31102014

Nifty gaped up above PDH.Failed to go below NS BRN 8200 level which was day open. Long on BPB PDH on break of RN. It was just trailing afterwards. Price stalled at BRN and there was a TRAP pattern there. Then it was a 20 point range for a long time. TP on BOF of range high. Skipped BOF of range low as there was NS BRN, RN and Range high above.

30102014

Did not trade yesterday. Today Nifty opened within previous day range. Broke PDH and BRN. Long on BPB of BRN. Trailed and stopped out at RN 8150. Did not take any trade in the afternoon as today is contract expiry. From tomorrow Nifty Futures lot size changes to 25

29102014

Not traded. Nifty was within IR, the opening MC candle the whole day. There were possibilities for getting trapped in BO/BPB  at  IRL and IRH in the morning session

28102014

Nifty gaped up within previous day range. IR formed. Short of FTC above 8030 from where yesterday Nifty  sold off. TP when price failed to go below DO/Range Low. Long on BOF of Range Low. Stopped out . Another long on BPB of Range High. TP when price reversed from RN 8050. Done for the day as I have some other work

27102014

Market was choppy with too many levels in between. Attempted a long on BOF of PDH/PDC. Stopped out below the entry bar. Did not attempt any other trade.

Seven Pillars

Working Memory of  human brain is a concept that always attracted researchers of Cognitive Psychology and Neuroscience. Working memory which is also called short term memory is the system that holds multiple pieces of information in the mind. Short term memory is responsible for the retrieval, processing, integration and disposal of information during a decision making process.

George A Miller of the Princeton University has done extensive research on this subject. His research is one of the most quoted papers in Psychology. This is frequently referred as Miller’s Law. He argues that the number of variables an average human can hold in working memory is Seven, Plus or minus to two.

Trading, especially a discretionary method is always a decision making process. It is very important to limit the number of information variables within the capacity of our short term memory for its effectiveness. Earlier I was using a lot more and was not able to cope with that. I had to eliminate and discard a lot and now the structure rests on just seven pillars.

Trend, Range, Decision Points, Space, Critical Mass, Order flow and Risk

If you are trading a discretionary method, please do a system audit. I am sure you will find too many variable that are not contributing anything but only overloads your working memory. Ensure that you are not using too many variables which are beyond the capacity of your short term memory.

The thousand pillar mandapas of South Indian temples are architectural marvels and they weathered natural calamities, wars and invasions for centuries. But your thousand pillar trading method will crumble like a pack of cards in no time.

Trading Journey

22102014

A 15 point Barbed Wire around BRN the whole day. Or we may call it a Cigarette. No trades today

Ache Din Aane Wale Hain

Here is some good news for Diwali. A price war is set to break out in the stock broking industry. India Infoline is all set to enter discount broking soon.They are ready for a price war too. Let us hope ICICIdirect , Karvy, Sharkhan and other biggies to follow suit. Read the News

IIFL will launch a new trading portal with the lowest brokerage rate in the industry yet.

Read more at:
http://economictimes.indiatimes.com/articleshow/44892805.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

21102014

Nifty opened above previous day closing range. IR formed. Went long on break of IRH. PDH was FTA. But price managed to break it and moved up. TP when price failed to stay above RN. Short on FTC above RN. Three attempts to move above RN failed. Price fell more than expected. TP at IRL, then HOD.Long on BOF of BRN. test of PDC. Quick move up . Again covered below RN. Another FTC short on TST of HOD. Allowed a deep pullback at PDH. Covered when second push failed.

WISH YOU ALL A VERY VERY HAPPY DIWALI.

20102014

Nifty gaped up above PDH. Did not expect further up move. IR formed. Went short as FTC when price broke IRH. Covered when price bounced from BRN. Next two trades were within a BW around BRN. First one scratched and second stopped out.

17102014

Nifty opened within previous day range. IR formed. Went long on BOF of PDL/PDC on break of IRL. Covered when price failed to stay above BRN. Skipped BPB of BRN as there was no momentum or stop triggering on break of IRH, Then HOD. Went short on Break below BRN. I expected this to run as it was a pattern failure also. But break below MSP failed and gave a TRAP signal.Exited above BRN. Did not enter long and  skipped the TRAP as I was suspecting a BW around BRN. But it moved well and hit RN 7850. Took a FTC trade here below NS BRN. It quickly moved down. Covered at FTA, a major flip

16102014

Nifty gaped down below PDC and went up. Short on BOF of PDC/BRN. Refused to go beyond IRL. Covered at 10 point profit. Price broke down below IRL and made another range between DO and PDL. There was a BOF of PDL. There was no momentum and space to move. So  skipped. Shorted the break below PDL and it was just trailing rest of the day. Price has broken below the major flip in daily chart.

14102014

Nifty gaped up above PDH and sold. Entered short on break of IR. Entry was too late. Covered when it bounced from RN. Another short on BOF BRN/TST of PDC. Did not move beyond IRL. Covered on BOF of IRL. BOF of PDC/PDH gave a short signal and this trade also did not run as expected. Covered at 20 point profit

13102014

Nifty gaped down below PDL. First candle acted as IR. Long on BPB of IRH. Then it was just trailing. TP near 7910.

Connect the Dots

Three years ago, in the month of October, Steve Jobs lost his battle with pancreatic cancer at the age of 56.May his soul rest in peace. This man was brilliant and inspiring. His commencement speech to the graduates of Stanford University in 2005 was considered as one of the best (Watch)

He always spoke about connecting dots. Till recently I could not get what it is all about.Here is a famous quote from Steve

 “Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after a while. That’s because they were able to connect experiences they’ve had and synthesize new things. And the reason they were able to do that was that they’ve had more experiences or they have thought more about their experiences than other people.”

Now I can relate this to my trading journey. I had spent thousands of hours searching the internet and hanging around in trading forums for a clue. This gave me a lot of ideas most of which were garbage. Finally I was able to eliminate a lot and retain a few which were useful.

Connecting all these things together and making an “Actionable” method took much more time. To be frank, I do not know when it happened. All I can say is one fine morning everything fell into place magically and price moves started making sense. Human brain is capable of doing it. Just give it sufficient time and adequate exposure. We can’t force it.

Hang on ensuring the survival. Focus on “Actionable” concepts and get a lot of exposure.  

Growth is always happening underneath. Success is always a Chinese Bamboo.    .  

10102014

Nifty opened near PDL and sold. First candle was a MC. Avoided shorting below it as BRN was near. Price broke below BRN and bounced back. traded just above it for a long time. Long on a minor BOF.
 TP when price got rejected from PDL. Then I suspected a channel. Later short on break of MSP as BOF of PDL/DO. Price went to LOD. Could not capture the full move. Exited on the bounce from BRN

09102014

Nifty gaped up above PDH and moved up. IR formed. Did not attempt FTC as RN was just below the tight range. Further bias was very bullish and wanted a signal to go long. Long on BO of IRH. . Covered on BOF of BRN. It was a tight trading range around BRN rest of the day

08102014

Nifty gaped down below PDL. The up move was swift. It did not give a pullback to go long . IR formed . This range acted as a Barbed Wire the whole day. Attempted a BPB long at BRN.This  trade failed and I exited when price fell below BRN. Went short here as BOF of BRN.This was also a pattern failure. Covered when price bounced from LOD. Went long on the BOF of LOD. TP at BRN. Price is still below BRN 7900. If it gets accepted above this level, it will be a BOF of 26092014 low.I expect positional shorts to unwind then

07102014

Nifty gaped down below PDL. IR formed. Went short on BPB of IRL. trade did not work. Scratched. Then it was a BW move around NS BRN-IRL. Short below the range low. Covered above BRN on break of the BO bar as price was moving down in a channel till then

Feedback Please

Dear Friends

I am very happy to note that many of the regular readers have given their feedback.Thanks a lot.

I have noted down all your suggestions and I will try to implement them wherever possible. Let me share the details with you.Please do  Click here to view the spread sheet 

Thank you very much for the support. Your feedback, suggestions and comments have helped a lot in the evolution of this method. Your continued patronage is a vital part of this growth and for that I am most grateful.Thanks again.

SMART Trader

 

 

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01102014

No commitment from traders. May be due to long holidays. After yesterdays big moves expected a range. Nifty was within previous day closing range and the only trade was a BOF of range high/BRN. Did not move as expected. Covered around 7980. Enjoy and celebrate the holidays.

Good News

Here is some good news for retail traders. NSE is reducing the lot size of Nifty Futures and Options from 50 to 25 with effect from 31 st of October 2014.Here is the NSE Circular on the matter.Thanks to Amber for the link.

This is great news for the novice traders who want to focus on skill development without much damage to their accounts.Those who are currently trading the 50 lot can now experiment with multiple lots. Strategies like part exit and adding to the positions can be tested without much fear and tension.

I was lucky to test this method trading Mini Nifty with a lot size of 20.Otherwise I would have lost 2.5 times more money during the initial stages which could have affected my psychology badly. Later Mini Nifty was discontinued as per SEBI direction. I had made a blog post on that earlier titled RIP Mini