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

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.

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. 

key to profit lies in the heap of losses!

many of you
must have been in stock market
since many years.

if i ask you point blank
"what would be the rough total of your winning trades?"
what figure would you give?

and then if i asked you
"what would be the rough total of your losing trades?"
what figure would you give?

chances are
that the sum total of the profitable trades will not be zero.
some decent figure would be there.

and the sum total of the losing trades will be huge
much more than the sum total of the winning trades.

and what would be the net total
(after combining the two figures).

again the chances are
that you would have slipped non stop
in all these years!

well, what's my point?

its plain and simple.

the above facts contain
two part-solution to your problem.

first,
if you were to only reduce and minimize your losing trade frequency and size
especially the size,
your balance sheet will dramatically improve!
who knows, by now, you might have been only marginally in the red, if not in the green,
with a treasure of experience as the base for the final flight!!!

as dr. brett steernbarger says
"If there is a holy grail to successful trading, it probably is risk management."

and now
the part-two of the solution-

why and when did you book the profit
of your few profitable trades?

was it fear of losing the profit
or was it a clear red signal to the rally?

again, chances are
you have a habit of
blinking first!

the cause of fear of losing the profit
like the cause of any other fear
is
darkness
and excitement.

darkness caused by absence of a method
and excitement caused by desperation.

think about it!

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)

self talk

i generally try to take and share trades with stoploss of 10-15 points.
like the last one where the stoploss is just 11 points away.
if one trades in nifty futures and trades with 1 lot (say), then the max risk in a 11 point SL is of 550 rupees. add another 150 rupees as brokerage (majority brokers charge less), this adds up to 700 rupees.
if the trade goes in the desired direction and gives a profit of 30 (say) points, the benefit amounts to 30x50=1500 rupees. minus brokerage of 150, it comes to 1350 rupees.
if one trades with mini-nifty, all this gets reduced proporationately.
if one can't take this much of risk with this much of potential for profit, one should not consider taking up trading. instead he or she can opt for occasionally buying lottery ticket.
otherwise, it can be a pretty decent self-employment.

only 3 conditions : a) i am assuming that the trader has got basic trading skills, b) he ruthlessly and strictly uses stop loss preferably using bid option, so that no time is wasted if SL is hit, c) re-enter the trade if price crosses back the SL (preferably in the same session).

the only game spoiler can be = a sudden sharp move that jumps the stop loss bid range.

this may happen occasionally. this is stock market - a semi-war zone!
this is why it is so important that we lose small and profit max possible - to build a buffer for such occasions.
trading is simple but not simplistic! 


(niftyshots.blogspot.com)

no gains, without (the right type of) pains

risk can't be separated from trading.
a trader must accept this fact.
once you accept this, it will be prudent to understand that there are four choices of trading risk you can take
1. small risk taken, small gain booked
2. small risk taken, maximum gain booked
3. large risk allowed, small gain booked
4. large risk allowed, large gain expected.
while type 4 risk remains a dream, rather a nightmare,
type 3 risk is what amateurs do on the way to becoming pro's (provided they survive)
type 2 risk taker is a pro
and type 1 risk is the sign of a maturing amateur.

(niftyshots.blogspot.com)

my views on stop-loss

below, i share my notes about "stop loss".

- any trade is based on probability and not on certainty. so there is always a chance of the
trade not going the intended way. (however, better the trade anticipation theory, higher the
percentage of trades going the intended way)

- stop loss is not a irritant, it is not a necessary evil as well. it is, infact, the most potent
profit yielding tactical tool. you can take any promising trade with intelligently decided
stoploss. without stoploss, all trades are risky and with it, no trade is risky. since risk is a
perception, it is linked to fear. and fear kills more traders than loss. fear cripples your
ability to react to adverse market moves. stop loss is like the rope in the neck of a fierce
hound tied to a pole and threatening you. with that stop loss rope, u r always safe from that big
bite. stop loss is a safety assurance which invites you to take any trade. just as they say that
courage is the fear whose prayer has been said, profit is a trade whose homework has been done
and stop loss cleverly decided.

-personally, i don't use the word "stoploss", i call it "stop chase". this nick name is based on
the reason and logic behind my definition and usage of the stop loss. here is it = i take a trade
on the basis of a formation/indication. just at the time of entering the trade, i decide as to
what will be the point where the formation/indication to take the trade can be considered as
having been destroyed/disturbed/spoiled/over. that point i take as the stop loss (in my language
= "stop chase"). why stop the chase? because there is no point chasing when you realise that the
chase was false!!!

- one more thing, if the stoploss (or the stop-chase point) is too away, i tell myself that it is
not the best time to start the chase (i.e. to take the trade). i wait. this is what i call
setting an "intelligent" stop loss (stop-loss chase point)

- after breaking my head for months and years against market theories, indicators and tactics, i
have realised that a trader's edge depends as much on deciding the stop-chase pole location as
much as on his or her ability to identify trading opportunities. the successful and profitable
trader may not necessarily be more intelligent or knowledgable, but definitely smarter in picking
the chase and stop-chase points.

- a time comes in a trader's professional journey when there is little scope of further improving
the skill of identifying credible, dependable and sure trading oppotunities in an
ever-treachorous operator-driven markets, the only way to become a still better trader is by
practicing and improving and mastering the art of chosing better and intelligent and clever
stop-chase pillars!

www.niftyshots.blogspot.com

learn fishing to be a successful trader

when i was in college
i often used to go for fishing
alongwith my friends...

we all had got
our handmade fishing rods

we would take along
a good supply of bait
to put in the hook
bit by bit
for luring the fish.

for quite a few times
it happened
that i put the bait
lowered the hook into the water
took it out after some time
only to see the bait gone
but no fish!

i felt so bad...

till one day
when the bait was gone
and a big fish had come!

since that day

i never mind
the disappearance of small baits!

because i knew
that on and off
some bait will get me a big fish!

with this one and only and simple trick
we caught so many fishes
in our college days!

bait
was our tiny investment
for
big rewards!

this experience
came handy
during my most difficult trading days!

when i trade
i take it as a fishing game!

i decide my entry point
and the stop loss
and i consider the difference between the two
as the bait!!!

that bait is meant to be fed to the fish
it is not a loss!

quite often
it gets me the fish
sometimes quite big!

this psychological trick
did wonders for me!

but remember
a bait is a bait
not full feast!

if you don't have a stop loss
or don't honour it
the sharks take away
the ship full of bait!

---

happy fishing!

the one who loses best, wins!

there are two ways to lose
lose smartly
lose losely

u lose smartly when u lose like a pilot whose jet goes out of control and he ejects safely.

the jet is lost but the human life and a highly trained elite pilot is saved!

u lose smartly when u pull the stop loss ejection trigger. the good thing is that even the principle jet is saved here as well as the trader pilot and his peace of mind!

on the other hand, u lose losely when u lose too late.

u lose losely when the writing is on the wall and the loss is most painful.

u lose not in the eleventh hour but 13th!

u accept the loss when u have no alibi or excuse left. when even your acceptance is no more graceful.

--

it is well known but hated secret

that good trade is never comfortable.

so, there is always a chance of loss!

so, this makes it more important as to how we lose!

--

the question is not who will be a millionaire

the question is who will stay a millionaire


so more important than winning is

preserving and building on the win.


there is only one way to ensure that

...lose smartly

and lose least!

--

that is perhaps the reason

why it is said that

trading is a losers' game!

the one who loses best, wins in the end!

a different kind of stop loss

there are three main reasons why traders don't use stop loss"

1. fear of booking the loss

2. expectation (sometimes proved right) that market will turn

3. loss of face that you were proved wrong

these are genuine factors

and it takes lot of time and effort

sweat, tears and blood

to tame these psycho-dogs!

--

i too had a lot of difficulty in overcoming these hounds.

then, one day

i found a unique psychological trick

which helped me trigger the stop loss

without even an iota of hesitation.

rather, i started loving pulling the stop loss trigger.....

here is it.....

--

whenever i find that i am on the wrong side of the trade

i don't bother to trigger the stop loss.

i just buy double the reverse position.

this may sound childish

but for me

this mental trick worked

just as penicillin worked on multiple infections

many decades ago!!!

--

it not only saves me from the mental tug of war

with my ego and emotions

it also works as a SAR (stop and reverse) for me.


i am always in the trade

and any loss is immediately overcome with profit.

tears are too small lived

they get wiped out by smile.



lately

i have further improved this trick as below:


i buy in current series (futures)

and sell in the next series.


i offset the booking of respective lots of respective series

by taking advantage of the zig zag motion of price within the channel.

the art of booking loss & profit!

traders are great athletes as well as great spectators!

when they run

they are a treat to watch........running like an obsessed creature....full of fear!

like a fugitive involved in a hit and run case!



and when they are not running

they are great spectators

cursing themselves as to why they are not in the race!



there are 4 types of trade athletes!



1. those who cut short their profitable runs but don't honour the stop loss hits

= typical newcomer unevolved trainee trader driven by 'fear of booked loss' and 'fear of loss of profit'. still, a good, necessary and inevitable phase for any new citizen of the market.

2. those who cut short their profitable runs but also honour the stop loss hits

= the first conscious effort of the budding trader. though he still can't overcome the fear of loss of profit, he definitely doesn't fear booking the loss. they keep ringing their piggy bank with coins till one mistake gets the better of them. such traders are less as this is more of an ideal state of a trainee mind.

3. those who not only let their profitable trades run but also don't honour their stop loss hits

= a wealthy newcomer who has got skin thick enough to bear the loss of accrued profit but not thick enough to accept that his calculation can go wrong. they win big and lose it all.....and finally blame the market.

4. those who let their profitable trades run till indication of trend reversal but honour their stop loss hits.

= matured seasoned silent emotionless egoless boring money machines. this stage comes with time but does come.

phantom trading!

life of a budding trader is full of troubles:

trouble 1: did not have a method, so kept losing.

trouble 2: had a method but did not follow it, so kept losing

trouble 3: followed the method but interpreted situation wrongly

trouble 4: interpreted situation right, but trade still went the wrong way!

--

trouble 1 is a training issue.

trouble 2 is a discipline issue

trouble 3 is a practice issue

trouble 4 is not your problem. it is an operator issue which you can do nothing about!

majority traders on the way to immortality think
that if they learn and practice enough
soon there will be a time when they will be expert enough
to be able to interpret any chart absolutely correctly!

this doesn't happen
and will never happen
till the market waters have crocodiles called
operators!

(and the day there are no operators, there will be no market!)


this means
that trouble 4 will always be there!

so, how do we safeguard against this one?

stop loss?

not a bad option!

but when the stoploss bell rings
it is not musical at all!

and sometimes
the adverse movement is so fast and big
that by the time loss is stopped
it is already big enough to hurt!

is there a better option?

fortunately there is one!

i recently came across this while surfing net
and it is amusingly (but aptly called)

"phantom rules"

by art simpson

there are two phantom rules

rule 1 :

WE ARE WRONG UNTIL PROVEN CORRECT!

what this means in simple words is

= if your trade doesn't go your way within a few hours, square-off!
keep a position for three hours unless they have proven to be correct by that time. otherwise, something is happening underground which you don't know or have not taken into account! put in yet another way, assume to be wrong if you are not proven right "soon enough". don't ever let the market tell you you're wrong. because by the time market proves you wrong, it might be quite costly!

this way, you may be missing out on some trades where things went your way albeit late, but you will always bleed negligibly when things did go wrong! besides, who stops u from re-entering once the position is prove right again?

according to art simpson
".....trading is a loser's game. he who loses best will win in the end!"

keep your losses quick and small.

in trading, i have experienced that possibilities are high when probabilities are low. indicators tell us probabilities and hence act as the unintentional agents of the operators.

in art simpson's words

"the correct way to control positions is to only hold them once they prove to be correct. most trader do the opposite of what is correct by removing positions only when proven wrong................in rule 1 it is important to understand we are saying the one criteria for removing a position is because it has not been proven correct. if the market does not prove the position correct, it is still possible that the market has not proven the position wrong. if you wait until the market proves the position wrong you are wasting time, money and effort in continuing to hope it is correct when it isn't. so, remove the position early if it doesn't prove correct. By waiting until a position is proved wrong you are asking for more slippage...............you don't go buy clothes, take them home and wear them until they prove to be wrong for you. instead you try them on and make sure the have a proper fit and look before you buy them...........we must remove the emotional elements, fear and greed, as quickly as possible in trading. If you can do it before you put a position on, you have a good start.

and here is the rule 2:

PRESS YOUR WINNERS CORRECTLY WITHOUT EXCEPTION.

in art simpson's words

".......without a correct method to press your correct positions you will never recover much beyond your losses. you need rule two to ensure you have a larger position when you are correct. you always want a larger position when you get a great move or trending market than when your position isn't correct..................rule 2 does not mean just because you have a position in your favor that you must now add to that position. you must have a qualified plan of adding to your position once a trend has established itself."

i have found one such way : whether 5min chart or 30min chart, once a trend (whether small or big) is established, the best time to add to the position is when william%r touches "opposite" extreme while rsi hasn't.

and these positions can be carried till price cuts sma 34 from above or till rsi failure-swing-point, etc.

being in the right trade is important, but equally important is staying in the right trade for sufficient duration.

in simpson's words

"trend traders will get larger when they are correct but day traders will start larger and get smaller when they are wrong. day traders can be large when they are wrong but trend traders will never be large when they are wrong. this is due to the nature of a loser's game for day traders.........rule 2 must be used if you expect to make money in the long run........"



(for further understanding
http://www.webtrading.com/phantom/preface.htm)

not a joke any more!

"why do traders miss the train every time???"

"because they can't afford to lose stop loss amount!"

just a joke?

"why do traders lose so much?"

"because they can't afford to lose stop loss amount!"

just sell!

a trader
went into a jewellery shop
to buy a diamond necklace
for his wife
an evening before the valentine day!
--
he selected a dazzling one
paid 1.2 lacs
put the necklace in the bag
came out of the showroom
and was about to get into his car
when suddenly
he noticed four
well-built guys
staring
at him
from across the street!
--
first he thought
they were looking casually
but then his gut told him
that something was wrong about
the way they were looking at him!
--
he hurried to locate car-keys in his jacket
the guys leaped towards him
on seeing them coming
he abandoned his car
and started running fast
into the adjacent street!
--
the guys followed him
he started running faster
much faster
street after street
the guys kept running behind him!
--
he
then
suddenly
slipped into a very narrow street
and reached
a small time
jewellery shop!
--
an idea struck him.
he entered this shop
and offered to sell the jewellery
after showing the receipt
he had just got
from the previous jewellery showroom!
--
"i can pay 75000 for this!"
said the man across the counter.
"but i just paid 1.2 lacs for this!"
protested the trader!
"sorry!"
replied the busy salesman!
--
the trader refused to sell
the jewellery
at a loss!
he stood up
turned
and
saw outside
the four gentlemen
waiting for him!
--
the trader called the police
from his cell!
the policeman on the other side
was also into trading
part-time!
--
"i will be late! just sell!"
the trader in the uniform advised.
"never worry about the purchase rate
when the trade has gone wrong!"

revenge and forgiveness

have you ever taken revenge?
do u believe in revenge?
or do u believe in forgiving?
--
if u have ever taken revenge
do u remember the end result?
didn't it make u feel even worse?
--
and do u remember
how u felt
when u forgave
and moved ahead
to spot the lesson
only to take
your kind of sweet revenge
differently
and
very effectively!
--
then why do we get bitter
why do we go after the market
to take revenge of the loss
then and there?
and in the process
expose ourselves further
losing bigger
and bleeding more!
--
instead
why don't we acknowledge
the defeat of the moment
take the lesson
forgive
and retreat
with a resolve
to improve
to take our own sweet revenge
our way
on our day!!!
--
in the words of
warren buffet
"you don't have to make it back the way you lost it!"

21 days

experiments

by psychologists

have proved

that

any routine

repeated religiously

without break

for 21 days

becomes a second nature

a habit!

--

unfortunately

it includes

all the easy

bad trading habits.

--

but fortunately

it also includes

all the difficult

good trading habits!

kalka-howrah mail

the auto reached new delhi railway station

the youngman quickly got off

picked his suitcase

paid the driver

and rushed in

straight to the ticket counter.

"one IIAC for kalka pl"

"which train"

"kalka-hawrah mail"

"pl fill this form"

he took out his jetter

jotted down his biodata

got the ticket

and rushed straight to the platform

crossing 7 platforms in-between

using the overbridge!

the train was ready

he had reached

just in time

once again!

--

kalka is the border point between haryana and himachal.

howrah is in west bengal.

'kalka-hawrah' mail

moves like a long necklace

around mother India

from around her neck to her left hand

extended towards far east!!

--

the youngman

dropped on the berth

took out 'trading your gut' by alexander elder

looked at his watch

and smiled big

anticipating a great journey

to the foothills of the himalayas!

--

"10.50pm"

but the train didn't start.

11...11.15...11.40....

the train didn't budge!

then...

finally...

it started

and the youngman heaved a sigh of relief!

--

but to his surprise

it started inching in the wrong direction!

"it is just shunting with some coaches" he said to himself.

gradually,

with a push

the train started crawling a bit more

but still

in the wrong direction!

the youngman's surprise

now turned into discomfort.

--

he excused dr.alexander

put down the book

and popped out of the window!

the train was wriggling

in howrah's direction

and slowly gathering momentum!

--

the youngman's discomfort now changed to panic!

he picked up dr.alexander and his suitcase

and leaped towards the exit door.

the train had yet not picked pace

it was moving very slowly

and was well within

the very long platform.

--

"should i get out or

should i wait?

may be it is just trying to change direction!" he discussed with himself!

he waited...

finally

the wriggling train

took mercy

and

and

and

picked some more pace!!!

--

"what's happening?

why is it going in howrah's direction?

kalka is that way?"

the youngman now started sweating!

the pace of the train was not much

and he could still easily deboard the train!

"but what if i am in the right train?

what if it is just going out of the station to change lane?

there are over a thousand others too in here!

all can't be wrong!"

and then

the train

finally

with a jerk

picked more pace!!!!

--

the youngman

now knew something needed to be done fast!

the platform end was in sight!

he had to decide in a few seconds.

he could still jump off

safely!

" i should get off

and get ticket for any other train to chandigarh.

there are many going chandigarh way.

from there i can catch a bus to kalka easily." he thought

"but what about this ticket?

what about this money i have already spent?

what if this train were to turn back out of the station?

what if the train just returns from nizamuddin station? or from faridabad or mathura?

i can wait!

yes,i can wait!

yes, yes, i must wait!!

i should have patience!"

--

and with those thoughts

the platform ended!

the youngman felt something in his chest.

but he gathered himself

and dr.alexander

and went back to his berth!

--

the train gained pace

with a long hoot

which pierced the youngman's ears

and hit deep within!

--

faridabad came

the train didn't turn.

the youngman waited boldly!

mathura came

the train didn't turn

the youngman waited bravely!!

--

1-2-3-6-9 hours passed.

the train was now rushing towards west bengal!

the youngman had

by now

patched up with the reality!

"i had never been to west bengal. i have never seen the howrah bridge. god wants me to see all this! it's all god' wish! i can easily pay for this unplanned trip!"

--

t.t. came

the youngman

took out the ticket

and handed over!

"are you nuts! where are you going?"

"howrah!"

"but the ticket is for kalka!"

"then, sir, why is the train moving this way?"

"where else should it go?" t.t. replied

"this was supposed to go to kalka" the youngman quipped back.

"that was the other kalka-howrah mail on the next platform. these two cross each other in new delhi everyday. you got into the wrong one! why didn't you drop down well within the extra-long platform? and why didn't you get down atleast on the next station? or next to next?"

--

the youngman had no answer!

he looked at dr.alexander

dr.alexander popped out of the book's cover

"you can't be a trader! stop bothering me."

--

---

----

and then

suddenly

the alarm clock rudely pulled

the youngman

out of his dream

straight onto the platform

of morning!

--

he found himself sweating

on a winter morning!

"thank god!" he murmurred!

he quickly took out his trading diary

and wrote

"1. check thrice before you board the trade

2. if, by mistake, you still board the wrong trade, get off well within the long stoploss platforms.

3. don't wait for the wrong trade to turn back. just get off! there are many others leaving for your place!

4. if you miss the platform, atleast get down at the next station (lower high or higher low) and take the reverse ticket!

5. go and see the howrah bridge atleast once in life.......with planning!"

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!