Trading Nifty

Gaurav Kumar · #61 31st July 2007, 02:34 PM

Quote:

Originally Posted by yoogi

Dear Gaurav Kumar,

I also dont like stop losses mainly becasue most of the time you see the stock/index bounce back just after stop loss. But I understood that it is an important MoneyManagement strategy.

Say if I want to use 2 lack rs for trading one particular tip/strategy. Then I must make full use all the 2 lack rs to gain maximum profit on that tip. So If you say Buy one lot Nifty now, I need to find out how many nifty I can afford to purchase.

If there is a stop loss, say
Buy Nifty @ 4500, ST 4350, Target 4700,

I, allowing slippage and opening gaps, would need MTM money for 200 points below purchase price in case if I make a stop loss of 150 points below purchase is recommended. So I will decide to buy about 20 lots, nifty. I risk all my 2 lack, to gain 2 lack rs

But if you are going to say hedge by buying/selling an option or selling physical shares instead of using a stop loss, how can I manage my money. So that is the reason why people recommend with a stop loss. It is a simple tool with which one can manage money effectively.

So if you think your strategy works best, calculate your liquid cash reserve needed (for MTM margins, brokerage / purchase costs for options..), margin cash (from stocks held) needed for your strategy before the start of trade.

So dont avoid explaining your hedging strategies. Because we need to know how much money we need to deploy and then we'll decide what is the actual return.

You could be cool, if you have 10 lack in your trading account and play with one Nifty contract, you can afford to loose 50% on nifty and still exit with 200 point profit when it bounces back.

Dear Yoogi,
Your point is fine with me. But as you have rightly understood, i dont invest my full fund.

I also do not react on tips...

As far as funds that are required, you dont trade on one future with one lakh of rupees.

What you need is to trade with about 40-65% of your funds at most, depending upon diversification of your portfolio. If you are diversified more you may go up to about 70 -75% of funds.

If you invest the full amount wanting to take maximum advantage of a tip, the moment the stock or nifty would fall even a few points, you are in trouble and your stop loss would be triggered.

As i say to others, MARKET KAHIN BHAGA NAHI JA RAHA that we should be desparate to make money in the very first tip we get. We can make money in the market whether it goes up, down or move sideways, so i am in no hurry. As long as i get abnormal returns from the market i am happy.

Wait and see the percentage returns i make.

With best wishes,
Gaurav Kumar

kavidhev · #62 31st July 2007, 02:35 PM

Hi ,

Can we exit the september short nifty. Market is going up fast.

plz advice.

thanks,
kavidhev

Gaurav Kumar · #63 31st July 2007, 02:36 PM

Quote:

Originally Posted by loosingstreak

What time frame do you trade/refer? I hope you do not mind my asking.

Dear Loosingstreak,

My horizon is normally anything from a couple of days to two-three weeks in nifty and upto 6 months in stocks

With best wishes,
Gaurav Kumar

Gaurav Kumar · #64 31st July 2007, 03:00 PM

Quote:

Originally Posted by ranj_2k

Dear Gaurav,

As I understand you are anticipating that nifty will touch 4700 before August expiry. I have future position at 4425 and 4490. It is not better to book profit with 50 plus point and re-enter as and when get opportunities. One can enter whenever nifty goes down. By this practice, in my opinion one can earn more than holding the position to the level of 4700. Secondally what is your strategy to hedge the position, say if market will fall by 300 nifty points due to any reason may be credit policy or another fall in US market.
Your valuable inputs are solicited.

Dear Ranj_2K,

Markets move in patterns on weekly, monthly, daily and quaterly charts.
What i look is for these patterns. One should not be rigid in the markets. So if the pattern is not being followed by the market due to any development in US , here or otherwise, a different pattern would be followed. Now i was saying that nifty shall touch 4700. The pattern existed even when US market fell heavily for two days. So i was confident.

Today, the CRR has been hiked by 50 basis points, which the market was not expecting. This could lead to a change in patterns, which would be obvious only at the end of the day.

Markets rarely crash in a straight line. Notice i reacted only when the market came up a bit and gave me an exit option for one of my nifty positions.

You may see that US market crashed on two consequetive days, but our market fell only on one day. Why was that? I for one was always talking of a recovery, and if you read my earlier post it was of a quick recovery this week. The recovery has now happened. How did i know of it? I know no big player, i myself am an ordinary investor just like you all. The only thing i saw was some chart patterns, which gave me that confidence.

Most people look at indicators alone, i look beyond that.

i have done my share of day trading before giving up.

Let me list what i consider a good strategy.

1. Should get good returns, better than mutual funds on an annual basis. I am not ineterested in day to day returns.
2. It should require few trades.
3. I should not be required to sit in front of my terminal the whole day. I shoudl be able to carry out other activites, ithout fear that i shall lose my money even if i go away for a short period.
4. It should not make me tense at any moment.

You may decide to differ from the above.

With best wishes,

Gaurav Kumar

Gaurav Kumar · #65 31st July 2007, 03:25 PM

Quote:

Originally Posted by kavidhev

Hi ,

Can we exit the september short nifty. Market is going up fast.

plz advice.

thanks,
kavidhev

Dear Kavidev,
no dont do anthing for the time being
Gaurav Kumar

tejaspatel_b · #66 31st July 2007, 03:42 PM

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marcus · #67 31st July 2007, 05:53 PM

Quote:

Originally Posted by Gaurav Kumar

Dear RRKarnani,
A request to some members who think that i am not talking sense: please do not read my posts if it does not help you.. I have no wish to say that i know more than you. There are hundreds who know more than i do. But please allow those who wish to read to read in peace without comments such as "you are wasting your time".

If you feel my posts are useless, i will discontinue.. The puspose is to share knowledge.. not fight with each other..

With best wishes

Gaurav Kumar

Dear Gaurav,

Thank you for your informative post, however the above is a totally irresponsible thing to say, please understand most of the people here are not novices and will indeed have questions, if you believe you know what you're doing and have conviction and faith in your method you should be able to answer any question confidently rather than saying "please don't ask me that" this amounts to saying "I don't know therefore please do not ask me".

I hope you will take it in the correct spirit and answer our members questions. This will further strengthen the notion that you actually know what you are doing.

Best wishes

Marcus

Gaurav Kumar · #68 31st July 2007, 07:57 PM

Quote:

Originally Posted by marcus

Dear Gaurav,

Thank you for your informative post, however the above is a totally irresponsible thing to say, please understand most of the people here are not novices and will indeed have questions, if you believe you know what you're doing and have conviction and faith in your method you should be able to answer any question confidently rather than saying "please don't ask me that" this amounts to saying "I don't know therefore please do not ask me".

I hope you will take it in the correct spirit and answer our members questions. This will further strengthen the notion that you actually know what you are doing.

Best wishes

Marcus

Dear Marcus,

I am indeed answering questions. My reactions was not to questions, but pointed barbs by certain members.

As i have repeated earlier, that paths to making money are many. If members comment "that reading his post is a waste of time", i think i have the right to react.

My reaction is only to such comments. As i have said earlier we are here to share knowledge and not fight with each other and show who is superior.

I agree nobody is a novice.. I have not said others are...

With best wishes,

Gaurav Kumar

uasish · #69 31st July 2007, 07:59 PM

Copied from Gaurav's Post:=

"1. Should get good returns, better than mutual funds on an annual basis. I am not ineterested in day to day returns.
2. It should require few trades.
3. I should not be required to sit in front of my terminal the whole day. I shoudl be able to carry out other activites, ithout fear that i shall lose my money even if i go away for a short period.
4. It should not make me tense at any moment."

V.Good strategy.

marcus · #70 31st July 2007, 08:28 PM

Dear Gaurav,

Well I misunderstood, I assumed you were annoyed with questions, thanks for the clarification, please do keep posting and discussing your strategy.

As for criticism my advice is do reply to constructive criticism but ignore destructive criticism.

Would it be possible for you to discuss what sort of patterns you look for specifically?

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