Have patience to sit through your positions with discipline
Be like the devout chanting lord's name steadfastly - Be with the flow of the markets.
Trade only in Nifty, if you must in others, then trade in highly liquid scrips.
Live to fight another day - Risk management by position sizing & stop losses
Don't pick the tops & bottoms but the major 75% of any wave.
Know your targets/exit points when you initiate a position and trade by it
When in doubt, reduce your position size by 50% or exit..
Your emotional slate of mind need to be balanced for a trading day.
Go to alpha state of mind with "Pranayama" to stay focussed & excel in your trades.
Saturday, August 8, 2009
Important traits of a smart trader
The most important is discipline - I am sure everyone says that. Second, you have to have patience; if you have a good trade on, you have to be able to stay with it. Third, you need courage to go into the market, and courage comes from adequate capitalization. Fourth, you must have a willingness to lose; that is also related to adequate capitalization. Fifth, you need a strong desire to win.” - Gary Bielfeldt
Successful traders
* Successful traders have absolute control over their emotions, they never get too elated over a win and too depressed over a loss.
* Successful traders seldom think of prices too high or low.
* Successful traders do not panic, they make adjustments rather than revolutionary changes to their trading style.
* Successful traders do not flinch at making the decision to take a loss, they never let loses ride and never add to loosing trades. (One old trader told me he thought his positions like stock in a store. If something sells it’s making you money and you add to that line, if something does not sell it is losing you money so you discount and unload it).
* Successful traders treat trading as a business not a hobby.
* Successful traders stay physically fit.
* Successful traders are prepared for all eventualities on any given trading day. they come to work with a plan that includes many contingencies and not what they just hope will happen.
* In your trading program you should therefore have answers to the following what if:prices open sharply higher or lower?
the market is quiet?
the market is very volatile?
the market makes new highs?
the market makes new lows?
the market goes up early then reverses later?
the market goes down early then reverses later?
* The successful trader only trades with money he/she can afford to loose.
* Trading can result in substational looses. It is also exciting, exhilarating and can be very ADDICTIVE. The more you are emotionally involved in your money, the harder it will be to make objective decisions about market entry and exit.
* Successful traders spend as much time focussing on money management as they do on trading methods.
YOU DO NOT HAVE THE PROFILE OF A SUCCESFUL TRADER IF YOU DO NOT HAVE AT LEAST SOME OF THE ABOVE TRAITS.
* Successful traders keep a low profile.
* Successful traders listen to the markets. Unsuccesful traders try to impose thier will on the market.
* Successful traders seldom think of prices too high or low.
* Successful traders do not panic, they make adjustments rather than revolutionary changes to their trading style.
* Successful traders do not flinch at making the decision to take a loss, they never let loses ride and never add to loosing trades. (One old trader told me he thought his positions like stock in a store. If something sells it’s making you money and you add to that line, if something does not sell it is losing you money so you discount and unload it).
* Successful traders treat trading as a business not a hobby.
* Successful traders stay physically fit.
* Successful traders are prepared for all eventualities on any given trading day. they come to work with a plan that includes many contingencies and not what they just hope will happen.
* In your trading program you should therefore have answers to the following what if:prices open sharply higher or lower?
the market is quiet?
the market is very volatile?
the market makes new highs?
the market makes new lows?
the market goes up early then reverses later?
the market goes down early then reverses later?
* The successful trader only trades with money he/she can afford to loose.
* Trading can result in substational looses. It is also exciting, exhilarating and can be very ADDICTIVE. The more you are emotionally involved in your money, the harder it will be to make objective decisions about market entry and exit.
* Successful traders spend as much time focussing on money management as they do on trading methods.
YOU DO NOT HAVE THE PROFILE OF A SUCCESFUL TRADER IF YOU DO NOT HAVE AT LEAST SOME OF THE ABOVE TRAITS.
* Successful traders keep a low profile.
* Successful traders listen to the markets. Unsuccesful traders try to impose thier will on the market.
Characteristics of a smart trader
First, let me say that I know of examples of successful trader’s that don’t have each of the characteristics that I would say the “typical” good trader shares. So there are exceptions to each of these.
Temperament - In general, people with more analytical and even tempered personalities make better traders.
There is a counterbalancing trait which is the willingness to take risks. Some traders with volatile temperaments are successful because they can take risks easily and can keep trading after getting knocked down. They also tend to blow up more often.
Character - Humility is a very important ingredient in trading success. The truth does not care what you think of yourself. The markets don’t care what you want to believe reality is. Trader’s that are humble are better able to examine their methods and trading objectively and make changes where appropriate.
I’ve known a lot of successful traders that most people might consider arrogant but when it comes down to their own success and the reasons for that success they were able to see the faults in themselves and their trading. The trader’s that were out of touch with reality tended to blow up and have short-lived success.
Intelligence - General intelligence is correlated with success but not as highly as you might think. The ability to discern patterns and relationships with limited information is very useful.
I’d say that you need to be relatively smart to be successful but not extremely smart. Smart enough to understand the principles but beyond that it doesn’t necessarily help you. I’ve seen many very smart people tie themselves up in knots by second-guessing themselves.
Social Skills - Most of the really successful traders are not very socially skilled. Many tend to be reclusive and introverted. There are some exceptions.
Management skills of the tangibles & intangibles - Most of the successful traders I know are not good managers. Most of the people with really successful trading organizations are good managers, they tend to make a lot more money and have some of their money placed with the traders who are less skilled in this area.
Core Beliefs - Most of the successful traders saw trading as a game and a challenge rather than as a way to make a lot of money quickly. They may not have started out that way but eventually the game and challenge became more important than the money.
System Trader’s versus Discretionary - The difference I have seen is that successful discretionary traders tend to trader larger and more aggressively, they also tend to blow up much more often. Their personalities are less even tempered and more volatile in general.
Temperament - In general, people with more analytical and even tempered personalities make better traders.
There is a counterbalancing trait which is the willingness to take risks. Some traders with volatile temperaments are successful because they can take risks easily and can keep trading after getting knocked down. They also tend to blow up more often.
Character - Humility is a very important ingredient in trading success. The truth does not care what you think of yourself. The markets don’t care what you want to believe reality is. Trader’s that are humble are better able to examine their methods and trading objectively and make changes where appropriate.
I’ve known a lot of successful traders that most people might consider arrogant but when it comes down to their own success and the reasons for that success they were able to see the faults in themselves and their trading. The trader’s that were out of touch with reality tended to blow up and have short-lived success.
Intelligence - General intelligence is correlated with success but not as highly as you might think. The ability to discern patterns and relationships with limited information is very useful.
I’d say that you need to be relatively smart to be successful but not extremely smart. Smart enough to understand the principles but beyond that it doesn’t necessarily help you. I’ve seen many very smart people tie themselves up in knots by second-guessing themselves.
Social Skills - Most of the really successful traders are not very socially skilled. Many tend to be reclusive and introverted. There are some exceptions.
Management skills of the tangibles & intangibles - Most of the successful traders I know are not good managers. Most of the people with really successful trading organizations are good managers, they tend to make a lot more money and have some of their money placed with the traders who are less skilled in this area.
Core Beliefs - Most of the successful traders saw trading as a game and a challenge rather than as a way to make a lot of money quickly. They may not have started out that way but eventually the game and challenge became more important than the money.
System Trader’s versus Discretionary - The difference I have seen is that successful discretionary traders tend to trader larger and more aggressively, they also tend to blow up much more often. Their personalities are less even tempered and more volatile in general.
Courage for traders
“Successful traders constantly ask themselves: What am I doing right? What am I doing wrong? How can I do what I am doing better? How can I get more information? Courage is a quality important to excel as a trader. It’s not enough to simply have the insight to see something apart from the rest of the crowd, you also need to have the courage to act on it and stay with it.”
Risk management
There is one big difference between traders, who make money and traders who don’t. It is called risk management. Even if you blindly pick your stocks, in the long-term you will make money as long as you cut your losses short. Add to risk management a proper equity selection model and then you are in top 5% in the world. The 5% that actually make money, consistently. This is the biggest secret of successful traders – cutting losses short. It saves capital and it saves your piece of mind.
If you browse on the internet, you will find thousands of articles that preach that losses should be cut short. It is well known fact and yet you’ll be surprised how few people actually utilize it, even those who write about it. Words are free. You can say whatever you want. Many people don’t practice what they preach and this is why the biggest edge someone could have is called discipline.
There are two types of traders: the ones that cut losses short and the ones that lose everything and go out of business. If you can’t define your risk in advance and most importantly if you can’t accept it, you should not be trading at all. Reading about cutting losses short will never be enough. It is human to believe that you are different and that you know better and that it will never happen to you. You have to experience it to realize it. It is part of the learning curve. I knew about this rule long before I committed serious money to trading and yet I didn’t practice it until I had my portion of outsized losses. Today, the thought of how and where I’ll exit a trade, is the most important.
I know that there are many people who preach that they don’t use stop losses and yet they are successful. Well, if they are successful doing that, then they are not really traders. They are investors and they limit their risk by hedging, which is a whole new chapter.
If you browse on the internet, you will find thousands of articles that preach that losses should be cut short. It is well known fact and yet you’ll be surprised how few people actually utilize it, even those who write about it. Words are free. You can say whatever you want. Many people don’t practice what they preach and this is why the biggest edge someone could have is called discipline.
There are two types of traders: the ones that cut losses short and the ones that lose everything and go out of business. If you can’t define your risk in advance and most importantly if you can’t accept it, you should not be trading at all. Reading about cutting losses short will never be enough. It is human to believe that you are different and that you know better and that it will never happen to you. You have to experience it to realize it. It is part of the learning curve. I knew about this rule long before I committed serious money to trading and yet I didn’t practice it until I had my portion of outsized losses. Today, the thought of how and where I’ll exit a trade, is the most important.
I know that there are many people who preach that they don’t use stop losses and yet they are successful. Well, if they are successful doing that, then they are not really traders. They are investors and they limit their risk by hedging, which is a whole new chapter.
Sandcastle..belongs to the sea..!!
Hot sun. Salty air. Rhythmic waves.
A little boy is on his knees scooping and packing the sand with plastic shovels into a bright blue bucket. Then he upends the bucket on the surface and lifts it. And, to the delight of the little architect, a castle tower is created.
All afternoon he will work. Spooning out the moat. Packing the walls. Bottle tops will be sentries. Popsicle sticks will be bridges. A sandcastle will be built.
Big city. Busy streets. Rumbling traffic.
A man is in his office. At his desk he shuffles papers into stacks and delegates assignments. He cradles the phone on his shoulder and punches the keyboard with his fingers. Numbers are juggled and contracts are signed and much to the delight of the man, a profit is made.
All his life he will work. Formulating the plans. Forecasting the future. Annuities will be sentries. Capital gains will be bridges. An empire will be built.
Two builders of two castles. They have much in common. They shape granules into grandeurs. They see nothing and make something. They are diligent and determined. And for both the tide will rise and the end will come.
Yet that is where the similarities cease. For the boy sees the end while the man ignores it. Watch the boy as the dusk approaches.
As the waves near, the wise child jumps to his feet and begins to clap. There is no sorrow. No fear. No regret. He knew this would happen. He is not surprised. And when the great breaker crashes into his castle and his masterpiece is sucked into the sea, he smiles. He smiles, picks up his tools, takes his father's hand, and goes home.
The grownup, however, is not so wise. As the wave of years collapses on his castle he is terrified. He hovers over the sandy monument to protect it. He blocks the waves from the walls he has made. Salt-water soaked and shivering he snarls at the incoming tide.
"It's my castle," he defies.
The ocean need not respond. Both know to whom the sand belongs...
The Sandcastle tells the story of a boy who builds a sandcastle by day, only to see it washed away, and then dreams about the sandcastle at night. In his dream, he awakes and walks down to the beach to discover that the sandcastle has grown to full size in the moonlight, and is now filled with people and merry-making. Yet once again the tide returns, washing away the giant fortress of sand, and turning all of its inhabitants back into mer-people and fishes. In the morning, we find the child back at the beach, building another dream...
I don't know much about sandcastles. But children do. Watch them and learn. Go ahead and build, but build with a child's heart. When the sun sets and the tides take - applaud. Salute the process of life and go home.
Author Unknown
A little boy is on his knees scooping and packing the sand with plastic shovels into a bright blue bucket. Then he upends the bucket on the surface and lifts it. And, to the delight of the little architect, a castle tower is created.
All afternoon he will work. Spooning out the moat. Packing the walls. Bottle tops will be sentries. Popsicle sticks will be bridges. A sandcastle will be built.
Big city. Busy streets. Rumbling traffic.
A man is in his office. At his desk he shuffles papers into stacks and delegates assignments. He cradles the phone on his shoulder and punches the keyboard with his fingers. Numbers are juggled and contracts are signed and much to the delight of the man, a profit is made.
All his life he will work. Formulating the plans. Forecasting the future. Annuities will be sentries. Capital gains will be bridges. An empire will be built.
Two builders of two castles. They have much in common. They shape granules into grandeurs. They see nothing and make something. They are diligent and determined. And for both the tide will rise and the end will come.
Yet that is where the similarities cease. For the boy sees the end while the man ignores it. Watch the boy as the dusk approaches.As the waves near, the wise child jumps to his feet and begins to clap. There is no sorrow. No fear. No regret. He knew this would happen. He is not surprised. And when the great breaker crashes into his castle and his masterpiece is sucked into the sea, he smiles. He smiles, picks up his tools, takes his father's hand, and goes home.
The grownup, however, is not so wise. As the wave of years collapses on his castle he is terrified. He hovers over the sandy monument to protect it. He blocks the waves from the walls he has made. Salt-water soaked and shivering he snarls at the incoming tide.
"It's my castle," he defies.
The ocean need not respond. Both know to whom the sand belongs...
The Sandcastle tells the story of a boy who builds a sandcastle by day, only to see it washed away, and then dreams about the sandcastle at night. In his dream, he awakes and walks down to the beach to discover that the sandcastle has grown to full size in the moonlight, and is now filled with people and merry-making. Yet once again the tide returns, washing away the giant fortress of sand, and turning all of its inhabitants back into mer-people and fishes. In the morning, we find the child back at the beach, building another dream...
I don't know much about sandcastles. But children do. Watch them and learn. Go ahead and build, but build with a child's heart. When the sun sets and the tides take - applaud. Salute the process of life and go home.Author Unknown
Friday, August 7, 2009
Thursday, August 6, 2009
Nifty reverses strongly from the major res. @ 4700.
Staying below 5 Dma(4660), Nifty may slide lower with intra rallies..
Between 12.00 noon to 2.00 pm, Nifty managed to stay above the "Hour High ema" and promptly got sold off thereafter denting the daily technicals too. For serious falls, 4420 & 4380 need to be broken. Holding those levels, Nifty can consolidate and attempt to go to new highs in few days time..
Slow macd has turned down and now we await its triggering its 9 sma for a confirmation of trend change.
After a brief false breakout above 4705, Nifty broke the channel support @ 4690 and fell 140 points from that point filling the gap @ 4582.At no time, the macd moved above its trigger line indicating the futility of the upmove past 4700. As this fall is happening after -ve div, it will head lower with intermittent bounces..
After a +ve div & a rally few weeks ago, now a -ve div and a fall, targetting initially 4450-4375 with possible bounces upto 4630-4660.
Channel break..Supports around 4475..
Between 12.00 noon to 2.00 pm, Nifty managed to stay above the "Hour High ema" and promptly got sold off thereafter denting the daily technicals too. For serious falls, 4420 & 4380 need to be broken. Holding those levels, Nifty can consolidate and attempt to go to new highs in few days time..
Slow macd has turned down and now we await its triggering its 9 sma for a confirmation of trend change.
After a brief false breakout above 4705, Nifty broke the channel support @ 4690 and fell 140 points from that point filling the gap @ 4582.At no time, the macd moved above its trigger line indicating the futility of the upmove past 4700. As this fall is happening after -ve div, it will head lower with intermittent bounces..
After a +ve div & a rally few weeks ago, now a -ve div and a fall, targetting initially 4450-4375 with possible bounces upto 4630-4660.
Channel break..Supports around 4475..
Nifty's intra set up-II
At 2.40PM:
2.18PM: Hourly channel break down below 4690.And thereabout is a S&R for intra day longs.
Nifty did not break 4665 after the previous post but broken above the 4705..Now to the upward targets....
2.18PM: Hourly channel break down below 4690.And thereabout is a S&R for intra day longs.
Nifty did not break 4665 after the previous post but broken above the 4705..Now to the upward targets....
Nifty's intra day set up
Above 4705, Nifty can move upto 4745-4775 area. Break of 4675-4665, may bring it towards 4605-4590 zone.
Wednesday, August 5, 2009
Nifty continues to get sold above 4700...but finds support @ 4620-4640.
Nifty has been trading in a range of 4615 to 4725 for the past 3 days with weakening momentum lately. It can deceive with false moves too..EOD prices will prevail.
There is negative divergence developing in the daily ROC chart. A daily close below 4650 will confirm it. Moving into -ve area will accelerate the fall.
Hourly "OB" got adjusted with intra dips but the daily shows some chinks.. negative div in fast macd, 9 day Rsi..
Though it has been closing above 4657, follow up decisive action is elusive...a possible consolidation can bring it down upto 4550-4475 zone. Trend remains up.
A redrawn channel support comes around 4650-55.
Another high past 4730 might find selling pressure as per this EW. But confirmation of follow up action should be watched..as possibilities are many.I have just posted the most obvious one here.
There is negative divergence developing in the daily ROC chart. A daily close below 4650 will confirm it. Moving into -ve area will accelerate the fall.
Hourly "OB" got adjusted with intra dips but the daily shows some chinks.. negative div in fast macd, 9 day Rsi..
Though it has been closing above 4657, follow up decisive action is elusive...a possible consolidation can bring it down upto 4550-4475 zone. Trend remains up.
A redrawn channel support comes around 4650-55.
Another high past 4730 might find selling pressure as per this EW. But confirmation of follow up action should be watched..as possibilities are many.I have just posted the most obvious one here.
Tuesday, August 4, 2009
Nifty finds resistance/ selling above 4710..now
Channel support comes around 4615.
Hourly high ema @4699, above that selling is likely to emerge..Supports in the region of 4640-4615.(5-Dma comes @ 4623)
It is not breaking past the 4660 decisively...a possible consolidation can bring it down upto 4550-4475 zone.
Hour continue to exhibit -ve divergences..As the prices reaching higher levels, macd is heading down..a clear stretched prices..Caution at higher levels..
4700-4750 will be the selling zone...Below the daily Pivot of 4683, falls may accelerate.
Hourly high ema @4699, above that selling is likely to emerge..Supports in the region of 4640-4615.(5-Dma comes @ 4623)
It is not breaking past the 4660 decisively...a possible consolidation can bring it down upto 4550-4475 zone.
Hour continue to exhibit -ve divergences..As the prices reaching higher levels, macd is heading down..a clear stretched prices..Caution at higher levels..
4700-4750 will be the selling zone...Below the daily Pivot of 4683, falls may accelerate.
Monday, August 3, 2009
Nifty's larger trend prevails & makes new highs..
A new uptrending channel is in place. SBI, ONGC have broken out of 2 months consolidation. If RIL moves past 2035, that will give additional momentum to the index.
Watch the weekly resistances in the Pivot table and book partially closer to the target.
Nifty has cleared the prev. highest close and will meet with stiff resistances in 4770 - 4820 zone.
Despite "OB" readings, Nifty continues its uptrend with larger trend(UP) intact.
Watch the weekly resistances in the Pivot table and book partially closer to the target.
Nifty has cleared the prev. highest close and will meet with stiff resistances in 4770 - 4820 zone.
Despite "OB" readings, Nifty continues its uptrend with larger trend(UP) intact.
Sunday, August 2, 2009
Punjab National Bank - PNB
PNB has reacted from above 700 levels, the previous resistances with "OB" readings but no sell signals. It continues to be a buy on dips. If the last few actions is to be taken as a "running correction", then clearing the 700 mark decisively will take it to much higher levels.
"SBI" and some other PSU banks have given a breakout from a 2 month consolidation pattern. Sectoral play may come into play here and PNB is an outperformer in the banking space.
50-DMA(Brown) may offer supports @ 665. If macd turns up in the next 2 days time, this negative divergence may get negated.
"SBI" and some other PSU banks have given a breakout from a 2 month consolidation pattern. Sectoral play may come into play here and PNB is an outperformer in the banking space.
50-DMA(Brown) may offer supports @ 665. If macd turns up in the next 2 days time, this negative divergence may get negated.
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