Trading in volatile markets

After 2-3 years of trading in a low volatility environment, markets have become volatile and this has affected my trading. Suddenly I realise I cannot take a position as risk is too high.

A move which happens in a day then happens in 5 min so what should one do?

The complacency of last 2-3 years has left me unprepared for the current environment and relearning is necessary as what I had learned in the past is sadly forgotten. So much for writing down strategies in a rule book.

Note that I am conditioned for an average trading range of 20 points per hour... now the market can give 40-50 points in 5 minutes!

Here is the chart.... 3 legs each of min 120 points giving a trading range of 360 points. This is huge and is something one gets in a good month!

Top gainers this year after the correction

- When markets recover, these stocks will give good returns
- Do not risk more than 1% of your capital on any trade

Buy signal on 15 min charts

- let us see what happens
- in a downtrend, buy signals usually fail

Market outlook

Daily charts:
- trend is down on daily charts
- today NF closed 0.9% in positive at 11067
- AD was 7:10
- VIX down 5%

- option writing support 11000

- is correction over? base building to start? let's see

Video: Intraday Gap Trading For Quick Stock Market Profits [In Hindi]

Tycoons of tomorrow: Nithin and Nikhil Kamath: Code Zero

...It was then that they decided that Nikhil—who turned out to have a real penchant for trading—would continue to trade, while Nithin would build a brokerage firm. That was how Zerodha came into being, going live in August 2010. The name was a play on zero and the Sanskrit word ‘rodha’, meaning barrier. The brothers wanted to position themselves as facilitators of zero-barrier trading for their clients.

“There was an active futures and options trading community and we started out charging `20 per trade irrespective of the size of the trade,” says Nithin. Those in the business immediately recognised the value of this proposition; otherwise they would be paying a percentage of the value of the trade as fees in the conventional broking system. They would easily save 90-95 percent of that by switching.

The brothers also paid attention to earning trust, because a client still had to transfer money to the broker to put in a trade. “We were the first to come up with a utility that showed all costs upfront, before a single trade was initiated by any client,” Nithin recalls. In 2011, they upgraded technology to allow clients to trade outside the NSE as well.

By 2013, competition had started using the discount broking model, too, and it was clear to the brothers that the future was about becoming a technology company that offered a superior platform for multiple financial services. Zerodha invested in a startup called Tradelab, which built a desktop trading platform that became popular among clients.

Read more at http://www.forbesindia.com/article/tycoons-of-tomorrow/nithin-and-nikhil-kamath-code-zero/51347/1

Some Contra Trades ... paper trade with someone else's money

Today... 



Few days ago... short trade worked very well

Market outlook

Daily charts:
- trend is down on daily charts
- today NF closed 1.5% negative at 10975
- AD wsa 1:5

- this was first close in 3 months below 11000
- Friday's low at 10866 not broken as yet

- highest OI at 11000 PE
- not sure how to read this.

Random outcome but consistent results

Norwegian Power Trader Facing Bankruptcy After Massive "Black Swan" Loss

...For readers who haven't been following one of the most stunning cautionary tales about the failure of risk oversight and its consequences, Aas - a legendary power trader with a seat on the Nasdaq Nordic commodities exchange - wracked up a staggering loss that when the spread between German and Norwegian power prices widened by 17 times during a single trading day, an incident that Nasdaq has described as a "a true black swan event."

The blowout was triggered by an extremely unlikely confluence of factors: A jump in the price of European carbon allowances, which caused German power prices to soar, and forecasts for unusually heavy rains in the hydropower-reliant Nordic region, which caused Nordic power prices to drop.

At the time, Aas had a huge open position betting that the spread would narrow. So when it widened by such an extreme degree, Aas was forced to surrender all of his liquid assets to cover his margin. But it wasn't enough, and the exchange was forced to liquidate his position at a massive discount in what is typically an unusually illiquid market (European power markets, once rife with hedge funds and other traders, have seen trading activity plunge over the past two decades as volatility stabilized, eliminating the incentive for speculation).

When the dust had cleared, other exchange members were forced to contribute back-up capital to cover the loss, narrowly averting what could have been a catastrophic collapse.

Read more at https://www.zerohedge.com/news/2018-09-21/norwegian-power-trader-facing-bankruptcy-after-massive-black-swan-loss

Video: Options Buying vs Selling - Which is Better For YOU? by @PRSundar64

Do fundamental factors drive prices?

I absolutely believe that fundamental factors drive prices, but like Bloomberg and CNBC I do not have a clue what fundamental factors really mattered until a year after a trend is over.

— Peter Brandt (@PeterLBrandt) September 24, 2018

Super bearish on nifty?

I am bearish for the first time in many years....2000-2002 market dropped 56%, 2nd wave......2008-2009 dropped 65%, 4th wave....Now 5th wave may have ended and 2nd wave of Largest time frame supercycle started...must drop more than 65%.....

— PANKAJ SHUKLA (@suklap) September 23, 2018

Why There is no Future in Options

Why There is no Future in Options ! “Naked” options have got their name for a reason ! Play safe !

Investing is not adventure any day ! Many lives Change their course

@pankajbaid17

Video: Irrational Market Behavior - Analysis | 21 September 2018

Notes from a trader

Question: in options, which is more profitable intraday or positional?

In your experience is it giving better returns than positional trading. For example, I/m attaching a 2 hour chart of nifty with your own indicator.

Would a positional short according to the sell signal given by the KPL indicator have given more profit than intraday trading?

Indeevar

NIFTY weekly charts

- trend is up on weekly charts (but down on daily charts)
- in 3 weeks, nifty has lost roughly 1000 points
- all weeks, we had a hammer candlestick which had no follow through buying
- note that a hammer at a top is bearish and bullish if it occurs after a downtrend

- this week's low is 10800 where we had very good buying coming
- this becomes SL for long positions

- a lot of rangebound trading may happen before a breakout happens - let's see

BANK NIFTY technicals

- trend is down on daily charts
- Friday saw a lot of selling with trading at 1200 points plus
- some signs of buying emerging from lower levels

- my swing high remains around 28400 levels
- a lower swing high is yet to be formed

- so a buy signal will take some time to come on daily charts

The relativity of income