iCharts Discussions

[vinay28]

good one rk. Market makers not only have large capital but also very fast algoritms but more importantly they are privy to inside news which becomes public later. In general then they are the ones, as their name suggest, who create markets and hence charts or curves. We will therefore be always behind the curve.

So no point in fighting it. Just follow ur TA, your instincts and your convictions

[rk_a2003]

The Moving Parts of the Market Dynamics

We must be wondering that even though for the past two days Global markets bounced up- Hangseng climbed up more than 10% ,European Markets climbed up around 6-7% ,US Markets too climbed up around 5 % why our Market went up only 2.5%?!.The reason is market closure on 6th for Dasara festival. If the market is open on 6th we may hope that our market too might have gone up at least around 5 %.Why things happen like this? The Reason is ‘Was’ Market .If our market is Open on 6th and went up say around 2%. On Friday it would have gone up another 3 % with the influence of ‘Was’ market which went up 2 %. But for our Friday market the was Market is -0.5% i.e. the Wednesday market and it will have its pulling down effect on ‘NOW’ market and was able to pull it down at least by 2 %.

‘u shd not have a mind set’ This is Our Original Expert Veerappan’s famous saying. What does it exactly mean and how we can be like that? What can help us to be without mind set? And allow us just to follow the market.

Go through the following Extracts which throws some more light on some of these aspects of Moving parts of the Market.




The market is the giver and taker of profits, making up the potential to each day’s profits or lack thereof. You cannot fight the flow of the market and expect to last very long, and the flow is determined by understanding the two parts, which make up the whole. Separate the market into two distinctive areas of movement. One is the day’s action, and the second is the preceding day and days of action that I call the undercurrent. Each of the two parts will apply upward or downward pressure on each trade. The strongest influence is today’s market. I will call it the NOW market. As a professional day trader, you must know what type of influence you have at the open, during the early trading, in the afternoon, and at the end, or you will be left out in the cold. The undercurrent is the WAS market. It is made up of the market dynamics from the previous day or days of trading and can seriously impact your trades. The WAS market is what alerts you to potential changes during the day and puts you on guard or in a defensive posture as you actively play the NOW market. The WAS market provides a subtle influence of opportunity each day because the WAS market usually repeats itself in the following day of trading.


When markets climb, they will build selling pressure but when I see the selling greater than the preceding days, I will go on alert for a possible change and try to find stocks that are at the highs to consider shorting. The NOW market will reflect the undercurrent of the WAS market until indications prove otherwise and the market takes a turn. One has to be very adept at spotting those changes, which enables us to take fast profits and ride the changing momentum. As you follow along and begin to understand these forces, you will be able to change and adapt quickly also.


The basic truth of market dynamics is that with sufficient movement, you will see increased selling pressure as stocks and markets climb, and as stocks and markets fall, buying pressure will increase. Day traders feed on the movements that are sufficient to create potential between the highs and lows as stocks trade each day. No movement means no trading for pros.


If the market has been ending near the highs with little selling off the tops of our gainers, the market is strong and climbing. As the market continues to climb, you should begin to be aware of gainers retreating off the highs to indicate a weakening market. The longer a market climbs the more selling pressure I would expect as we trade each subsequent day. Day traders make the most money when the swings are big and the market is consistent. We trade on percentages and when the market consistently behaves the same day after day, it enables our aggression to grow as we see the same patterns. We only need movement and we do not care if it is down or up. So, the real point of the WAS market is to play consistency, but understand that as a market climbs or drops, the likelihood of a change is growing greater and greater. A trader should be on his or her toes to look for the signs of change and go with the flow.


The NOW market is defined by the pre-market action; the first drops when stocks move down at the open, if they do, and the first climbs as traders buy the hot trades and the oscillations during the day. It finishes with the end of the day’s trading.


To understand what the market is telling me, I will watch the market in different phases of the day’s trading. I watch the pre-market, the open, the mid-morning, and the afternoon trading, as well as the end market. I try to break up the trading demeanor in relationship to time because quite often you will see waves of buying and selling occurring during specific times of the day. I have seen early buying, late buying, early selling, and late selling because the market tends to run in cycles. I will look for repeating patterns of time-related activity. When I see a change during one of the phases of the market, I will take careful note because it can be the first whisper of the winds of change.

[veerappan]

I have seen early buying, late buying, early selling, and late selling because the market tends to run in cycles. I will look for repeating patterns of time-related activity

this is your words rk...... we r trying to [ last one year over already still in process..] ... find out time matchings and levels..... if we get it ..... then we can say this way.... with out seeing sreen .... what is the time 11.04 am... axis bank price is 928... just buy for me delivery pick..... 14th day it will touch nearest point of 988... dont ask me just sell it off... like this....

the day will come.... [ if we r alive we can ..bcoz personally i dont believe or obey in tomorrows].......

bye
veeru
chennai boy

[rk_a2003]

TRADING ATTITUDE


"Posted: 10 Oct 2011 10:33 Post subject:
________________________________________
magic number 4888 rockeddddddddddd again..................how to trade u knew.....4890 low "

This is the Post of Our Original Expert Veerappan, now where are we on 14th at 5132.For us who observe his calls time to time and wonder what magic does he have and why they are so successfull? I am not saying that his calls never fails, like any other method/strategy they do but the predefined loss is very less and when they click the profits are huge. And they click quite often.

Just to know in what stage we are in .How we can evolve ourselves and transform ourselves in to 'veerappan'? to know you need to go through this Extract, which I read in a book.the comments in parenthesis are mine not original.



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Changing with the market comes from many years of experience. Newer traders have the most difficult time changing with the market because they do not have a feel for the markets. There is no experience of market moves, no understanding of what drives markets, and no abilities to follow their beliefs based on limited knowledge. Many professional traders have a feel of where the market is headed and are able to build upon positions based on this feel. Before traders can understand this level of feeling, they must spend years working on the mechanical ideas presented to them within their trading system. Whether it is short term trading or even investing, there has to be an understanding and experience derived from a trader’s interaction from the markets? The more familiar the mechanics become over time, the more a trader can act automatically on market opportunities.


Markets change constantly. It is a dynamic environment that shows changing indicators, patterns, and moves, but it is based on a few common things. These are things like fear, greed, panic, and disagreement of value. These underlying aspects to the markets cause volatility and constant change. Traders will continue to trade their patterns and indicators until they no longer work. In this sense, a trader will cease to exist if he does not learn to adapt to the changing of his patterns and indicators relative to his belief system. A trader must be just as dynamic as the market but with a set of rules that enables him to profit handsomely when he is right and cut losses immediately when he is wrong. Traders gain this ability by years of hard work. The notion that a trader can trade for one or two hours a day and play golf the rest of the day sounds nice, but if a trader really wants to be consistent over time, he needs to dedicate himself to his progress. The idea is not to become a part of the market, but rather to let the market become a part of you. Once the market is inside you, you will gain that feeling that is needed to change with the markets. Getting to this point takes many years to do so and it is a process that never ends due to the dynamic nature of the market.( this must be the stage where Veerappan sir is standing)


You can become more in touch with the mechanical sides of trading in some very simple ways while you are learning. Once you begin to make the mechanical side of your trading more automated, the bridge to your mental state can start to develop. The most obvious start is for a trader to associate himself with better traders. At the beginning, this isn’t a very hard step. However, I am surprised at how many traders come into the trading game with their pre-conceived ideas and are unwilling to accept any information from colleagues. They figured that they had been around the markets long enough that they had nothing to learn or be taught. They found out months later that they needed to expand their willingness to participate with those more knowledgeable than them. The idea behind this association is to build a trust with that individual to teach you the mechanics behind trading and to correct any misinformation behind market moves or other aspects of trading.( but it is really difficult to find a knowledgeable mentor who is capable to guide you, Casper sphere heads in it in this blog at the moment.)

Once a trader begins to understand relatively simple aspects of trading, they have a foundation by which to accept or reject further information stemming from their current knowledge base. Once they get a reasonable sense of the markets, they need to begin to build some expectations for the future both within themselves as well as their chosen system.


Many traders fail to plan their strategy in the beginning. This can be seen in poor planning of their capital base or their willingness to jump right in the market with their money without understanding why they are entering the market in the first place. Remember that there are no minor leagues in trading. You step up to the plate with your money in hand and the best traders in the world are happy to take it if you let them. Market Makers and professional traders are trained over many years to trade the markets. They have more knowledge than you and are able to capitalize richly on this knowledge. This is where a trader must again devote and commit to trading as a profession. A trader must carefully track his or her system on a daily basis. There needs to be a foundation for the system being utilized that fits you and how you feel about the markets. Regardless if the trading system is scalping, short-term trading, or momentum trading, you must carefully keep track of the way that system provides opportunity throughout the day. A trader needs to get a feel for different periods of the day as some may provide more opportunity than others.

[umesh1]

[rk_a2003]

How Can We Be Objective ?! A Millon Dollor Question?

All of us knew that being objective with the market will pay’s of.And also it’s almost equal to achieving highest level of consciouseness.Which is really really a difficult task if not impossible. Look at us.... We are Full of GREED,FEAR, AGONY,DISTRESS, JEALOUSY and ENVY, RIVALRY ,OVER CONFIDENCE, UNDER CONFIDENCE,ANGER.... with all these instincts How can we be objective?!.

If it needs decades of interactions with the Market , If it needs assimilating the market with you , If it needs that some one has to say Hey! Look at this man he is the market! and market is him.. If it needs overcoming and mastering all your interfearing instincts, if it needs strengthening and elevating your positive instincts like love, sympathy, modesty, sociability, constructiveness, acquisitiveness.

What is the use even after achieving it?!. Once you achieve that stage you may no longer need the benefits you will get out of it. What a parodox?! To get some thing you need to achieve a stage and after achieving that stage you may no longer need that thing.

Still, there could be an intermediate stage.And we need to move ahead what so ever may happen in future. To help all of us in this journey;Giving the following extracts taken from a book in a synopsis form . Read it.



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So far we have talked about market dynamics in general terms. Now it is time to narrow it down into more practical terms. A daytrader who plays the same game over and over again, over time, will get slaughtered when the market changes. What worked yesterday and the day before may not necessarily work today. Agood trader can change with the changing market. It is a simple understanding of these forces and how they affect a stock’s movement. If you can master these concepts, you too can have your own crystal ball.


This concept has many separate components, so I have broken them down into five basic sections: sector strength, historical marketstrength, market strength (macro-momentum), daytrader strength, and micro-momentum strength.



SECTOR STRENGTH

To determine sector strength, I monitor 5 to 10 stocks in the sector I am watching with the highest volume (from the previous day). If a sector has gapped up, and the stocks are all running like wildfire, I score it as a +10. If they are all aggressively dumping and have gapped down, I give it a score of -10. Generally, they will be somewhere in between these two extremes and are scored accordingly. Once a sector is hot for a period of 2 to 3 days in a row, the momentum catches on and any positive news will greatly affect a stock.

If the sector leaders end near the high end of the price range for the day, they are excellent candidates for position plays that I will hold for longer periods. Once a stock or stocks in a sector end below the midrange on the day, I exit the long-term trade. Many times you can have a fairly neutral market in which nothing much is happening, but one sector will be hot and moving. write down the sector strength number and then move onto figuring out the market strength score.



MARKET STRENGTH

Market strength is the strength of the general market that day. We determine market strength in two ways: 1. Watching first-day gainers gapping and volume prior to the open 2. Watching second-day gainers for follow-through buying volume and gapping. Note that the gapping and volume will normally be a bit weaker on second-day gainers than first-day gainers. A market strength of +10 would be first-day gainers gapping up a large percentage with huge volume just prior to the open and second-day gainers following through, gapping up on large volume. Amarket strength of -10 would be the exact opposite. Note that market strength as we use it is not a normal indicator. In other words, you cannot listen to CNBC for comments such as “a strong market is expected today”; this is not the same type of indicator.

If I see big gapping on first-day gainers but second-day gainers are not participating with gapping and volume (or even gapping minimally), I will consider open shorts to be very good. If everything is gapping up from the open a large amount, I will consider the possibility of a strong run-up from the open and will not short anything. I may also consider buying the first up-tick instead of waiting for the first bottom. If I see gapping fade near the open, this will be a tip-off to early profittaking and I will short. This fading trend is very important to understanding how the open selling will go. If first-day gainers are trending down before the open, it will indicate selling pressure. The same is true for first-day gainers; if the gapping is trending up or climbing near the open, I will expect buying and a possible run-up. Once I determine and give the market strength a score, I write it down and move onto the historical market.



THE HISTORICAL MARKET

Although the historical market has the least effect of all the indicators, it has an effect nonetheless and needs to be factored in.Selling pressure climbs as the market climbs and buying pressure climbs as the market dives. Those are my general rules. Each bottom or weakness will bring in buyers to some degree and each top or market strength will bring in sellers. For historical market implications, you do a bit of both in that you track the gainers for selling pressure as a market climbs and track for buying as the market retreats. You must take the historical market strength into consideration. If the historical market strength trend has been up, the daily market strength is up, and the sector strength is up, you have a powerful combination and you must play it accordingly. Once I give the historical market strength a score between+10 and -10, I move onto the daytraders indicator.



DAYTRADER STRENGTH

To determine daytrader strength, I watch the small stocks and look for unusual runs. On my screen, I put up the hottest 10 small stocks. I look for the following things:
• The initial runs to see how far up they go (what percentage)
• The bounces at the bottoms to see how much they bounce
• Where the stock ends up at the end of the day (that is, near the high, middle, or low)

I also watch to see if stocks peter out or run strong on the initial runs.If they peter out, that indicates that a lot of daytraders are losing money on residual bounces and are not playing them anymore. If stocks are running up big on their initial runs, bouncing big at the bottom, and ending up near the high of the day, I would consider the daytrader strength score to be high. Daytrader strength is also measured by the reaction of stocks to news, especially on CNBC or in chat rooms. The initial climbs and the selling are good measures of how active they are. At times, good news will not move stocks very much, indicating they are a group of losers. Other times a CEO burping can cause a 20-percent move in the stock. When daytraders are very active, you can get days in which the gainers will oscillate with very good potential most of the day. You can learn to evaluate this indicator by tracking stories and watching how they react to that news. Once I give the daytrader strength a score between +10 and -10, I move onto the micro-momentum.



MICRO-MOMENTUM

This is the most important indicator, but it must be taken into context with all the other indicators. This is the force affecting the individual stock and the daily swings a stock will make. This is what causes a stock’s momentum, what gets the stock rolling. A number of causes, such as analysts’ opinions or estimates, publication stories, news releases, hype in chat rooms, splits, or even a simple mention of the stock on CNBC or other news programs, can cause this momentum. The number one cause for this momentum is news. Although we touched on the news pattern earlier, it warrants a closer look when discussing market dynamics. Remember, as I stated earlier, the street always overreacts to news. We need to learn to rate the value of news and how it affects the momentum of a stock.


PUTTING IT ALL TOGETHER

Do not concentrate on any one part of this five-part equation alone. For example, a great story, a huge short-term earnings potential, a huge gap up on good volume, and an end up near the high of the day yesterday sound great. But if the sector strength, historical market strength, market strength, and daytraders strength are all weak, you may not get the follow- through you expected. You must look at all five indicators. The very definition of dynamics implies change. As a result, these values need to be assessed all day long. A good trader must keep track of first-day gainers and second-day gainers to reevaluate the values on an ongoing basis. The worst environment to trade in is one in which the indicators are all pretty much neutral. Panic buying or selling is always the best for us. This rule of movement and extremes is why our best and most predictable trades are those that have moved at least 20-percent.

(PS: We will look in to a few scenarios with multiple combinations of the above equations with different ratings and what it mean to the Market Momentum in my next post which will be definetly usefull even to seasoned traders)

[rk_a2003]

My laptop broken...... yet to be fixed. Using another one.

Could not post the follow up extracts as promised.

Mean while........ an extract highlighting the importance of Money Management.



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Two tales of foolish woe

Not convinced of the importance of risk management?

Consider the following hotshots who managed hundreds of millions of dollars and posted amazing returns . . . only to lose it all under difficult market environments when you can differentiate the skilled from the amateurs. Victor Niederhoffer: Dr. Victor Niederhoffer is a well-known hedge fund manager and statistician with an impressive resume: Harvard undergrad with a PhD from the University of Chicago. He taught finance at the University of California, Berkeley, in the 1970s. You’d think that if anyone knew about risk, it’d be Niederhoffer. Niederhoffer launched his own hedge fund and did quite well: He posted annual returns of 35 percent per year for several years. One popular magazine even named his hedge fund the number one fund in the world in 1996. But remember that trading can be deceptive, and the appearance of success can be illusory.


Niederhoffer’s party came to a crashing end in 1997. His wrong bet on Thai bank stocks coupled with a major decline in the Dow Jones IndustrialAverage caused Niederhoffer major losses and forced him to shut down the fund. All those glorious gains in prior years were wiped out. Had Niederhoffer better diversified, invested in more liquid assets, and not used heavy leverage, he may have walked away with a few bruises but the ability to fight another day. Despite his major setback, Niederhoffer launched a new hedge fund in 2002 and, remarkably, was awarded a prize for the best performing fund in 2004 and 2005. But — and I kid you not — his fund was closed in September 2007 after suffering a decline of more than 75 percent following the sub-prime market collapse and credit crunch. “He is his own worst enemy,” Nassim Taleb, the author and derivatives trader, says of Niederhoffer. “One of the most brilliant men I have ever met, and he wastes his time selling options — something nobody can have any skill in — and it leaves him vulnerable to blowing up.”


Long Term Capital Management: Long Term Capital Management (LTCM) was a hedge fund founded in 1994 with two — count ’em, two Nobel Prize winners in economics on its board of directors. With people that smart steering the ship, there was no way anything negative could happen . . . or so it would seem. (As you may be catching on, portfolio returns and intelligence seem to be negatively correlated.) In the early years, LTCM posted incredible returns: 40 percent on average. But the firm used extensive leverage (borrowing money to amplify possible returns — for example, using $1,000 to buy $2,000 worth of stocks). A crisis in Russia sparked major losses in LTCM’s positions, and the firm went bust. LTCM failed because it took on extraordinary leverage and because its risk management system assumed markets would become efficient, meaning security mispricings wouldn’t persist or widen. Markets aren’t always rational, and during periods of panic, they become very irrational.

The point of these examples isn’t to convince you that a Nobel Prize in economics or a degree from Harvard won’t save you from the possibility of blowing up. In fact, it’s nearly the opposite: These things may be a greater hindrance than a benefit! Why? Perhaps degrees from top schools or Nobel Prizes make individuals arrogant of the risks that are present in the market. After all, if I know everything and the market is moving in a direction contrary to my thoughts, then clearly the market is wrong. That kind of thinking can kill your stock portfolios.

[freedom]

[veerappan]

rk have u seen 5353 on friday games?

[peace69]

if I know everything and the market is moving in a direction contrary to my thoughts, then clearly the market is wrong. That kind of thinking can kill your stock portfolios.

[codered]

[rk_a2003]

A Refresher on Trading and Investing


1.Always keep booking profits and taking cash out (try to recover your investments and play with your profits only).

2.Never mix your trade, i.e., if you play for intraday, square off your positions at the end of day. Do not convert your intraday into delivery in case trade moves against you, as you can never get a chance to get out of your position if they keep moving in the same direction.

3.Never try to average in a falling market, wait for the market to stabilize, and then try to average (some people are of a view that you should never average and instead use that money to buy some blue chips at cheap prices to strengthen your portfolio).

4.Always trade with a predetermined amount of money that you have set aside. Do not keep pumping in more money in hope of recovering your losses. If you could not make it before... No guarantee that you will make it this time, so it is prudent to stop trading, wait for some time, rethink your strategy, cool down a bit, and then decide to venture again or not.

And don't venture in again just with a hope... there should be a solid and scientific reason in support of it.Incase you can't get one.... stay away till you get it.

5.Always try to follow what you have decided to do. Do not change your trading strategy just because some one recommended it.

6.Always maintain some cash or safe investment like fixed deposits and don’t break them to invest in shares just because you feel that you will get far better returns here.

7.Don’t trade on a daily basis.

8.There are at least 5 to 7 days in a month when the signals are pretty conclusive. Trade only on those days and the profits for the month would be much more.( That's why there is a saying that the most of the Trading and Investing is waiting game )

9.Do a lot of reading and do your own analysis and research for trading.

10.Never make yourself dependent on any broker. Their calls will rock on for two days. Thereafter you will become overly dependent on them and then they will give wrong calls and run away with your booty. These brokers are hand in gloves with operators. So always do your research.

11.Use the calls given by others only as an aid. Trade only if it tallies with your own findings.

12.Never utilize your capital at one go and don’t ever listen to experts and tip providers.

13.You have to trade and learn from your experience.In this aspect books will do nothing and trade with real money .Just paper trading and playing virtual stock market trading games is nothing but waste of time. The truth is that you have to have losses to learn and…… real loss not notional.( That's why there is a famous saying on stock market ...If you come with money you get experience and if you come with experience you get money)

14.Most important thing is having control on your desires. Anyone can get distracted easily and may take huge risks to earn huge money with the kind of opportunity available here, so it is important to control yourself, but that quality too comes in you when you suffer losses.

15.Don’t panic in bad times.

16. Keep learning and at any point of time do not think that you know everything; otherwise, there can be unpleasant surprises in store for you.

17.Don’t day trade in momentum stocks.

18.Don’t play on margins.Never ever trade them without a Stop Loss( They are potential land mines…. You may wrecked at any time)

19.Ride the momentum in the early phase and do not underestimate both the bulls and bears. Both have the capacity to turnaround on their own.

20.Never invest big in your initial phase of the trading career irrespective of blue chips or high/low beta stocks.

21.Never go blindly by anyone’s recommendation in a huge way.

22.Patience is the key to success. An example of a successful trader, “I started to invest from October 2009 and still not seen green shoots but I will surely see one day”.

23.In case you think that trading is not your cup of tea then consider long term investing. You will never lose money with proper long term view. Just buy and forget and actual earning from equity is not speculation or trading. Actual gain that you will earn in long term is dividend and capital appreciation. The best way is to go 10 year backwards and watch out any old stock prices as compared to now. But the key for guaranteed success in this approach is picking them at attractive valuations.(probably at this time every one will be selling them and you will be among the few who starts accumulating them )

24.Intraday trading looks very attractive especially for beginners, whereas they should be staying away from it. But those lessons can only be learnt after burning fingers.

25.One good long term Investment is better than hundreds of stock trades.
Avoid only sticking to intraday trading. You may make money in one or two or at the most few days but at the end you will definitely lose (unless you are an expert day trader).

The best way is to invest for a longer term. Pick up fundamentally strong companies, buy them at bargain price, and then hold them until you have a substantial profit. You will realise that eqity provide extraordinary income over the long term with least risk.

And finally I don’t think that anything mentioned above is new to you …..It’s just a refresher.

[ajayhkaul]

RK it is good ,nevertheless, to revisit some tenets so traders don't get carried away

[rk_a2003]

Does A Method Need Secrecy To Continue Its Success?


Sometimes I wonder Is it the way to keep any method as a secret to protect the profits.Initially I too thought that once a successful Strategy/Method/Tactics……. has become popular it may lose its edge.

But afterthoughts slowly changed my opinions. Now I feel that

• There is no way that a new method getting widely accepted and practiced instantaneously in mass.

• Still in case it gets instantaneous popularity and practiced by wide sections it further guarantees its success for a certain period of time.

• It may lose some of its edge( just edge not relevance) when it is over popularized and people start getting out even before meeting targets and getting in even before entry signal made.

• Look at classical double tops and bottoms they still give you fair amount of success for a simple reason that majority of the traders look for them and jump in to take positions after the formation.

I have not heard of a Double Bottom/Top traps! Do they exist? like a Bull Trap or Bear Trap.


I only can say this secrecy attitude arises due to other reasons whatever it might be.

What happens to human kind if the inventor (or his descendants) of the fire keeps it as secret or claims patent and demand all who ever using it to pay the royalty? The same applies to Wheel, Bow and Arrow, Cultivation, Carpentry, Metallurgy what not…every sphere of technology including modern science.

The Human society is sustaining/developing not because of secrecy and confinement because of sharing and passing on knowledge.

However, I might be missing some crucial points otherwise why this secrecy attitude persists?

[vinay28]

However, I might be missing some crucial points otherwise why this secrecy attitude persists?

The point you are missing is the sense of insecurity rk. Some people become wiser with experience and some just don't. Habits always die hard.