The Professional Trader.

Prabhakar asks: ” I heard you saying that shorting has to be done by professional traders only. Could you please elaborate why shorting may not be suitable for everybody.”

My Notes: (a) Shorting involves the use of Futures, which is a derivative. Derivatives require the use of margin & leverage. Leverage can lure the innocent into over-trading. (b) The use of derivatives MUST be accompanied by strict money management (stop losses). Novices will not use stops, thus causing a lot of grief to themselves. (c) The stock market has a secular uptrend (generally). The short seller tries to take advantage of quick bursts of movement against the broad secular up trend. This requires great skill, which only professionals with lot of experience can have.

My regards to Prabhakar for asking this sensible question.
In response to my reference to probability, Reader Jagdish makes a valid point  “As brilliantly put by Larry Hite – IT IS INCREDIBLE HOW RICH YOU CAN BECOME BY NOT BEING PERFECT.”

Ashok wants to know if I am going to attend the Lucknow Investor Camp. The answer is: I hope so. The camp is scheduled on January 16, Saturday.

HOT Lists
Traders MUST have a short list of stocks in which they intend to trade (day or swing). These lists are reviewd from time to time (weekly or monthly) but such lists should exist. If you do not have a list, then go ahead and create one for yourself.

Traderfeed.blogspot.com discusses Day Structure here
Dr Brett Steenbarger defines each trading day into a possible seven types:
1) Range Day – The market will oscillate around an average price value with relatively low volatility through the day
2) Upside Trend Day – The market will open near its low price for the day session and build its way higher through the day, closing near its high price.
3) Downside Trend Day
4) Upside Breakout Day – The market will open within a range, but will build volume and attract participation at the upper end of that range, leading to a price break above the range.
5) Downside Breakout Day
6) False Upside Breakout Day
7) False Downside Breakout Day

The Americans continue to lead the world in research and new methods of trading. Dr Steenbarger is a pioneer.
Cheers.