Tuesday, 29 September 2015

Don’t be Penny-wise Pound-foolish……My Journey as a Trado Trader


Don’t be Penny-wise Pound-foolish……My Journey as a Trado Trader

I took 10years to relentlessly follow the teachings of Saint (Dr Sree Kumar Ravindran) and absorb all I could from the published blogs in various forums.
While most of my learning through Saint’s blog helped me instil the passion towards trading…..there was that one mind block to make the very first step into this “Weird wild world of Stock market”. Then came the launch of Tradonomix, an Academy which for me is an Institution that aims to bring passion/dream into a reality for those standing on the shore waiting to wet their legs and feel the spiritedness of having achieved their dreams…….
I was skeptical on joining any course and it took few rounds of discussion with the Tradonomix team till I was convinced that……..how can trading be different from flying a plane…and how is that it takes several hours/months to learn flying while we need no preparation for trading……. This according to me was absolutely ridiculous……My initial learning from the blog made my decision easier.
My training was unforgettable……awesome bunch of well-read and experienced trainers, energetic group of peers to support each other, complex homework and to top it all…..The Trader’s Group-Silver and Gold Club……made me feel a dream come true…..
Trust me if you don't learn trading the methodical way……you are certain to lose money in a single trade which would account to more than that of your course fee. The course clarified my doubts on money management, risk management, when to trade and most importantly when not to trade. It also helped me to maximise the gains and minimise loss. It improves your confidence towards trading and helps you to grow into a Prudent Trader.

Thank you Tradonomix……I’m glad to be a TRADO TRADER.
Milind

Monday, 7 September 2015

GAMBLER TRAIT NO 1:BUY,BUY,BUY ON DIPS!!!

Go anywhere and one sees the desperate call to BUY. Screaming from news channels,financial websites, every analyst around cries out: Here is a Dip!!Buy it, buy it now before the chance is lost, before all possible chances of getting at lower prices is lost forever. Go on Twitter, go on CNBC, Bloomberg, read any financial publication and there is this desperate cry exhorting you to buy the market NOW and on Dips.

Ask them how much of a Dip a Dip should be before you can possibly get into these markets, and you are faced with a blank look and a deep, pondering silence. A long, glum, gloomy Silence. Many of them would quote a Warren Buffett line of Buy Low, Sell High and then pray that you stop with your piercing questions. Do go easy on them though ,they really have no answer to these questions.

Markets go up, they go down.There is no madness when markets correct or enter into a downtrend. No madness at all when extreme price action to any one direction settles down to an opposite trend. But there is indeed a great madness in this great desperation of convincing everyone to buy under the guise of BUYING ON DIPS!!! And a greater madness, when that is exactly what you go on to do.

Think Shorts in a Downtrend. Think Longs in an Uptrend. Know the difference between the two, and the exact point where one becomes the other. A Downmove is a downmove is a downmove and there is only one action that needs to be done. Take shorts(in Futures Markets) or stay out if your country or market does not allow that. But trying to catch a falling knife, and you are going to get hurt.

Buying on Dips however intelligent the concept may sound ,or however aggressive that concept is sold, is nothing but a gamble.Get on the Right Side of the Market. Apply your strategies and become a Strategic Trader. Remember one important thing: If you want to be the greatest of gamblers, be one, but the greatest Gambler does not gamble. He plays as per a well planned out Strategy.Stay away from small time, amateur gambling. Stay away from following a financial and media setup that tells you of the dire need for you to do so .Instead.......Go with the Flow of the Markets!!

Thursday, 27 August 2015

Zen and the art of Stock Trading


The last two weeks have been chaotic for global stock markets. China’s benchmark Shangai composite has crashed 42% from its June peak. Hong Kong and Taiwan are similarly down, and the panic is spreading.

Closer to home, Black Monday saw a 1000 point drop in the Sensex, and the Rupee crashing in response to fears about the Chinese and the larger global economy.

What drives markets in this way? What drives the fizzy sense of excitement that creates a bubble, and the subsequent panicky escape that causes the crash? After every crash, we collectively promise ourselves not to be caught up in the frenzy, only to find ourselves in the same pattern of boom and bust five or six years later.

Time and time again, over hundreds of years (dating back to the Tulip market in Holland), humans have interacted with the concept of future gains in irrational ways, buying when they should sell, selling when they should buy, and often losing not just their assets but their peace-of-mind as well.

Why? Ultimately, as humans, we approach the future with two things in hand – a map, which is our past; and a flashlight, which is our emotions. We think these are handy, practical tools to help guide us through the future. However, these are precisely the tools that cause us to remain in an endless cycle of irrational highs and lows – both in life and in trading.

At Tradonomix, our philosophy surrounding trading is different.  In trading, as in life, there are ways to transcend the cycle of pain-and-gain, of joy-and-sorrow. Ours is a Zen-like approach to markets – be it stocks, commodities or currencies.

When you focus on any given stock or a market and consciously focus on cutting out all extraneous noise – your own mental machinations, as well as those of pundits and analysts – you begin to focus on the present state of that stock in and of itself. Without reference to its past, or any emotional tie to its future – you focus on the way the stock is moving – up or down.  You don’t focus on why, just the what. Once you focus on the what, you achieve a state of unemotional calmness from which you can make trading choices that are driven neither by fear of the past or hope for the future, but merely the complete serenity of the Now.

The key to our philosophy at Tradonomix is simple – Being in the Now, Living in the Present, Going with the Flow.

In the coming days, stay tuned to this blog to find out more about how to stay focused on the present market – yes, even this panic-stricken global Bear market – and learn how to use our philosophy to achieve a state of Zen-like mastery on your portfolio.

About  Author
Dr. SREEKUMAR RAVINDRAN

Founder and Chief Managing Director at Tradonomix


Dr. Sreekumar Ravindran, known as Saint in trading forums such as Trader Saint Forum & Traderji, is the visionary and mind behind Tradonomix. He is a passionate trader himself and has spent over 15 years in researching and accumulating knowledge of trading and applying the same in real-time.

Dr. Sreekumar strongly believes that trading is a learnt skill and that awareness needs to be created for trading as a profession for the common man. Tradonomix is one of his first steps towards this belief, from where he intends to take Tradonomix to an advanced technology-driven social platform for learning, and achieving financial independence.

Note: Thoughts by Saint, edited and compiled by Rohini Kumar, Head-Content Management, Tradonomix

Friday, 21 August 2015

Living on a Prayer and Preying for a Living: The difference between the Gambler and the Strategic Trader


What is your trading style - are you a Gambler or a Strategic Trader? Do you live on a prayer, or do you prey for a living? Let’s examine the two.

The Gambler is someone who will take a shot in the dark, and pray that when he turns the lights on, the arrow has hit the target.  Now why was the Gambler willing to take a risk on any particular stock? It could have been various reasons – intuition, a solid analyst report, a tip. But essentially, the choice is not because of any kind of calculation or risk/reward process – just a blind leap of faith. If the gamble pays off, this kind of trader is lauded as a maverick, if it doesn’t – well, you always knew him to be a Gambler, didn’t you?

By having no set process, no fixed aim, and no exit strategy, the Gambler is essentially living on a prayer. If the markets go up, he is happy, and, when the markets go down, he is anxious, perhaps mutters several more prayers under his breath. Far enough down this path, the Gambler is someone who is completely driven by emotion. He buys into Fear and sells into Greed and Euphoria.

Now what about the Strategic Trader? Strategic trading is essentially the opposite of gambling. The key characteristic of Strategic Traders is that they are skilled hunters – they are steadfast not only on their prey, but on developing processes by which to effectively hit their target.  Strategic Traders ruthlessly assesses the risks and rewards of any stock, by studying it closely, and putting probability on his side. Like any good hunter, they are watchful of the patterns and movements of the stock – if the prey moves left or right, the hunter jumps quickly in the same direction.

In this sense they are completely unemotional, essentially the opposite of the Gambler. Think of the Strategic Trader as the eagle that soars above miles above head, eyes pierced for the slightest movement of its prey.  The Strategic Trader, like that master hunter, knows when to let keep gliding, when to swoop down, and when to swoop up. There is no joy or fear for the soaring eagle – just a complete reliance on its unyielding vision. The eagle isn’t taking a gamble, it is taking a sure shot.

Which would you rather be? A Gambler or a Strategic Trader? Do you want to Live on a Prayer, or Prey for a Living?

About  Author
Dr. SREEKUMAR RAVINDRAN

Founder and Chief Managing Director at Tradonomix


Dr. Sreekumar Ravindran, known as Saint in trading forums such as Trader Saint Forum & Traderji, is the visionary and mind behind Tradonomix. He is a passionate trader himself and has spent over 15 years in researching and accumulating knowledge of trading and applying the same in real-time.

Dr. Sreekumar strongly believes that trading is a learnt skill and that awareness needs to be created for trading as a profession for the common man. Tradonomix is one of his first steps towards this belief, from where he intends to take Tradonomix to an advanced technology-driven social platform for learning, and achieving financial independence.

Thursday, 20 August 2015

Trade of the Day (20.8.15) - LIC Housing Finance

Name of the Stock Future: LIC Housing Finance

Type of Trading: Intraday Trading

Trade Details : Short Below 12:15 pm lows and Exit EOD

http://www.tradonomix.com/Editor/assets/LicHsgFin_20082015.png

A Beginners Guide to Cash and Futures Market in India

The term “Cash Market” and “Futures Market” might raise the eyebrows of the people who are completely new to the concept of stock Market. This article is an attempt to help the beginners to understand about these basic terminologies which are commonly used by people in the stock market.

Stock Market/Share Market in India

In India, we have 2 prominent stock exchanges which are as mentioned as follows

1) NSE – National Stock Exchange of India
2) BSE – Bombay Stock Exchange of India

                These stock exchanges are the medium/intermediary which facilitates people to buy/sell shares of their preferred companies. Basically, the stock brokers like the names of Sharekhan, Motilal Oswal, India Infoline etc., get registered with the stock exchange(s). And commonly people like you and me, can open an account with these brokers, so as to participate in the business of buying/selling shares. (Just like how one opens a bank account with a bank, so as to deal with his/her monetary transactions for day-day or business related activities)

In stock market, the commonly known 2 types of markets are

1) Cash Market (Equity Market) – It’s a market in which equity shares of the companies are bought/sold by the market participants like Mutual Funds, FII’s, and Ordinary Retail Investors/Traders.
               
For Ex: Let’s take a company i.e., Infosys. We all know its familiar company in India in the software sector. Now let’s say, one wants to buy the shares of Infosys (as the person is expecting the price of the share might go up in the upcoming years based on his/her own analysis) he can do it by placing a buy order in the terminal through his broker. And to buy these shares, he needs to have the required cash in his brokerage account.

2) Futures Market – It’s a market in which Futures contract of the companies/commodities/currencies are traded by the market participants. A Futures Contract is an agreement between two parties to buy or sell a specified quantity of an asset at a specified price and at a specified time and place.

They are normally traded on an exchange which sets the standardized norms for the futures contracts. In futures contracts, one can go long (buy)/go short (sell) without owning the asset.

All Futures contracts in the NSE segment is settled on a cash basis, whereas Futures contracts traded in the MCX allows a person to take physical delivery of the asset on the contract expiry date, if the buyer wishes for the same.

For e.g., if one had bought a Gold contract, then he/she can take physical delivery of the same on the contract expiry date by paying the total value of the contract, whereas in NSE, if one had bought a INFOSYS futures contract, no delivery of shares will take place to the buyer, rather the contract is settled on a cash basis on the expiry date.

(Note: All Futures Contract comes with an Expiry date, beyond which the contract ceases to exist. For ex. Infosys Futures Contract for the month of August will expire on the last Thursday i.e., 27th August (this expiry date is determined by the stock exchange)

Difference between Cash Market and Futures Market


Cash Market
Futures Market
Dividend
By Buying & Holding shares in the Cash Market/Equity Market, one can receive dividend as and when a company declares it. Like if one is holding shares of Tata Steel in Cash Market, and if the company declares a dividend, then one is entitled to receive the dividend amount into his bank account
By holding shares in the Futures Market, one won’t be able to receive dividend declared by the company
Margin
To take delivery of shares, 100% cash is required. For ex; if one decides to buy 5000 shares of XYZ Ltd., in Cash Market which is trading at Rs.100, then Rs.5,00,000 has to be there in the brokerage account
One can take position, by having 20% of the total amount in his account. For ex; if one decides to buy 5000 shares of XYZ Ltd., in Futures Market which is trading at Rs.100, then approximately 20% of Rs.5,00,000 = Rs.1,00,000 has to be there in the brokerage account
Expiry
There is no expiry period in cash market. If one buys the shares, he/she can continue to keep holding as long as he/she wants to
All contracts come with an Expiry Period, beyond which the contract ceases to exist. For ex., If one buys Tata Steel August Futures Contract, it will get expired on the last Thursday of August. So, if one wants to continue holding the long position after expiry, then one has to buy the next month contract on the expiry day
Lot Size
In cash market, one can buy as many shares as he wants to buy like 5 shares or 50 shares or 400 shares or 610 shares etc.,
In Futures Market, one can buy only in lot sizes which are prescribed by the exchange from time to time. For ex: 1 Lot of Tata Steel in Futures Market comprises of 1000 shares
Overnight Shorts
If one expects price to go down in the next couple of days, he won’t be able to go short (selling now and buying later) now and buying it back in the next couple of days
If one expects price to go down in the next couple of days, one can able to go short (selling now and buying later) now and buying it back in the next couple of days







Advantage of Cash Market

·         It’s ideal for people who are entering stock market with small capital (Like one can begins investing/trading by having Rs.10,000 in his/her account)
·         One can buy shares starting from very small quantity like 5 shares, 10 shares etc., as per his/her capital availability
·         If one holds shares in the Cash Market, he gets an ownership in the company, and therefore he is entitled to receive the benefits like dividend, bonus issues etc., as declared by the company from time to time


Advantage of Futures Market

·           Futures Market gives the flexibility to go long (buying) as well as to go short (selling) on an overnight basis. (One can go short in a futures contract on Monday and can buy it back on next Monday)
·           Rather than having 100% cash, it’s enough, if one has 20% cash in his account to take position in the futures market, while the rest of 80% cash can remain in his/her bank account, which yields small interest as well. (If one has a total capital of Rs.5,00,000, and to buy 5000 shares of XYZ Ltd., which is trading at Rs.100, one is required to have around Rs.1 Lakh (assuming 20% Margin) only. The  rest of the capital Rs.4,00,000 can be placed in a bank account and can be transferred to the brokerage account, as and when its required)


Wednesday, 19 August 2015

Trade of the Day (19.8.15) - Ambuja Cements

Name of the Stock Future: Ambuja Cements

Type of Trading: Intraday Trading
Trade Details: Long above 18th August 1:45 pm highs and Exit below the open of 3pm bar