Sensex

Monday, November 30, 2009

RE: [Technical-Investor] Information overload & Random thoughts

 

My own take on this –

 

1.       In our journey as a trader/investor OR in general in capital markets, we will come across many who are more knowledgeable (theory) and experienced (practical) than we are. We'll also find people who start off in the markets after we do J

2.       What happens is that when we see the more experienced ones trading successfully,  we follow (OR do we stalk??) them regularly in an attempt to know (a) what books they've read, seminars they've attended (b) who taught them about markets etc. Ofcourse, most of them being the generous souls they are share this freely.

3.       Next attempt is to read up the same books and find out what's in them that made experienced traders to be as successful they are. Ofcourse, take-away from a book is different for each person that reads it.

4.       Frequent chats/email exchanges too will follow.

 

So far all points are good because, it's all theoretical. I'm quoting from any book here. I've done most of these things myself in my initial years as a trader/investor, from a point of view that the other person always knew more than I and did the right trade more often than I did.  J

 

5.       The practical aspects of trading is the more challenging part and no book teaches you this.

a.       Elements  of a successful trader –

b.      Reducing losses –

c.       Admitting your mistakes (to yourself) –

 

In my discussions with experienced traders, (a) I've realized they understand their money very well. Secondly, (b) they have a plan and they stick to it. And thirdly, (c) they are quick to realize mistakes and correct the course.

 

(a)    What do I mean by understand money very well ??

 

I mean to say – if you have 1L to start with, clearly you can't be trading many stocks, can you ? So, limiting yourself to 1 or maybe 2 is the first mandate. (Many of us do this as well, until we come to know of someone doubling their capital in some other stock – that's when the stock-switching starts!!). An experienced trader doesn't switch-stocks (irrespective of his available trading capital) because someone else made more money than he/she did. They know their time will come J - Patience is the key here.

 

(b) Plan – Have a trading plan

 

Entry, exit criteria and SL's are paramount J and from my interactions, they stick to it irrespective of what happens.

 

( C ) Mistakes –

 

Realizing that a trade is not going your way and making quick corrections is something an experienced trader does much better than starters.

 

Note - I've inferred the three points from my discussions with some of the experienced folks here. I've made lots of mistakes in my trades as well. Sometimes, I break my head as to why I made them. Sometimes, I don't. But the larger point is – Am I learning from my mistakes and getting better ? If I'm learning from my mistakes, than I'm in the right direction.

 

Finally, looking for a direct solution from others (in terms of calls, when to buy and sell) doesn't really help in sharpening one's skill. Each one needs to develop a method/plan that suits their style of trading and stick to it. Even a simple MA cross over will give results (as shown by another member who follows it diligently and gets +ve results!!!) but how many of us follow it for extended period of time ??

 

Such things call for lots of discipline and patience. Those that persevere with these, will succeed more often than others.

 

Cheers and Good luck to all !

-Girish

 

From: Technical-Investor@yahoogroups.com [mailto:Technical-Investor@yahoogroups.com] On Behalf Of Brijesh Janardhanan
Sent: 30-Nov-2009 12:52
To: Technical-Investor@yahoogroups.com
Subject: Re: [Technical-Investor] Information overload & Random thoughts

 

 

Sorry, I couldn't help posting some thoughts on this subjects. Apologies if I hurt anybody's sentiments.

I do not know why people are flattering themselves by calling themselves "newbies" or "juniors". Does calling that give them more leeway to make mistakes? Does market treat a newbie a little softer? If you are giving your self an allowance/excuse to make mistake, you are more likely to make that mistake.

Mistakes are important to learning process but in market (unless you are very rich) quality of mistakes is important not the quanity.

Forums may have seniors but not the market. Everyone is a newbie in market. So drop this crutch of 'newbie'ness and get on with trading.

Prashanth, Abhijit, Pankaj and others have given more wisdom than we would ever need to become great traders. If we truly understand their points, there is no need of e-books or anything. Do we really understand what they meant(?) that we are out searching for another e-book?! Have you really understood their posts or just glanced over it?

Hope I am able to get my point across. Just some honest opinions.

 

Happy trading,
Brijesh

 

 

From: PRS PTL <galaxypvhd69@yahoo.co.in>
To: Technical-Investor@yahoogroups.com
Sent: Mon, November 30, 2009 8:47:46 AM
Subject: Re: [Technical-Investor] Information overload & Random thoughts

 

there's no seniors by born. seniors became senior from junior. seniors can advise how to become senior. juniors can benefit and learn from real experienced one's posting. if moderator feels overflowing and vesting of space and time by juniors, they can monitor and filter posts. but only seniors allowed will not do good for seniors. as i have said before, juniors have their own importance. they can do field work and some time, reveal something new that seniors unable to pin point. think there should be relation like teacher-student between seniors-juniors. juniors' qestion will force seniors to be updated. thus both side benifit. it's win-win situation. both side should understande and take advantage. no good to language. expect to pardon. all the best. thnks.

From: FLOYD JOHNY LEWIS <fjl24@yahoo. com>
To: Technical-Investor@ yahoogroups. com
Sent: Sun, 29 November, 2009 11:24:00 PM
Subject: Re: [Technical-Investor ] Information overload & Random thoughts

 

Hi Abhijit

 

Agreed to everything you said except the last line.

 

That was not only a bit too harsh but below the belt too.

 

What i inferred by your last line was - that this forum is only for the Seniors and know all's if that be the case then i think i am in the wrong forum.

 

It is quite possible that we may have gone overboard in all our excitement - but there was no intentions whatsoever to overshadow the Seniors.

 

Prashanth and moderators - would be grateful if you could let us know whom this forum is for??? as would not like to violate the forum rules innocently nor post in a forum which is only for the know all's.

 

Well seniors not joking this time though.

 

Regards

Floyd

 

 



--- On Sun, 11/29/09, Abhijit <ap19632000@yahoo. com> wrote:


From: Abhijit <ap19632000@yahoo. com>
Subject: Re: [Technical-Investor ] Information overload & Random thoughts
To: Technical-Investor@ yahoogroups. com
Date: Sunday, November 29, 2009, 12:30 PM

 

The newbies need to think, why in spite of my caution, it was me who has posted 2 trading strateies over the last 10 days - actual trading strategies, and not just text book stuff. (I know someone who made a huge profit in Suzlon futures and he thanked me personally after booking profits - I told him to book at 78...long from 64 I think - in futures).

 

If you wish to let me be just a bystander, knowing fully well what repurcussions it will have, then so be it.....it is like the teenage kids nowadays (those who have teenage kids will appreaciate) - no matter what you advise, they will do what they want.

 

So keep on posting tons of material, and at the end of a few weeks, few months, please do not end up where you are now.

 

When Pankaj and me said we have gone through all this, it has some meaning guys.

 

In the last 10 days, from my memory, following are the strategies that have been posted:

 

MA crossover, OOPs, 200 E to S crossover, MACD, Stochastics, ADX, RSI, 12range bar, and some more.

 

Tell me honestly, when the market opens tomorrow---- which one are you going to use?????? All will give profits some times, all will give losses some times.

 

Finally it is your temparament and money management that will save you, and not ONE strategy.

 

Have you ever wondered why other seniors have not posted anything and why TI has become almost a 'newbies' forum now???

 

AP

 

 

 

 

 

 

----- Original Message -----

From: Prashanth

Sent: Sunday, November 29, 2009 9:28 PM

Subject: [Technical-Investor ] Information overload & Random thoughts

 

 

Hello,

 

This month has been a record of sorts in this group. For November (which is still to end), we currently are having the largest amount of mail sent in any month from the start of this group. Thankfully, most if not all messages are worth the read and hence the overload is bearable to a extent.

 

I see a lot of interest in reading books, checking out seminars, etc. That is all the more wonderful since there is a huge amount of knowledge that can be used out there. But as AP rightly said, reading everything without focus just because its available out there (and for free) can actually hinder a person rather than helping him grow.

 

Based on my own perception, to newbie's and even experienced guys, it may seem that one is comparatively not well acquainted and worse taken at face value (both here and elsewhere), everyone seems to be successful while one is not so successful. While there are and will indeed be few successful traders, its important to understand what success means from their own viewpoint rather than assuming success to be able to make lots and lots of money.

 

Success in markets can be very subjective. A person who has a full time job and in addition trades / invests in the market may feel that he is successful if he can make around 20 - 25% a year. For a full time trader / investor, such returns are not even considered since they have a much higher satisfaction level.

 

Being in the markets for over a decade, I can say one thing with Guarantee, not many offer to say the truth. Ask any one in the market and all of them seem successful which is theoretically improbable. A Investor may find success in few stocks, but conveniently forgets the larger number of duds he holds. A trader on the other hand showcases specific instances of success while at the same time not exactly pointing out that using the same strategy he also has had pretty had months.

 

There is no holy grail in the markets that work and catch all trends. On Friday, we had a massive move of around 100 point on downside from open and then a further 150 points on the upside. No such strategy will exist that can potentially catch both the ways. If one focuses on eating everything, the only thing that will be eaten is the trader's capital.   

 

Statistics says that around 75 - 85% of options expire worthless. In the series of November 09 for example, on a approximate calc basis, at end of trading on Thursday, 90% of options were worth Rs.5 or less (and hence all the options can be assumed to have expired worthless). This does not have to mean that selling options is a better option. Infact, if you are not having sound knowledge of both TA and option theory, selling options carries more risk than buying options.

 

Persons like AP, Vish among others are very experienced professionals and thus while it may seem that trading options is very easy, please do understand that such performance is because of huge amount of experience that they have had over the years.

 

For anyone starting off in the Investment world, please do note that many members here who contribute liberally are established players. While it will be worth observing them and asking them questions, trying to copy their record is a sure recipe for disaster. Its would be something like a person who just having seen a doctor perform a easy surgery think that surgery is easy and try the same without grasping the details and the experience the doctor possesses before he has ventured into surgery.

 

I have seen too many cases of financial ruin and hence I believe in being conservative when approached by newbie's. The idea is to first survive in the markets, you can always thrive when you are really ready.

 

Cheers & Happy Trading

 

Prashanth

 

 

 

 

The INTERNET now has a personality. YOURS! See your Yahoo! Homepage.

 

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Posted by nsivaa at 2:16 AM

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