Next Good Bets

My Chartgame Records

2012-01-20T20:47:00.003+05:30

Chartgame had played an incredible role in helping me solve the riddle of the stock market. The advantage of the game is that it lets us try out our ideas on real data (albeit historical) in a virtually real time manner accelerating days into seconds. This accelerated mode actually takes us into accelerated learning phase by letting us experience stock price movements very fast. In reality as it takes weeks to play with each stock, the lessons learnt from each transaction lose their weight by the time we start another trade. If one is not a day trader, but pre-occupied with another profession, trading takes a backseat. Despite years of experience it can still look like a mystery as to what makes the individual stocks move.

In the first two years of my stock market operations I had few moments when I felt I found the best way to bigger profits. The white candlestick idea was one such moment. After looking at many stock charts and by also emulating real time experience by loading multiple charts differing in their last day, I noticed that a white candlestick indicates the strength and two such consecutive ones indicate possible upside in the following days. Stop loss was there for the worst case possibilities. But I had never done an analysis to see how effective stop losses can be or what happens if stop losses become random because of various possibilities. This had caused me lose a great deal consistently that too during the worst ever meltdown period in 2008.

Everytime I got a new idea I used to focus on the postive sides of it and ignore any downside risks. But Chartgame shattered all of my myths and hope that there must be some strategy to consistently beat the market. Stock price movements turned out to be totally random madness. All kinds of possibilities that one can think of have showed up after playing one stock after another. By accelerating the experience (an experience for those who have learned up to feel this game as much as a real experience) it helped me learn those things that would have taken decades to learn. Once can waste decades of life, just to learn that stock market is simply a random game. But from this experience I realized what it takes to succeed in this game and also decided never to suggest direct investments in stock market for the innocent, ignorant and the weak-hearted.

Thanks to its creator Matthias Wandel, we now have the opportunity to evolve our trading habits without spending money. It is very useful to practice despite not mimicking the intraday stop orders that are possible in real trading.

b>My Chartgame Records

Im Not Afraid.. Very Soon This Will All Be Just a Dream

2011-09-19T10:04:00.000+05:30

[EMIN∃M:]
Yeah, it's been a ride
I guess I had to, go to that place, to get to this one
Now some of you, might still be in that place
If you're trying to get out, just follow me
I'll get you there

Warning: uncensored full video song

[Chorus:]
I'm not afraid (I'm not afraid)
To take a stand (to take a stand)
Everybody (everybody)
Come take my hand (come take my hand)
We'll walk this road together, through the storm
Whatever weather, cold or warm
Just lettin you know that, you're not alone
Holla if you feel like you've been down the same road (same road)

Warning: uncensored full song lyrics ahead..

[EMIN∃M:]
You could try and read my lyrics off of this paper before I lay 'em
But you won't take the sting out these words before I say 'em
Cause ain't no way I'ma let you stop me from causin mayhem
When I say I'ma do somethin I do it,
I don't give a damn what you think,
I'm doin this for me, so fuck the world
Feed it beans, it's gassed up, if it thinks it's stoppin me
I'ma be what I set out to be, without a doubt undoubtedly
And all those who look down on me I'm tearin down your balcony
No if ands or buts, don't try to ask him why or how can he
From "Infinite" down to the last "Relapse" album
he's still shittin, whether he's on salary paid hourly
Until he bows out or he shits his bowels out of him
Whichever comes first, for better or worse
...

...
...

[Chorus]

And I just can't keep living this way
So starting today, I'm breaking out of this cage
I'm standing up, I'ma face my demons
I'm manning up, I'ma hold my ground
I've had enough, now I'm so fed up
Time to put my life back together right now! (now)

[EMIN∃M:]
It was my decision to get clean, I did it for me
Admittedly, I probably did it subliminally
for you, so I could come back a brand new me you helped see me through
And don't even realize what you did, believe me you
I been through the ringer, but they could do little to the middle finger
I think I got a tear in my eye, I feel like the king of
my world, haters can make like bees with no stingers
and drop dead, no more beef flingers
No more drama from now on, I promise
to focus solely on handlin my responsibilities as a father
So I solemnly swear to always treat this roof, like my daughters
and raise it, you couldn't lift a single shingle on it!
Cause the way I feel, I'm strong enough to go to the club
or the corner pub, and lift the whole liquor counter up
Cause I'm raising the bar
I'd shoot for the moon but I'm too busy gazin at stars
I feel amazing and I'm

[Chorus]
Full song lyrics @ AZLyrics

Revisiting Two Stocks: PAPERPROD & PETRONET

2011-08-01T08:55:00.000+05:30

On July 5 I had posted about two stocks that could be potential cadidates for short term. It's been almost a month now. But these two proved to be exceptional performers and validated my picking strategy. They were really 2 good bets!
Two Stocks for Two Weeks PAPERPROD & PETRONET

Now I will summarize the progress in these stocks as of now.

PAPERPROD was at 75 when I posted. On 29 July it is at 89. It never closed below 20 DMA.

About 18.7% gain in share price!

PETRONET was at 139 when I posted. On 29 July it is at 172. It too never closed below 20 DMA though had a jerky low in the white candlesticks (which is not trustable).

About 23.7% gain in share price!

I wish I had traded these shares. I had these in mind but was caught by too many stocks as can be noticed from other posts afterwards. But I never monitored any of those stocks except for INSECTICID which I was watching for four months and made about 6% gain (before brokerage cuts) only. It was a psychological bet. I learned I should not feel psychological attachment to stocks that I pick with respect to their order. However INSECTICID is still on its own, diverging from the market and showing good gains since the last week. That too was a good enough bet!

9 Golden Rules for Trading Stocks

2011-07-09T16:42:00.002+05:30

In my quest to get a practice into trading stocks first by playing on chartgame.com before putting real money at risk, I had learned several strategies which I found to be not working after a day and also faced massive frustration each time profits evaporated and losses went above 90%.

It was time on last Sunday that I looked at my post on July 1 and tried to observe things from the perspective of the lessons learnt from the book (How I Made 2 Million in Stock Market). I gradually began to notice consistency in my results after following those lessons or rules. If I did not remember them before I start on a new chart @ Chartgame.com, I was immediately going into negative spiral. So these became mantra of stock trading. Hence I decided to summarize the 9 golden rules for trading stocks and imprint them deep in my memory.

9 Golden Rules for Trading Stocks

Objectives:

Right Stocks
Right Timing
Small Losses
Big Profits

Weapons:

Price and Volume
Box Theory
Automatic Buy-order
Stop-loss Sell-order

Unobtanium (highly important) Rule:

Despite following above 8, there is no such thing as gaurantee in the stock market. We can go wrong anytime on any stock. So keep losses small, take breaks often, chillax & develop high frustration tolerance with the willingness to learn all the time, from all mistakes/losses.

Because the learning curve never ends for a stock market operator.

Moneycontrol Price Trigger Alerts for 8 July 2011.

2011-07-08T11:39:00.001+05:30

MC Price Trigger Alerts for 8 July 2011. Not all are for up trend. Some are for checking support after pullbacks.

17 Stocks for 7 July 2011 With Price Trigger Alerts

2011-07-07T08:30:00.009+05:30

These 17 stocks are picked for having large white candlesticks and after crossing previous day's high. I am studying these by placing price trigger alerts on Moneycontrol. Actually Insecticides India is not similar to other stocks. I just had a trigger alert already which is still waiting.

The upper price trigger will be the automatic stop buy. If executed the lower price trigger will be the stop loss trigger that needs to be placed immediately after the buy stop trigger alert.

I would be paper trading with 10000 capital divided into 5 parts with 2000 for each. On margin (as this is for swing trading and diversification across stocks) I might go upto 34000 maximum in case all 17 are triggered. I think this is rather too much to start first. I didn't want to spend more time shortlisting down to 7 or 8 stocks.
Let me study how they do in next few days.

In the last two days, POLARIND had gone up by 10% in three consecutive sessions as it has a circuit breaker at 10%. It had gone up by more than 30% since it is discovered and 87% in a month. This shows how rewarding penny stocks can be at the same time with huge risk.

10 Stocks to Watch for Intraday and Short Term

2011-07-05T06:30:00.004+05:30

Volume and volatility are the important criteria for intra-day trading. Below are some stocks screened for volume and volatility from icharts.in. All these stocks may also show a second leg upwards after this first one fades as these are all above 10 day, 20 day & 50 day moving averages but most potential may be RELINFRA & SEINVEST.

DISHTV

DLF

HEXAWARE

KRBL

MRPL

POLARIND

REIAGROLTD

RELINFRA

SEINVEST

TTML

Two Stocks for 2 Weeks : PAPERPROD & PETRONET

2011-07-05T05:57:00.000+05:30

Below are two stocks I discovered through certain criteria using EOD screener on icharts.in. Both are potential candidates to rise if they cross above high of yesterday. 50 day EMA or the last day's low (whichever is closest to LTP) is a good point for stop loss.

PAPERPROD

PETRONET

7 Stocks to Watch for Intraday Today

2011-07-04T11:46:00.001+05:30

Below are 7 stocks I got from EOD screener from icharts.com using a set of criteria. Let us see how they will perform today.

BANG
Bang Overseas Limited

DEEPIND
Deep Industries

PATINTLOG

PEACOCKIND

PFOCUS

POLARIND

PUNJABCHEM

Revisited: How I Made 2 Million Dollars in the Stock Market

2011-07-01T19:35:00.002+05:30

As I mentioned in previous post I have been trying to get back into stock market since then. My desire to trade or invest has grown considerably in the last few weeks. Especially after I read my most favorite book the second time. It is “How I Made 2 Million Dollars in the Stock Market”.

The book is not only a classic; it is also packed with very powerful advice and analysis. As I was reading it second time I had noticed certain things that I had conveniently ignored when I read the first time. First time, I had only focused on things that I had just learned at that time and that matched pretty well with bull market and my few exceptionally successful trades – 154% in RNRL, BHUSANSTL 13%, POWERGRID 15%, ARVINDMILL 14% in that year. There are other very few swing trades in my portfolio that resulted in profits but not so much.

As the bear market started in 2008, I really didn’t have a particular strategy for entry or exit. I somehow ignored the main strategy taught in that book and got excited about short term profits through swing trading. These profits were neither many nor large enough to cover the losses of failed operations in a down trending market. My profit-loss worksheet is full of the losses that followed this time and their total overshadowed everything mentioned above. The deepest loss was 90% in SELMCL.

As I read the same book again this time I was able to notice the most important analysis and reasons for both entry and exit strategies for the only best way (long term) to gain in the stock market.

Nicolas Darvas wasn’t just some dancer cum investor. He was reported to be awesome at whatever he does. Atleast I learned he was “super” awesome at stock market investing not just for pulling 2 Million Dollars in a 18-month period but for the powerful analysis behind his moves. I should have learned this atleast two years back. Now I sincerely regret this.

In his 7 year long investing journey, Darvas summarizes below points as he develops his famous box theory after first 5 years.

My objectives in the stock market:

Right stocks

Right timing

Small losses

Big profits

My weapons:

Price and Volume

Box theory

Automatic buy-order

Stop-loss sell-order
The entire 200 page book could be summarized in those 10 lines. But it was not all. The most important and most often repeated advice was that we can go wrong despite all our analysis and strategies. There is no such thing as guarantee in the stock market. This is very powerful information at times to let us avoid small losses from turning into large losses. You must have heard yourselves saying, “no way this can be happening”. For those with little or no experience in stock market, this might appear like something at hindsight but for the serious investor it is like a universal law and makes a lot of things clearer.

Now suddenly a lot of things became clear to me. Why it was felt so exciting to trade for short term (a week to a month), later why I got caught up in false swing traps, etc. But every time I made the decision to stop investing, after a string of losses, was the only right decision I had made since the beginning. I should also have avoided diverting attention away from stock market. I can just spend time sharpening the saw if I got fed up with a string of losses.

“Small losses and big profits” was the most striking idea of Darvas. It is easy to know it at hindsight but difficult to apply in practice. That is why he adds other objectives and weapons. When all of these are combined one can develop a powerful strategy. For a long time I wasn’t able to understand one of the Q&A at the end of the book (you bought smack in the middle of a trading range). It was on page 184. This time I was able to get the reason behind this answer.

I am taking these 9 points from Darvas’ book and trying to materialize my own trading/investing strategy that can improve consistency. I liked this book a lot not only because of insightful analysis but also because it is entertaining like a novel. I made a point to keep reading it from time to time.

IN RETROSPECT: Past Four Years into Trading Stocks!

2011-03-01T08:11:00.001+05:30

It has been about four years since I had first started investing in stocks in the Indian stock market. I can clearly remember the losing trades of the first financial year and the only one high profit trade I ever had along with moving from long term investing to short term trading before making a wipe-out trade for the bitterest experience I ever had.

When I started investing money in stocks it was a humble beginning. Nobody gave any encouragement. I have noticed many people starting trading stocks directly, after so many years of getting into a job with the same capital that I started with early on. Folks just follow the famous rule: invest money you can afford to lose. And you will certainly lose if you can :)

I would say the time that I spent investing into stocks for almost first two years was the most exciting in the last four years! Ever since I stopped buying or selling (it was like bringing a fast car to a grinding halt), I had really lost the excitement in life. I remained passive for the two year period (2009-2010) during which, one medium term but a fantastic bull market had run in the markets, which was like a short preview of the longest bull market (2003-2007) and a window of opportunity.

Looking back I didn’t have an easy way. I was gradually moving from long term investing to short term trading. I certainly felt over-confident when I was betting on junk stocks in bear markets using techniques that should be applied on momentum stocks in bull market times. These are what I had experienced one after another making it difficult to comprehend what was going wrong:
• A near complete wipe-out trade (~90% loss wiping out 50% of total profits of two years in three months time frame)
• Buy & hold in bear markets (to get over short term mindset simple trades failed)
• Trapping at false highs (everytime I buy at high and stocks retreat till I sell at low, losing rest of total profits)
• Grinding halt trade (four stocks all going wrong just because I was a little late for a pullback trade and too early for the bull market, digging losses into original capital)

I wasn’t very much worried about the last one except that it turned my +ve position onto the –ve side. Even while I was holding bleeding shares of selmcl I wasn’t really serious about losses. I remember during that time as I told a friend (Vinay) that I was holding it to see how the pain feels. I realized that it was not only a bitter experience but it made me realize that the pain of losses is always same. This one stock still looks like a black mark in my experience and made me realize one every important lesson: “no matter how much profits we make, a single 90%-99% loss can ruin everything”.

Certainly loss isn’t something anyone would want to hold onto unless he is novice and holds out of hope. I wasn’t having any hope though. As Michael Douglas says in Wall Street “Nothing ruins my day more than losses”. That is always true for any stock investor.

At the end of all this, I wasn’t sure of what is happening and I wanted to correct myself before I get back again. I tried to find answers to these failures. Unfortunately there wasn’t a simple answer. They got interlinked.

All these losses (including the worst bear market) just started with those “trap at false high” trades. One buys at price above yesterday’s high to make sure to buy only if the stock were to rise and not get trapped in otherwise case. It actually works well on charts. When I discovered this trick of making significant profits in just a week’s time in strongly trending stocks, I almost thought I had found the Holy Grail of stock trading. Suddenly everything became crystal clear. All stock charts, all time periods seemed to follow one consistent pattern. But what I failed to notice was its practicability in real world.

We can’t trade on thin margins. Little or no loss also means loss due to great brokerage charges. I certainly didn’t have time or confidence to place stop orders for entry/exit as often as this strategy demands. The worst thing is that it isn’t Holy Grail after all in bear markets but it is in bull markets. This made it practically dangerous in bear markets or near the onset of bear markets. I have so many such trades that I am scared to buy stocks at high prices just because the price gap to the stop loss point is high.

This resulted in next set of losses. Before that, I was able to do atleast one good trade in the list of bad ones, in Moserbear, making 10% gain, buying closer to the low and selling after a quick pull-up. Later it rose as much as 30%. That made me even more confused at that time. So in the last one (grinding halt trade), when the market had turned around sharply I was already late for the party but trying to buy on pullbacks and not above highs. This had perfectly trapped me for the big losses as the market gave up all the gains of sharp turn around and resulted in huge stop loss. The mistake was not to buy closer to low, not to buy above high, but intermediate point (with huge stop loss margin) when it wasn’t really clear what is going to happen. The market really dived down to its lowest level after this but that was the lowest ever since. I was actually right about the turn around of the markets but was a little early for the long term trade, a little late for the short term.

A simple lesson from all these failures is that what worked easily for the long side (not the short selling side) in bull markets, will not work, but works against, in the bear markets. In bull markets you can even buy a stock at its highest and hold very comfortably on as it bleeds for short time and then see it go to even highest levels within no time. In bear markets it works so only for the downsides. A stock that retreats from lows, will eventually fall back down to lowest lows. Looking at how things reverse from bull market to bear market is a bit confusing for a single hand trader (that cannot do short selling).

But more importantly the Holy Grail that I thought I found wasn’t correct. There is no Holy Grail to stock market investing. I just had to read last few para’s of a book I stopped out of excitement at that time. There it says, this buy above high strategy works less than 50% of the time which means losses have to be cut short at any rate. If stop losses have to be larger than comfortable level, then better to avoid. There the truth comes from an experienced trader (the author of the book).

Now the truth is known, I think my confusion is cleared. We can’t make consistent profits with strict rule based trades. Rules are for money management that is deciding capital allocation and reducing losses by cutting them short. For closing or entering trades we have to rely on “gut feeling”.

Recently I started playing on chartgame.com. This is an amazing website that helps practice virtual stock investing without actually trading. It is better than trading and virtually as best as real trading practice.

I played it a year back too but with the Holy Grail idea :). I was able to practically see its failure. But it got shaded with the fact that this game at the time didn’t incorporate the short selling feature. Though initially I was able to beat the market over large number of stocks, I was losing. It went worse. Also around that time any random sampling of a stock price history more often resulting in a bear market period. This too made it difficult to see where I was going wrong.

In the last week or two, I played again. This time I was able to beat the market more often. I learned it was easy to make losses. There are almost infinite ways to lose. But there are only few ways to make profits. All the 250 ticks while playing the game in one stock, I had to be carefully to cut losses short and take profits when they are there and follow the stock movement all the time to finally notice that I did better than buy & hold. When I get into relaxed mode and just ignore few ticks, it’s a gone case. But it can be corrected after some loss (or loss of opportunity).

I can summarize all of this experience in three points on how to make profits consistently investing in stocks:
1. Always cut losses short. A loss never tastes sweet. It is always painful (small or large) and feels bitter.
2. Take profits when they are there. How to decide? When happiness seems to come at a faster rate with time, then it is time to take profit.
3. Follow or feel the rhythm of the stock price movement. Keep monitoring shares of interest periodically (daily or weekly) and avoid monitoring all stocks, all markets or broader market. Stocks can move independently and most of the profits are made by following its unique and independent rhythm.

One thing I had not mentioned here but learned long time back and followed even in worse bear markets is this:
• Don’t make random entries or on the urge buying (unless it is bull market)

Although I didn’t summarize these to be final list till now, I still had almost got it when I made two small profit (but no loss) trades one in 2009 and another in 2010.

In 2009, when RNRL was retreating after down trend, I bought it through the rise and followed it constantly and felt its rhythm before closing it in two orders, one for profit and another for zero. In this I had felt its rhythm and accordingly made moves. I had cut losses (short even before losses started as stock fell down to lowest levels since selling off). I had followed money management by reducing exposure in two chances when things are not very clear about its further upward trend.

In 2010, (from the return of the stock trader PIPAVAVYD), again I followed its rhythm and though I didn’t take available profit, closed it in small or no profit. This stock too plummeted (and the current bear market set in) just after this sell-off.

Interestingly in both of the above cases, the stocks were giving only one last chance before turning around into oblivion. It is important to note this because this is where all the investors get trapped into long term large losses and stop trading for long time. I won’t boast that I am good at this. It is a result of following the four points mentioned above. Four years of trading experience isn’t gone waste and it will prove its worth more with next good bets.

Now I can’t wait to get started this time. I know I had lost touch with the market. So I will start small (very small). But the fear is that it is way into bear market right now to consider long positions. May be I will wait but keep following the market till the next turn around.

RBI’s Gambling on Dollar-Rupee Exchange Rate
Sensex Crossed 20K Again! Nifty Crossed 6K
The Second Wave of Great (Deep) Recession is Around the Corner
The Three Parameters of Stock Trading: Entry Time, Exit Time & Seletion of Stock
Stocks vs. Gains: How Much can You Expect to Gain from the Stock Market?
Is There a Hidden Treasure in the Stock Market?
Does History Repeat? This is About Average Stock Market Returns
Why You Should Sit Tight to Make Big Money from Your Bets?

Don't Let Them Say You Ain't "Beautiful" - EMIN∃M

2010-11-02T06:00:00.008+05:30

[Eminem]
Lately I've been hard to reach
I've been too long on my own
Everybody has a private world
Where they can be alone
Are you calling me,
Are you trying to get through
Are you reaching out for me,
I'm reaching out for you

Warning: uncensored full song lyrics ahead..

Uncensored full song & lyrics of Emin∃m Beautiful:

Eminem on 6Lyrics.com

[EMIN∃M:]
Lately I've been hard to reach
I've been too long on my own
Everybody has a private world
Where they can be alone
Are you calling me,
Are you trying to get through
Are you reaching out for me,
I'm reaching out for you

I'm just so fuckin' depressed
I just can seem to get out this slump
If I could just get over this hump
But I need something to pull me out this dump
I took my bruises, took my lumps
Fell down and I got right back up
But I need that spark to get psyched back up
In order for me to pick the mic back up
I don't know how or why or when
I ended up in this position I'm in
I'm starting to feel distant again
So I decided just to pick this pen
Up and try to make an attempt to vent
But I just can't admit Or come to grips,
With the fact that I may be done with rap
I need a new outlet
I know some shits so hard to swallow
And I just can't sit back and wallow
In my own sorrow
But I know one fact I'll be one tough act to follow
One tough act to follow
I'll be one tough act to follow
Here today, gone tomorrow
But you have to walk a thousand miles

[Chorus:]
In my shoes, just to see
What it's like, to be me I'll be you, let's trade shoes
Just to see what it'd be like to
Feel your pain, you feel mine
Go inside each other's mind
Just to see what we find
Look at shit through each other's eyes
But don't let 'em say you ain't beautiful oh
They can all get fucked.
Just stay true to you so
Don't let 'em say you ain't beautiful

[EMIN∃M:]
I think I'm starting to lose my sense of humor
Everything is so tense and gloom
I almost feel like I gotta check the temperature in the room
Just as soon as I walk in
It's like all eyes on me
So I try to avoid any eye contact
'cause if I do that then it opens a door for conversation
Like I want that... I'm not looking for extra attention
I just want to be just like you
Blend in with the rest of the room
Maybe just point me to the closest restroom I don't need no fucking man servant
Trying to follow me around, and wipe my ass
Laugh at every single joke I crack
And half of them ain't even funny like
Ah Marshall, you're so funny man, you should be a comedian, god damn
Unfortunately I am, but I just hide behind the tears of a clown
So why don't you all sit down
Listen to the tale I'm about to tell
Hell, we don't gotta trade our shoes
And you ain't gotta walk no thousand miles

[Chorus]
But don't let 'em say you ain't beautiful
Oh They can all get fucked.
Just stay true to you so
Don't let 'em say you ain't beautiful
Oh They can all get fucked. Just stay true to you so

[EMIN∃M:]
Nobody asked for life to deal us
With these bullshit hands we're dealt
We have to take these cards ourselves
And flip them, don't expect no help
...
...
rest of the lyrics

RBI’s Gambling on Dollar-Rupee Exchange Rate

2010-10-11T18:01:00.007+05:30

It is well known how RBI (Reserve Bank of India) intervenes in the foreign exchange market and manipulates the currency exchange rates. What most of the analysts notice is that the rupee is pegged to the dollar and only allowed to become weaker with respect to the dollar and avoid getting stronger at any cost. But that is not exactly the case. The fact that all the RBI chairmen did the same things also points to things beyond RBI’s control.

So basically RBI is controlled by the power at the center which has been in control of UPA for many years. For all the time the Congress party was in control of the govt. in the history of India since Independence, the much noticeable mark apart from increasing poverty and population is the declining currency value. The idea of this party is not really to develop the country as it might seem, but to do a redistribution of wealth systematically from poor to rich by manipulation of Indian financial systems through complex ways that victimized poor man wouldn’t be able to understand. That’s what our Hon’ble Prime Minister’s so many academic degrees are for. They don’t do any damn good for the one Indian that does not understand how the financial system works or how RBI is manipulating their daily lives.

The current administration (of India) is very much known for its pro-western policies and so-called secularism (better said anti-Hindu). What it is not known for is that it is just another political party that works for its own gain like any other. No govt. sows the seeds for the so-called growth of India or whatever you call it. If the economic powers didn’t choose to outsource their work, there wouldn’t have been this “growth”. Weaker rupee is not necessarily the cause for outsourcing though it was the trigger. The flooding of investments during the last growth period was such that RBI couldn’t keep pegging rupee to dollar without taking huge losses. That’s when Rupee rose to <39 Rs/$. But on the dark side, when the recession started the powers continued to peg the currency rate whereby growth turned into “redistribution of wealth”. Fixed exchange rate essentially imported the recession (or better said “outsourced”) into the country. The fleeing of investments away from India was so strong that rupee became very weak to cross above 51 Rs/$. All this happened so fast.
(Image Copyrighted @ Yahoo! India Finance used under fair use for illustration)

Recent trend in currency exchange rate (rupee vs. dollar) makes us wonder if RBI has reversed its policy. But I don’t think so. Although an appreciating rupee is very helpful for a poverty stricken country and only bad for exporting Industry, I doubt that it is has reversed its trend. I feel that it is just another game played by the control of the govt. on RBI to meet their ends only. It may be to meet the needs of some entity that the powers in control are obligated/willing to help like they did earlier for the exporting Industry by depreciating currency value.

Rupee has been appreciating against dollar all through the month of September:

(Image Copyrighted @ Yahoo! India Finance used under fair use for illustration)

I have noticed enough trends in the past and the change of RBI chairman didn’t make any difference either. It does not matter whether it was a Rao or a Reddy. The RBI chairman is at best a puppet much like the mutual fund manager who can’t make his/her portfolios perform better than the market Index. I don’t like any gambling of RBI with exchange rates. This makes things worse to those who learned the trend and just started to adapt to that. Stock trading is not simple just for the same reason that trends keep changing.

Update on 18 Dec. 2011:
Now after a year since posting this, I see lot of popularity for this post as Rupee has depreciated to its all time low. Talk to me about growth.. where is growth when the currency is at its historic lows? Who the heck is really growing? In the name of growth all we have is a manipulation of money flow between rich and the poor in a transient phase (with time) that initially it appears to be a growth which eventually gets UNDONE with record levels of inflation. Yesterday we imported IT jobs, now we are importing recession & inflation. The inequality of income keeps growing by the day and after a TIME we will realize what in the name of growth happened is essentially a redistribution of wealth. And in the most sophisticated ways. That's what you get if you elect people who pose as highly educated with lot of degrees to show for. You won't even know what the heck is going on till it gets worse unless you too follow the economy regularly.

(Image Copyrighted @ Yahoo! India Finance used under fair use for illustration)

Fate of Rupee: depreciates faster and by a larger amount but appreciates as if somebody stops it at 44!

(Image Copyrighted @ Yahoo! India Finance used under fair use for illustration)

And one more important thing to note is that during the greatest bull market period 2004-2007 our currency INR was continuously going up. I remember as I used to read the forex weekly update on Saturday in Economic Times. Then RBI used to intervene in a process called sterilization and limit its rise. It would have easily gone to a peak of INR25/$ instead of just INR39/$. Well it deserved that for giving a growth rate of atleast 8% when US economy is at only 2% growth. RBI which is in control of Finance ministry had intervened to control its rise instead of letting the free markets to take care but this year as INR is reaching its historic lows they say RBI won't intervene, let the free markets decide. Hell! Free market will take it easily to INR 80/$ in no time. On bad days when foreign investors withdraw money it declines by 1.5 to 2 rupees per dollar. How many such bad days does it need to reach 100/$?

With the rupee at its all time low (and that too despite the fact that dollar kept falling during last two years which is why gold is rising), did we lose all the foreign investment in the country or did we import too much? There is still more withdrawals to come. The bad times seem to have just started. I used to think things will only get better before they get worse. Looks like the best part is over. The future is no longer about recession. Welcome to 21st century - Super Inflation period.

Sensex Crossed 20K Again! Nifty Crossed 6K

2010-09-22T21:10:00.000+05:30

Indian benchmark Index Sensex (BSE) crossed the good old mark 20K. This is second time and being a large number of points it is an important mark.
Today's Sensex chart (long term with 200DMA, 50DMA & 20 DMAs)

NIFTY (NSE Index) too is on a good course and crossed its 6K mark.
Today's Nifty chart (long term with 200DMA, 50DMA & 20 DMAs)

As the charts show the market is clearly in a good uptrend. The indices are above all the three moving averages. With respect to 20 day moving average it is clear that the indices made the decisive move upwards. There will be resistance expected upwards. That's what the experts will say. But its the momentum that keeps them going.

When the markets have just broke out we should not doubt the strength. However this move lacked market breadth. That means it is the usual FIIs that are fuelling this move. There is nothing new in that. It might just happen that the indices gain broader market support with time. That is the kind of time when traders who follow new high stocks make good money.

The Return of the Stock Trader (Pipavav Shipyard, Thangamayil Jewellery)

2010-08-07T16:50:00.002+05:30

After hibernating from trading stocks for a really long time (about two years), the stock trader has made return. However this time there isn’t much excitement or enthusiasm as it was before. But there is a cautious and serious attitude to take the best returns the stock market has to give.

Since the time I wrote the post “Does a Share Trader undergo Hibernation?” I haven’t traded stocks and kept away from the market missing the golden opportunities available. I did not become a fool nor did I frighten so much. But I got the confidence that we can trade for profit in any trend but also fear that we should trade with the trend and with caution for losses have the potential to change our lessons learned and attitude towards the market. To make comeback I told myself to stick to simple strategies and only trade on long or intermediate trends.

A few weeks back I bought a book “Stock Market Trading Rules: Fifty Golden Strategies” by William F. Eng from Sapna Book House. I found it a year back but I didn’t buy due to high cost. As I couldn’t buy it anywhere else I bought it this time. It took almost a year to find it again in the same Sapna Book House.

This book helped me rejuvenate my interest to trade stocks. It has wonderful rules formulated from already taught rules and from personal experience of the author. This is very valuable book for me. It taught me something I wasn’t able to crystallize on my own. The author summarizes that in simple words in RULE 50:

“Control what you can
Manage what you cannot

The following are items that the trader can, and must, control:

The amount of money put into the markets.
The amount of markets to follow.
When to enter a trade.
How to enter a trade.
When to exit a trade.
How to exit a trade.
How to spend one’s time.

The following are items over which the trader has absolutely no control:

The direction markets will move.
The duration of the markets’ movements.”

This book helped me to start trading again with renewed confidence, hope and reduced fear. I had been in Goldbees for almost half a year. So I just upped my capital a month back when Gold prices pulled back. Goldbees is scrip name of Gold Benchmark Exchange Traded Fund and it costs the same brokerage price as trading stocks. I didn’t consider this as a trade as it was a really long term investment and also I was not fully in it yet. But as I take the suggestion of many experts that Gold will rise to double or triple its value in the last year, I am in for it.

Goldbees Long Term Chart

One of the important lessons I learned from the past few years is that the bear markets don’t last for long time though they do more damage in short time. I knew that stocks fall or retreat downwards faster than they go up. But it was also held well in the worst bear market. The worst bear market lasted only five months in 2008. Rest of the time market stayed in range trading and upwards trends.

Also my best profits are made while sitting tight and looking for long range bets. Short range and short term trading is certainly most attractive and lure everyone into its trap. But the problem is that you need to be consistent in trading. For the time we spend it is not worth doing short range trades but go for long range trade even if it takes long time to get the profit. My past shows me that those are the best trades and gave me most happiness.

Nifty Long Term Chart (it is called bull market :D )

One day I sat down and made a list of all stocks making new highs from the Economic Times online edition. There were too many but I took about four from each day till 10 days backwards. That means to capture as many stocks as possible different in their timelines. Now I watch this list every day or two. So I had noticed these two stocks Thangamayil Jewellery and Pipavav Shipyard. The market itself was in good long term trend as it was above 200-day moving average (green line on charts). From past experience it was easy to see how easy it is to make profits now on these stocks.

Thangamayl Long Term Chart

Pipavavyd Long Term Chart

The two stocks have made pullbacks from their recent highs and are shrinking in their daily range. That was to form a base pattern before breaking it above or below. Pipavav’s chart reminded me of symmetrical triangle pattern and I made an entry before it is too late at the price of 97.8. I waited for two weeks after buying on a Friday. By this Friday (yesterday) the stock is now up by 8%.

Pipavav Shipyard Symmetrical Triangle Pattern

Of course it happened in two days only. That is the way of these stocks making into new high lists of market statistics. Same was the case with my biggest loser SELMCL in which I entered too late. But it is better to get in early and wait than to miss it and chase it. However I was placing stop losses almost every day since I positioned in this stock.

Thangamayil too made a 10% upmove in the last two days. I wanted to enter this just to diversify to increase chances of profit but I wasn’t short of time so I didn’t diversify. I could wait as long as they take to make their move.

As stocks move in your favor there will be some change in your thinking. Before this I had very low risk appetite. It was bad to be like that in a bull market trend. Hence one profitable trade is needed. The risk taking appetite rises with consecutive profitable trades. When it gets too large we should give it a break. Otherwise things can turn around. I feel that now I can give all the time that the market demands.

Jayeebhava – What a Real Crap Movie, like Trading an FMCG Stock!

2010-06-06T23:16:00.010+05:30

"hIroyijam anTE.. anukunTe vachchEdi kAdu
blaD lO unDAli bradar" – Protagonist in Jayeebhava

"హీరొయిజం అంటే.. అనుకుంటె వచ్చేది కాదు
బ్లడ్ లో ఉండాలి బ్రదర్" - జయీభవ కథానాయకుడు

This is too much crap. Almost every Telugu person likes Sri NT Rama Rao (ఎన్టీఆర్). That does not mean that these heros (his grand sons) should repeatedly use his fame to support their films. Jr. NTR's movies are okay to watch. But Nandamuri Kalyan Ram is playing with his money.

When I went home for Diwali last year I heard lot of buzz about this movie Jayeebhava. On TV channels as trailers or ads, on FM Radio too there was promotion of this movie. Not knowing what was there in the movie, I only guessed "Oh.. the movie might do too well."

It went unnoticed since then. The actor Nandamuri Kalyan Ram looks just like one friend of mine. As each hero has his unique style I wondered what his style was other than being grand son of Anna garu.

Starting with the titles I noticed the producer name as NKR, the protagonist. I got the first doubt about the movie. Why did he have to produce his own movie? Was nobody daring to take the risk to do a business with him?

వీడికి పులి కావల్సొచ్చింద? అసలే ౧౪౧౨ (1412 tigers) మిగిల్నయంటె!

Although the initial scene makes one think that this is a serious movie one would be mislead. Just after 10 minutes I got the second doubt with his song (NKR walks with a Tiger as pet instead of dog – good money spent for graphics), extra cutting dialogues (బై బర్త్ నాకు బలుపెక్కువ.. అందరూ నన్నే చూడాలి) and over-action (బార్ కెల్లి తాగకుండ బాటిల్ విసిరి నలుగురిని తన్నడం). Then the crap starts and I realized the truth.

NKR does not know how to act (by birth naaku balupekkuva.. Andaru nanne choodali). I know that acting is not an easy job. But then there are professionals to do that if he cannot. Just because he has money he produces a movie with himself as hero. This film gives the impression that it is a casual business. It gets exaggerated when using names like NTR, Anna garu, Thaatha garu, Chirru, Kirru etc.

Even the storyline is not unique. To a great extent it is just a copy of earlier film Ready of young actor Ram. Ram acts very well with his own style. What is this guy thinking of movie? Acting is an art. Blood (ancestral background – NTR, N Balakrishna, N Harikrishna) or bank balance (actor and producer) won’t give that skill. One should practice and perfect the art.

Even superstar Krishna is okay in acting. He (Kalyanram) acts as if his action is over and talking to the crew members. At best he did not have a banner of NTR on his head. What a crap movie! The storyline and his acting make the movie so predictable and so uninteresting. Even documentaries are nice to watch. Some comedy scenes of Brahmanandam are unique and add fun to the movie. Otherwise this is really a total crap. Somehow I felt that blood during violence was not shown appropriately. Even without using a sword the villain gets blood on the back of his neck which is totally crap. Nobody ever hits a villain at the back of his neck in fight scenes. Also color of blood looked like orange color paint. It was overdone.

All the while I was thinking like this: Oh.. What is NKR thinking? Produce a movie as an actor, copy some storyline of a successful movie and the movie produces more money (and he also becomes a top hero). It is like an FMCG company that does not create new products but keeps on selling same product like Colgate or still better comparison is Hindustan Unilever. This HUL stock now changed name to ULL that never goes up or down. Its price was stable for a really long time since bull markets and in the last worst bear market too! Watching this movie was like trading or tracking or being trapped in an FMCG (ULL) stock. What a waste of time! (I did really trade HUL for many months so I know it)

If this is to treat movies just as a form of business making little profit with each movie then it is fine. But if NKR expects to become a top actor then.. that is a good joke.

సినిమా ఇండస్ట్రీ ఇజ్జత్ తీసేస్తుండు.
"అభినయం రాకపోయినా ఫైట్లు, స్టంట్లు కుంటోడు, అవిటోడు కూడా చేస్తడు.
దానికి ఒక హీరో కావాలా, బ్లడ్ లో ఉండే హీరో కావాలా?" అని NKR చూపించిండు.
సినిమా అంటే మజాక్ అనుకుంటుండు మన ఎన్కేఆర్.

What a real crap even in minute details. This movie violates causality. In one scene they show how to attract a bullet backwards to pull inside the gun. That is the best way to describe it. Otherwise in rewinding of the gunshot two cigarette smokers react in a forwarding sense as the bullet passes backward. Did I miss on why this crappy scene was made?

The Second Wave of Great (Deep) Recession is Around the Corner

2010-06-01T23:25:00.004+05:30

The much awaited second wave of great recession is around the corner. The first wave started with a sudden shocking wave coincident with local problems (Relpower finance, Weekend holidays and late morning opening times for banks) and global causes (Powershow of FIIs in shaking markets). It ended finally like a bloody war ends, with many interesting events along the way (Oil prices flare-up, Russia correcting Georgia, finishing touch with year-end quarter meltdown). Of all, the most memorable was the September-October meltdown that rocked all businesses worldwide. Life was never the same. Everything became 1/3 :-).

The sudden tsunami wave on Jan 22 2008 had suggested the depth of the then upcoming recession. Many analysts announced that it would be worser than the Great Depression of the past century. That meant that it won’t be like a small recession in a growing economic scenario. That is why it will have its own waves or trends and counter trends. The first wave has passed (2008) and also the first counter trend (last year’s intermediate bull market trend or temporary economic growth).

There is an Elliot Wave Theory on stock market movements. This theory talks about five waves in a particular trend. In those five three will be in the same trend and two will be counter trend as illustrated in the figure. It is also showing three more waves after the peak.

Elliot Wave Illustration (cc-licensed image)

Basically we can take two ideas from this. That is, a particular trend once established gets completed in three in-trend waves with two counter-trend waves of lesser strength separating each of them. And the counter wave moves the market back less than the in-trend wave moves it. That is retracements or pullbacks won’t exceed the damage or growth done by the initial moves. If they do that indicates trend reversal and more strength in the counter trend so that it establishes a new trend.

When recession appeared to start in January 2008 it was thought of as a healthy normal correction like any other time in the past few years before 2008. The stocks in mid December 2007 to first week of 2008 were all skyrocketing. Dummies too got a life. Too many stocks were making into the list of 52-week highs. Unfortunately I didn’t realize what I was witnessing. That was the peak of the bull market (in other words like Everest for a mountaineer). Even if you had traded stock after stock with strict stop losses making sure to trade as many stocks as possible you would have made all the money that the same capital would have earned in long term trades in the three years of bull market before that month.

I just guessed that this (great) recession would be a nine month recession like a temporary counter trend in a long term bull market trend. But things changed (or became apparent) rapidly in 2008. Then I had to expect a nine month growth period (counter trend in a long term bear market) after the first wave. This trend started with its own shocking wave (should I say so - on May 18 2009, UPA winning India’s elections) and revived all the stock broking businesses by now. It must have been a good ride for those who had participated in it (as the stats show).

Like the sequel of a movie series I don’t expect the same action/thrill in the second wave as it was in the first wave. As the governments over the world have intervened in the way of the economic recession to maintain the status quo of old heroes and suppress the newcomers, we may not have to expect the same effects of this wave as that of the first one. Rather than expecting something I want to be a spectator for this wave. If there is anything we should watch out for the third wave which is likely to coincide with 2012. Let us wait and watch as the future unfolds itself.

Update (04/06/10): When I said "we may not have to expect the same effects of this wave as that of the first", I also mean that the stock indexes might actually go up instead of down (that will be the effect of inflation which is the effect of governments intervention into business).

Update on 18 Dec, 2011: Well the future is unfolding now. 2012 seems to unfold a great deal of action, not the action in the movie 2012, though :) But in the financial world. I think the future is more of a re'grow'ce'th'ssion than simply growth or recession. Recession and growth happening parallelly, recession for those who can't compete and growth for others who see and exploit opportunities fast.

Prolonged period of uncertainty is expected as people evolve and learn from previous recessions. No matter how much it gets prolonged the worst part of dramatic action can't be escaped. If it gets prolonged much, its effect will only be worse. The history shows that the last legs of recession are always worse. I used to say, things will only get better before they get worse. The best part may be getting over. Now I would say things won't get better, this time, after they get worse.

Day Trading Basics for Dummies

2010-04-02T22:26:00.004+05:30

Next Good Bets

My Chartgame Records

Im Not Afraid.. Very Soon This Will All Be Just a Dream

Revisiting Two Stocks: PAPERPROD & PETRONET

9 Golden Rules for Trading Stocks

Moneycontrol Price Trigger Alerts for 8 July 2011.

17 Stocks for 7 July 2011 With Price Trigger Alerts

10 Stocks to Watch for Intraday and Short Term

Two Stocks for 2 Weeks : PAPERPROD & PETRONET

7 Stocks to Watch for Intraday Today

Revisited: How I Made 2 Million Dollars in the Stock Market

IN RETROSPECT: Past Four Years into Trading Stocks!

Don't Let Them Say You Ain't "Beautiful" - EMIN∃M

RBI’s Gambling on Dollar-Rupee Exchange Rate

Sensex Crossed 20K Again! Nifty Crossed 6K

The Return of the Stock Trader (Pipavav Shipyard, Thangamayil Jewellery)

Jayeebhava – What a Real Crap Movie, like Trading an FMCG Stock!

The Second Wave of Great (Deep) Recession is Around the Corner

Day Trading Basics for Dummies

Day Trading is Highly Profitable When Bubbles Burst

अब क्या होगा कालिया? (यहां से शेयर मार्केट कहाँ जायेगी?)

A Simple Strategy for Consistent Intra Day Trading

The Three Parameters of Stock Trading: Entry Time, Exit Time and Stock Selection

What is the Easiest Way to Make Money?

Trading Stocks is All About Taking Chances

Stocks vs. Gains: How Much can You Expect to Gain from the Stock Market?

Couldn’t Post Anything Today!

Why You Should Consider Share Trading As A Profession?

Is There a Hidden Treasure in the Stock Market?

What is Your Stock - A Laggard, a Leader or a Mover?

Why You Should Sit Tight to Make Big Money from Your Bets?

Should You Trade in Liquid Stocks or Illiquid Stocks?

The Importance of Plan for Your Trading

How to Cope with an Unexpected Massive Loss And Emerge Again as Professional Stock Trader?

Apply Speed Breakers (Stop Losses) for Your Losing Stocks

Learn to Take Lessons from Your Losing Trades

Your Loss Does Not Necessarily Mean Somebody’s Gain

Averaging the Buy Price to Minimize Risk: A Common Mistake of Stock Traders

Is Long Term Trading Better than Short Term Trading?

Is Investing in Stocks Better than Trading Stocks?

Does History Repeat? This is About Average Stock Market Returns

Never Make or Take a Loss: You Should not get Trapped with This Belief

Buy at the Bottom or Buy When Everyone is Selling: A General Misconception of a Stock Trader

Buy Low and Sell High: Why You will Not Succeed in the Long Run with This Myth?

Trade with the Money You can Afford to Lose: Another Myth in Stock Trading

Someone Loses When Someone Gains: Do You have This Belief about Stock Markets?

How You Should Use Diversification in Trading Stocks?

The Myth of Diversification in Trading Stocks