never ask the age of a trader, guess it!

eve babitz had once said
"by the time i'd grown up, i naturally supposed that i'd be grown up"

--

satchel paige, the famous american baseball player had once said
"how old would you be if you didn't know how old you are?"

--

the above two quotations hit every struggling trader hard!

every "trader" who has spent time in the market, "naturally" starts supposing that he has become a "grown up" trader!

but the real challenge is, how "old" or "mature" a trader would be if he didn't "know" how old or mature a trader he is!!!

myths about self kill a trader more than the hits of operators!

operators are only standing knives against which
violently shaking carrots slice themselves everyday!!!

secret of day trading success

which of the following trading scenario would you prefer
A. (total 375 points profit in 7 trades) + (total 95 points loss in 8 trades)
B. (280 points profit in 7 trades with no loss)
(*brokerage adjusted profit and loss)
well, on the face of it
both the above scenario look same.
rather, scenario B looks better than scenario A which looks scary!
but, the reality is
that
1. scenario B is just a mirage....it doesn;t happen pratically.
2. scenario A is not only practical but is the best way to be successful in trading.
3. even scenario A doesn't happen
instead scenario C happens as below
C.  (total 175 points profit in 7 trades) + (total 375 points loss in 8 trades)
why?
cutting winning trades early
and cutting losing trades late!
------------------------------------------------------
there is nothing called opportunity without risk.
and where risk is there, there has to be loss.
"cutting loss early, letting profit go on till max possible and trying to increase percentage winner trades"
is the secret of trading success.
------------------------------------------------------

in the above example (scenario A) which is close to reality, you will notice that trade success ratio isless than 50% but the net result is good! this fact speaks volumes. traders are so scared of loss as well as losing trades that they miss the real thing....the net profit!

same thing happens in life. we are so obsessed with the hardships and troubles that we miss the real things.........!!! 

(niftyshots.blogspot.com)

opponent from a different dimension

90% of the technical traders
lose in the market.

pity
that they take their defeat, failure and loss
itself as an indicator
of some deficiency
in their knowledge and application of indicators and technicals.

result?

they get back to
burning themselves
as well as the midnight oil
to learn more of technicals and indicators.

poor souls!
little do they know
that they are losing the trading battle
less on the technical front
and more on the tactical front.

they are trying to catch the market
with technicals
while the market is dodging them
in another dimension....
tactics,

beating the traders in three ways
- whipsaws
- directional dodge
- unpredictable behaviour

no technicals can make a net
that can catch the liquid fish.

need to catch the flow
from its weakness
....the flow
the irresistible urge
and compulsion to flow
the bad habit to dodge!

(niftyshots.blogspot.com)

gtalk

JP :
Banta Singh went to an eye specialist to get his eyes tested and asked "Doctor, will I be able to read after wearing glasses?"
Yes of course, said the doctor, why not!
"Oh How nice it would be I have been illiterate for so long" replied Banta with joy.
Me:
Ha ha....same thing happens when people enter stock market, wear technical glasses and expect to read profit without getting literate about trading psychology \
SA:
sir i am not active trader
guide me where can i learn technical analysis?
Me:
let me give u a different advise. don't learn technical analysis. observe price movement for many days and ur own methods will pop in ur head.

SA: ok
you mean i have to observe after trading hours?
Me:
observe before during and after trading hours, gradually ur trading gut will get subconsciously programmed. just like some of the best auto mechanics in my town are illiterates but are most educated by their experience and observation
SA:
ok sir
sure
thank you very much for your guidance
observing NIFY only enough right?

Me:
u r welcome!
yes observation is the best education. killer training!
=============================================
u can gtalk with me @ jagmohanshan@ g mail.com
for my view on nifty keep track of my updates in mudraa.com
for my nifty views and links to articles in mudraa send ur cell no. to 09418037474
Js (niftyshots.blogspot)

the risk of not taking risk

as they say
not taking risk
is the biggest risk!

u r saying no to the opportunity?

thereafter u can't complain that u didn't get the opportunity!!!

u got one (rather u get many)
but the trouble is
that u want opportunities
without risk.

stock market it not a restaurent
where u can order for boneless fish or chicken.

there is nothing called risk-less opportunity.

risk and opportunity are inseparable.

in reverse all this means is
that wherever there is risk
there has to be an opportunity!!!

further,
it is only one small thing that you decide to take risk.

what's most important is

a) when to take the risk

b) and how much.

take risk at the edge of a pattern

and take that much beyond which the pattern which formed the basis of the trade, nomore holds

true!

there are only two ways a price can go
- either up or down

there is no third way.
so, you already have 50% chance of winning under your belt
now all you need to do
is to find ways to increase that probability!


(niftyshots.blogspot)

why traders struggle - III

if you can't see blood

don't be a doctor.

if you can't see a temporary loss

don't be a trader!

minor corrections are part of a trade. that's the only way price moves. majority trades experience low blood pressure and abnormal pulse rate at the sight of an adverse price movement. those who are not sure of their trade and those who can't see temporary loss can't hang on.

(caution : don't lose more (blood) than is warranted)

why traders struggle - II

they

DON'T TRUST THE TREND.

majority traders are insecure fearful adament rebels

who take premature unwarranted prolonged reverse positions!

why traders struggle - I

the trouble with struggling traders is not that they don't take risk

the trouble is that they take wrong type of risk.

they take risk with losing trades

but avoid risk with winning trades!!!

good batsmen can be good traders

yes,
a good batsman can be a good trader.
lets see how....


a good batsman tries to read the bowler's hand while he releases the ball
= a good trader needs to read the hands of the operators


a good batsman knows the field setting
= a good trade knows the chart setting


a good batsman doesn't fiddle with a ball too much out of stump and leaving him
= a good trader doesn't fiddle with an "inviting opportunity" too much "out of stump and leaving him"


a good batsman doesn't hesitate to use his feet once he has seen the ball well
= a good trader doesn't hesitate to take the trade once he has seen it well


a good batsman respects every good ball by the bowler
= a good trader respects every good trick by the operator


a good batsman knows that every ball can't be hit for a six
= a good trader knows that every price movement can't be traded for a "six"


a good batsman knows that a ball can't be hit as demanded by the spectators
= a good trader doesn't get carried away by the hooting of the "spectators of fear,greed and excitement" inside his head


a good batsman knows that he needs to settle down, read the pitch and read the wicket before giving a charge
= a good trader knows that he must understand the market situation, trend and stage of the trend before entering the trade


a good batsman knows the importance of singles and running between the wickets
= a good trader knows the importance of booking every profit that may vanish. he knows the importance of scalping.


a good batsman knows the importance of partnerships, staying at the wicket.
= a good trader knows the importance of holding the nerve and staying in a winning trade


a good batsman knows that he must face the pace to score
= a good trader knows that he must face the fury of volatility


a good batsman knows that more the pace of the ball easier it is to score by just sweet timing.
= a good trader knows that more the volatility and tricks used by the operators, easier it is to make money by just sweet timing.


a good batsman knows that at times he needs to see off the new ball, see off a fierce spell....
= a good trader knows that at times he needs to just pass-off and see-off the fierce spell of uncertainty, volatility et al.


a good batsman knows that getting out at duck is part of the game
= a good trader knows that loss, hard luck and wrong decisions are part of the trade.


a good batsman knows that every new innings is new and different
= a good trader knows that every new trade is new and different


---


be "the wall", "mr.dependable", "the colonel", "the hurricane".............

nike, deo and watch

a trader was losing non-stop.
he tried every indicator
every tips provider
every website
every business tv channel
every trick
every strategy
cash and carry
futures
options
indices
stocks
....everything!
he still kept losing!
one friday evening
his dad gifted him a watch.
on saturday
he bought a pair of nike.
on sunday
he bought a new deodorant.
on monday morning
he wore the new watch
slipped into his nike
sprayed the new deodorant
and went to the religare hub
to trade.
and he made a big profit.
he was shaken with surprise.
next day
he made handsome profit again!
he was totally perplexed.
but the next day
he lost!
then
he recalled
that he had forgotten his watch home that day,
was not wearing his nike
and had not sprayed that deo!
next day
we made sure that he "took" all three to the trading pit!
and he made big profit!!!
he was ecstatic!
he came out
jumped in the air
and punched his fist in sheer joy!
his hand hit the tubelight.
the tubelight got shattered
and so did his dream
which ended with the restless sleep!
he checked the alarm clock.
"1 hour for the market to open!" it said.
he got out of the bed
freshened up
dressed up
left the nike in the shoe rack
spared the deo
and went out
bare wrist - without the watch.
-
that evening
he made his biggest profit!
he had traded
on his own
without nike, deo and watch.

the difficulty of being a successful big trader

if u want to buy a few bathing soaps
u would obviously go to the neighbourhood shop.
what if you need a few hundred soaps?
u would need to go to the wholeseller.
what if you need a few lac soaps?
(don't ask me why would you need so many. this is just an example)
in this case u need to go to the c&f agents or the company directly.
similarly,
if u want a hundred odd shares where would u go?
and where if u want a few thousands?
a few lacs?
stock market is a market
where retailer
wholesellers
as well as c& f agents
....all go to the same place to shop.
(nobdoubt, primary market, i.e. IPO's are there for mass buying
but there aren't many, especially for the same good stock!)
now, therein lies the trap.
if three types of customers are standing in a queue to buy
hundred, thousand and lac stocks respectively
how would they buy?
if all of them place the order of all they need
at the same time.
the "few lac shares for buying" order
would shoot the prices through the roof.
or the "few lac shares for selling" order
would crash the price through the floor!
this is the reason
why big buyers and sellers
play games.
they get into the garb of "retail trader"
and keep accumulating or distributing shares
slowly but surely
without making too much of a noise.
the moment they make some noise
(there "some" may be "hell of a noise")
markets get scared!
so, when the big c&f agents go shopping
they have to shop gradually
for a long period of time before their "shopping" is done.
not only that,
after their "belly" is full
they have to see their shares go up further (if they are long) or go down (if they are short)
without much of further buying or selling.
for this
all they do it
is not support adverse movement
and support pro-movement if required.
and once their target is achieved
they have to get out
from the same door that the retailers use for exit....
slowly and silently....
lest they should trigger a stampede.
this again explains the gradual down trend.
therefore, any up or down trend
generally continues for some time.
never take a trend to be over too soon.
think from the point of elephants
who have to use the same door as that for goats.
by the way, the fluctuations and volatility u experience on the way
is nothing but the shaking of the "jar"
by the operators
to accomodate more of their greed!
on a different note, just imagine the challenge that u will face the day u become a big trader
seeing an opportunity, wanting to trade fat but unable to slip your big fat order without making a noise!

the key to the code of operators

futures is based on spot

options is based on futures.

futures does what spot does.

but strangely,

option generally does opposit to what futures does.

there are many reasons for this

1. mass traders use options to speculate. (which operators don't let happen so easily unless it suits them)

2. mass traders use options to hedge (hence opposite movement)

3. smart traders use opposite options to straddle and strangle (having no net movement w.r.t. futures)

4. mass traders use options to take premature trend reversal positions (which generally don't happen)

increase of open interest in futures means acceleration of the trend of futures.

but increase of open interest in options (irrespective of put or call) doesn't necessarily mean acceleration of
the trend of options but increase in trend of futures.

vice versa for decrease of open interest.

like every mirror image

option is same as futures

but opposite!

this is the key to the cracking the code of operators.

language of stock trading

ecg is the language of the heartbeat.
richter scale is the language of the earthquakes.
and a chart
is the language of the stock.
-
while priceline is stock's analog language
the indicators are its digital language.
the clarity, range and depth of the digital language is far better.
though a language can't claim to reveal all that is there in the heart of the sayer
coupled with the "body language" of the sayer
it can reveal quite a bit.
-
those trained and experienced to read the chart
can tell what the market or stock movement is trying to say.
you don't have to be a science or engineering student
to be able to master the language of the chart.
since this is a language
any arts student
or a person with sensitive and watchful eyes and head
can learn and master it!
-
as i mentioned in my earlier post,
random behaviour of a sufficiently large group
becomes a pattern!
everything around us (including markets)
exhibits patterns!
even change happens in a pattern
(afterall, we have change, rate of change, rate of change of rate of change......and so on!
but it will always become a pattern.)
even brownian motion has a pattern of randomness! you can expect randomness and apply probability theory!!!
-
the beauty of watching and watching and keep watching
stock price movements is
that soon you start seeing and hearing and feeling and understanding
the hidden pattern, the message, the signal!
no need to be good at statistics or maths....
no need to have the memory of a chess player.....
just need to be relaxed
and in love with the market.
love has a unique language...
it teaches u everything.....including trading!!!
-
going a step further
just recall
the sign language of the speech-challenged people.
do they communicate with just one hand?
or do they use two?
mostly, it is with two hands!
i used this hint
to learn the language of charts.
i studied rsi to a fine extent,
but still i found that it bluffed many a times.
i just added the "second hand"
- william % r
......results were enough to make me
roll and roll and roll with laughter!!!

the martial art of catching a falling knife

"never try to catch a falling knife"
has become a cliche'.

it has seemingly become
such an old fashioned statement
that
actually catching a falling knife
has now become a fashion statement.

only that everytime
this daring catwalk turns out to be
a robe malfunction!

the knives that fall by mistake
or because of some serious misunderstanding
are the ones that do rise back.

but such accidents are rare.

rarely do the knives fall
for no reason!

either there is some earthquake outside
or some butcher inside
the trading house.

and till that reason is there

they will keep falling

while dodging on the way!

knives of butchers (read operators)
move up and down;
in which case
both rising as well as falling knives
can be deadly.

still,
a knife is a knife.

always better to be picked
from the table.

if, however, you are a samurai
there is
one safe way to catch a falling knife -

and that is
to move your hand down
equal to the speed of its fall.

i.e. buying the crashing stock
expecting it to keep falling
and hence be mentally, spiritually and physically
ready to let it go
if it doesn't seem to be stopping.
and repeating the process
again and again
till its handle
is firmly in your grip!

trading is the only martial art
where a loose grip is a must! 

tip in the pot to the top

all tips are not bad.


some are good

few are excellent.


but surprisingly

almost all

especially the ones mass circulated

seem to go in opposite direction

for some time

before they show their worth.


reason?


well,

the technical calls are based on

technicals.


good technical tips

are pro-rally

and more importantly

pro-fundamentals.


big-pocket operators

know it and see it all.


while they certainly can't ignore

the fundamentals and the rally for long

they definitely have the reason, intention and power

to rock the boat

in opposite direction

atleast for some time.


good "tipsters"

know all this.


they try to give tips

after some delay.


i.e. they don't pass on the tip

the moment one pops up!


but hold it

keep it in the "pots of ready tips"

till the tips season out

mature

age

get despirited

denatured

and

de-stinged!


once the operators are done with their tricks

the tippers

reach their golden "pots"

recheck

and release the tips!


a good tip

must go in the pot

before going to the top!

point of smooth sailing

i constantly try to figure out
how the market can trick or fool
the majority of investors.

then after the majority have been fooled
i get in
at what i call
the 'pointof smooth sailing.'

a so-called failed signal
can actually be the beginning of
a more complex pattern
that is far more reliable
than the initial signal
based on a conventional pattern.

- mark minervini

a professional trader's secret

- have a method, an edge

- keep taking every trade indicated by this "edge"

- since the trade is based on a proven seasoned "edge" and since you know that anything can happen in a given trade, and since you also know that irrespective of the outcome of this trade you are bound to make good money if you keep following your "edge" without anxiety in the long run, stay in the trade till it is "definitely wrong".

- take the next trade irrespective of the outcome of previous trade.

- if the edge is right, by probability, you will make good money in the long run.

- do all this with a trade size just right for sound sleep at night.

these formulae are based on the following five fundamental truths
given by mark douglas
in
trading in the zone

1. anything can happen.

2. you don’t need to know what is going to happen next in order to make money.

3. there is a random distribution between wins and losses for any given set of variables that define an edge.

4. an edge is nothing more than an indication of a higher probability of one thing happening over another.

5. every moment in the market is unique.  

predicting trading success amidst unpredictablility

"how does one produce
consistent results from an uncertain probabilistic outcome?  

this is another paradox of trading,
random outcome consistent results.  

first you have to believe
in the uncertainty and unpredictability
of the outcome of each individual trade.

second you have to believe
that the outcome over a series of trades
is relatively certain and predictable.  

this degree of certainty is a
function of how good the edge is.  

you must learn and completely accept the fact
that you don’t know what will happen next,
and in fact don’t need to know,
in order to be consistently profitable.

since you don’t have to know the outcome of each trade
you do not place any significance, emotional or otherwise,
on each individual trade."

- trading in the zone
mark douglas

the new trade

"consider the perspective
of a successful trader
observing a nervous beginner.

say a trader experiences a series of losing trades,
thus he is hesitant to take the next signal.

the professional trader would consider the novice traders fear
as irrational
as the “now moment” opportunity
has nothing to do with the last few trades.

each trade
is simply an edge
with a probable outcome
and is independent of every other trade."

- trading in the zone

mark douglas

no gain with pain

"top traders do not perceive anything about the markets as painful;
therefore no threat exists for them.

no threat means nothing to defend against.

nothing to defend against means
there is no reason for your conscious and subconscious defense mechanism
to be activated.

to obtain this mind set you have to redefine your relationship to market information
so that there is little or no potential to perceive anything as threatening.

this new mind set will allow you
to remain focused on the opportunities available
instead of tapping into emotional pain. "



- trading in the zone
mark douglas