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.

Useful resources on DERIVATIVES

Web provides top class resources on financial markets,trading and exchanges.

1. Derivatives FAQs by Ajay Shah, an original thinker in Financial Economics. Although the document is

a bit dated, his prose reminds me of the style of Larry Harris in Trading & Exchanges

2. Another original piece by Dr Ajay Shah

Interesting Readings

Stop Loss is a commonly discussed topic in Trading Rooms. Disagreement over the use of stops is common among experienced traders.

1. Scholarly opinion on Stops at DailySpec
2. Modern Classics of Trading here

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

Are you a Day Trader?

One of the common points of discussion among traders is about their timeframe. Day trading, Swing trading or position trading  or scalping ?

1. Many traders defend and elucidate the advantages of their timeframe ( for ex Intraday).
2. The point is I am a trader. Depending on the opportunity presented by the market I am flexible with the time frame.
3. Drakoln of  Speculator Academy opines on this here.
4. Tucker Report has  thoughts on Day Trading and opportunities in Very short or very long time frames.
5. Trader  Mike has an interesting take on Day Trading.
6. A scholarly day trading approach by DailySpec Lister .
7. Every trader has a niche. He has to practice and perfect it.
8. Trading intution can only be gained by years of Screen time.

Where will the market go today?

This is a common query by market participants. I have a different opinion on this.

1. As an intra-day trader I dont like to have a fixed opinion on the market direction.
2. The moment I express my directional opinion if any I am locked into this opinion and finding it difficult to trade.
3. Each instrument you trade has a different market. Many participants may not recognise this. They may not necessarily follow the broad market direction.
4. Though this may appear simple , clarity in basics will be of utmost importance.
5. The amount of information already reflected in the stock price and the trader's evaluation of this relative opinion ( ex : Crompton Greaves reaction to Avantha Power IPO, Sesagoa's inclusion in NIFTY, KVB's reaction to Rakesh Jhunjhunwala's announcements )

INTRADAY FUNDAMENTALS

Intra-Day Trading  requires lot of attention to detail and a science in itself.

1. I have been inspired by several concepts from SMB Trading Blog like Stocks in Play, Second day plays, Earnings play.
2. Combining Intraday fundamentals with technicals.
3. Traders' intution as a result of  years of screen time ( 10 yrs min according to Outliers by Malcom Gladwell),ability to process breaking news ( witnesses in TCS - Friday) will result in good trades.
4. Identification of Niche of the trader is important since it tells us where the escape routes exist.