some good reference
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indian industrial growth..2002-12
finacial relation..bond &market..
business-standard enews letter..
capitalideasonline.com.
any fund manager talk show..
read.. their view not their prediction on MARKET..
I TELL YOU ... DON’T follow ... THEIR ACCURACY LEVEL OF HARDLY 30%
LESS THAN HEAD /TAIL TOSS
YES I MEET THEM PERSONALLY...AROUND 6 OF THEM..
VERY SMALL SAMPLE..BUT CONCLUSIVE[atleast for me]
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those who enjoy trading/ hobby pl read...
wiley trading
FINANCIAL RISK/ TRADING
AN INTRODUCTION TO THE PSYCHOLOGY OF TRADING AND BEHAVIORIAL FINANCE
author..mike elvin...
Trading on the stock exchange is all about playing against the mind of the masses. The big guys and operators successfully will beat your mind by making you think, think and think. Is the right time to get in, will the market fall, and so many times people have asked me when the BIG correction is going to come?
Many people have gone short in this Bull Run and felt the heat. 'Go short' that is what your mind will tell you when the NIFTY makes 3% over 2-4 days.
There are many traders who suffer from this mental gridlock. Chances are that you are one of them. Human beings excel at pattern recognition but when coupled with risking money, they fail miserably. Fear or greed gets in their way of thinking. It is your ability to recognize charts, without needing conviction from another trader or CNBC that will separate you from the rest.
Predicting is a curse that is thrust on a trader, because normal thinking tells you that to make money you have to be able to predict a movement in a certain direction.
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This is where you take out the emotion and thinking from trading. Use the best charting software and setup a tri-state signaling system that should tell you when to long, short or be out of the markets. It doesn’t matter if you following a trend trading system or a breakout system. You will be probably fit into one of these categories of a trend trader or a breakout trader. It is for you to choose. U can master both. Once the decision-making is handled by emotionless software, which work tirelessly for you, most of your time you can spend on money and risk management. Stop thinking about whether the buy/sell signal is valid or not. Just make sure that the difference between entry point and the stop loss is acceptable by your risk management system. Focus most of your on capital management. Things will become easier for you. Stick with your system and don’t keep changing it. Do as many as a test you would like before applying it to your trading style.
You will still not be successful if you don’t develop a good profit taking mechanism. You or your system be may be very good at generating 70% perfect buy or sell signals, but unless a good stop loss and profit taking strategy is not is place you will be out of the game maybe not soon enough but later. A sloppy stop loss is all that is needed to make things go against you accumulation. On the other hand your impatience will not let your ride the full Monty. There is no way to tell if this is a top or a bottom if you have made it on the right side of the trend. The best way is to change the stop loss of your first lot above your or below your entry point using time as a parameter. The rest you can exit when your decision system tell you to. The more time you allow your trade to flow more are the chances that it makes you a good bundle.
You will perfect your system by surviving in the market. Taking a small hit today is the best strategy. Learn and device your risk and money management techniques and leave alone making entry decisions, because there is no perfect signaling system and there will not be one. There are plenty of tools available out there that can do better than you. Making money in our markets or for that in any conventional market is the art of capital and risk management.
Remember -Neal Hughes is basically daytrader trading 60minute and 5 minute time frames etc. Now What about using his tactics on a long term basis specially when you trade long term on darvas box theory momentum trading?
The concept can still be applied. but you need to look at breakouts on weekly charts of the stock in question and then drop down to daily chart to implement pullback buying as delineated in the examples.
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If you want perfect trades, perfect your trading plan. Neal Hughes -"FibMaster
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ANY TRADER MUST SEE THESE Q ..ANSWERED..
� How to know where to put your stop loss and when to move it
� Learn the key to understanding & applying volume
� How really understanding volume can deliver larger profits
� Which indicators work best
� How to properly combine indicators for outstanding reliability
� Charting mistakes that can cause you to miss some of the best trades
� Advanced support and resistance techniques
� How to keep from getting whipsawed out of a trade
� Stocks you should avoid like the plague
� How to profit no matter which direction the market is going
� The best way to stay in a profitable trade (swings & trends)
� The logistics of opening and closing trades
� The Achilles Heel of traders, "Money Management" including;
� How improper capitalization can sink your ship
� Proper position sizing
� How to get the most out of your brokerage account
� How record keeping can increase your profits
� Demonstrates how simple successful trading can be
� How the understanding of an indicator can produce superior profits
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Expected or unexpected eventualities though unpleasant happen at times even with all the forces trying to prevent it. With increasing stress between Left and UPA, a trouble in the government cannot be ruled out entirely at the present time. This probability led me to put this thread here. Market reacts to this kind of stuff sharply and then recover in a short timeframe (according to a study on rediff.com which I could not locate now, average time of recovery to previous levels in US market is around 4 days... hope my memory is not very bad). Now when it happens, this, though unfortunate an event, gives opportunity to capitalize intraday or in short term. That was the good part of a bad thing. Now the bad part of the same bad thing is that just at that right moment, our emotions take control and decision-making capability is smashed. We are confused and in yo-yo situation, shall we sell, shall we buy. If we can develop a rule (intraday as well as delivery) for these eventualities, then that would make up for our decreased insight during such time.
I would request readers to put their valuable opinion and share experiences, especially senior members who have huge collection of such experiences.
BOULDER, Colo. (CBS.MW) -- Most traders experience a rite of passage and baptism by fire during the first few months after opening up a trading account; emotional mismanagement combined with a general sense of complete and utter confusion as a stock appears to trade in a manner opposite of what they would think in light of the fundamental research.
A perfect example: Taser International (TASR: news, chart, profile).
Even if you are completely new to the world of trading or investing, there is a good chance that this developer and manufacturer of less-lethal self-defense devices has entered your trading universe. The real question is, "How can a trader effectively filter out the noise and look at TASR shares objectively?"
Do not buy TASR! Why? Well, for one, prisoner-rights group Amnesty International said stun guns are needlessly deadly and more testing is needed. A red flag. Moreover, many articles and reports have surfaced, especially in the New York Times, raising questions about safety and adding to the specter of debilitating lawsuits in the future.
In addition, it has been said that corporate insiders have sold 1.3 million shares, worth roughly $68.4 million, and this coupled with over 50 deaths associated with these "less-lethal" guns must have bullish traders running to the hills. Additionally, quarter-to-quarter sales growth has fallen from 24 percent to 16 percent in the third quarter. Do not buy!
If these reasons were not enough, consider that as of November 15th there were over 15.9 million shares short; thus making it clear many traders are in fact betting prices will fall. How can they be wrong?
This should be a proverbial slam dunk for bears; however, I feel it only makes prudent sense to explore another angle on TASR before coming to a decision. In fact, most true trading professionals only look at an objective, pragmatic analysis of the market, by studying supply and demand on a chart -- Technical Analysis (TA). Almost all the aforementioned information was simply subjective "news" that elicits emotions that run contrary to profitable thought. Do you remember when the bad news about Enron hit the marketplace? Trust me, it wasn't near the top and only a clear knowledge of charts patterns would have given a trader a "real" read of emotions.
Technical analysis paints the psychological picture from A to Z, and if a stock is in an uptrend in spite of a negatively spun fundamental story, technicians can easily look past the fundamental theme because they are comfortable with certain chart patterns that they have seen over time that allow them to define risk vs. reward and make clear what the path of least resistance is.
In the short-term, which is less influenced by the fundamental company performance, money flow and psychology are the underlying factors that technicians can use to get a sense where the money is going and what current psychology is. They may soon become more favorable to accepting the risk of an upside move vs. a downside slide. With that said, before we submit orders to go short TASR, let's explore the technicals.
As of this writing TASR is currently trading above its 10-, 20-, 50-,100- and 200-day moving averages (DMA). With the 50 DMA rising, a technician can conclude that shares have been traversing higher and that the path of least resistance is higher. Additionally, these moving averages are all pointed higher and they are aligned in such a way that the 10 DMA is above the 20 DMA and the 20 DMA is above the 50 DMA, and the 50 above the 100, and so on. Alignment in this fashion is bullish and reinforces the objectiveness of the trend -- bullish. What is more relevant to a trader, a bad news story or price action? Emotional traders generally follow the former.
Continuing on, there was a failed attempt in early November to take out the yearly highs of $32.08 and during the last month shares have been creating a symmetrical triangle and appear poised to breakout higher. Of course, who will fuel the demand? Well, for one, traders that have been selling TASR short (borrowing shares with an obligation to deliver shares back to the brokerage house, and a trader is forced to cover -- "called away" -- if the lender wants the shares back) may all rush in to cover at once if the primary trend continues.
Simplicity is the market's greatest disguise. Traders turn on the TV, gulp five cups of espresso, and then sometimes trade based upon information that most traders have fully dissected hours, sometimes days, ago. I have found that taking the subjectiveness out of the equation and using technical analysis can turn the opaque into the transparent. As the saying goes, "Trade what you observe, not what you believe." I observe price action in TASR as bullish and giving an antithesis reaction to recent fundamental negativity. And the best part of all is that, as a trader, I can limit my bullish risk via stop loss order and, if triggered, listen to the market. Of course, odds are I am right. Buy TASR.
DAVID NASAR
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There is nothing better than the experience and knowledge one can gain from real trading with one's own money
Well, I am a daytrader and daytrader by choice as well as compulsion.Though I have yet to achieve significant profits in this arena, I could not resist myself from writing over here.
Well, day-trading is certainly not a lottery, it involves an armour of skills, tools and most importantly their application. Indicators--Yes, they do work but you need to keep your stop-loss pretty tight. One always need to trade in multiple time frames. Following a stock--Good till it's giving you profits, but till the time daytrading comes handy to you--it's better to avoid changing directions, may hit you hard. One should only change direction when the trend has reversed completely.
Again, in day-trading, if the trader has failed to catch a break-out in the very early stage, he should stay away otherwise he may end up buying/selling in overbought/oversold territory.
News is one area, a day-trader has to be very alert about. But one caveat is--Don't take action on TV/website news--They flash only when the action has taken place, One must watch the technical indicators after hearing the news and act. Rather one classical wisdom is--" Buy on Rumor and sell on News".
Yes, the traditional methods do fail in day-trading or sometimes one is never able to catch the moving fishes. The charting softwares need to be replaced by or assisted by some new breed of softwares which alert the users on parameters like volume break-outs, market makers' moves, Range-bound moves,etc. I am compling a list of items I would like in my software and perhaps 5 yrs down the line, my friends on the forum can use it.
And finally, yes there are traders who are well-off after being fully engaged in day-trading.
Regarding, the brokers making money from jobbing and day-trading ---- They have a methodology which works for them only is doing what they have been doing for ages--- Playing the spreads. They are still applying the art learned during the historical period of Pit-trading to their benefit. However, it can't work for a trader 'coz of brokerage cost involved. Even the brokers are finding it difficult to sustain the spread play due to increasing transaction costs like stamp duty and STT. And yes, they do overtrade-- A broker will do 400 transactions per day playing the spread but he will never wait for technicals to tell him that the trend is still intact, resistance is at so-n-so level, till the time, market is above so and so level, it's just a correction. He will book loss (a small one), will ride the pullback (make some money over there) and will jump the wagon once again, the trend resumes. And when it comes to returns, if transaction costs are met while playing the spread game, Return on Investment(ROI) is more than what all the other kind of traders/investors can dream about only.
Generally most of the people jump the gun, before they can dump the gun. I mean, we just rush ourselves into trading, hardly few people resolve why they are entering into this market and for what purpose.
1. We need to make sure whether we are an investor, trader or a mix of both
2. Based on what we decide, we need to make a strategy.
3. I say, banks give you 10% interest, even at the end of the year you make 20-30% profit in the market it is much more than that. for ex: last year august i bought Infosys @ 1450 and now the C.M.P is around 2600. A cool appreciation of close to 45%. No Technicals here, just invest in sound companies(Blue Chips) and forget, they will reap you profits in lots over a period of time. Unfortunately, to cover my lossess in day trading, I have to close my positions @ 2000 itself.
4. Day trading is very risky and so too F&O. Its not a child's play and often if caught on a wrong side, you are out of business.
5. For a peaceful trading, i feel positioning trading is the best, but be alert all the time.
6. I have sufferred sleepless nights because of the lossess i incurred in day trading and F&O. I have the confidence to recover, as any bad things just take a minute but for a good thing whole life is not sufficient.
7.Its upto a person to decide, whether to sit and watch or commit a suicide.
At present I am developing the right attitude for Trading and evolving my strategy of how to remain in the business.
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Hi friends,
When we discuss position trading versus day trading let us not forget they are 2 sides of the same coin. The only difference is the risk/reward. The basics of the game remain the same. What do we need to have a trade?
1) Entry point
2) Stop loss
3) Exit
In other words a trading system. If we have the above we have a trade.
Further markets cannot be predicted in any time frame and we should not even attempt to do so.
Markets can only do 3 things namely:go up, go down, and remain where they are, and since what the markets do is beyond our control we can only control our reaction to what the markets do?
If you are ready with your reaction to the above you are ready to trade.
I would sum it all up to say "A good trader is a good trader in any time frame" and the vice versa also holds true.
One of the biggest mistakes most traders make is that they are too concerned with what the market might do.
To be successful in trading you need only be concerned with what the market is doing!
__________________“Knowing how to approach and play the game of trading well will only take you part way to ultimate success.
I have always wondered why there are no graphs for FIIS/mutualfunds investments since they are reputed to drive the markets. If volume precedes price, they precede volume,do't they? There has to be a graph plot on them to enable us to know what they are plotting in the market:-
Swami Vivekanand, “ He who is overcautious falls into dangers at every step; he who is afraid of losing honor and respect gets only disgrace; he who is always afraid of loss always loses”
This is an extract from the speaking tree of the spiritual columns of the times of India(4/4/2004). It further elaborates on how India lost the Bangalore test because of an overcautious approach.
Applied to the stockmarket, this is the paralysis due to analysis syndrome. Whether it is technical or fundamental analysis, the stockmarket presents a mass of information to deal with and unless one learns to be lean and mean and takes quick decisive action, success is not possible. Over information is bound to be a liability. Swami Vivekanand’s last line in the para above also literally applies to the stock market. Why be afraid of loss when we have strict stop losses
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For selecting any stock, there must have been a premise as to why the stock was purchased. This premise varies from person to person and from time to time.
My premise for holding this stock may differ from your premise and hence, a conclusion cannot be reached.
Since you are a newbie to trading, allow me to make 1 fact clear. You will hear a lot of noise on buy this and buy that...sell this and sell that but very few of these call givers actually disclose why they are giving the call to buy or sell. People who make money do it silently.
It's your money which is at stake and do you not think you should have a clear picture of your objectives and constraints than allowing others to do the same? It is only homework which matters a lot. Make the purpose of your trading clear and also put down in writing the maximum loss you can bear in worse case situations for each security...stick to it in case of adversities... use a stop loss.
hope you understand that some traders in this forum are system followers.
I'm no expert but I do wish to disclose my viewpoint.
There is a difference between the following:
1) Losing, and losing on a consistent basis
2) Building your own trading system and choosing other's systems
3) Using a trend follower and a zig zag indicator.
-->The trades disappeared because the trading system you used had a zig zag indicator.
--> Why don't you stick onto a few selected securities? The chances of losing in a consistent basis is relatively low...if not, impossible. You can diversify this list as you become more experienced.
--> No one likes to disclose their trading system/trades. It isn't nice to ask them that.
Your feelings have an immediate impact on your account equity. You may have a brilliant trading system, but if you feel frightened, arrogant, or upset, your account is sure to suffer. When you recognize that a gambler’s high or fears is clouding your mind, stop trading. Your success or failure as a trader depends on controlling your emotions.
When you trade, you compete against the sharpest minds in the world. The field on which you compete has been slanted to ensure your failure. If you allow your emotions to interfere with your trading, the battle is over.
You are responsible for every trade that you make. A trade begins when you decide to enter the market and ends only when you decide to take your self out. Having a good trading system is not enough. Most traders with good systems wash out of the markets because psychologically they are not prepared to win.
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Trading Tips-
-Remember that there is always another trader on the other side of the trade doing the exact opposite that you are doing. Only one of you can be right.
- Waiting around for the perfect trade or the perfect opportunity will guarantee that you never trade stocks.
- Trading stocks is about probabilities, NEVER certainties. You are not smart enough to predict, with consistency, what will come next.
- Conventional wisdom is usually wrong. Trade against the crowd, not with them.
- Money, trade, and self management has always been and will always be the holy grail to trading stocks.
hmmmm.........the question you need to find the answer to is:Can it be done?If Everest has been scaled before,even once,one cannot say that it cannot be done......one can surely say that he/she cannot do it,but not the other way around.If even one person can make money from the markets using TA,if even one person could consistently pull money out of the markets,then it can be done.
So,my friend,if you really wish to succeed at this(that's step no 1 actually,do you really have that burning desire to succeed and make the necessary sacrifices)........if you therefore wish to succeed,you have to take all the blame for it.Every time you lose because you didn't adhere to your rules,the blame is not the market's,not this forum's,not your wife's,not TA's or FA's.......yours and yours alone.Go back to your methods,your money management disciplines,your entry and exit criteria,your mind,your health......somewhere,there's a problem that you need to look into and rectify.
Been there,done that,my friend........ I can understand the frustration and agony.But don't allow your mind to settle for petty excuses.......take all the blame and look into what needs to be rectified.
And,as for people successfully making money out of TA.......There are many in this forum itself who are doing it.And as said before,if one person can do it,it can be done.
Whether you want to make the necessary sacrifices and undergo all the pain required is another question.
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There are old traders and there are bold traders, but no old and bold traders.(Old is gold here, it seems)
Failed Traders know the price of everything and value of nothing,
Short term transactions frequently act as invisible foot, kicking society in the shin.
Timing is vital. It is much more important to buy cheap than to sell dear.
Behave according to what is rational rather than what is fashionable.
People tend to overreact to bad news and react slowly to good news.
Nobody gets market timing right even half the time.
When the gap between perception and reality is maximum, price is the best.
Stock will move above or below its business value depending more on emotions than economics.
When the degree of consensus was the greatest, the extent of error was the most pronounced.
One of the hardest things to imagine is that you are not smarter than average.
Group consensus can be so powerful that it erases critical past experience and common sense.
Passion is more powerful than brain power.
Disregard majority opinion; it is probably wrong.
THIS R QUOTE FROM MOTILAL ABOUT TRADING
ON INVESTING
Be greedy when others are fearful and be fearful, when others are greedy.
Four most dangerous words in investing- “It is different this time”
Great (Idea+Manager+Price)= Great investment results.
True investors realize that ‘get rich quick’ usually means ‘get poor quicker’
Savings will not make you rich, only canny investments do that.
Wealth creation is the art of buying a rupee for 40 paise.
Own not the most, but the best.
Investing without research is like playing pocker without looking at the cards.
It is optimism that is the enemy of the rational buyer.
The definition of a great company is one that will remain great for many, many years.
Focus on return on equity, not on earning per share.
Business growth per se tells little about value.
The secret of long-term investment success is benign neglect. Don’t try too hard. Much success can be attributed in inactivity.
Value of analysis diminishes, as element of chance increases.
The time to get interested in a stock is when no one else is.
An investor’s worst enemy is not the stock market but his own emotions.
There is no formula to figure out the intrinsic value of a stock. You have to know the business.
Temperament costs investors more than ignorance
In Investment, understanding is more important than information
MOTILAL
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Managing risks is in many ways the foundation of the entire process. Managing risk comes down to two things. First is how you are going to place your stops. That goes back to cutting your losses short. Consider trading as a business venture. Managing risk means recognizing what the costs of trading are. Make a comprehensive plan. Winning traders always treat their trading like a game, but they also look at the whole thing as a money-making business. – GLEN RING
Most aspiring traders underestimate the time, work, and money required to become successful. To succeed as a trader, one needs complete commitment. Just as in any entrepreneurial venture, you must have a solid business plan, adequate financing, and a willingness to work long hours. Those seeking shortcuts are doomed to failure. And even if you do everything right, you should still expect to, lose money during the first five years – losses that I view as tuition payments to be made to the school of trading. These are cold, hard facts that many would-be traders prefer not to hear or believe, but ignoring them doesn’t change the reality. – MARK D COOK
Consistent success is difficult to achieve because the trading environment differs in almost every way from the environment in which we live our everyday lives. For example, in our everyday lives our fears help us avoid unpleasant or painful experiences. In the trading environment, fear colors our perception of market information thereby influencing our actions. As incredible it may sound, fear of making a mistake, losing money or missing an opportunity, will actually cause us to create the very experiences we are trying to avoid. Consistency as a trader does not depend upon your knowledge of market behaviour, but rather upon a very unique mind-set. – MARK DOUGLAS
We know that the random element in the market represents at least 40 to 60 percent activity. Therefore, it’s not logical to look at every tick or to think that every tick or every chart formation has meaning. They don’t. There are too many traders trying to look at the markets from too stringent an analytical viewpoint. Most of what happens in the markets is meaningless. Why try to interpret every little movement, every little reversal, every little tick? In trying to do too much, they’re actually paying too much attention to the market. You have to keep a distance from the market. Only then will you have the psychological resources to let your profits ride. You won’t be looking at every tick and interpreting it in a fearful way. – JAKE BERNSTEIN
“The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth.”
“The markets offer many opportunities to self destruct without a safety net. Every trader tries to hit others. Every trader gets hit by others. The trading highway is littered with wrecks. Trading is the most dangerous human endeavour, short of war “.
“Trading is a minus sum game. Winners receive less than the losers lose because the industry drains money from the market. Better than average is not good enough. You have to be head and shoulders above the crowd to win a minus sum game “
“All losers knocked out of the game by a string of losses or a singly abysmally made trade. No matter how a good his system is, a streak of bad trades is sure to put the loser out of business. “
““A professional trader cannot afford illusions.””
Some people have been critical of my criticizing seminars in the earlier post. Well, in my view seminar may be good to finetune if you already have good professional trading experience or you are an engineer with good spatial intelligence and programming background. As can be seen above one cannot afford not being thorough.Now I want to mention a constructive alternative in a new software I discovered.
It would not be out of place to mention here that Ashish who despite all his intelligence and all those promotions had to be trained in practical accounts both by me and the accountant since he had no exposure to that. Some of the mistakes he was making were in the nature of “A small spark catches a big fire” “ A small leak can sink a big ship” and could have cost him his job. So no matter what the qualifications and intelligence, there are some things only practical experience under the right mentor can teach.
The Stocks and commodities people sent me a sample( their August’2004) issue. In that issue, one MBA from Harvard who gave up his real estate business to become a very successful options trader says,” If someone wants to be successful, they should follow somebody else who has done the same thing. If I am trading, I must find somebody who is good at it. If I want to become a restaurant manager, I need to find somebody who’s done it before and done it well. “ . This new software is very effective for that. It seems like a pygmy compared to Metastock/ Tradestation but from learning and economics point of view is a giant which I why I had to give so many examples above.
The Seminar people are competent and knowledgeable but to transfer that knowledge to a rookie is a different ballgame altogether. I seem to have bumped into a good alternative.
Before I mention it, I would like to say that when you learn to know how to drive a car, all you have to know is the basic functions of what clutch, accelerator, brake, gear etc is and start driving. Otherwise with something like free knowledge on the internet available, if you get too lost into theory and start reading about cars, you may end up more confused. Technical analysis is very dangerous that way with the multiplicity of websites and indicators available which do not always indicate what they are supposed to indicate .
Market Facilitation Index comes pretty close.It was developed by Bill Williams of trading chaos.Along with the paint bar studies of fake,squat etc they actually make a very good indicator though not a perfect one.A few of the useful one I find[cv]
All indicators have their own weakness and strength. Generally a complete trading system compromises of a set of indicators.
As I like to trade trends and in the direction of trends I think the single most robust and important indicator for me is the "moving average"! It helps me to visually identify trends at a single glance.
-traderji
THE TAPE READER
The Tape Reader, on the other hand, from his perch at the ticker, enjoys a bird's eye view of the whole field. When serious weakness develops in any quarter, he is quick to note, weigh and act.
Another advantage in favor of the Tape Reader: The tape tells the news minutes, hours and days before the news tickers, or newspapers, and before it can become gossip. Everything, from a foreign war to the passing of a dividend; from a Supreme Court decision to the ravages of the boll-weevil is reflected primarily upon the tape.
The insider who knows a dividend is to be jumped from 6 percent to 10 percent shows his hand on the tape when he starts to accumulate the stock, and the investor with 100 shares to sell makes his fractional impress upon the market price.
The market is like a slowly revolving wheel: Whether the wheel will continue to revolve in the same direction, stand still or reverse depends entirely upon the forces which come in contact with its hub and tread. Even when the contact is broken, and nothing remains to affect its course, the wheel retains a certain impulse from the most recent dominating force, and revolves until it comes to a standstill or is subjected to other influences.
The element of manipulation need not discourage any one. Manipulators are giant traders, wearing seven-leagued boots. The trained ear can detect the steady "clump, clump," as they progress, and the footprints are recognized in the fluctuations and the quantities of stock appearing on the tape. Little fellows are at liberty to tiptoe wherever the footprints lead, but they must be careful that the giants do not turn quickly.
The Tape Reader has many advantages over the long swing operator. He never ventures far from the shore; that is, he plays with a close stop, never laying himself open to a large loss. Accidents or catastrophes cannot seriously injure him because he can reverse his position in an instant, and follow the newly-formed stream from source to mouth. As his position on either the long or short side is confirmed and emphasized, he increases his line, thus following up the advantage gained."
This is the objective of the Tape Reader - to make an average profit. In a month's operations he may make $4,000 and lose $3,000 - a net profit of $1,000 to show for his work. If he can keep this average up, trading in 100-share lots, throughout a year, he has only to increase his unit to 200, 300, and 500 shares or more, and the results will be tremendous.
The amount of capital or the size of the order is of secondary importance to this question: Can you trade in and out of all kinds of markets and show an average profit over losses, commissions, etc.? If so, you are proficient in the art. If you can trade with only a small average loss per day, or come out even, you are rapidly getting there.
A Tape Reader abhors information and follows a definite and thoroughly tested plan, which, after months and years of practice, becomes second nature to him. His mind forms habits which operate automatically in guiding his market ventures.
Long practice will make the Tape Reader just as proficient in forecasting stock market events, but his intuition will be reinforced by logic, reason, and analysis.
Here we find the characteristics which distinguish the Tape Reader from the Scalper. The latter is essentially one who tries to grab a point or two profit "without rhyme or reason" - he don't care how, so long as he gets it. A Scalper will trade on a tip, a look, a guess, a hearsay, on what he thinks or what a friend of a friend of Morgan's says.
The Tape Reader evolves himself into an automaton which takes note of a situation, weighs it, decides upon a course and gives an order. There is no quickening of the pulse, no nerves, no hopes or fears. The result produces neither.
He must study the various swings and know where the market and the various stocks stand: must recognize the inherent weakness or strength in prices; understand the basis or logic of movements. He should recognize the turning points of the market; see in his mind's eye what is happening on the floor. He must have the nerve to stand a series of losses: persistence to keep him at the work during adverse periods; self-control to avoid overtrading; a phlegmatic disposition to ballast and balance him at all times.
For perfect concentration as a protection from the tips, gossip and other influences which abound in a broker's office, he should, if possible, seclude himself. A small room with a ticker, a desk and private telephone connection with his broker's office are all the facilities required. The work requires such delicate balance of the faculties that the slightest influence either way may throw the result against the trader. He may say: "Nothing influences me," but unconsciously it does affect his judgment to know that another man is bearish at a point when he thinks stocks should be bought. The mere thought, "He may be right," has a deterrent influence upon him; he hesitates; the opportunity is lost. No matter how the market goes from that point, he has missed a cog and his mental machinery is thrown out of gear."
Having thus described our ideal Tape Reader in a general way, let us inquire into some of the requisite qualifications.
First, he must be absolutely self-reliant. A dependent person, whose judgment hangs upon that of others, will find himself swayed by a thousand outside influences. At critical points his judgment will be useless. He must be able to say: "The facts are these; the resulting indications are these; therefore I will do thus and so."
Next, he must be familiar with the technicalities of the market, so that every little incident affecting prices will be given due weight. He should know the history, earnings and financial condition of the companies in whose stock he is trading; the ways of the manipulators; the different kinds of markets; be able to measure the effect of news and rumors; know when and in what stocks it is best to trade; measure the forces behind them; know when to cut a loss and take a profit. Silence, therefore, is a much-needed lubricant to the Tape Readers mind.
The advisability of having even a news ticker in the room is a subject for discussion. The tape tells the present and future of the market. On the other hand, the news ticker records what has happened. It announces the cause for the effect which has already been more or less felt in the market.
Money is made in Tape Reading by anticipating what is coming - not by waiting till it happens and going with the crowd.
The effect of news is an entirely different proposition. Considerable light is thrown on the technical strength or weakness of the market and special stocks by their action in the face of important news. For the moment it seems to us that a news ticker might be admitted to the sanctum, provided its whispering are given only the weight to which they are entitled.
To evolve a practical method - one which any trader may use in his daily operations and which those with varying proficiency in the art of Tape Reading will find of value of assistance - such is the task we have set before us in this series.--Clif Droke
Strictly defined, tape reading is the practice of interpreting price-to-volume configurations of listed securities on the various stock exchanges. Since trading volume is an extremely important (and frequently overlooked) element of stock trading, a major premise of tape reading is that buying and selling interest can most readily be identified and measured by looking at a stock's volume at any given time in relation to its trading range. In classical tape reading, price and volume are given equal weighting and each element can never be analyzed without the other.
An old Wall Street axiom, which you are no doubt familiar with, is that "the tape tells all." It simply means that any available information that will have an impact on the outlook for stocks, and for the economy as a whole, will be reflected in advance in the tape. This is because the people who have the greatest insight into "inside events" are sure to try to profit from their advanced knowledge by buying or selling stocks before such information trickles down to the public. By the time news of an important financial or political event reaches the trading public, the insiders who are savvy to the ways of the market, have already taken their profits, leaving the public holding the "bag." Most of us will never have the advantage of being insiders; however, with a firm knowledge of tape reading this isn't necessary to profit from the market. In fact, being able to read the tape means that you can trade right along with the insiders and participate in big moves before the trading public catches wind of what is going on. In order to provide you with a better idea of the basics of tape reading, we have excerpted below several paragraphs from the all-time classic book on tape reading, "Studies in Tape Reading," written in 1910 by Richard D. Wyckoff. Don't let the date discourage you from reading it - it is just as timely today as it was nearly 100 years ago:
The science of determining from the tape the immediate trend of prices.
It is a method of forecasting, from what appears on the tape now, what is likely to appear in the future.
Tape Reading is rapid-fire horse sense. Its object is to determine whether stocks are being accumulated or distributed, marked up or down, or whether they are neglected by the large interests. The Tape Reader aims to make deductions from each succeeding transaction - every shift of the market kaleidoscope to grasp a new situation, force it, lightning-like, through the weighing machine of the brain, and to reach a decision which can be acted with coolness and precision.
It is gauging the momentary supply and demand in particular stocks and in the whole market, comparing the forces behind each and their relationship, each to the other and to all.
The Tape Reader is like the manager of a department store; into his office are poured hundreds of reports of sales made by the various departments. He notes the general trend of business, whether demand is heavy or light throughout the store, but lends special attention to the lines in which demand is abnormally strong or weak. When he finds difficulty in keeping his shelves full in a certain department, he instructs his buyers, and they increase their buying orders; when certain goods do not move he knows there is little demand (market) for them; therefore, he lowers his prices as an inducement to possible purchases.
A floor trader who stands in one crowd all day is like the buyer for one department - he sees more quickly than anyone else the demand for that class of goods, but has no way of comparing it to that prevailing in other parts of the store.
He may be trading on the long side of Union Pacific, which has a strong upward trend, when suddenly a break in another stock will demoralize the market in Union Pacific, and he will be forced to compete with others who have stocks to sell.
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Five minute bar charts are used by day traders, hourly or daily by swing traders, weekly charts by investors."
How exactly does the investor use the weekly chart? Should he see that the price is above the 30 week moving average or greater than 200DMA in the daily chart? What else should he see? Any oscillator? Looking at it one way, investing is nothing but trading on primary, isn't it?
"Monthly and weekly charts are chiefly used for determining important support and resistance levels and making long-term trends" How exactly does one use them?
During intra-day trading, I learnt that one is supposed to use end of day charts to mark support and resistance and see whether or not they are penetrated during the day.
Simmilarly are the supports and resistances marked on weekly charts monitored non a daily basis for end of day trading-whether they are penetrated or not?
Monthly charts are strictly for primary trend I suppose but they seem quite useless for end of day trading.
The significance of the weekly and/or monthly charts are important when one wants to trade in the direction of the primary trend.
You can read more on Multiple Time Frame
__________________The same idea applies if you are trading any security on a daily basis, in which case, the weekly bars will be the basis for the trend as well as the important support and resistance points”
What does the word daily imply here- end of day or intraday. I would presume end of day. In Intra day I was taught to use end of day resistances and supports and see whether the intra day priced crossed them or not?
How does Technical analysis help an investor when one says that "fundamentals tell you what to buy and technicals when to buy.and sell?” I know about the price being greater or less than the 200 moving average.Can you add to that ? If one had a delivery of a few stocks, what all one should see?
TREND is the single most important factor to watch out for. If the trend is UP one can go long or hold on to their long positions. Once the trend turns down one should be out of their long positions and go short.
Trading with the trend is hard to do because a logical give-up exit point will be farther away, potentially causing a larger loss if you are wrong. This is a good example of why so few traders are successful. They can't bring themselves to trade in a psychologically difficult way.
When you trade in the direction of a trend, you are truly following the markets rather than predicting them. Most unsuccessful traders spend their entire careers looking for better ways to predict the markets.
Basically you see a higher market time frame( say end of day supports and resistances) and see whether they are penetrated or not in intra-day, isn't it? Similarly weekly Supports and resistances are penetrated end of day or not?
Please be specific on how an investor can use Technical analysis
It is much easier to see the major trend using weekly data, find the short-term direction on daily data, and time your entry using hourly bar
When the weekly trend is up, daily declines point to buying opportunities. When weekly trend is down, daily rallies point to shorting opportunities.
The problem with daily charts if u r trading intraday is that u get to look too far back.With weekly one it gets prehistoric i feel.
Lets look at an example
If say I have a system for daily bars and i use a trailing stop to lock in the profits after say 3% of opposite move.If the market moves higher then our trailing stop moves higher.This sounds good theoretically but this stop mechanism needs to know what occurred first—the high or the low of the day; did the market open and then move higher and pull our trailing stop up and then move down and stop us out? Or did the market first move down and stop us out and then move up and make new highs? This type of information cannot be discerned from a daily bar.
The point i am trying to make is that daily and weekly charts give u a very unrealistic feel while trading intraday.Ofcourse they r useful to determine long term trend and key levels but they have serious limitations.
Also many people overlook the importance of intraday historical data.Fibonacci traders know this well while drawing retracement levels.The retracement levels are completely different when drawn on different time frames.
I figured out a year ago that systems backtested,optimized and curve fitted on daily bars look very rosy and show excellent performance but when they are tested on intraday bars which is when u actually trade the performance deteriorates considerably.It was very painful to watch all the work go down the drain.
Weekly charts are useful and u will also see that many indicators actually show good performance in them but for intraday traders like me they dont offer much.If u r a investor then weekly charts are definitely for u but not otherwise .So what is the right time frame for you? Well, it all depends on your personality.
You have to feel comfortable with the time frame you are trading in. You have to feel at home with that time frame. There is always a degree of pressure when you trade because there is the real potential for loss or gain and that will effect you to some degree. You should however not feel that the reason you are feeling pressure or frustration is because things are happening so fast that you find it difficult to make decisions or so slowly that you get frustrated.
The question is if you could make the same amount of money trading any time frame which time frame would you choose. You will of course have to take into consideration that the time frame you choose does generate enough trading opportunities for you to be happy with the results.
It is also worth noting that if your trading is going well and you are profitable then don't even think about changing time frames. As the saying goes ''if it ain't broke don't fix it.''
When you do eventually find the time frame you are happy with you can then start looking at multiple time frames to help your analysis of the market.
It is much easier to see the major trend using daily data, find the short-term direction on hourly data, and time your entry using five or ten minute bar. Hope this is corrrect. I have not done much day trading.
When the daily trend is up, hourly declines point to buying opportunities. When daily trend is down, hourly rallies point to shorting opportunities.
What about position trading. Monthly charts are too long term? Isn't swing trading a kind of postion trading only although there are three main categories-day,swing and position.
normally i operate based on trend positions. s1, s2, previous closing, current opening, r1,r2. I found the first one hour either the graph zooms up and comes down or declines and rises. around 12.30 or so the real trend starts. by1.45 the picture becomes clear. definitely by 2.50pm you can see what is going to happen. either r2 is crossed or s2 is over. this is the time to make quick money. for example yesterday (16th nov) around 2.50pm i noticed hsbc moving up and up and up. around 3.20 fell a little bit.
When deciding on a trade or investment, be it short, intermediate or long term, multiple time frame analysis can help clear the noise and offer a balanced view. Multiple time frame analysis!?! It sounds complicated and fancy, but it simply refers to the same chart with more than one time compression (e.g. daily or weekly). When both the weekly and the daily charts are in harmony, the chances of success can be greatly enhanced.
The essence of the strategy is easy: Use the higher time frame price activity to define the tradable trend as well as potential support and resistance levels.
Markets exist in several time frames simultaneously. They exist on a 10 minute chart, an hourly chart, a daily chart, a weekly chart, and any other chart. Traders often feel confused when they look at charts in different time frames and they see the markets going in several directions at once.
The market may look for a buy on a daily chart and a sell on the weekly chart, and vice versa. The signals in different time frames of the same market often contradict one another. Which of them will you follow? Most traders pick one time frame and close their eyes to others – until a sudden move outside of “their” time frame hits them.
Daily charts are great, but participants can get caught up in the move of the moment. Even though daily charts can contain random movements, they do have their strengths. Once an underlying trend is identified, daily charts can be useful to pick entry and exit points. On the other hand, weekly charts filter out the random movements and can help identify the stronger under currents that are driving the price.
The same idea applies if you are trading any security on a daily basis, in which case, the weekly bars will be the basis for the trend as well as the important support and resistance points. That is the foundation of multiple time frame trading. Besides the effectiveness of using a method based on a multiple time frame approach, another advantage is the method need not be complicated. A trader can make his or her method as simple or as complicated as desired. For me, though, the simpler the application, the better the results.
The proper way to analyze any market is to analyze it in at least two or three time frames. If you analyze daily charts, you must first examine the weekly charts and so on. This search for greater perspective is one of the key principles of the Traders Edge Trading System.
Look at the daily chart of HFCL below. What does it tell you. Most traders would say that it is just the beginning of another uptrend. Well, most traders are not successful! To be successful in trading any market, one has to first examine the trend on a higher time frame.
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RECENTLY I FACE TRADING CATASTROPHY...not by trading BUT by holding losers..buy and is hold dead man....so like phoenix..i shall comeback.
Reason ..cockiness...[as usual play of bridge & chess]...ya.. i can not handle...so the ship ruins with captain...STOP IS FOR SISSIES...any rational individual must stop self sabotage first,....before..he thinks to be a trader
so i open my material ...start copy paste...
Before you make any commitment to begin or even to continue trading , we believe you must
honestly ask yourself; "Is stock trading for me?"
Many programs will tell you any one can make money on thebstock market and I guess technically they are right. But the reality is, for most, failure is inevitable.
You see, the major limits to your success are placed there by you. As we have pointed out, trading is a mindgame. So to a large extent your success is controlled by your beliefs and actions.
We want to examine this issue in some detail because,
although at the moment you may be skeptical, it really is the key to your success or failure.
Apart from inadequate capital and poor money management,
novice traders usually fail DUE TO
1]lack of commitment
2]lack of knowledge
3]self-limiting beliefs
4]ego
5]poor state of mind
6]lack of focus
7]undisciplined
8]no strategy
9]failure to accept responsibility
10]lack of perseverance.
Traders who don't address these issues will not survive.
And the statistics show this to be true
Many novice traders get frustrated when they don't havebinstant success. Without real commitment they will not do what is necessary to achieve success.
Lack of knowledge, which is a major cause of failure, is a result of an individual's attitude. How
anyone thinks they can enter the stock market without training amazes us. Yet it happens all the time. People who accept that golf lessons are necessary before they head
out onto the course will start trading with little or no knowledge
Most novice traders fail to appreciate the level of skill needed to trade successfully. They have no system and resort to guessing or the use of tips from friends. They are effectively gambling, not trading.
At the same time, too much information can lead to overload and inaction. It is far better to narrow your focus and concentrate on just a portion of the market.
Beliefs -Traders who do not have a positive belief system or cannot reconcile their beliefs to the actions of the market do not survive.Self-doubt will destroy you as a trader. In particular,
it is critical that you do not tie your self-worth to your actions in the market. Despite the emotional attachment that you might feel, you must accept that whether one of your trades proves to be profitable or not, it is not a reflection of your value as a person.
Your success or failure in the market depends on your thoughts and feelings.
Don't tie your self-worth to any individual trade
Remember that you always have a choice in the stock market.
Ego- Ego is one of the greatest enemies to stock market success.
Your ego needs to win all the time and wants to win now,
if not sooner. It can't stand being wrong. And so it rationalizes events and denies reality.
You must be able to perceive the market how it is, not how you want to believe it is. But it is difficult to clearly see price action if your ego is in the way.
Ego makes us take small profits but large losses. It argues that even a small profit is a win. But a loss hurts and instead of accepting a small loss we try and get it back.
Men in particular are prone to say, "I'm going to make
back that 10000/- loss, no matter how long it takes!"
Ego makes us sell stocks that go up and keep the ones that go down. If a stock price increases there is immediate gratification in being right so taking quick profits feels good. And we won't sell the bad ones because we have then made a loss
Do you see the logic here?
We tell ourselves that we haven't made a loss until we sell. So if we don't sell, we can't make a loss!
State of Mind- The stock market is an unusual environment.
It is a pressure cooker type atmosphere for those unfamiliar with it and it can generate emotional and
irrational behavior.
The market is a large group of people trading their perceptions. Throw lots of money into the equation and it is not surprising how emotionally charged an environment it can be. The power of group psychology and the mob mentality ensures that irrational action is commonplace.
At a personal level, fear and greed are the primary emotions at work. And stress and anxiety are common issues that need to be dealt with.
Probably the strongest mindset with novice traders (and many who have traded for a long time) is the fear of failure - the fear of loss
Fear blinds us to opportunity. Greed blinds us to danger.
Have a healthy regard for the market but don't be intimidated or fearful. Find a balance between confidence and respect.
Everyone is afraid. It is how you respond to that fear that determines whether you succeed.
If there was one topic that we would stress above most others it is focus.
The ability to concentrate on the present moment to the exclusion of other distractions is vital when you are trading. And one of the great things about focus is that fear and anxiety actually disappear when you are concentrating on the task at hand.
Traders who don't learn how to focus will be continually distracted and will find it hard to make decisions. To trade well you must learn to stay in the present moment.
Focus eliminates fear.
Discipline is so important in trading. You need it to do the things that you have to do, even when you
might not want to. Such things as analysis; risk control;money management and record keeping. All are critical and all require discipline.
Discipline is also necessary to maintain focus and to follow your trading system. Most importantly, it is critical when you suffer a string of losses. As it is discipline that will get you back on the horse
The vast majority of traders lose money not because of their trading strategy but because of their lack
of discipline. There are no rules in the market.
You have to develop your own. And then follow them.
Strategy- You need to find a trading system that works but,
more importantly, one that you trust and are comfortable with. You then have to apply it and this is where discipline comes in.
But the truth is that most novice traders concentrate on this subject and particularly entry signals, far too much.
The reality is that good risk and money management backed by a supportive belief system is far more important.
Don't get us wrong. Having a valid trading system is critical to your success. Just don't fall into the common trap of thinking that it is all you need.
Your state of mind is more important to your success than your trading system
It is you, not your system that will determine your success.
Responsibility -Your trading success is in your hands. It is your responsibility, no-one else's.
Traders who don't accept this will fail. Because they will always be blaming someone or something for their mistakes and never learning from them
You are responsible for your success. No one else.
Perseverance Without action, knowledge is useless. Massive action is the key to real success.
Many traders begin with great enthusiasm but become easily
disillusioned. Perseverance is required to get beyond this stage and to start to reap the rewards.
