HAMAARAA MONDAY..HAMAARAA MONDAY..

FROM AN EXPERIENCE

“I’ve found over the years that much of what separates  
the excellent traders form the average ones is not so 
much their ideas ,but what they do with those ideas. 
Two traders will have positions go their way and then 
pull back a bit. The first trader, anticipating 
punishment, fears losing his gain and takes a quick 
small profit. The second trader, anticipating reward, 
adds to the position on the pull back and reaps large 
gains. Same idea, different outcomes, all as 
result of conditioned patterns of thinking.”

Now,

How do these following values play out in our trading?

1. Truth: Truth is an absolute value. Some things are 
true in all places and times. Resisting evil, for example, 
is always right.

2. Justice: Justice consists of treating others as one would 
wish to be treated. “Do unto others as you would have them 
do unto you” summarizes this concept of justice.

3. Courage: Courage means standing up for justice.

4. Moderation: Nothing should be carried to excess.

5. Wisdom: Wisdom enables a person to know what justice 
is, to recognize when courage is required, and to do what is right.

In this column, let’s explore truth as it applies to our trading.

One of the clear, clean things about trading is that 
truth is immediately and finally manifested. The price goes 
up or down or nowhere. Your trade or position 
is profitable or not. You can’t spin it any other way. 
You’re right when you make money. You’re wrong 
when you lose money. That’s just the way it is..

There are also other truths involved. You just got lucky. 
You have a robust and proven method for trading that you 
can rely upon over time. Your methods are flimsy 
at best, unpredictable at worst. You have no method or you 
have a million methods which amounts to the same thing. 
Your impulses frequently and easily override your methods, 
or you rigidly apply your rules even when you clearly should not.

You keep clear records so you can assess what works best, 
or you don’t and at the end of the day 
(or the week or the month), you have no idea. 
Your record of action is either clear 
or murky. To correct it, it needs to be clear.

You need to tell yourself the truth as you go along. 
No excuses. No complaints. No trumped up stories. 
If you can truthfully analyze your trading mistakes 
as well as your trading strengths, you can make 
adjustments, and develop a personal style that will lead 
to trading success.

Telling the truth about each day’s (week’s, month’s) trading 
doesn’t mean you have to be brutally cruel to yourself 
or gloomy about your trading. What it does mean is that 
you don’t have to do that again, and you can optimistically 
look forward to the next day’s trading. You will know the 
truth, and the truth will make you free.

You want to keep your trading in true alignment with any 
known or possible clues as to the on the ground truths in 
relevant areas. There are fundamental truths, 
technical truths, methodological truths, inter-relational 
truths, and personal truths. The closer you can get in any 
or all of these areas, the better your prospects. 
You will seek to know the truth, and those truths will 
power your trading. 

Fear: A healthy amount of fear can be a good thing for 
every trader to posses, mainly because it helps convince
you to cut losses early.
But fear is a tricky emotion that can cause traders to behave

irrationally.

We’ve all experienced the same feelings when a stock 
we weren’t watching at the moment stages a breakout move. 
When you finally notice the stock

 is up a significant amount, yet you can’t shake the feeling 
that it will move higher. In this case, fear has a powerful grip. 
Instead of fearing losses,

 you’re afraid of missing out on potential profits. 
This leads to chasing the

breakout, and either severely limiting potential gains and 
wasting a trade.

My solution to this problem is simple:

If you like a stock that has already

broken out, make it a rule that you cannot buy shares
until you have

waited at least one hour from the point when you wanted to buy.

If the stock pulls back to an acceptable entry point

(which shares are bound to do, especially during the 
middle of the day)

feel free to buy shares. But if it continues to run, accept 
that you were too slow, and move on to your next target.

With a self-imposed time limit, you will eliminate impulse 
trades that can wreck havoc on your monthly gains.

Greed: Every single trader is in the market to make money. 
If you’re not,then I’m afraid you’re in the wrong place. 
But there’s a distinct line between

wanting to succeed at trading — enjoying repeatable profits 
as the reward

for your success — and being greedy.

Greed causes overtrading, and overtrading kills profits. 
Instead of patiently waiting for ideal setups, greedy traders 
will jump on any stock that’s moving.

The result is usually the same every time: a ton of 
commissions destroying what little profit was made.

The key takeaway here is to only trade the best patterns or setups.

You don’t always need to be buying stock just for the sake of 
having shares.If it helps to limit yourself to a certain number
of trades per week, you should add a caveat
to your trading rulebook.

                                                                                                (to be contd)

BELIEVE IT OR NOT

JUST CONCENTRATE & MEDITATE LOOKING AT 
THIS FOR 10 MINUTES BEFORE AN IMPORTANT 
JOB TO BE COMPLETED THAT DAY AND
SEE HOW MIRACULOUSLY IT WORKS
WITH THE RESULT

TODAY’S TRADING STRATEGY

OF NIFTY FUTURES – JAN 31 

We were continuously warning the investors, bull followers

very boldly for the past 3 months 
when everybody expecting the Indian
market to create new highs, history
this month speculating,writing -  
bla-bla-bla-bla

What is happening now - you all see on cards.

We see in calculations, insight much before.

Refresh your memory or scroll down to know the
attainable levels of NIFTY SPOT we mentioned
very earlier.

5560 reached in the previous session (as predicted) 
and you all going to watch INDEX coming down
to 5380 in few days

Any bounce within that is merely a 
DEAD CAT BOUNCE – 

as always mentioned by us in this
BEAR MARKET

But remember an important factor
in SPOT

A very good support is seen @ 5380

If the index manages to bounce back
from this level
with volumes a good spurt is triggered 
and the market goes into bulls hands for next few days then.

So dear investors,

watch 5380 of Nifty (INDEX) very carefully

NOW…

What is going to happen today (Jan 31) in Nifty Futures?

Day Resistances were @ 5560-70-5600

Day support @ 5500

If breaks 5500 and trade for 15 minutes

again a non-stop slide upto 5470-55 is for sure

Suppose, if sustains above 5538 for 15-25 minutes

a hike upto 5570-5596 is very much possible

So day traders and swing traders can watch these two levels

(5500 & 5538) today carefully

(Exact entry, exit, stoploss levels, reverse trades, exclusively
to the subscribers)

BANK NIFTY

Buy btwn 10735-50           

T1 – 10797-821      

T2 – 10836-45 

T3 – 10875 

Sell btwn 10608-594       

T1 – 10547-22  

T2 – 10508-498  

T3 – 10470

SHARE TIPS TODAY (JAN 31) 

1) Sell BOC @ 274.10 

     T1 – 272.25

     T2 – 270.40 

2) Sell CROMPGREAV @ 262.25

    T1 – 260.15

    T2 – 258.50

3) Sell LICHSNG @ 175.75

    T1 – 174.20

    T2 – 172.90-169.10

4) Sell BLUESTARCO @ 345.25

      T1 – 341.50

      T2 – 340.60

      T3 – 338.75

   

Disclosure:

Number of free tips is deliberately reduced.

Solely I have all the rights to stop this too

at any moment.

Subscribe as soon as possible if you want to enter
in correct time (which is very important)
in every share and earn more without panic.

Join hands with us and feel free in trading hours.

EVERY THIRD INDIAN LIVING BELOW POVERTY LINE

Of 104 countries surveyed (5.2 bn people in all), 1.7 bn live in poverty. Every third Indian is living below poverty line, 
estimates an expert group saying that more than 37 per cent of people are poor, ten per cent more than estimated earlier.

Among the states, Orissa and Bihar are at the bottom, while Nagaland, Delhi and J&K have the least number of poor,
says a report by the expert group, headed by Suresh Tendulkar, former chairman of PM’s Economic Advisory Council.

As much as 41.8 per cent of the rural population survives with monthly per capita consumption expenditure of Rs 447, they spend on essential necessities like food, fuel, light, clothing and footwear.

Among urban population, 25.7 per cent are poor, spending Rs 578.8 on essential needs.

Lies, Damned Lies and Statistics

According to the Planning Commission’s recent estimates, 
poverty in India came down from 35.97 per cent in 1993-94 to 27.54 per cent in 2004-05.

Although the Tendulkar report has estimated the poverty at 37.2 per cent against the Commission’s estimate of 27.5 per cent, it did say the estimates are “not comparable” as the former is based on new basket of goods. It must be mentioned without hesitation, that left to themselves, the governments’ appointed Commissions and Committees, would like to proclaim, that there is no poverty in India. To say that poverty levels have come down in India, is not only twisting the figures, but a total travesty of the facts and the actual state of affairs in the country. As a regular visitor to rural areas, because of My lands, I can only say, that poor have become poorer, because of the rise in prices, which the Government has not been able to control.

PERCEPTION Vs REALITY

“It is often said by experienced investors that the equity market

discounts future events. Investors who support that contention

believe that if you wait for an event to occur before investing,

then you would probably be too late because the investment

implications would already have been priced into the

particular investment.

The notion that the equity market discounts future events

necessarily leads us to the conclusion that the equity  market

prices stocks based on perception rather than on reality.

Future events that are supposedly being discounted have

not yet occurred. Therefore, stock price movements reflect
investors’ changing perceptions of what will occur,

but not what will certainly occur. If the market were able

to discount an event with complete certainty,

then we would not worry about volatility or risk.”

ZEN OF TRADING

So far the Apprenticed Investor series has discussed a lot of don’ts. Don’t do this, don’t do that; avoid talking to these kinds of traders; don’t say or think these kinds of things.

Well, it’s time to shift gears, and since trading is an active enterprise, I’ll discuss some things you should do. I plan to expand on these ideas significantly in future episodes.

Taken together, the following 10 rules will not only help you with the philosophical grounding necessary for thoughtful — and successful — investing, they will help you avoid some of the more common mistakes made by investors and traders early in their careers.

This is the “Zen of Trading;” It is more than an overview — it’s an investment philosophy that can help you develop an investing framework of your own.

1. Have a Comprehensive Plan: Whether you are an investor or active trader, you must have a plan. Too many investors have no strategy at all — they merely react to each twitch of the market on the fly. If you fail to plan, goes the saying, then you plan to fail.
Consider how Roger Clemens approaches a game. He studies his opponent, constructs his game plan and goes to work.

Investors should write up a business plan, as if they were asking a Venture Capitalist for start-up money; just because you are the angel investor doesn’t mean you should skip the planning stages.

2. Expect to Be Wrong: We’ve discussed this previously, but it is such a key aspect of successful investing that it bears repeating. You will be wrong, you will be wrong often and, occasionally, you will be spectacularly wrong.
Michael Jordan has a fabulous perspective on the subject: “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. Twenty six times, I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”

Jordan was the greatest ball player of all time, and not only because of his superb physical skills: He understood the nature and importance of failure, and placed it appropriately within a larger framework of the game.

The best investors have no ego tied up in a trade. Those who refuse to recognize the simple truism of “being wrong often” end up giving away unacceptable amounts of capital. Stubborn pride and lack of risk management allow egotists to stay in stocks down 30%, 40% or 50% — or worse.

3. Predetermine Stops Before Opening Any Position: Sign a “prenuptial agreement” with every stock you participate in: When it hits some point you have determined before you purchased it, that’s it, you’re out, end of story. Once you have come to understand that you will be frequently wrong, it becomes much easier to use stop-losses and sell targets.
This is true regardless of your methodology: It may be below support or beneath a moving average, or perhaps you prefer a specific percentage amount. Some people use the prior month’s low. But whatever your stop-loss method is, stick to it religiously. Why? The prenup means you are making the exit decision before you are in a trade — while you are still neutral and objective.

4. Follow Discipline Religiously: The greatest rules in the world are worthless if you do not have the personal discipline to see them through. I can recall every single time I broke a trading rule of my own, and it invariably cost me money.
RealMoney’s Chartman, Gary B. Smith, slavishly follows his discipline, and he notes that every time some hedge fund — chock full of Nobel Laureates and Ivy League whiz kids — blows up, the mea culpa is the same: If only we hadn’t overrode the system.

In Jack Schwager’s seminal book Market Wizards, the single most important theme repeated by each of the wizards was the importance of discipline.

5. Keep Your Emotion In Check: Emotion is the enemy of investors, and that’s why you must have a methodology that relies on objective data points, and not gut instinct. The purpose of Rules 1, 2 and 3 is to eliminate the impact of the natural human response to stress — fear and panic — and to avoid the flip side of the coin — greed.
Remember, we, as a species, were never “hard-wired” for the capital markets. Our instinctive “fight or flight response” did not evolve to deal with crossing moving averages or CEOs resigning or restated earnings.

This evolutionary emotional baggage is why we want to sell at the bottom and chase stocks at the top. The money-making trade — buying when there’s blood in the streets, and selling when everyone else is clamoring to buy — goes against every instinct you have. It requires a detached objectivity simply not possible when trading on emotion.

6. Take Responsibility: Many folks believe “the game is fixed.” To them, I say: get over it. Stop whining and take the proper responsibility for your trades, your losses and yourself.
Your knowledge of the game-rigging gives you an edge. So use your hard-won knowledge to make money.

We have a national culture of blame-passing, and it infected investing long ago. Enron did not cause your losses, and neither did stock-touting analysts, or talking heads on CNBC. You did, and the sooner you accept this, the better off you will be.

A Chinese proverb is particularly insightful as applied to trading: “He who blames others has a long way to go on his journey. He who blames himself is halfway there. He who blames no one has arrived.”

7. Constantly Improve: Investing is so competitive that you cannot afford to stand still. Investors should constantly seek to raise their skill level by learning as much as possible about the markets, the economy, trading technologies and various schools of investing thought. But whatever you read, you must do so with a keenly skeptical eye, while retaining an open mind (‘taint easy to do).
One way to constantly improve is to find something for which you have a peculiar natural proclivity for and develop that gift. It may be moving averages, or position sizing, or MACD, or Bollinger Bands or the Arms index. Perhaps you have an expertise in some aspect of technology, or a particular sector.

This is essential because a developed expertise yields ancillary benefits. It bleeds over into everything else, with net positive results. The specific area of expertise you own does not matter as much as having one. Those of you who have been trading for a while will know exactly what I am referring to.

8. Change Is Constant: Heraclitus was a Greek philosopher best known for his “Doctrine of Flux”: “The only constant is change.”
That doctrine is especially true in the markets. Therefore, as you constantly upgrade your skills, you must remain supple enough to adapt to an ever-changing field of play.

Human nature — especially in herds — is unchanging. But these behaviors must be contemplated within their larger context. Add a new element — PCs, lower trading costs, the Internet, vast amounts of cheap data, even CNBC — and you introduce a new factor that impacts all the players on the field.

As conditions change, you must decipher how they impact your strategy, your emotions and your trading — and adjust accordingly.

9. Learn to Short/Hedge Stocks: Short is not a four-letter word. Successful traders learn to play both sides of the fence. That’s less controversial today than it was as the market was first falling apart, but it is no less true.
When a particular strategy isn’t working, the market is telling you something. Thoughtful traders must consider whether there are bigger issues than their own trading mechanics when they enter a losing streak.

In Law School, students learn they have to be ready to argue either side of a case. You never truly knew a case until you could argue both for and against it. Only when you were able to see its warts could you truly appreciate the beauty.

The trading corollary is that you should never own a stock unless you know what makes it an attractive short. Each buy and sell decision should be an argument pro and con.

The market is cyclical; count on a bear market every four years or so. Unless you plan on sitting out for 18 to 24 months once or twice each decade — as much as four years out of 10 — you better learn to either short stocks or hedge long positions.

10. Understand Sector Strength and Market Trend: This rule generates the most “pushback” of any on the list, because it’s so counter-intuitive: Stock selection matters less than you think.
Studies have convincingly demonstrated that about 30% of a stock’s progress is determined by the company itself; a stock’s sector is equal to at least another 30% (if not more). The overall direction of the market is an even bigger factor, counting for some 40%.

If you own the best company in the wrong sector, or buy the greatest stock when the broader market is going the other way — both positions are likely to be losers. But if you see a strong sector, the market trend will help out even the weakest stock in the bunch.

So that’s the 10 rules I call the “Zen of Trading.”

Investing skills are worthless without a broader framework in which to practice them. The above rules will provide you with that frame of reference. They were as true 100 years ago as they will be true 100 years from now. Those who develop a plan and an investment philosophy are on the path to achieving trading success.

(Refer to ‘OUR POLICIES’ in blog archives if you

 have any queries)

For further details,

Contact Admin (Analyst) @

(0)9788563656

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                                                                -SAMUEL BUTLER,  

RELAX CORNER

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