JOYOUS WEEK END

FROM AN EXPERIENCE

The Gambler - This is the “I’m-giving-up-my-job-to-become-a-trader-because-I-don’t-like-working-9-to-5″ idiot. Observe that this bottom-dwelling resident of the phylogenetic scale is not giving up his job because he’s had success at trading. He’s also not giving up his career because he so loves trading that he researches it day or night and has found a winning edge.

No, The Gambler doesn’t do anything beyond 9-to-5, because what he’s after are easy riches, not effort and earned success. He hears that others have been successful (usually from Idiot #3), and he figures, “That means I can do it too”.

Invariably, the Gambler is attracted to daytrading. Why? It gives him a sense of action, and it justifies his decision to abandon all efforts at productive work.

Besides, you can’t really explain to your wife and kids why you’re not out there with working humanity supporting your household when you’re sitting around doing nothing, holding positions for weeks at a time.

So the Gambler actively trades in and out of markets, pretends like he’s got a job, and every so often berates his spouse when she wonders when the family will be able to pay its bills. My take on Gamblers?

They’re not interested in trading; they’re interested in their fantasy. So interested that they’ll take their bank accounts and families down with them.

Be a Hawk, Not a Worm

Always be aware of the big picture. Investment market movements are a function of the global economic and political environment as well as the collection of moods and attitudes of investors.

While investors are mercurial, the political and economic landscape tends to move in a more deliberate fashion.

Peter Stamos, chairman and CEO of Sterling Stamos Capital Management, relayed the story about the headmaster on campus who walked his dog every evening. Every evening after dinner the headmaster would stroll along the quad, walking his dog who hurriedly scampered from lawn to lawn, bush to bush, occasionally stopping to greet a passer by. Each evening the headmaster walked an identical path in a slow and predictable
fashion, yet predicting the path of his dog was impossible. That depended upon an incalculable number of decisions taking place in his trusted pet’s brain. Ultimately, the dog followed the headmaster. After all, he was on a leash.

Peter’s point was that the economy is the headmaster and the market is the dog. Over shorter periods,
predicting the markets’ pathways is like reading the collective minds of investors, yet over longer periods, the market must follow the economy. Focus on the landscape and understand the economic headwinds and tailwinds as your guide to managing your asset allocation.
(to be contd)

LEARN THINGS


Remember that only those who possess and use the necessary skills to survive the period of great danger are in position to profit from great opportunity. Risk control is paramount.

1. The extrinsic (time) component of the option premium goes to zero at options expiration. Always.


2. Although statisticians would argue, the probability of occurrence of an extremely unlikely event is much greater if you “bet the farm” on the event not occurring. Never forget that black swans do exist.


3. The human brain is not inherently logical. It evolved for survival and is prone to make erroneous assumptions and draw incorrect associations. To guard against these potentially costly errors, continuously challenge your assumptions.


4. Absence of proof does not constitute proof of absence.


5. Thinly traded options are usually characterized by egregious B/A spreads. You may be able to negotiate acceptable spreads to enter the trade. You will not be able to do so if you need to exit. It is usually better to stay away from these snares.


6. Option orders executed as spreads always receive better fills than individually placed orders.


7. Failure to consider current IV in an historic framework for the particular underlying will usually cost money.


8. Failure to follow predicted changes in volatility prior to a known event (e.g. earnings) indicates there is some factor of which you know not. When discovered, it usually impacts your position negatively.


9. Failure to use and understand option modeling and option modeling software puts you at a significant competitive disadvantage to other participants in the options market. The only thing more expensive than having appropriate tools is not having them.


10. It is stunningly easy to “roll more than you can smoke”. It is usually disastrous to attempt to smoke all you rolled if you find yourself in these circumstances. This is another reason to model trades and crisply define risk.


11. If you create multi-legged option beasts by manually entering the orders as opposed to entering from a graphical presentation, you will enter positions incorrectly and end up “upside down” and commit other similar errors more often than you thought possible. You must monitor the magnitude of extrinsic value when short options are ITM. Failure to do that and considering your trade plan in light of these developments, will result in unanticipated early assignment at the most inopportune times. Option positions can be easily adjusted to improve their structure only before they enter the ICU.


12. Forgetting to honor time stops when holding certain varieties of option beasts can be as costly as forgetting price and/or P/L stops.


13. Good traders know what they know; great traders also know what they don’t know.


14. If you don’t understand the trade and its structure, you will lose money.


15. Buying OTM options as a single position (as opposed to representing one of several legs of a spread) is almost always a bad idea.


16. Keep your trade sheets tidy. Allowing short options with minimal value to remain on your sheets as opposed to closing them for trivial cost is not being frugal; it is denying the existence of unforeseen and unforeseeable risk.


17. When trading options, as in life in general, you will make many errors. Each mistake contains a lesson. Study your mistakes and learn the lesson each teaches. You already paid for the instruction.


18. Pickpockets prowl the option markets with great regularity. Their bread and butter trade is buying ITM options for less than the intrinsic value. Never sell an option for less than intrinsic value. Be aware of “Plan B” to capture the entirety of the intrinsic value.


19. If all you have is a hammer, everything looks like a nail. The available option strategies are numerous and designed to accommodate a variety of market conditions. If you limit yourself to 1 or 2 strategies, you are not taking full advantage of the inherent flexibility of options. Learn several strategies, their nuances, and indications for their use.


20. Avoid having open option positions on stocks that will split. Option trading has adequate complexities without dealing with non standard strikes and changes in contract size resulting from splits. Your head will explode trying to deal with these complications. Avoid them like swine flu; spend your energy elsewhere.


21. Understanding the various concepts of volatility is essential for success. Volatility can be considered in light of:a. What was (SV, statistical vol; HV historical vol; different words and abbreviations for the same thing),
    b. What is,
    c. What shall be (IV, implied volatility, Market Implied Volatility (MIV); confusingly disparate words and acronyms signifying identical concepts)
    
    Of these three, IV is by far the most important. The nexus point is right here, right now. The future is unclear and always will be so. It is essential to understand IV and its various implications.


22. Be relentless in your pursuit of perfection but accepting of the fact that you are human and will never achieve it.


23. The first half hour of each day in the option markets is usually quite noisy; the predominant activity is fleecing the sheep. Don’t be one of the sheep.


24. Obfuscation of the basic concepts and structure of option strategies is the everyday business of the option community. The names of various strategies are multitudinous and confusing. Understand the concepts and be conversant with the various names of the strategies; success lies in analysis and execution not nomenclature.

MARKET REACHING DESTINATION EVEN AFTER A SLIP..???

THINK IT OVER

TODAY’S DAY TRADING STRATEGY OF NIFTY FUTURES– SEPT 3

Did u friends notice yesterday’s write up..?

Perfectly went upto

my 1^st resistance – 5509 and turned..!!!

What next..?

NOW

No buying in Nifty futures till 5495 level is crossed and the movement is sustained.

If happens today hike upto 5544-54 is for sure

If trades below 5495 for 20 minutes

See a Slide upto 5470-63

Good support @ 5463

And obviously no problem for Bulls above this level

BANK NIFTY

Good Support between 10950-30

Buy btwn 10983-11000

T1- 11028-41

T2- 11054-72

OR

Sell btwn 10927-10

T1- 10882-68

T2- 10855-38

Nifty, Bank Nifty levels and intraday news updated here gives astonishing success rate (more than 97%) that is more than enough for the readers to attain a decent profit daily.

To mint much more money pls subscribe our service and

enjoy daily market with our guidance.

Thank you.

SHARE TIPS TODAY (SEPT 3)

Sell SBM @ 1022

T1 – 1012

T2 – 1001

RICHARD DAWKINS WITH STEPHEN HAWKING

A must watch conversation it is..





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-Mahindeesh (a) Sathish

Cuddalore-2

Tamil Nadu

India

TODAY’S QUOTE

It is time we recognized that belief is not a private matter; it has never been merely private. In fact, beliefs are scarcely more private than actions are, for every belief is a fount of action in potentia.

-SAM HARRIS, The End of Faith

RELAX CORNER

JUST SMS TO YOUR PAL

Sardar made a call to the airport.
Asked,”How long is the journey from Punjab to America?”
Receiptionist: “One second sir….”.
Sardar: Ok, thank you..!!!

DISCLAIMER

THE RECOMMENDATIONS MADE HERE DO NOT CONSTITUTE AND OFFER TO SELL OF A SOLICITATION TO BUY ANY OF THE SECURITIES/COMMODITIES OF ANY OTHER INSTRUMENTS WHATSOEVER MENTIONED. NO REPRESENTATIONS CAN BE MADE THAT THE RECOMMENDATIONS CONTAINED WILL BE PROFITABLE OF THAT THEY WILL NOT RESULT IN LOSSES. READERS USING THE INFORMATION CONTAINED HEREIN ARE SOLELY RESPONSIBLE FOR THEIR ACTIONS. SURFING OR USING ‘tradersharmony.blogspot.com' DEEMS THAT THE SURFER ACCEPTS AND ACKNOWLEDGES THE DISCLAIMERS AND DISCLOSURES.THE INFORMATION PUBLISHED ARE FOR EDUCATIONAL AND INFORMATIVE PURPOSE ONLY AND THE USER/READERS SHOULD TAKE ADVICE OF HIS/HER ADVISOR BEFORE TAKING ANY DECISION FOR BUYING, SELLING OR OTHERWISE DEALING WITH SECURITIES/COMMODITIES OR ANY OTHER INSTRUMENT WHATSOEVER.

UNIQUE THURSDAY

FROM AN EXPERIENCE

When you have clearly outlined and identified your trading methodology, then you must have the discipline to follow your system. A Lack of Discipline in this regard is the second fatal flaw. If the way you view a price chart or evaluate a potential trade setup is different from how you did it a month ago, then you have either not identified your methodology or you lack the discipline to follow the methodology you have identified. The formula for success is to consistently apply a proven methodology. So the best advice I can give you to overcome a lack of discipline is to define a trading methodology that works best for you and follow it religiously.

The fourth finger of the invisible hand that robs your trading account is Lack of Patience. I forget where, but I once read that markets trend only 20% of the time, and, from my experience, I would say that this is an accurate statement. So think about it, the other 80% of the time the markets are not trending in one clear direction.

That may explain why I believe that for any given time frame, there are only two or three really good trading opportunities. For example, if you’re a long-term trader, there are typically only two or three compelling tradable moves in a market during any given year. Similarly, if you are a short-term trader, there are only two or three high-quality trade setups in a given week.

All too often, because trading is inherently exciting (and anything involving money usually is exciting), it’s easy to feel like you’re missing the party if you don’t trade a lot. As a result, you start taking trade setups of lesser and lesser quality and begin to over-trade.

How do you overcome this lack of patience? The advice I have found to be most valuable is to remind yourself that every week, there is another trade-of-the-year. In other words, don’t worry about missing an opportunity today, because there will be another one tomorrow, next week and next month … I promise.

I remember a line from a movie (either Sergeant York with Gary Cooper or The Patriot with Mel Gibson) in which one character gives advice to another on how to shoot a rifle: ‘Aim small, miss small.’ I offer the same advice in this new context. To aim small requires patience. So be patient, and you’ll miss small.”

(to be contd)

A SUCCESSFULL TRADER

Trading is being young, imperfect, and human – not old, exacting, and scientific. It is not a set of techniques, but a commitment. You are to be an information processor. Not a swami. Not a guru. An information processor.

Participating in the markets can only develop your trading skills. You need to become a part of the markets, to know the state of the markets at any given time, and most importantly, to know yourself. You need to be patient, confident, and mentally tough.

Good traders offer no excuses, make no complaints. They live willingly with the vagaries of life and the markets.

In the early stages of your trading career, pay attention not only to whether you should buy or sell but also to how you have executed your trading ideas. You will learn more from your trades this way.

Never assume that the unreasonable or the unexpected cannot happen. It can. It does. It will.

Remember, you can learn a lot about trading from your mistakes. When you make a mistake – and you will – do not dwell on the negatives. Learn from the mistake and keep going.

Never forget that markets are made up of people. Think constantly about what others are doing, what they might do in the current circumstances, or what they might do when those circumstances change. Remember that, whenever you buy and hope to sell higher, the person you sell to will have to see the same opportunity at that higher price to be induced to buy.

Traders who lose follow one of several typical patterns. Some repeatedly suffer individual large losses that wipe out earlier gains or greatly increase a small loss. Others experience brief periods during which their trading wheels fall off: they lose discipline and control and make a series of bad trades as a result.
Wise traders make many small trades, remain involved, and constantly maintain and sharpen their feel for he market. For all of their work, they hope to receive some profit, even if it is small in terms of dollars. In addition, continual participation allows them to sense and recognize the few real opportunities when they arise. These generate large rewards that make the effort of trading truly worthwhile.

At the end of the chapter he lists specific observations that have a high enough probability of reoccurring he considers them rules:

• If you find yourself holding a winning position, adding up your profits, and confidently projecting larger gains on the horizon, you are probably better off exiting the trade. The odds are that the trade has run its course.


• When entering a trade with a market order and your fill is clearly better than expected, odds are it will end up being a losing trade. Good fill, bad trade. Get out!


• If all your ‘trading buddies’ agree with your expectations regarding the next big move, it probably will not work out. If everyone’s conviction level is as strong as the consensus, do the opposite.

RISK TAKERS LISTEN TO THIS

“Risk is the possibility of loss. That is, if we own some stock, and there is a possibility of a price decline, we are at risk. The stock is not the risk, nor is the loss the risk. The possibility of loss is the risk. As long as we own the stock, we are at risk. The only way to control the risk is to buy or sell stock. In the matter of owning stocks, and aiming for profit, risk is fundamentally unavoidable and the best we can do is to manage the risk. To manage is to direct and control. Risk management is to direct and control the possibility of loss. The activities of a risk manager are to measure risk and to increase and decrease risk by buying and selling stock.”










TODAY’S DAY TRADING

STRATEGY OF NIFTY FUTURES– SEPT 2

As predicted and written in the Monday post,

Oscillation between 5358 and 5480 exactly happened in last 3 sessions…

What to think likely now..?

Good support @ 5451 & 5438

And surely no problem for Bulls above these levels.

Possible hike upto 5501-19-39 after 5490

If breaches 5438 with good volumes,

Slide upto 5420-5406-5376 can be seen

BANK NIFTY

Good Support @ 10814

Buy btwn 10923-40

T1- 10968-82

T2- 10995-11013

or

Sell btwn 10867-50

T1- 10822-10

T2- 10795-78

Nifty, Bank Nifty levels and intraday news updated here gives astonishing success rate (more than 97%) that is more than enough for the readers to attain a decent profit daily.

To mint much more money pls subscribe our service and

enjoy daily market with our guidance.

Thank you.

INTRADAY TIPS TODAY (SEPT 2)

Sell COSMOFILMS @ 127.30

T1 – 126.25

T2 – 125.05

SCRUTINIZE YOURSELF

“At the end of each trading day (week) you shouldn’t focus solely on your P/L. Instead, focus on your thought process during the day and how well you executed your plan. If you consistently execute your trades according to plan and still lose money, then you need to reevaluate your approach. While there is definitely a cyclical rhythm to the market, no strategy will always work. You need to constantly and objectively review what is working and what is not so you can make necessary adjustments to you plan.”

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-Mahindeesh (a) Sathish

Cuddalore-2

Tamil Nadu

India

TODAY’S QUOTE

As belief shrinks from the world, it is more necessary than ever that someone believe. Wild-eyed men in caves. Nuns in black. Monks who do not speak. We are left to believe. Fools, children. Those who have abandoned belief must still believe in us. They are sure they are right not to believe but they know belief must not fade completely. Hell is when no one believes.

-DON DELILLO, White Noise

RELAX CORNER

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Tring Tring Tring.
Sardar: Hello kon bol raha hai?
Other side: Ji, main bol raha hon.
Sardar: oye ye to kamal ho gia,
idhar se bhi main hi bol raha hon.

DISCLAIMER

THE RECOMMENDATIONS MADE HERE DO NOT CONSTITUTE AND OFFER TO SELL OF A SOLICITATION TO BUY ANY OF THE SECURITIES/COMMODITIES OF ANY OTHER INSTRUMENTS WHATSOEVER MENTIONED. NO REPRESENTATIONS CAN BE MADE THAT THE RECOMMENDATIONS CONTAINED WILL BE PROFITABLE OF THAT THEY WILL NOT RESULT IN LOSSES. READERS USING THE INFORMATION CONTAINED HEREIN ARE SOLELY RESPONSIBLE FOR THEIR ACTIONS. SURFING OR USING ‘tradersharmony.blogspot.com' DEEMS THAT THE SURFER ACCEPTS AND ACKNOWLEDGES THE DISCLAIMERS AND DISCLOSURES.THE INFORMATION PUBLISHED ARE FOR EDUCATIONAL AND INFORMATIVE PURPOSE ONLY AND THE USER/READERS SHOULD TAKE ADVICE OF HIS/HER ADVISOR BEFORE TAKING ANY DECISION FOR BUYING, SELLING OR OTHERWISE DEALING WITH SECURITIES/COMMODITIES OR ANY OTHER INSTRUMENT WHATSOEVER.

GOLDEN (WEDNES)DAY FOR GOOD OLD BEARS

FROM AN EXPERIENCE

Human nature often gets in the way of sound investment decision making; even among institutional investors. Do you consider yourself to be “better than average”
drivers? Most people do.
The Lake Wobegon Effect, as it’s affectionately called, was inspired by the radio series, A Prairie Home Companion by Garrison Keillor, where “all the children are above average.” Seriously though, overconfidence has the potential to make bad investments worse, by pushing obstreperous investors to hang
onto losing positions; even when evidence to the contrary is overwhelming. New car buyers love reading favorable reviews about the bright and shiny automobile they just purchased, at the same time they would be highly critical reviews that criticize their decision. As investors, we sift through a myriad of information as we assemble a mosaic. How valuable would our conclusions be if we latched onto data that only supported our views and ignored information that refuted it?

****

*In a year around 40 to 50 books on trading are published, I read most of them, there are very few which have actionable trading ideas and can help you enhance your trading skills. Trade Like an O’Neil Disciple: How We Made 18,000% in the Stock Market is one of the best books I have read in recent years. I am already reading it second time and taking extensive notes.

If you are growth/ IBD/ momentum/ CANSLIM kind investor you will find practical ideas and some new ways of entering and exiting trades. You will also learn how explosive returns are possible under right circumstances using those methods.

The book also goes in to details of short selling and has couple of good short selling strategies.

The book is not for beginners and those looking for simple methods without much effort, you need to have some foundation about growth and momentum investing before appreciating and understanding it.

A must buy for growth/momentum investor who want explosive returns…..

(to be contd)




ONE OF THE WORLDS LARGEST DEBTOR NATIONS

Here is the table from the Indian Reserve bank which claims that Bharat is fifth in external debt. Most analysts know that the claim ( US $ 229.9 billion (22.0 per cent of GDP) paints a rosy picture and the real debt is more than a tirllion Dollars. The debt is also growing exponentially.

http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=20940

India’s External Debt as at the end of March 2009
As per the standard practice, India’s external debt statistics for the quarters ending March and June are released by the Reserve Bank of India and those for the quarters ending September and December by the Ministry of Finance, Government of India. The external debt data are released with a lag of one quarter. A detailed account of external debt as compiled in the standard format as at end-March 2009 in rupee and US dollar terms and revised data for the earlier quarters are set out in Statement 1 and 2, respectively. The developments relating to India’s external debt as at end-March 2009 are discussed in the following paragraphs.

Major Highlights of External Debt

(i) India’s external debt, as at end-March 2009, was placed at US $ 229.9 billion (22.0 per cent of GDP) recording an increase of US $ 5.3 billion or 2.4 per cent over the level of the previous year mainly due to the increase in trade credits.

(ii) As per an international comparison of external debt of the twenty most indebted countries, India was the fifth most indebted country in 2007.

(iii) By way of composition of external debt, the share of commercial borrowings was the highest at 27.3 per cent as at end-March 2009 followed by short-term debt (21.5 per cent), NRI deposits (18.1 per cent) and multilateral debt (17.2 per cent).

(iv) The debt service ratio has declined steadily over the years, and stood at 4.6 per cent as at end-March 2009.

(v) Excluding the valuation effects due to appreciation of US dollar against other major currencies and Indian rupee, the stock of external debt would have increased by US$ 18.7 billion as compared with the stock as at end-March 2008.

(vi) The share of short-term debt in total debt increased to 21.5 per cent at end-March 2009 from 20.9 per cent at end-March 2008, primarily on account of rise in short-term trade credits.

(vii) Based on residual maturity, the short-term debt accounted for 40.6 per cent of the total external debt at end-March 2009

(viii) The ratio of short-term debt to foreign exchange reserves at 19.6 per cent in March 2009 was higher compared to 15.2 per cent in March 2008.

(ix) The US dollar continues to remain the dominant currency accounting for 57.1 per cent of the total external debt stock as at end-march 2009.

(x) India’s foreign exchange reserves provided a cover of 109.6 per cent to the external debt stock at the end of March 2009 as compared with 137.9 per cent as at end-March 2008.

Here is a report from HinduBusinessline:

India’s external debt rises by 8.1% at Sept-end

Our Bureau

New Delhi, Dec. 31

The country’s total external debt stock, at the end of September, recorded an increase of 8.1 per cent from the end-March 2009 estimates.

The external debt at the end of September stood $242.8 billion, an increase of $18.2 billion over end-March.

While the long-term debt showed an increase of $19.2 billion (10.6 per cent) and went up to $200.4 billion, the short-term debt came down by $985 million (-2.3 per cent) to $42.4 billion. The increase in external debt over the previous quarter stood at 5.7 per cent or $13 billion.

Valuation effect on account of depreciation of the dollar against international currencies accounted for $8.3 billion (45.6 per cent) of the total increase in the external debt. The increase in total external debt also reflected the impact of inclusion of cumulative SDR allocations to India by International Monetary Fund as a long-term debt liability in external debt statistics.

The debt-service ratio, i.e. the ratio of total debt service payments to current receipts worked out to 4.9 per cent during April-September 2009 as against 3.7 per cent for April-September 2008. The ratio of short-term external debt to foreign exchange reserves, which was 17.2 per cent at end-March 2009, came down 15.1 per cent at end-September 2009. The ratio of Government external debt to GDP has remained around 5.0 per cent in the last three years.

ARE U CLOSE TO PERFECTION?

Becoming the perfect trader is no easy task, and I daresay that nobody has been able to achieve this great feat. The perfect trader buys at the absolute low of the day and sells at the absolute high. And depending on whether the high happens first or the low happens first determines if he is long or short for the day. It’s really easy to calculate this metric. It is simply the absolute value of the daily range or the high minus the low.

To get an accurate handle on the concept, we first ask what time frame we will be using. For end-of-day traders or swing traders, the daily bar is your competition. If you day-trade off the five-minute bar, well then use the five-minute bar to gauge your performance.
This concept is used in system trading and because vast amounts of data are typically used, we system traders need to resort to our super-duper calculators, also referred to as our programming language. This is an example of what code looks like for our daily perfect trader. The language is TradersStudio’s version of Visual Basic, but you can get the idea and use it with any program you wish. It’s the basic loop function.
For i = FirstBar to LastBar step 1
Next
PerfectProfit = PerfectProfit + Range [i]
You’ll need to dimension your PerfectProfit variable as an array if you want it to tally up daily ranges.
But you don’t need to be a systems trader to get some use from the concept. You can simply take a sheet of paper and tally the sum of all the bar ranges for your time frame. Take your net profit and divide it by perfect profit for a sobering assessment of how far from perfect you really are.
If you are 20% of perfect, then you have an impressive system. Don’t be discouraged to find out you’re more in the 2% range. What they say about flyfishing applies. First you try to catch a fish (profitable trade), then you try to catch a lot of fish (consistently profitable), then you try to catch big fish (participating in large moves) and then you seek the fish that has never yet been caught.

NFUTURES TODAY’S
DAY TRADING STRATEGY – SEPT 1

Strong Intraday resistance @ 7 DEMA - 5446

Today if trades above 5400 for 15-30 minutes,

Jerk upto 5419-29-45 is possible

If failed to sustain,

Slide upto 5382-70 and more is for sure

BANK NIFTY

Supports @ 10711 & 10683

Buy btwn 10761-78

T1- 10805-19

T2- 10831-48

Sell btwn 10706-690

T1- 10663-49

T2- 10637-20

Nifty, Bank Nifty levels and intraday news updated here gives astonishing success rate (more than 97%) that is more than enough for the readers to attain a decent profit daily.

To mint much more money pls subscribe our service and

enjoy daily market with our guidance.

Thank you.

SHARE TIPS TODAY (SEPT 1)

INTRADAY

Sell SBM @ 1074

T1 – 1064

T2 – 1055

WORLD'S WORST TEACHER

The market often rewards bad behavior. You exit a stock because your stop is hit. You are okay with this because you followed your plan. The market then immediately reverses. You begin to think, “If only I stayed with the position.” The next time the market goes against you, you decide you are not going to get tricked again. This time though, the market does not reverse and what started out as a small manageable loss is now huge.

The market will give you loss after loss forcing you to abandon a methodology right before it takes off without you. On the flip side, the market will lull you into a false sense of confidence. You trade larger and larger, taking on excessive risk. You print money until your risks become so excessive that one or two bad trades wipe you out.

Learn from the market, but realize that sometimes it can be a lousy instructor.

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Tamil Nadu

India

TODAY’S QUOTE

Wives are young men's mistresses, companions for middle age, and old men's nurses.

-FRANCIS BACON

RELAX CORNER

JUST SMS TO YOUR PAL

Sardarji to others:
Did anyone lose money wrapped in a rubber band?
One said, Yes I did
Sardar: Well, it’s your lucky day,
Be Careful hereafter..
Here’s your rubberband!

DISCLAIMER

THE RECOMMENDATIONS MADE HERE DO NOT CONSTITUTE AND OFFER TO SELL OF A SOLICITATION TO BUY ANY OF THE SECURITIES/COMMODITIES OF ANY OTHER INSTRUMENTS WHATSOEVER MENTIONED. NO REPRESENTATIONS CAN BE MADE THAT THE RECOMMENDATIONS CONTAINED WILL BE PROFITABLE OF THAT THEY WILL NOT RESULT IN LOSSES. READERS USING THE INFORMATION CONTAINED HEREIN ARE SOLELY RESPONSIBLE FOR THEIR ACTIONS. SURFING OR USING ‘tradersharmony.blogspot.com' DEEMS THAT THE SURFER ACCEPTS AND ACKNOWLEDGES THE DISCLAIMERS AND DISCLOSURES.THE INFORMATION PUBLISHED ARE FOR EDUCATIONAL AND INFORMATIVE PURPOSE ONLY AND THE USER/READERS SHOULD TAKE ADVICE OF HIS/HER ADVISOR BEFORE TAKING ANY DECISION FOR BUYING, SELLING OR OTHERWISE DEALING WITH SECURITIES/COMMODITIES OR ANY OTHER INSTRUMENT WHATSOEVER.

AWESOME TUESDAY...?

FROM AN EXPERIENCE

Recognize past mistakes and eliminate them. This month’s Golf Magazine has an article analyzing each shot of Tiger Woods career. Tiger’s success is less predicated by the good things he does than by virtue of doing far fewer bad things than other PGA golfers. All of us have a particular bad habit that consistently costs us. You should get an occasional feeling of deja vu when repeating a stressful event. Embrace that personal information as a signal. Your worst habit is potentially your best fade.

Peak performance in trading is frequently hindered because of the emotions a trader feels, and more importantly how their trading behaviors change based on those emotions. I have found that the following four emotional experiences have the greatest, direct impact on a trader’s ability to achieve higher levels of success.

1) Fear of Missing Out
2) Focusing on the Money and Not the Trade
3) Losing Objectivity in a Trade
4) Taking Risk Because you are Up (or down) Money

Fear of missing out occurs when a trader is more afraid of missing an opportunity than they are of losing money. As a result, traders tend to overtrade in a desperate effort to ensure that they do not miss out on money-making situations. This overtrading can then potentially trigger an undertrading response if the traders experience a “trading injury” such as a big loss along the way. The way to solve this is first to accept the reality that you’re always going to miss out on something, somewhere. The second step is to establish game plans on paper and hold yourself accountable to executing those plans.
Focusing on the money and not the trade limits performance because the trader quantifies their success based on their profit and loss data. As a result, when he or she is up or down a certain amount of money that they view as significant, they alter their trading behaviors regardless of what the actual, real trading opportunity is that is presented to them. The way to solve this is to quantify your success based on HOW you traded not HOW much you made on the trade. Did you have edge? Was it your pitch? Did you make a high-quality trade?

Losing objectivity in a trade occurs because traders develop emotional ties to their previous entry levels. The trader is no longer making trading decisions based on the trade, but rather based on how much they are up or down in the trade. The key to overcoming this is for the trader to continually ask him/herself, “Why am I in this trade?” and “If I was not in this trade right now, would I enter this trade long, short or do nothing?”

Taking bad risk because you are up or down money
People do not like to lose – especially money. Normal solid risk/reward thinking becomes skewed once a trader is up a large sum of money. They begin to experience something called “mental accounting” and they treat money differently based on how they made money or how quickly they earned it. On the flip side, when traders are down money, they tend to be consumed with trading for revenge and trying to make it back, oftentimes as quickly as they lost it. As a result, they may take “shots” or do the “screw it” trade because they feel helpless. To solve this destructive behavior, the trader should use their trading journal to document their emotional highs and lows and what triggered it so they can be in tune with when they are feeling over-confident or angry/frustrated. Once they recognize these emotions, they should immediately call a time out and step away from the computer or reduce the risk they are taking until they can bring themselves back to center court.

THE BEST TRADING

“Any thought put into your mind and nourished regularly, will produce results in your life.” John Kehoe

An affirmation is a statement made in the present about the future as if it had already occurred in the past. Let me say it more simply. An affirmation is a simple statement about what you want to become true in your life. You state it in the present tense as if it were already true. You repeat your hopes and dreams. You declare the opposite of your fears. For example, the fear that you could lose all your money becomes: “I grow my capital through consistently applying my winning methods.”

Be careful to word the affirmation in the present tense. Statements made in the future stay in the future. “Next month I’ll turn my trading around.” stays out there in the future. Now is when you need to turn the trading around.

Affirmations can be repeated to yourself silently or aloud. You can incant them with feeling or whisper them to yourself. You can record them and play them, or write them and read them. A good time to assert them is just as you’re falling asleep or waking up, or any other time of the day. You can say them while you drive or wait in a bank line or as you watch the market or manage a trade.

And here is a little miracle. You don’t have to believe the truth of the affirmation in order for it to have an effect. Of course, it’s better if you imagine it to be true or becoming true.

Sometimes it’s more believable if it’s a process statement. “I am slender” can change to “I am becoming slender.” “I am consistently profitable” changes to “I am becoming more consistently profitable.” There are times when the process is more credible than the reality.

You can also turn the statement into a question. “In what ways am I becoming a better trader?” “How am I becoming a more professional trader each year?” The mind accepts the truth of the question and searches for evidence.

We think in language. The words we think fill our minds and crowd out opposing thoughts. A word encompasses an idea. Ideas are stronger than will power. Ideas seduce and return as reality. By reiterating thoughts they become a part of our natural thoughts and become our beliefs and express themselves in our actions.

You want to state your affirmations in a positive form. Negatives produce the opposite of what you want. “Don’t lose money.” enters into the mind in the form of “lose money”. Clearly you don’t want that. Much better to say,”Today, I make money trading.” “Don’t lose money” becomes a worry, and you begin to imagine losing money and you feel bad. Thought mixed with emotion attracts its essence.

Keep your affirmations short. Don’t get lost in convoluted sentences and paragraphs. A simple sentence ten words or less will do it: “I follow my trading rules.” “I take every valid entry.” “I stay with my winning trades.” “I cut my losses right on time.” “I act on time right on time.” “I apply my methods to the market.” “I want what the market wants.” “I can handle anything that comes up.”

You can also use a single word: “Courageous.” “Consistent.” “Steady.” “Professional.” “Winner.” “Confident.” “Clear Minded.” “Detached.” “Patient.” “Effective.” Who are all these words? You are. The “I am” is implied and understood.

Affirmations are used to bring into being what Earl Nightingale calls the strangest secret: We become what we think about. When you affirm, you’re filling your mind with repetitive notions. They seep into your subconscious mind, and manifest themselves in your actions.

What if you could affirm your way to trading success?

NFUTURES TODAY’S DAY TRADING STRATEGY – AUG 31

Today’s Resistance @ 5439/5462

If trades above 5439 for 15 minutes

hike up to, 5462 is possible

BANK NIFTY

Overall resistance in EOD card today @ 10928

Buy btwn 10803-21

T1- 10848-62

T2- 10875-93

Sell btwn 10747-29

T1- 10702-687

T2- 10674-657

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SHARE TIPS TODAY (AUG 31)

INTRADAY

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T2 – 103.80

T3 – 102.10

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