IndiaVIX

I post here an abstract of a  paper on IndiaVIX which is under review of Indian Journal of Finance coauthored by myself, Dr D Raghunatha Reddy of JNTU SMS, Dr TNL Prasad , DGM ( Finance ) of NCC.

                  INDIA VIX:           Examining the Negative and Asymmetric                       

                                                 Volatility Index – Market   Return Relationship

This paper examines the behavior of India Volatility Index (India VIX). We study two aspects: First, the negative correlation between changes in India VIX and market returns. Second, the asymmetric nature of the changes in India VIX with respect to market returns. S&P CNX NIFTY Index has been used as a proxy for the market and the study period covers March 2009 through November 2011. Using OLS Regression method on daily data this study finds an inverse relation between movements in India VIX and movements in the NIFTY. The study reveals the asymmetric nature of the Volatility Index- Market Return relationship. This study is useful for understanding the behavior of India VIX and helps policymakers in the design of appropriate instruments based on India VIX for hedging and risk management.

Keywords: Volatility Index, Hedging, Derivatives, Indian Stock market

Improving MBA(Finance) Education at Colleges

Some observations of my experience of teaching and interacting with MBA( Finance) students at Colleges on how to improve the quality.

1. Usage of NCFM Materials : These materials will be useful for correct and latest understanding of  market structure and deign. Some of the textbooks are at least 5 years out of touch with market realities.
2. Market Simulator                 : Finance students can get real feel of the market by using tools like NSE pathasala.
3. Market Based Approach         : Understanding finance from the prism of financial markets will help sharpen the understanding. Corporate finance also should be linked with market based approach.
4. Financial Newspapers              : Students should be encouraged to utilize ET, BS to understand real-time market happenings
5. Market Experts                        :  Colleges can invite market experts and experienced professionals from brokerages, regulators and other market infrastructure institutions to share their experiences.
6. Standard Text Books                : Text book selection is also important from my experience. For ex INVESTMENTS by Bodie, Kane, Marcus, Mohanty suits very well to  Indian examples against say, Fischer and Jordan. Same is the case with   Options by HULL & BASU. ( By the way I am looking forward to interacting with Mr . Basu at IFC 2011 at Bangalore IIM)
7. Empirical approach                     :  Finance concepts can be operationalized using data from NSE, BSE websites . Use data to illustrate which will enhance the experience of students.
8. Charting Tools                             : There are free Technical analysis tools offered by NSE like TAME .These can be utilized to demonstrate Technical analysis real time.
9. Business Channels                         :  Students should practice listening to  Channels like CNBC, ET NOW, BLLOMBERG, NDTV PROFIT at least one hour daily. Well give known anlysts like Udayan Mukherjee, Lata Venkatesh  give good insight into latest happenings.
10. Statistical orientation                   :  lectures should  preferably be less of personal opinion and more of statistics based approach.
11. NCMP                                           : It is advisable for MBA( Finance) students should at least get a NCMP Level 1 certification before they finish their degree which willl differentiate them from others in the job market.

NSE Certified Market Professional Level 5

NSE has introduced NCMP Level 5 under its NCFM umbrella.

1. It is awarded to candidates passing 11 + NCFM Modules.
2. 4 New modules were added which are very interesting for a student of finance.
3. NCFM helps to standardize and bring the Indian context to finance body of knowledge.
4. As academics depend on US texts, quality  Indian material is lacking particularly in the areas of market practices and design. NCFM materials will bring classsrooms to a common platform which I think is a positive externality(in economics jargon)
5. I would believe this has prompted NSE to launch tie-ups with universities for MBA( Financial Markets) and BBA ( Financial Markets) courses.
6. I would expect more NCFM modules in areas like  Technical analysis, Advanced Derivatives, Financial Journalism,Statistics for Financial Markets which come to my mind straight away.

Attending Workshop at BDU, Trichy

The participation in the workshop on " How to write a Research paper " is very enlightening for me.

1. I thoroughly enjoyed the experience though it is one way 18 hrs travel from Hyd - Trichy .
2. I particularly liked the Pongal at Egmore station and  also at Trichy
3. When returning back, in Chennai central the Sambar Rice is Fantastic @ Saravana Bhavan
4. I wanted to network with researchers in Finance and I could meet very nice people.
5. My friends in this trip included Mr. Narayanan, Mr Prabhakaran and his two student colleagues.
6. The hospitality and the humility with which BDU- Department of commerce and financial studies function is truly an example to emulate.
7. I particularly liked  Dr Roji George for his finance examples on Literature Review.
8. Hope to visit again on JAN 7-8,2012 for FIMIC 2012.

Markus Heitkoetter on Trading Education

 I take the liberty to publish Markus Heitkoetter's comments on Trading Education. He is a respected blogger and Trading Educator.

Learning to trade the forex market successfully is something that many aspiring traders fail to achieve. Many beginning forex traders erroneously drop thousands of dollars on forex educational products with the belief that the more expensive the product the more effective it will be. Thanks a lot...

Markus Heitkoetter  further comments

Hi,

Sellers of trading education strongly advise traders to seek assistance of a professional commodity broker to provide them with valuable functions that best suit their needs. A commodity futures broker can ensure that all trades are placed correctly, avoiding any costly mistakes. Thanks a lot.

Training on Futures & Options

BlackSwan intends to conduct a training program on F&O during NOV 5-7,2011 and repeat the same course on NOV 19-21,2011.

1. Signals from F&O by Devangshu Datta my favorite analyst here.
2. Measuring Volatility here.
3. Another good piece by Devangshu Datta.
4. Conquering Volatility
5. Article on F&O strategies as a template for analyzing market movement.

Infact, a collection of his articles in Smart Investor of Business Standard every Tuesday will make one a well informed trader or investor in Derivatives.

First Day of IPO Listing: Wild & Spurious Volatility

IPO Listing day fluctuations are abnormal. As CNBC anchors term it there are lot of fun and games in these counters as there are no price bands on listing day.

1. Financial Express on Listing Day Volatility
2. Report on IPO listing day volatility in Business Standard
3. Prithvi Haldea of Prime database on Listing Day price bands.
4. SEBI's earlier proposal of 25% price band on first day of IPO Listing.
5. DNA on the Violence of Volatility of New Listings. One has to participate to experience the abrupt price fluctuations.
6. Will pre-opening trade help in case of IPOs Listing day fluctuations ?
7. IPO manipulation behind these violent moves ? Sucheta Dalal here
8. Research article on IPO pricing
9. Scholarly article on IPO pricing. Infact the vast amount of availability of academic literature makes the study of financial markets endlessly fascinating and intellectually satisfying. A motivated student of financial markets can grasp all aspects of an issue from various sources and form an informed opinion.
10. Another article by SSS Kumar who is an alumni of SVUSBM and a student of Dr M S REDDY who is my professor at Tirupati.
11. Information assymetry in IPO pricing may necessitate not applying price bands on Day 1.
12. Today( Oct 23,2011)'s new listing VASWANI has allegations of dummy IPO subscription.  
13. Related Article on  Vaswani
14. Always fascinating prose by Dr Ajay Shah on IPOs. He reminds me of Larry Harris of Trading & Exchanges. His articles on Indian Finance together with Dr Susan Thomas of IGIDR will be a GITA on Indian Finance & Markets. Infact Dr Susan Thomas web page contains lot of notes on Econometrics and Finance which is a feast for students of Finance and Financial econometrics.
15. Another respected thinker on Indian Finance even quoted in India's Financial Markets Book.
16. MoneyLife on IPO manipulation

Must Read Finance Authors

During my approx 20 years of fascination for the subject of  Finance & Markets , I came across many fantastic authors which I will try to recollect here.

1. Bodie, Kane, Marcus on Investments
2. Luenberger  with Investment Science
3. Paul Willmott on Derivatives & Quantitative Finance
4. Aswath Damodaran on Investment Valuation
5. Larry Harris on Trading & Exchanges
6. Victor Niederhoffer on SPECULATION
7. Brett Steenbarger on Trading Psychology
8. N N Taleb on  Hedging &  Randomness
9. Anderson & Sweeney on Statistics
10. Fabozzi on Fixed Income
11. Ajay Shah & Susan Thomas on India's Financial Markets
12. Chris Brooks on Financial Econometrics
13. Hull on Options & Futures
14. Elton & Gruber on Portfolio Theory
15. Fuller & Farrel  on Investments
16. FX Diebold on Forecasting
17. Snedcor on Statistical Methods
18. J R Verma on Derivatives & Risk Management
19. Mark Hirschey on Investments - More on the Behavorial aspect.

BlackBox Sellers of Trading Education

Today I have attended a Seminar ( rather a sales pitch !) by a person in Hyderabad who wants to sell his 3-Day workshop and Trading Software.

1. The company's 3-Day workshop is priced at approx  Rs 40000/-.
2. All techniques of influencing the audience were used by the Trading system seller. Like anchoring the seminar  benefits to Rs 200000/- worth.
3. I personally could not identify with the speaker's motivational seminar with rather using flowery analogies, exaggerated claims, quoting outliers as if they are normal!
4. You can check the company's website  here
5. I would rather refer all my friends to Dr Brett  at www.traderfeed.blogspot.com
6. You have a life time of learning resources here by Dr Brett
7. I take the liberty to recommend you the book TRADING & EXCHANGES by Larry Harris for Rs 400 at 1 % of the company's workshop.

VOLATILITY

Volatility or Vol as Market participants call it affectionately is the soul of Financial Markets. Recently I came across lot of resources on Volatility as my research also involves survey on Volatility.

1. Nobel Laureate Robert F Engle  on VOLATILITY. His FT Lectures here.
2. R F Engle's take on Financial Market Volatility on Youtube.
3. Interview with Engle by FX Diebold.
4. In fact I am greatly influenced by Dr K Kiran Kumar of NISM for introducing me and being a teacher of  Financial Econometrics at NISM in his EERF Summer Schools. Engle has actually participated in a conference at NISM two years back.
5. One book that is extremely lucid in explaining financial econometrics is  Chris Brooks.

NEWTON LINCHEN ON INDEPENDENT TRADER

Dear Professor,

Namastê!

It has been occurring some improvements to this issue: I only day trade now patterns I had worked with comprehensive statistics.

This means a lot in terms of reducing overtrading and the emotional factor of trading.

Notice that when you analyse trade by trade, you're "right" or "wrong", depending whether the trade works out or not. That kills traders, for we misinterpret random events with a "failure" of our judgment skills... When you only trade with statistical setups, you don't feel bad anymore about losing trades (you're acquainted now with the histogram of the distribution of the series of trades - losses and gains), and you also don't feel exhilarated when the trade is a win, because, remember, it was not the fruit of your recent workout in analysis or judgment. It was the result of the distribution of the series of trades, according to the statistical pattern.

In other terms, when the statistical trades works well, it's just normal. When it produces a loss, it's not your fault.

: )

Interesting Readings

I found the following to be of interest to Traders and students of Markets.

1. How to become a professional Trader 
2. Developing a daily game plan
3. Scholarly article on Market Quality . I remain fascinated with Market Microstructure - the study of internal workings of the market.

25 Hours Trading Course @ BlackSwan

BlackSwan  has scheduled a 3-Day, 25 Hrs Trading Course during August 13-15, 2011.

1. The details of the Course is given here.
2. This is a full time course from 9.30 am - 5.30 pm. Includes Tea, Snacks & Lunch
3. It covers Technical Analysis & Derivative Strategies.
4. The inspiration is from  SMB Training, Dr Brett, Afraid to Trade.

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.

The Independent Trader

Trading the markets is one of the most challenging endeavors. This is a field where only the best can survive unlike other professions where average can also make a reasonable livelihood.

1. SMB Training elaborates on the daily life of an Independent Trader.
2. Some psychological aspects of Trading
3. Difference between professional and amateur traders by Dr Brett
4. How to become an independent stock trader
5. One of the most tough tasks in becoming a profitable day trader is overcoming Transaction Costs.

NISM - EERF as a Platform for Finance Researchers

I had a very good experience at NISM attending the yearly EERF 2011 workshop.

1. I have no hesitation in recommending any researcher,teacher of finance, Market practitioner, Scholarly investor, Corporate executives in financial markets research and practice to attend it at least once. I have attended twice and thoroughly enjoyed it.
2. I think only comparable programe is by Susan Thomas at IGIDR namely Statistics for Financial Practitioners. But I am not sure of its frequency and accessibility.
3. EERF can act as a very good platform for budding researchers in Finance. I came to know many researchers in this area through this venue.
4. I highly appreciate an almost encyclopediac view of financial markets related research by Dr K Kiran Kumar of NISM  ( ex- ISB, IISC)

MBA/BBA in Financial Markets

A welcome trend is developing in Financial Markets Education. Super specialization and focused curriculum,industry tie-ups are becoming important  for good business education.

1. NSE has tied up with Punjabi University, MDU for BBA/ MBA in Financial Markets.
2. BSE Training Institute is offering MBA- Financial Markets in association with IGNOU
3. FTKMC an associate of MCX is also offering PGD in Financial Markets Practice
4. DMC institute of Capital Markets is also in the process of starting MBA & BBA in Financial Markets
5. ITM institute of financial Markets has a PGDM - Financial Markets course
6. NISM has  a well regarded  1-Yr course called PGPSM
7. BLB Institute of Financial Markets has MBA/BBA in Financial Markets in association with MS University
8. Business India Institute of Finance has a 1-Yr course in Financial Markets
9. IFMR has a highly reputed PGDM- Financial Engineering
10. NMIMS has an MBA in capital markets program in association with BSE

This is only a partial list. Financial Market education is on the rise on the back of NSE's Ravi Narain's comments.

Some project Ideas for MBA Finance students

I would like to list out some ideas for Project work and also empirical study. Pl note that these are are borrowed extensively from the existing financial markets literature.

1. Stock Index Futures Market in India
2. Single Stock Futures Market in India
3. Index Options Markets in India
4. Stock Options Market in India
5. Commodity Futures Market in India
6. Risk Management at NSE
7. Risk Management Using Derivatives at NSE
8. Study of Selected Mutual Fund Schemes in India
9. Study of selected ULIP schemes in India
10. Technical analysis- A study of selected Indicators
11. Study on On-line Trading, Clearing & Settlement
12. Comparitive analysis of  internet trading schemes of Selected Stockbroking firms in Hyderabad
13. Sub-Brokers at NSE : A study in Hyderabad
14. Currency Futures Market in India
15. Currency Options Market in India
16. Study on Commodity Exchanges in India
17. Study of Indian Capital Markets at NSE
18. Study on  Regulation of Indian Securities Market - Case study of SEBI
19. Indian Stock Market Volatility - A Study
20. FII impact on Indian Stock Market
21. A Study on Exchage Traded Funds ( ETFs)
22. Fundamental analysis of different Companies
23. Beta analysis of selected Nifty stocks
24. Study on IPOs at NSE
25. Dividend analysis of Selected Companies
26. Study of Single Index Market Model on selected Nifty Stocks
27. India VIX- A study on Volatility Index
28. Study on PMS Schemes in India
29. Portfolio Construction & Management
30. Study on selected M&A's in India
31. Study of Market Efficiency in India
32. Indian Stock Market Integration with Selected Countries
33. Study on Investor Behavior in Hyderabad

MARKET QUALITY

My research topic revolves around assesing the impact of Microstructure innovations on Market quality at NSE.

1. I am proposing to examine the issue from three stand points
2. Market quality in terms of a) Informational Efficiency b) Market Volatility c) Market Integration
3. I want to examine how various metrics can be used as proxy for these measures.
4. Presently I am doing a survey of literature.

Basic Skills for MBA ( Finance) students

I hope that many students doing project work for their MBA ( Finance) brush up on their following skills.

1. How to type in MS-Word, Using MS-Excel for simple tasks of forming a table etc
2. Browsing for required information on google and othe search engines.
3. Getting required data from websites like http://www.nseindia.com,www.bseindia.com,www.sebi.gov.in/ and othe sites mentioned in a previous post.
4. Basic report writing skills. 

My role models in Indian Academic Finance

I would like to share my role models in Academic Finance. Of course this cant be an exhaustive list. I tried to put whom ever I came across or read personally or through their writings.

1. Ajay Shah definitely one of the top most thinkers in finance, economics and policy. His book on India's Financial Markets is a must read for any body remotely connected with Indian Finance.The book is full of empirical justifications rather than empty opinion.
2. Susan Thomas . I admire for her clarity and depth in econometric treatment of financial markets. She has lot of top quality finance materials online for free download.
3. J R Verma . Famous for Derivatives. I have used his book on DERIVATIVES & RISK MANAGEMENT for my class at VJIM.
4. Kotha Kiran Kumar of NISM. I have attended two summer schools on EERF just to listen to his interpretation of Market Microstructure research and his unique way of analysing research papers. He shows you how to connect econometrics with finance.
5. Prasanna Chandra . I have heard his lectures at my initial days at ICFAI.
6. NJ Yasaswy for pioneering the the financial education revolution in India through ICFAI.
7. SSS Kumar who is an alumni of SVUSBM whre I have also studied.
8. M S Reddy has made initial impression on me at my SV University MBA days for his way of questioning.

SOURCES OF FINANCIAL INFORMATION

Much of the information required by MBA students for their project work can be found on the web.Some of the frequently used sources are

1. Government Owned websites : Securities and Exchange Board of India (SEBI) http://www.sebi.gov.in/
2. Reserve Bank Of India   http://www.rbi.org/
3. Ministry Of Finance  http://www.finmin.nic.in/
4. Stock Exchange Websites : National Stock Exchange ( NSE) http://www.nseindia.com/
5. Bombay Stock Exchange http://www.bseindia.com/
6. Multi Commodity Exchange http://www.mcxindia.com/
7. Financial Magazine / Newspaper websites: Business Standard  http://www.businessstandard.co.in/
8. Hindu Business Line  http://www.thehindubusinessline.com/
9. Financial Express  http://www.financialexpress.com/
10. Wall street Journal  http://www.india.wsj.com/
11. Financial Times  http://www.ft.com/
12. Economic Times http://www.economictimes.indiatimes.com/
13. Mint http://www.livemint.com/
14. Business Today http://www.businesstoday.intoday.in/
15. Business India  http://www.businessindiagroup.com/
16. Economist  http://www.economist.com/
17. Capitalmarket  http://www.capitalmarket.com/
18. Indiainfoline  http://www.indiainfoline.com/
19. Equitymaster  http://www.equitymaster.com/
20. CRISIL  http://www.crisil.com/
21. Moneycontrol  http://www.moneycontrol.com/
22. CARE  http://www.careratings.com/
23. Myiris  http://www.myiris.com/
24. Bloomberg  http://www.bloomberg.com/
25. Reuters      http://www.reuters.com/

What PRICE should we use?

There are four prices observed in the market. Financial press reports OPEN,HIGH,LOW,CLOSE.

1. There is a difference between Closing Price and Last Traded Price(LTP). NSE provides Closing price as last half an hour VWAP(Volume Weighted Average Price).

2.If Corporate actions(Bonus,Stock Split,Rights) happen how to adjust the price so that when we caluculate returns it does not give a wrong picture ?

3. CMIE-PROWESS gives ACP( Adjusted Closing Price). Yahoo Finance also gives Adj Close data.

Essential Econometrics for Research in Finance @ NISM

I had the pleasure to attend  EERF 2011 @ NISM, Mumbai.

1. The program is from  Apr 30 - May 10,2011
2. I have met many interesting people from academics including  Mr D N RAO ( who has published widely on Mutual Funds), Dr Pandikumar ( PSGIM) .
3. On Day 1, interesting class sessions & discussion on Financial Data by Dr Kiran Kumar ( earlier with ISB) though afternoon session is a bit lacking in Financial examples .
4. Road map of Econometric tools and Statistical Thinking by  Dr K K on Day 1.
5. Most of the examples relate to Financial Markets and Market Efficiency and Microstructure. I hope to get some inspiration for my PhD Thesis.

MBA Finance Projects @ BlackSwan

I have the pleasure to interact with MBA Finance students advising on their Projects.

1. Most of the projects deal with  Indian Financial Markets, Risk Management at NSE, Performance Evaluation Of MF Schemes,Fundamental Analysis of Companies, Study of Commodities Markets,Risk Management using Derivatives,Study of F&O Market in India etc.
2. Indian market data is freely available at http://www.nseindia.com,www.bseindia.com,www.mcxindia.com/ and individual MF websites and Company websites for financial data/ Annual Reports.
3. Even though the project study appears simple at conceptual stage, there are lot of details at the implementation level. For ex when trying to do a study on " Performance evaluation of MF Schemes" we have come across the following issues.
4. Which Bench mark to consider ? NIFTY/ BSE 200/ CNX 100
5. NAV frequency ? Daily/ Weekly/ Monthly
6. What is the Risk free Return ?  RBI rate/ SBI term deposit rate
7. Various MF data sources are available. For eg  http://www.amfiindia.com,www.%20mutualfundsindia.com,value/ research, CRISIL, http://www.mf.economictimes.com/, SEBI, Business world and Business Standard sites.
8. For Capital Market related projects  ISMR 2009, NSE Fact Book, Risk Management guidelines are very useful.
9. Some common enquiries students can undertake is regarding examination of Return and Risk of selected instruments ( Equity Futures, Commodity Futures) and compare them on the basis of Volatility.
10. One fruitful study is adequate characterisation of Risk Containment Measures by exchanges ( NSE) in terms of Margins, Capital adequacy norms and their detailed calculation.

Trading and Poker

There had been lot of articles about comparing Trading with poker.

1. Dr Brett on TRADING & POKER

  2. Intersting discussion at DailySpec

  3. The Chair's Admonition.

  4. Sushil Kedia on  Bluffing

  5. More articles at DailySpec

INTERESTING READINGS

Interesting Readings

1. Article on Day Trading here

2.The rise of college traders here

Teaching Trading

As the financial markets become more accessible and democratised the need for Trading Education grows.

1. In my own way I have conducted around 15 programs in the past one year. They are basically 2-day workshops focussing on necessary trading skills, TA tools, psychology and risk management.
2. Around 200 participants were covered by our courses.
3. An intersting article on Teaching Trading at Universities.

Discussion with Option Pundit

I had a surprising and interesting conversation with the founder of OPTION PUNDIT. It was pleasnt conversing with him and sharing various ideas about Indian market peculiarities in terms of options market.

His unique take on Indian Market.

What we can learn from FUTURES & OPTIONS Program

FOME  workshop  scheduled on JAN 8 - 9 , 2011 has the following objectives

1. Learning about Option Pricing Models ( BSOPM)
2. Compare the risk profiles of Option Trades
3. Estimate the probability statements made by a volatility figure
4. Discuss how changes in different variables will affect the Value of calls & puts
5. Principles of volatility trading and how this type of trading can be profitable
6. Identify ways to make money trading with a long and a short Gamma position
7. Caluculate the Historical Volatility and evaluate the resulting Data
8. Describe Skewness and Kurtosis
9. How Skewness & Kurtosis affect the prices of OTM Option
10. Understand the basic Option position payoff profiles
11. Risk Sensitivity mubers - Greeks
12. Trading in the real world - putting it all together to derive our forecast volatility
13. Trade structure that benefit from rising or falling IV
14. Trade Structures that benefit from Time Decay acceleration
15. Trade Structures that benefit from  Rapid price Spikes
16. Price distortions during the final days of an expiration Cycle
17. Predicting and exploiting expiration day strike price pinning
18. Expiration day Volatility Collapse and dynamic position management

Trading Floors at Colleges

For MBA students specialising in Finance and Investments integrating Classroom and Trading Room is important.

1. Where Homework Is Managing a $200,000 Stock Portfolio
2. Many B-Schools are also adopting this idea to show case and bring students to speak industry jargon.
3. Dr Brett on Financial Engineering program
4. I had similar experience at ICFAI School of Financial Studies in running a Trading floor with SPIDER IRIS Software and othe real time facilities.
5. Dr KGR at VJIM had contemplated these facilities long back.

Student Empirical Research in FINANCE

I had chanced upon this article on the experiences in " STUDENT EMPIRICAL RESEARCH "

1. Lot of interesting findings useful for B-Schools / MBA institutes.
2. I think this is a welcome trend in Business education as being implemented in Great Lakes , VJIM , ISB etc.
3. The skills required of Post Graduates as commneted upon by Dr Ajay Shah
4. Interesting discussion on the increasing relevance of FRM

OPTIONS & VOLATILITY Resources

Some of the options & volatility resources that are of interest to traders and students are listed below.

1. Daily Options Report
2. Option Condors
3. DonFishback's update
4. Options for Rookies
5. Options Pundit

NEW & Refined FUTURES & OPTIONS Training JAN 8 - 9 , 2011

Futures & Options Made Easy (FOME 2011) is improved & refined in 2011 with lot of new additions very useful for students, traders and any one interested in the Derivatives Markets.

1. Option analysis software is being provided free .
2. Complete analysis of 22 option strategies of NSE OTS Module.
3. Lot of Examples are added to the course presentation
4. Complete market microstructure and market design is integrated.
5. Special topics on VOLATILITY and Statistical Concepts.
6. Real world trading approach and demonstration of trading and analysis software tools .
7. Sessions on Trading psychology & riskmanagement

INTERESTING READINGS

Some of the posts I found may be of interest to the readers.

1. How to trade with the STOCHASTICS.
2. Newton Linchen has a very interesting Trading & Investment Library
3. From the God of Trading Psychology
4. JR Verma on Financial History books. His Derivatives & Risk Management is a my favorite for Indian perspective. I think everyone interested in Financial History should read william Goetzman.

Can I be 100% sure of Making Money?

In response to my many advertisements in the print media, canvassing for participants in my three trading & Investment education workshops , I often face many intriguing questions.

1. Three core educational workshops were being focussed by me namely 

 a) TECHNICAL ANALYSIS MADE EASY ( TAME),
 b) FUTURES & OPTIONS MADE EASY ( FOME)
 c) FUNDAMENTAL ANALYSIS MADE EASY ( FAME)

    2. Often participants ask"  is there a 100% guranteed way to make money ". I am left speechless for a moment as I have no short answer.

    3. Here I try quote from professional traders in trying to answer the above question.
    4.  “Contrary to popular belief, trading is a craft. Like an artisan who develops a craft over a lifetime, it requires a discipline to be exercised daily.” Mike Bellafiore 

    5.   What’s going to happen? Who knows. As a trader, you’re not supposed to know the absolute future   to be able to profit from it.
You study the chart, assess the structure, define the probabilities, and then if you feel an opportunity presents itself, position into the price action that triggers an entry (or exit in the case of a stop-loss).
                                        
                                   - COREY ROSENBLOOM

6,"There is nothing to 'get' as a trader. What works one month may not the next. Trading set ups you crush one year may be extinct the next. As prop traders our job is to recognize present patterns and exploit them. But we also must have the humility to accept that these patterns might change at any moment. And when they do we must find new patterns. We must adapt."

                              - Mike Bellafoire

I can quote from any number of respected industry voices, but the beginning or developing trader needs to realize and internalize that" there is no holy grail in trading to be discovered"

Stocks in Play

Stocks that may be on traders' radar today

1. FINANCE TECH : The stock appears to have rebounded stronly yesterday. My inductive leap  of understanding in this might have to do with  SEBI Chairman replacement / hopes of MCX-SX revival ?

Understanding TREND !

One of the major dilemmas faced by the traders is regarding Trend. Here let us try to understand it by standing on the shoulders of Giants in the field of financial Markets.

1. Interesting readings on Momentum. The large amount of research freely available on the web provides a solid foundation for the motivated market participant.
2. How to draw a Trend Line. Many of the details in TA is important  and nuances in TA should be considered.
3. Jim Sogi on Trends
4. Phil a DailySpec author on Trends
5. Trend following by Rocky Humbert
6. Trend spotting from Kensmith
7. The classic by chairman of DailySpec and the chief speculator on Negative feedback
8. Range and Trend by Bill Rafter

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 .

Essential Package for MBA ( Finance) students & Fresh Graduates

BlackSwan Financial Marlets School is launching an essential package for MBA Students of JNTU/OU.
This package is planned as three parts which will give solid understanding of Equity markets, Practical exposure to Trading & Exchanges, Corporate perspective on relationship management in Financial services industry.

1. One-Week Crash Course ( Dec27- 31,2010) full time ( 10am - 4 pm) on the subjects  SECURITY ANALYSIS & PORTFOLIO MANAGEMENT , DERIVATIVES.
2. NCFM - Capital Market Dealers Module & Derivatives Market Dealers Module Training
3. Live project with Share Broker ( Member of NSE)

Feedback from a Participant

I am happy to post a pleasant feedback from a participant in Futures & Options Training program.



                "Hi Mr Dhananjay,




I am Alnoor Parbatani , i ve attended ur workshop on future and option strategies last week , which gave me good insights on market and its behaviour .


Now i am comfortable in understanding of option strategy and after reading and understanding of material u given to me , i tried my first hands on attempting the ncfm option paper mock test werein i was able to score 75% in my first attempt out of 90% . i thank u for ur valuable traing and input .


reagrds


Alnoor "


9533252765

Technical Analysis training Program

As I am preparing for the 2-Day workshop on  DEC 18- 19, it gives me an opportunity to look afresh at my TA Concepts, tools, actionable strategies.

1. Understanding Trend is the most basic. Often beginners questions revolve round Trend determination.One good post on this by Tucker report.
2. What Indicators trader should use and the steps to follow in looking at a price chart ? 20EMA,50 EMA, 200 SMA and Bollinger Band ( 20,2,0) together with MACD (3,10,0) is the preferred approach of Corey Rosenbloom.
3. Reasoning in terms of Key levels to watch, idenfying any confluence in all these price levels, developing an IF / THEN logic will build a solid foundation for the trader.
4. Using multiple timeframes in our analysis. Studying daily chart, weekly chart in conjunction or reading both 15-min and 30-min Intraday chart.
5. Having tools to detect TREND CHANGE
6. Trying to answer the frequent question of best time frame to Trade
7. Interesting post on the relevance of Trading Education.
8. I will be emphasising on the various free tools available to the Indian retail trader in his quest for trading success.
9. This 2-Day ful time program will help investors and traders take independent decisions, make sense of the randomness of markets, decode the jargon of financial media anr recommendations/ tips from brokers and consultants. 

Reflections on F&O Training Program

We have succesfully completed F&O Training program during Nov 28 - 29. Some of my learnings from this workshop

1. The group of 14 participants are very involved. Experienced traders from brokerages, Technical analyst also attended.
2. Innovations in the program included walking through many Derivatives articles by Devangshu Datta in Business Standard, Using Options caluculator in NOW Software.
3. As a team we are able to crack the Option Greeks.
4. Our course pack is compiled from NCFM modules on Derivatives Market dealers module, Option Trading strategies Module, Derivatives & Riskmanagement by J R Verma and Options Trading by Jeff Augen.
5. Need for actionable techniques and immediately useful trading ideas were stressed by some of the participants.

FUTURES & OPTIONS MADE EASY ( FOME)

FOME , a Derivatives workshop is being conducted on NOV 27-28,2010 at BLACKSWAN Financial Markets School.

1. The twin objectives of this workshop are

     a) To understand the Derivatives Instruments- Futures & Options as they  are traded at NSE 
      b) To be able to succesfully clear NCFM - Derivatives Dealers Module ,    NCFM - Option Trading Strategies Module

  2. The following topics are covered in the course

             a) Introduction to Derivatives
             b) Reading the Derivatives page
             c) Market Index
             d) Introduction to Futures & Options
             e) Application of Futures & Options
             f) Option Strategies - 22 types of strategies given in NCFM - Option  trading strategies module
            g)Option Pricing
           h) Greeks - Delta, Gamma, Vega, Theta, Rho
           i) Volatility
           j) Trading the Earnings & Expiration Cycle

 3. Practical analysis of Open Interest, Put-Call Ratio, Implied Volatility data
     is discussed

Useful Web resources for Independent Traders

Huge data and info is available on the net for a motivated independent trader. Some websites provide excellent tools at reasonable price. I think this is leading to huge participation and democratisation of financial markets. Some would argue it is leading to huge volumes aiding price discovery.

1. NSE offers excellent data and visualization facility by way of  NSE MARKETTRACKER
2. ICharts has a screener and stock lists and stock Glance facility which is also appreciated by active trader community. I believe it comes at a nominal charge.
3. One of the dilemmas faced by an independent, active ,discretionary trader is in stock selection. As emphasised by SMB Capital  being in SIP ( Stocks in Play) is most important for active traders.

Thinking about Volatility

Volatility is a bit less understood and researched by retail market participants compared to directional bets.

1. There is lot of disdain about academic work on markets in the arena of practicing traders. This gap needs to be bridged as there is plenty of fine academic work on market behavior and the traders edge can be derived from that.
2. My reading of Victor Niederhoffer, Brett  Steenbarger's works have made me appreciate the scientific and quantitative aspect of markets.
3. I had the pleasure of attending NISM workshop and listening to the fine lectures of Kotha Kiran Kumar on Volatility and Market Microstructure.
4. Fine Understanding about Volatility here from none other than Robert Engle.
5. Volatility is least understood because it is not directly observable unlike price movement.

Understanding Price Structure

The basic intention in the TA training course @ BlackSwan is to make investors & Traders understand the technical jargon. Concepts of TA are very important than simplistic technical rules or tips.

1. Often media and analysts proclaim about the structure of a market or Instrument. Corey  Rosenbloom lucidly explains about PRICE STRUCTURE.
2. After reading and following Corey Rosenbloom, I got to respect TA and the importance of understanding deeply its concepts.
3. Stockbee on concepts of TA.
4. I am happy to see a fellow SpecLister and highly respected Analyst SUSHIL KEDIA launching a TA forum for Indian Traders. I would love to be part of this initiative. Sushil regularly contributes to DailySpec and I liked his articles.

What is BlackSwan Financial Markets School ?

BlackSwan Financial Markets School had succesfully completed a two day Technical Analysis workshop during Oct 2-3.

1. Nine participants from diverse backgrounds and age groups attended the workshop.
2. The group expressed tremendous satisfaction on the way it is organised and presented. one medical doctor, ex-CEO, an Entrepreneur, an IT professional on a sabbatical from UK, a professional Day trader, A beginning Trader, Investor are part of this group.
3. We shared ideas, exchanged notes and  both the teacher and taught are richer for the experience.

TECHNICAL ANALYSIS MADE EASY ( TAME) 2010

BlackSwan Financial Markets School is offering intensive,detailed, practical training program in Technical Analysis from Oct 2-3,2010 at Hyderabad.

1. The program curriculum is exhaustive, well-structured.
2. Having seen many TA programs lacking the context and becoming mere powerpoint presentations, BlackSwan aims to concentrate on CONCEPT-ORIENTED TA.
3. Dr Brett on Introduction to TRADING
4. TA is but one piece of Learning how to trade.
5. Creating a learning culture for your trading effort.Trading is a mindset and a way of thinking, it is more than entry, exit, stop loss and target.
6. New and developing traders need to have a holistic understanding of market environment and context.
7. Inspiration for this training efforts derived from Dr Brett's thinking.
8. Sharing curriculum of the Trading program is important to asses the quality of the program.

STOCKMARKET APTITUDE TEST ( SMAT) 2010

BlackSwan is proposing to conduct SMAT 2010 a stockmarket aptitude test for all learners interested in Trading & Exchanges.

1. Possible partners for this initiative are Stockbrokers, Exchanges, B-Schools, Media partners like economic news papers and business channels, trading software providers etc.
2. The possible dates for the launch is Nov 2010.
3. The participants will be awarded discounts ranging from 25-100% on a 3- month NCMP Level 4 course.
4. SMAT can be benchmarked to industry needs (for ex StockBroking and financial services employee requirements)

Transaction Costs in Trading

Active trading involves huge transaction costs. In my experience as an intraday trader and running a trading office predominantly consisting of short term traders

1. Huge amount of energy is expended in the form of Transaction Costs, Taxes
2. Some of the items in the Broker's charges that need clarity is the Stamp Duty in case of Brokers having regd office at Hyderabad.
3. Turnover Charges being charged in excess of NSE Charges from clients ?
4. Victor on the effect of VIG

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.