Friday, April 13, 2012

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FY 2012-13 Happy New Trading Year!

Wish you many exciting trades for the new trading year 2012-13!

I am so happy to start the new trading year. I waited out the last two months counting each day to close the old financial year without having to record any balance in ITR-X/Y/Z forms. I used to postpone about learning how to fill and/or fill that form every year and avoided trading (basically exchanging stocks). But I will bother about that next year now that a year is over.

Even the new years are not starting well one of these days. Indiabulls Securities introduced AMC (Annual Maintenance Charges) from new year. The only reason I didn’t close that account since Nov. 2010 was because it didn’t charge AMC. I sent a mail asking them to close again but they only asked why and never got back to start the process. I have the closure forms. But anyway, I decided not to login to the site forever (atleast if I don’t get a good service from other brokers). I am excited to start the new year with Sharekhan who offered half the brokerage rates as Indiabulls did. New things are always exciting.

It is certainly exciting with Sharekhan. At first I was not comfortable with trying new brokers as Indiabulls service too comfortable. But Sharekhan is not at all bad. It is different. But it allows placement of orders after-hours which is a high priority for jobber-cum-traders and it also has longer session time. So no need to relogin to its browser based session every few minutes. The best part is the brokerage rate (although atleast one friend gets even lesser brokerage rate but I am almost there).

I just started off today with an entry price evaluation trade in LOVABLE making a loss of 25 rupees. In this the brokerage was only 2.76. It turned out to be less than 0.1% brokerage rate. I never had such an experience with Indiabulls. It would have been minimum 0.3%. Even with a 0.7% loss, the brokerage is still insignificant compared to the loss. This is what I wanted for a long time. I am not sure if tax rates have changed for intra-day trades or I have to wait for T+2 settlement period to see the final brokerage rate. Anyway, 0.1% hair-cut opens doors for highly leveraged margin trading experiences for once in a quarter opportunities.

After I noticed the exit trade from LOVABLE, my head was almost spinning wondering about spirals of share price pullbacks with increasing time periods and how many such trades will be required before I can end up with the perfect entry price. It may be easy for a fulltime trader. Or may not be. But after 5.5 years I realized I can’t make those excuses anymore. I should get realistic and focus on only maximizing trading strategies that involve less number of transactions with each one counted and less time monitoring them.

That means I will stick to my favorite trading style – pyramiding. Multiple entries and single exit trading strategy. It doesn’t matter which way you trade. Loss always happens. Earlier I used to do single entry, single exit with buy on stop orders. It almost always failed with losses in upwards of 10k per trade in those bad days of 2008. The problem then was with not understanding the conclusive meaning of stop loss and making a single entry without diversifying across time.

With low brokerage rate and multiple entries, the loss per trade is significantly reduced. Only problem is to place the stop loss order immediately after each entry into positions. I would need a blackberry or a real-time alerting mobile device that also helps quickly place stop loss orders without needing me to go through a maze of pages from login to order confirmation. Do we have any such device (other than a laptop or iPad)?

I certainly can’t expect to monitor order executions frequently through the day. Atleast not with multiple stocks. Moneycontrol sends free email alerts for price triggers. But sometimes the mail gets delayed. Gmail gets delayed for long time into hours. Ymail gets delayed by 15 minutes or more or sometimes less. Sometimes it is also lost (I have tested & it is lost all the time if office mail is used). If this delay has to be modeled as a margin of error, then I may be back to old brokerage rates or even worse. Atleast I wouldn’t have to monitor all day.

May be Sharekhan gives longer enough session durations to take care of this problem with a page reload as often as possible. 5 years of work experience tells me that everything is possible once you decide to consciously develop a habit. No question of lack of time, conflict with work, divided attention or heads spinning!

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