A KEY MONDAY

FROM AN EXPERIENCE 

Paul Farrell observes that 95% of traders don’t make it. 80% of all day traders lose money. One study found active investors turn over their portfolios excessively (258% annually) but made less than 12% on their money. Passive buy-and-hold investors with only 2% portfolio turnover had significantly better returns.

And, most day traders suffer negative health consequences from their hyper active market moves.

To find out what your trading instincts mean — to grade your own Traders Psychological Profile — answer the following questions YES or NO:

Traders Psychological Profile

Y N You’ve tried more than one new investment strategy this year

Y N Feel you’re buying and selling funds at the wrong time

Y N Rarely open up to anybody for feedback about your losses

Y N Subscribe to two or more newsletters, feel overwhelmed

Y N Can count on one hand all the good laughs this week

Y N Have a lingering resentment about someone or something

Y N You love cable news, but need more time to trade

Y N Rarely break a sweat when exercising the past few weeks

Y N Wonder whether you bet too much on recent investments

Y N Need more than three caffeine and alcohol drinks a day

Y N Feel “something” keeps you from making more money

Y N Frequently don’t trust your instincts or your strategy

Y N You’ve had a major family or personal loss recently

Y N Believe losses are caused by the market manipulators

Y N You’re overweight and snack often on comfort food

Y N Fear your future trades may fail due to a losing streak

Y N Diet and sleep are disturbed by worries about money

Y N Your retirement portfolio’s not growing fast enough

Y N No vacation in a year, and lack an active social life

Y N Nothing (or everything) interferes with making money

Add up the number of Yes answers. Farrell notes that if your total number of “yes” answers is six or more, then day trading is too stressful and risky for you.The alternative to active trading is intelligent asset allocation. At the very least, he advises that you segregate your “untouchable” retirement money . . .

                                                                                                                                                                                         (to be contd)

FUNDAMENTAL

Last Week’s Market Round Up:

"Markets end a volatile week with meager gains "

Sensex ended the week at 16,972.51, partially up 0.13%, while the Nifty ended at 5,146.05 marginally higher by 0.14%.

The RBI’s stance to keep Repo Rates and CRR unchanged at 8% and 4.75% respectively reversed the buildup in expectations of investors by registering losses.

Greece elections saw leftists lose out to pro-austerity parties while the FOMC meet in the US failed to commit to an aggressive stimulus programme (QE3), while extending its Operational Twist to the end of 2012.

Disappointing Manufacturing PMI data for the US, Euro-zone and China could be an indication of a downturn in global growth.

Rupee soared to a life high 57.33 against the US dollar this week, versus 55.64/US dollar last week.

MARKET OUTLOOK

"Rupee depreciation to weigh on sentiments"

At the current level of 16,972.51, the Sensex trades at a PE of 15.3x FY12 earnings and 13.4x FY13E earnings estimate.

At 13.4x, we trade below average valuations of 15.4x one-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.

TECHNICAL

Round-up: "Range-bound session"

Nifty opened the week on a positive note and broke the mentioned resistance range of 5150-5180 and made a high of 5190. Thereafter throughout the week Nifty was trading in the range of 5150-5050. Finally Nifty closed at 5146 with a marginal gain of 0.14% on w-o-w basis. Cements, Pharma, Realty, Cap Good and Banking stocks outperformed the broader markets on w-o-w basis.

As mentioned in our previous report “On upside Nifty has resistance in the range of 5150-5180 and downside Nifty has support at 5000 levels, thus in the coming days breach of either side will lead to sharp upside or downside move”. On Monday Nifty opened on a positive note and breaches the mentioned resistance range of 5150-5180 and further made a new high of 5190.

Going forward for a day or two Nifty trades above 200DEMA as well as break its recent high of 5200 then we will witness further upside till 5378 and above that 5400.

However downside Nifty has support at 5050 which is the 21DEMA

NIFTY FUTURES - LEVELS TODAY (JUNE 25)

OVERALL RESISTANCES NOW @ 5195-5205-31-95-5342

OVERALL SUPPORTS NOW @ 5140 – 5090 – 5027 – 4976

Day’s Resistance @ 5158-95-5205-29

Day’s Supports   @ 5149-37-20

If trades above 5158 for 5-10 minutes a hike upto 5195

is very much possible

Above 5195 means see more hike upto 5229

Suppose if cuts & trades below 5149 for 15 minutes an intraday slide upto 5121 is possible

TRADING QUOTES

PLANNING, DISCIPLINE & PATIENCE

‘Predicting rain does n’t count; building arks does’: Warren Buffett’s Noah Rule.

“To know and not to do, is not yet to know” – Courtesy of Tom Witters.

‘It’s easy to have faith in yourself and have discipline when you’re a winner, when you’re number one. What you got to have is faith and discipline when you’re not a winner.’ – Vince Lombardi

‘After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!’ – Jesse Livermore

FEAR

‘Never let fear of striking out, get in your way’: Babe Ruth.

PERSPECTIVES

‘It’s tough to make predictions, especially about the future,’ – Lawrence Peter ‘Yoggi’ Berra.

“go as far as you can see, and when you get there , you will see further.” -

anonymous

‘Don’t worry what others think… They don’t do it very often’ – Courtesy of Mark Carstens.

“A little learning is a dangerous thing, but we must take that risk because a little is as much as our biggest heads can hold.” – George Bernard Shaw.

“Those who cannot remember the past are condemned to repeat it” – George Santayana.

“Glory is fleeting but obscurity is eternal” – Napoleon

‘A long term investment is when I break even.’ – Courtesy of David Wong.

“There are many truths, but only one reality” – Courtesy of Robin Farrell.

‘It’s not whether you get knocked down, it’s whether you get up.’ – Vince Lombardi.

‘We would accomplish many more things if we did not think of them as impossible.’ – Vince Lombardi

“Vision – It reaches beyond the thing that is, into the conception of what can be. Imagination gives you the picture. Vision gives you the impulse to make the picture your own.” – Robert Collier.

“If you’re 30 minutes into the game and you don’t know who the patsy is, you’re the patsy.” – Courtesy of Saranjot Dosanjh.

‘Price is observable and objective while value is perceived and subjective’. – John Murphy.

‘In theory, there is no difference between theory and practice. In practice there is.’ – Yogi Berra.

“As a rule, Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works…. The Failure of great banks… and mercantile firms…are the symptoms incident to the disease, not the disease itself.” – John Stuart Mill (1867).

‘You need three bear markets to know what to do. The first nearly wipes you out, the second you learn how to survive and the third you take by the scruff of the neck and enjoy it.’ – Crispin Odey of Odey Asset Management.

“Never in recorded history, has the supply of capital not overwhelmed the supply of opportunity.” – Joseph Lassiter .

‘You only live once but if you work it right, once is enough’. – Joe E. Lewis.

“If you really know whats going on, you don’t even have to know whats going on to know whats going on… You can ignore the headlines because you anticipated them months ago” – Michael Steinhardt.

‘Another lesson I learned early is that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.’ – Jesse Livermore.

“Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognize the trend whose premise is false, ride that trend, and step off before it is discredited.” – Soros.

ON LOSSES (& PROFITS)

‘Tradings only real secret is… The best loser is the long-term winner’ – Phantom

“Trading is a losing game, the best loser is the long-term winner” – Anonymous.

‘Losses can either be lost money, or tuition in the school of trading’ – Courtesy of Mark Moskowitz.

‘The worst advice I use to get was. – ‘No one went broke taking a profit’’. – Courtesy of John Berra.

“It seems that the necessary thing to do is not to fear mistakes, to plunge in, to do the best that one can, hoping to learn enough from blunders to correct them eventually.” – Abraham Maslow

‘“Learn to like your losses”. Why? Because they are small!’ – Courtesy of Stuart A.Brown.

“One common adage…that is completely wrongheaded is: You can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits.” – William Eckhardt.

“Its not about being right or wrong, rather, its about how much money you make when you’re right and how much you don’t lose when you’re wrong.” – George Soros.

“The first loss is the best loss.” – Jim Rogers.

“Losers average Losers”…Paul Tudor Jones.

“You learn nothing from your winners and everything from your losers.” – Courtesy of Jeff Horn.

·“To become a Master Trader, you must first be a successful loser.” – Jeff Horn.

EGO

“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.” – Paul Tudor Jones

PERSONAL RESPONSIBILITY & SELF AWARENESS 

‘……you get the results you want. You produce your own success” – Gene Agatstein.

“I know from experience that nobody can give me a tip or series of tips that will make more money for me than my own judgement.” – Jesse Livermore.

‘There is no holy grail, and there is no magical system. You have to win the battle within you first before you can win with the markets” – Courtesy of Maria Psarra.

“If you are distressed by anything external, the pain is not due to the thing itself, but to your estimate of it; and this you have the power to revoke at any moment.” – Marcus Aurelius.

“If you don’t know who you are, this is an expensive place to find out” – Adam Smith, The Money Game.

RELAX CORNER

ONE IS THE LONELIEST 

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