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How To Improve Consistency In Your Trading

How To Improve Consistency In Your Trading

If you are failing to consistently book profits then there is something wrong in your trading style. Consistent return is very important in stock trading. The problem is change in plan of trading every time they trade. And this is one of the main reasons why most fail.

Misconception of Trading

Traders think consistent profits means making money every day and winning every trade. This is a huge misconception. Consistent profits means successful in at least 70-80% of the trades and losses if any are limited.
This ensures they make profit in one financial year. read more

Date of post: 25-Feb-2019

Some reasons why there is too much volatility in the markets:

  • Indo-Pak Tension – This could have tanked Nifty but luckily it did not break 10600, but created confusion in traders mind. It did go down but not too much.
  • Tussle Between Government and RBI. This problem is going on since very long and I do not think this will get over soon.
  • General Elections in Apr-May 2019 – This is a major source of volatility and will keep moving the markets till the elections are not over.

My advice is trade with the basics of trading – do not let the stop loss be violated. This means if you have decided to keep stop loss on certain point – it’s better to exit the trade at that point. And when it comes for time to book profit – just do that. Do not wait for more.

If you want to play safe my courses will help you. Please note that option selling is required so you must have at least 75,000 in your account to do my strategies. read more

Disclaimer: Although most of the time writing or shorting puts often produces better results than buying calls or holding a stock it comes with its own inherent risk. Please know the risk involved before shorting a put. I am not responsible directly or indirectly for any ideas or strategies written in this post or this website.

Selling options whether it is call or put is considered very risky proposition especially by new and novice traders. One reason is everywhere it is written in option trading books as well as in many online websites that selling options is an unlimited risk. This is true on paper but is there any rule that says if you sell and option you cannot close it before expiry? read more

Here is the new change in future and option selling margin from 21-January-2019:

Change in F&O margins from January 21, 2019

Here are the official circulars:

SEBI: https://www.sebi.gov.in/legal/circulars/dec-2018/review-of-risk-management-framework-for-equity-derivatives-segment_41314.html

NSE: https://www.nseindia.com/content/circulars/CMPT39766.pdf

There will not be any change in margin for option buyers. However if you are future trader or option seller – this might effect you. Mainly profits will reduce in terms of percentage on the margin blocked if you trade future or sell options. read more

2019 Indian General Elections are due to be held in India between April and May 2019 to constitute the 17th Lok Sabha. Its obvious that a lot of speculative trading will happen from now until the results are declared. In fact for one month after the results are declared there will be volatility.

See this movement of Nifty last six months from October 2018 to February 2019:

Nifty Oct to Feb 2019

Nearly 1500 points drop from Sep to Nov 18 and then 1000 points surge in next 2 months. This is volatility. A 500 points up and down in a few months is considered stable stock markets – but 1500 move points is above average volatility. Be prepared for this for next few months. read more

The major reason why traders lose money is they make the same mistake over and over again. They do not realize that if you do the same mistake again you may get the same result again.

Here are two biggest mistake traders do:

1) Hoping of a reversal and not taking stop loss when it comes, and
2) Taking profits early in the fear of making a loss if you do not take out the profit.

Other Mistakes:

3) Averaging a losing trade : This is again a blunder. You should just take a stop loss that is all. Averaging a losing trade means you will lose more. read more

Tips on What You Should Trade on a Budget Day

Budget is tomorrow 1-Feb-2019 please trade carefully.

Read this article to know what you should trade on a budget day.

Important for option traders:

Do not sell options especially if you do not know how to hedge. And if you buy options please keep in mind that India VIX will keep falling thought the day as the budget progresses so option prices will not increase the way they normally do. In fact if the move is slow then option buyers may suffer a loss even if the direction is correct.

Suggestion for Derivative Traders: read more

Have you ever done a course and got so much confidence that you are ask your mentor on how to deploy a capital of 8 lakhs with the strategies learned?

Here is one such customer of mine who is willing to do that:

How do you feel when you do a course worth a 5 or 6k and think about deploying 8 lakhs after see that these strategies work and can be compounded to make money month after month for your entire life?

Here was my reply to him:

This is his email in text if you found it hard to read on image:
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Hope you are doing well. Attached file contains the strategies I bought from you so far. I’ve used these strategies for some time and found them good (particularly Conservative Non-Directional Strategies on NIFTY options). Later I was not regular in applying these strategies month on month as I had to move my funds to another asset class. Now, I got 8 lacs capital to trade on these strategies and I would like to use this capital only for options strategies month on month. So, based on your views, feedback from your customers and based on the returns they have provided can you please suggest me which strategy I can deploy month on month. Also, are there any New or Modified or fine tuned strategies for above strategies I can consider? read more

When VIX Drops Nifty Rises

Part of my newsletter to my subscribers dated 29-Nov-18

I have written this before that Nifty and India VIX are inversely proportional. Today I want to just write again because it has again proved that they both are inversely proportional.

See last 3 months graph of India VIX and Nifty – Source: MoneyControl.com:

India VIX Sep-Nov 18

Nifty Sep-Nov 18

Can you see from Sep to Nov 18 India VIX kept on rising and Nifty in the same period kept on falling?

If you read my emails thank you. Hope you remember what I said on 27-Nov-18 that Nifty at 10600 is looking very strong and at the time of writing this email on 29-Nov-18 Nifty is at 10824.25. read more

All Options Do Not Expire Worthless

Traders who short options profusely have a misconception that over 80% of options that are traded expire worthless. Let us see option chain for Banknifty expiring on 22-Nov-18.

Option Chain Banknifty 22-Nov-18

Source: https://www.nseindia.com/live_market/dynaContent/live_watch/option_chain/optionKeys.jsp?symbolCode=-9999&symbol=BANKNIFTY&symbol=BANKNIFTY&instrument=OPTIDX&date=-&segmentLink=17&segmentLink=17

Please note that the options colored in yellow are all In The Money (ITM) when this screen-shot was taken at 1.02 pm on 19-Nov-18. read more

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