Monday, November 29, 2010
Trading Tit-Bits.........
I learned that the markets offer the trader an opportunity to profit from price movement, and these opportunities are basically in perpetual motion. It is an environment where the individual has the freedom to create his own results, unimpeded by many of the constraints that exist in everyday social life. These never ending opportunities make the market a perfect mirror of the trader’s attitude. What the trader sees in that movement and what he can do about it the markets have no control over. All the choices and all the power to turn these choices into experience reside in the mind of each trader
9 Trading RULES for Traders.......
28 November 2010
1) NO TRADING ONCE THE DAYS LOSSES EXCEED XXXX.XX. (Insert your Rupee amout) Trading frustrated is no way to trade.
2) DO NOT OVERTRADE. Simply mathematics…the more high frequent trades I make, the more I get out of control, the more long term profits I end up losing.
3) NO TRADING THE SAME STOCK AFTER TAKING A LOSS THAT IN THE STOCK ALREADY THAT DAY.
4) THE MORE STUBBORN YOU ARE, THE MORE YOU WILL LOSE. THE STOCK MARKET IS ALWAYS RIGHT.
5) ALWAYS SET YEARLY AND MONTHLY TRADING GOALS, AND NEVER LOOK AT A DAILY CHANGES IN ACCOUNT. No one will be right everyday, impossible. But over time, months, year, years, you will see what your true success rate is. This is most important, there will ALWAYS BE BAD TRADES. I guarantee it.
6) DON’T CHASE STOCKS JUST TO DO A TRADE. AVOID BOREDOM TRADES. IF NO TRADE IS THERE, PASS, AND SOMETIMES DON’T TRADE ANY STOCKS AT ALL.
7) TRY TO GET IN BEFORE THE HEADLINES INSTEAD OF BUYING THE HEADLINES. Market homework absolutely required to be a success.
NEVER, EVER TRADE OVERNIGHT/EARNING PLAYS ON MARGIN. No swing long or swing short trades on margin. Shorting itself requries margin, but if I short long term it’s in small size compared to account balance. I NEVER hold overnight on margin, EVER, no exceptions.
9) SHRUG OFF ALL LOSSES IF RULES ARE FOLLOWED. It’s the trades when rules are broken that bother me, which is rare. If rules are followed, I learn from the loss, but move quickly to the next opportunity.
Managing your energy ........
When we get up in the morning, we have a certain amount of energy. It is up to us to decide how we will use our energy and where we will focus it. So how do you manage your energy during the day?
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- What activities energize you and what drains your energy?
- How do you sequence your activities?
- Do you try to do everything yourself, or do you focus on your strengths and delegate the rest?
- How do you deal with stress?
- How do you motivate yourself?
- Who do you surround yourself with?
- How do you manage your energy?
- How do you deal with the bad news or naysayers?
- How do you deal with emails, phone calls, IMs and other things that can distract you?
- Are you being productive or running out of time each day?
If you try to be everything to everyone, you get burned out.
You might have heard of the 80/20 rule – 20% of our efforts get 80% of our results. You can focus your energy on the efforts that get you the results, or let yourself get distracted. When you get distracted, you are very busy, however you do not produce the result that you want in the time frame that you want. The choice is yours.
Tomorrow may be too Late.......
Trading has many ups and downs and can easily cause us to feel defeated.
However, defeat can only be disastrous if we classify it as disastrous.
Losses, defeats, failures, etc. have been a part of history for every person who has reached high levels of success. The difference with the successful people is that they analyze the situation immediately. Those that tend to fade away are those that wait until tomorrow or maybe never to review and discover why the results were not what they expected.To be successful we must accept every result as a part of our growth and to apply those findings today. Don’t wait until tomorrow, because tomorrow may be too late.
However, defeat can only be disastrous if we classify it as disastrous.
Losses, defeats, failures, etc. have been a part of history for every person who has reached high levels of success. The difference with the successful people is that they analyze the situation immediately. Those that tend to fade away are those that wait until tomorrow or maybe never to review and discover why the results were not what they expected.To be successful we must accept every result as a part of our growth and to apply those findings today. Don’t wait until tomorrow, because tomorrow may be too late.
Trading Tit-Bits...
A man may beat a stock or a group at a certain time, but no man living can beat the stock market! A man may make money out of individual deals in cotton or grain, but no man can beat the cotton market or the grain market. It’s like the track. A man may beat a horse race, but he cannot beat horse racing. —–REMINISCENCES OF A STOCK OPERATOR by Edwin LeFevre
But my greatest discovery was that a man must study general conditions, to size them so as to be able to anticipate probabilities. In short, I had learned that I had to work for my money. I was no longer betting blindly or concerned with mastering the technic of the game, but with earning my successes by hard study and clear thinking.—-REMINISCENCES OF A STOCK OPERATOR by Edwin LeFevre
If the unusual never happened there would be no difference in people and then there wouldn’t be any fun in life. The game would become merely a matter of addition and subtraction. It would make of us a race of bookkeepers with plodding minds. It’s the guessing that develops a man’s brain power. Just consider what you have to do to guess right. –REMINISCENCES OF A STOCK OPERATOR by Edwin LeFevre
Time to Read :Trading Rules !
To me, it’s useful to re-read things like this sometimes, just to remind myself of the obvious. I hope you find them useful. (The last rule alone has saved me a lot of money over the years…)
Trade Management
- Let winners run. While momentum is in phase, the market can run much further than might be expected.
- Do not exit winners without reason!
- Be quick to admit when wrong and get flat.
- Sometimes a time stop is the right solution. If a position is entered, but the anticipated scenario does not develop then get out.
- Remember: if one thing isn’t happening the other thing probably is. Historically, this has never been good for me…
- Be careful of correlations. Several positions can often equal one large position bearing unacceptable risk. Please think.
Other thoughts
- I am responsible for risk management, money management, trade management, doing the analytical work and putting on every trade that comes.
- I am not responsible for the outcome of any one trade. Markets are highly random. I do not have a crystal ball. I am not as smart as I think I am.
- Risk management is the first and last responsibility. I can [mess]anything else up and be ok as long as I do not violate my risk management parameters.
- Opportunity comes every day. Do not neglect the work. Must do analysis every day.
- Opportunity comes every day. Get out of [crappy] positions. Move on.
- I am a better countertrend trader than a trend trader. Sometimes the crowd is right, and they will run me over at those times if I’m not quick to admit I’m wrong.
- If you’re going to do something stupid, at least do it on smaller size.
Thursday, November 25, 2010
Scams & Banking Graft.........
Analysts are expecting a knee-jerk stock market reaction to the CBI investigations into fraudulent loan disbursals. Many stocks might hit the lower circuit, and stocks from the banking and realty sectors which are a part of the F&O segment could decline further, they say. The issue is not as simple as it looks, and with senior management personnel of LIC, Bank of India, PNB and Central bank of India involved, how many more scams the markets can discount remains to be seen, said analysts.
“It is a national disaster,” said Dr Nirakar Pradhan, CIO, Future Generali Life Insurance. “Realty and banking stocks will open weak and stay weak and this could hamper the government's disinvestment programme, in case the magnitude of these developments is significantly large,” he added.
Analysts feel that this episode could hamper the overall credit growth, as problems related to microfinance also started in the same way.
The RBI had already increased the margin requirement for home loans to 20 per cent to check banks' exposure to real estate. One can expect the apex bank to bring additional checks and balances in place for loan disbursal.
“The RBI norms are already so tight and we see that some people have managed to get around that too,” said Mr Abbas Merchant, Senior AVP, Jaypee Capital Services. “In case norms are tightened it would be difficult for real estate companies to meet their loan obligations with just operational cash flows in the absence of a refinancing mechanism,” said Mr K. Ramanathan, CIO, Single Manager Investments at ING Investment Management.
Market experts say nothing much can be done if an independent director accepts illegal gratification. Companies are already finding it hard to find good independent directors. If there are clear cut selection norms for independent directors then very few would dare to take it up. “It is very difficult to fathom the integrity of an individual hundred per cent. At the end of the day, whatever the standards prescribed, discipline comes from within and it finally devolves on to the individual's own conduct,” added Dr Pradhan.
“Selection norms for independent directors cannot be prescribed as independent directors are usually eminent personalities and this would act as deterrent,” said Mr Ramanathan. Usually companies use publicly available information to get independent directors, he said.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
Law of Karma – “Value Systems for Success”...........
Delusion of Emotion
At the emotional level, many people misunderstand selfish attachment and infatuation to be true love. Attachment is when love is polluted with selfishness. Attachment is far from true love. It is inverted love. Attachment, in effect, is nothing short of hatred. When most people claim they love somebody, be it spouse, parents, family or children, what they mean is that they are affectionate to someone because that particular individual satisfies them either at the physical, emotional or intellectual level. Suppose the supply to any of these three levels of the personality is reduced or the supply is stopped fully, what happens to the love and affection? Invariably that ‘love’ diminishes.
Therefore, when you claim you love a person just introspect. Often the feeling to that person is because he or she is catering to your physical-emotional-intellectual demands, your whims and fancies. In effect, whom do you actually love? You love yourself. It is just the opposite of love. Selfish love is misunderstood as true love. It is delusion at the emotional level.
..to be continued…
..to be continued…
Must Checks Before The Trade...
Before the Trade
1. Do you know the name and numbers of all your counterparts, especially if your equipment breaks down?
2. When does your market close, especially on holidays?
3. Do you have all the equipment you’ll need to make the trade, including pens, computers, notebooks, order slips, in the normal course and in the event of a breakdown?
4. Did you write down your trade and check it to see for example that you didn’t enter 400 contracts instead of the four that you meant to trade?
5. Why did you get into the trade?
6. Did you do a workout?
7. Was it statistically significant taking into account multiple comparisons and lookbacks?
8. Is there a prospective relation between statistical significance and predictivity?
9. Did you consider everchanging cycles?
10. And if you deigned to do a workout the way all turf handicappers do, did you take into account the within-day variability of prices, especially how this might affect your margin and being stopped out by your broker?
11. If a trade is based on information, was the information known to others before you?
12. Was there enough time for the market to adjust to that information?
13. What’s your entry and exit point?
14. Are you going to use market, limit or stop orders?
15. If you don’t get a fill how far will you go? And what is your quantity if you get filled on all your limits?
16. How much vig will you be paying if you use market or limit orders and how does that affect the workouts you did knowing that if you use stops you are likely to get the worst price of the day and all your workouts will be worthless because they didn’t take into account the changing price action when you use stops, to say nothing of everchanging cycles?
17. Are you sure your equipment is as good and as fast as the big firms that take out 100 million a day with equipment that takes into account the difference between being 100 yards away from an exchange and the time it takes the speed of light to reach you?
18. Are you going to exit at a time or based on a goal? And did you take into account what Jack Aubrey always did which is to have an escape route in case all else fails?
19. What important announcements are scheduled? and how does this affect when and what kind of order to use? For example, a limit before employment is likely to be down a percent or two in a second. Or else you won’t get filled and you’ll be chasing it all day.
20. Did you test how to change your size and types of orders based on announcements?
21. What’s the money management on this trade?
22. Are you in over your head?
23. Did you consider the changing margin requirements when the market gets testy or the rules committee with a position against you increases the margins against you?
24. How will a decline in price affect your margin and did you take into account what will happen when you get stopped out because of margin?
25. What will happen if you need some money for living expense or family matters during the trade? Or if you have to buy a house or lend money to a friend?
During and After the Trade
1. What’s your game plan if it goes against you and threatens your survival?
2. Will you be able to get out? Did you take that into account in your workout?
3. More typically, what will you do if it goes way against you and then meanders back to give you a breakeven? Or if it immediately goes for you or aginst you?
4. Would you be willing to take a ½% profit if you get it in the first 10 minutes?
5. Did you test whether taking small opportunistic profits turns a winning system into a bad one?
6. How will unexpected cardinal events affect you like the “regrettably,” or the pre-annnouncement of something you expected for the next open? And what happens if you’re trading an individual stock and the market goes up or down a few percent during the day, or what’s the impact of a related move in oil or interest rates?
7. Are you sure that you have to monitor the trade during the day? If you’re using stops, then you probably don’t have to but then your position size would have to be reduced so much that your chances of a reasonable profit taking account of vig are close to zero. If you’re using 10% of your capital on a trade, they you’ll have to monitor it for survival. But, but, but. Are you sure you won’t be called away by phone calls, or the others?
8. Are you at equilibrium in your personal life? You’re not as talented as Tiger Woods, and you probably won’t be able to handle distressed calls for money or leaks on the home front. Are you sure that if you’re losing you won’t get hit on the head with a 7-iron, or berated until you have to give up at the worst possible time?
9. After the trade did you learn anything from the trade?
10. Are you organized sufficiently to have a record of all your trades for your accounting and learning?
11. Should you modify your existing systems based on it?
12. How does recency and frequency and value affect your future?
13. Did you fit your after activities to your mojo?
14. If you made a good profit, did you take some capital out of the fray for a rainy day?
15. Have you learned to say “fair” whenevever anyone asks you how you’re doing and are you sure that you don’t spend a fortune after a good trade, and dissipate your profits with non-economic activities?
16. Is there a better use for your time than monitoring the ticks or the market every minute of the day if you do, and if you don’t, do those who do so and have much faster and better equipment than you have an insurmountable advantage against you?
Well, specs, that’s what I come up with off the top. How would you improve or augment it?
Lifestyle & Improvement.......
A wandering mind is an unhappy mind (Harvard)
Don’t forget to yawn (Penn Gazette)
Stress management tips for a better work/life balance (Accounting Web)
How to extend your life and health for as long as you can (James Altucher)
A bad mood causes us to take risky decisions (BPS Research Digest)
The only way to avoid wasting time is to say no as much as possible (James Altucher)
The riddle of experience vs memory (TED)
How to exploit your employer (James Altucher)
Why freedom is bad for entrepreneurs (Peter Shallard)
Patience, persistence and presence of mind are…
Sitting at a desk a stone’s throw from the former Lehman Brothers building in London’s Docklands, it felt pretty good to make $1,898.50 by moving my finger twice. As somebody who works for a monthly pay cheque, it was the fastest two grand I’d made in my life.
But a day’s training as a City trader taught me more than the simple lesson that money moves fast in the Square Mile. It’s also about persistence, patience, presence of mind – and making a shrewd bet.
At a beginners’ trading session at futures specialist Amplify Trading, participants could deal in currencies, oil or the widely followed S&P 500 index of US shares. I chose foreign exchange. Aware of the upheaval on the bonds market as the weak economies of Ireland and Portugal came under pressure from speculators, I chose to “go short” on the euro – a bet that the European currency would fall against the US dollar. But after trading two “lots” – a specific volume – my trade immediately went bad. Disaster.
My “professor”, managing director William de Lucy, urged against instantaneously hedging by betting in the opposite direction. He smiled and explained that trading was as much about staying the course as making the right choices. Buying and selling randomly or reacting to headlines was a recipe for failure, he said.
A few minutes later, the euro started to fall. I was exultant, without thinking for a second about family and friends in my native Spain becoming poorer, in dollar terms, as I was getting richer. Tempted to take some early profits, I thought of hedge fund manager John Paulson, who made $6bn by betting on the collapse of the US sub-prime mortgage market – and then waiting two years to close the trade. Patience.
At the risk of stereotyping, the firm says testosterone-fuelled men tend to be more active – even if there is little activity in the market – while women are more patient, consistent and selective. De Lucy says his firm tries to stop traders thinking they will make instant fortunes, reiterating that the job is a marathon, not a sprint.
“This is like a tennis match: you can’t smash the ball all the time, as you will miss the hit when the right time comes,” he said. Trading rooms as a bear pit of loud Cockney barrow-boys? That was the 1990s. They are quieter and more diverse now, he says.
So, as a trader who ticks two boxes for diversity (female and foreigner), I decided to be patient, watching my trade become more and more profitable. To distract myself, I joined the chatroom on the right of my screen, connecting former Amplify students around the world, now working at different banks and trading rooms. Since some were in Spain, I asked them what would be tougher: to bet on the financial markets or on Real Madrid winning the league?
My fun was only interrupted by the complaints of my heavy-trading, money-losing colleagues, one of whom carried out a hyperactive run of 87 trades in euros, oil and stocks to net a profit of just $6.25. After a much-needed cup of tea, my professor suggested I take some profits. I agreed, as I had already made quite a lot and, frankly, things were getting boring. Where was the craft in this job?
I took $750, thinking about one of De Lucy’s remarks: “Psychology is more than half of this game.” I looked at the towers of Canary Wharf, once full of bankers and traders who thought their systems could never go wrong.
Becoming my own chief risk officer, I called it a day half an hour before the closing bell. I had made far more than anybody else in my group, gone twice for tea, had a chat about football – it was time to cash in my chips and go.
A swift reality check ensued – it was all, of course, a paper profit. Leaving Canary Wharf, I felt the way thousands of traders must feel: that it’s all a game. With two clicks, I had made more than billions of people around the globe live on for a year. But in a sense, it’s not all paper: profits on the financial markets mean a loss to others, people I don’t know. I looked at the financial pros leaving work in a rush and wondered whether they were aware of the people and circumstances beyond their screens. Have we still not learned to consider the human factor?
TRADING ERRORS ........
1. Refusing to define a loss.
2. Not getting rid of a losing trade when it is obviously a loser.
3. Getting locked into a bullheaded opinion about market direction.
4. Focusing on monetary value of trade instead of market structure.
5. Revenge trading to recoup a loss.
6. Not reversing a position when the market is clearly changing direction.
7. Not following the rules of your strategy.
8. Planning for a trade and then not taking it.
9. Not acting on your intuition.
10. Giving back recent gains due to overtrading or inconsistency.
We can learn a lot from the market, and from ourselves, if we would only listen.
Trading Tit-Bits...
The power of measuring the danger, together with a certain alertness and watchfulness, is very important. There should be a balance of these two, Prudence and Courage;Prudence in contemplation, Courage in execution.Lord Bacon says: “In meditation all dangers
should be seen; in execution one, unless very formidable.”Connected with these qualities,properly an outgrowth of them, is a third, viz:promptness. The mind convinced, the act should follow. In the words of Macbeth; “Henceforth the very firstlings of my heart shall be the firstlings of my hand.”
Think and act, promptly.
should be seen; in execution one, unless very formidable.”Connected with these qualities,properly an outgrowth of them, is a third, viz:promptness. The mind convinced, the act should follow. In the words of Macbeth; “Henceforth the very firstlings of my heart shall be the firstlings of my hand.”
Think and act, promptly.
Wednesday, November 17, 2010
Sensex likely to hit 23,500 by end-2011: Prudential Financing....
Riding on the solid GDP growth and strong global liquidity flows into the country, the Bombay Stock Exchange's benchmark Sensex is likely to hit the psychological level of 23,500 by end-next year, an international financial sector expert said today.
"We are looking at good gains from the Indian equity market. The Indian equity market is poised for a tremendous growth. Looking forward, I will say the Sensex is likely to reach 23,500 level by December 2011," US-based Prudential Financial Managing Director John Praveen told reporters here.
There will be a strong uptrend in FII inflows as India's economic growth story is very strong, he said.
As per Sebi data, overseas fund houses were net buyers of Indian equities worth $6.42 billion during October, the highest amount pumped in by FIIs in any single month. The total net investment by FIIs now stands at $ 24.79 billion, the highest in a single year.
The developed nations are not growing to their full potential and hence, every one wants to capture the growth story of emerging markets, including India, which is driven by strong domestic demand and solid exports, the expert said.
Sectors such as infrastructure and industry are likely to fare well on the equity markets, he said.
During the first quarter of 2010-11, the Indian economy witnessed a healthy 8.8 per cent growth. The 30-share Sensex today settled at 20,589, down 286.62 points over its last close following mixed corporate results.
"We are looking at good gains from the Indian equity market. The Indian equity market is poised for a tremendous growth. Looking forward, I will say the Sensex is likely to reach 23,500 level by December 2011," US-based Prudential Financial Managing Director John Praveen told reporters here.
There will be a strong uptrend in FII inflows as India's economic growth story is very strong, he said.
As per Sebi data, overseas fund houses were net buyers of Indian equities worth $6.42 billion during October, the highest amount pumped in by FIIs in any single month. The total net investment by FIIs now stands at $ 24.79 billion, the highest in a single year.
The developed nations are not growing to their full potential and hence, every one wants to capture the growth story of emerging markets, including India, which is driven by strong domestic demand and solid exports, the expert said.
Sectors such as infrastructure and industry are likely to fare well on the equity markets, he said.
During the first quarter of 2010-11, the Indian economy witnessed a healthy 8.8 per cent growth. The 30-share Sensex today settled at 20,589, down 286.62 points over its last close following mixed corporate results.
The 5 Rules of Happiness...
By Burt Goldman/ Creator of Quantum Jumping
You know when you're happy, and certainly no one has to tell you when you're sad. But what is it that makes a person happy?
It is important to realize that what makes you happy might depress another person. There are people, because of guilt, a feeling they do not deserve what they have, or a feeling they will lose what they have that makes them unhappy when they should be happy.
Possessions are a poor measure of happiness. Possessions are subjective and relative to the individual and the individual's viewpoint. Instead, we will use a philosophy as an example.
This philosophy is about enjoying things you like, avoiding or changing things you do not like, and accepting what you cannot avoid or change by the skillful use of your viewpoint. The use of this philosophy, as embodied in the five rules, will allow you to test many problem areas in your life and find solutions. With this philosophy, you will be well on your way on your pursuit of happiness.
Rule Number One: If You Like a Thing, Enjoy It.
Now that seems outrageously simple. At first you might say, "That's ridiculous, of course if I like something I'm going to enjoy it." But when you stop to think about it you'll probably agree that there are many things in life that we like but don't enjoy. The reasons we don't enjoy things we like are (a) guilt, and (b) fear. You will not enjoy something you like if you feel guilty after having done the thing, or if you are fearful of the consequences of doing it.
Rule Number Two: If You Don't Like a Thing, Avoid It.
The second rule seems simple enough, but reflect for a moment on how many people are involved with things they do not like -- a job, a person, a vehicle, a type of food, any one of a thousand things -- and for some reason they don't avoid those things. "Well, I can't avoid it. I have to work there because I need the money." Or, "I have to be involved with this person for many valid reasons." How many justifications can you think of for not avoiding the things you do not like to do?
Rule Number Three: If You Don't Like a Thing, and You Cannot Avoid It, Change It.
Here again, the answer is simple: change it. But just as in avoidance we rationalize that we need something about it -- the money, the time, the security -- something is holding you to that particular thing if you don't like it, cannot avoid it, won't change it, but are still involved with it.
Rule Number Four: If You Don't Like a Thing, Cannot Avoid It, and Cannot or will Not Change It, Accept It.
Acceptance -- now there is a catch. How can you accept something you don't like? How in the world do you accept something that is 'unacceptable'? How do you accept a situation that you're not happy with? How do you accept a person that you're not happy with? Well, you really don't have to accept anything; you can, of course, be unhappy. If you don't like it, won't change it, cannot avoid it, and will not accept it, I guarantee that you will be unhappy. There are, however, five rules to the secret of happiness, and within the fifth lies the key.
Rule Number Five: You Accept a Thing By Changing Your Attitude Towards It.
You are the result of your viewpoints and attitudes. Everything is relative to the person experiencing it. There are no absolutes -- nothing is good, nothing bad, except as it relates to you. Nor is life good or bad. Life simply is. You change those things you wish by changing your viewpoint about them.
How easy!
How difficult!
Your attitudes and viewpoints are all part of your mind and once you develop the power of self mind control you will be the master of your own attitudes and viewpoints. Using these five rules you'll soon find yourself on the right path on the pursuit of happiness. You'll realize why people are unhappy. Eventually it will become automatic, and you'll find happiness a predominant state of mind. Once you realize the ease of acquiring this emotion, you develop an entirely new scale of highs and lows.
Unremitting happiness, of course, is not a possible or desirable state. According to the principle of rhythm, there is always an inflow and outflow, an ebb tide and a flood tide. You'll always have highs and lows -- there's no way to avoid that. However, your highs will be higher and your lows will be higher. You'll then find that what is a happy state for you might be a state of depression for someone unaware of the Five Rules of Happiness.
Cash ststistics....
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 16-Nov-2010 | 3157.02 | 3353.71 | -196.69 |
FII Statistics.......
| FII DERIVATIVES STATISTICS FOR 16-Nov-2010 | |||||||
| BUY | SELL | OPEN INTEREST AT THE END OF THE DAY | |||||
| No. of contracts | Amt in Crores | No. of contracts | Amt in Crores | No. of contracts | Amt in Crores | ||
| INDEX FUTURES | 73831 | 2231.20 | 63931 | 1930.25 | 583471 | 17545.75 | 300.95 |
| INDEX OPTIONS | 542920 | 16367.27 | 527975 | 15917.53 | 1924377 | 57622.97 | 449.74 |
| STOCK FUTURES | 99510 | 2889.04 | 86046 | 2502.98 | 1505347 | 41593.73 | 386.06 |
| STOCK OPTIONS | 28379 | 914.61 | 27870 | 897.29 | 36535 | 1046.20 | 17.31 |
| Total | 1154.07 | ||||||
Monday, November 15, 2010
Trading With A Plan....
A planned trade is one that is guided consciously, filtered according to a variety of criteria that are designed to provide a positive expectancy. The opposite of a planned trade is an impulsive one, in which traders enter markets before explicitly identifying what they are doing and why. The difference between planned and unplanned trading is one of intentionality: being proactive in taking controlled risks vs. being reactive to what has already occurred in markets. Even the most intuitive and active trader can trade in a planned manner, if many of the elements of planning are achieved prior to entering positions.
So what are these elements of planning? The ideal trade identifies:
1) What you’re trading – Why are you selecting one instrument to trade (one stock, one index) versus others? Which instruments maximize reward relative to risk?
2) How much you’re trading – How much of your capital are you going to allocate to the trade idea versus other ideas?
3) Why you’re trading – What is the rationale for the trade? Why does the trade idea provide you with an “edge”?
4) What will take you out of the trade – What would lead you to determine that your trade idea is wrong? What would tell you that the trade has reached its profit potential?
5) Where you will enter the trade – Given the criteria that would take you out of the trade, where will you execute your idea to maximize the reward you’ll obtain relative to the risk you’ll be taking?
6) How you will manage the trade – What would have to happen to convince you to add to the trade, scale out of it, and/or tighten your stop loss?
A beginning trader will take time to answer these questions, much as a new driver will need time to properly steer and brake a car. With experience, however, planning can occur very quickly, as much of a trader’s homework is accomplished before the market opens. For instance, before the open, I already have identified the short- and intermediate-term trend of the market; pivot points that will serve as profit targets; and volatility that will guide my position sizing. From there, much of the trade is a function of pattern recognition and execution–seeing selling or buying dry up in a rising or falling market and entering the trade at a level in which I’ll make more by hitting my target than by hitting my stop.
A good trade is not necessarily a profitable one: even the best planning is fallible. Rather, good trading is defined in terms of intentionality: having a constructive, valid purpose and sticking to it. When emotional and physical factors–anxiety, frustration, fatigue–affect decision making, they generally do so by impairing intentionality. Under the sway of an altered cognitive, emotional, or physical state, we become more reactive, less intentional. One of the most effective steps we can take when we’re no longer in the “zone” of immersed concentration is to double down on trade planning, taking the next few trades only after writing down or talking aloud the elements listed above.
Training yourself to become more intentional during periods of heightened arousal or fatigue is an excellent strategy for building emotional resilience–and preventing trading losses from becoming trading slumps.
Personal strengths and Weakness...
We all have different personal strengths and weakness. Many people focus on transforming a weakness into a strength. While that is admirable, the reality is that it’s not always possible.
Although I agree with the basic idea of brain plasticity, and I whole-heartedly agree with the idea of always striving for self-improvement, I also know that as humans we have a certain degree of natural-born temperament and not everything about us can be changed.
Although we can’t always build or change every weakness into strength, the good news is that we can always leverage our strengths, if we know how. And that is mighty powerful. It’s so powerful that if you leverage the right strengths in the right way they can do an excellent job of not just counter-balancing your weaknesses, but can propel you so far ahead that those weaknesses pale in comparison.
One of the most powerful things you can do for yourself is identifying your natural strengths and then work to see how you can build on them.
We all have different personal strengths, and knowing how to leverage them is an important part of successful trading. A major consideration here is that you try to identify and leverage your own personal strengths, and not simply copy someone else’s. All too often I see struggling traders running from one style to another style whenever they see someone else’s success. One of the primary reasons why copying someone else’s trading style doesn’t always pay off in trading is because of different personal strengths.
HnS How the EW theory confirms its success or failure...
I just came across this one page word document. It's a puzzle to me as I'm not at all familiar with EW and the counts. Those of you interested may provide the feedback so that novices like me can have EW feast.
As far as I could understand from these two attached pics below, for a proper HnS reversal pattern, wave 4 should be LS and wave 5 should be the H, then wave b of the correction fits in the correct context for a HnS reversal. In the second pic, wave b is taken as H and this fails the HnS pattern. But to differentiate between the wave 5 H and wave b H is out of my league.
Credit to the author who ever he/she is.
Cheers!
Babu Kothandaraman
Head and Shoulders How the EW theory confirms its success or failure
The famous "head and shoulders" pattern can be discerned in a normal Elliott top (see Figure 7-3), while a head and shoulders pattern that "doesn't work out" might involve an expanded flat correction under Elliott (see Figure 7-4). Note that in both patterns, the decreasing volume that usually accompanies a head and shoulders formation is a characteristic fully compatible with the Wave Principle. In Figure 7-3, wave 3 will have the heaviest volume, wave 5 somewhat lighter, and wave b usually lighter still when the wave is of Intermediate degree or lower. In Figure 7-4, the impulse wave will have the highest volume, wave b usually somewhat less, and wave four of c the least.
Key Events during the week....
Key events during the week |
India |
| v India’s Industrial production (IIP) for September 2010 is at 4.4% versus 8.2%YoY v Food inflation declined for the 4th week consecutively to 12.30% from October 30 v India's foreign exchange reserves rose to $300.214 billion as on Nov. 5 v India's apparel exports returned to a growth trajectory expanding year-on-year by 2.5% to US$743mn in September v West Bengal government increased the VAT rate on luxury items by 1%, from 12.5% to 13.5% for additional resource mobilization |
| United States of America |
| v US Job openings dropped by 163,000 to 2.93 million in September v US Jobless claims declined by 24,000 to 435,000 in the week ended Nov. 6 v US government posted a smaller budget deficit of $140.4 billion in October v US consumers’ index improved to 69 from of 67.7 in October v US wholesalers Inventories climbed 1.5% in September |
| Europe |
| v Europe’s economic grew 0.4% in the 3rd quarter v U.K. manufacturing rose 0.3% in August v German economic growth slowed & rose 0.7% in the 3rd quarter v France’s economy grew 0.4% in the 3rd quarter v Italian industrial output plunged 2.1% in September |
| Asia Pack |
| v People’s Bank of China ordered an increase in bank reserve requirements by 50 basis points v China inflation rose to 5% in October v China's trade surplus widened to US$27.15bn for the month of October v Moody’s Investors Service raised China’s foreign and local debt rating to "Aa3" from "A1" v Japan’s Consumer confidence in Japan fell to 41.1 points in October v Japan's current-account surplus rose to $24.1bn in September |
Economic Release calendar as per IST
(01/11/10 to 06/11/10)
| Country | Economic Data | Exp-ected | Prior | Due date | Re- Marks |
| JN | GDP (QoQ) | 0.60% | 0.40% | 15/11 | Inc |
| JN | Capacity Utilization (MoM) | - - | -0.90% | 15/11 | NA |
| JN | Ind.Prod. (MoM) | - - | -1.90% | 15/11 | Na |
| IN | Mthly WPI YoY% | 8.50% | 8.62% | 15/11 | Dec |
| US | Advance Retail Sales | 0.70% | 0.60% | 15/11 | Inc |
| US | Empire Manuf. | 13 | 15.73 | 15/11 | Dec |
| US | Business Inventories | 0.60% | 0.60% | 15/11 | Unc |
| JN | Machine Tool Orders (YoY) | - - | 70.90% | 16/11 | Na |
| US | Ind. Prod. | 0.30% | -0.20% | 16/11 | Inc |
| UK | BOE Minutes | -- | -- | 17/11 | Na |
| US | Housing Starts | 600K | 610K | 17/11 | Dec |
| US | Building Permits | 570K | 539K | 17/11 | Inc |
| RU | Ind. Prod. R MoM | 1.70% | 1.50% | 17/11 | Inc |
| US | Initial Jobless Claims | 445K | 435K | 18/11 | Inc |
| US | Philadelphia Fed | 5 | 1 | 18/11 | Inc |
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