Trading Nifty

[Gaurav Kumar]

Dear Friends,

As Ashish may say a pattern failure today. MArket just failed to rise. However, i do not see a change in pattern of the market and so we should see the market go up tomorrow. The market may have scared traders into shorting Nifty..

I for one am confident of its move up tomorrow

With best wishes,
Gaurav Kumar

 

[Gaurav Kumar]

Trading Nifty- A quick review

Dear Friends,

The market did not behave the way i thought it should have.

Needless to say as and when that happens, i check as to why i could not get it right. To say the least it means i overlooked some possibilities and became a bit rigid in my analysis when i thought that the support of Dow's big move should be good enough to see the market move to 4400 levels..

In my mind, i had been thinking in terms that the market should go to 4400 and then come back to 4300 level after a couple of days.. so i overlooked another possibility.

As i said in a post a few minutes back i did not expect the gap to be filled today... (even though in my personal capacity i had placed an order at that level as already stated in the post prior to that). That did cause me to change my target for the day.. But the possibility that the market may close around 4308 level on the future struck me only at around 3.10 p.m. A definite failure on my part....

Anyway, what is clear is that until and unless there is some earth shattering news from international markets, we are at some sort of a bottom and the market is set to rise from here. We should expect 4400 levels again, and we will review at that stage, to see whether we go right upto 4500 levels also.

So no harm done at all except a bit of M to M, which is well under control.

With best wishes,

Gaurav Kumar

 

[aroymkp]

And what if the market crashes down from here - how will that be handled

 

[Gaurav Kumar]

And what if the market crashes down from here - how will that be handled

Good question,
one which i expected.

Before i go further, the chances of market crashing are very very low. But cannot be rigid on that, so lets say what can happen and how i would handle it.

Let us say that in a worst case scenario, the market opens 150 points down and does not close its gap. Nothing can be worse than that?

I am hilding two long positions and on net margins am about 2000/- down. With a starting sum of 75000/- i would not have any option of hedging with short nifty future. Yet 150 points down from here would still leave me with just about money to buy a put option. That is a part hedge only and not good enough.

so i must work out where Nifty would stop before recovering. this takes time and the answer i can give only in the morning, as i am still working it out.

Let us take a hypothetical situation that nifty opens at 4150 does not fill the gap and i see it going down to 4000.The obvious thing would be to first and foremost to close out the nifty long position taken today at a loss and short for the next month (assumption i have not taken a put option yet)

My loss would be about 180 points on this nifty, and i would be down about 180 points M to M on another nifty i still hold. Then with the perfect hedge. I could now buy a put, and if i am sure that we shall see 4000 level might as well exit the remaining long position and short that also.

In any case, the worst case scenario presents me with many possible ways to handle it. Does not look very elegant when presented ( not as elegant as my trades so far), but there are more aces up my sleave.

Last but not the least, survival depends upon the ability to undertand where the market would reach and how it will or will not bounce.

One may question that i did not seem to be right today, so i may be wrong tomorrow. Agreed, i could be but the question of survival depends upon money management techniques that stem out of hedging. There are many hedge techniques, which can be used to survive. Once the market stabilises you can again prosper. So i dont worry.

With best wishes

Gaurav kumar

 

[Gaurav Kumar]

Dear Friends,

Let me make a statement. Whatever happens to the US market we are not going to see a huge fall at the opening. So the concerns voiced by a member to whihc i replied a few minutes back are unfounded.

Let me say one more thing. Huge gap down openings are preceded by some signals. Take the huge gap down opening the day following the CRR hike. Though i missed out on that the market would open with a huge gap downwards, the signal of the impeding market falls were clear from the market patterns.

similarly, today's close gives an indication of an impending rise. Assuming that markets in US fall dramatically and our economy is to be badly affected by that, and assuming the market does fall here also and also assuming that the market falls a huge amount, let me assure you that the opening cannot be a huge gap down. At worst it would be few points down, would fill the gap and then fall. That sort of a pattern would enable us to exit comfortably and go short.

So the possibilty of the worst case scenario that i took up in my previous post almost does not arise.

with best wishes,

Gaurav Kumar

PS - A few minutes back Dow was 50 odd points down. Let me assure you i am not scared nor am i worried.

 

[Gaurav Kumar]

Dear Friends,

The Dow ended up in positive territory after all.

For those who follow the US markets closely, i would expect the US markets to remain steady tonight also.

So there does not seem to much to worry from international markets at least for now (we are of course ignoring another market that does have a significant impact the world over, ie the Chinese....)

I would stick to what i was saying yesterday... market are to go up, so there is nothing to worry and we shall book profit on our purchase yesterday.

With best wishes,

Gaurav Kumar

 

[rkgoyal_98]

Let me say one more thing. Huge gap down openings are preceded by some signals. Take the huge gap down opening the day following the CRR hike. Though i missed out on that the market would open with a huge gap downwards, the signal of the impeding market falls were clear from the market patterns.

similarly, today's close gives an indication of an impending rise.

Kindly tell us What are the patterns U are talking above for Gap down and impending rise. That will help us to look for such things in futures. It will be very good if you can open a new thread and discuss there all patterns.


Thanks
Rajeev

 

[Gaurav Kumar]

Let me say one more thing. Huge gap down openings are preceded by some signals. Take the huge gap down opening the day following the CRR hike. Though i missed out on that the market would open with a huge gap downwards, the signal of the impeding market falls were clear from the market patterns.

similarly, today's close gives an indication of an impending rise.

Kindly tell us What are the patterns U are talking above for Gap down and impending rise. That will help us to look for such things in futures. It will be very good if you can open a new thread and discuss there all patterns.


Thanks
Rajeev

Rajeev,

As i have said in my earlier posts, my study includes psycology in addition to TA, fundamentals and economics. As a result the patterns do not come out of charts (though i do use many standard TA tools like RSI, Moving averages, ROC, etc.)

I believe that it is the big players who decide where the market is to head. What i do is to try and think as a big player would think.

So the patterns come out of psycology rather than charts..While TA can be taught, this is not easy to explain..All i can say is think like a big player...You can gain only if the larger population looses.... this is because secondary markets are nothing but transfer of wealth.... You can gain big only if many loose.. their loss should be small enough to keep them coming back and of course they should gain also once in a while or they would quit..

Think of how you would manipulate a gambling game if you have a rich but unskilled person in front of you. How would you manage to strip that person's wealth totally?... Think about Shakuni who duped Yudhistar into loosing everything he owned (if you have read Mahabharat carefully you would be aware that Shakuni once played with Yudhistar and lost heavily...that of course was delibrate but Yudhistar did not know.. So in the actual game later on Yudhistar remained never realised he was playing against a master manipulator)

That is what big players do...or at least that is my belief.



With best wishes,

Gaurav Kumar

 

[uasish]

Let me say one more thing. Huge gap down openings are preceded by some signals. Take the huge gap down opening the day following the CRR hike. Though i missed out on that the market would open with a huge gap downwards, the signal of the impeding market falls were clear from the market patterns.

similarly, today's close gives an indication of an impending rise.

Kindly tell us What are the patterns U are talking above for Gap down and impending rise. That will help us to look for such things in futures. It will be very good if you can open a new thread and discuss there all patterns.


Thanks
Rajeev

Sometimes a simple traditional RSI can also show us.

http://www.traderji.com/106637-post329.html

 

[Gaurav Kumar]

Sometimes a simple traditional RSI can also show us.

http://www.traderji.com/106637-post329.html

I agree Asish,

The question is of reducing errors in interpretation. all these are simply tools which are to be used.

Gaurav Kumar