iCharts Discussions

[rishveer]

[sonila]

[rk_a2003]

The high profile companies’ earnings in US have been a disappointment so far. Investors realized it thus Market shed around 2 %. It’s evident that QE1, QE2 failed to create expected impetus.

Well, there was no panic selling it’s just a steady and gradual decline. Why one should panic when they knew it that the whole central banks and governments are backing the market .Even why should we worry about fundamentals instead of taking long positions peacefully.

The reason is how much one may tweak financials through high level engineering .The basic laws cannot be changed. Demand,Supply,Profitability,Inflation thrust for more profits cannot be changed thus the gulf between expectations and the reality always may poke in.

It may need some trigger event for a severe fall to happen.The mounting US Fiscal deficit cliff which is in the process of threatening Himalaya’s record could be a possible trigger.There will be always a point where the last straw on the camel's back effect occurs.

The world economy witnessed great depression lasted for decades from late 1920’s till 2nd world war. It took a Second World War scale of destruction to catapult the economy out of depression.

The recession currently going on is actively managed by Governments with unprecedented illusionary measures has not yet shown any promise of recovery. Right now There is no possibility of 3rd world war .So how come it catapult itself out of this mess .Nobody knows including Bernarke&Obama.

By the way, I am always at a discomfort whenever my strategies put me in long positions. It is a great relief for me whenever they put me in short side …Bindass ….Though I know it is unlikely to happen a collapse in near future …… A discomfort always poke in my mind posing questions will it be a Black Monday or Black Tuesday or Black Friday?..... That’s why Ignorance is Bliss.

[rk_a2003]

TRADING RULES

1. Focus on the process of trading, not the outcomes. Keep your attention on selecting the trade, assessing the reward potential to risk, making the entry, setting your stop, managing your trade, and finding the exit. These are the processes of trading and these are where your attention should be. If you are worried about the trade outcome – whether the trade is going to be a winner or a loser – you have already lost.

2. Keep a probabilistic attitude about trading. Understand and accept that trading is based on probabilities. If you have a trade setup with an edge, then you know it won’t work out every time, but it will lead to profitability over a large number of trades. Maintaining a probabilistic attitude also helps with a focus on process rather than the outcomes. When a trade fails, it’s expected. It is simply one of the trades that had the odds of not working out.

3. Be aware of when your ego is pulled into a trade. Learn to recognize the signs that you’ve been hooked into believing you have to be right. It might be a tension in the body or thoughts of fear of a loss, or even the opposite: thoughts of grandiosity. Whatever your pattern, learn to recognize it so that you don’t get ambushed by your ego and make errors in your trading.

4. When you notice your ego in the trade, take specific steps to address it. First, acknowledge it. You can even say to yourself, “Ah, there’s my ego at work” if that seems to help. Second, don’t fight the ego, try to suppress it, or get down on yourself in any way. We all have egos, and they can be quite valuable at times, though trading is typically not one of those times. Accept it as a natural part of being human. Finally, turn your attention back to the process of trading. Focus on whatever you need to do next for your trade and put your full attention there.


Don't be a perfectionist. It's impossible in trading to attain perfectionism.

[vinay28]

For those who haven't read about risk management

[rk_a2003]

[rk_a2003]

Be A Successful Trader From This DEEWALI

•Your biggest enemy in trading is going to be a directional bias, an opinion about market direction ... whether yours, a broker's or a friend's. Shut it out! Learn to concentrate on the "right-hand side" of the chart-in other words, on the pattern at hand.

• One of the things you should acquire is an increased ability to listen to the market." You should at least heighten your awareness of market action and price behavior at critical points.

• It is important to initially trade a new concept or strategy on paper. Only by seeing a pattern over and over again will you truly feel comfortable with it. You must believe in its ability to repeat itself. Don't be surprised if you find yourself actually becoming excited as you see the patterns begin to set up.

• If a pattern does not make sense to you, don't trade it. If you don't have a 100 percent belief in it, you will not be able to overcome losing streaks.

• All you need is one pattern to make a living! Learn first to specialize in doing one thing well. Traders can earn their living by trading any one of the patterns that they specialize.

• Cling to the strategies that cannot be designed in to a mechanical system. Be grateful that they are not! If they were, a large fund would come into the marketplace and exploit the edge. It is estimated that over 90 percent of the large pools in the markets are run on a mechanical basis, systematically attempting to exploit trends. It is very difficult for these funds to move large amounts of money on a short-term time frame. They do not have the luxury of using resting stop-loss orders without risking adverse slippage. They cannot be as nimble as the small trader can-and herein lies your edge. So use your advantage of being light and fast , which the big funds are unable to practice for a simple reason that their size won’t allow it.That’s why I often describe that retail trading is akin to a guerrilla war fare...Hit and Run. Don’t expose yourself for an undue risk by staying prolonged time periods in a trade.

• This brings us to the most important point. Initial stop loss orders are essential! Each strategy must have a protective stop upon being filled. Stops are necessary for your protection against worst-case scenarios. (Remember, we are trading on probabilities only.) All it takes is getting sloppy once, or experiencing the "frozen rabbit syndrome" in a bad trade, to undo the efforts of the previous 20 trades. Placing initial protective stops must become a habit that is never broken.

[sujai1234]

[rk_a2003]

"Here's what I believe:

1. The markets are not random. I don't care if the number of academicians who have argued the efficient Market hypothesis would stretch to the moon and back if laid end to end; they are simply wrong.

2. The markets are not random, because they are based on human behavior, and human behavior,Especially mass behavior is not random. It never has been, and it probably never will be.
(and also based on Demand and Supply cycles which exhibit ebbs and tides in every time frame and can be tracked glaringly in longer time periods and expresses itself with booms and dooms and grand cycles.)

3. There is no Holy Grail or grand secret to the markets, but there are many patterns that can lead to Profits.

4. There are a million ways to make money in markets. The irony is that they are all very difficult to find.

5. The markets are always changing, and they are always the same.

6. The secret to success in the markets lies not in discovering some incredible indicator or elaborate
Theory; rather, it lies within each individual.

7. To excel in trading requires a combination of talent and extremely hard work-(surprise!) the sameCombination required for excellence in any field. Those seeking success by buying the latest $300 or even $3,000 system, or by following the latest hot tip, will never find the answer because they haven't yet understood the question.

8. Success in trading is a worthy goal, but it will be worthless if it is not accompanied by success in your life (and I use the word success here without monetary connotation)."

[rk_a2003]

“Don't trade when you can’t afford to lose. In fact, there are few more certain ways of guaranteeing that you will lose than by trading money you can't afford to lose. If your trading capital is too important, you will be doomed to a number of fatal errors.

You will miss out on some of the best trading opportunities because these are often the most risky. You will jump out of perfectly good positions prematurely on the first sign of adverse price movement only to then see the market go in the anticipated direction.

You will be too quick to take the first bit of profit because of concern that the market will take it away from you.

Ironically, over concern about losing may even lead to staying with losing trades as fear triggers indecisiveness, much like a deer frozen in the glare of a car's headlights.

In short, trading with "scared money" will lead to a host of negative emotions that will cloud decision making and virtually guarantee failure.”

[psalm]

[vinay28]

That's why market is chaotic!

[rk_a2003]

Have you ever played chess seriously? If the answer is yes you must be aware of the fact that each and every step in chess should be well thought out and carefully planned one. You cannot afford a casual step or for the matter of fact even a step with depleted concentration. One such step can cost you the entire game no matter how brilliant you played the rest of the game.

In the same way trading has to be treated when viewed as a whole. We can read story after story of very talented traders who blew up because of one or two bad trades. The overwhelming reason that traders win or lose is not because of their entry method, but because of their money management skills.

By "money management" it simply means keeping losses and drawdowns to an absolute minimum while making the most of opportunities for profit. If you fail to adhere to it even a few instances it’s akin to making a casual move in chess game and you are bound to blow up.

To be frank I get in to casual approach with my trading at times but I get out of such positions the moment I recognized my casual approach and fortunately I am fast in recognizing it. It’s called traders itch.

One must try to completely avoid it.

[sldesai]

thanks for comparing with chess. properly explained.

[rk_a2003]

Infy is used very well by bulls (No one other than FII’s).The better results could be just a rebound after a series of bad quarters. In the backdrop of the short term bearishness around 11th Jan Infy result was released. There are good number of people who rely on recent past and all of them went short in INFY banking on recent past and prevailing short term bearishness in the market.

The perfect set up for the Bulls .Infy released’ better than expected’ result with optimistic guidance…Bingo(We Knew it)…. pump in some money in to infy; Trigger all the shorts which can take it up further on its own. Watch fun.

The short term bearishness turned in to continuation of long term bullishness with the help of INFY up move... That’s how it works in Bullish Markets. Tiny positive news translates in to big bull move.

Next quarters may not be a continuation of this quarter for INFY. IT firms are not on rosy picture, cost cuttings are coming in from everywhere, people who are on bench are getting sacked.

In future at an approprite time (Not for you and me buddy) INFY may go down again. Never mind, for now it’s did its job for phony BULLS.