Wednesday, December 15, 2010
Saturday, December 11, 2010
Saturday, December 4, 2010
Patience Please - From BkForexAdvisors.com
Patience Please
Want to know what is the greatest enemy of most traders? Patience. Most of us simply get in and out of our trades way too quickly making our entries too early and taking our exits too fast. For those of us who trade on intra-day basis the problem is even worse as we are often tempted to trade just for the sake of trading and one impatient decision can erase half a days work.
As speculators we have only only one true edge in the market - selectivity. Investors have much more capital than we do and are able to weather wide swings in price. Market makers have much better information on flow and while making money from bid ask spreads. Both of those participants can remain in the market on near permanent basis. As traders we don't have such luxury. But we do have one serious advantage - we don't have to play the game when there is no meaningful activity. We can sit on the sidelines for as long as we want. Unfortunately, that's something that very few of us do.
I certainly can't do it very well. My need to be involved often trumps the good sense to be selective and I wind up paying for my impulsive actions over and over and over again. In fact I know that if I was more patient my P&L would improve markedly.
Depending on your time horizon trading requires two different types of patience. If you are a short term intra day trader patience in timing is much more important than getting an optimal price. Essentially you need great patience in entry since your targets are relatively close and will likely be hit if you are correct in your analysis of the price action but so will your stops if you are wrong. On the other hand longer term positional traders typically have much wider stops, so they can often survive the ebb and flow of intra day price action but have a difficult time in holding their position to the target profit. Basically short term traders needs patience with their entries, while longer term traders need patience with their exits.
One of the great ironies of trading is that we often focus all of our energy on money management and never consider the importance of patience to our overall success. After a while almost all of us learn to take stops, to avoid doubling down into losing positions and to control our leverage, Yet few of us work on learning how to be more patient which ultimately may be the true key to long term success.
As speculators we have only only one true edge in the market - selectivity. Investors have much more capital than we do and are able to weather wide swings in price. Market makers have much better information on flow and while making money from bid ask spreads. Both of those participants can remain in the market on near permanent basis. As traders we don't have such luxury. But we do have one serious advantage - we don't have to play the game when there is no meaningful activity. We can sit on the sidelines for as long as we want. Unfortunately, that's something that very few of us do.
I certainly can't do it very well. My need to be involved often trumps the good sense to be selective and I wind up paying for my impulsive actions over and over and over again. In fact I know that if I was more patient my P&L would improve markedly.
Depending on your time horizon trading requires two different types of patience. If you are a short term intra day trader patience in timing is much more important than getting an optimal price. Essentially you need great patience in entry since your targets are relatively close and will likely be hit if you are correct in your analysis of the price action but so will your stops if you are wrong. On the other hand longer term positional traders typically have much wider stops, so they can often survive the ebb and flow of intra day price action but have a difficult time in holding their position to the target profit. Basically short term traders needs patience with their entries, while longer term traders need patience with their exits.
One of the great ironies of trading is that we often focus all of our energy on money management and never consider the importance of patience to our overall success. After a while almost all of us learn to take stops, to avoid doubling down into losing positions and to control our leverage, Yet few of us work on learning how to be more patient which ultimately may be the true key to long term success.
Thursday, December 2, 2010
Sunday, November 28, 2010
Options/futures data for 26th Nov (EOD)
Summary:
1. Again as we saw on Thursday, the DEC Options data is not displaying that bearishness we have seen on the screen in the last few days. Just take 5800PE vs 5800CEs - the 5800PEs are massive 51L vs 24L 5800CEs (even after a 100% increase in 5800CE OI on Friday).
2. 5900 seems to be balanced level with a negative bias. Given that there is only 9L difference between PE/CE, it could go either way depending on whether buyer or seller is strong
3. As of now, 5800 is the support and the 6000 is the resistance. Below 5800 there are good supports at 5700 & 5600
4. PCR dipped on Friday from 1.32 to 1.26 - but these are still much higher numbers than what we saw in last few days of Nov expiry (around 0.97-1.08)
Nifty Futures:
2.49Cr OI down 3.87% (10L shares cut)
Banknifty Futures:
14L OI flat
Wednesday, November 24, 2010
Sunday, November 21, 2010
BHEL - Will the real culprit for the fall in this stock please stand up?
I have no freakin idea why BHEL is falling. It did report decent results (despite bad overall IIP numbers). A tank in futures from, 2712 to 2235 is almost 17% fall!!
Daily chart:
Daily chart:
On daily charts BHEL has already reached the lows seen during 25th May (when Nifty nit 4800 level). When all major EMAs don't provide any support, I am looking for POC from march 2009 (@2255) and VWAP @2165 to provide support.
An interesting thing is the BHEL was the first one to bottom out in September 2008 and by March 2009 when Nifty revisited 2500 levels, BHEL didn't revisit the lows. Now BHEL seems to be the first one to fall. Déjà vu?
Monthly MP monthly chart:
Monthly chart shows that any bounce to 2378 might be sold into and next big resistance will be 2450-2465 (monthly VWAP/VAL of previous 2 months)
OI Story: OI has gone down more than 20% from the time it reached 2700+. OI that got added from tank day of 2490+ to 2434 immediately got cut in next two days. Now DEC futures have seen much bigger OI addition (almost 7m) from 2420 levels. Shorts are getting rolled over now.
If Nifty tanks badly from here, BHEL could relly head to 2185-2165 range because those shorts will not go without making money!
Sentiment:
Karvy recommending a short in it from 2265-2260 for target of 2185-2200. Brokerages recommending short after 18% fall from peak ==> may be its a sign of bottoming?
What's the Risk?
The Government is acting like a sucker and announcing FPOs for any PSU that it can given investor appetite shown for COALINDIA. So even though everything about BHEL might be good but if Govt announces some stake sale (which typically market makers will already know) one might get screwed buying the dip!
Examples are - SCI, MNDC ..
What's the Risk?
The Government is acting like a sucker and announcing FPOs for any PSU that it can given investor appetite shown for COALINDIA. So even though everything about BHEL might be good but if Govt announces some stake sale (which typically market makers will already know) one might get screwed buying the dip!
Examples are - SCI, MNDC ..
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