FROM AN EXPERIENCE
“You can learn from this how to develop independent judgment, so that you need never ask anyone’s opinion or listen to anyone’s tips, or take anyone’s advice. You can so train your judgment that you will know just what to do and when to do it. When you are in doubt you will do nothing.” –Richard D. Wyckoff
As traders, we are exposed on a daily basis to the trading concepts of risk and reward. Personally, my own reward to risk tolerance took some time for me to feel comfortable with it. How much do you want to risk on each trade, and how much are you looking to make at a minimum?
Are you at its minimum profit objective going to make more money than you risk? So if you would take two trades, and one would win and the other would hit your stop loss, would you turn a small profit on your trading? Obviously, the goal of every trader should be the three general trading rules.
3 General Trading Rules:
Cut Your Losses Short
Let Your Profits Run
Take Profits On The Ride
What I found out over time, as a trader, the hardest component of a trading plan is to stick with it when you are winning. You will find it is easy for a trade to take out your stop loss, because you have mentally prepared yourself for it.
But on the other hand, you may find where do you take profit the hardest component to quantify as a trader. What I believe for my own personal reward/risk trading strategy/method is to set up for a minimum 2.5 to 1 on every trade.
Be happy to move out of a trade a break even, if it doesn’t set up correctly. You should find two words to be a part of your trading plan: flexibility and change. These two words will be your best friend, if you use them properly.
You can learn from other trader’s, but your trading decisions should in the end be your own. OWN YOUR TRADING PLAN!
The last part of Wyckoff
This ‘game’ is rigged! The faster you understand this … the better off as a trader you will be, in my very, very humble opinion.
(to be contd)
(to be contd)
NIFTY FUTURES – AN OVERALL VIEW
-Overall Trend is 101% down !
-If able to close below 4759 for 3 Days with a weekly close, then will see NF kissing 4570-52 as soon as possible within 2nd week of June.
-Short Term wrench is inevitable!
-Even though good for Bears to go short once again !
REMEMBER..REMEMBER..REMEMBER..
Pls do remember Nifty Futures should cross 7 Days Exponential Moving Averages sustain and close above the level (that did not happen since MAY 03) for a decent correction – otherwise 101% it will favour only BEARS
– any pull can be considered as a DEAD CAT BOUNCE firmly.
WHY AFFRAY...? WE PROVIDE YOU BOTH
FUNDAMENTAL
This Week’s Market Round Up: "Markets closes lower for fourth successive week"
Sensex closes at 16,152, down 0.90%; Nifty closes at 4,891, down 0.79%.
In the week gone by, crisis in Eurozone deepened with failure in formation of coalition government in Greece
Run on banks in Greece and Spain
Most Asian currencies were under pressure. Rupee fell sharply against U.S. Dollar to a new all time low of 54.91. RBI intervention, helped rupee to recover smartly to close the week at 54.46.
Week saw stellar Quarterly performance from Capital goods major L&T and India ’s biggest lender, State bank of India
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Positives:
1) Cheers to Mark Zuckerberg and Facebook for building an
incredible business and whose reward today is hugely deserved and exciting to
watch.
2) April Housing Starts back above 700k for 4th month in
the past 6 at 717k, above est of 685k and March revised up by 45k to 699k.
3) After rising from 19 to 28 thru the winter months and
falling to 24 in April, the May NAHB home builder survey rises to 29, the best in
5 yrs.
4) Refi apps up by 13% with new low in mortgage rates.
5) NY mfr’g in May rises to 17.1 from 6.6 in April but
still down from 20.2 in March and 6 month outlook falls to 29.3 from 43.1.
6) Old news but Q1 GDP in Germany
7) China
Negatives:
1) Europe again the main
concern as Greek stocks fall another 10% and new PSI bonds sell to lows as bank
run fears spread and we have to wait another month for new elections. Spanish
IBEX down 6% as Bankia falls 15%. MIB lower by 7% and both Spanish and Italian
bond yields jump and Spanish CDS goes to new high.
2) Philly mfr’g falls to -5.8 from +8.5 and well below
expectations of +10 as weakness is broad based and the outlook falls sharply.
3) Initial Jobless Claims 5k more than expected at 370k
and prior week revised up by 3k.
4) April Retail Sales reflect give back as they rise just
.2% m/o/m ex gasoline.
5) CPI moderates to 2.3% from 2.7% y/o/y but tell that to
people whose wages are flat. Core rate up 2.3% y/o/y matching most since Sept ’08.
6) Shanghai
Market Outlook
"Eurozone turmoil likely to weigh heavily on sentiments in near term"
At the current level of 16,152, the Sensex trades at a PE of 15.0x FY12E earnings estimate and 12.9x FY13E earnings estimate.
At 12.9x, we trade below average valuations of 15.4x 1 year forward earnings.
Central banks in emerging markets are expected to support slowing growth through monetary easing, leading to a further fillip for growth and risk assets.
As a market stance, we maintain our long bias given expected recovery in corporate capex, stabilization of downgrade cycle in corporate earnings, and attractive valuations of 13.5x FY13E on the Sensex.
We recommend being less aggressive than earlier and expect some consolidation in markets in the near term as flows run dry. We recommend accumulating stocks with strong and robust business models in this consolidation phase.
Sectoral Outlook
"Stay with companies having robust business models"
RBI in its latest policy cut interest rates by 50 bps to provide a fillip to deteriorating growth environment.
We expect pick-up in corporate capex and credit growth buoyed by further monetary easing.
We would advice clients to play interest rate sensitives like Banks and Capital Goods (Yes Bank, City Union Bank and Larsen and Toubro) to capitalize on falling rates theme.
At the same time consumption and agri stories (GSK Consumer, Bajaj Auto, Coromondal Fertiliser) would continue to do well.
We recommend reducing exposure on global cyclicals like Tata Steel as concerns from China
And this is going to happen in today’s session
TECHNICAL VIEW
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Round-up: "Southbound Journey Continues"
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Round-up: "Southbound Journey Continues"
As mentioned in earlier report that "Going forward, Nifty is likely to trade with negative bias and index can witness sell off till 4800 if it breaches and start trading below 4900 mark", Nifty started the week with negative note and achieved our mentioned target of 4800 and further made a low of 4788. However in the last trading session Nifty recovered all its losses and finally Nifty closed the week at 4891 with marginal loss of 0.44%.
Nifty Outlook: "Strong support at 4750"
On the weekly chart Nifty had already retraced 38.20% of the recent rally from 4531 to 5629. Beside this oscillators are trading in the oversold region. Thus going forward in near term bounce back will be witness only if Nifty starts trading above 4960 on the weekly basis.
However on the weekly chart as Nifty had made lower top as well as trading below the short term averages clearly suggest that the overall trend is still weak and we maintained our downside target 4750.
Bounce back should be used as an exit opportunity from the long positions. On upside, short term Nifty has resistance at 5125.
NIFTY FUTURES LEVELS FOR MAY 21
Day’s Resistance @ 4922-55-83
Day’s Supports @ 4854-30
*No problem to kiss 4921 above 4890 – To see a bulls run (intraday) Nifty futures should cross 4922 and sustain above the level for 5-10 minutes – If happened we can see 4952-82
*Suppose if cuts and trades below 4889 for 5 minutes see a non-stop slide upto 4855-37 and 4821 after that.
9 SKILLS TO BE ACQUIRED BY THE TRADERS
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1) Learning the dynamics of goal achievement so you can stay positively focused on what u want-not what u fear.
2) Learning how to recognize the skills you need to progress as a trader and then stay focused on the development of those skills, instead of the money ,which is merely a by product of your skills.
3) Learning how to adapt yourself to respond to fundamental changes in market conditions more readily.
4) Identifying the amount of risk you are comfortable with -your “risk comfort level”-and the learn how to expand is in a way that is consistent with your ability to maintain an objective perspective of market activity.
5) Learning how to execute your trades immediately upon your perception of an opportunity.
6) Learning how to let the market tell you how much s enough instead of assessing the potential from your personal value system of how much is enough.
7) Learning how to structure your belied to control your perception of market movement.
8) Learning how to achieve and maintain a state of objectivity.
9) Learning how to recognize “true ” intuitive information and then learning how to act on it consistently.
PURGE EGO IN TRADING
“Don’t be a hero. Don’t have an ego. Always question
yourself and your ability. Don’t ever feel that you are very good. The second
you do, you are dead.”
“At other times in the past, investors lost a good profit
by holding on too long, trying to get a long-term capital gain. Some investors,
even erroneously, convince themselves they can’t sell
because of taxes—strong ego, weak judgment.”
“When did you turn from a loser to a winner?When I was
able to separate my ego needs from making money. When I was able to accept
being wrong.Before, admitting I was wrong was more upsetting than losing the
money.”
“Most traders who fail have large egos and can’t admit
that they are wrong.”
“Clearly, flexibility and suppression of ego are key
elements of Gelber’s success.”
“Actually, the best traders have no ego. To be a great
trader, you have to have a big enough ego only in the sense that you have
confidence in yourself.”
Ego can also stop you from being profitable as a trader. Maybe
you only like to short because you think this economny is going to H____ and
the market rallies for a month and the whole time you try shorting it when you
should be buying the pullbacks. In this scenario, the stongly held belief
system is affecting the traders ability to see what is really going on and
costs either being stopped out, or only making a small profit and missing the
big moves etc.
So, the more we can become egoless, flexible in our mind
and not have a preconceived direction the market is going in, the better we
will be as a trader.
Ego as a trader can also be, we think trading is like
playing an electronic game: enter a trade without a set up or proper
understanding of PA etc.
There are a lot of skills to develop as a trader and if
we thought, we didn’t need to learn stuff that would be having ego.
A best trader is always learning about the market and
about himself.
He knew his set ups and did his trades
mechanically. Sometimes he was right and sometimes he was wrong but when the
market trended he was all over it very intensely.
So, he would
kick into high gear when the market trended; He would click his entry button
like a rabbit, tttttttttt would go those entries. When he felt unsure of the
market, he would cut down his contract size and be conservative.
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