

6. use method and fixed-time fences to eliminate (or atleast minimise) the effect of dodging and mind games played by operators and market deep-pocket-forces. use 'law of averages' to your effect. expect wrong trades as per the method (they will always be there and are expected and ok) but never quit trading after the negative trade. i call these negative trades and not bad trades......no trade as per a method is a bad trade......a good method properly executed can still result in loss....it should be called a negative trade and not a bad trade........a negative trade is a probabilistic entity but not a routine one. the trouble is that we stop trading after a loss yielding trade taking it as a bad trade instead of a negative trade.........pick any method.....decide its parameters.......so ruthlessly that even a computer or robot can trade as per it.....and then stick to it......don't stop trading when you make profit......don't stop trading when you make loss........never abandon the method.......method is like a cross in the trader's neck.......lose it and the devil will get you.

trading with three laws of robotics

i was reading 

Isaac Asimov's "Three Laws of Robotics"

it has occured to me that if a trading system is like a robot

it must obey these 3 laws meant for robotics.

here are the adaptations of the three laws of robotics

to the trading system

law one of robotics : a robot may not injure a human being or, through inaction, allow a human being to come to harm.

adaptation of the law to trading system : a trading system may not cause substantial loss to a trader or, through inaction, allow a trader to come to loss.

law two of robotics : a robot must obey any orders given to it by human beings, except where such orders would conflict with the first law.

adaptation of the law to trading system : a trading system must NOT obey any orders given to it by the trader in the heat of the trading - it should trade strictly as per its defined rules, except where such disobedience would conflict with the first law.

law three of robotics : a robot must protect its own existence as long as such protection does not conflict with the first or second law.

adaptation of the law to trading system : a trading system must protect its own existence as long as such protection does not conflict with the first or second law.

why technical indicators are not enough

if you are a medium term (swing or positional) trader
you have decent chance to make money
after learning and practicing the basics
1. money management
2. method
3. mind management

but if you are
a day trader or a very short term trader
even the above three
may not be enough

you may find it difficult to make profit

and you may find it extremely difficult
to preserve the profits
assuming you had got some!

reason?

simple!

operators don't want you to be profitbale.

why?

because if you are profitable

then they won't be!

so what do they do?

...dodge you, trick you, confuse you, bulldoze you

......trap you, checkmate you

how do they do that?

simply, by doing

what you don't expect to happen

the way you don't expect that to happen.

unpredictability is the only predictable thing in the market!

and what do we learn?

'predicting with indicators!'

'anticipating the trends and change of trends!'

and this is where you get beaten

hands down!!!

--

so?

what to do?

my learning is

that you can't beat the market with indicators

and trained gut alone!

YOU CAN'T BEAT THE MARKET

WITHOUT TACTICS.

you need to find ways

which land you in a win-win situation!

you need to find

'casual' moments of the market

- situations and moments

when the market's bluffs lie exposed!

where the operators can't play traicks on you

at least that easily!

you need to find ways

to be with the minority that is on the side of the operators.


here are some examples

- btst is a corner
where operators can't trick you.

- similarly, hedging is a way
where operators can't befool you.
(hedging is always done between unequal objects)

- likewise, using the one sided power of options
is a great way to take safe calls.

- one more weak spot of the operators
is the fact that operators can't change directions
at the drop of the hat.
there are time intervals between such turns.

- another possible idea for tactics is
the fact that mass public trades on
predictions of indicators
and sentiments.
so you can be sure
what the "herd" is going to do
and hence
what the operators might do

- yet another tactic
is to expect the unexpected
at every expectation point.

---

i just shared a few ideas with you.
i am developing my method
on the basis of one of these.
you may choose yours.
but the core / central message is

- indicators without tactics
are boomerangs.

- tactics with indicators
make the real defensive and offensive trading systems!

road to trading success....

churchill said
"success is going from
failure to failure
without losing enthusiasm"

this line sums up my journey in stock market.

do i lose?
yeah! you bet!!

am i a good loser?
no way!!!

for the first one hour after booking the loss
i am like a dog sniffed by a snake....
i simply become a statue and don't talk to anyone.

for the next one hour thereafter
i kick myself a hundred times

for the one hour thereafter
i decide to quit trading
and simply drown myself
in some task which can help me forget everything!

only after those three hours
do i cool down!

then i realise
that while it is easy for me to take myself
out of the market
it is not that easy (if at all it is possible)
for me to take the market out of me!

it is then
that i sit down
take out my entire army of concise trading notes and tools
and start to analyse
what went wrong
and why!

80% of the times
i realise
that i had all the tools and info
to pick the right trade
and didn't
because i was "in a hurry"!

i look into the nearest mirror
and it confirms to me
what a careless trader i am!

rest 20% of the time
i realise that something had happened
which was simply not in my experience and understanding database.

that is what
re-sparks the learner in me.
i get down
to update my "software"
and plug the gap in my method.

i have been telling my wife
four times every month
for the last 27 months
(since jan 2009)
that
i have plugged the loop hole in my system...
and everytime
i return and confess
that i just came across
another nasty one!

this way
i have been improving
my trading method
time after time
after time
after time
after time....

...everytime i feel
that i have got my "holy-method"
only to be
painfully deceived!

and amusingly (but not ashamedly)
biggest failures
and loopholes
surfaced in recent times!

it may sound strange
but i think it is expected
and ok!

my patience has been tested
to the extreme....

but thanks to all this
my trading system today
is quite strong!

am i confident now!
yes! you bet!!

am i sure that there are no loopholes left?
no, not really!

so, have i stopped trading?
no way!
not NOW!!
at any cost!!!

while i won't be surprised
to see the next loophole
i expect to see them fewer!

also,
i will not desist from kicking myself hard
if i don't stick to my
latest version of
trading taj mahal!

for i know that i am not very far
from trading success
which will stay with me
for a life time!

surely
"success is going from failure to failure
without losing enthusiam!"

jogging is good for trading but....

ever since the markets started opening
at 9 instead of 9.45
the trader habits changed a lot
almost overnight.
--
one such trader
who had a die hard habit of
jogging
started waking up at 5
instead of 6.
--
one such day
he woke up
freshened up
got into his track suite and joggers
and went out for a 5 km routine jog!
--
the city was still sleeping
except an occasional enthusiast!
--
he kept circling the empty lanes
in his locality
and enjoying the light music
on his mp3 player.

after a few rounds
he stopped,
took out the cake he had brought with him
and took a bite!
--
cake was his weakness
besides the market.
too much of both were
not good for health
but were damn tasty!
--
the short feast was going on nicely
till suddenly
he
was whizzed past
by a street dog
with bread in his mouth!
--
hardly had the trader recovered from the disturbance
that
he heard the loud barking
from behind!

he turned around
and saw coming
a furious hound!
--
the hound was obviously after the street dog
running with the loafs of bread.
--
the trader panicked.
he stopped eating
held his cake tightly
and started running
behind the street dog
away from the hound!
--
the hound got perplexed to see
the trader running!
he was very annoyed to see the trader
cross his path.

just then
he noticed
the cake in the intruder's hand!
enough incentive for the hound
to leave the street dog

and get after the trader!
--
now the hound was after the trader
instead of the street dog!
he followed the trader street after street
and soon trapped him in a corner!
--
the poor trader now had 3 choices
run with the cake
run without the cake
eat the cake!
--
the third possibility was only theoretical
considering the tension in the air.

the first possibility was not possible

so, the trader opted for the middle choice
handed over the cake
and said
"here, have it! i have more in the kitchen!"
--
the hound leaped at the cake
and turned without thanking
the "generous" trader!
--
far from the street corner
the stray street dog
thanked the trader
for taking it all on himself
and giving him enough time
to eat his bread loafs!
--
the trader walked home
and got ready for the trading day
took out his currency cake

but swore
never to cross the path
of the operator hounds
running after the stray street traders

and mind his own
method!!!

i, me and my method!

there was a time

when i used to trade.

now,

i don't.

instead,

my method trades for me.

i just sit on the adjacent sofa

read newspaper, sip coffee

and watch him trade!

--

when i see a situation

i just look at the funny serious face of my method

to check what he is thinking

and what he does?

when he too spots the situation i have already seen

and acts on it the way i think it should have

i feel really proud of it.

but when it doesn't spot the threat or the opportunity

or when he does opposite to what i think

i feel scared.

it takes me a lot of courage

to hold myself back

and silently repeat to myself

that i must not interfere,

and that i must let my method do

whatever he wants!

--

after a while

when i see the outcome of the method's decision

of ignoring the opportunity or threat

i feel ashamed at myself

and double proud of my method!

it is then that i realise

that i did the right thing

in employing my method.

--

now, i have developed

a deep respect and confidence

on my most faithful employee

my method!

you don't buy a bournville in stock market too!

they say

you don't buy a bournville

you earn it!

but what do people actually do?

out of sheer temptation

they are already decided

to enjoy a bournville!

do they stop

and double check

whether they have earned it?

no!!!

they know they have the bucks in the pocket

they go forward

buy it

peel the wrapper

and slip it onto the wet tongue!

result?

pterodactyl,

the flying reptile

comes out of nowhere

takes them away

only to return them

sans

life!

same things happens in stock markets!

amateur

unsuspecting traders

"decide" to buy a stock

out of sheer temptation

without double checking

whether they have really "earned" the trade

thru method and patience!

result?

the flying reptiles of stock market

appear out of nowhere

and take them away

only to return them

lifeless

and

sans

money!

ATM

stock market

is like

an

ATM

which is open

5 days a week,

forever,

can be assessed from anywhere,

can dispense money

even without

depositing!

--

all....

provided

you know the PIN.....

the method!

--

as dr.phil mcgraw

says in his masterpiece

'life strategies'

"crack the code

otherwise your fate is sealed!"

--

4 simple rules of Richard Dennis (words from masters)

1. Trade with an edge

- Make sure that you have a trading strategy that will make money.

2. Manage risk

- Don’t trade with so much leverage that you risk losing everything.

3. Be consistent

- Do this to reap the benefits of your trading strategy.

4. Keep it simple

- Don’t try to make trading more complicated than it actually is.

how to overcome your sunsign in trading?

just follow a method.

a method has no date of birth

and hence no zodiac sign

and hence no limitations by birth!

incorporate that method with the strengths of all sun-signs

and

let that method trade on your behalf!

you will be a great trader!!

also,

pl remember

as Osho says

"being aware of your limitations

is the beginning of freedom from it!"

something was missing!

"forecasting (the markets) is unforecastable"

you probably won't have believed this if i had said it.

but would you pay a closer attention to this

if i told you that

this was said by none other than

john bogle

named by fortune magazine as one of the investment industry's four "giants of the 20th century"!

--

after month's of learning technicals

i felt that i could predict the markets

accurately and repeatedly.

but let me share frankly

that technicals (and even fundmentals)

can help estimate the market movement

can help estimate the building-up pressure

but cannot predict it with certainty!

rather, many i times

i have noticed

that despite well done home-work

the prediction gets ruthlessly bulldozed.

the probability of being right increases with technical analyses

but not the certainty!

we just can't afford to relax after the verdict of TA.

--

having come this far

it was a blow to me

till i realised

that i must accept the reality.

that something else was missing to back-up TA!

something else was required to fill the dangerous gap!

that TA was meant to play a different role than deciding the trade

--

before i discuss that different role

let us first see

what does john bogle recommend

--

well, all he says is

'stick to basics'

'stick to simple trading'

'just follow fundamental and unarguable principles'

'just use common sense'.....

and you will beat the market!

--

i translated that into a simple trading formula for myself

"just keep following the market"

--

now what role can my TA play in this new set-up?

what was missing and how can i bridge the gap?

simple,

i listen to TA honestly

and take position on their advice.

since this position is well considered

i trade with confidence

like a warrior

who doesn't know that he is going to get killed

but enters the battlefield with full confidence

based on his training and equipment and strategy and leadership.

--

after i have taken the well-researched position

if the market does pro-TA act.....fine!

but if it doesn't

i ruthlessly honour the stoploss

salute the verdict

thump my foot on the floor as mark of obedience

turn around and go behind the market

no questions asked!!!

and how do i know the market is not in the mood to follow TA?

when it breaks my stoploss

or when it breakouts or breakdowns levels opposite to my TA's direction!

--

since the day

i started following this simple rule

my stress levels have crashed

profits have increased

and

their frequency and consistency is heart-warming.

and last but not the least

i have finally tamed the fear of the market!