30042012

When market spikes at open , generally two things can happen. 1. Trend will continue as a channel move 2.Price will reverse and the spike will act as a range.Today the price broke PDH and I was expecting a PB to the BO point.and was a little late to enter.In a Channel move do not expect a fast move and book profit if you can get a reasonable profit. BOF of PDH gave another long trade.
Compare the chart with the price action of 27-04.Then price spiked into a resistance and the new zone was rejecting. Today spiked well  above a resistance and price gets accepted at the new zone

Idea

Close the Gap

I own and drive cars for the last 20 years and have driven more than 2 Lakh KMs. Luckily, I never had a tyre puncture during this period. I have not changed a car tyre so far in my life time . I have theoretical knowledge reading the owners manual and also have observed  many people doing it.I hope these knowledge will help me to do it when need arises.

But there is a big gap between the two.This is the difference between how you believe to act under certain situations and how you actually act when time comes.There is a lot of difference between knowing something and doing something.Everybody knows how to lose weight. but very few do it.Everybody knows the ill effects of smoking but fail to quit.

Trading is not different. Ignorance or lack of knowledge is not the problem for many. A lot of people very well understand  how the market works and what the market bias is, but yet very few are able to put that knowledge into practice

It is the application of the knowledge that makes the whole difference.Everything that we need to know is freely available and are in public domain. Problem is  most people will never put the efforts and the time to consistently apply that knowledge in their everyday trading process

The sooner you close this gap the better

27042012

Nifty Gaped up above 5200 and moved 50 points within the first 15 minutes without giving any pullback.Break above 24-04 high failed to hold and gave a short opportunity. Those who missed it got another chance RT.  PDH and DO failed to give support. BOF PDL gave a long signal.

I had been to Karnataka on a pilgrimage with my family. We visited Kollur, Murudeshwar, Sringeri, Horanadu and Dharmasthala.and had a nice time at Maravantha beach.

Nothing has changed  in the markets. The good old decision points continue to work

Trading Naked

Trader Analysis

Market is a dual auction process where multiple buyers competing to buy from the market and multiple sellers competing to sell into the market.Price is where a seller and buyer agrees to transact.Price moves depends upon the demand and supply .Let me try to explain this with a DOM view of a trading platform

In the above example 23 lots are being offered at 10559. Nearest bid is 19 lots at 10558. Here no transaction will take place.Either the buyers should bid up or the sellers should quote lower.Suppose those who are willing to sell 23 lots at 10559 revises their order to 10558, 19 orders will get executed at 10558 and the remaining 4 offers will remain un executed at 10558 level

Now imagine somebody punching a market sell order of 275 lots . All the bids shown in the above example  will get filled and the remaining one order will get filled at a far lower price say 10300 where another bid exists.And it is a Flash Crash.

Price move is a function of demand and supply. Urgency or desperation of the participants move price.Any trading method which is not based on this reality will fail.

Successful trading is knowing where a big enough group of traders will succumb to fear and greed, and acting with or before they act, allowing their order flow to take our position to profit.

What we need is not TA ( Technical Analysis) but TA ( Trader Analysis)

20042012

This is scary. Nifty crashed 300 points in a minute. This is a 30 sec chart of Nifty Futures which shows the fall happened in less than half a minute.Exact reason for the fall is still  unknown.As per news reports NF printed a low of  5000. But as per ICharts the low is 5225, I wonder why ?

19042012

Nifty opened within previous day range. PDL gave good support and FTC gave a long signal.BOF of the PDH gave a short signal.For me the first trade was a scratch. I sold when price rejected the DO initially.. But it moved another 30 points after my exit.
I regret after each and every trade. Always make some mistakes. But no problem as long as my gains are more than my losses.

18042012

Nifty gaped up above PDH. Bias was bullish. 1PB trade did not move. stopped out. I was expecting a gap closure and continuation of the trend.It did not happen. Nifty tested PDH near market closure and there was no commitment from traders.

17042012

First bar of the day was a doji and it acted as a trading range for nearly an hour and a half. BPB of this TTR gave long signal.Three continuous hammers gave an impression that the pull back is over. This was a scratch.trade. RT of the breakout point gave another long.

16042012

Nifty opened below PDL and the first bar was a bullish bar which went above PDL. When the pullback failed to go below PDL , it was a signal to go long.Second signal was a short FTC at the previous swing high. BOF of PDC gave another long.

Demotivators

I enjoy making demotivational posters. It is fun. All you need is a good picture. Sense of humor and a funny caption. Rest can be done here.

Oceans of Fantasy

Markets often reminds me of the Ocean. From the seashore to the deepest depths,oceans are home to some of the most diverse life on Earth. From the warm sunlit waters of the surface to the pitch-black bottom layer of the ocean,where the water is almost freezing and the pressure is immense, life exists.

These organisms have adapted to the difficult environmental conditions like no light, low oxygen, scarce food, crushing pressure etc. Many creatures in the deep oceans are bioluminescent and produce their own light.Many have huge mouths or enormous guts to gobble up as much food as they can when it is available.

Different zones of the Ocean need different set of skills for survival.Just staying afloat in the respective zone itself is a a major concern for these animals. Some fish have gas-filled swim bladders, while jellyfish and other creatures absorb huge amounts of water in their tissue.

Like the Ocean, Market is inviting and notoriously dangerous.You can see the biodiversity in stock markets also. There are multi billion funds and small investors,Bulls and bears,Scalpers,day traders,swing traders, position traders,brokers, analysts and buy and hold investors.These creatures differ in their skill, knowledge and style. They operate in different time frames and the market feeds them all.

It is extremely important to stick and adapt to the respective zones for survival. Select and stick to a trading style that suits your personality.

"Jack of all Trades" will not survive as a trader for long. 

 This really is a great song:  Oceans of Fantasy -BoneyM

13042012

Theoretically there were two trade opportunities . I missed both .

Reading: Great News

Casinos can be great businesses—until the gamblers run out of money.
The same may be true for FXCM, a foreign-exchange broker that mainly serves retail customers.
In each of the last four quarters, more than 70% of FXCM's U.S. accounts were unprofitable for those trading them.
I found this on Wall Street Journal
Generally it was considered  less than 5%. of traders made money consistently from Market. Now my chances of survival has gone up six fold to 30%. It is party time . Cheers.

12042012

Almost all the day Nifty moved within a range of 30 points. Still it gave two three opportunities to a nimble trader at Decision points.Focus on the Decision Points.
 Like real estate, Location is most important in trading

Reading: Quality of Life

While surfing, I stumbled upon this excellent blog post by Shri Vibhas Pande
Here is the Link to the original blog post


Having reached the middle age, one tends to introspect on how life was spent so far and how it can be utilised in a even more effective manner. I have hence conducted a small audit and have identified four critical things to enjoy a happy and fruitful life.

1. Health. One must enjoy a healthy, long, disease free and blissful life. This is the bottom line. All efforts are towards achieving this. Healthy, long and disease free life can be earned by slowing down pace of life thereby reducing stress and hence ageing process. Regular exercise is essential for this aspect. Open air exercises, fresh air and sunlight, adequate sweating and deep breathing are a must.These habits are to be formed. Once formed they bring in small but effective changes in our body systems naturally. Adequate deep sleep is essential for good health. Specially half an hour siesta post lunch. It is heavenly. 

2. Relationships. Investing in deep and bonding relationships is essential for a blissful and complete life. Spouse, children,parents,uncles and aunts,cousins, nephews,nieces, coursemates, friends,acquaintances......

The list is long. What is essential to note is that each relationship has an unwritten Emotional Bank Account (EBA). We can not withdraw more than what we deposit. We need to invest in EBA of each relationship on a regular basis and withdraw hardly ever from it. 

3. Bank Balance.  One must have adequate bank balance to enjoy good quality life. How much is enough is dependent on one's 'wants', not 'needs'. Needs are really not very much. It is the 'wants' that create the desire to amass wealth. As long wealth is created ethically, it gives you peaceful sleep. Unethical wealth creation goes against our very aim of 'blissful life'. Always remember, 'money is a good servant but a poor master'. 

4. Time. All the above mentioned factors are governed by one important element. Time. We live life in the present moment. This moment can not be stored, recreated,carried forward. We must be masters of our own time. Let no one else command our time more than what we allow. Life is to be enjoyed this very moment, every moment. While we do not have control over flow of time, we must have control over the quality of our time. This is possible and must be exercised.

Thus good health, warm relationships, strong bank balance and free quality time are most critical elements to enjoy good quality life. 

11042012

Nifty opened below PDL. Bias is bearish. First signal is a BOF short of PDL. A scratch trade.. Next three opportunities gave good profit. All you need is to trade the three setups  at quality decision points.BOF, TST and BPB will give you very low risk entries.Notice how the PDL acted as both resistance and support

10042012

FTC at HOD gave a short signal.. First BOF at LOD did not move as expected and gave a loss. The second signal made good money.

09042012

Nifty gaped down below 5300 and two attempts to go above it failed. FTC at BRN gave the first short signal
BOF at LOD gave a CT long. Most of the time Nifty was trading in a tight range.

Reading: Follow Your Effort

If you really want to know where you destiny lies, look at where you apply your time.

Time is the most valuable asset you don’t own. You may or may not realize it yet, but how you use or don’t use your time is going to be the best indication of where your future is going to take you .

Let me make this as clear as possible

1. When you work hard at something you become good at it.

2. When you become good at doing something, you will enjoy it more.

3. When you enjoy doing something, there is a very good chance you will become passionate or more passionate about it

4. When you are good at something, passionate and work even harder to excel and be the best at it, good things happen.

Don’t follow your passions, follow your effort. It will lead you to your passions and to success, 

Mark Cuban in blogmaverick

Typical Trader

Majority  of the traders will miss the reality of Market. They fail to understand the real reason of  price moves.
They will waste their time and exhaust their energy trying to trade the shadows.Finally they will get frustrated and quit.Find out the real thing and stop chasing shadows.

Most of the retail traders are not even playing the right game

Three Trade Setups

My trading revolves around trader decision points. I trade the acceptance and rejection of price at these areas and always trade away from the decision points.

Decision points are price levels where the market strongly reacted earlier. Most of the time they are proven price levels.But market will always create  new DP levels  Traders are creatures of habit and you can expect them to react at these price levels again

There are three trade setups when price encounters a decision point.

1.Price stalls just before the DP and there is no attempt to break the level. In other words it is failure to breakout. I call this TST and FTC (There is a slight difference between the two). After a TST and FTC price drifts down to the lower DP

2.Price breaks the level and pulls back. Pull back find support at the breakout level and the new level holds.
this is a signal to trade with the trend.If the level holds price can only do one thing that is to go to the next DP.This setup is called BPB

3.Price breaks above the DP but fail to hold the level.There is strong opposing order flow on the other side and price get rejected.. Naturally it has to come down to a lower DP where new buying emerges.This is called a BOF.

I have only given the long examples These can happen in short side also.There are other factors to be considered while trading these setups. like Strength of Trend,Strength of the DP. Price action at the DP , distance to the next DP level etc. I will try to explain these factors later.

 These are the three setups you can trade with the lowest risk.

04042012

Nifty gaped down . FTC gave a short signal. But price did not fall as expected. BOF at DB was a disaster CT trade. The Pin bar and good volume trapped many. TST at a major swing low was a clear long signal . see the massive volume at the area..Another range day..

Rubik's Cube and Trading

Rubik's cube,the mechanical puzzle invented by Erno Rubik, was the international rage during early eighties. Over 100 million Rubik's Cubes were sold in the period from 1980 to 1982.

I was a student that time . I spent a lot of time on this. But the only way I could solve it was by removing the coloured stickers and refixing it to restore the original appearance. In our town only two guys could do this and they kept their methods secret.

The "Aha!" moment came when I met a senior scientist from ISRO on a train journey.He told me that Solutions follow a series of steps and include a set of algorithms for solving each step.Basic solutions require learning as few as four or five algorithms.He taught me a method with which I could solve it .

The method he taught me was not very efficient. It needed around 200 twists and took more than five minutes to solve. But it was more than enough to beat my home town wizards.I was really surprised to see these guys who turned a blind eye towards me earlier, approached me to discuss the methods.

Trading is not different. Most of the thinking is done before hand.The Logic is converted to a method or system involving different steps and these logical steps are executed as per the situation. Earlier,I wondered how these experienced traders are able to take split second decisions while trading. Now I know they are just reacting to the situation by just executing a well thought out,well defined,logical step

03042012

Nifty gaped up above PDH and pulled back to the PDH. Trade this as a  BPB of PDH as the bias is bullish. BOF of the HOD gave a short signal. One can go long at TST of DB at PDH. All scratch trades only. Nifty moved within 20 points the whole day.

02042012

Nifty opened just below PDC . Price rejected the low level. FTA is PDH exactly where it stalled. Retest of the PDC and LOD gave a clear long signal. Those who missed it can go long when Nifty made a HL.
BOF at the day high gave a short signal
Avoid trades too close to trouble areas . For example if you try to short at rejection at point "A". FTA is PDH and it is  too close and there is no space for the trade to move. Further the trade is CT