Reader Danish suggested a few posts back that we should also discuss trades that did not go our way. So here is a trade that I currently have:
The Nifty was in a narrow trading range for the last four trading days. Actually, it was for the entire week since Friday was a holiday. This is how my analysis went:
Primary trend of the Market: UP
Intermediate trend: UP
Significant Pivot: Yes, at 5200
The Narrow range comes in a strong uptrend. I therefore assume that this range is a pause in the ongoing up move. A move above last week's highs may result in a decent upthrust. Taking out the pivot should add more steam to a breakout.Therefore, we went long in the Nifty on Thursday afternoon, choosing deep in the money calls rather than futures. (Because we had a three day weekend, so you never know! Calls have much less risk).
So, this is an ongoing trade, which can do well or go wrong.
Now this is a discretionary trade. We also run systems (for our trading as well as for clients) which are fully mechanical. These systems are either flat or long, depending on how they are structured, but none of them is short. (Most are flat, I think).
Meanwhile, I am going to see 'three idiots' - the movie, although working in the markets, I wonder if I will get new insights into human nature. (We have seen it all).