Sunday, May 19, 2013

Let's beat the heat!

As summer progresses towards its high, we are left with 2 choices: Either to crib & cry about it, or to figure out recipes that can help us stay cool and hydrated. Being a part of the later, and more importantly, wiser lot, we can’t help but reach out for water, lemonade, chilled buttermilk and juicy fruits to stay hydrated and feel refreshed. Why do we go for such alternatives? Because we know that the heat will behave in its own way, & do what it wants to do. So we have to find our way out.

Similar is the case with the markets, where the markets are not concerned with what we want. They will do what they want to do. All we can do is figure out recipes that can help us “beat the heat” of the markets, and stay cool!

Let’s have a look at what Bruce Kovner, one of the top traders from the olden days thought; and followed:
  1. Be willing to make mistakes regularly. There is nothing wrong with it. Make your best judgement, be wrong; next best judgement, be wrong; your third best judgement, and then double your money!
  2. Stay RATIONAL & DISCIPLINED under pressure.
  3. Once a strategy is selected, stick to it.
  4.  If you apply yourself consistently, great things can happen. It is very easy to miss the point that you can really do it. If you take a position and use discipline, you can actually make it
  5. Only 2 advice: Risk Management, & Undertrade
  6. Discipline & willingness to make mistakes are significant traits of the winning trader.

The common mistake is to think of the market as a personal nemesis. The market is totally impersonal. Whenever a trader says, “I wish” or “I hope”, he is engaging in a destructive way of thinking because it takes attention away from the diagnostic process. Being able to witness the markets as they are without any personal biases is the basic ingredient to any recipe we may develop for ourselves, in my opinion! I would look forward to having your opinion in the comments area.

[Notes from Sudarshan: This is the first post, written by Kirtan, for our blog. I hope we will see his words, time and again]


Nilesh Deshpande said...

Respected Sir,

I guess Nifty has exhibited what is known as a Bearish engulf, right into the supply zone at the top of its recent up move.

I was surprised that you advised traders to refrain from initiating any shorts in your end of day comments on CNBC.

As always, I hope you would be proven right by the markets.

And then it will be one more lesson that we fellow traders will learn from you.

Niket said...

points to be kept in mind in these burgeoning markets..!!! worthy 'heat beaters..' keep it up..