its all their game

when deep pocket operators stop supporting "buys", the prices start falling even if they don't sell.
when deep pocket operators stop supporting "sells", the prices start rising even if they don't buy.
but, when deep pocket operators start supporting "sells", the prices start crashing.
and, when deep pocket operators start supporting "buys", the prices start soaring.....
its all their game.
till you see this you can't make money big and consistently

and the beauty is, they don't do it themselves.....

their computers do this for them......

with amazing efficiency and ruthless effectiveness......

don't believe?

then check the rate of change of rates of bids / asking rates in your terminal.......

overwhelming bids are "theirs"
just look at the speed and consistency of change of bids.
just see how smoothly and accurately the bids are moved away from your rates.
just see the amazing accuracy of the gaps being maintained.

and while doing all this, they accumulate the diamonds or distribute the lemons.

you and me and we all are "trading" against the "playing" terminals with "super software" triggered by ordinary brains with extraordinary money chesters.

my market philosophies

- market doesn't know whether you are long or short. so, rest assured, the market is not after you. since it can't see you (the individual), it is not thirsty for your blood and money. you are yourself running scared and coming in the way of the speeding trolla like a street dog. remain cool and perch atop the moving beast.

- market will either go up or down, it has no third way. so, there is always 50% chance of winning. all we have to do thereafter is to try and improve that percent.

- we are playing on technical level and getting beaten on the tactical front.

turning radius of markets

when i see traders seek and ask for shorting opportunities in bull runs or buying opportunities in bear drops, i feel like jumping into the screen to his side of the pc and shrieking "Don't!!!"

reason?

every car has a turning radius. every car needs some circle, some width to turn.

only cars in cartoons can turn around like a 'V'.

same is with the markets.

if and when they have to turn, they need a "turning radius". they can't and don't turn in a 'V'

so, whenever, u see a bull run or bear slip (in any time frame), wait for that circle or curve to be
formed.

trading situations are like elephants (not just cars). they take some time and manoeuvring to turn, and they can't hide it.

never panic at sharp adverse sudden unforeseen unwarranted move. it always invariably retreats
(atleast and mostly) once.

then. ofcourse, it depends upon how much leveraged position you have in your mouth that may
threaten to choke you or how much buffer holding funds you have.

my trades

my recent trades 

(for updated list..........www.niftyshots.blogspot.com)

bought 6000ce lots  july series @ 23.35      (5 july)  @ 5792 nifty, squared @53.25 = plus 29.10

bought 6000ce lots  july series @ 41.20      (5 july)  @ 5862 nifty, squared @84.65 = plus 43.45

bought 6000ce lots  july series @ 49.00      (5 july)  @ 5882 nifty, open

bought 5900ce lots  july series @ 46.25      (3 july)  @ 5767 nifty, squared @64.90 = plus 18.65 

bought 6100ce lots  july series @ 26.25      (2 july)  @ 5890 nifty, open 

bought 5900ce lots  july series @ 52.60    (28 jun)  @ 5770 nifty, squared @93.30 = plus 40.70
bought 5600ce lots  july series @ 141.50  (27 jun)  @ 5641 nifty, squared @216.05 =  plus 74.55

-----------------------------------------------------------------------------------------------------------

this month net = plus 28

bought 5700pe lots  july series @ 152.95 (21 jun)  @ 5634 nifty, squared @140.70 = minus 12.25

bought 5700pe lots  june series @ 38.15  (17 jun)  @ 5800 nifty, squared @85.65 = plus 47.5

bought 5600pe lots  june series @ 30.15  (12 jun)  @ 5784 nifty, squared @ 39.55 = plus 9.40

bought 5900pe lots  june series @ 102      (11 jun)  @ 5890 nifty,  squared @156.20 = plus 54.20

bought 5800ce lots  june series @ 212.90 (4 jun)  @ 5958 nifty, squared @153.35 = minus 59.55

bought 6100ce lots  june series @ 37.95 (3 jun)  @ 5925 nifty, autosquared @ 0 = minus 37.95

bought 5900pe lots  june series @ 44.25 (29 may)  @ 6097 nifty, squred @ 72.25 = plus 28 

bought 5800pe lots  june series @ 55.75 (24 may)  @ 5987 nifty, squared @ 56.30 = plus 0.55

----------------------------------------------------------------------------------------------------------

this month net : plus 137

bought 6100pe lots  may series @ 33.80 (20 may)  @ 6186 nifty, squared @88.80 = plus 55 

bought 6200ce lots   may series @ 38.25 (13 may)  @ 6070 nifty, squared @ 63.65 = plus 25 

bought 6200ce lots   may series @ 20.95 (3 may)  @ 5967 nifty, squared @ 63.65 = plus 43

bought 5600pe lots  may series @ 12.20 (3 may)  @ 5967 nifty, autosquared @ 0 = minus 12.20

bought 6100ce lots   may series @ 23.20 (29 apr)  @ 5877 nifty, squared @ 59.90 = plus 36.70

bought 5600pe lots  may series @ 20.70 (25 apr)  @ 5887 nifty, autosquared @ 0 = minus 20.70

=================================================================================
this month net : plus 54
bought 5300pe lots       apr series @ 15.90 (10 apr)  @ 5498 nifty, autosquared @0 = minus 15.90

bought 5800ce lots"      apr series @ 12.18 (5 apr)  @ 5538 nifty, squared @ 94.80 = plus 82.62

bought 5900ce lots       apr series @ 24.35 (25mar)  @ 5641 nifty, autosquared @ 11.85, = minus 12.5

------------------------------------------------------------------------------------

this month net : minus 48

bought 6o00ce lots       apr series @ 29.95 (19mar)  @ 5749 nifty, open, autosquared @0 = minus 29.95

bought 5700pe lots march series @ 26.85 (14mar)  @ 5850 nifty, squared @11.40 = minus 15.45

bought 6200ce lots       apr series @ 18.45 (13mar)  @ 5850 nifty, open,autosquared @0 = minus 18.45

bought 5700pe lots march series @ 13.2   (8mar)  @ 5909 nifty, squared @22.45 = plus 9.25

bought 6000ce lots march series @ 44.10 (8mar) @ 5930 nifty,autosqaured @ 0 = minus 44.10

bought 5700pe lots march series @ 28.35 (7mar)  @ 5816 nifty, squared @11.40 = minus 16.95

bought 5900ce lots march series @ 27.90 (28feb) @ 5690 nifty, squared @94.55 = plus 66.65

------------------------------------------------------------------------------------------------------------------------

this month net : plus 7

bought 5800pe lots      feb series @ 33.50 (28feb) @5810 nifty, squared @112.15 = plus 78.65 points

bought 6100ce lots march series @ 19.05 (26feb) @5778 nifty, squared @ 15.75 = minus 3.3

bought 6100ce lots march series @ 37.65 (21feb) @5895 nifty, squared @ 15.75 = minus 21.90

bought 6100ce lots      feb series @14.80 (11feb) @5892 nifty, autosquared @ 0 =minus 14.80

bought 6100ce lots      feb series @ 31.60 (6feb) @5979 nifty, autosquared @0 = minus 31.60

trading lessons from Everest

day before yesterday, on 29th, was the 60th anniversary of the conquering of the Mt.Everest

summit by Edmund Hillary and Tenzin Norgay in 1953.

it was a sheer coincidence that i was reading a book by arjun bajpai (world's youngest non-

sherpa to climb everest) since last few weeks and ended it around midnight (00:03hours) on

29th may. i never knew that everest was conquered on 29th may till i read it in th elast pages

of arjun's book "on top of the world".

all these weeks i felt as if i too were climbing world's highest mountain alongwith arjun. so

excited was i that i just couldn't come off the submit once the book was out.

i wanted more of everest. i wanted to know more.....experience it more. i checked for books on

everest and found one "into thin air" by Jon Krakauer. i downloaded it, read it. then i

downloaded and watched the movie adaptation of this best seller book.

still thirsty, i downloaded and watched 2 BBC documentaries on everest.

by now, i knew the route to the summit by heart, the heights, the camps, the rules, the

tragedies, the risks, the weather.......and a lot more. though i may not be able to attempt a

climb everest for many reasons, i have somehow felt as if i have climbed top it a few times

already, on the back of those climbers.......and died a few times along with those who choked,

fell and got buried on the way up or down.....

i can go on and on but that some other day.

today i want to register / pen down (rather key down) certain lessons which i learnt while

virtually climbing mt.everest. having been climbing trading mountain (arguably higher than the

everest, and certainly no less treachorous) for so many years, it suddenly struct me that

many, if not all, rules of mountaineering on everest were astonishingly applicable to trading

as well. why not recognize them....and record them?

now here are those rules. there may be many more (which i will keep adding as and when i

receive them). one more thing, i have deliverately kept the rules short and terse, with

minimum explanation. mainly because of two reasons : one - to stimulate you to go climb or

read or watch about everest for yourself ( i want you to google and learn more), two - i am

plain lazy. all i am doing it writing the everest rule followed by trading adaptation comment.

so, here are the rules:

-------------

* acclimatize : go slow, adapt, acclimatize.....or get killed.
= every new trader wants to conquer the trading summit without acclimatizing to the altitude,

the oxygen, the body metabolism.....getting altitude sick and dying

* first learn the basic mountaineering, the rock climbing, the tools, the gear.....
= no alternative to this in trading as well.....basic technical skills and awareness is a must

* study, read, learn, hear, watch a lot about the mission before going there
= know what to expect. be mentally ready.

* try lower hills first.
= paper trade, mini-trades....

* climbing everest is not a passtime...not a picnic
= same about trading. trading is not an escape haven where you go and seek shelter from life's

other losses and rejections.

* fix the logistics
= and the computers, the internet connections, the demat accounts etc.

* fix your turn-around time before you start. better return alive to attempt the summit

another day (final summit push, beyond camp 4, is started by the climbers around midnight so

that they reach summit before noon and return before it turns hot, avalanche-prone, or before

the weather turns bad.....you have to return to the highest camp, below the "death zone" under

8000m before it turns dark. if you are not at the summit by 1 pm, it is time to turn back,

come what may.)
= if trade is not going your way, turn around.

* don't force the climb
= the market won't be tradeable just because you are there ready with your climbing gear.

* beware of the avalanches
= aplenty in the market. know how to get out of the way.....or take advantage

* beware of the crevasses
= pitfalls, traps of trading.....they are always there, often covered.learn to spot them.

* use ropes, and hooks....
= and stop losses

* don't move out without checking the weather report
= macros

* wait for the window of opportunity....stay put till then.
= 90% trading chance will come in 10% time.

* improvise when stuck
= once your sub-conscious is attuned, it can advise you when u r stuck/

* never mind the coughs
= fluctuations are normal....including a few ribs crackings.

* mind your self talk
= no negative talk.no fool hardy. "any sufficiently determined idiot can reach the

summit...the trick is to get down alive"

* every climb is a different one
= overconfidence kills. good traders avoid reputations.

* respect the mountain (god). (everest decides who climbs it)
= market decides who makes the money.

* love the mountain
= love the market

* never under-estimate the mountain forces
= just because you have been spared doesn't mean you can bet it all.

* pray
= pray

* be lucky
= be lucky

* remember
= be thankful

million dollar traders

pl find below links to the 3 part bbc series "million dollar traders"

i recently came across these and watched them. these are 1 hour each 3 parts of an "experiment" wherein 8 shorlisted novice traders are given 1 million dollars to trade (after ofcourse basic training and under watchful expert eyes)

what a series this is! what an experiment it turned out to be!

every novice, ambitious (& even others) must watch these. all tensions and emotions and dilemmas and triumphs etc are beautifully (and at times in raw ugly manner) exposed!

watching these and other videos will add to any trader's learning curve.

enjoy.

http://www.youtube.com/watch?v=v6ciY8u04Kk

http://www.youtube.com/watch?v=ML4ObTeYLhg

http://www.youtube.com/watch?v=pWkzAvE5aQQ

4 advanced rules for trading success post HMP

post HMP (Honey Moon Period)* only those traders can make it big in stock trading 

1. who can ruthlessly stick to a closed-ended system (with well defined & fixed entry and exit points which don't change at the dictats of markets or emotional states). constantly improving that system is, however, allowed.

2. who can play with "sufficiently" small amount (e.g. a billionaire can play with a million dollars)

3. who are in no hurry to come in the 'top ten wealthiest persons in the town' list

4. have the head and nerves for compounding principle without violating the above three rules. 

* unlike normal life, HMP in trading can last long.....real long.......sometimes forever!

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.

swing trading thumb rule - I

take the position in-line with the trend at the start of the 2nd week of the series and ride without fear till the end of 3rd week of the series.

alternate trading

(in reply to a query)

http://www.mudraa.com/singlepost.php?messid=152809

dear chandrasekaranji,

very valid points. thanks for sharing.

i have given a lot of attention to these considerations in recent times. that is why i say that retail traders are playing on technical level and getting beaten at tactical level. 

i do not rely too much on technicals these days. 

one of my friend in a south indian city has a friend in a european stock exchange and is a top notch software professional. his job is to program and test and improve and manage the software for the top FIIs/ Banks which invest globally. his is quite a "secret" and "sensitive" job. he once told my friend that he comes to know whenever those big fat honchos are about to buy or sell en'mass. he told that they have all the info globally before hand. he told him that big men know it beforehand and make it happen for rest of the world. no amount of technical study can predict what those "doers" are going to do.

technicals are boys toys to self amuse. they do work but not sufficiently.

therefore, i have been working for the last several months to find ways to know DIRECTLY what the "operators" are going to do rather than "INDIRECTLY" trying to guess thru technicals what they are likely to do. 

i don't think that there can be more "scientific" way to do homework for trading! 

and trust me finding the shadow or fingerprints of operators is not impossible if you go all out with that focus. have found 2-3 and working to develop the details. 

regards

trend check?

one of the most popular, most important and least understood and confusing aspect in trading is.....trend.

"trend is your friend!" it is said. but just as in normal world, it is difficult to know who is your true friend, it is equally if not more difficult to know what is the underlying, undercurrent, true trend of the market as of now.

trading without knowing the underlying trend is like para-gliding without knowing the direction and speed of the wind.

as i said in one of previous articles, if you are pro-trend even your blunders are likely to be pardoned. even if a new trader knows nothing about the market, he or she is almost sure to make money if only he or she takes pro-trend trades, sticks to it and doesn't vibrate too much (which market tries hard to make you to).

while a pro-trend ill-timed casual trade is likely to give profit (or atleast little or no loss), a well-timed studied pro-trend trade can give snowball profits washing away all self-doubts.

trend is decided by the market forces endorsed by the operators who know almost all.

and many a times, the trend is not obvious, by choice. market fluctuates a lot making the retail trader believe that either there is no trend or trapping the poor fellow take the wrong trend as the trend.

how is trend decided? 

i pondered over this question for many many months and came out with different answers. i knew that the key to trading success lies in the lock of "trend". over the time, i shortlisted and devised some methods to know the real trend.

the three top shortlisted tools for knowing the real underlined undercurrent trend are:

- moving average

- rsi

- options premium data analyses

but curiously, but not so surprisingly (after you read the game plan of the operators putlined below), all three parameters above are not awake at the same time at any time. i guess this is deliberate, to confuse and trap the prey.

while there are many other ways to know the trend, these are among the best. for these tools are effcient in knowing a hidden, camouflaged or subtle trend as well.

and the good thing is that all three of these are technically and genetically different and hence independent and without influence from each other. 

in my blog www.niftyshots.blogspot.com, i will henceforth, try and share regularly trend for the current nifty series based on my study of the above parameters. since trend changes max 2-3 times a month, don't be surprised if the updation about it in the blog is not daily. so, when i share the trend direction, it indicates the trend on that day / during those days of that series. it may change after a few days as and if market decides for the same.

also, note that i call the trend - underlying trend, because many a times, a trend is either not obvious or not visible. for major portion of the time, operators will not like to let the trend be known. after all, operators are against the majority. and they want the minority to be as small as possible. they will try every trick of the trade to not let you know what the trend is going to be before the explosive breakout or breakdown. or, they will not like you to know that they are accumulating or distributing. accumulation and distribution phases happen before the trend is actually visible. 

what this means is that a trend is there even before it appears on the screen. also, a trend may be there even when there is no movement on the graph. just like a snake which is alive and waiting with held breath, even when it is motionless. not only that, a trend may be up even when the market may move 50-100 points down in one or few days.....vice verse is also true. 

operators do whatever is possible to keep everyone confused. they want you to take wrong sides. and once having done that they tend to move the market so fast that everyone is left stranded behind high and dry.

having said that, i want to end by saying that while operators do a lot of things to confuse and trick retail traders, they leave a few clear, inevitable and shameless clues that reveal the trend for the keen silent emotionless motionless eye.

happy "trading"

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.

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.

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all i have to guard against is the time decay.

similar situation, different decision

http://www.mudraa.com/trading/143227/0/btst-30july-js.html

dear murliji,

thanks for asking and sound like the echo of my self talk.

1. why i terminated both calls of yday in 10-15 points

= there was a strong "undercurrent" signals for slide down. so i took the intraday downward position. but as is often possible near sma 34 lines, those strong signals are bulldozed. for 1-2 hours, it seemed that the upward movement was a bluff. so while i let the first short position drift without sl, at sufficient high intraday position, i gave my shorts a second shot but this time with stop loss. i went for a stoploss for 2 reasons - a)second trade was more in-the-money and costlier, b)if the market was to still continue to drift up (as it eventually did), i didn't need longer signal to accept that the "undercurrent" was false and an upward rally was in store. therefore, the second short trade was with a tight (but well thought of) 10 point one. the first one was costlier @ 15

2. why i let today's trade ride the roller coster

= yesterday's bulldozing of "short" signal was enough signal of an upward rally. so i had little doubt of going long for overnight. 1% asian market buoyancy in morning hinted that i was right. but the rbi policy was a factor that stood in-between. besides the overnight bullish hints, there were enough signals in the morning that hinted that upward movement was inevitable. i was jittery to see the markets dip in the pre-lunch session, but frankly, i was not surprised. i rechecked the signals and saw buoyant forces again. and i was sure that operators / market forces couldn't bulldoze opposite side signals on consecutive days. plus there were 1-2 more reasons. by now, it was obvious that market forces had used rbi news to play the intraday game. buying and adding to the long positions at the intraday lows was an excellent idea (which i decided against, for some reasons).

i checked signals again after 3 and saw clear btst invitation.

so while squaring yday trades was the acceptance of the limit of adverse trade setup, not squaring today's intraday adverse trade was a tough put-my-foot-down deliberate decision to stick to my understanding.

and all this time, i was almost ready with the backup plan.