Why Reliance Missed the Rally.......????

Every Market Players understand what Reliance means to market.Market made new high but reliance dint show any brightness on its face. But who takes market to up and down?? neither you nor me but FII takes, not even DII can dare to do alone in such type of adverse environment.However FII took market to new high,But this time FII decided to avoid Whole Reliance Group because of the conflicts between ambani brothers, the conflict affected the values of these stocks not even these stocks but those stocks also which are associated with Reliance group in some way or other.FII chosen other stocks e.g. ONGC,INFOSYS,SBIN,TATAMOTORS,etc. instead of Reliance group.These stocks moved far ahead but Reliance kept on watching these stocks from far behind & probably distance may increase among these in coming days.Dowjones was oversold, moved up on Friday, if there is no bad news in market it ll continue its upmove ,European market is also oversold it should bounce back.Our market should touch 5350 and hold for a healthy correction but if it doesn't hold then 5150 should come but it has least chance.Market may react as per these levels-5265-5328-5368 supports and 5472-5535-5575 resistances.
Trade with caution.Good Luck.
INTRA CALLS-->PLEASE VISIT SITE DURING MARKET HOURS FOR INTRA CALLS.VISIT PAST CALLS MOSTLY HAD CIRCUITS.
DELIVERY CALLS-->BUY PUNJ LLOYD,JPASSOCIATE,CENTURY PLYBOARD,SUJANA TOWER,BENGAL & ASSAM COMPANY,SUZLON,NMDC,NTPC,BALLARPUR INDS. ....THESE ARE LONG TERM GOLD MAKE A FIXED DEPOSIT IN ALL THESE.
BUT FOR SHORT TERM BUY BAGFLMS AT 13 SL 12 IN LARGE QUANTITY & GET HANDSOME & QUICK RETURNS.......ENJOY.

HAPPY & SAFE TRADING.

Intra and Delivery Tips

HI,I AM BACK AGAIN WITH MY SUPERB TIPS FOR YOU.I HOPE YOU ENJOYED PROFITS FROM MY PREVIOUS TIPS.PLEASE MAINTAIN STRICT STOP LOSS.HAVE A SUPERB PROFITABLE DAY TODAY.........GOOD LUCK.

BUY INDSWIFTLAB AT 114 SL 113 TRGT ABOVE 120 INTRA.
BUY PRAKASH STEEL AROUND 189-90 SL 184 TRGT ABOV 200 INTRA.
SELL MYSORE BANK ABOV 1225 SL 1235 TRGT 1168 INTRA.
SELL TCS ABOV 874 SL 876 TRGT 869 OR BELOW INTRA.

NOTE:-PLEASE BOOK PROFIT WHEREVER YOU FEEL LIKE DON'T WAIT FOR TARGET.

HAPPY TRADING

Intra and Delivery Tips

HI,I AM BACK AGAIN WITH MY SUPERB TIPS FOR YOU.I HOPE YOU ENJOYED PROFITS FROM MY PREVIOUS TIPS.PLEASE MAINTAIN STRICT STOP LOSS.HAVE A SUPERB PROFITABLE DAY TODAY.........GOOD LUCK.

BUY SIYSIL AT 351-53 SL 348 TRGT ABOVE 367.INTRA,
BUY STERLITE AT 151 SL 150 TRGT 155 OR ABOVE.INTRA,
BUY HINDUJAVEN AROUND 470 SL 460 TRGT ABOVE 500 INTRA.

NOTE:-PLEASE BOOK PROFIT WHEREVER YOU FEEL LIKE DON'T WAIT FOR TARGET TO COME.

Market Looks in Bears Grip...??

Today Market started its journey with flat opening and remained under presser throughout the day.World markets are making new lows daily but Dowjones has support near 10000 and looking oversold and a bounce back is expected whereas Ftse is concerned it may correct a bit more.Our market is looking overbought and everybody is cautious and most of them believe that its very difficult for market to make a new high from here on.Today bears tried to tighten the grip but couldn’t break major support levels,at this level a correction for market ll be healthy.But a major fall is not expected until it holds 5350 levels.Tomorrow Market ll open with a Gap down & ll remain under presser,further downside expected.Market may react as per these levels 5421-5455-5480 supports and 5539-5572-5597 resistances.APPLY YOUR MIND AND TRADE SAFELY.GOOD LUCK.
INTRA CALLS:-
PLZ VISIT SITE DURING MARKET HOURS FOR INTRA CALLS.
DELIVERY CALLS:-
BUY JKIL AROUND 204 SL 198 TRGT ABOVE 220.
KEEP AN EYE TOMORROW ON–
PTC,HANUNG,VISHAL RETAIL,RICOAUTO,OMAXE AUTO, FOR QUICK RETURNS.

Intra and Delivery Tips

HI,I AM BACK AGAIN WITH MY SUPERB TIPS FOR YOU.I HOPE YOU ENJOYED PROFITS FROM MY PREVIOUS TIPS.PLEASE MAINTAIN STRICT STOP LOSS.HAVE A SUPERB PROFITABLE DAY TODAY.........GOOD LUCK.

BUY SURYAJYOTI AT 47 SL 45 TRGT 52 INTRA.
BUY PTC AT 123 SL 121 TRGT ABOV 135 INTRA.
BUY VISHAL RETAIL AT 56.80 SL 54 TRGT 59.50 INTRA.
BUY IBN18 AT 126 SL 121 TRGT ABOV 140 INTRA.
BUY HANUNG AROUND 270 SL 265 TRGT 300 INTRA.

HAPPY TRADING..

Don't You Want Quick Returns...?

HI,I AM BACK AGAIN WITH MY SUPERB TIPS FOR YOU.I HOPE YOU ENJOYED PROFITS FROM MY PREVIOUS TIPS.PLEASE MAINTAIN STRICT STOP LOSS.HAVE A SUPERB PROFITABLE DAY TODAY.........GOOD LUCK.
Watch market how is it behaving now a days,once it crossed one level doesn’t want to come down to those levels or below those level.market goes up to come down, but how and when..? a question worth to be answered,as long as you don’t have answer please be in the camp of FII i.e. on long side but with caution.DII selling continuously means this is the level where one should book profit and sit on cash.
INTRA CALLS:-
BUY DS KULKARNI AT 87-88 SL 84 TRGT 94.
BUY JINDAL PHOTO AT 224-225 SL 219 TRGT ABOVE 230.
BUY MYSORE BANK AT 970 SL 955 TRGT ABOV 985.
BUY ADVANIHOTEL AT 48.5 TRGT ABOV 50 SL 46 .PLZ DO INTRA N BTST IN JKIL AT 206 SL 202.
DELIVERY CALLS:-
BUY FAME AT 81 SL 80 TRGT 88.BUY VARUNSHIPING SL 40 TRGT 48,BUY ZICOM SL 76 TRGT 90 & ABOVE.BUY BALAJITELE SL 54 TRGT 62

This is What You Need to Know

This is what you need to know about each stock in order to prepare for the trade diligently before each buy trigger / entry:

1. What is the stock's ticker symbol
2. What is the stock's average daily volume.

3. How far is the stock above it's EMA moving averages (i.e.: 13 EMA, 34 EMA)
4. What' is the stock's short ratio.

5. How far is the stock off from it's recent highs (i.e.: -1%, 5%,-10%,-20%, etc)
6. What pattern is the stock in on the daily chart.

7. What Type of Tend is the stock in (i.e.: bullish or bearish )
8. What direction is the stock in up or down?
4W85MCVCX434

Market Review and Tips

HI,I AM BACK AGAIN WITH MY SUPERB TIPS FOR YOU.I HOPE YOU ENJOYED PROFITS FROM MY PREVIOUS TIPS.PLEASE MAINTAIN STRICT STOP LOSS.HAVE A SUPERB PROFITABLE DAY TODAY.........GOOD LUCK.

Market made a new high today leaving bears looking for shelter and bulls having upper hand throughout the day.nobody expected this kind of closing, it was so fearful for shorters that they couldn’t dare to make fresh short positions but i believe this was right time to make, as we cant catch tops and bottoms.its Friday tomorrow and Dow trading in deep red so we can expect a gap down.its advisable to trade with caution and buy those stocks which are good for coming trading sessions.Market may react as per these levels 5431-5454-5497 supports and 5564-5587-5630 resistances.

BUY SABERO ORGANICS AT 70 TRGT 80 SL 68.
BUY SUJANA TOWER AT 55 SL 50 TRGT 65.(MAY GIVE UPSIDE BREAKOUT BUY FOR LONG TERM)
BUY CHHATT INDS AT 9 SL 8 TRGT 12.
BUY BAGFILMS. BUY BARTRONICS. ALL DELIVERY CALLS.BUT KEEP AN EYE ON ARCHIES,SSWL,ICICIBANK,SHORT IT SECTOR STOCKS ALL INTRA.
HAPPY & SAFE TRADING.

Market Review and Tips

HI,I AM BACK AGAIN WITH MY SUPERB TIPS FOR YOU.I HOPE YOU ENJOYED PROFITS FROM MY PREVIOUS TIPS.PLEASE MAINTAIN STRICT STOP LOSS.HAVE A SUPERB PROFITABLE DAY TODAY.........GOOD LUCK.

Today’s Market was saved by SBI Q1 result otherwise global market was heavily down and then IIP data wasn't up to the street’s expectation and food inflation was also higher ,overall scenario was turned negative but then sbi result came and saved bulls and made those people right who believe in buy in dips.but storm hasn't passed yet.more downside is expected with negative to flat opening tomorrow, then its Friday so trade with bit caution and don't close your eyes in falling market search for gold in it.Market may react as per these levels 5323-5348-5382 supports and 5441-5465-5499 resistances.
BUY INDIAN HOTEL AT 95 SL 90 TRGT 105.
BUY CIPLA AT 310 SL 300 TRGT 340
& ACCUMULATE DISHMAN PHARMA ON DIPS.KEEP AN EYE TOMORROW ON MNM,RAINBOW PAPERS,OMNITECH,TATASTEEL,& SBIN(SHORT ABOVE 2800).

HAPPY TRADING.

Market Review and Tips

Today Market closed a bit down due to fall in global market,but our market did not fall that much as global market.European and us market are deep in red and we expect a gap down tomorrow but most of us ll be thinking of buying in dips and market ll recover but its advisable that it might be a trap and this time all investors should be careful and this can be the beginning of a big fall.but some stocks which have already fallen enough can be bought e.g. Reliance inds,idfc etc.market may react as per these levels 5334-5373-5397 supports and 5459-5498-5522 resistances.TRADE WITH CAUTION.GOOD LUCK.
BUY ON DIPS BAGFILMS,IDFC,RELIANCE INDS,CENTURY PLY,RCF,SUBEX,MUDRA.

Highlights of new bank licences discussion paper

Foreign shareholding in new banks could be capped at 50%, though with a lock-in period of ten years.
Industrial and business houses that have predominant presence in the financial sector could be allowed to set up banks after proper checks and balances in place. As an intermediate step, the industrial houses could be allowed to take over regional rural banks (RRBs).
Initial capital requirements may be prescribed at Rs500 crore, which may be raised to Rs1,000 crore over five years. The higher capital requirements are aimed at ensuring serious players and optimum utilisation of capital.
The Reserve Bank of India (RBI) may require promoters to bring in minimum 40% capital with lock-in period of five years, with threshold for other significant shareholders to be restricted to 10%. A case could be made for increasing promoter threshold to 20% though subject to stringent criteria.
The stance of the discussion paper could be positive for large non-banking financial companies (NBFCs) vying an entry in the banking space (Reliance Capital, Shriram Transport Finance, Edelweiss, etc).

Market Review and Tips

We closed today at a new high with support from global cues, tomorrow also we can expect a gap up opening and crossing 5500 but it looks very difficult for market to sustain there so it is advisable to short market at opening and get some quick profits,DOWJONES,FTSE and NIFTY have become overbought, a correction is imminent.market may react as per these levels 5389-5411-5448 SUPPORTS AND 5507-5529-5566 RESISTANCES..TRADE WITH CAUTION.....GOOD LUCK.
SELL WIPRO AT CMP TRGT 410 SL 450
SELL SBI ABOV 2650 SL 2700 TRGT 2550
ACCUMULATE JPASSOCIATE SL 110 TRGT 130-40
ACCUMULATE IDFC SL 170 TRGT 195..AND KEEP AN EYE ON THESE FOR INTRA -TILAKNAGAR,KSKENEGRY,ABCIL,DCM,GARWAREOFFSHORE.

What Type of Trader Are You: Part-Time or Full-Time?

Before you start to trade, you need to establish goals in terms of how much time you can devote to trading.  Are you going to trade on a full or part-time basis?  Always keep in mind, as with any business, the more time you can devote to the business in the beginning, the better the business will be.

Many traders I know spend the entire day in front of the market. They are glued to their monitors from one to two hours before the opening bell until well after the market closes in the afternoon.  They take advantage of every profit opportunity offered during market hours.  I also know many traders who work other jobs and trade two to three days a week.  Their style takes advantage of trades that take two to six days or weeks from start to finish.  I’ve even traded with some hot shot traders who only trade one to two hours a day and make a fortune doing so.

O.K, now that you’ve decided how much time you can devote to trading, here are a few more questions to consider:

How many trades do you plan to make each day.  Three or fewer? How long do you intend for the position to be open?  Six days or possibly six weeks?  How much time do you intend to devote to “homework?”  As much as possible with no intention of doing it 24/7?  Do you plan on focusing on trading after work and on weekends?

If you answered yes to the questions above, you are a part-time trader.  This style fits most of the trading population.  Most folks have a full-time job and three and a half kids at home.  Time can be limited and, realistically, there is only so much time in a day. We all know that unless you devote some extremely focused time to trading, it can get very expensive. If you are fortunate, and can focus every hour of everyday on the market, the following tendencies would define a full-time trader:
 You will be in front of the market every day.  From before the open until after the closing bell.  You will also know when it is best not to trade and sit on your hands or step away from your machine should market conditions so dictate. You strive to execute and manage your trades with workman like precision. Your goal is to make fast profits, sometimes being in trades for only a few seconds.
You study more than you did in high school or college and love hearing those magical words from your spouse as you duck into another book store,    “Are you going to spend more money on another stock trading book?!”  and your objective is to trade stocks for a living.

 The lesson is to establish your goals early and your ability to focus will be much clearer and easier.

Market Review and Tips

Market could not cross 5500 today also and its being tougher and tougher now. but as saying goes ‘To leap forward we need to take two steps backward’.I never dare to predict the market but market proved me right today.but for tomorrow we can expect flat to negative opening and expect market to be under presser and profit booking may come.but trade in market with cautious approach.market may react as per these levels…5387-5415-5431 supports and 5475-5503-5519 resistances.GOOD LUCK.
BUY RAMSARUP WITH SL 100 TRGT 120.CMP 107.65
BUY SHRENUJ WITH SL 54 TRGT 60 CMP 55.50.
FOR MORE TIPS VISIT PREVIOUS POSTS ON BLOG.

Market Review and Tips

Now we have maximum possibility of market crossing 5500 tomorrow after having gap up opening but i doubt the sustainability of it above 5500 so it is advisable to short market in gap up opening and take some quick profit.FII’s are buying and DII’s are remaining cautious but why ? a question must be answered.Dow looking overbought and our market is going to be.a caution for buyers but shorters should start making positions.market may react tomorrow as per these levels 5383-5405-5436 supports and 5490-5512-5543 resistance.
SELL ALLAHABAD BANK FUT ABOVE 202
GOOD LUCK AND ENJOY…………

Market Review and Tips

Everyone is saying that market ll cross 5500 and provides higher targets 5600-6000 etc but still we are not able to cross it however world market performed very well yesterday dow closed 200+,asian markets also traded in green,because of that we had good opening but we could not crossed 5500 even could not sustain higher levels,what does it indicate,which type of trigger it needs,Beware !!, its time to understand and to take calculated and informed decision.On 04 aug market may react as per these levels 5391-5408-5424 supports and 5457-5474-5489 resistances.Trade accordingly.GOOD LUCK.
SELL ALLAHABAD BANK FUT AUG ABOVE 202 SL 215 TRGT 190-80.
START BUYING JPASSOCIATE SL 108.
KEEP AN EYE ON FOLLOWING STOCKS TOMORROW:-
HOTELLEELA,MAXWELLINDS,SHRENUJ,TEXMACO,NBVENTURES,HIRECT.

Determining Support & Resistance Levels on Charts

In this educational feature, I'm going to tackle an issue about which several of my readers have inquired: How to determine support and resistance areas on the charts.

My favorite method (and I believe this the most accurate method) of determining support and resistance levels is to look at a bar chart and its past price history and then see at what price levels the highs, lows and closes seem to be touching the most. This method of determining support and resistance levels works on any bar chart timeframe--hourly, daily, weekly or monthly. Many times a bunch of highs or lows will be concentrated in a small price area, but not at one specific price. If that's the case, I will determine that area to be a support or resistance "zone." The one thing I will point out with determining support and resistance zones is that you don't want your zone to be so wide that it's virtually useless from a trading standpoint.

Major price tops and bottoms in markets are also major resistance and support levels. Unfilled price gaps on charts also qualify as very good support and resistance levels. Trendline support and resistance is also very useful to the trader. Projecting these trendlines to determine future support and resistance areas is extremely effective.

It's important to note that when a key support level or zone is penetrated on the downside, that level or zone will likely become key resistance. Likewise, a key resistance level or zone that is penetrated on the upside will then likely become a key support level or zone.

Another way to discover support or resistance areas is by looking at "retracements" of a significant price move--price moves that are counter to an existing price trend. These moves are also called "corrections." For example, let's say a market is in a solid uptrend. That uptrend began at the 100 price level and prices rallied to 200. But then prices backed off to 150, only to then turn around and continue to rally higher. This would be considered a 50% retracement of the move from 100 to 200. The 150 level proved to be solid support. In other words, the 50% retracement level proved to be a solid support level because prices dropped by 50% and then moved back higher. The same holds true for downtrends and "corrections" to the upside.

There are a few retracement percentages that work well at determining support and resistance levels. They are as follows: 33%, 50% and 67%. There are also two other numbers called Fibonacci numbers. (Fibonacci was a mathematician.) Those numbers are 38% and 62%. So, these five numbers are the best at determining retracement support and resistance levels. Most of the better trading software packages have these five percentages calculated in a tool, so that all you have to do, for example, is click your mouse at the beginning of the price trend and then at a high, and the percentage retracements are laid out right on a price chart.

Still another way that support and resistance levels can be identified is through geometric angles from a certain key price point. W.D. Gann, a legendary stock and commodity trader who died in 1955, is the most noted proponent of this method. He also used the same five numbers to calculate his angles. Again, the better trading software will provide "Gann fans" to plot the angles on the charts.

Finally, support and resistance levels for markets can be determined by "psychological" price levels. These are usually round numbers that are very significant in a market. For example, in crude oil, a psychological price level would be $20 per barrel, or $25, or $30. In soybeans, a price of $5.00 or $6.00 or $4.00 would be a psychological level. In cotton, 50 cents would qualify. Silver would be $5.00.

There are other methods traders use to determine support and resistance levels, but those mentioned above are the most popular.
by Jim Wyckoff

Intra and Delivery Tips

HI,I AM BACK AGAIN WITH MY SUPERB TIPS FOR YOU.I HOPE YOU ENJOYED PROFITS FROM MY PREVIOUS TIPS.PLZ MAINTAIN STRICT STOPLOSS.HAVE A SUPERB PROFITABLE DAY TODAY.........GOOD LUCK.
-----------------------------------------------------------------------
SELL SBIN FUT AUG ABOVE 2600 SL 2660 TRGT 2450
BUY RELIANCE INDS ON DIPS AT OR BELOW 1000 SL 980 TRGT 1030-40-60.
BUY GRANULES AT 90 SL 85 TRGT 110
BUY FCH AT 280 SL 277 TRGT 295 INTRA
BUY REIAGRO ON DIPS SL 20 TRGT 30
BUY JPASSOCIATE ON DIPS SL 108 TRGT 130
BUY TARAPUR AT 35 SL 33 TRGT 40-45 (STRONGLY RECOMMENDED).

Five Steps to Consistent Profits

Hi, I could not stop myself from sharing this excellent article by Van K. Tharp,

The goal of my Super Trader program is to help people develop a full time trading business that produces consistent, above average profits under various market conditions. This means that you can perform profitably in up markets (both quiet and volatile), in down markets (both quiet and volatile), and sideways markets (both quiet and volatile). And to help traders reach this goal, I’ve designed a five step approach. If you are reading this, then you probably would like that sort of performance, even though you may not be part of the Super Trader program. My objective here is to familiarize you with the five steps.

1. Work on yourself and your personal issues so that they don’t get in the way of your trading. This step must be accomplished first; otherwise, it would interfere with each of the other steps.

2. Develop a business plan as a working document to guide your trading. This business plan is not to raise money, which is the purpose of many business plans. Instead, it’s designed to be a continual work-in-progress to guide you throughout your trading career. The business plan actually helps you with all five of the steps. The plan also includes an overview of the big picture influencing the markets you will be trading and a method for keeping on top of those factors so that you will know when you are wrong. My view of the big picture is updated in the first issue each month of Tharp’s Thoughts.

3. Develop several strategies that fit your view of the big picture and understand how each of these strategies will perform under various market types. The ultimate goal of this step is to develop something that will work well under every possible market condition. It’s actually not that hard to develop a good strategy for any particular market condition (including quiet, sideways). What’s difficult is to develop one strategy that works well under all market conditions—which is what most people attempt to do.

4. Thoroughly understand your objectives and develop a position sizingSM strategy to meet those objectives. Probably less than 10% of all traders and investors understand how important position sizing is to trading performance and even fewer understand that it is through position sizing that you meet your objectives. Thus, the fourth step is to develop position sizing strategies for each system that will help you meet your objectives.

5. Monitor yourself constantly and minimize the number of mistakes that you make. I define a mistake as not following your rules. Thus, for many people who have no written rules, everything they do is a mistake. But if you have followed the first four steps, then you will have rules to guide your trading and you can define a mistake as not following those rules. And, of course, when you repeat the same mistake over and over again, then that is self sabotage. However, by monitoring your mistakes and continuing to work on yourself, you can minimize the impact of such mistakes. People who do this, in my opinion, will tend to produce consistent, above average profits.

Part I: Working On Yourself

This part of the program is so important because everything you do is shaped by your beliefs – in fact, your reality is basically shaped by your beliefs. What’s a belief? Every sentence I’ve written (including this one) reflects my beliefs. Every sentence that comes out of your mouth reflects your beliefs. And your beliefs shape your reality. Who you think you are is shaped by your beliefs.

Let me give you an illustration of how that works. My niece from Malaysia came to live with us when she was 19 years old (my wife and I were putting her through college in the United States). After she’d been with us for a year, one day she said to me, “Uncle, in my next lifetime, I would like to be born beautiful and talented.” Let’s see, she is very artistic. My wife has become a professional painter, but my niece actually completed the initial art course faster than my wife did – she was so good. In addition, she sings like an angel. Also, coming from a liberal arts background she got a degree in biomedical engineering, graduating cum laude. I think she passes the talent criteria with flying colors. As far as beauty, I’d describe her as one of the most stunningly beautiful women I’ve ever seen. And everyone that meets her comments on how beautiful she is. Here was an incredibly beautiful and talented woman, who because of her beliefs, didn’t think she had those qualities at all. Your reality is shaped by your beliefs. By the way, I’ve been working on those beliefs of hers since she’s been living here, and she’s finally coming around.

So who you are is basically shaped by your beliefs about yourself. In addition, you do not trade the markets. Instead, you trade your beliefs about the market. So one of the key aspects of working on yourself is to examine most of your beliefs to determine if they are useful. And if they are not useful, then find beliefs that are more useful. This is one of the key aspects to working on yourself.

You probably will never be free of limiting beliefs and some aspects of self-sabotage during your lifetime, but I consider this step to be complete when you transform about five very limiting aspects of your life and you feel very different about each. Once you’ve accomplished five such transformations, then I consider you capable of generally overcoming future roadblocks that might come up in your trading.

Part II: Developing a Working Business Plan

The business plan part of trading includes step one. In fact, a good business plan includes a thorough examination of the person who is doing the trading – beliefs, issues, strengths, weaknesses, goals – everything you can possibly think of about yourself should be included in this document.

However, the plan should also include many other important things:

*

Your assessment of the big picture and how you’ll keep up with it. For example, I wrote about the possibility of a huge secular bear market in 2001 when I first started working on Safe Strategies for Financial Freedom. I decided that the big picture should include a) a general assessment of the stock market in the U.S. and world wide; b) a general assessment of the strongest and weakest areas of the world for investments; c) a general assessment of the strength of the dollar (or your home currency if you are not using the U.S. dollar); and d) a general assessment of inflation or deflation potential in the future. I also developed ways to measure each of these and my way of keeping up with them is to write a market update on the first Wednesday of each month.
*

Other strategies, such as how you will do research, monitor your data, market yourself (to your family or clients), monitor yourself, manage your cash flow, keep track of your trades and your performance. Basically, running a trading business involves many systems other than trading systems. And to have a successful trading business you’ll need to master those others systems.
*

You’ll need several strategies that fit the big picture and that work when conditions change. For example, strategies that work in volatile bear markets (e.g., 2008) are quite different than those that work in quiet bull markets (e.g., 2003).
*

A worst-case contingency plan so that you’ll be prepared for anything major that could upset your trading business. This sort of planning often takes as long as six months to complete.

Part III: Develop Trading Strategies That Work Under Various Conditions

In 1999, everyone in America seemed to be a stock market expert. For example, we were giving a stock market workshop at the Embassy Suites at Cary and one of the bartenders said to the other, “Perhaps we should take Dr. Tharp’s Stock Market Workshop.” The other one responded, “No, I don’t need that. I could teach a workshop like that.” Similarly, a waiter in a high class steak restaurant informed us that he was really a trader, but that he just works as a restaurant part time at night. He’d already made over $400,000 trading and he considered himself to be an expert trader. However, my guess is that those people didn’t survive 2000-2002 much less the market we’ve been through in 2008. Why? They are different markets, and a strategy of buying and holding high tech stocks, which worked in 1999, had mixed to horrible results in the years since 1999. However, a strategy of buying inverse index funds as soon as the market signaled a clear bear market in 2007 has worked wonders in 2008. The basic idea is that you have to know what kind of market we are in:·

*

Up volatile (11%)
*

Up quiet (19%)
*

Sideways volatile (20%)
*

Sideways quiet (38%)
*

Down volatile (10%)
*

Down quiet (2%)

These are the six market types and the percentage of time we’ve been in them (rolling 13 week windows) since about 1950. Down quiet markets very seldom occur (about 2% of the time), but the other five market types do occur often enough that you need to be able to find something that works profitably when it does happen.

Typically, most people attempt to develop one strategy that works in all kinds of markets. The waiters and bartenders, and most others for that matter, usually fail. However, there is good news. It’s not that hard to develop a strategy that will work well in each kind of market. What’s difficult is to find one that will work well under all conditions. However, you don’t have to do that if you simply monitor the market condition.

Part IV: Develop a Position Sizing Strategy to Meet Your Objectives

In our workshops we typically play a marble game. Marbles are placed into a bag to represent a trading system. For example, a trading system might include 20% 10R winners, meaning that when one of those marbles is drawn, you make 10 times what you risk. The system might also include 70% 1R losers, meaning that when one of those marbles is drawn you lose whatever you risk. And lastly, the system might also include 10% 5R losers, meaning when those marbles are drawn, you lose five times what you risk. By the way, the marbles are always replaced after they are drawn so that your odds remain the same after each draw.

Now some of you might be thinking, "But you’ll lose 80% of the time. How can you possibly make money?" Let’s say there are 100 marbles in the bag. If you total the R value of all the marbles in the bag, you’ll find that they total to +80R. That means that on the average you’ll make 0.8R per pull over many, many marble draws. Thus, the expectancy of the system is 0.8R (after 100 trades, you’ll probably be up about 80R). And if you risked about 1% on each marble pull, then after 100 pulls you’d probably be up more than 80%. Perhaps now the system doesn’t seem so bad.

However, when I play the game I usually provide the audience with different incentives. For example, I might say that if you go bankrupt, you are out of the game and have to pay a fine of $10. I might also say that if you end the game down 50%, you have to pay a fine of $5. I could also say that if you lose money by the end of the game, it will cost you $2. On the positive side, I might say that if you make money, you’ll win $2. If you make 50%, you’ll win $5. And I might also say, if you make the most money, you’ll win whatever is left in the pot – let’s say $100. Notice how my incentives set up a number of objectives for the game. For example, here are three possible objectives:

*

To win the game at all costs, including risking bankruptcy. The person who wins the game will usually have this objective.
*

To win at least $2 and to make sure that you don’t lose more than $2. Notice how this is an entirely different objective.
*

To win the game, but to make sure that you don’t go bankrupt. Again, this is an entirely different objective from the first two.

When I tell people how to strategize about the game, I suggest that they answer the following questions:

*

Who are you?
*

What are your objectives?
*

What is your position sizing strategy to reach your objectives?
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Under what conditions might you be willing to change your position sizing strategy?

If 100 people play the game (starting with $100,000) and they all get the same trades (i.e., the same marble pulls randomly done and replaced), then chances are there will be 100 different equities at the end of the game. You will also be able to group people according to their objectives. For example, those who are trying to make money and have minimal losses will have a minimal fluctuation of equity around a 5-10% gain. However, those trying to win the game will have huge equity fluctuations ranging from bankruptcy to making millions.

My point here is that the game illustrates what is really important to trading success – the “how much” variable of position sizing. Thus, a key step for anyone wanting consistent profits is to develop a strategy with a positive expectancy and then develop a position sizing strategy that maximizes the probability of meeting your objectives. This hugely important step is largely ignored by most traders and investors, including most professionals.

Part V: Taking Steps to Minimize Your Mistakes

What happens when you don’t follow your rules? You make a trade when your system didn’t tell you to trade. You are supposed to get out when your stop is hit, but you don’t get out. Your position sizing is way too big on one particular trade. Those are all mistakes. And mistakes can be very costly.

We’ve done some preliminary research on the cost of mistakes and results suggest that for leveraged traders, mistakes can run as high as 4R per mistake. If that person makes ten mistakes in a year, then that person could find his or her profits dropping by about 40R. That means that if he or she made 50% on the year – they could have made nearly 100%. If he or she lost 20%, then mistake free trading could have made that person profitable.

For long term investors with wide stops, mistakes probably cost about 0.4R per mistake. The total cost per year is about 4R. However, the average investor is lucky to make 20% per year so 10 mistakes could easily cost them 20% of their profits.

The final step that you must concentrate on is to minimize the impact of mistakes on your trading. This amounts to developing a disciplined routine in your trading and continuing step one – working on yourself.