Trading is Fun!

Nifty Futures remained locked in a narrow 28 point range for the first 3:20 hours of trading. This was an indication of a narrow range that was probably ready for a breakout / breakdown. As it happened, at 13:15 PM, futures moved above the trading range, signalling an upside breakout.

That’s the market for you. The market rewards traders who have the patience to wait or their trades.

For Traders:
The Index remains inside a trading range with 2875 as resistance and 2700 as support. We saw the Nifty breakdown below 2700 support. But, there was no follow through as the market rallied back all the way near 2875 resistance.
A close above 2875 will change the scenario from bearish to bullish. While it is still possible that the breakout could be a whipsaw (just like the downside breakdown), we still follow the market, accepting the whipsaws, if any.

Question: Why is program trading potentially harmful ?

Answer:

Large trading houses run computer programs which trade large volumes of futures & options. Movement of large volumes creates sudden volatility in the market. Retail traders & investors cannot handle such sudden changes in volatility. These people then lose money, or simply move away from the market.

Trading provides liquidity to markets. But, markets were liquid without program trading. So, program trading serves no useful social purpose. It scares away retail traders / investors.

The key question is: Is the world designed for the rich, powerful and greedy ? Are they entitled to all the benefits of mankind without a thought to the other 99.99% of inhabitants ?