Complacency is the keyword now.

Finally got into a short position on Nifty & Silver on Friday after many unsuccessful attempts. Don't know as to how long I would stay with them. 


I was not able to update the blog for some time now as the markets were demanding my undivided attention. Will try to be as regular as possible with my updates. But sometimes it's just not possible.


A sense of uneasiness is in the air as complacency increases in the markets. Feeling a little uncomfortable at these levels.


As US & other markets were weak on Friday, I think it should be a good opening for me on Monday.:)


3 quotes from Warren Buffett that are worth remembering in the current environment:


"If past history was all there was to the game, the richest people would be librarians."


"Only when the tide goes out do you discover who’s been swimming naked."


"Risk comes from not knowing what you’re doing."


Have a good trading week!:)

Please try again later....

Last week I managed to close my positions just in time as all three positions went against me. It was pure luck that I got out with a smaller loss than I normally take. Nothing else. No crystal ball gazing done here. So, please try again later. Thank you.:)


Anyway, I have been trying a few positions here and there but not sure as to which of them would make those meaningful trends. So, staying with the process and hoping to get hold of atleast one such profitable trend.


Have a great trading week ahead!:)

Short on Lead, Natural Gas & IT stocks

The last week was a good time to finish off some year-end  activities as the markets were lacking direction and conviction.

After some wait I think some clarity is emerging in global markets.

I am short on Lead, Natural Gas and some large cap IT stocks. Clearly defined situations all three of them. Makes it much easier to diagnose in case of trouble.

Sitting on the sidelines....

Closed my Natural Gas shorts on Thursday. It was a good one-way trade. Nifty rallied smartly after I closed my longs. Don't know what to make of these markets right now. Too many conflicting signals everywhere.


I'm staying out till there is more clarity.


Disclosure: No trading positions. Have long-term investments in stocks.

Closed Nifty & Aluminium. Added shorts in Natural Gas.

I closed my longs on Nifty & Aluminium yesterday. Added to my shorts on Natural Gas which is working for me & seems to be in a secular downtrend. That's it for now. Have a great trading day!

Nifty long again....

I am re-trying longs on Nifty. Bought Nifty futures on Friday. In commodities, I am long on Aluminium & short in Natural Gas.

There is nothing much more to write about as the markets have been pretty slow and unexciting, actually a bullish sign according to me.

Closed Nifty Longs

I closed my long positions in Nifty futures today.
Still holding some hedged positions in commodities.

Be an amateur in the markets.

It helps. It really helps if you have the attitude of an amateur when dealing with the markets. Be a student. Not an expert.


The problem of being an expert is that experts are too much into their protective shell that they have developed over a period of time, a skill set, sort of an idea of how markets ought to behave etc. etc. 


Why take any chances, when it is so comfortable inside the shell?


Remember, Markets are dynamic, self-learning and continuously evolving. A kind of Darwin's theory of Natural Selection is in play here. It's not just numbers. 
Experts cling to their skill set. They have figured it all out. They take pride in that.
A successful trader adapts to the ever-changing market dynamics. Gets rich.


So, Don't cling to your skill set. Don't be an expert. 
Be dynamic. Be an amateur. Evolve with the market. Keep learning everyday. Get rich.


Disclosures: Long Nifty Futures. Long Aluminium. Have investments in stocks.

Nifty long after a long time

Closed my longs in commodities as things were getting a little too volatile for comfort.

Went long on Nifty futures today after a long time.
Hoping for a smooth ride!

How to make money.......blah blah blah

This is how most of the get-rich-quick guides are generally titled. My job is not to give a review on those books. As you already know by now, I am very critical about that kind of stuff, so it won't be an A rating for most of them anyway.

I just wanted to point out something much more imp.....which profoundly affects the way you look at trading as a business.

"How to make money......"?? How does one make money?

No. You don't make money.


It's your money that makes you more money. You just help yourself by being on the sidelines as your money works for you.

It's an organic process. Your money grows.
Not an inorganic one. Not an additive process.

A lot of your success in trading depends on the way you look at it.

That's why capital preservation is so important.

In trading as a business:
Your money = Your Plant & Equipment
Your money = Your Employees
Loss = Expenditure to run it

Profit is what it makes when you make enough number of good decisions.

So, a better title could start something like "How do I make my money work for me....blah blah blah".
Atleast the titles will make more sense that way.

Enough of gyan for today. I'll stop here before I slip into the danger of taking my gyan too seriously.

****

It was a fantastic start for the week in commodities. A solid rally in most of the base & precious metals. I was positioned well this time. So, my money is working well for me.:) Market permitting, wish to continue longs for some more time.
No positions in Nifty. Have investments in stocks.

Budget day market action. A Moment-Of-Truth.

This market seems to be needing higher & higher doses of good news just to stay where it is.
After a good budget,  all it does is a 1% gain on the indices!! That's what I call a moment-of-truth on a key-event day.


I think for Nifty, it will be prudent to trade on the bear side for some time. Let's see.


Disclosure: Still holding some long positions in commodities. No positions in Nifty yet. Have investments in stocks.


Have a great trading week ahead!

Union Budget - 2010

As I was thinking of the upcoming Union Budget and how I should position myself for it, one thought that struck me was the kind of expectations traders have from the budget this time.

Unlike 2009, when it was touted as the "Biggest Budget Ever", the expectations from 2010 are almost NIL. That in my opinion might actually be very good for the market and may be a bullish sign. I am never comfortable forecasting the markets, so I will stop there. 

Trading is much simpler & easier when compared to forecasting. So, let me stick to my trading & leave the complex and difficult job of forecasting to the "experts".

I have some hedged positions in commodities & investments in stocks. Have no positions in Nifty.

Looks like a busy weekend ahead.

Like all great things in life, markets are beyond language!

I have been reading quite a few reports on "how china will crash", "Why the US will default on its debt" and "how we will eventually slip into a Great Recession or Depression" finally leading to yet-another mother-of-all-crashes. Heard of "double-dip" and other such theories? "V-shaped", "W-shaped", "Square root symbol shaped", "Inverse Square root shaped" etc.

For whatever they are worth, there are as many theories of the "eventual collapse" as there are economists & analysts.

The opinions & analyses presented in these reports is so out-of-sync with what is actually happening on wall-street. Markets have been very resilient and have refused to crack even after so much persuasion by the doom-sayers. Makes me more & more bullish as a trader as I go through yet-another report on why "stocks are doomed" to retest 2008 lows! Have been reading them for quite a while now, almost 10 months.

It's like saying, "Everyone except me will make the same mistake again."

It is important to remember that the market & its participants are not as dumb as the analysts believe and do learn from their previous mistakes and may not repeat the same again, atleast not in the same fashion.

Markets normally do not need to be told on "when to fall" and "how much to fall". They will do it when they have to in their wisdom, when thats the right thing to do. After the last of the bears covers the last of his shorts in desperation (fear?) with a market-order and goes double long (greed?)!

I believe, like all great things in life, markets are beyond language and cannot be explained in a few sentences and/or in a few equations of a report.

As far as my positions are concerned, I am long on commodities. Have no position in Nifty futures. Have investments in stocks.

Stay relaxed, stay focussed & stay profitable!

Do I know how to take a loss?

This is the SINGLE most important question you will ever ask yourself as a trader. Be honest & Answer it.

"Taking a loss gracefully" is a skill that is developed over a number of years. It's not easy. And it's the most important skill in trading.

Ironically, the average trader never even bothers to ask this question. He is always after the next best strategy or trading system that will make a guaranteed profit. So why even think about how to take a loss?

Taking a loss is an art. Easier said than done.

A loss can be financially damaging & psychologically devastating. So, it's v.very important that you know how to take it when its small.

If you are playing chess with the Grandmaster, Viswanathan Anand how many games do you expect to win out of say, 10 games?

Even if you are a Grandmaster yourself, 6 out of 10 should make you very happy. Right?

Then, how can you expect to win & make a profit each and every time you trade? Trading is probably the most difficult game on earth.

Remember, "that trader" on the other side of your trade might have devoted a better part of his career & life in mastering this game for decades.

In trading, always expect to make a loss. That way it is much easier to take it when it comes.

Never let a loss eat into your capital. Never. Take it when it's really small.

Pls read the last 2 lines once again, they are the "holy-grail" of trading.

GOLD - The Ultimate Brand!

Back after a long weekend. Just bought some Gold futures as I see a little bit of upside here. No other trading positions as of now.

A few thoughts on Gold:

After buying the shiny yellow metal, I was wondering as to why people buy gold! What is it in Gold that has caused it to capture the human imagination for hundreds of years. Recently, even the central banks have started buying hundreds of tons of the yellow metal.

I just think it is the best brand-building exercise done over hundreds of years and Gold may just be the greatest brand ever!

Otherwise, why would one buy something which has absolutely zero economic utility? It is very difficult(almost impossible) to assess the "fair value" of Gold by any of the traditional valuation methodologies. The P/E (Price/Earnings) ratio of Gold is infinite since it has no earnings! What is the book value of Gold? Anyone?:)

Consider Silver, also a precious metal and has some industrial application.

I sometimes feel Gold is just perception & nothing else.

Gold is not consumed in any manner. One buys it just for the sheer pleasure of buying and possessing it. Amazing, Isn't it?

True, Gold acts as a store of value but it is very hard to imagine people using Gold to buy and sell goods/services in this modern age.

Please do share your thoughts on Gold in the comments section.

Blame it on futures traders.

With soaring food inflation, some people have already started blaming it on futures trading in commodities. Commodity futures trading has always been a favorite whipping boy for some sections of the media & a few unemployed politicians.

As far as I know, there is no credible research that suggests that futures trading causes higher prices. Sure, they can cause spiky price moves but that can happen on the up as well as on the downside and get faded away pretty quickly. And this can happen in any market that is leveraged. Not just commodities. The price of crude oil went as high as $150/barrel and came crashing back to around $50. The lesson: Prices driven up purely by speculative futures trading without fundamental support cannot hold for long.

If any, a liquid market generally causes better price discovery. Look at what happened to some high-profile IPOs in the past. The illiquid grey market price and the very liquid futures price on the listing day. Which price was closer to fair value?

Globally, futures in Agri-commodities have been trading without any problems.

The govt. has already banned futures in a few agro-commodities in the past but that didn't stop those commodity prices from soaring.

If the market crashes, we blame it on short-sellers and ban them. If the market soars, we blame "excessive speculation" in futures and ban them again!

It is time for us to rethink & stop skirting this very important issue of food inflation by simply blaming it on hoarding and/or futures trading.

The food inflation in our country may be pointing at deeper supply-side issues than we are ready to accept.

Would love to hear from you on this issue. Do share your thoughts on the same in the comments section.

A little cherry picking in stocks.

I have been doing a little bit of cherry picking in stocks as I am not sure clueless of the short-term direction of the markets. Have been busy searching & buying companies with good earnings growth, good earnings growth & good earnings growth!

Raamdeo Agrawal once said,"Stocks are slaves of earnings!". How true!
Mr. Raamdeo Agrawal is Director and Co-Founder, Motilal Oswal Financial Services.

I have no significant futures positions as of now.

Markets choose to implode...because the bubble never got big enough to burst!

I can't help but inform you that Nifty might slip to 3700 or thereabouts in the next few sessions(God knows, how many) i.e. if you believe some of the forecasts by various market pundits. I neither support nor reject their view.  But if and when that happens, please do remember to give them their due credit as "they were the first ones who told you so....":)

It was a good closing for the week for me as I covered most of my shorts in Silver, Copper & Nickel. I covered my Nifty shorts yesterday much sooner than I would have liked as it was becoming too volatile and unpredictable.

Anyway, I have no business staying in something which I am unable to understand. Right? Markets are tough. Why make things more complicated? There are lots of markets to trade and so many opportunities out there. Spot the easy ones and go after them. That's the way I like it. It is much easier to handle that way.

I still have a few shorts in commodities but that's because even a few of them can make a large difference if there is a panic sell-off.

Have a wonderful weekend!

Is fundamental trading possible?

The other day I was watching one of the "fundamental" analysts on the blue channel who says that things are likely to improve in the coming months and the markets have been over-reacting on the downside. This after reminding us & the TV anchors of her "market prediction" a week earlier on the same channel of the imminent market collapse as the fundamentals are "stretched". "Stretched" at 5200 nifty and cheap at 4900? 300 pts on nifty an over-reaction?? My calc tells me its not even 6%. Oh, then by the same logic wht abt the over-reaction on the upside of abt 100% in the last 9 months!

I am not against fundamental analysis or anything like that. Far from it. I believe, fundamentals are the most important criterion for investing in stocks or any other asset.

But to change them on a daily basis just to make them fit to our trading plans without any fundamental shift at the ground level makes them look more like funny-mentals rather than fundamentals.

I have always felt that fundamentals do not change perceptibly on a daily basis and generally take some time to get discounted. Markets don't fall 50% in a single day, jst because they are overpriced by 50%.

I think the analysts know this too. I wish they were atleast honest with themselves.

Trading based on fundamentals is as bad if not worse than investing based on charts.

Just my humble opinion.

Would love to hear from you on this subject. Please do share your thoughts in the comments section.

I hate blog titles!

I always have a very difficult time finding an appropriate title for my blog especially when it is about the future direction of the market. I wish we never had titles for blogs.:)
To put in less than 10 words or so as to what the market is going to do tomorrow or day-after is simply over-simplifying things. The market is simply too big to fit into the title of a blog or any article, for that matter.

Thank God! I don't have to search for a title atleast to this post.:)

It was just the kind of weak day where you short the Nifty by noon and decide whether to carry-forward or not by evening. I chose to keep it for tomorrow.
The initial weakness in the morning gave me the much needed clarity to open up my shorts again. Will have to wait and see as to whether my persistence pays-off this time.

Nickel, I squared-off.

Will leave you with the Ball of the century from Shane Warne. Enjoy watching!

Markets Stabilise. I Cover.

I covered my short positions in all counters. Its always a very pleasant feeling to book profits after sitting patiently for more than a week now in those positions. Crude I closed at a small loss.

I also initiated a small short position in Nickel today.

In others, I will try to re-initiate shorts if weakness is back in the coming days.

Global markets weak. Looking for some more downside.

I have been carrying some shorts on Nifty, Silver, Copper & Lead Futures for abt a week now. Initiated a few shorts in crude in Saturday's truncated trading session.

Globally markets have been in a downtrend for a while now and I think there is some more downside left in many of these markets. Hope to see a good dip in the coming days.

I will leave you with one of my favourite quotes from the greatest trader ever..

"There is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again."

Jesse Livermore in Reminiscences of a Stock Operator

Relaxed Trading = Happy & Profitable Trading!

I am a relaxed trader as you can see from my profile. I am not leveraged to an extent where I have to watch the markets tick-by-tick. Though I do watch the markets very closely but that is for different reasons and not because I am leveraged to the hilt.

Some symptoms of not so relaxed trading...

• Forced to watch the screen or follow the markets on a tick-by-tick basis
• Waiting all thru the weekend for the markets to open on Monday

Please don't confuse a relaxed approach to a lazy one. Stay focussed but don't be tensed.

Try my style of trading and see the difference yourself!

Stay Relaxed & Stay focussed.
Happy  & Profitable trading will be yours for sure! I know this from first-hand experience.:)

Hi there! Welcome to my trading blog!

I will be posting my thoughts on trading in Nifty and Commodity futures here.  I hope you will find my blog informative, interesting and useful to your trading needs. Your comments and feedback will be greatly appreciated.