Simple analysis

[RSI]

As Iyer's analysis predicted, today DLF has breached the Rs 800 level and went down although it recovered a bit by close. Now it is worth watching whether it will go below 785 which is a support level.

Congrats Iyer, for the accurate analysis

Regards

-Anant

Dear Anant,

Thanks for the compliments.

But please note, whatever I say about future possible movement of price or its direction, they are not "predictions". All members please note that point. I always analyse and give reasons on what basis I am saying that this is the possible future movement and this is the possible future direction. That is my opinion. Note those words "my opinion". Market seldome cares about anybody's opinion. It will do what it wants to do. All that we have to do is to align ourselves in the path of least resistance. Some use the expression "dancing in accordance with the tune played by the market".
When I "predict" and if things do not go along the way I "predicted" there will be lot of ego and there will be extreme difficulty in accepting the reality that market is not moving as per my "prediction". Note how "I" comes here. This delay in accepting the reality and still lingering with my prediction will certainly be perilious. It will wreck me both financially and psychologically. Trading can be a tedious job in such a situation. So do not believe in "predicting" nor attempt to do any such thing. On the contrary make it a habit to analyse things deeply, make deductions on the basis of analysis and thereafter go in accordance with what your analysis says. Inspite of all such analysis, you may miss a point or two or sometimes it may so happen that market will simply turn upside down without any warning and all your analysis may go wrong. That is where stoplosses and other stuff come. The quicker you dance in accordance with the tune played by the market, better will it be for your well being. The quicker I accept that my analysis is wrong, lesser will be the loss and damage.

Hope I made the point clear. No offence meant to anyone including Anant.
Thanks and regards
R. S. Iyer

 

[RSI]

Continuing on business of predictions, I found this post in one of the threads in another forum. I could not express so beautifully as done in the copy pasted post herebelow. Here it is

"Boy, do I ever agree with this. I have to remind myself when trading not to try to predict the market. It really limits me. I consciously try to use "anticipate." When I see, for example, a sign of weakness, I then anticipate no demand. If that occurs, I then anticipate an upthrust. If that occurs, I can take the trade. Thinking this way helps me be more patient -- something I am always working on.

I remember reading from Mike Douglas that in the markets, "anything can happen." Sometimes, it seems, that anything does happen. When I am predicting, I start to narrow my mind and filter out contradictory information. I am not open to what the market is telling me. The "anything can happen" seems to occur more frequently when I am predicting, because I'm not in tune with the market. I can't tell you how many times I have taken a short, the market goes down a bit, and then paints a low volume, narrow range bar with a decent close. Because I was predicting, I ignored this signal that the market was likely going to attempt a rally. When I am trading well and anticipating, I can "see" the market better and I am out of the short on the next open.

This was such a problem for me for so long, I started keeping a journal just on this. I called it, (name omitted) and recorded every time I did this. Slowly, I began to realize that predicting the market was feeding my ego. Every time I predicted and the market did as I predicted (mind you, I was never in those trades!) I felt self-satisfied. In reality, was fooling myself that I really "knew" the market and "understood" it. I came to learn that for me, prediction = ego, and getting my ego involved is a stupid way to trade.

I found that predicting limits my trading. I don't see alternatives, I have more losses, and I miss opportunities. Anticipating is such a better mindset."

I sincerely hope this post helps many.
Thanks and regards
R. S. Iyer

 

[RSI]

Do you know that your weakness itself can be harnessed to your advantage? Agreed, most of us are trading in miniscule number of shares, which is grossly insufficient to move the market in any direction. But have you realised that this itself is your advantage? You can have quick entries and exits in and out of markets as many times as you wish that too without turning the price against you by your own action.

Please do not misunderstand this post. I am not advocating overtrading.

 

[uasish]

Continuing on business of predictions, I found this post in one of the threads in another forum. I could not express so beautifully as done in the copy pasted post herebelow. Here it is

"Boy, do I ever agree with this. I have to remind myself when trading not to try to predict the market. It really limits me. I consciously try to use "anticipate." When I see, for example, a sign of weakness, I then anticipate no demand. If that occurs, I then anticipate an upthrust. If that occurs, I can take the trade. Thinking this way helps me be more patient -- something I am always working on.

I remember reading from Mike Douglas that in the markets, "anything can happen." Sometimes, it seems, that anything does happen. When I am predicting, I start to narrow my mind and filter out contradictory information. I am not open to what the market is telling me. The "anything can happen" seems to occur more frequently when I am predicting, because I'm not in tune with the market. I can't tell you how many times I have taken a short, the market goes down a bit, and then paints a low volume, narrow range bar with a decent close. Because I was predicting, I ignored this signal that the market was likely going to attempt a rally. When I am trading well and anticipating, I can "see" the market better and I am out of the short on the next open.

This was such a problem for me for so long, I started keeping a journal just on this. I called it, (name omitted) and recorded every time I did this. Slowly, I began to realize that predicting the market was feeding my ego. Every time I predicted and the market did as I predicted (mind you, I was never in those trades!) I felt self-satisfied. In reality, was fooling myself that I really "knew" the market and "understood" it. I came to learn that for me, prediction = ego, and getting my ego involved is a stupid way to trade.

I found that predicting limits my trading. I don't see alternatives, I have more losses, and I miss opportunities. Anticipating is such a better mindset."

I sincerely hope this post helps many.
Thanks and regards
R. S. Iyer

Aptly described,thks Mr Iyer,

 

[sanx]

Do you know that your weakness itself can be harnessed to your advantage? Agreed, most of us are trading in miniscule number of shares, which is grossly insufficient to move the market in any direction. But have you realised that this itself is your advantage? You can have quick entries and exits in and out of markets as many times as you wish that too without turning the price against you by your own action.

Please do not misunderstand this post. I am not advocating overtrading.

^^ Please explain in detail with an example .

Thanks for the other post of iyer's .

 

[RSI]

^^ Please explain in detail with an example .

It is explained in my previous post itself. But if there is any further doubt let us take a hypothetical example.

Imagine that I am trading in DLF shares. How much shares do I buy or sell? 50? 100? 200?. What is the average volume of DLF in one exchange (NSE) per day? Nearly 1.25 million to 1.5 million. Whether my buying of 50 or 100 shares make such a huge difference to the price of DLF? Answer is absolutely not. But think of a large fund or a HNI who is dealing with 1 lakh shares per day (this figure of 1 lakh shares is only imaginary just to give an idea that it is large holding when compared to overall traded volume per day or for that matter any number shares that is quite large in the context of the traded volume in the time period in the chart you are looking at). Now imagine that such a person is stuck with his inventory of DLF shares and the market suddenly starts to go down and our large holder has to exit. Can you imagine what will happen to the price if he were to offload all his inventory when the price has already started to come down? Price will crash by the selling of the large holder described me above. He might have intially thought of a price for his 1 lakh shares. But he will be in for a nasty surprise when the market crashes. So he has turned the price against himself by his own selling. Thus he has to incur large loss by his own selling. Now think in the reverse. Such a person wants to acquire 1 lakh shares of DLF and even before he begins his acquisition, price starts to move up. What will happen if he were to buy in a hurry? Price will explode like anything. Now compare myself/yourself in such a situation. I can buy at the desired price even if the price has started to move up without incurring significant loss. Similarly, I can sell or even wait for the formation of the top because my quantity of 50 shares or 100 shares can be disposed off quickly without incurring much loss.

Since I am trading in such a small quantity, I can even afford to take trades in a small trading range. Whether I take it or not is a different question. But whether a big guy will dare to trade in large quantity when the DLF is moving in such a small trading range, say 10 or 15 rupees per day? That again explains as to why volume is very low in trading range.

This is what I meant by harnessing my weakness in to strength.
I sincerely hope this has clarified all your doubts
Thanks and regards
R. S. Iyer

 

[Tapaswi.S]

Dear R. S. Iyer,
You are too good, the way you illustrate and explain, even a newbie can understand comfortably. I think you keep newbie in mind while explaining.
anyway thanks for your analysis. Please keep posting

best wishes,
Tapaswi

 

[RSI]

Dear R. S. Iyer,
You are too good, the way you illustrate and explain, even a newbie can understand comfortably. I think you keep newbie in mind while explaining.
anyway thanks for your analysis. Please keep posting

best wishes,
Tapaswi

Dear Tapaswi,
Thanks for the encouragement and compliments.

But keep in mind the title of this thread. It is simple analysis. Let it be trading or for that matter anything else, one can easily grasp and follow only when it is kept in simple form. Learn to recognise the simple things in life. We are easily overawed by complexity and we have the bad habit of appreciating complexity that too unquestioningly. That should not be the way of life or for that matter trading. When I go deep in to any matter, and when I reach foundation level, I am surprised that it is as simple as that. Then I am ashamed about myself by realising that I missed them only because I was running behind complexity, still worse, I did not understand the structure of basic foundation.

I am aghast at the way matters are being taught and learned at school. Be it science subjects or maths, we should first learn its basis in a simple manner and thoroughly. I am extremely sad to see that it is not being done in schools. That is why we are having half baked products every where.

Anyway, thanks to you once again for bringing up this matter and giving me an opportunity to speak my mind on this.
Thanks and regards
R. S. Iyer

 

[AmoghG]

Very valuable thread, please don't let this get buried on the second page onwards. Traderji please make this a sticky.

 

[asnavale]

Dear Anant,

Thanks for the compliments.

But please note, whatever I say about future possible movement of price or its direction, they are not "predictions".

... ... ...

Hope I made the point clear. No offence meant to anyone including Anant.
Thanks and regards
R. S. Iyer

Hi Iyer,

Yes, I agree with you that it was a wrong word to use when I said "predict". But, really I was not getting the correct word. I too did not mean "predict". You have correctly put it as "anticipate". At the time of writing I did not get this word. Thanks for correcting me.

Now we can see how the simple analysis has shown us where DLF is going and what to anticipate further.

Please continue the simple analysis and enlighten us all. I also request other members to come forward with similar examples and bring out their views by applying the simple analysis.

Regards

-Anant