Tuesday, December 1, 2009

December begins well

December, a month that usually favors the bulls, has started off with a strong rally. Today, the Nifty closed at 5122, up 89 points. That's a good start. In the morning, I was on CNBC, and I explained the existence of a narrow trading range between 4920 and 5120. A break from the range should give a trending move, I suggested.

Udayan asked me if it was possible to cross 5120 today itself. My answer was: The Nifty was trading at 5060, so another 60 points were easy to cover, since all the signs were suggesting a trending day. This number was eventually hit during the day itself. Sometimes, we are lucky.

Enough of the Markets. Manish T. asks "How was your Jodhpur investor camp experience?".

My experience was good, just as in other camps. People in Jodhpur seemed deeply involved in the market, through investments as well as derivatives. They heard us with rapt attention, then asked a number of questions. The underlying sense was: "we remain afraid of this rally, yet want to join the market." This is a question that is in the minds of most people.

Investors should buy only on corrections, like the one that took the Nifty to 4540, a month ago. Such moves come, two to three times a year. Sometimes, a stock will have its own cycle, so there are opportunities often.

Traders have to go with the trend. They should be long.

Trading Journal

Brett Steenbarger says "Each day I reviewed major turning points in the stock indexes and observed how indicators and correlated indexes behaved. The exercise consisted of identifying--in retrospect--the trading opportunities that were best and the information that might have put me into those trades.


In a sense, I used the journal to reverse engineer markets.

The journals consisted of pages and pages of annotated charts. Although I did not use the term at the time, the goal was pattern recognition.
......
In the beginning, I didn't know what to look for. I spent time with many indicators (including many of the common ones included in charting programs, as well as chart patterns and cycles) that added little value to my pattern recognition. It was the patterns that recurred over time that became my focus.


I realized that if I could just find a few stable patterns, I could work on recognizing them in real time and sustaining profitability.

I spent over a year on those journals before I ever placed a trade. The charts are still organized in folders in my cabinet for reference."

Writing a trading journal every day is a good practice.

5 comments:

NITIN DAMLE said...

Sir,
I think opto circuit is breaking out of falling channel and one can buy with stop below 205 Pl comment

CHANDU said...

Hi Sir,

Its good to know about trading journal,i dont know what points i need to make out,Can you give us a format so that we can get an idea how to write and i can add more points to my journal.

Your posts are always useful and i saw when u said indian markets are volatile and today itself we cross 5120.

My best regards with u and god bless you always.

kk said...

RESPECTED SIR

YOU SAIL ON CNBC , YOU ARE NOT A GREAT FAN OF REALTY STOCK

WHY???

THESE PROVIDES HUGE SWINGS FOR TRADERS

men said...

Mr. Sudarshan, if one draws fiboancci levels over different periods we get a range of 5315-5365 as the first likely target if >5183, you have suggested to go long, what should be the stoploss in such a case? Thanks,

amit_icecool said...

hello,sir
i m a great fan of ur knowledge, most of times u hit bull,s eye ..i keep on watching u ,at t.v. n also follow ur tips,being a trader ur tips n sayings r of great use to earn in market...

thanks.