ESPACIOS A PROTEGER

assumption 12pass with 60% marks...lets start ... ...

statistics...basic concept of probability, regression analysis, sd...and qc ECONOMICS...stock market as lead indicator, demand/supply.cycle concept

business...enterprenaur what makes him click,why a business fail,concept of monopoly and market share

MARKETING...NEW PRODUCT aggressively develop market share, old product how to cut competition...game of advertising macro economy...budgetary policy,rbi monetary and credit policy,la.repo...reverse repo...rate of interest ...inflation and its impact

INTERNATIONAL FINANCE...forex,global village,cheap product ,political risk ,stable govt,fdi ,import export gatt,ppp and swap,money flow and money squeeze

BEHAVIORIAL FINANCE...how crowd behave,how greed /fear affect individual and when in group.dream vs reality,wish hope,study on fallacy...when one quits

VALUE OF MONEY...time value discounting concept,cash in hand ,oppurtunty

TIME MANAGEMENT...priority,get organised,abc analysis,delegation,imp learn to plan then act.

self development...SWOT ANALYSIS.pogress review

company...product development,market niche,ir ,distribution channel,vision,fund management ,integrity accountancy...debit/credit,3statement..balance sheet,profit loss,cash flow,financial ratio analysis its implication corporate finance...budget and forecasting,debt/equity ratio, how to fund

costing...of a product,value vs. perception,time value ,break even ,overhead, profitability

VALUATION...discounted cash flow,firm valuation,relative valuation technique,dividend model,book value vs replacement value

basic financial planning...ur personal balance sheet...asset vs liability,derisking and insurance concept, asset allocation , ur suitability as risk taker BOND MARKET...yield curve analysis,interest rate implication

COMMODITY MARKET...CYCLE , WHERE LIES OPPURTUNITY

STOCK MARKET...WHY , for whom no, neat/bolt function...concept of software

OPTION /FUTURE...leverage tool, derisk vs speculation,pricing model like black scoles/binomial...danger associated in trading RISK RETURN STUDY...risk premium,expected return ,variance, beta,capm

PORTFOLIO THEORY...efficient market, portfolio diversification,markowiz model ,indexing,sharpe ratio,portfolio performance ,arbitrage FUNDAMENTAL...INDUSTRY ANALYSIS,govt policy,burgain power of buyer,substitute product,PORTAR MODEL

STOCK PICKING...MANAGEMENT QUALITY,LIFE CYCLE OF A STOCK,operation profit/operating asset,analyzing non financial aspect of company,leadership in sector,emerging blue chip,cyclic turnaround defensive stock

SECTOR AND ITS LEADER...banking, hotel, power,pharma, metal, fmcg, refinery, cement , auto, software...[idea i learn from equitymaster.com]

SCENARIO ANALYSIS

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BEHAVIORAL FINANCE ...aspect of repeatative mistake

ta...which indicator suit u...learn to read volume , overbought oversold market,mometum and stoploss,leverage to winner / cut loss early YOUR CHECKLIST...SCREENING CRITERIA, WATCHLIST,SYNCRONISATION technique.

TRADING IS MORE WITH PSYCHOLOGY,BUSINESS ,WAR

FIRST decide why trading?what u want to after 3yr...after 5yr/8yr?

study ur personal life...ur strength , what u do when u find something wrong?

your skill development attitude...commitment level ...ur comfort level

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life is oneway...trading another way...NONO HOW TO COPE FINANCIAL LOSS

AVOID ROAD OF SELF DESTRUCTION...CONSCIOUSLY STOP IT

BEHAVIOR MODIFICATION TO IMPROVE...TAKE ego pride out of u...they r main hindrance in trading AVOID COMPULISIVE BEHAVIOR

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PREPARE STRONG FOUNDATION...MAKE U A BETTER TRADER AFTER 3YR,STRATEGIC PLAN...STEADY DETERMINATION UNDERSTAND AND FACE REALITY

...FOLLOW MOMENTUM AND INERTIA...

UNDERSTAND PRICE...WHEN IT TAKES UP SPEED CHANGE IS LAW...IN TRADING/IN MARKET /IN U

COMMIT TO CHANGE FOR +,IF THINGS OK...DISCIPLINE NOT TO CHANGE FROM IT COMMITMENT TO CHECK A/C URSELF

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REASON OF UR DOWNFALL...AVOID OVERTRADING ENVIRONMENT TO SUCCESS ...IMP

HAVE A PUNCHLIST...TIME AND PRIORITY CONCEPT UNDERSTAND MONEY MANAGEMENT...READ RYAN JONES

On Trade Learning

05 July 2015 12:18 PM

All rational people will agree that there is uncertainty in the stock market, that predicting where prices will go is foolish .In Science we know how cloud is being formed but can you guess that the most scientificallydeveloped nations CANT get their Weather Forecast right upto 65 % time.

Govt. of each Republic we see in a political map has a Weather Forecast deptt ,think about the combined Billion Dollars World spend each month !! and through decades of experience;Data; pool of

Statelites;these Guys cant get the Forecast RIGHT.

Then we with a computer & Data & some knowledge have the audacity to think we can Predict Price ,where it involves millions of trades with million different emotion & intention.

Atleast in case of Weather we have 100 % scientific knowledge how & what of Weather.

We think that we can predict where stocks will go, that is the reason we trade the market, to make money from our predictions.

But no one can predict the market with absolute certainty. Therefore, you have to stop looking at trading ONE trade at a time. Imagine what would happen to the Matka owner who looked at their gambling business one bet at a time. The Matka can not predict who will win the Super Lotto or what the next 'Patta' drawn in a game of zero to nine will be.

It can be Ekka or Panja -the Operator does not bother ,they don't try.

Becoz in the Long Haul Probability is going to play in their Favour this Simple fact is known from the Casino owners of Las Vegas to the 'Matka' operators of Gujrat.The Gambler plays AGAINST the House,the House wins by Long Haul as probability is stacked in their favour.

What the casino does, and what we as a trader should be doing, is trading the probability of what will happen. The casino makes money because they know what will happen over the next 1000 hands of blackjack.They have an edge.

The question is, do you have an edge in the market?

Are you trading a strategy that assures you a profit over a large number of trades?

If you are serious about making money in the market, you should be able to define the expected

out come of your trading strategy in the same way that a casino can predict their profitability from millions of dollars wagered in the pursuit of 21.

How do you calculate your edge? Simply:

((Profit of a successful trade times the probability of a successful trade) - (loss of an unsuccessful trade time the probability of an unsuccessful trade

As an example, a trade that has a 30% chance of making Rs 5000 and a 70% chance of losing Rs 1000 has an expected profitability of Rs 800.

Here we see how even a trade that has the odds stacked against it is worth taking because it has a positive expected outcome. If you make this trade enough times, you will average Rs 800 in profit per trade.

This means we need to set out on a study to determine the probabilities of profit and loss for a trading strategy. Establish a set of rules and then test them over a large sample of trades to determine the expected value of the trade.

But, if we find a trading strategy that has a profitable expected value, are we assured of success in the same way a casino is assured a profit hosting games of blackjack?

No. In blackjack, there are rules enforced by the casino. The player must give the casino their money if they go over 21. They must give their money if they have a hand that is lower than the dealer.

In trading, there is no one to enforce our well tested trading rules except WE.

In the heat of the trading moment, when WE must decide whether to exit the trade at the stop loss point or hold out for a turnaround, it is only up to US. When we have the choice of

selling for a profit or continuing to hold until we get the sell signal ;though our strategy was tested for, it is only up to US.

And we, assuming we are a normal human being, are likely to break our own trading rules.Why?

Because we avoid pain and pursue pleasure. We lack confidence in our strategy because of our recent experience. We think we can use our better judgment based on what we are seeing NOW in the Price. We lose focus.

These are the things that turn the relatively simple pursuit of making money in the market in to a frustrating, mind numbing and stressful process. Who is at fault?

Only us.

We Trade Price,hence 1st of all we have to find the Greater Trend ,there a Longer term say 144 period Weighted MA to find What is the Slope (-)ve or (+)ve.

Then say EoD pivots to find the General Trend.After we get the GT (Greater Trend) by WMA slope & EoD Pivots we then look at current on going Trend.

Current Trend is strictly only by Saint's HH HL OR LH LL.

Here when we get the GT & CT ,we trade only towards the GT means whenever CT ,in its wave form is towards GT we take only those trades.

Here we must also keep in mind the

Reaction areas ,that is EoD's R3 R2 R1 P S1 S2 S3 & EoD's Fib levels,becoz our trades flow may get stalled or reversed on those reaction areas.

Say we get a workable few points –EMPTY SPACE FOR EASY MOVE ,between these reaction points,where both GT & CT in same direction we take those trades.

Maybe in FULL DAY there may be only 2-3 trades but we take only those trades no other trades.

For consistence we look for High probability trades only.

These trades have greater probability of Wins.

KMI INDICATOR can work as a visual aid to identify the current trend of PRICE (HH HL LH LL) Change of �slope� green/red will define Wave Highs and Lows .

Here pl be clear the Indicator change in color is not Waves High Lows but the Price action, prior to that has influenced the indicator to change it's color hence High Low is in PRICE.

You dont gain a lot but you can have nice quick visual reference of the current direction.

You may reduce whipsaws on sudden price spikes that can point to false�

Prediction

05 July 2015 12:19 PM

To be a Trader-20yrs Page 130

You may reduce whipsaws on sudden price spikes that can point to false�

lows/highs especially in fast timeframes or less liquid instruments.

COMMENTS ON INDICATOR

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Indicator is to be used only as a visual aid .Don‟t misinterpret its price predictive and take a trade based only on the indi cator .Trade only to be taken on price analysis + confidence ( ur reliable indicator bias)

What is the Trade Off ?

You introduce an indicator to improve efficiency of trend direction prediction but you end up losing consistency. There are h undreds cases that what INDICATOR SUGGESTS,the opposite will happen;

BEST take price HH/LL .

the key issue here is to avoid CONFLICT, suitable MA indicates a direction bias, Use this in your trading plan. On a daily ch art where waves are naturally smoother but look at the potential implication of introducing a 2oMA ,- 2 or 3 indicators you may decide to use, BUT may end up in conflicting signals that will certainly create bad trading decisions/ failure to activate trade.

After all my job is to find Room between reaction points , we still have to pull the trigger,put the trade.Any delay will red uce my risk/reward…,hence we need TIMING the Entry.

It can be above last bar high or below last bar low or crossing 50 % level of last bar.

This we will have to work out which suits me best in PRESENT MARKET CONTEXT.

Here the indicator may help,close above/below a value, as a trigger or you can wait for a conservative change of �slope� green/red for confirmation.

Remember: we do not trade Indicators we trade Price- it is just a trigger.

WHAT IS THE GOOD OF IT?:

It can give you an objective entry point, reduce drawdowns and identify warnings that the trade MAY go bad and/or clear exit signals.

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NOISE :The first and foremost thing to have is to practice absorbing the NOISE.

Practically speaking the NOISE is nothing but what is happening in the security's price above or below certain % value, it is the entry levels before either the stop is hit or the target is hit. So anything between the entry and stop or entry and target is noise.

This noise varies according to the chart periodicity. The noise for a person who trades using Daily charts might not be the n oise for the Trader who uses 30 min. charts. Hope it is not confusing.

So, first we have to understand what time frame we are using in charts to initiate the trades. And then the entry, stop and e xit. Anything in between is a noise. So while practicing, just go least bothered what ever happens to the security in between. Wait to get stopped out or t o reach the target.

If we start paying heed to the movement of the asset price in between, then we will start changing the trade plan and spoil t he trade. This changing the trade plan might help us once or twice, but finally it makes us losers in the market.

So, once the trade is initiated with a good trade plan, never change it. To go that rigid, before initiating the trade itself - try visualising the scenarios with

"what if" thought in the mind. "What if this doesn't go like I planned", then we will start thinking in the other way and und erstand one more route for the security's price movement. Like this if we are ready while designing the trade - with the Road Map of the price move - then the price behavior won't surprise us and it further helps un in going stable and absorbing the noise.

I remember one incident … He initiated trade in Infosys. And booked a huge profit in it. But this was done out of trade plan. The trade was initiated keeping Daily charts in the mind but exit took place just for the reason the security was tracked intraday. ..it was a profitable tra de. that member must have taken one more entry into it at a good price and must be running it still- as he is wise in practicing technicals. …nobody is foolproof when dealing with the markets.

So time and again we should protect ourselves.

It is better to make a record for the trade plan and track it. We should look into it whenever we try to do something with th at security in which we are already in, to understand the original trade plan- which should preferably be with the Security's Price Road Map. Then we will get reminded of the trade plan. And this helps us in sticking to it. It will work wonders my friend.

This definition on noise helped me a lot in building a position sizing strategy

Ok, so we are talking DSP here.Talking abt filters, MAs are low pass filters while derivatives of SMA etc like MACD are hi-pass filters.But before we get into all that, lets talk about the time-series itself.

Ok, so a stationary series is one whose statistical properties are constant along its length. Its quite well documented that financial time-series are heavy-tailed and not stationary.Volatility clustering is another important topic, i.e tendency of autocorrelation in volatility.Giv en all these different conditions, I think its absolutely treacherous to try and detect signals within all this noise. Theres just too much randomness to deal wit h here than most people think and most are 'getting' fooled by it.

Normally no effort was made into understanding the data itself. For me INDICATOR the buy-sell signal part hardly is the important issue, the key thing is to beat randomness.I have attached a map of my development process, the 'Analysis & Mining' is the primary area of my developmen t. Another thing it does is to help with 'intuitive' understanding of markets. Ofcourse people are not interested in such undertakings, everyone wants to quickly get to the 'buy-sell' stage. Again, as I have said before, its not bad at all , as Napoleon once said - " Never interrupt an enemy when he is making a mistake". Ofcourse I am talking generally and not about superior guys like U, but this is not the way to go about system design.

How to employ the most sophisticated and effective risk management rules used by professional traders

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… with their focus solely on capital preservation … the pros use risk management to prevent big loss.

I think that especially with beginners, risk management is not understood very well and people don‟t understand that you can greatly increase your returns by having some definite risk management rules .

Just by having a stop loss in place, you‟re limiting your downside risk before you do anything else.

Once you‟ve conditioned yourself to accept that you must use a stop loss as a trader, the next step is to fashion a methodology for setting that level which is the most appropriate level for either the kind of trading you‟re doing or the instrument that you‟re trading or the approach that you‟re taking in the market, and so on.

For example, if you put your stop loss too tight, you will continually get stopped out of profitable trades – where the stocks have just pulled back to pause or rest for a couple of days and hit your stop loss level before it subsequently moved back up.

It is very, very important to establish these levels where they will:

a) Do the job in terms of preserving your capital,

b) Will not be so tight as to see you disadvantaged, being stopped out early of trades that have the potential to run on for even greater profits.

While some of the simple rules that we talk about are very simple, getting them to be a habit and actually applying them with discipline every time you trade is tough to implement.

As You are battling against human nature. That fact only reinforces

why you have to manage your emotion out of trading in order to accurately and diligently use your stop losses.

One of the first levels that we put stop at might be below holding support.

If you have a stock that has been falling down, say it‘s consolidated around about 100/- and it started to move up and you‘re deciding to buy into the stock at say 102/-. Having your stop loss, below that 97/- level is really quite sensible because 100/- being support several times, your expectation is the stock may then come down and touch that 100/- level again.

If you put your stop right at 100/- above you are invariably going to get stopped out. So instead of having at100/- just have it slightly below, maybe 97/- – just to give you a little bit of comfort and less likelihood of

getting accidentally stopped out.

getting accidentally stopped out.

In document AVISO IMPORTANTE: (página 54-64)