gtalk between China and Russia

CHINA: Good Morning RUSSIA

RUSSIA: Good morning

so, what’s the plan for new year bash ?

CHINA: with family......at home tonight.......on the famous mall road tomorrow!!!

and urs

RUSSIA: very much at Home

CHINA: i was just spending some time to understand what

RUSSIA: I never venture anything on the 31st night. often keep myself in the quite mood.

CHINA: nifty might do this year!

RUSSIA: ok

CHINA: that's good! same here...

RUSSIA: so, what does your study says?

CHINA: nifty around 3200 is a possibility which can't be ruled out

RUSSIA: that scares me

CHINA: i am looking at 10 yr nifty chart

RUSSIA: ok

CHINA: atleast 55% chance....

and that is hell of a chance

RUSSIA: 3200 nifty means my portfolio will be just 10% of the value invested

CHINA: i forgot that

u r an investor too

RUSSIA: very very much

CHINA: don't panic, just don't ignore that

RUSSIA: sure,

CHINA: besides, it will not drop the apple on newton's head

it will happen so slowly

RUSSIA: what my main concern is to know, what went fundamentally So wrong that, everyone on the street is so bearish.

CHINA: that nobody will feel it much!

RUSSIA: also, I was watching an interview yesterday

CHINA: there is hell hell hell lot of liquidity in the world....pumped to avoid default after default after default without any gdp growth........

see i didn't watch any interview.....

i just opened the 10yr chart

with a mood to analyze this aspect

and look what has just sneaked in my head

RUSSIA: wherein, motilal oswal guy was stating that, market often makes bottom when 99% people believe that market is heading even lower and start to sell their portfolios in Losses assuming that, they will enter at lower levels

could be

I don’t say it would not.. go down from here

CHINA: motilal oswal is a big big name. i agree with him

RUSSIA: but wondering what will be the spare of Indian economy after such down falls

CHINA: but a lot lot people are looking for upside as well

if we analyze indian economy, we may be shocked!

RUSSIA: yar, there are always 2 sides of a coin, people are bullish & bearish

what shocks you after analysis ?

CHINA: local economy mess coupled with global meltdown can cause this

RUSSIA: I agree, but still 6% GDP is better than 2% of the west economy

CHINA: govt can't take any political decision. no reforms (much needed) possible till feb elections.

see, the premium indian markets command is because of 8% growth rate not 6

RUSSIA: veer ji, I am of a camp, that nifty may go till about 4000 and make a reasonable ground to invite FIIs to invest for the next 10 years

CHINA: ultimately, fundamentals decide where market goes after all drama

RUSSIA: 3200 is bit too much of Pessimism

CHINA: just take the market to 4000, don't need any more pessimism to take it down to 3200

RUSSIA: correct

CHINA: let’s ask ourselves a basic question

today

RUSSIA: which amount to about 10% down from here

CHINA: i repeat - today

RUSSIA: pls

CHINA: are we seeing economy improving?

i ask a few qs

1.

interest rate going down?

not as of now

not today

RUSSIA: true

CHINA: 2. fresh capacity building taking place in various sectors?

no

3. is rupee ok

RUSSIA: no

CHINA: 4.

any chance of 1991 like policy boost?

this govt is crippled

5.

what's happening globally? is the worst over?

well,

the worst hasn't yet started

all europe, china and US are busy

since 1 year now

to stop the avalanche

how?

mindless liquidity pumping

where has the money gone?

nowhere...it is out there

RUSSIA: all above is true on the face of the mirror

CHINA: has the economic activity picked up to engage that money

no

ok

forget all this

let us

just try to list pro's

in favour of rise

1.

pl help me

just because it has fallen so much and

just because indicators are enough oversold

is no reason for nifty to go to 6000 and beyond!

RUSSIA: agree

fully

CHINA: nifty can't go that up without fii's

RUSSIA: very true

CHINA: fii's are not jerks to put their money in india...looking at our state of affairs

fii's would like to keep liquidity to face any eventuality in europe

see. one thing i always believe in

that

no real turnaround comes

in ;life as well as economy

till real real trouble

no jerk wakes up till real crisis

just look at the 10 yr graph

RUSSIA: ok

CHINA: we are slipping since nov 2010

earlier it looked like some correction

now it looks like slippage

2003 to 2007 was different

RUSSIA: but, we haven’t reach a level... where our economy has to see the graveyard

in such times only, smart money is invested... check what major investors like Jhunjunwala did in the past

CHINA: there was no graveyard situation in 2008 as well

conditions got created

RUSSIA: but veer ji, Guys invested in 2008 have made money even till now

let me prove it

pls allow me

TCS was below 600 now 1155

pls note Kotak was 280. I bought touched 900 before split and even now 455

SBI / TATA STEEL / even mid caps were dam cheap except the infra sector

almost all stocks bought in 2008 gave good returns

I will share an excel sheet with you

right away

I am not saying by any mean that, WE ARE NOT IN MESS

CHINA: times change

and we are at one of these historic turning points

RUSSIA: agree.. but cannot rule out the turnaround could be for positive even ..

one thing I have learnt

CHINA: yes, it can be. we should indentify the trend

RUSSIA: Stock market world wide

CHINA: courtesy u

i have been

pushed to start looking at swings

RUSSIA: discounts all what is to happen ( Future)

CHINA: i disagree with this a bit

this is spread by big money

big money knows it is going to do what it is.

goldman sachhs knew that subprime collapse was coming

infact they had betted heavily on it

RUSSIA: before a company starts to performs, you will see the stock jumping up with the next quarter results

CHINA: only they and players like that knew it

RUSSIA: i am no where denying it

CHINA: u know the difference between halaal and jhatka!

fii's believe in halaal termination

by that definition they are................

RUSSIA: all I am saying is... we may well be close to bottom as well and things may start to change now... I remember my early days of speaking with you, where in you yourself mentioned... that, In your views...

Market has either entered or about to enter for a long bullish trend

CHINA: RUSSIA even i am learning,

RUSSIA: we all for that matter

in punjabi there is a proverb..

CHINA: as a trader i like up as well as down equally.....u as an investor + trader naturally need to be worried

pl

RUSSIA: Ghar Pakki vekh ke kachi ni thahi di

I invested by mistake at the peak of 2007. and saw meltdown in 2008/2009

CHINA: i'm sure u and i will atleast be cautious after this

discussion'

RUSSIA: with bank going out of business ... us market being killed

yet , they are much better than any of us

today our problem is in 2 areas

1) Inflation which directly results in interest rate

2) Govt need to get up to do something on policy

Milesh shah is the best tech guy I respect the most in the stock market

The Guy behind ICICI prudentional

now with AXIS BANK a fund manager

as Fund manager

CHINA: yes, but govt is presently in minority. unable to get anything passed....just see fdi in retail.....opposition will want to kill the deeply injured govt completely.......no 1991 for another year.

what does milesh say?

RUSSIA: He did say.. that FIIs are so smart that, while they sell they also make market so lazy and Tired that, Investor lose interest and in suicidal thoughts, often kill their portfolio by jumping in the well

CHINA: well, has such a scenario come?

RUSSIA: and FIIs buy

CHINA: if not yet, it is on the cards?

RUSSIA: to be honest.. I don’t know

But one thing I know

for sure

Investor never lose money

trader does

u may have to wait for some time

But lf one is investor

3 year down the line

CHINA: pl add a few words in that line "Investor never loose money" so that i agree

that

RUSSIA: the same money gives you atleast 2 times

CHINA: Investor never lose money IN FUTURE-SECURE BUSINESSES

RUSSIA: See, the definition of an investor is not, That you invest today and keep your neck again and again on the screen

I have something to share here

Milesh said once

CHINA: yesterday, ;looked at suzlon after a long time. i had last bought it at 110 and sold at 123. yday, it was 18

pl

RUSSIA: That, Even when u plant a seed of mango tree... you got to wait for 12 years to get mangos..

I know brother

some sector never saw the sunshine in last 2 years

I will tell you something

There was stock call Raj infra or something like that... was available for just 60 paisa in 1990

to 1992

nobody bought

some did

stock now is 125

another example

HUL ... darling company

agree ?

CHINA: i agree.....

RUSSIA: do you agree ?

did not do anything in the last 10 years

stock was below 150

for all this while

now 425

what I am trying to say is... A specific sector

does great stuff in a particular time

CHINA: RUSSIA, why not act as a "fund manager" instead of an "investor"

RUSSIA: one has to identify

hahhahah

not my cup

CHINA: 150 in bank would have become 600 in 8 yrs

no no, u got me wrong

what i mean with "acting like a fund manager" is

that we should not be emotional with specific stocks

and be cunning like a bania

RUSSIA: correct

that’s ryt

veer ji, you must notice one thing

CHINA: put money where rokra is

RUSSIA: get this very clearly

CHINA: RUSSIA, life is short. need to see money multiply

i also agree that surplus ,money can be invested..

should be invested

RUSSIA: what happen when RBI is on the run to increase the interest rate

market often get in the same mode as we witness today

i have something to share with you

let me call you

importance of volume in trading - I

many traders give a lot of importance to volume.

i always paid minimal attention to volume.

my attitude towards this important parameter got a shot in the arm when i heard an interview of a veteran successful trader who too, like me, didn't give importance to volume.

still, hearts of hearts, i was not comfortable avoiding looking in the eyes of
"volume"

today, i finally decided to bite the bullet.
i spent some good hours studying the phenomenon called
"volume"

and here is the synopsis of what all i read or thought or discussed with my core circle.

--

if price is rising and you simultanousy see rise in volume

it doesn't mean that buyers are more than the sellers.

rather, for 10 trades, there have to be exactly 10 buyers and 10 sellers....always!

infact, as you know, rise in price means that the desperate buyers have found reluctant sellers......resulting in rise in price.

and rise in volume means that more buyers were bitten by the desperation at that price point.

as martin pring says, volume and price are two independent entities.

price can move with or without rise in volume.

lets take an example.

these days bananas cost 40 rupee a dozen in shimla.

not too long ago, they cost 20 rupees a dozen.

if today 2500 dozen bananas got transacted in the fruit market when price was 40/- a dozen

what would trade volume you expect the next day if the price falls to 35? 30? (assuming other factors remaining constant and desperation of banana comsumers remaining the same.)

well, obviously, you will expect more banana fans to be interested in buying at lesser rate.

what if the rate tomorrow falls to 25? 20?

well, the volume will shoot up!

it might shoot up to the same trade level as it was when the price was 20 a few days back!

afterall, 20 rupee was the latest "support" price of banana.

so, does this rise in price really indicate that the bottom fishing is taking place and the price of banana will rise from hereon?

not really, in my opinion.

trade volumes of banana rose at 20 because 20 rupee per dozen was the latest support price for the fruit.

in other words, the volume of desperate banana lovers just shot up at a perceived bargain price!

price can still fall and fall big!

having said that, volume still signifies some crucial things

1. the price-value perception of public.

2. expected behaviour of buyers at support and resistance

does volume shoot up indicate fii/dii/big player position change?

yes and no.

yes, because generally fii's/dii's trade big volumes.

no, because fii's are known to accumulate or distribute, not "buy" or "Sell".

the difference being the manner in which they sell or buy....the stealth!

the sudden spike may just be a big deal which had reached a "target" price.

fii's buy when it doesn't show.

fii's sell when it doesn't show.

the best time to sell or buy may be when the volume is low......





(to be continued in part 2)

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!!!

think before you feel

horace walpole had said
"life is a tragedy for those who feel, but a comedy to those who think"
--
how true for trading as well!
"trading is a tragedy for those who feel, but a comedy to those who think"
-
should traders feel what they are thinking?
or think what they are feeling??
or feel what they are feeling???
--
if you ask me - none of the above
traders should only think what they are thinking.
--
don't feel it, just think it.

never trade without having lunch

when i learnt to play chess seriously around 20 yrs ago

one of the first things i learnt was

that a chess game can be broadly divided into three phases

1. opening game

= opening game generally lasts around 15-20 moves. as the name suggests, this is the opening phase when positions are taken and army is deployed. the first move previlege lies with the white camp. the black camp just responds to the opening moves of the white pieces. the white camp is the decider and attacker, black camp is the responder and defender. how the middle game will proceed, what colour the war will take depends on what shape the opening battle takes. since there are dozens (if not hundreds) of opening moves possible, there can be so many number of opening scenarios. the white camp tries to create a battlefield scenario of its choice. the purpose is to lure and trap the enemy in a situation decided by the first mover! it is rare to see the white to attack the black camp in the opening game or vice versa. particularly if the opponent is not a walkover. even kasparov didn't dare that (except rarely) against karpov. any attack without porperly unfolding and readying the defense can be suicidal especially against a strong opponent. so, all in all, opening game is to open and deploy the defence as well as offence.

2. middle game

= middle game takes over from opening game. it typically last for 20-30 moves after the opening game. once the army is deployed and the specific position-for-the-day has been taken, the real battle starts! all tactics, strategems and killings are made in this part. the real loss or gain or manoeuvring happens here. how well, the opponents had read each other and prepared in the opening game shows up here.

3. end game

= the game is all but over by the end of the middle game. though one opponent would have did a collateral damage to the other in the middle game, the game still needs to be won comprehensively. no battle is over till the king is captured or killed or check-mated. some smart warrior kings escape daringly even even from seemingly hopeless positions! an end game generally lasts 10-20 moves but much lesser time.

--

day-trading setup is also like a chess game.

one prominent difference = retail traders always play with black and can only react and respond to what the white camp, the operators do.

another difference = retail traders start attacking the white camp, the operators right in the opening game.

third difference = here the kasparovs or the karpovs or the anands play against novices!

a trading day can be divided into three phases

1. opening phase

=  opening phase is the one when the operators set the battlefield for the day. everyday, they come up with a different trap. everyday, the setting and situation is different. in the opening phase, operators butcher the retail traders who come charging without waiting.....just swept in the rush of blood. opening game is the phase which is often deceptively contra to the trend. this is the time when dreams are sold by the operators. mirages and expectations and desires of retail traders are treachorously fanned and fuelled by the white camp. and when the trapping is complete, the middle game is a one sided affair. when the operators just trap the early blind moths desperate to enter the fire!  

this opening phase of trading typically lasts till the midpoint of the session - the lunch time!

2. middle phase

= once the drama, the bluff, the trap, the volatility, the contra-dream, the lure is over in the morning session, the operators are left with no option but to do what sanity and trend and fundamentals allow. they swifty start doing what they should be doing.

3. end phase

= like a chess game, the trading end game is just a small tail.....more of a formality......sometimes to dress the wounds of the loser....sometimes to kill him decisively. mostly it happens after in the last half hour or so.

--

big moves happen mostly in the afternoon. what happens in the forenoon session are not big moves but bluffs and whipsaws.

you will rarely see direction changing (except once at most) in the afternoon session.

you will always see big move after lunch whereas you will notice that forenoons are mostly dull or indecisive or rangebound.

--

amateurs mostly trade in the opening phase, professionals mostly trade in the middle phase.

--

whipsaws are aplenty before lunch and rare after lunch.

avoid trading without lunch, before lunch.

anything to lose!

want to be successful in trading?
here is a simple way.
"make mistakes!"
but you won't.
so i hereby, change my wording
"stick to your convictions of a trade"
only 2 things are possible
- either ur conviction will be proved right
- or ur system's chinks will be exposed, hence paving way for improvement.
--
in his masterpiece
"6 success forces"
 joseph sugarman had included one success force as
"do anything to fail"
--
if , however
you don't believe in admitting the mistake
and don't believe in improving your trading system
or,
don't have a trading system in first place
i have only one advice
"don't make mistakes at all!"
there is only one way of doing that
don't trade.




(niftyshots.blogspot.com)

do what u fear doing in the market

"Don’t look for easy trades and setups at all times. 
Test yourself by working challenging trades and difficult markets 
in order to test and improve your skills. 


For example, if you’re uncomfortable and not skilled in trading options, 
spend a month just trading options. 
If you’re uncomfortable with shorting stocks, 
spend a month just shorting stocks. 


We only have the opportunity to improve if we constantly test ourselves 
and work on things we find most difficult. 
If you don’t learn to work on your weaknesses, 
sooner or later they will catch up to you when it will hurt the most."


Dr.Bob Rotella