Review - Monday, Jan 28,2013

The day is a range bound  largely trading ahead of RBI policy tommorrow ( Jan 29). I am in no mood to trade today trying to conserve and expecting to replenish my trading capital by Feb 11. Put on my screen JET AIRWAYS and EVERONN early in the morning  possibly as  "Fade" candidates but couldn't muster the courage to place the trades.

In the afternoon, watched some minor fluctuations in scrips where 3Q results are being announced. JSW Steel had good set up for minor profit taking. Banking stocks are weak, especially the leader SBI as it is at a crucial overhead resistance at 2550 levels. It traded at a high of 2530 levels and retraced to 2490 ish. May be it's difficult to overcome the OH resistance at 2550 unless there is a 50 bps cut in repo tommorrow.

Interesting readings for Intraday Traders

I found the following articles would be of interest to day traders.

1. Measuring Intraday Trading
2. The difficulty of Intraday trading.
3. The edge in Day Trading.
4. Some intraday patterns for US Markets
5. Identifying day structure
6. Anatoly Veltman on Day Trading
7. Larry Williams on  Day Trading
8. Trading the open in Intraday.
9. Defending  Day Traders

Trading and Survival

As Jeff Watson a Daily Spec author writes
 " The main lesson to learn in trading, more than anything else, is how to keep out of trouble. Manage to keep out of trouble, keep your own counsel, and the mistress might give you a second or third date."

1. The art of survival from Jim Sogi
2. Climbing Market
3. Humility in Trading
4. Brett on the mistakes traders make

Risk Management for Intraday Active Discretionary Independent trader(IADIT)

An Intra-day trader is one who opens and closes his positions with in the same trading day ( for eg between 9.15 am - 3.30 pm in case of NSE). Active trader is one who does more than a couple of Intra- day trades. Discretionary trader  uses his understanding, intuition and gut feel to enter and manage and exit trades instead of a mechanical/ automated trading system. An independent trader is one who trades his own money instead of institutional money or also called retail trader.

1. In case of an IADIT, the same person acts as researcher, risk manager and trader. This poses unique responsibilities, role conflicts and inter twining of risks.
2.  As Dr Brett writes in his blog  www.traderfeed.blogspot.com                                                            "Risk management isn't just about keeping losses down; it also means taking maximum prudent advantage of opportunities that present themselves. It's taking more risk than reward in one's trades that ultimately can lead to failure."
3. Setting up of loss limits : The trader has to set daily loss limits and per trade loss limits and also a drop dead loss level for the day( what is the maximum I am willing to lose in a day).
4.   Further to quote   Brett on this issue
   
   "When we trade size that is too large for our account size, we subject ourselves to drastic swings in P/L, and that subjects us to drastic swings in mood. In turn, we then make trading mistakes that bring a negative expectancy to each trade, and the size eventually blows us up."

New Modules in NCFM

I am proud to be a Level 5 NSE Certified Market Professional ( NCMP) having passeed 14 Modules.

1. NCFM gives a comprehensive and current information on Modules which are highly relevant for finance students and professionals.
2. As one finds MBA Finance curriculum and teaching materials out of touch with current market reality and market micro structure, market design issues are dealt in detail at NCFM.
3. Progressively adding more modules NCFM has become a very integrated body of knowledge(BOK) freely available to anyone.
4. Latest additions to this BOK are    Project finance module, Technical analysis module, Mergers & Acquisitions Module.
5. What I find interesting is taking a highly uncertain and ambiguous subject like Technical Analysis and adding a professional touch and normalizing it through their market expertise and vast pool of practitioners available.