Market Moves

Nitin Damle asks:
”
Today morning I heard u on CNBC Awaz telling to buy Nifty near 5400
Sir, my reading was different I was thinking that short term trading indicators are pointing towards correction Nifty is not moving above 5450 and there is huge negative divergence on MACD & actully given a sell signal so as per my reading it was a sell with S/L 5450 I got confused hearing u please tell me what was your reading.
”

My Notes:
Nitin, lesson No 1. Do your own thing. TV cannot become a substitute for your own thinking & analysis.
On Awaaz, I said: Buy above 5450 OR on a dip near 5400. This was in response to a question on ‘What should a trader do with the Nifty today?”.
My own reading of the charts was also explained. I suggeted that there is limited upside as the markets are likely to see choppy conditions for the next few weeks.
Last Friday when the Nifty was at 5470, I said in the morning show with Udayan that I was no longer bullish since at 5470 the risk reward ratio for bulls was not favorable.
Now, for today’s day trading call, buying on a dip seemed to be the least risky method. But, overall, I became ‘not bullish’ since Friday, but that does not mean that a down trend is coming! For me, a dip starts if the 5350 support is broken on a closing basis. For day trading, today did offer a short selling trade, but that was around 1:20 Pm when the Nifty started breaking down below the day’s lows.

Mental Fitness

Thinking out side the box

Original creative ideas are innovative because no one has ever thought about them before. Those who develop such ideas are usually thinking in a different way than others. Academic studies have shown that fundamental datapoints (earnings,corporate actions, etc.) explain roughly 30 percent of daily/weekly stock price variation. Given that fundamentals are only one of many factors that determine stock price, it is crucial to understand what other factors play a role in determining stock prices.

In order to make money in the markets, a trader needs to know something that other people don’t know yet. She needs to be thinking ahead of the curve, to anticipate what is going to happen before there is evidence in the markets that it is going to happen and everyone starts to get on board with the same trading hypothesis. To do that, the trader needs to know nmore about her subject, than others. Whatever her edge is: Technical patterns, fundamental analysis, news flow – the more she knows, the more she can make a calculation about the likely target or trajectory the stock is going to follow. The more work she does, the more she is ahead of others and the earlier she gets into her position. this leads to more confidence in the position and a greater chance of success.

(Adapted from : The Mental Strategies of Top Traders, by Author: Ari Kiev )