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Market updates for 12/11/2012

 

Nifty daily chart

 

 

 

Nifty has  closed below the support at 5720 and has trapped the bulls. Now we need to see whether it reached the support at 5630 or once again reaches 5700-5750. Short term trend will remain up as long as Nifty is above 5630.

 

Nifty weekly chart

 

 

 

Nifty is testing 5740 from past 7 weeks !! but it is  unable to close above this level on weekly basis. A strong weekly close above 5740 is required to reach 5940 levels.

 

Chart of the day

 

Dow Jones Industrial Average

 

 

 

Dow Jones has closed below 200 DMA which indicates medium term down trend. Now we need to see whether Indian Index is going to correct or not.As of now market is sideways but down trend may happen if the support at 5630 is breached.

 

Nifty medium term trend

 

Trend	UP
Initiation Date	08-07-12
Initiated at	5336
High since change	5815
Reversal if closes below	5580

 

Thought for the day

 

The mind is its own place , and in itself can make heaven out of hell , a hell out of heaven...- John Milton

 

 

 

 

Risk Management in Trading as explained by Peter L Brant

 

Successful trading operations are dictated primarily by how risk is managed. Many novice commodity traders assume each trade will be a winner. Professional traders manage their trading to assume that each trade may be a loser. Obviously, there is a major difference between the two perspectives. The Factor Trading Plan operates with several global assumptions, including:

I have no idea where any given market is headed. I may think I know, but in reality I do not know. History has shown that my degree of certainty about a given market’s direction is inversely correlated with what actually happens. In fact, I think a trader with excellent money management practices could take the other side of trades in which I have a strong belief and make money consistently.

 About 60-70 percent of my trades over an extended period of time will be profitable.

As many as 30-40 percent of my trades over shorter periods of time will be unprofitable.

 There is a high probability each year that I will incur eight or more losing trades in a row.

 There will be losing weeks, losing months, and even losing years in my trading operations.

 Important risk management guidelines have been incorporated into the Factor Trading Plan to address these global assumptions. The primary guideline is that the risk on any given trade is limited to 1 percent of trading assets, and preferably closer to half of 1 percent of assets. Because I think in incremental units of $100,000, this means that my risk per trade per unit of $100,000 is a maximum of $1,000. My trading assets committed to margin requirements rarely exceed 15 percent. I don’t recall ever receiving a margin call for the account used to trade my full program. If  I risk 1 percent of assets per trade and am wrong eight straight trades at least once each year, it means that I will experience a drawdown of at least 8 percent with certainty, at least on a closed trade basis.

 A 15 percent drawdown is about as much as I can emotionally handle. I have encountered a drawdown of at least 15 percent in 9 out of every 10 years I have operated a fully implemented trading program. I find myself more risk intolerant as I grow older. At the present time, my risk management protocol attempts to limit the maximum annual drawdown to 10 percent (measured from week-ending peak to week-ending valley). I attempt to ignore intraday equity spikes because I have no desire to catch the bottom of each day’s high or low, and I do not want to waste energy in even thinking about it. In  fact, as I will discuss in this book, I think it is unwise to pay attention to account equity levels on a day-to-day basis. I consider correlation between markets when determining risk. For example, a bearish trend by the U.S. dollar against the euro is also likely to be accompanied by U.S. dollar losses against the Swiss franc and British pound. A bull market in soybeans is likely to be accompanied by advances in soybean oil or soybean meal.

In composite positions of highly correlated markets (grains, interest rates, stock indexes, currencies, precious metals, industrial commodities), I attempt to limit my risk to 2 percent of assets. All successful trading operations must be built on a foundation of overall risk management.

Market updates for 09/11/2012

 

Nifty Daily chart

 

 

Nifty has finally breached the resistance at 5720 and has sustained for 2 consecutive trading sessions. So this breakout can be considered as a sustainable breakout and now the possibility of reaching previous peak 5820 is very high. Is it going to correct from 5820 ? well , it is difficult to say at this point of time. But if it sustains above 5820 then the possibility of reaching 5950 will be high. Short term and medium term trend of Nifty are up at this point of time.

 

Chart of the day

 

Tata Motors

 

 

 

Profit in trading is not luck. It involves lot of lot of effort , belief , patience and persistence. Tata Motors is one such example. We entered Tata Motors after a breakout from descending channel for an expected target of Rs.285 and the target is achieved today. Those who executed bullish synthetic call strategy ended up in a profit of Rs.5000 per lot without much stress and risk.

 

Nifty Medium term trend

 

Trend	UP
Initiation Date	08-07-12
Initiated at	5336
High since change	5815
Reversal if closes below	5580

 

 

Open Positions

 

Scrip	Type	Price	CMP	P/L
LT Nov 1650 PE	Buy	51	38	-3250
LT Nov 1600 PE	Sell	28	19	2250
Nifty Nov Fut	Long	5792	5767	-1250
Nifty Nov 5800 PE	Buy	73	82	450

 

 

Positions Squared off

 

Scrip	Buy Price	Sell Price	P/L
Tata Motors Fut	271	281	10000
Tata Motors 270 PE	9.5	4.5	-5000
Total			5000

 

 

Thought for the day

 

If you don't accept small loss you will end up in mother of all losses.

 

 

 

 

 

 

 

Market updates for 07/11/2012

 

Nifty Daily Chart

 

 

Nifty has marginally  closed above 5720. How ever to get more confirmation let us wait one more day and two consecutive close above 5720 can take Nifty up to 5800. MACD will indicate short term uptrend if Nifty makes flat to positive close for one more day.

 

Nifty medium term trend

 

Trend	UP
Initiation Date	08-07-12
Initiated at	5336
High since change	5815
Reversal if closes below	5580

 

 

Open Positions

 

Scrip	Type	Price	CMP	P/L
LT Nov 1650 PE	Buy	51	26	-6250
LT Nov 1600 PE	Sell	28	11.85	4035
Tata Motors Fut	Long	271	269	-2000
Tata Motors 270 PE	Buy	9.5	10.5	1000

 

 

Thought for the day

 

Leadership is the privilage to better the lives of others. It is not an opportunity to satisfy personal greed.