Wednesday, May 31, 2006
- Why Analyze Securites?
- A Random Walk
- Technical Analysis 1
- Technical Analysis 2
- Fundamental Analysis 1
- Fundamental Analysis 2
- What are Charts?
- Support and Resistance
- Introduction to Chart Patterns
- Candlesticks 1
- Candlesticks 2
- Candlesticks 3
- Candlesticks 4
- Candlesticks and Support
- Candlesticks and Resistance
- Candlestick Bullish Reversals 1
- Candlestick Bullish Reversals 2
- Candlestick Bearish Reversals 1
- Candlestick Bearish Reversals 2
- Bump and Run Reversal BARR
- Double Top
- Double Bottom
- Head and Shoulders Top
- Head and Shoulders Bottom
- Falling Wedge
- Rising Wedge
- Rounding Bottom
- Triple Top
- Triple Bottom
- Cup with Handle
- Flag, Pennant
- Symmetric Triangle
- Ascending Triangle
- Descending Triangle
- Price Channel
- Measured (Bull) Move
- Measured (Bear) Move
- Indicators 1
- Indicators 2
- Indicators 3
- Indicators 4
- Accumulation/Distribution Line
- Average Directional (ADX)
- Average True Range (ATR)
- Bollinger Bands
- Commodity Channel Index (CCI)
- Chaikin Money Flow 1
- Chaikin Money Flow 2
- Chaikin Oscillator
- Moving Averages 1
- Moving Averages 2
- MACD 1
- MACD 2
- MACD 3
- MACD 4
- Percentage Volume Oscillator (PVO)
- Price Oscillator (including PPO)
- Price Relative
- Rabbitt Q-StockRank
- Relative Strength Index (RSI)
- Standard Deviation
- Stochastic Oscillator
- Williams %R
- John Murphy's Ten Laws
- Arthur Hill on Goals, Style and Strategy
- Arthur Hill on Moving Average Crossovers
- Scott McCormick's Gap Trading Strategies 1
- Scott McCormick's Gap Trading Strategies 2
- The Pre-Holiday Effect
- The "Last" Stochastic Technique
- Richard Rhodes' Trading Rules
other reading material
- WhatIsTechnicalAnalysis.pdf (4.40 mb)
- TechnicalAnalysisAtoZ.pdf (8.47 mb)
- ClearStationEducation.pdf (1.23 mb)
- TradersWheel.pdf (1.97 mb)
- WizardsDen.pdf (1.90 mb)
- Tradecraft.pdf (3.25 mb)
- Briefing.pdf (3.50 mb)
- StockMarketManias.pdf (2.12 mb)
- TurtleTrader.pdf (13.50 mb)
- NasdaqTraderManual.pdf (2.47 mb)
- ForeignExchangeMarket.pdf (1.32 mb)
Practically speaking, risk in the stock markets is a function of time.
..... to read more.. >> follow
Monday, May 29, 2006
To read previous Nifty Updates.
In the long term we would eventually move up!
Question is: How long is long?
Idea is: We have a lot of time to waste meandering up and down.
For now more down than up.
I would not hurry to pick up stocks which dropped.
Shall wait for all around me to give up hope. :p
Saturday, May 27, 2006
"The Psychology of Judgment and Decision Making" suggests that overconfidence is greatest in situations where individuals have no better than chance odds of being correct in their judgments.
One of the reasons for this is called the Gambler's Fallacy. A person who guesses market direction once a day and has a 50/50 chance of being correct will encounter, on average, about six occasions per year in which he or she is correct five times in a row. Some of these random traders will, by sheer good fortune, hit this streak early on in their career. According to researcher Ellen Langer, early (but random) experiences of success lead individuals to be highly confident in their ability--even when the task is guessing the outcome of coin tosses! This is because they are more likely to attribute success to internal factors--skill--than to situational reasons or chance. The gambler who experiences a (random) streak of wins becomes convinced that he has a hot hand and raises his bets accordingly. The result is predictably disastrous.
Do traders behave differently from gamblers? Research suggests not.
- Terence Odean found that traders who were most confident in their decision-making traded the most frequently--and lost more money than other traders because of the increased transaction costs.
- A provocative study from the London Business School presented traders with price data and asked the traders to make trading decisions based on the data. Traders were not informed that the data were generated randomly. The traders who expressed the greatest confidence in their decisions, not surprisingly, were also the ones who, on average, lost the most money.
- The "illusions of control" demonstrated by these traders can reach extremes bordering on the absurd. In Langer's studies in which coin tosses were presented as tests of "social cues", for instance, 40% of all subjects insisted that their ability to guess the outcome of the coin tosses could be improved with practice--and 15% believed that enhanced concentration and an absence of distractions would improve their results.
- A different kind of overconfidence can be seen in surveys of traders and investors, asking them for their expectations for the market. Traders feel better about their ability to call market direction than is warranted. For example, in such surveys as those conducted by Investors Intelligence, over 70% of respondents pronounce themselves either bulls or bears--despite the fact that the majority of time the market is range bound.
- Research cited by Hersh Shefrin, in his review of behavioral finance studies entitled Beyond Greed and Fear, finds that traders are most bullish after extended rises--with inexperienced traders most bullish of all. That is paradoxical, because market returns historically have been greatest following years of decline, not years of strength.
- Similarly, it is not uncommon to see put-call ratios elevated after a five-day period of decline, despite the fact that returns, on average, are superior following five days of weakness than after five strong days.
- Quite simply, traders extrapolate from the past to the future--and confidently act upon these (false) expectations.
Is it possible to immunize oneself from overconfidence? My personal therapy for treating overconfidence has been to test out my trading ideas and calculate:
- precisely how often the pattern would have been successful if used in the past; and
- how much of a P/L edge was present over that time.
- Those statistics, which I report on my blog, ground me in the inherent uncertainty of markets and prepare me for the very real possibility, with any trade idea, that I will be wrong.
- This, in turn, has helped me greatly with risk management, as I am unlikely to wager a large proportion of my trading stake on any uncertain proposition--even when the odds are in my favor.
- The past is hardly a guarantor of the future, but by assuming that the future won't be better than the past, we can soberly assess the downside and avoid overconfidence.
The best trades, I find, have enough of a historical edge to make me feel confident about the idea, but also enough potential downside to prevent me from feeling overconfident.
Planning for each trade being a potential loser may seem counterintuitive, but it keeps risk management sharp and overconfidence at bay. And that makes a world of difference to the bottom line.
Friday, May 26, 2006
How for some new names?? (haha)
- Trading in the Twilight Zone
- How I made $20 in the Stock Market
- Stock Market Blizzards
- The Joy of Giving Up
- Probably High Trading
- Technical Analysis of Stock Traps
- How to Make Money in Stockings
- A Random Hock Down Wall Street
- Trading is for Dummies
- Options, Pricing, and Futility
- To Kill a Martingale
- Getting Finished in Options , the Last Edition
- The Education of a Speculum
- Rammed by Foolishness
- Options as a Tragic Investment
- Trading for a Survival
- Come into my Trading Trunk
- Technical Analysis of the Fickle Markets
- The Masturbating Swing Trader
- Fooled By Flatulence
- Dynamic Farting
- Building Losing Systems with PlayStation
- Pears Trading
- Technical Paralysis of Stock Bends
- Climax into my trading room
- New Shading Dimensions; how to profit
Wednesday, May 24, 2006
Before you read this, let me warn that anal'yzing Nifty is "fifty" times complex'er than regular EagleEyeing.
(And being correct on Nifty doesn't implies a great trader and vice versa. Nifty analysis is more of an exercise in creative thinking. :-) )
Wait, I have not yet given up.
I have a decent record in dealing with Nifty and her husband Sensational Sensex (click click).
Before we go on to looking at oil and dollar is making Indian Mkts a wee bit juicer.
Now for the Slippery Crude. (Spend less on petrol and buy stocks from that cash)
and now the most sophisticated chart. (hold your nose)
This is the sexy NSMidCap index. (dont ask, what that means)
this broader index gives a more complete view of wider market, and all detailed embeded in image.
Have a comment? Feel free to put one in the comments link somewhere underneath.
Always understand the risk/reward of the trade as it now stands, not as it existed when you put the position on. Some people say, "I was only playing with the market's money." That's the most ridiculous thing I ever heard. -Bill Lipschutz
You don't have to get in or out of a position all at once. Avoid the temptation of wanting to be completely right. -Jack Schwager
I basically learned that you must get out of your losses immediately. It's not merely a matter of how much you can afford to risk on a given trade, but you also have to consider how many potential future winners you might miss because of the effect of the larger loss on your mental attitude and trading size. -Randy McKay
I take the point of view that missing an important trade is a much more serious error than making a bad trade.- William Eckhardt
Large profits are even more insidious than large losses in terms of emotional destabilization. I think it's important not to be emotionally attached to large profits. I've certainly made some of my worst investments after long periods of winning. -William Eckhardt
Investing is a negative game emotionally. If you're playing for the emotional satisfaction, you're bound to lose, because what feels good is often the wrong thing to do. When all the criteria are in balance, do the thing you least want to do. -William Eckhardt
You should spend no time at all thinking about those roseate scenarios in which the market goes your way, since in those situations, there's nothing more for you to do. Focus instead on those things you want least to happen and on what your response should be. -William Eckhardt
It's important to distinguish between respect for the market and fear of the market. While it's essential to respect the market to assure preservation of capital, you can't win if you're fearful of losing. Fear will keep you from making correct decisions. -Howard Seidler
Make sure you have an edge. Know what your edge is. And have rigid risk control rules. - Monroe Trout
I focus my analysis on seeking to identify the factors that are strongly correlated to a stock's price movement as opposed to looking at all the fundamentals. Frankly, many analysts still don't know what makes their particular stocks go up and down. -Stanley Druckenmiller
It's not whether you're right or wrong that's important, but how much money you make when you're right and how much money you lose when you're wrong. -Stanley Druckenmiller
Soros is the best loss taker I've ever seen. He doesn't care whether he wins or loses on a trade. If a trade doesn't work, he's confident enough about his ability to win on other trades. There are a lot of shoes on the shelf; wear only the ones that fit. If you're extremely confident, taking a loss doesn't bother you. -Stanley Druckenmiller
If there's a large move on significant news, either favorable or unfavorable, the stock will usually continue to move in that direction.
The critical ingredient is a maverick mind. Focus on trading vehicles, strategies and time horizons that suit your personality. In a nutshell, it all comes down to: Do your own thing (independence); and do the right thing (discipline).
The ability to change one's mind is probably a key characteristic of the successful investor. Dogmatic and rigid personalities rarely, if ever, succeed in the markets. The markets are a dynamic process, and sustained investment success requires the ability to modify and even change strategies as markets evolve.
To use a life insurance analogy, most people who become involved in the stock market don't know the difference between a 20 year old and an 80 year old. Investing in the market without knowing what stage it is in is like selling life insurance to 20 year olds and 80 year olds at the same premium.
Once a price move exceeds its median historical age, any method you use to analyze the market, whether it be fundamental or technical, is likely to be far more accurate. For example, if a chartist interprets a particular pattern as a top formation, but the market is only up 10% from the last low, the odds are high that the projection will be incorrect. However, if the market is up 25% to 30%, then the same type of formation should be given a great deal more weight.
The key to investment success is emotional discipline. Making money has nothing to do with intelligence. To be a successful investor, you have to be able to admit mistakes. I trained a guy to trade who had a 188 IQ. He was on "Jeopardy" once and answered every question correctly. That same person never made a dime in trading during 5 years!
Most people lose money because of lack of emotional discipline
-the ability to keep their emotions removed from investment decisions. Dieting provides an apt analogy. Most people have the necessary knowledge to lose weight—that is they know that in order to lose weight you have to exercise and cut your intake of fats. However, despite this widespread knowledge, the vast majority of people who attempt to lose weight are unsuccessful. Why? Because they lack the emotional discipline.
In my opinion, the greatest misconception about the market is the idea that if you buy and hold stocks for long periods of time, you'll always make money. Let me give you some specific examples. Anyone who bought the stock market at any time between the 1896 low and the 1932 low would have lost money. In other words, there's a 36 year period in which a buy-and-hold strategy would have lost money. As a more modern example, anyone who bought the market at any time between the 1962 low and the 1974 low would have lost money.
Perhaps my number one rule is: Don't try to make a profit on a bad investment, just try to find the best place to get out.-Linda Bradford Raschke
I believe my most important skill is an ability to perceive patterns in the market. I think this aptitude for pattern recognition is probably related to my heavy involvement with music.- Linda Bradford Raschke
Only by acting and thinking independently can an investor hope to know when an investment isn't working out. If you ever find yourself tempted to seek out someone else's opinion on an investment, that's usually a sure sign that you should get out of your position. -Linda Bradford Raschke
You can't listen to the news. You have to go with the facts. You need to use a logical approach and have the discipline to apply it. You must be able to control your emotions.-Blair Hull
The most surprising thing I have discovered is how ready people are to fool themselves. People's perceptions of reality and true reality are not the same thing.- Robert Krausz
Monday, May 22, 2006
People who could spot opportunity would have purchased stocks at super low levels and
make a tidy profit till the close...
|Company||Low 22-May-06||Close 22-May-06||% recovery|
|GUJ AMB CEME||70||91||29.86%|
|MAH & MAH||565||635||12.39%|
Sunday, May 21, 2006
Friday, May 19, 2006
I hope this does not instills pain in heart and is just taken as a nature of mkt.
~~~~Click on image to expand.
I had posted several days earlier warning that many >> heavy weights were cracking channels and this would lead to more falls in coming days. You can look at that also.
Thursday, May 18, 2006
Here are a few pointers one should look for.
- Stocks go up and they go down also.
- Stocks can go up, higher than we think.
- Stocks can go down, deeper than we think.
- Points 2 and 3 are right very often.
- When you listen to "common people" saying great things for economy, please try to turn fearful and dont join the crowd whole heartedly.
- When you listen to "common people" saying depressive things for economy again think ahead and purchase shares.
- When all u see around is hope and hype, run.
- People who purchase shares since it has gone up are innocent lambs.
- People who try to trade shares without knowing risk are still more innocent.
- Lambs are systematically slaughtered for meat and wool.
- Its far more difficult making money trading stocks than what everyone thinks.
- In a trade, either you or the person on other side is right. Are you sure you know enough?
- When an analyst says "mkt would come up" ask him will he try to sell of this shares as it comes up? And if everyone wants the same thing would it happen?
- When a friend gives you a tip, do you ask him enough questions? or just take his tips since you want to "do something"?
- Has your friend demonstrated over time that he can make good decisions? or does he just says fancy things and shift the pain on govt and news?
- Does you friend makes you "think" or does he tries to make you "feel".??
Only people who can think unemotionally and wait for opportunity with Eyes as sharp as Eagle can make money in long term. Rest would give their helping hand to make the focused guys get richer.
Tuesday, May 16, 2006
A: Whats view for mkt tomorrow? I heard your view on nifty went went right yesterday?
Z: Seems some more selling and then some consolidation.. trend looks down over the next few weeks.
A: How come you say for weeks.
Z: this is insight which elliott wave gives. A strong down impulse would lead to one more such down impulse. Though I am not sure.
A: why not sure? if not sure how can u trade?
Z: I am never sure. I just take my chances.
A: So whats ur target?
Z: dont have a fixed target.
A: then where would you cover shorts?
Z: dont know for sure. would look at intraday patterns.
A: Anything to short for tomorrow?
Z: Dont know.
A: You say mkts are weak, cant u suggest one short?
Z: What if my idea fails?
A: Give me one sure shot shorting idea
Z: I dont have sure ideas.
A: How long you doing trading?
Z: Since some time.
A: you cant give one sure trade? If not why not?
Z: Nothing is sure and having traded for long time doesnot remove the inherent uncertainity in mkt moves.
A: Whats "inherent uncertainity"?? talk simple yaar.. tell me what to short..!
Z: means one cannot get very sure of anything in mkts.. my giving a few trades to you wont help you.
A: Why wont it help?
Z: Since 30-50% of my trades fail.
A: What 30-50% failures? Man did u make any money trading? How can u trade like this? In the tips my friends get they guarantee 95% success rates.
Z: My losing trades are small and winners take care of them and give me my profits.
Dont know for 95%.. I have never seen anyone do that.
A: Man.. my friends said you could help me. You only talk confusing.
Z: This is how it is. Nothing is for sure. U have to take measured chances. and take small positions.
A: Why small? I like large positions.. Full thing in/out. Small karke maja nahi aata.
Z: That would slowly lead to capital erosion.
A: Yeah I got stuck 2-3 times. Had to get fresh money in.
Z: ok. spend some time thinking of risk. That may help.
A: Kya yaar, all this risk and all. :(( Give me a few tips, I need to make up my stuck money. help me if you can and if you know how to trade.
Z: Trading is difficult. Making up lost money is even more difficult.
A: then what do I do?
Z: Dont loose money.. play safe always.
A: Yaar safe karte karte kafi din trade nahi kiya... Phir thora kiya and made little...and my friends made a lot on their tips... and when I did large i got stuck.
Z: Hmm.. Trading is difficult.. you also see that. How is your friend doing now?
A: I think they got stuck in this dump. they are also asking the person who gave them tips what to do.. seems all tips have stopped.
Z: Oh ok. mkts are preety nasty stuff. Does shakes up from time to time.
A: What do you suggest? What to trade.
Z: I suggest you take time out to read. Trading can wait.
A: How do I make money yaarrrrrrr..
Z: Preserve your money first.
A: Damn.. waste of time to talk here.
Z: sorry for that.
A: Anyway, What do you suggest to readddddd :((
Z: Something which gives you edge and you can digest.
A: GIve me some name?
Z: read on patterns, momemtun, elliott, and dont ignore risk part. risk is most imp.
A: ok chal yaar.. i cant read so much. thanks for everything.
Z: ok.. see ya.
A: if you got some hot tips.. pass kar dena.
Z: okie.. will try.
Saturday, May 13, 2006
Friday, May 12, 2006
The Charts are Live when markets are on.
Sterlite Industr (ADR) 5 Day
PowerShares Indi (ADR) 5 Day
Dr Reddy Labs (ADR) 5 Day
HDFC Bank Limite (ADR) 5 Day
VSL (ADR) 5 Day
Rediff.com India (ADR) 5 Day
Mahanagar Teleph (ADR) 5 Day
Morgan Stanley I (ADR) 5 Day
Patni Computer S (ADR) 5 Day
WNS (Holdings) L (ADR) 5 Day
Sify Technologie (ADR) 5 Day
Tata Motors Ltd (ADR) 5 Day
Cognizant Techno (ADR) 5 Day
WisdomTree India (ADR) 5 Day
Infosys Limited (ADR) 5 Day
Barclays Bank Pl (ADR) 5 Day
ICICI Bank Limit (ADR) 5 Day
SAY (ADR) 5 Day
Wipro Limited Co (ADR) 5 Day
India Fund (ADR) 5 Day
SAYCY (ADR) 5 Day
Tata Communicati (ADR) 5 Day
Long Term Charts of many important world indices, currency and commodity.
Japan Nikkei 5 Day
US treasury 10 year
Thursday, May 11, 2006
Sooner after the right shoulder formed we saw a sharp fall which was contrary to expectations of many co-traders.
Click on image to expand.
Today during Trading hours MACD in 5 and 15 min systems showed large divergences and after the initial dump and rise the next sell signal was more powerful. Here is an update.
Updated image under.