Category Archives: Game-Changers

There’s no God, is there?

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Or is it just us?

We’re both good and bad, us humans.

Sometimes we strive for the highest. At other times, we stoop to the lowest.

Yeah, it’s just us.

Our best deeds appear Godly to someone in need. Someone or the other plays God to someone or the other in a spot, every now and then.

And that’s amazing. Of course an act like that sure helps that someone in need, but what does an act like that do for the someone who’s doing it?

Vacuum.

Are you familiar with the principle of vacuum?

Vacuum governs flow.

High-pressure flows towards low-pressure. Vacuum is as low-pressure as it gets.

What kind of flow does an act of charity attract?

Goodness.

By doing good, you attract more goodness towards you.

Goodness can even take the form of wealth.

Boost your wealth.

Be good.

Commit copious acts of goodness.

Play God to millions.

Let there be no need for an actual God.

I don’t like saying it, but that’s the best cushioning / protection you can give to your portfolio.

Truth is truth.

Benevolent principles need to be propagated.

I don’t care about how awkward it looks.

I write because I care.

Deciding to Invest?

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An investment opportunity comes along.

How do you react?

This is how I react.

First up, funds. Do I have clear funds to invest? No? Forget it, obviously.

Funds – maybe? Meaning, if I do some wangling around, fund demand could be met? Ok, move on to next step before taking a decision on the wangling.

Funds – clear – yes? Next step by default, but I’m telling myself that I’m not letting these hard-earned funds go just like that. The opportunity will need to clear my scrutiny. Period.

Then – time? Do I have 15 clear days to conduct deep due diligence.

No? Forget it. I may be travelling. Some event might occupy my time and mind. No time – no investment. Period.

Yes? Ok. Next step.

Energy? Due diligence is exhausting. I need energy reserves. My body and mind tell me. If they’re up to it, I’ll know. If not, the sheer idea of due diligence at that point will make me want to puke. Such is the power of mind and body to convey a message. No energy means improper due diligence. Not happening. No investment.

Yes for energy? Body is alive. Mind is alert. Moving to next step.

Due diligence. Digging deep buddy. I’m going to get under their skin. I’ll pick out their lie. I’m going places they won’t imagine I could get to. The internet is my oyster. We’ve never had it so good wrt information flow and disclosure. I start digging, and get so engrossed, that I forget about time.

Due diligence scrutiny check block oblique spoiler alert oblique deal-breaker? Could be an uncovered lie. Recently I discovered 100% pledging in a company, with everything else ok. Could be any dirt or its tracks. No investment.

Due diligence cleared. Go back to funds – maybe. Bring out mental weighing scale. Is the investment so worth it that I’ll wangle fund demand?

No? No investment.

Yes? Next step.

Think clearly. Very hard earned funds are about to go away for a while. What does the sum total of my everything tell me?

No? For whatever reason. I don’t question my sum total. No investment.

Yes?

Investment.

Happy investing! 🙂

Making it Count

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You’re playing a big one.

What’s foremost?

Make it count. For heaven’s sake.

Why?

Big plays don’t come too often. When they do, you have to catch them. You need to have energy left, to play. Then you just go all the way. Till the play plays itself out.

Life is an accumulation of knicks and knacks.

At first, you don’t know what you’re good for.

When you do know it, you start out as a net-net loser in whatever you’re good for, because every rookie needs to pay tuition fees. These are the costs of your mistakes.

Then you start getting the hang of something you’re naturally good at. Tricks of the trade – you learn them. You succeed in making your activity applicable, perhaps even financially viable.

Next step is to scale up.

You need to make your successful model count. Period.

Tired? Want to do other things? Need to borrow? Too big a pain? Time-issues? Overdose? Bureaucracy?

Whatever.

Don’t lessen the flow. Hold on. Ask the Universe for reserves. See the play through.

One life can mean just a few big plays.

When you’ve latched onto one, and have set it up so beautifully, now’s the time make it count.

Best of luck!

🙂

You, and Your Purpose

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Who are you?

Yeah, that question again…

Frankly, I’m not too bothered about who you are.

Yeah, I’m too busy trying to fathom who I am.

Guess who needs to be concerned about finding out who you are?

You!

Nobody else.

In addition to “Who are you?”, here’s another one that goes with the flow…

Where do you fit?

Not stopping…

What’s your purpose?

Yeah, why are you here?

What drives you?

Where do you start?

And sure, where do you stop?

What’s the gauge? How do you gauge where you stand with all these questions and their answers.

Luckily for you, Nature hid this gauge inside you.

Connect please.

You’ll feel… comfortable where you fit.

You’ll know where to start. When to stop. From inside. Below all the huff and puff, in the stillness of mind, lie answers. Find them. Talk to yourself. It’s not crazy to talk to yourself. In fact, those who don’t are crazy.

Where you’re happy doing stuff lies your purpose. That which causes maximum happiness and satisfaction, in you and around you – that’s your purpose.

Your behavior in multiple situations tells you who you are.

Align who you are with your purpose.

Once you know who you are, you can go about defining and delineating your risk-profile.

Small Things are Big Things

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You’ve covered lot of ground, and are now cleaning up the field. 

You’re tying up the loose ends. 

Your small acts here count big. 

Please see them through to their logical conclusion. 

Don’t get up without completing full action. 

An act at or towards the end leans on the main piece of action which you’ve already fulfilled. 

It’s loaded on a spring. It’s effectivity is enormous. However, you are tired. You’re looking to close up. Hashtags, man, what are these hashtags!? Why do I have to put them, you’re saying to yourself. What purpose do they serve? Let me just forget about them.

No.

Hashtags are just one thing. A small thing, but then, a big thing. 

Tying your act into your own seamless sphere is another such thing. 

I know, it’s a pain…but seamlessness is a beautiful feeling. 

I like to imagine that seamlessness is the equivalent of free-falling in a mad, mad world. Maybe that’s a nonsensical analogy, but that’s what I like to imagine. Seamlessness gives you a huge advantage in today’s world. Take it. Make the effort to keep yourself seamless. 

Backing up, yeah yeah. Who likes backups? You’ve got to do them, however. No pain, no gain. I’ll talk to you after some data-loss. Only bother hooking up with me if you’re well backed-up. I don’t have the energy to lend a shoulder that withstands your tears in the event you weren’t back-up. 

Where hashtags stop, that’s where your organisational skills should take over. Meaning, that one hashtag-search could give a thousand results. How do you still find what you’re looking for? Logic. You’ve used your logic while organising your work. Logically, your file should be somewhere, and that’s the somewhere you look. 90%+ you’ll find it there. Follow seamless logic. The first logical avenue that comes to mind…take it. Yeah, your seamlessness also stands on your own seamless logic. 

Staying with what counts is a small thing, but again, it’s a big thing. 

On the path, one strays. One is distracted. What do you do?

The mind is like a baby. 

Don’t deny it outright. 

Trick it. 

Let it stray for a bit. 

Then, when its defences are down, bring it back to the main path. 

Keep bringing it back, until it starts getting a rooting righ by returning to home-base every half an hour. That’s the sweet-spot.

Don’t lose yourself into lost causes. 

Achieve. Fine. Set goals. Sure. Get them done. Great. Move on. 

Moving on is one small step. However, it’s a big step. Not many have the strength or the mental capacity to move on. Make sure you do. 

How?

Open your eyes and see the world. 

If you feel that your one achievement is going to make it spin, fine, stay on there, good for you. If not, please move on to your next achievement. Keep doing this till you find that one big, big thing for yourself. By that time, you’ll have many small things going on auto-pilot anyways. 

Get a grip. Nip something small when it’s small. Get to the big. Go for it. 🙂

Plusses & Minuses of a Cloud-Society

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Where do we stand today?

What’s changed compared to yesterday?

Are we better off?

What’s not better off?

Where is all this heading to?

Lastly, what’s your takeaway. 

People, questions, questions and more questions. It’s good to ask questions. Those who don’t, well, they don’t evolve. Stagnation in today’s day and age is owing to being late for a bus because nobody was there to put your shoes on for you, so that you could catch the bus. You didn’t attempt to put on these yourself, and you didn’t attempt to run-off bare-feet either. You kept waiting for someone who would put your shoes on for you. People, forget it and wake up. This party’s hot, and it’s moving very fast. Keep moving with it. It’s a hell of a ride. 

The word “Cloud” is very big today. 

“One needs to be in the Cloud, blah blah blah” etc. is heard at parties. 

Humans have realised the vulnerability of hardware. Data in the cloud is probably safer. Yes, Cloud it is . Cloud is the future. HOWEVER…

a). Keep multiple backups on your own hardware also. Accidental deletion on the cloud could sync across all your devices. Where do you stand then? Most cloud backup softwares throw in backing up to additional hardware for free. Use this. It’s a legitimate freebie. You’d be a fool not to use this. Btw, of course you’ve got your time-machine or similar backups going on the side too. BE WELL BACKED-UP.

b). Don’t necessarily keep sensitive data on the cloud. You can very easily manually back up your password-bank (for example) across multiple devices. Sensitive data needs to be password protected. Period. Music and photos can fall into different categories here. Depends on you. 

c). The norm with contacts is that they start backing up to your main email ID. Great. Losing one’s contacts becomes that much harder. Don’t store sensitive stuff in your contacts. 

d). Your main email ID becomes hugely important. Make sure it’s not hacked. Keep changing it’s password. Remember it’s password. Update it in your password bank. Use your email ID to search. Old emails, files, attachments, photos, anything. Today, the whole repository goes along with your email. 

e). Have a balanced approach towards social media. Don’t upload stuff you’ll regret. Try and circulate your family photos within controlled circles. Be wary of social media, and teach your kids of its dangers. 

f). THEN, Cloud is one thing, and accessibility to it and being well-organised on it is another. You could be fully in the cloud, but what use is your stuff to you in the cloud, if it’s not accessible across all your devices seamlessly, at a button-click. There are many software-services doing this for you. Your software-service needs to have a lightning search-functionality, which goes through your search-words and hashtags at a super speed [((btw you are not functioning without hashtags today, so that you can easily sift through your stuff, and call up something in a flash))]. Of course the whole thing costs. Just pay and BECOME SEAMLESS. What’ll you be set back by? 50 USD pear annum? Don’t be penny-wise pound-foolish. DO THIS. 

g). Please don’t forget your Internet-Security along the path. Use a pay-service, on you mobiles and your computers. People, why do we forget the basics?

h). Guard your eyes. Wash them. Use a moistener. Use Ayurvedic eye-drops on the side. Do eye-exercises. 

i). Guard agains neck pain (back-pain). Swim. Walk. Posture. Don’t overdo media. 

j). Guard agains index-finger pain. Mobile and desktop typing and touch has made the index finger of supreme importance. However, it is susceptible to pain and disease if you are not careful. 

k). Guard against heart-attack. We are a sedantry lot now. Almost all day, we vegetate. Most of us, that is. Get a band. Programme it to buzz every hour that you are in your seat. When it buzzes, move. Follow your daily steps. 10-15,000 steps per day is the need of the hour. Couple the band to your diet. Follow its calorie-burning module. Teach your band, till it comes out with intelligent suggestions. A band is like a pet. 

l). Guard your karma-balance. Be a contributor. Don’t only be a free user. Contribute freely on the web. Add to the world. Take the world forward. You are using so much stuff off and on the web, for free, that if you are not on your guard, you might end up exhausting a lot of karma. Thus, generate fresh positive karma too, to keep levels up. 

m). Lastly, it all depends on the internet connection you have, and how much you remain connected as you move. Spend well here, have access to more than sufficient data allocation and speed, both on your computer and on your mobile. An adequate internet connection with ample data-allocation is the lifeline of being in the Cloud. 

YEAH, use your Cloud well and optimally. Fine-tune your Cloud-effectivity. Keep in good shape. Be Cloud-proud! 🙂

Understanding and Assimilating the Fear-Greed Paradox

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Holy moly, what are we talking about?

Let’s say you’ve done your homework.

You’ve identified your long-term stock.

Fundamentals are in place. Management is investor-friendly. No serious debt issues. Earnings are good.

Valuation is not right.

You wait.

How long?

Till the price is right.

What happens if that doesn’t happen.

You don’t pull the trigger. It’s difficult, but you just don’t pull.

Let’s say the price is becoming right.

You are looking for an extra margin of safety.

You are waiting to pounce. How long?

What’s your indicator?

Your gut?

Many things have been said about the gut.

It does feel fear.

Look for that fear.

Scrip is near a very low support, but holding. You are afraid that this last support might break and that the scrip might go into free-fall. Look for that fear. There goes your buying opportunity, you are probably saying. Intraday, support is broken. You are now sure it’s gone. Look for that feeling. Intraday, scrip comes back. Closes over support. Large volume. This chronology is your buy signal. You pick up a large chunk. Scrip doesn’t look back.

You don’t have to go through this rigmarole. You don’t have to bottom-pick. This exercise is for those who want that extra margin of safety.

Now invert the situation.

You’re sitting on a multibagger.

Lately, you’re not agreeing with the company’s business plans. You want out. Best time for you to exit would be now, sure. But, scrip is in no resistance zone, and is going up and up and up. What do you do?

Look for greed within yourself, when you start saying “Wow, this is going to be the next 100-bagger!” Look for the moment during this phenomenal rise when you’re getting attached to the scrip and don’t want to get rid of it, despite having concluded that you don’t agree with the vision of the promoters. Look for the time you start going “My Precious!”

Sell.

This chronology is your intrinsic sell signal.

Sure, radical.

I agree.

Sure, I’m combining trading techniques to fine-tune my investing.

I’ve stood on the shoulders of giants.

I’ve seen from their heights.

It’s time I start contributing.

Whose Game Are You Playing?

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Are you playing your game?

No?

Why not?

Why do you play someone else’s game?

Do you think that’s going to make you happy?

Just for the record, working for someone doesn’t necessarily mean you’re playing that someone’s game. You’re walking a common path with someone. Could be your boss. Spouse. Parent. Sibling. Whosoever. You could still be playing your game.

Life’s a game too.

A game doesn’t mean you have to rule over someone, or something. Wherever there’s a lesson to be learnt, a game is on. When we talk about your life-lessons, we talk about your game.

If I’m not mistaken, life is about learning. For some of us. There are souls who come to spend surplus Karma. Once this is exhausted, their game changes by default, since the lessons start again.

We come face to face with people and situations… to learn. The same people and / or situations keep reappearing till some learning is fully learnt. They can appear in an overbearing role, but you’re still playing your game. You’re learning your lesson. Or not. These people and / or situations cause you to behave as per a groove which has encompassed your life. The lesson is to learn how to break out of the groove. If you’re learning the lesson, you’re playing your game. If not, you’re playing someone else’s.

Play the market. Play your game with the market. Someone else’s successful market game might lure you. It won’t give you lasting succes. Why?

Someone else’s successful market game caters to someone else’s psychology. In crux situations, you will falter in that game. You will lose it all. That someone will succeed. He or she has spent years devising a game which caters fully and totally to his or her psychology and risk profile. Not to yours. He or she cannot know as much about your own psychology and risk profile as you do. Therefore, devise your own market-play. Then, play it.

It takes years or perhaps a decade to discover and understand your behaviour, psychology and reactions to varied market situations. Be there. In the market. Make small mistakes. Learn your lessons. Understand your grooves. Devise a comprehensive strategy around this.
That’s your game.

What are you waiting for?

Play it.

🙂

Breathing Time

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Ideas…

… make the world spin.

At the core of any genius achievement is at first… an idea.

Ideas don’t come for free.

A certain degree of evolution translates into a corresponding idea.

Evolution costs.

Pain is a precursor to evolution.

Not every good idea is lucrative. Lots of bad ideas emerge too.

We’re concerned about sifting through the noise.

A potential candidate emerges, let’s say.

You feel you’ve got something.

What’s the next course of action?

Sit.

Don’t jump.

Let it breathe.

It will either continue to breathe, becoming stronger day by day, until it is so strong, that it coerces you into expression. Or, if it’s weak, it’ll die. It might even transform… … into something stronger.

Let the idea make you want to jump. Yeah, let it become that strong, inside of you. You’ve been sitting, remember?

Why?

Why this whole rigmarole?

You want a high success translation percentage.

Why not? It’s human nature.

And that’s why.

Strongly evolved ideas translate more easily into systems of success.

Even if you don’t remember me, remember this line just above.

Thanks.

The Thin Line

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Have you met the thin line…

…  between ambition and greed?

You see it. You want to cross it without wanting to cross it.

What stops you?

A deadly sin is… deadly. If you’re sensitive enough, you do fear the effects of a deadly sin.

Greed can ruin. It has the capacity to upset an apple-cart.

Sometimes you want something that extra much.

Ambition turns into over-ambition.

You get your something.

You’re a go-getter.

You become over-confident.

You forget your basics.

Next few times around, you cross the thin line repeatedly. The high is addictive. Soon, you’re crossing…

… without even knowing.

Yeah, the vicious cycle outlined above has made you insensitive. You’ve stepped over, don’t even know it, and on you’re going. You’re blinded by greed.

It’s not happened overnight. First the thin line beckoned you to come back. Your over-ambition spurred you on a few steps more. A few more steps wouldn’t harm, right?

Wrong.

You’re not sensitive anymore. You’ve lost normal vision. You’re greedy for your goal. You’re not sticking to your basic tenets. You’re not playing safe anymore. You’ve started to even play with your safety moat, in order to achieve an even bigger goal.

You’ve set yourself up to fall… big.

If you do, I hope for two things.

First up, I hope you don’t fall too big, and that you can get up again.

Second, I hope that this fall is your last one, and that it has made you sensitive again.

Sensitive?

Towards what?

Yeah, sensitive towards the thin line.

I Don’t Want the Cancer

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Are you hurt?

A.

Do you want the cancer?

B.

I do get hurt. Yeah, things hurt me. I’m an emotionally penetrable human being.

Fine. That’s me.

What I definitely don’t want is option B.

Who wants option B?

Can’t think of anyone.

Who gets option B?

Many.

But who?

Those who can’t forget the hurt. Yeah, people who’re unable to move on.

To forget the hurt and move on, simultaneously saving ourselves from the cancer, we need to forgive.

Someone’s misbehaved. Hurt you. Are you going to ruin your future days? No.

Forgive. Forget. Move on.

Just remove the mould in which cancer can potentially set in.

What makes you think it’s different in the markets?

A loss is a hurt.

Need I say more?

You can do the math.

Can I Really Really Really Do Without Fundamentals?

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I like to trade without a bias. 

Lack of bias means freedom… 

… freedom to think independently…

… not falling prey to another person’s opinion…

… which then allows you to listen to your system…

… trade identification…

…setup demarcation…

…trigger-entry…

…trade triggered…

…trade management…

… trigger-exit…

… exited.

That’s it, move on to the next trade. 

News gives me a bias. 

No news. 

You know what else gives me a bias?

Fundamentals. 

I don’t wish to look at fundamentals. 

If my eyes are seeing a setup in the EuroDollar, I would like to take it without the nagging thought of “what will happen if Scotland says NO or YES”.

I don’t want to care about inflation numbers, or job figures, or industrial output or what have you. 

I mean…can I just …do it?

Meaning, can I just do away with fundamentals, and focus on technicals only, which is my area of specialization?

Sometimes, I get a little unsure. 

I start looking around. 

How are others doing it? The experts, that is. 

My uncertainty gets fanned a little more, when I see experts not really ignoring fundamentals, even though they might be specialized in technicals. Hmmmm. I’m still not happy looking into fundamentals. I mean, why should I take time-out from my strong suit, and devote it to my very weak suit?

No, I decide. I’m really not going to look at fundamentals. 

What’s the worst that could happen?

Let me just see if the worst that could happen is bearable.

Ok…I ID a trade…demarcate a setup…and the trade goes against me because of the announcement of some number in the afternoon. People looking at fundamentals would have waited for the announcement of the number and then traded. Fine. 

In the world of trading, it is always good to have the worst-case scenario unwrapped and right before your eyes to see what it really means. 

You know, I can take this. 

Would you like to know why?

Firstly, I would like you to understand that we are looking at large sample-sizes here. Any sensible reasoning would only apply to large sample-sizes. 

Over the long run, and over many, many trades, Mrs.Market will go either way after an announcement of a fundamental number with a chance of roughly 50:50. 

If this is true, it is very good news for me, good enough to just kick fundamentals out of the equation. 

At times, the market reacts as per the crowd’s anticipation. 

At other times, it reacts in the opposite fashion. 

I assume that the ratio of the above two directions taken by Mrs. Market over a very large sample-size would be 50:50.

I think my assumption is correct. I don’t want to go through the labour of proving it mathematically. 

Ok, let’s assume that my assumption is correct. I then kick fundamentals, and go about my work while relying on my strong-suit, i.e. technicals. This trajectory will very probably have a happy ending. 

Now let’s assume that my assumption is wrong. 

What saves my day?

Technicals. 

Technicals very often give setups that factor in crowd behaviour and crowd anticipation of market direction. 

Technical setups get one into the build-up to an announcement. 

More often than not, one is already in the trade, in the correct direction, enjoying the build-up to an announcement without even knowing that the announcement is coming, if one is not following fundamentals. 

Technicals can actually do this for you. I’ve seen them do it. I mean, the GBPUSD has been giving short setups during the entire 1000 pip run-down recently. To have availed such a setup, people haven’t needed to know that a referendum is coming. All they’ve needed to do is to take the trade once they see the setup. 

Actually, that’s it. I don’t need more.  

I don’t need to reason anymore with myself. Everything is here. 

I think I can let go of fundamentals safely.

Even this trajectory should have a happy ending.

Where to, Mr. Nath?

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Last month, I scrapped my market-play system.

Happens.

Systems are made to be scrapped later.

One can always come up with a new system.

I love working on a new system.

It’s challenging.

What I want to talk to you about is why I scrapped my last system.

I found four accounting frauds, as I did my market research, all online.

You see, my last system worked well with honest accounting.

It had no answer to accounting frauds.

Also, I got disillusioned.

Are we a nation of frauds?

How does one deal with a nation of frauds?

More importantly, how does one play such a nation?

Does one invest in it? Or, does one sheer trade it?

Questions, questions and more questions. These encircle my mind as I work to put my new system together.

I am in no hurry to come up with an answer. A country like India deserves a befitting answer, and that it will get, even if the sky comes down on me while I put my system together.

Slowly, I started to think. How many systems had I scrapped before?

Hmmm, four or five, give or take one or two.

I have an uncompromising market rule of going fully liquid when I scrap a system.

Full liquidity is a tension-tree state. It allows one to think freely and in an unbiased manner. Being invested during volatility impedes one’s ability to think clearly and put a new system together.

Ok, so what answer would my new system have towards fraud?

All along, it was very clear to me that future market activity would be in India itself. Where else does one get such volatility? I am learning to embrace volatility. It is the trader’s best friend.

Right, so, what’s the answer to fraud?

Trading oriented market play – good. Not much investing, really. First thoughts that come to mind.

Buying above supports. Selling below resistances. Only buying above highs in rare cases, and trailing such buys with strict stops. Similarly , only selling below lows in even rarer cases, and again, trailing such sells with strict stops.

Trading light at all times.

Fully deploying the bulk of one’s corpus into secure market avenues like bonds and arbitrage. You see, bonds in India are not toxic. Well, not yet, and with hawks like the RBI and SEBI watching over us, it might take a while before they turn toxic. If and when they do start turning toxic, we’ll be getting out of them, there’s no doubt about that. Till they’re clean, we want their excellent returns, especially as interest rates head downwards. In India, one can get out of bond mutual funds within 24 hrs, with a penalty of a maximum of 1 % of the amount invested. Bearable. The top bond funds have yielded about 13 – 15% over the last 12 months. So, that 1% penalty is fully digestible, believe me.

With the bulk of one’s returns coming from secure avenues, small amounts can be traded. Trade entries are to be made when the odds are really in one’s favour. When risk is high, entry is to be refrained from. A pure and simple answer to fraud? Yes!

You see, after a certain drop, the price has discounted all fraud and then some. That’s one’s entry price for the long side. On the short side, after a phenomenal rise, there comes a price which no amount of goodness in a company can justify and then some. That’s the price we short the company at.

Of course it’s all easier said than done, but at least one thing’s sorted. My outlook has changed. Earlier, I used to fearlessly buy above highs and short below lows. I am going to be more cautious about that now. With fraud in the equation, I want the odds in my favour at all times.

These are the thoughts going on in my mind just now. Talking about them helps them get organized.

You don’t have to listen to my stuff.

I’m quite happy talking to the wall.

Once these words leave me, there’s more space in my system – a kind of a vacuum.

A vacuum attracts flow from elsewhere.

What kind of a flow will my vacuum attract?

Answers will flow in from the ether.

Answers to my burning questions.

Three Ways to Double Down

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To win big as a trader, one needs to understand and implement a strategy of doubling down when things are looking good.

The difference between mediocre success and mega-success as a trader is linked to a trader’s ability to double down at the proper time.

We’ve discussed position-sizing. That’s one way to double down.

A day-trader, or a very short-term trader has the luxury of seeing one trade culminate and the next trade start off after the first one culminates at its logical conclusion. For most longer-term traders, many trades can be occurring simultaneously, because started trades have not yet come to their logical end, and new opportunities have cropped up before trades commenced have come to their logical end.

What do such traders do? I mean, they do not know the final outcome of the preceeding trades.

Yeah, how could such traders position-size properly?

Well, a trade might not have come to its logical conclusion, but you do know how much profit or loss you are sitting on at any given point of time. The calculation of the traded value for the next trade is simply a function of this profit or loss you are sitting on. Simple, right?

Well, what if you don’t like to position-size in that manner?

What if you say, that here I am, and I’ve finally identified a scrip that is moving, and that I’m invested in it, and am sitting on a profit. Now that I know that this scrip is moving, I’d like to invest more in this very scrip.

Good thinking. Nothing wrong at all with the thinking process.

You now pinpoint a technical level for second entry into the scrip. Once your level is there, you go in. No heavy or deep thinking required. As a trader, you are now accustomed to plunging after trade identification and upon setup arrival.

Question is, how much do you go in with?

Is your second entry a position-sized new trade? Or, do you see how much profit you are sitting on, and enter with the exact amount of profit you are sitting on? The latter approach is called pyramiding, by the way. Pyramiding is a close cousin of position-sizing. Normally, one speaks about pyramiding into one very scrip, when the trader buys more of that very scrip after showing a profit in that scrip. Once could, however, also pyramid one’s profits into different scrips.

When you’re pyramiding into one very scrip, you’re putting many eggs in one basket. Right, the risk of loss is higher. The thing going for you is that this risk for loss is higher at a time when your profits are up in a scrip that’s on its way up. Therefore, the risk during a downslide is higher, but the probability of that risk’s ability to result in an overall loss for you is lower than normal. You understand that you have balanced your risk equation, and with that understanding, you don’t have a problem putting many eggs in the same basket. After all, it’s a basket you are watching closely. Yeah, you know your basket inside out. You are mentally and strategically prepared to take that higher risk.

There’s yet another way to double down. I’d like to call this the “stubborn-bull trading approach”.

Let’s say you are sitting on a profitable trade. Yeah, let’s say you are deep in the money.

Now, a safe player would start raising the stop as the scrip in question keeps going higher and higher.

On the other hand, a trader with an appetite for risk could risk more and more in the scrip as it keeps going higher and higher – by not raising the stop, till a multibagger is captured. On the other hand, this trader would also be setting him- or herself up to give back hard-earned profits. Yeah, no risk – no gain.

What’s the difference between the stubborn-bull trading approach (SBTA) and investing?

When you’re adopting the SBTA, you’ll cut the trade once it loses more than your stop. You’ll sit on it stubbornly only after it has shown you multibagger-potential, let’s say by being up 20-50% in a very short time. You’ll keep sitting on it stubbornly till your pre-determined two-bagger, three-bagger or x-bagger target-level is reached. After that, you’ll start raising the stop aggressively, as the scrip goes still higher. Eventually, the market will throw you out of your big winning trade. You see, the SBTA strategy is very different from an investment strategy. For starters, your entry into this scrip has been at a trading level, not at an undervalued investment level. Undervalued scrips normally don’t start dancing about like that immediately.

Let’s be very clear – to reap big profits in the long run, you, as a trader, will need to adopt at least one of these doubling down strategies – position-sizing, pyramiding and / or the stubborn-bull trading approach.

Have a profitable trading day / week / month / career! 🙂

Two Minutes of Freedom

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Why have you come?

Meaning, why are you here? What’s the purpose of your earthly sojourn?

Do you want to do something new?

No? How boring is that?

Why would you just want to live and leave with nothing original to your credit?

At times, I feel the urge to discover something earth-shaking.

Don’t you?

I mean, don’t you want to go where no human has gone before?

Whether we are successful or not is not the point.

At least we possess this desire.

And that’s where freedom of thought comes in.

You are born free, to think.

No one can steal that freedom from you, even in the worst conditions of bondage.

Use your freedom.

Think freely, even if it’s for two minutes a day.

Lose all shackles, as a rocket in space loses a burnt surplus engine. Define your own path, and think freely on that path. Develop it, bit by bit.

Slowly, your thought will take form. A whole system of work will emerge. Keep developing this.

Your system will take you places. For example, if you’re playing the markets, it’ll win you money.

It is new, it is original, it is your system, and it can well take you where no human has gone before.

Well done, keep going … … and it’s all happening because of the two minutes of freedom you allowed yourself.

Happy Second Birthday, Magic Bull !!

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Seasons change. So do people, moods, feelings, relationships and market scenarios.

A stream of words is a very powerful tool to understand and tackle such change.

Birthdays will go by, and, hopefully, words will keep flowing. When something flows naturally, stopping it leads to disease. Trapped words turn septic inside the container holding them.

Well, we covered lots of ground, didn’t we? This year saw us transform from being a money-management blog to becoming a commentary on applied finance. The gloom and doom of Eurozone didn’t beat us down. Helicopter Ben and the Fed were left alone to their idiosyncrasies. The focus turned to gold. Was it just a hedge, and nothing but a hedge? Could it replace the dollar as a universal currency? Recently, its glitter started to actually disturb us, and we spoke about exit strategies. We also became wary of the long party in the debt market, and how it was making us lazy enough to miss the next equity move. Equity, with its human capital behind it, still remained the number one long-term wealth preserver cum generator for us. After all, this asset class fought inflation on auto-pilot, through its human capital.

Concepts were big with us. There was the concept of Sprachgefühl, with which one could learn a new subject based on sheer feeling and instinct. The two central concepts that stood out this year were leverage and compounding. We saw the former’s ugly side. The latter was practically demonstrated using the curious case of Switzerland. There was the Ayurvedic concept of Satmya, which helps a trader get accustomed to loss. And yeah, we meet the line, our electrolytic connection to Mrs. Market. We bet our monsters, checked Ace-high, gauged when to go all-in against Mrs. Market, and when to move on to a higher table. Yeah, for us, poker concepts were sooo valid in the world of trading.

We didn’t like the Goldman attitude, and weren’t afraid to speak out. Nor did we mince any words about the paralytic political scenario in India, and about the things that made us go Uffff! We spoke to India Inc., making them aware, that the first step was theirs. We also recognized and reacted to A-grade tomfoolery in the cases of Air India and Kingfisher Airlines. Elsewhere, we tried to make the 99% see reason. Listening to the wisdom of the lull was fun, and also vital. What would it take for a nation to decouple? For a while, things became as Ponzi as it gets, causing us to build a very strong case against investing a single penny in the government sector, owing to its apathy, corruption and inefficiency. We were quite outspoken this year.

The Atkinsons were an uplifting family that we met. He was the ultimate market player. She was the ultimate home-maker. Her philanthropy stamped his legacy in caps. Our ubiquitous megalomaniac, Mr. Cool, kept sinking lower this year, whereas his broker, Mr. Ever-so-Clever, raked it in . Earlier, Mr. Cool’s friend and alter-ego, Mr. System Addict, had retired on his 7-figure winnings from the market. Talking of brokers, remember Miss Sax, the wheeling-dealing market criminal, who did Mr. Cool in? She’s still in prison for fraud. Our friend the frog that lived in a well taught us about the need for adaptability and perspective, but not before its head exploded upon seeing the magnitude of an ocean.

Our endeavors to understand Mrs. Market’s psychology and Mr. Risk’s point of view were constant and unfailing, during which we didn’t forget our common-sense at home. Also, we were very big on strategy. We learnt to be away from our desk, when Mrs. M was going nowhere. We then learnt to draw at Mrs. M, when she actually decided to go somewhere. Compulsion was taken out of our trading, and we dealt with distraction. Furthermore, we started to look out for game-changers. Scenarios were envisioned, regarding how we would avoid blowing up big, to live another day, for when cash would be king. Descriptions of our personal war in Cyberia outlined the safety standards we needed to meet. Because we believed in ourselves and understood that we were going to enhance our value to the planet, we continued our struggle on the road to greatness, despite any pain.

Yeah, writing was fun. Thanks for reading, and for interacting. Here’s wishing you lots of market success. May your investing and trading efforts be totally enjoyable and very, very lucrative! Looking forward to an exciting year ahead!

Cheers 🙂

Getting Too Comfy For Our Boots, Are We?

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What a party we are having in the debt-market, aren’t we?

Exceptional payouts, day after day, week after week, month after month, it’s almost going to be year after year.

Are you getting too comfortable? Lazy, perhaps?

Meaning to say, that when you can get a 10 % return after tax without having to move your behind for it, it is a very welcome scenario, right?

People, scenarios change.

It isn’t always going to be like it is at the moment.

Are you flexible enough to change with the scenario?

Or will you be lost in the current moment, so lost, that you will not recognize the signs of change?

What would be these signs? (Man, this is like spoon-feeding….grrrrrr&#*!).

Inflation begins to fall.

The country’s central bank announces back to back interest rate cuts.

Too lazy to read the paper? Or watch the news? Ok, if nothing else, your online liquid mutual fund statement should tip you off.

How?

The payout, dammit, it will have decreased.

Also, something else starts performing.

What?

Equity.

Smart investors don’t like the debt payout anymore. They start moving their smart money into value equity picks.

Slowly, media stops reporting about a gloomy economy. The buzz gets around. Reforms are on the way.

Foreign direct investment picks up. The media latches on to it. It starts speaking about inflows as if the world begins and ends with inflows.

Now, the cauldron is hot and is getting hotter.

Debt payouts are getting lesser and lesser. Equity is already trending upwards, and has entered the meat of the move.

If the trend contnues, a medium to long-term bull market can result.

There you have it, the chronology played out till just before the start of a bull market of sorts.

Be alert. Recognize the signs early. Be mentally in a position to move out of the debt market, if the prevailing scenario changes.

Otherwise…

… you miss a first run in equity. Boo-hoo. When stocks cool at a peak, and start falling, you make multiple wrong entries into them.

You get hammered by equity, having caught it on the down-swing.

You missed the correct entry time-point in equity because the debt-market made you too comfortable. You were late to act. When you acted, finally, you caught a correction, and took a hammering.

One or two more hammerings like that, and you’ll be off equity for the rest of your life.

And that, my dear friend, would be a pity.

Why?

Because, in mankind’s history, it is stocks that have given the best long-term returns. Not gold, not debt, not bonds, but stocks.

You need to approach them properly, and timing is key.

The Road to Greatness

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” time goes by

so naturally

while you receive

infinity “

– (Guru Josh Project).

Are you systematic? Punctual? Disciplined? Persevering? Large-hearted? Do you think out of the box?

All of the above?

Relax. You are already on the road to greatness.

So what if the world hasn’t recognized you…yet?

Why do you want the world to recognize you?

Why does the world’s opinion of you matter to you?

Why do you need a stamp of approval to feel you’re on the right path?

Frankly, if you’re treading a new path, where no person has gone before, well, then, nobody’s qualified enough to give you that stamp of approval.

Right, the road to greatness is paved with identity crises.

Greatness is achieved, if you do something differently, and do it well. With the passage of time coupled with your perseverance, you discover and outline a new dimension in your field. You’ve struggled along the path, because it’s a new path, with no roadmaps. People have made fun of you and have ridiculed you, because you are different, and refuse to conform to a norm set by “average” society. Exactly that’s the struggle.

Averageness is comfortable. For greatness, one needs to pull the extra distance.

Alone.

Because one is not average, one needs to discover who one is. This happens along the path.

The path to greatness is not comfortable.

Nevertheless, it is enjoyable.

Yes, after a while, struggle starts to get enjoyable, once you become used to it. You start enjoying being pushed to your limits. The biochemistry of your body’s peak-performance state can actually give you a huge kick, as in a “high”. Try and stay there, as long as you can. This “high” is only happening to you. Stay there, as “(the) time goes by, so naturally, while you receive … … infinity.“ – (Guru Josh Project).

Game-Changers

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Change.

The one factor that keeps us evolving.

Adapt or get left behind. Seems to be the Mantra of the times.

The management of money has seen some big game-changers over the last few decades. We want to speak about them today.

In the ’90s, Bill Gates wrote about business at the speed of thought. We’re kinda there, you know. Let’s say you have an idea. From idea to framework, it’s mostly about a few button-clicks, with the web being full of idea-realizing resources. See, we’re already discussing the biggest game-changer, which is the flow of information. Today, we live in a sea of information. It’s yours to tap. Delivered to you on a platter. Such information flow changes everything, from lead-time to middle-men. Best part is, almost all of the information available is free!

Then there’s technology. Cutting-edge software, everywhere. Now, there’s even a software to smoothly organize your contract notes and calculate profit or loss, and taxes due. It’ll give you the appropriate print-out, whichever way you want it. You don’t need to hire an accountant to audit your market play. You just click the contract note and the software extracts all relevant information from it, organizing it beautifully. Actually, that’s nothing. Market-play software is what we should be speaking about. Cut to the movie “A Good Year”. Just picture Russell Crowe motivating his “lab-rats” to go for the kill and short an underlying, only to short-cover a few points below. The technical software follow-up of the underlying’s price on the wall-panels is the image embedded in my mind, as the price gets beaten down, and then starts to rise again.

Market software allows you to run scans too. A common exercise I do at the beginning of a trading day is to narrow down the 4,537 active stocks on the BSE and the NSE to about 10 tradable ones. I do this with 2 back to back scans. Each scan takes a minute. Then, I study the charts of the tradable stocks and select two or three to follow. That’s another 5 minutes. Putting on trigger buys or sells for these stocks takes 2 minutes. So, assuming that a trade gets triggered in the first minute, I have arrived from scratch to active trade in 10 bare minutes, with no prior market preparation. That’s what technology can do for you, and more. Software is expensive. It’s mostly a one-time cost with a life-time of benefit. Worth it. The management of money is a business, and each business needs initial investment.

Numbers have changed the game. Volumes have grown for many underlying entities that were illiquid earlier. When volumes are healthy, the bid-ask spread is very tradable. Thus, today, you can choose to trade in almost any avenue of your choice and you are almost certainly going to get a liquid trade.

Our attitudes and lifestyles have changed too. Today, we want more. No one is satisfied with mediocricity or being average. We have tasted the fruit that’s to be had, and are willing to get there at any cost, because we are hungry. Luxurious lifestyles lure us to rush into the game, which we play with everything we’ve got, because as I said, we’ve tasted the fruit, and we want more. Our approach has made the stakes go up. We need to adapt to the high stakes with proper risk-management.

It’s never been easier to access funds, even if you don’t have them. Leverage is the order of the day. Of course that changes the game, leading to higher volumes and increasing the frequency of trading. We need to keep debt-levels under control. It’s never been easier to go bust. Just takes a few button-clicks and a few missed stops. The leverage levels take care of the rest.

Game-changers will keep coming our way. As long as we keep adapting and evolving, our game will not only survive, but also blossom.