Come into the Trader's Den

[Smart_trade]

No activity in the Traders' Den in the new year ?......Let me post a chart of Nifty Futures 30 min timeframe to show possible trade and add locations and trailing down of Stops last week..........

Best wishes for a great 2011 for everyone....

Smart_trade

 

[Smart_trade]

One more chart.....Bank Nifty Fut 30 min Timeframe...........down ...down and down.....

Smart_trade

 

[anuragmunjal]

One more chart.....Bank Nifty Fut 30 min Timeframe...........down ...down and down.....

Smart_trade

hi ST
nice illustrations. I feel these two posts of yours are enough to teach anyone on ' how to trade'. I have this one small doubt, according to ur system, there should have been an add on the last 30 min candle in bnf, but it was not taken. was this becos it was a low probability trade since the market had been down for an extended period and was aproaching its close or was this due to some other reason...


regards

 

[Smart_trade]

hi ST
nice illustrations. I feel these two posts of yours are enough to teach anyone on ' how to trade'. I have this one small doubt, according to ur system, there should have been an add on the last 30 min candle in bnf, but it was not taken. was this becos it was a low probability trade since the market had been down for an extended period and was aproaching its close or was this due to some other reason...


regards

Hello Anurag.....thanks for the kind words coming from you as always......

Very keen observation.....yes you are right.......but that add was not taken because the method requires that after original position plus 3 adds we need some sideways action giving us time correction to take further adds. Or we need to crack long term support to take further adds without time correction.

Same thing in NF chart....it shows 4 adds as possible add locations but we have taken only original plus 3 adds......

Best Wishes,

Smart_trade

 

[AW10]

No activity in the Traders' Den in the new year ?......Let me post a chart of Nifty Futures 30 min timeframe to show possible trade and add locations and trailing down of Stops last week..........

Best wishes for a great 2011 for everyone....

Smart_trade

IMO, new year wishes do work.
I think people who traded this chart with adds, have got the perfect start of 2011 trading year.

Happy Trading and wishing you lot more green trades in year ahead..

 

[tnsn2345]

Dear Friends,

The below content is w.r.t. my post in S'72's thread, Lost 13 + 3 Lacs...

........

For all those like me who were exposed to computers almost at the fag end of our acedamics period, would have played a computer game called 'Dave', though today it looks like a primitive game (as compared to the gaming gadgets available today), this game (Dave) caught fancy of many of my generation and hooked people onto b&w CRT monitors for hours (including me).

You may ask why I am refering this game now (well almost more than 15 years since I played it for the first time), because this game is what trading and how markets are. It can teach risk management, patience, positioning, and all those things what trading involves today.

Firstly, the game... At the start you have 3 lives (Dave - which appear on the top right hand of the screen) in addition to the one Dave which is already there on the main screen. So when one Dave dies, one life is reduced and 2nd Dave comes and plays the game. The moment a life is gone the game is reset to the beginning of the level in which the life has gone, so you begin again.

This is similar to asset allocation for trading, never put everything at stake on one trading portfolio, divide it into 3/4/5 equal parts and play the game. So if you are a day trader, allocate funds 3 / 4 part of your day trading funds and use only one part at a time, other parts are your buffer.

Because had there been only One Dave in the game, then completing all the 10 levels was just impossible.

Similarly, if one part is gone (which will some day or the other when you are caught in the firing line) then the second part takes it's place and the game continues.

Now the second point, as you lose life in the game, and you keep adding points (in trading - money) another Dave becomes alive after completion of 20k, 40 k points, similarly in trading as some parts keep getting blown, the profits are accumulated, hence after reaching a certain set profit, more parts allocations should be created for trading portfolio.

The third point, there are various monsters, spiders in the game (Dave), and you need to patiently study their movements, before attacking or escaping from them, similarly in trading patience helps. In this game (Dave) there is no time limit / timer, so you can have all the time in the world to plan and make move, and so also the same applies to trading, there's always going to be a market tomorrow, so you can wait.

The fourth point, in the game there are Jetpack which are used by Dave to help him fly and achieve his mission. The jetpack have timers and would get exhausted after the fuel is over. And the jetpack are not available all the times, they are there only are certain places and for specific use. Similarly in trading, I can correlate them to Options. Options are NOT available all the times to profit (especially by going long on Options) there are only fewer ocassions when Options can benefit (Long Options), and they carry timer too, so just like Jetpack in Dave, go Long on Options (only when opportunities are there) and get out (i.e. before the Jetpack is over).

Fifth point, there are traps at various places and there are diamonds at places Dave cannot go, still they are there, they are only for the purpose to attract him and not for him to get them. Similarly in trading, there are things which are beyond our reach and understanding, it is better to give such fake / spurt opportunities a pass instead of being carried away and taking a hit below the belt.

Lastly, and the most important, once I finished and master this game (like any other computer game) you know what and when things will happen, you know it is a programme and your mind knows exactly what to do. Similarly in the markets NOTHING NEW EVER HAPPENS, yes nothing new ever happens. It's all the same every day, week, month. If you eliminate the noise and just see the charts (forget the news, TV channels, newspaper etc) you will realise that, we as humans try to put name / tag to what is happening in the market viz, inflation, GDP data, interest rate, Oil prices, CRR hike, FII inflows etc etc etc. but this is just the tagging we do to what has happened in the market. So if you elimiante this noise TOTALLY and just SEE what is happening and NOT HEAR what is happening, you will too conclude that nothing new ever happens in the market. And it is so then, it is just like our computer game - Dave, where you know what is going to happen the next level and your mind is programmed to act accordingly to win the game and the market.

Hope this was not too much for you all to comprehend Dave (or any other similar computer game) to trading, thank you for bearing with me.

Regards,

p.s. : I still have 'Dave' on my laptop and also the Desktop, now with a LCD screen monitor and play this game as and when time permits.

 

[PGDIMES]

Dear Friends,
For all those like me who were exposed to computers almost at the fag end of our academics period, would have played a computer game called 'Dave', though today it looks like a primitive game (as compared to the gaming gadgets available today), this game (Dave) caught fancy of many of my generation and hooked people onto b&w CRT monitors for hours (including me).

Hope this was not too much for you all to comprehend Dave (or any other similar computer game) to trading, thank you for bearing with me.

Dear tnsn2345,

The analogy between a primitive video game called Dave(I think Mario was another game of that generation) and trading is completely mind-blowing.:clapping: It reminded me of an analogy between water and energy. Similar analogy can be made between playing chess and trading...

 

[tnsn2345]

Hi all,

Pls let me know your views on below plan.
What should I add in it to make it more robust?

Aim : Earn 3% profit/week excluding brokerage on invested capital

Observation : Nifty option prices as below when NS is at 5885
A)Sept 5800 : CE 138 +PE 28 = Total 166
B)Sept 5900 : CE 73 +PE 58 = Total 131
C)Sept 6000 : CE 30 +PE 113 = Total 143

A(166)-B(131)= 35 ( 27% higher than value of B)
C(166)-B(131)= 13 (9% higher than value of A)

Conclusions :
1. Above data indicates that at money CE+PE cost is cheaper as compare to far money option.
2. If market moves in any of the direction then CE+PE pair will move at higher value.
3. Normal movement in Nifty is >100 points in week. I mean to say this week's close is 5885 hence next week, it will at least touch once either to 6000 or 5800 level on one of the day.

Plan:
1. Buy option pair CE+PE of same strike price when NS is @strike price (+/-10points) on every Monday
2. With above example 5900 CE+PE will be bought @131.
3. This means target for sell will be 136.9 (Rs3.9(3% profit) + Rs2(Brokerage for both lots)
4. Target should get achieved if nifty moves by 100points in either direction within 3-4days (based on the data given in observation section.)
5. Square off position on Friday in case target is not achieved. (As time decay will eat premium value during weekend)
6. Take fresh position on next Monday.
7. Do not take position in same month's options after 20th of every month as premium loss will be high due to time decay. (With this logic I have to take position in Oct series on Monday)

Expected returns :
1. 12%/month if all four weeks target is hit.
2. 6% if one of the week market is range bound & does not move even 100points in whole of the week. This mean ~3%loss in that week & 9% profit in other 3weeks.

Adavntages:
1. Do not have to predict trend for market. Any side movement is fine with you.
2. Open positions are hedged hence risk is lower.

Dear RRMhatre,

For CE 5900 @ 73, Theta is 3.65 and for PE 5900 @ 58, Theta is 2.02

Total Theta on your position is 5.67, hence your price of your pair will reduce from 131 to 125.3 at the end of FIRST DAY itself if the market closes flat, unless there is spurt in volatility. So on the next day itself, instead of 100 points of Nifty swing you will require 150+ nifty swing to make profit of 3%. It this does not happen on the second day again the value of pair would reduce approx by the above amount and you will eventually sink.

This strategy of buying ATM Call and Puts (Long Straddle) should do well only if you expecting volatility to increase (and that too sizeably) and you expect big move either side (something we saw when the election results were out more than a year ago). Very rarely one gets conditions to trade this strategy.

You may back test this by randomly picking 10 - 15 data points in the last one year and my guess is hardly you will find encouraging result.

Regards,

Dear AW,

Was refering some of my old posts today (alone today at home since the weekend :-( ) and found above posts posted in Sep 10 and in this thread itself.

This is in relation to our disucssion on writing Option in another thread 'Trading Nifty Options?'. I thought I should represent it here.

I took this trade (NO writing Options on such 'predictable day') and was rewarded handsomely.

Regards,

 

[4xpipcounter]

I have often used that same analogy, and likened myself to it. I remember in 1980, when I owned my insurance business, I would call my clients and move their appointments up, because I was busy at the video arcade playing Mario Bros along with other favorites of the day. I still enjoy playing video games.
My favorite? You got it! Watch my charts, and executing accordingly. The difference is instead of putting money in the machine. I watch the pips mount up on each trade, which translates into its dollar equivalent. So, instead of putting money in the machine, I collect money from the machine, namely my home computer.
The comfort level is a little higher. Rather than the cold confines of an arcade where no food and drink are allowed, I now have my home computer, with food and drink next to it, and my little buddy, Tucker (in the pic) on my lap.

Dear tnsn2345,

The analogy between a primitive video game called Dave(I think Mario was another game of that generation) and trading is completely mind-blowing.:clapping: It reminded me of an analogy between water and energy. Similar analogy can be made between playing chess and trading...

 

[4xpipcounter]

http://img197.imageshack.us/i/93077147.png/

I don't trade Nifty, but I do notice all the clamor concerning it, so I found a chart on it, applied my methodology to it, and decided to add my 2 cents to it.

There are strong obviations on the monthly chart for future direction of this market, but all the data does not print accurately, and so the weekly will at least give a good sketch of what to expect. MT, the minimum expectation is 5088.50, which is the top of the weekly cloud. There is a pattern of strong divergency on the monthly, which would indicate the top of the weekly cloud will be taken out, and we will see 4907, and reckon a further drop beyond that.
A bearish engulfing candle has developed on the monthly, so along with the divergent pattern, it is also implied the market should see circa--4700.
Of course it will take several weeks for this whole pattern to fully develop, but I would reckon the recent peak made in November at 6341 is going to hold for a long time.