Concepts of Trading

I have started my learning in markets the hard way paying huge tution fees to the market and Vig to the brokers. Starting with fundamentals and by necessity learning by trial and error in brokerage trading rooms reminding of Reminiscences of a Stockoperator 's description way back in 1997.

1. As my journey continued with rich information contained in web 2.0 , I am fortunate to discover giants in the field of speculation, trading psychology and derivatives including Victor, Brett, Taleb.
2. Where as the beginning trader starts with Technical analysis and Charts , solid foundation may be possible only with CONCEPTS of TRADING.
3. TA when understood in terms of concepts like Trend, Momemtum, mean reversion, Low risk entry, classification of tools for ranging and trending markets,Day Structure assesment,Execution in countertrend,Allowing the market to show top or bottom formation, Sticking to timeframe,and understanding the Technical indicator built up rather than mechanical rules will put the developing trader in a formidable position.
4. I find much appreciation for the way the material of NSE Technical Analysis program is prepared in the lines of emphasing the concepts of Trading. The flow of the content in TA is very smooth and connected.

Short cut to approximating IV,HV

Some of the benefits of sharing market information is the trainer achieves more clarity on specific concepts.

1. In delivering NSE program on derivatives , I came across a shortcut to approximating Implied Volatility(IV) and Historical Volatility(HV).
2. Normal approach to caluculating HV involves statistical caluculation.
3. Devangshu Datta of BS describes a thumb rule approach to estimating HV. It involves calculating the daily  HIGH - LOW range as a % of Futures settle price. You can take say, a 20-day moving average of this in order to get a smoother value. This can be used as a proxy for HV.
4. For estimating IV, We can take nearest to money call option and nearest to money put option premiums and calculate the breakevens to derive a range. For ex Nifty at 5280, 5300C (premium 100) and 5250 P (128) can be considered. A strangle breaks even outside 5558 -5022. This 536 points can be expressed as a percentage of NIFTY 5300 approx 10% as a estimate of IV. 
5. Black-Scholes options caluculator gives more precision but a thumbrule approx can be done as above

Technical Analysis @Manipal Education

The training program  jointly delivered by me along with another colleague gone very well.

1. NSE's Technical analysis material supplied to the participants provided unique way of classifying TA
2. Students liked the classification of TA tool kit and what tools to apply to Trending, Range-bound markets and transitioning markets from Bull to range-bound and vice versa.
3. Audience participation is very good with practicing traders and even top management from some brokerages thrown in.
4. I could bring value to the process through my emphasis on trading psychology and risk management mostly adopted from Trader Feed.
5. Intraday trading strategies with pivots is one chapter on the TA course.
6. I could personally appreciate how the basic concepts of TA can help the beginning trader have a grip on the market perception.
7. So many commentaries on  Financial Press and TV  became evident after going through this process along with my co-learners.
8. Much of the philosophy and terminology was effectively internalised by the participants by the end of the workshop as they were freely using the jargon.
9. Illustration of many concepts were done using  TAME and ShareKhan 's TradeTiger platform.
10. TA concepts when viewed in a foundational sense clarified many of my hazy opinion on TA.

NSE - MANIPAL Training Program on DERIVATIVES

I had the pleasure of taking classes for NSE-Manipal Training program on Derivatives at Hyderabad.

1. The educational material of NSE is absolutely top class.
2. The 14-hour program covered all Market Design, Microstructure and Analysis
3. Audience interacted very well  with diverse profiles from JPMorgan, Dr Reddy Labs, Stockbroking employees like Kantilal Chaganlal, India Infoline, and Independent traders.
4. I could discuss various indicators for derivatives analysis like  OI, CoC, PCR, IV by taking reference to DEVANGSHU DATTA's article in BUSINESS STANDARD - Smart Investor JULY 2007
5. Interpretation and understanding of Derivatives analysis by Devangshu Datta in Tuesday's BS will be very helpful to investors & traders in interpreting market direction.
6. Participants could appreciate the role of market design in taking trading decisions.

Simplifying the TRADING Framework

Today I had an aha moment trying to explain a methodology to understand price action to a new student of Markets and Trading.

1. The need for reference points which act as handles for the trader is emphasised.
2. These price handles will make the trader make sense of randomness
3. New and developing trader could feel a sense of elation at understanding the complex world of  Trading
4. When you can write your trading style on the back of your visiting card you can easily explain the approach to traders.

Understanding Investments

INVESTMENTS is a subject that is better understood and interpreted through a quantitative and statistical lens. This will avoid many biases of narrative distortion,selective recounting and other heuristics mentioned in behavioral finance.

1. I would think INVESTMENTS by BKM & Pitabas Mohanty with good indian examples and data will help students of Investments learn the right way.
2. Practicing with data from NSE website, Yahoo Finance, BSE website is the way to feel and understand finance theory.
3. MBA Course curriculum is enriched in OU & JNTU. BlackSwan Financial Markets School plans to associate with MBA Colleges and B-Schools in Interpreting SAPM, Investments Courses with practical approach and live trading.
4. Bridge Course for BCom/BBA students can also be implemented.

Finance Education in Hyderabad

As I ventured into financial markets education space in Hyderabad, I happened  to meet many interesting people.

1. My  deepest regard for Dr KG Ray of VJIM for his emphasis on Empirical Research and grooming students on research methodology.I learnt a lot from him  academically even though there are minor differences with style of admin. I can vouch for the superiority of VJIM's PGDM program, its pedagogy, curriculum, student culture and Vibrant atmosphere with top class infrastructure.
2. Mr Vishnu Mohan of Firstmove Advisors for his clarity and confidence of his techno-Fundamental approach.
3. Damodar Sai for his Intraday  and Technical analysis skills.
4. Harsha for his expertise in Commodities Trading and advisory.

Different ways of approaching the Market

Some of my random observations interacting with market participants and self styled portfolio advisors

1. Need to appreciate that there are many ways of approaching the market from different angles
2. Market comprises of different risk and time frames. Both long and short may be right when viewed from different time frames
3. Market consists of RISK. It is like a raw material made available to the participants.They can manufacture their own risk ( dish)
4. Experts trying to tell about their succesful tips but unwilling to discuss methodology and concepts of Trading.