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.

my own laws and rules of day-trading

my first introduction to stock market was in november 2003. but i got serious only in jan 2009. though i had become literate about trading by that time, my real education and training started only after that. and what a journey it has been in these 46 months. full of sweat, tears, blood, death and re-birth....

majority portion of this journey is archived in the form of my 1000+ articles and posts in mudraa.com as well as my blog.

while the learning is still on and will and should always be, i have no hesitation in admitting that i have passed out of the univ and started my pro journey.

in the past 2-3 months i have been seriously devoting time to fine-tune and test and retest and improve my trading method. during this period, i have written and shared quite less due to the time constraint.

today, was in quite a relaxed mood and took the liberty of teasing myself with one of my favourite self-questions - "what are the laws of day-trading as per you as of today as per your method and understanding?"

this is one question that i have been asking myself very very regularly so that i always keep the larger picture right before my eyes and mind.

here is the latest list of my laws and rules for day-trading.

- trade pro-trend and even your blunders will be pardoned. (i have devised my methods to identify the three phases - up trend, no-trend, down-trend)

- technical indicators are the time tables of operators. operators and bandits never stick to time table. don't fool yourself with technical indicators but be aware of them anyway. look for the clue of the operator movement. retail traders play at the technical level and lose at the tactical level. retail traders will lose lesser simply by playing the trade rather than trading the trade.

- market does opposite to the majority opinion.

- use options, not stoploss.

- do your homework and enjoy the "game" of operators. choose right, sit tight.

- never spend your profit. plough it back after taking out contribution to the buffer fund. start with small principal, don't infuse any more capital. resolve to be a millionaire from one coin with the clever method.

- when you realize your mistake or see that the situation has changed since your homework, admit it and save whatever coins are left. stand up and win back lost coins and more.

- play points and not money. gradually, you will develop strong stomach muscles for bigger bets without butterflies.

- take advantage of the temporary adversity rather than succumbing to it.

- divide your capital in parts and start only with one. don't rush to become an operator overnight. learn to stand before you walk, learn to walk before you run before you fly....multiplication will take care of any amount of time you take to wait and learn addition and subtraction.

- experts know nothing. whatever they say won't happen. atleast that way, that day. not because they don't know, but because operators make it a point to go the other way, the other route. operators' modus operandi will never get exposed openly. because when it gets exposed openly, the operators would have abandoned it much earlier.

- all days are not tradable, all trades are not of same duration and juice. all trades are different in tactically.

- more study takes you away from the truth. finally, you would have to unlearn all to bring the real thing back in focus. the world of conventional trading training is fake. it is creating an army of goats for the predators.

why i don't use a stoploss now!

http://thebestbusinessintheworld.blogspot.in/2010/01/u-cant-be-winner-in-stock-market.html

this is an article i wrote 3 years ago.

i opened it again after all this time and was amused to read it. so i thought why not update it with my present views on the topic.

= i no longer use stoploss. i trade only in options which have inbuilt stoploss. i trade only intraday or very short-term and only in nifty options. i trade only with well-developed method. i used my head to create the method. now, i no longer use the head. i just let that method do the trading for me. my emotions have gone almost out of some window. i just use my head in the evening (no every evening) only to fine tune the method. i am not afraid of the adverse unexpected unforeseen move. reasons? probably one reason is that such instances happen very less. second, i have developed the confiection that i select trades after sufficient homework of technique and tactic that it would be hard to lose if i stayed stable in case of adverse move. thirdly, i have programmed myself to take advantage of the bluff or adverse move of the market instead of panic. one reason that allows me this luxury is that i put in money in steps. i never put all my money on the table. i have sufficient backup buffer funds. 

trading has become boring and hence profitable for me.

i no longer use stoploss. but it is so hard for me to advocate not ot use it to others. because somewhere deep, i know that stoploss is a devil created by the devil which doesn't want you to stop fearing. and ofcourse, fear you will, if light of knowhow and experience is not with you.

Js

option screw drivers to suite the need

when market was @ 5445spot today, 5400pe was @ 19
when the market slipped t0 5395 (50points), 5400pe rose from 19 to 33 (14points)

when the market was @ 5405spot, 5300ce was @ 121
when the market was @ 5415spot, 5300ce was @ 135
(14points)

14points in both
but total movement in the first was 50points
and in the later 15points.

same result, different effort.

in the first case, i was less sure of the move,
so i bought cheaper slow moving option.

in the second case, i was more sure of the move,
so i bought costlier fast moving "overdrive gear" option.

that's the beauty of options!

flexibility......
different screw drivers as per the need!!!

how many lots?

Dear all,

This is to emphasize that when I buy cheaper at-the-money or out-of-money options I don't buy more lots than I would have bought had I bought costlier in-the-money options.

I buy cheaper options when I expect comparative uncertainty or volatility, or when the situation is less clear.

By buying cheaper options I put lesser money at risk.

I buy a lot of cheap option lots only when I want to gamble big time with controlled risk, like I did when I bought 5100 pe lots for less than 9rs on expiry day on 26 July which rose to 61rs.

just because i was ready to deploy larger amount in costlier options doesn't mean that i buy more lots of cheaper options just to deploy all that amount.

Best wishes

booking profit and trailing stoploss

i have this standard profit booking rule for intraday or overnight nifty trades with in-the-money options:

one third lots booking@25 points,

one third lots @40 points

and balance flexible.

once a target is crossed, previous target becomes trailing stop loss for the balance lots.

trailing stop loss for balance lots after crossing first target is the entry point.

why i prefer to trade in options instead of futures

* safety (especially large unforeseen sudden moves)...and hence peace of mind. you thereafter never trade with "scared money".

* more leverage of capital

* adverse movement is lesser than the pro-movement for the same movement of spot.

*  more effective stop loss.

* lot of flexibility viz. a viz. which option to buy 

* deeper in-the-money options have much less premium and move as much as futures.


* options have inbuilt stoploss.

----

all i have to guard against is the time decay.