Wednesday, July 28, 2010

Market Moves

Nitin Damle asks:
Today morning I heard u on CNBC Awaz telling to buy Nifty near 5400

Sir, my reading was different I was thinking that short term trading indicators are pointing towards correction Nifty is not moving above 5450 and there is huge negative divergence on MACD & actully given a sell signal so as per my reading it was a sell with S/L 5450 I got confused hearing u please tell me what was your reading.

My Notes:
Nitin, lesson No 1. Do your own thing. TV cannot become a substitute for your own thinking & analysis.
On Awaaz, I said: Buy above 5450 OR on a dip near 5400. This was in response to a question on 'What should a trader do with the Nifty today?".
My own reading of the charts was also explained. I suggeted that there is limited upside as the markets are likely to see choppy conditions for the next few weeks.
Last Friday when the Nifty was at 5470, I said in the morning show with Udayan that I was no longer bullish since at 5470 the risk reward ratio for bulls was not favorable.
Now, for today's day trading call, buying on a dip seemed to be the least risky method. But, overall, I became 'not bullish' since Friday, but that does not mean that a down trend is coming! For me, a dip starts if the 5350 support is broken on a closing basis. For day trading, today did offer a short selling trade, but that was around 1:20 Pm when the Nifty started breaking down below the day's lows.

1 comment:

Krishna said...

Dear Sir
Why one should not write stardles or strangles to take advantage of time decay.
I have seen that it normally decays and can fetch a decent money if written in the beginning of series.
Is really risk is so high that retail traders should never go for it ??
Normally retail traders keep burning their hands through buying options as it gives a fake feeling of limited loss.Truth is very few retail traders make money in buying options while on the other hands options writers take good advantage of time decay through writing.
Please note that I am not talking about naked CALL or PUT writing but starddle or strangle seem reasonably good tool to make money.
I have studied on above matter through paper trading for almost one year and in my knowledge area results are normally okay.
Please guide sir.
Warm regards