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Stock Arbitrage Trading Explained

by Dilip Shaw on August 18, 2017

in Stock Trading

Arbitrage is done my big financial institutions. It is simultaneous selling and buying of two similar financial products to take benefit of difference in prices.

Though arbitrage is no more popular now, it was very popular a few years ago. Trading volumes were less so arbitrageurs took a lot of benefit. However now trading volumes have increased and there are a lot of systems that make sure there is not too much volatility in markets.

But still arbitrageurs exist.

Some traders use automated trading systems to arbitrage. read more

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8 Lakh Loss in Stock Trading

by Dilip Shaw on August 14, 2017

in Stock Trading

I keep getting emails form traders losing money while trading however sometimes the losses are so much that I feel like telling you to make sure you are also not in the same page.

Here is the email from my free subscriber I got a few days back. My reply is in bold.

Hello Dilip,

Good day. I have been following your mails and I understand that your courses would help traders earn up-to 5% a month on the capital invested, through options trading. I have done options, strictly CALL and PUT and I have gone through all the trouble and mental stress you were talking about in your mails in 2015. read more

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What is Bid And Ask Spread In Stock And Options Trading

by Dilip Shaw on August 12, 2017

in Stock Markets

Novice traders are confused to see Bid and Ask when they trade options in their trading account. In this article you will learn what is Bid And Ask Spread In Options Trading.

Ok let me start here. Have you ever walked in a bank and did you see this? USD Sell price and Buy Price? Did you notice that sell price is always higher then buy price? Why because banks cannot make money if they buy and sell USD at the same price.

When a trade is going on in a market place there has to be some kind of negotiation. This depends a lot on supply and demand. read more

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How To Trade Moving Average MA

by Dilip Shaw on July 31, 2017

in Technical Analysis

Moving Average aka “MA” is a very popular technical analysis tool. This is very useful for short term traders. Moving average is based on past prices. It helps traders to find the direction or the trend of the stock for the short term.

Two commonly used moving averages are the Simple Moving Average (SMA), and the Exponential Moving Average (EMA).

Simple Moving Average is very simple. It is average closing prices of a stock over time.

Exponential Moving Average (EMA), is also the average of closing prices of a stock over time, but it gives more importance recent closing prices. read more

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Intraday Trading Free Tips Advice For Beginners

by Dilip Shaw on July 20, 2017

in Intraday Trading

Learn Intraday trading tricks, techniques and ideas for Nifty and Indian stock markets.

Retail traders journey starts from investing then to Intraday day trading. Intraday trading is very attractive especially to the younger generations. However most lost money because they either speculate their trades or take to tips providers.

What is Intraday Trading?

Intraday or day trading is buying and selling or selling and buying a financial instrument in same trading day. It attracts traders because they are eager to make money every day. read more

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Do Not Take A Loan To Trade

by Dilip Shaw on July 18, 2017

in Stock Trading

Yesterday a young man just out of college called me in the night and inquired about the option course. I told him what I tell everyone. Then he asked about the returns. I said approx 2-3% a month. Then he said in Bangalore I will get a loan at 18% per year then how can I make a living with just 30% return a year. 30-18 = 12% return a year. He went on to say if I drive a rickshaw I will make more. He wanted to loan at least 10 lakh and trade. He told me that Rs.30k is not good enough to survive in Bangalore. read more

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What To Do In Rising Markets Should You Book Profits

by Dilip Shaw on July 17, 2017

in Stock Markets, Stock Trading

Stock markets have recently seen growth in huge percentage. This kind of amazing growth comes after at least three range bound years.

Nifty – the most popular stock Index in India has grown from 8000 to almost 9900 in few months. From 26-Dec-2016 to 14-Jul-2017 it has increased from 7908.25 to 9886.35.

In percentage terms this is: 9886.35-7908.25 = 1978.10 = (1978.10 / 7908.25) * 100 = 25.02% growth in 6 and half months.

Now what is the question in most traders mind. In fact at the time of writing it is 9918.50. Highest in the history of stock markets in India. read more

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Highest Open Interest

by Dilip Shaw on July 13, 2017

in Newsletters, Stock Trading

Date: 13-July-2017

This bull market is not showing any decline at all. It is getting frustrating now. I think GST has a big role to play.

Current position Nifty as on 13-07-2017 at 11.22 am:

Last six months graph of Nifty:

India VIX also hovering from 10-12.

So what are option traders trading?

The answer lies in trading volume or most active options open interest. This information can be obtained from the NSE site here.

According to today’s data as of 11 am:

Highest open interest at Call Options (most active option): read more

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Where Should You Take A Stop Loss In Stock Trading

by Dilip Shaw on July 11, 2017

in Intraday Trading, Stock Trading

Lots of traders do not know where to take a stop loss. This article discuses where to take stop loss.

85% of the traders who enter the stock trading business (not stock investment business) start with day trading. In India it is known as Intraday trading.

The reason is pretty simple.

They know that risk is involved in derivative trading. Derivative trading is trading options and futures. They start with Intraday equity trading. Once they start making losses they enter into derivative trading. In both the trading losses are there, therefore they do not want to take the position forward and try day trading. read more

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