Jagan, I disagree with you on this.
Markets are designed only to give one success, provided you listen to it. It does not know who you are, what you do or where you come from.
Also, Market makers, brokers, analyst etc don't form an opinion for you. They don't make anyone trade on gun point. It is the trader himself who forms an opinion based on what he hears. Also, the concept of majority and minority is just over stated. There's no visible majority and similarly there's no visible minority which the majority target.
Also, how do you intend forming rules without FA OR TA? Opinions are inevitable. Hence, its easy to say that opinions should not be formed. An year like 1987,1995,2000, 2008 will get all these concepts out of any trader's head. That is why, trading is the most well paid profession, and also the most difficult one.
Tc
Raunak Bhai,
I absolutely agree with you from an individual trader's perspective that
if you are able listen to the markets then one will get success.
My opinion below could be highly debatable but in my several years of observation I held the below opinion.
Markets are designed only to give one success, provided you listen to it.
It does not know who you are, what you do or where you come from.
Most of you would have heard mutual fund advertisements and at the end there will be lightning voice
"Mutual funds investments are subjected to market risks".Have any one thought what those risks are ?
Markets are designed to deceive people.
Some thing like a lier's poker.
In Las Vegas terms - The house always wins.
Like wise in capital markets majority of the people loose their hard earned money for the benefit of a few.
No matter how good a stock - the price is determined by the smart money.
There are several good stocks with less P/E,PEG ratio buts till remaining un touched.
What do you mean by listening to markets ? -- go in the direction of the smart money.
Find out the scripts where accumulation is happening or where distribution is happening.
NEVER SIT IN FRONT THE TRADING TERMINAL.SIT IN FRONT OF A DECISION MAKING SYSTEM.
This is the first basic thumb rule for a trader to take money out of the markets.
How many people can afford to do this ?
Is it possible for every person to spend monthly on Internet/NSE Data charges/SW charges/ and more over their time.
How many people have the capacity in terms Money,Knowledge,Patience,SW background to understand the market dynamics.
That's the reason people come in and go but markets remain.
How many people in our country have advanced get/Amibroker/Metastock or conversant with AFL ?
or atleast aware that there is a sw called Advanced Get/Amibroker.
All the rules are in favour of Big Investors.
Even Automation SW are highly priced to the tune of 1 Lakh/month.
First of all how many people are aware that trading could be automated.
How many of people know that Big investors get news few minutes before news getting published in the TV channels.?
How many people here are aware of Reuters ?
Money lost by a person is not money gained by another person.
Trading is not a Zero Sum Game.
For every click on a computer trading terminal some one is paying the following
Govt + Brokers + Stock Exchange one way or the other.
They are the winners irrespective of people make or loose money or crash or bull run.
Govt being the highest gainer out of Stock markets.
Stocks doesn't have any intrinsic value for themselves like commodities.
There is no real production involved.You have limited stocks.
Supply and demand of the stocks are created artificially.
It is just the opinion or bet on the stocks future prospects.
If you have money Just accumulate/operate a stock at the bottom and dump it on the retailers at the High.
No questions asked.Just make sure that it is not done so visibly like Harshad Metha,Ketan Parekh.
A stock like Satyam can go down to 7 - 8 rs from 650 rs in stock markets but the same cannot happen for a commodity.So who determines this price.It can go to zero as well.
Global Trust Bank.
DSQ.
ASTRAL
.......
.......
The list goes on.
Who brought the price of Satyam to 7 - 8 rs level ? - The market makers.
By precisely knowing the demand and supply of a stock they are able to manipulate well.
One fine morning One reputed TA gives a short call news in CNBC on Tata Steel with a down side target of 480 rs a day or two before expiry.The same day it touched 494 rs.
A smart Fund manager of a reputed Mutual fund purchased certain percentage of TS that day.The script is going up non stop from then.
That evening the news appeared in the same channel.
The day before expiry Maruti crashed like any thing.
On the day of results BOI(11 % earnings up) crashed 11%.
During the previous govt
Most of us should be aware of the play on oil companies like BPCL,IOC,HPCL by the then M.......r.
Why go to that extent.
Most of us would have observed Block deals in NSE.
The companies would buy in lump like 5 lakh shares.
The retail people would buy the shares following jump in volume.
They would dump it pass it on to the retail customers with a minimal margin say a ruppee per share.
So we cannot avoid manipulation by smart money.
Just think of the following situation
1. Remove the so called liquidity providers/Market makers from the exchange.
2. Companies should not be allowed to provide the market makers with crores and crores of shares.
3. Corporates should not be allowed to trade their shares.
4. or Leave market making to a Non profit organisation.
5. Define an intrinsic value for each share.
6. No rumours/News/policies/ during market hours.
7. On upper freeze down freeze days publish the names of the major profit makers.
8. After listing a share with premium if the share price goes down beyond a certain limit.
9. Make sure if the company board of directors/insiders trading.
Or it should be released with a buy back promise from the company.
9. On any single day whether any one has been charged with circular trading ?
How many people have committed suicide in the 2008 market crash ?
Market makers, brokers, analyst on gun point don't force you to trade.
It is the trader himself who forms an opinion based on what he hears.
Why do analysts/Brokers give calls they could themselves buy the shares and get rich ?
It is some thing like this why do you trust a Broker/analyst ?
Bcoz for the lack of infrastructure,knowledge,Money one person seeks advice from an analyst.
Otherwise TV channels and Analysts wont exists.
Again people getting free calls are more vulnerable to cheating.
Why a loosing trader is not able to stop trading ?
It is called gambler's syndrome.He will always be deluded with a false hope that he could recover the loss and make a fortune in short span.
One cannot keep himself out of trading even knowing that he will loose when he goes to broker house.
But your inner urge to recover the loss will create chaos and will make a person ultimately to surrender to some sources.
Broker Houses
1. I know personally broker houses giving calls to generate their daily turnover.
They will make sure that their clients will not make huge profit or loss but survive so as to generate enough brokerage for them.
2.Their HNI calls gets circulated first few days well before in advance than to ordinary clients.
Analysts
1.Some Analysts do have hidden agenda there are many wrong calls given by them purposefully during accumulation/distribution phases.
2.For analysts it is a risk free source of money in the form of consultation or technical calls which is highly being misused now a days by mushrooming TA companies.
TV channels/News Papers
Are being misused by operators/Smart money to distribute/accumulate shares.
Insider trading is happening.This will happen and nothing can be done since Market makers/Brokers/Analysts/Traders - They are all humans with greed.
Leave here.What about recent US Investment banking house crashes ?
The reason behind the fall of banks.
What about the watch dogs and Regulators
Sample Jokes
If you trade with out leverage in forex it is legal.
"Margin trading in derivatives" is allowed for stocks/commodities but the same is not allowed in Forex.
I went to court with my friend for his sub broker fraudulently cheated him by selling a IFCI call@10 paise from his account and sold the same immediately at 8.75 rs when the stock was trading 9 rs.
The Judge asked what do you mean "Options" ?
Finally
Also, how do you intend forming rules without FA OR TA? Opinions are inevitable.Hence, its easy to say that opinions should not be formed.
Fundamentals are required but again are today they are highly and easily manipulated.Not all fundamentally strong companies are trading at their deserving valuations(which is again highly subjective).
Technicals are absolutely required to pick a stock.
Personally I would prefer technicals rather than fundamentals and keep fundamentals as a supporting mechanism for a stock pick.
My point is technicals or fundamentals just don't hold on to your bullish or bearish views.
Just go with the Price action and be with the trend and let the markets decide the view.
Trading rules - Money management rules.
Fibanocci or ATR based targets/Stop loss.
And especially for day trading I think trading with out any bias or opinion would be best.
My point is "It is our hard earned sweet money friends" and it is our responsibility to protect ourselves from the markets.
It is a high risk game and we should play the game accordingly.
My apologies if I hurt ed any one's opinion or sentiments in my above writing.
Best regards,
-JK
