Trading Method.

please specify ur method.

Hello all -

This is my first time on this discussion forum. Being a trader from the U.S., I didn't realize thier were so many traders in India. Here is a quick bio of myself. I started out after college at a company called Cybertrader (www.cybertrader.com) in the Texas, the U.S. of course. From there, we were aquired by Charles Schwab which is one of the largest discount brokers in the U.S. At Cybertrader, I was a project manager in charge of developing trading online direct access trading software.

Now, I have left the company and started my own called Commando Trader (www.commandotrader.com). Please understand that I am not trying to promote my website but more trying to give all an idea of who I am so I can fit in

Since I now build trading systems, I thought this would be the perfect thread to start posting on.

Regarding building system, the first word of advice I have for everyone is building a system based of the K.I.S.S. Now some of you may already know what this means, but for those of you who don't...

...K.I.S.S. stands for Keep Simple Stupid System. What this means is that the more simple the system, the better chance of mastering it increases. Yes, it always looks better on your charts to have multiple indicators and time frames. However, from my experience, Keeping It Simple has been my best bet.

Please feel free to ask questions about the U.S. market or the trading industry in general. I will be more than happy to answer them.

Cheers!

One thing to keep in mind is that there is no one way to be a successful trader. The major I like to tell traders about is that you must use a strategy that fits your personality. If you are not able to emotionally handle a loss day trading, then you must look at another type of strategy.

For myself, I automted a trading strategy that I use to manually trade myself. I have even written manuauls based on the strategy which I teach traders in the U.S. That being said, no matter how much you learn, the first rule of thumb is to choose a style of trading that will fit your personality.

Commando Trader
www.commandotrader.com

Dear Commando Trader,
I am very happy a US stockmarket expert is in midst of us and is here to enrich our knowledge. First of all I would like to know the difference between US and Indian Markets, taking positions in futures and options. I do most of the trades in futures. Please tell me how many shares are available per lot in Dow futures and Nasdaq futures and how much it costs per lot? Tell me some details about the futures market like- brokerage, expiry date, good brokerage firm which charges reasonable brokerage, etc. Thanking you.
gvnarendra

DEAR VIJAY CHAUHAN.
SORRY FOR LATE REPLY. HERE I M SENDING U THE METHOD.
U WONT BELIEVE IT ! I HAVE TRIED IT ON TWO SCRIPS ZEE AND TISCO, AND IT WORKS, AND STILL WORKING. RECENTLY I M TRYING ANOTHER METHOD WHICH IS ALSO EFFECTIVE. THAT I LL SEND U AFTER THIS. IN THE MEANWHILE I REQUEST ALL THE MEMBERS TO TRY THIS METHOD AND PL. LET US KNOW THE RESULT.
Rules on how to play the game for a ZERO loss / Only profits move with the stocks:

- Always, play with 20% of the available funds. That to delivery based, if the situation warrants, or else you can square it off.

- Choose the right stock, since a fall from entry point would mean ultimate marriage. One would have to take delivery, and play another 20-40% and operate the way out. Another fall can take the balance funds.

- So once you’re stuck with a share, you may have to operate in that scrip for almost 6 months or even 1 year to get out, with ofcourse, atleast 50-75% returns, not bad for one year right?, Very safe too.

- So scrip selection and fund management is the only key to this game, where profits are occasional interludes in this strange game of losses.

- One’s long, and books losses. One’s short and also books losses, and a monthly high low is about 20-30%. So, why not try to tap atleast 10% in 1 month? After all it’s a lot for a month!

- See, in any business, one has to set up an infrastructure, have a lot of overheads, involve a lot of capital, procure / produce a product, market it and give 30-60 days credit and make a profit, which takes atleast 2-3 months. So an average turnover should be around 4-6 times the capital employed, and with depression or a huge interest outgo, the net profits would be around 40% annualised. Now, we play this game, with an urge to make money in an hour? 3 hours? 5 ½ Hours? Or maybe a week? Not fair right? So always wait for a correct entry, patiently for a week or even a month. Sometimes, even months of waiting can fail, like tatatea. After a wait from Feb peak at 600, non-stop fall and from March, consolidation for 5 full months at 350 levels, now, even that entry at 320 would need to be averaged at 254 (10 year Major Monthly support line), and below that it would mean 233 / 224 / 211 / 185. So one needs a lot of time, patience and money to keep buying and wait for a couple of months to get 40-60% returns.

- So keeping all this in mind, try to buy in the following pattern to always be a winner.

- buy 10 @ 100

- buy 10@ 90

- buy 20@ 81 trade it at 90 if it re-bounds technically.

- Wait and buy again if it falls to 81, same 20 shares.

- Buy 40@ 70-72. Trade it at 75-80 levels 40shares everytime.

- By this time, it should have been a month, and with so many intra-day trades, the cost for 80 shares should be well below the present market price. But bear in mind that you will start selling only above 100, whenever that happens, until then you can keep on trading in that single stock all year through.

- Another, pattern is that say, in SBI, RIL, TELCO, buy 10 shares for every 10 rupees fall & sell on every 10 rupees rise. This works out every week as they all move up & down atleast by 10 bucks EVERY week. So you can enter in the mid-price and keep trading until the year low happens, eventually, once every year, and buy a higher volume there for stock-in-trade and keep on trading until the year high, which also happens once in a year. (I’ve seen this happen in the past 2 years and these methods seem to be sure fail-proof methods) But to do this, one needs to control to 2 important values in life, Divorce Desire & Greed, and Marry contentment and satisfaction from what you get. One may see infosys surging or Satyam zooming and Himachal shining…..but if you’re a trader in SBI, then that’s all you should care about, and let the BSE/Nasdaq/INFY/SIFY/EURO/USD and whatnot go to **** for all you should care. There can never be a loss, since you use last-in, first-out basis of trade, and if you buy for every 10 bucks fall and sell for every 10 bucks rise, how can you ever lose? SBI would need at the most 30000 bucks even if it comes to 50bucks. In the long run, over a year, only those with a discipline of taking deliveries and averaging their Blue-chip stocks (not the junk stocks) win in this game, as many a foot has trodden to the broker’s office, but only those who invest come regularly, and new faces (traders) come and go, never to be seen again…….!

- For this reason, I always choose the BSE-A group stocks as you have the option to carry-forward all through the year, if you keep on trading, that is. (An idle position cannot be carried forward for over 10 weeks as per rules, but your broker may permit that, if there are others trading in that scrip during that 10 weeks).

- Another thing, in this type of strategy, there’s no question of any stop-loss orders. After all we want to make profits and absolutely NO losses at any point of time, right?

- Last but not the least, a compulsive trader is always a loser and a conservative trader rarely loses!

- Winners never quit and quitter’s never win. So, try trading along the lines mentioned above, and bring name to this business of trading in stocks. It’s always shunned and treated as a gambling joint, and at times it’s disgraceful when someone calls it as a pure game of luck and like a card game or like the horse-races, ‘cos 80% of the guys are trader’s who don’t mange their funds. Since they book losses, nobody respects a day-trader much, even though he may trade profitably on these lines. Finally, you’ll be compared with a “smart” investor guy who sat at home and bought Infosys at 20 bucks and Satyam at 75 bucks and has make a killing with the bonus and stock-splits, blah, blah,!

gvnarendra,

To answer your questions, I have stated them next to each question you have asked. I hope this makes it easier.

I am very happy a US stockmarket expert is in midst of us and is here to enrich our knowledge. First of all I would like to know the difference between US and Indian Markets, taking positions in futures and options. As far as trading options and futures in the U.S. markets, the principles are the same. What might be different is the margin requirement for each instrument you are trading. For example, if you are trading the Dow futures, your margin requirement is usually around $1,200 per contract to hold it overnight. If you close all your positions at the end of the day, then the margin requirement is much lower, as low as $300 per contract. For options, depending on the type of strategy you are using, the margin requirement will be differrent. As we all know, naked options is the most risky which means the margin requirement is higher. Of course, if you have large enough account, then you will not need to trade on margin. I do most of the trades in futures. Please tell me how many shares are available per lot in Dow futures and Nasdaq futures and how much it costs per lot? One thing to keep in mind regarding the Dow and Nasdaq futures is that they trade at different exchanges. The Dow trades on the CBOT, Chicago Board of Trade while the Nasdaq trades on the CME, Chicago Merchantile Exchange. Also, for both contracts, you can choose to trade the full contract or the Nasdaq Emini or Dow Mini. Both the Nasdaq Emini and Dow Mini have been created for trader's with smaller accounts. Also, these are only traded electronicall. The Nasdaq Emini contract is made up of 100 stocks which are mostly technology stocks. So the beta is much more on these stocks causing much more volatility. For the Dow contract is made up the 30 most liquid blue chip stocks in the U.S. MarketsTell me some details about the futures market like- brokerage, expiry date, good brokerage firm which charges reasonable brokerage, etc. Thanking you.
gvnarendra

As far as brokerage firms and costs, there are a lot of choices to choose from. The usual rule of thumb is that the larger the account you open and trade, The min. acccount size is $5,000 and commission of $6-$7 per round turn (the buy and sell).

I hope I was able to give you some more insight regarding the questions you asked. For more information about the Nasdaq futures, visit www.cme.com and look up Nasdaq Emini. For the Dow Mini, visit www.cbot.com. For brokerage info. you can contact www.rcgpsd.com and ask for Mike Kuta. He handles my account for Commando Trader.


Feel free to post any other questions you have

Dear HMP,

Thanks for sharing your method.

From the following quote, I assume you are talking of trading in futures ?

"For this reason, I always choose the BSE-A group stocks as you have the option to carry-forward all through the year, if you keep on trading, that is. (An idle position cannot be carried forward for over 10 weeks as per rules, but your broker may permit that, if there are others trading in that scrip during that 10 weeks)."

Thakyou Commandotrader for the insightfull reply. It was very helpfull.
gvnarendra

Dear HMP,

Your post reminded me of something I have read before - and I checked up and found it was cut and paste of an article by a Hyderabad based analyst named Arjun who discontinued his analysis on being placed with GE,US.Remember this was written 5 or 6 years back ,hence the reference to BSE A group scrips being in the carry forward - those were the days of badla-and there were no futures and options.Please check out this link

http://www.ways2gain.com/arjun_trading_rulz.html

Nothing wrong in cutting and pasting - at least you have brought it to the notice of those who are new.But please go through the material to see that there are no anachronisms - and also acknowledging the source is not a bad idea.

Kannamthanam

Dear Kannamthanam
U Have Guessed It Correctly. The Article Was Written At The Time ,when There Was No Ban On Badla System. I Just Did Cutting And Pasting. But The Article Still Holds The Good. U Have Just To Follow The Method. My Intention Was Just To Explain The Methodology , Which I Have Been Using Sucessesfuly For Past @ 1.5 Years. And I Thought That Our Other Members Also Should Get Benefit From It.
Regards
Hmp.