Concepts of Finance

I was reading or rather forced to read Concepts of Physics by  H C VERMA  by my daughter Gangineni Hita studying 8th Class at Sri Chaitanya Techno Schools. Her aim is to get into the prestigious IITs through their JEE Exam.

1. I wonder whether a distilled concepts of Modern Finance as articulated by Susan Thomas, JR Verma is needed for B-Schools.
2. Modern Finance is predicated on lot of Concepts like No-Arbitrage Pricing, EMH, Time Value of Money etc.
3. Excellent article by J R Verma on Teaching of Finance
4. Dr Susan Thomas Opines on Modern Finance
5. Essential reading on New Facts of Finance
6. One of my most liked book for concepts of markets and Trading is by Larry Harris. Even Victor recommends it as an outstanding must read.

Everyone can Learn & Use Technical Analysis

TA remained a secret to me for many years due to lack of access to proper resources and orientation. Now one of my aims in this blog is to share and open the TA approach to as many market participants as possible.

1. As a DailySpec member , I have my own reservations about naive TA and stubborn adherence to rigid rules.
2. But if approached in the way of concepts, TA can be a powerful tool in the arsenal of a disciplined trader.
3. Another advantage in understanding TA is to be aware of the Media Jargon in interpreting market movement.
4. If one has basic concepts of TA, I found following many analysts in the media like Ashwani Gujral, Sudershan Sukhani, Rajat Bose, Devangshu Datta,Atul Suri  enriches our foundation and really adds to building our edge in the market.
5. I believe the first step in becoming an independent analyst , is to understand what other commentators are saying and can we reconstruct their arguments independently ?
6. What I implent in my Futures & Options training program is to decode many of Devangshu Datta's Derivatives articles in Business Standard .

How to generate Trading Ideas

One of the best practices I am trying to implement in my short term trading approach since entering into professional trading of stockmarket is STOCK SELECTION.

1. Trading only active stocks with volume and volatility, Identifying stocks in play, Stocks with Breaking News, Top Gainers/ Losers .
2. Brett Steenbarger on Identifying Trading Themes.
3. Personally I would zero-in on Stocks with huge CNBC coverage, print media exposure as contrarian plays trying to fade extreme optimism / pessimism on the stock.
4. Opening reversals identified work faster with less heat for the Intraday Trader.

World Class education on Trading - for Free

For a motivated student of markets  , Web offers a feast of trading education resources.

1. Understanding Technical Analysis to the core from  Corey Rosenbloom.
2. Concepts and techniques of Intraday Trading  by  SMB Capital
3. You have to drink and eat every post of the God of Trading Psychology.
4. Scholarly education for a speculator from the Giant in the field of Speculation.
5. Plenty of trading ideas and model templates from Stocktwits

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.

Simplifying Your Trading Framework

Active Traders internalize market lessons through exposure to patterns, pain of market losses, learning forced by the market.

1. There are many stages in the development and evolution of a trader.


2. I believe it is always difficult to predict the market as it appears mostly random. But a trader with clarity of his approach and trading framework is not surprised by the market moves . This progressive elimination of being surprised by the market makes him resistant to being fooled by randomness.


3. The trader should be able to explain his approach on the back of a visiting card in three steps.


4. The trader can reduce most of the trades to three approaches . Thus the concepts of trading are superior and of lasting edge than a single trade idea.


5. I would admit most of the trading experience and knowledge can be distilled in this excellent article by Brett Steenbarger.


6. When the market movement cannot induce surprise in the trader most of the negative power of the market is reduced. As the greats in trading say " In the expert's mind there are only few possibilities where as an amateur sees many possibilities".