Though the CRR hike was anticipated & the hike was announced on mkt on thursday itself but you thought it is discounted as even after hike the mkt went up,but OK got your point. You are very meticulous in your plan & ready with contigency plan B also,so on Friday pre-mkt it seems the contingency plan didnt took into a/c about a Huge Gap down ,OK that is also possible but after seeing that Gap ,didnt it spark you to Sell Double ? Or you thought let the Day end & let me read the movement ,after that in cool mental frame i will work out a way out.
As it seems now you went for the 2nd option.Frankly i fail to understand ,as you can judge the 'Price Zone sentiment area' very well than many others,then why you did not Sell (not even double but plain vanilla holding) at 10.15 on Friday with SL (only to cover later on the day) ,this jobbing ,your & our type of trader always do with holdings whether in cash or derivative.
Dont tell me you where paralysed (which i dont believe) ,jobbing is not booking loss.Only those can take recourse to jobbing ,who are more confident about Price levels (becoz if it boomerangs & hit SL ,then both bird in hand & bush gone).You have also demonstrated your uncanny accuracy of price levels.
I was just trying to read your mind.Still now i firmly believe you will come out of this successfully ,but analysing these kind of situation in my trading life i have seen a riskier selling double or simple jobbing pays.
Plz share your experience in this,i always look forward to enrich myself from good traders rich experience.
Dear Ashish,
You have got my thinking almost right. Let me correct a few things....
I did not think that the market had discounted the CRR hike. What happened was that the market after the initial fall, came back to 4460 level very quickly. As the market was expecting a 25 basis point CRR hike, the actual hike of 50 basis points was totally unexpected. As a student of economics (I prefer to call myself a student, even though i teach the subject at a Business School), i was very surprised at the quantum of the hike.
To be honest i was not anywhere near the terminal, when the hike was announced. i got the news on phone from one of my friends (i have a network which will give me relevant news when i am not online). The initial shock and the fall to about 4410 levels was on expected lines. But what does one do in such a situation? Instead of booking a loss which would have been 120 points, i waited for the market to recover, which it did. My pattern analysis meant indicated that the market should come back to 4460 odd level before it goes down. So if i had to exit from my long position that should have been the level.
But another thought crossed my mind, that the market was poised for 4700 levels prior to the CRR hike announcement. this meant that the market pattern prior to CRR hike would also hold value and may take the market up to 4550 levels. Of course that could not be certain. So instead of exiting the long position and shorting, i simply hedged at 4460 levels.
Next of course i should have exited my long position before the close when the market hit 4530 on the nifty future. However, i thought that there was a strong possibility of the market hitting 4550 in the morning next day in the first few minutes before falling. As i said earlier that was a mistake in the hindsight.
Once the market opened with a huge gap, had i exited my long position i would have booked a loss of 150 odd points. You would note that the maximum the market lost after that is another 100 points in intra day trades, with the market closing above 4300 levels every day or a 200 points M to M. this is what i had studied overnight. In my view the market seemed unlikely to go below this level. So instead of booking a 150 point loss i prefered to wait. Had it been 50 points instead of 150 odd, i would have booked the loss.
You have correctly understood that i did not want to take a decision in intraday trades and waited for the close. This is because i had analysed that the market is bound to return to 4500 levels this month. In any case, many decisions taken during intraday trades dont work for me ( i prefer saying that instead of saying intraday decisions are often wrong, as day traders would be up in arms against me). I have done my share of day trading and abandoned it.
Finally , i could have exited and shorted, but i was anyway holding a short position (in the form of a hedge) which i covered 100 points down and booked a profit. So effectively, i brought the price of my long position down from 4530 level to 4430. Since then i have managed to get the effective cost of my nifty further down by another 100 points. Now the obvious question would be why this rather than exit totally and short?
The answer is that i still believe we shall see markets at 4700 levels and yes even 5200 levels. So i prefer to be long rather than short. Had i seen a level of 3500 from the patterns i would definitely have reversed positions. As of now you can read it this way that i am effectively sitting on a long position acquired at a net cost of 4330 odd (having booked 200 points profit in the meantime)
Finally, Dow has moved up 286 points today. What if nifty opens up sharply and does not look back? With a long position, i am well poised to take advantage of this situation, where as those who have exited all long positions may have to buy at higher levels.
Finally the final word, it took me 7 years of learning to figure all this..The biggest benefit is that i no longer require to sit 5 1/2 hours on my terminal. I go out without fear. For about 20 days in June i was touring, without my laptop and the only thing i used to do was to call up my broker in the morning and give him instructions. My friend network would just sms me 3-4 times a day to give me an idea of how the market traded..I was in a position to do decide without the use of all the tools like TA (even though i do use TA also as a tool).. what it did mean that in June i was not able to make as much money as i would have had i been online, but still its a far cry from the days when i used to fear leaving the terminal even for 5 minutes.
Hope that answers everything.
With best wishes,
Gaurav Kumar
