Archives of “January 3, 2019” day

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How to know when to exit your position?

  
  Education
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This started as a quirky post but quickly turned into something probably more useful. I admit the post is based on personal experiences. Luckily, I do not make these mistakes any more….at least not very often ;). Enjoy!

1) It is time to sell when…..you find yourself using extra technical indicators on charts to justify holding your position that you didnt use to get into it in the first place!

2) It is time to sell when…..you find yourself going to yahoo message boards to see if someone has some positive news that you don’t know!

3) It is time to sell when…..you find yourself justifying to yourself holding a position for fundamental reasons when you entered it for technical reasons!

4) It is time to sell when…..when you listen to an ” Idiot expert” on Blue Channels  or Joker Analysts Websites  to chart a stock checking for entry when you are already in it!

Let me know if you readers have any other such fun “indicators” and I shall add them.

9 Rules by Nassim Taleb’s Risk Management

  
  Education
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Rule No. 1- Do not venture in markets and products you do not understand. You will be a sitting duck.

Rule No. 2- The large hit you will take next will not resemble the one you took last. Do not listen to the consensus as to where the risks are (that is, risks shown by VAR). What will hurt you is what you expect the least.

Rule No. 3- Believe half of what you read, none of what you hear. Never study a theory before doing your own observation and thinking. Read every piece of theoretical research you can-but stay a trader. An unguarded study of lower quantitative methods will rob you of your insight.

Rule No. 4- Beware of the nonmarket-making traders who make a steady income-they tend to blow up. Traders with frequent losses might hurt you, but they are not likely to blow you up. Long volatility traders lose money most days of the week.

Rule No. 5- The markets will follow the path to hurt the highest number of hedgers. The best hedges are those you alone put on. (more…)

The Hidden Variable in Your Trading Success

  
  Education
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Most traders realize that trading involves a lot of psychology. And most traders readily admit that a significant portion of their trading losses, or lack of performance, is due to “psychology”. Although the term ‘psychology’ isn’t always mentioned as an explanation, you can see it easily enough in the following statements ……”I froze just as I was about to pull the trigger”….. ”I hesitated and missed that trade and was so pissed that I got myself into an impulse trade right after”….. “That large loss was not what I wanted, I held it thinking it would come back because last time I bailed out of this type of trade I got stopped out right before it reversed”….. “I was really nervous about losing money again so I got out of my winning trade way before my target”

Those are four common examples of trading psychology issues manifesting in one’s trading. Do you recognize yourself in the above statements?

All four of those statements have in common one thing, fear. Whether it’s the fear of not being perfect, the fear of being wrong, fear of losing money, fear of missing out, the fear of not being approved by others, or some other fear, the common theme is fear. Most trading mistakes are a maladaptive attempt to deal with fear or anxiety.

Emotions like fear and anxiety cannot be eliminated; it is part of the human experience. But how you respond (your behavior, the action you take in response) to anxiety and fear will determine how successful you are as a trader. Some traders recognize this and do something about it; they learn to work with the fear and anxiety to reduce the chance that they’ll continue to fall into the same old behavioral response pattern to fear and anxiety.

Fear will never disappear. Yes, maybe some days you feel more ‘in the zone’ and fear is less of an issue, but most days you’re probably not in the zone; and on those days the fear is unavoidable. Most likely, those are the days when you have your largest losses. The question is, what are YOU going to do to work with the fear? If you cannot eliminate fear, you must learn to work with it, use it to your advantage. Emotions are a form of self-communication; you need to learn what the message is (e.g. If this trade loses I won’t succeed as a trader) in order to begin to learn how to control your actions in response to the fear and anxiety. Your performance will not change until you learn to manage yourself differently when experiencing fear and anxiety.

BSE Sensex :Below 17897 ,My target-17448-17298

  
Analysis, Education
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-Above is the Daily chart of BSE -SENSEX.

-Just see IN 6 days crashed by 428 points after hitting a high of 18047.

-Look at Negative Divergence on RSI (Same u will see in Nifty Future chart too )

-MACD is in sell mode.

-Just remember these levels :Crucial support for Sensex -17748-17298.

-In this fall it will try to kiss these levels.

-Suppose break and closes below 17298 level for 3 days then Iam expecting slide to continue and panic can take Sensex upto 16849-16699 level.

-Above levels are valid till Sensex not crosses 18047 level.

-101% No need of Watch Blue Channels or Read Pink papers and Pay money for Subscription.To know trend and levels for Sensex and NF ,I will do free of cost in this Blog only.

To know more about Intraday trading calls/Commodity trend/Crude /Forex /Global Indices & Stocks ,Just send me at [email protected]

Updated at 7:17/16th April/Baroda

The Racing Line of Trading -Trading Wisdom

  
Analysis, Education
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I was watching a formula one race the other evening and it reminded me of the racing line. The racing line is the direction, speed and angle in which a driver goes through a corner. Come in too far from the inside, your exit will be poor. Too far out, someone can pass you. Come out of the corner perfectly but be in the wrong gear, you’re toast.

I was thinking how many times traders hit a trade entry well but don’t have the right leverage (wrong gear). Or come in too far from the inside and spin out before they complete the corner (capitulate with too much leverage).

Effectiveness Is the Measure of Truth

  
  Education
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In trading as in life, effectiveness has to be the measure of truth. If something doesn’t work, there is no point in continuing to do it. Misperceptions, false unconscious or conscious beliefs, and unhelpful behaviors can contaminate and desecrate your most sought after results.

Imagine the frustration of a trader who perceives that a market is changing direction when in fact it is persisting in its original thrust. Or consider, for further example, an investor who bought into the belief that buy and hold is a valid investment strategy. That investor had to have experienced devastating losses over the past year. Or ponder the trader who repeatedly fails to utilize stop losses and experiences numerous outsize losses because he won’t accept a loss.

When you choose effectiveness as your measure of truth, you can learn from your mistakes. You can make plans, take action, receive feedback, and assess the results. You can revise your plans, take new actions, receive new feedback, on and on, until you find a viable strategy that will work most of the time.

When you fear loss, when greed overcomes you, when you get reckless, or when you hesitate, you become grossly ineffective. When you’re confused or ambivalent yet think you need to take action, you do yourself no good. In each case you need to sort through your thoughts, develop a clear focus, search for the high probabilities, and take prompt and calm action. (more…)

Greed and Fear Are Two Sides of the Same Coin

  
  Education
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Merriam-Webster’s dictionary defines greed as simply “… a selfish and excessive desire for more of something (as money) than is needed.” Greed is often referenced as one of the main contributors to trading loss. Greed mangles the mind by distracting the trader from what matters most in the trade, which is quite frankly to protect your capital by prudent planning and following rules. It also distorts your judgment regarding high probability strategies and effective follow-through.  Additionally, it is the other side of the fear coin; that is, greed can arguably be thought of as a fear of not having “enough.”  Of course, having enough is a purely subjective notion, but for the reasonable person, someone who wants more, more, more as in getting every cent in a move, or wanting more than one’s share, is considered “greedy.”  Whether we’re talking about the fear of loss or the fear of not having enough, either way it is a very difficult emotional challenge to getting the trading results that you want.  Now, the question is what do you do about those bouts with fear/greed that takes your trading effectiveness south?  The important thing of course, is to manage your fear/greed one trade and one incident at a time.

Managing errant emotions is one of the most important trading skills that you can develop. Emotions are an inextricable part of being human and cannot be totally taken out of the trading equation.   However, you wouldn’t “want” to take emotions out of your trading even if you could. Yes, negative emotions throw a monkey wrench into your process; for instance, anxiety, fear, greed, guilt, self-doubt, impatience, apathy, to name a few are what mangle your thinking.  (more…)

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