Trading your Plan.

Today morning, on CNBC (as well as in this blog!), I had given our trading plan for the Nifty. We were short, and, planned to close our short positions when the market opened. The reason was an expected gap down in our favor. When markets give a favorable Range Expansion (RE) in our favor, our trading plan says that we should exit.

Now, Markets do what they want to do. Just because I close my short positions , the market will not stop going down. But, my plan is to exit, so I should exit. As luck would have it, Markets opened at the lows and then rallied to close almost a 100 points higher. They could easily have done the opposite. But, my exit in the morning would still be the correct action because I was following my plan.

Nifty 5000

Over the past two weeks, I have been suggesting a downside target of 5000 in the Nifty. This is not rocket science, technical traders should have identified bearish patterns, trading range breakdowns and come to similar targets.
Given the bearish mood in international markets, together with Indications by the SGX Nifty, a decline of 80 points from Friday’s close of 5080 is likely, bringing the Nifty to 5000.
The first time we touched 5000 in the Nifty was in September 2007. Time flies, but the Market did not.
I expect some support to come in at 5000 levels. Then, the market has to take a call on the next move, it could easily be towards 4800 or so.
80% of our short positions were closed around Nifty futures at 5100. The balance 20% are likely to be closed some time today. When we have range expansion (unusually large moves in our favor), as traders, we take profits and wait for new patterns.