Skip to main content

Failed trade: Road to TA

My failed trade - Road to TA

This trade happended some time in the mid of 2003, most probably Mar-Apr. The general sentiment in the market was bearish. This was probably my second or third trade in my personal account. During those times, my idea was to take position trades using options. Pick the trend, buy an option, sit on it.

In the mid-2003, my boss, also a very good trader himself and Vivek Patil, one guy I used to watch for 'tips'; were both bearish. Or so, I understood. I therefore took a Nifty put option, with few days to expiry. [I had no idea about theta]. This was an OTM, simply because it was "cheap". If I remember correct, it was two strikes out of the CMP.

Initially, the market stayed rangebound. But I kept my position, because two of my bellweathers were still bearish. Markets during the final days drifted close to my strike, but was still comfortably above my strike.

Then something happened. Overnight there were some terrorists killed about 14 Kashmiri Pandits. It made me very happy. Earlier, a month or so back, terrorists had killed about 26 Kashmiri Pandits the market had fallen sharply. This was roughly around the time, when LK Advani was touring or had toured Kashmir. Therefore, I conculded, markets will fall again and this time the prices were so close to the strike, I expected the option to expire in profits.

But the market dint budge. I was waiting for the market to go lower, but it never happened. It resolutely stayed above my strike and expired there. So near yet such a miss! In my gust of frustuation, I found myself thinking "If the terrorists killed 10 more Kashmiri Pandits, I have would have made money."

What followed was a stark ans stunning realisation. My thoughts had become so barbarous, inhuman and so desperate, that I was actually wishing 10 more dead people. It dint take long for me to realise, that if I ever wanted to make money I would have to be more objective. My trades would have to stand on their own feet and reason. I cant expect the helps of likes of Osama and terrorists to help me out. I needed a good solid reason, to convince myself when I lost money, than blame the terrorists!

All the training and knowledge had made me more knowledgable but I still needed a 'system' to trade. It was then I started taking a serious look at TA. I have since then watched vivek Patil closely, then joined yahoo groups few months later. But my best investment was a simple TA software, which I worked, played and tweaked 24X7. It took me sometime to gather courage and confidence to put my money back into the market. But, when I put it back and traded, entire floor was awed. A kid trading smartly [more like, a kid trading so much and not loosing much money]. In another few months, "I" was dispensing tips. :))

Thankfully I learnt an important lesson early and cheaply.

:) Falkor

Comments

Post a Comment

Popular posts from this blog

Cognitive rules of business presentations

In his recent book, Clear and to the Point, Kosslyn explained that the four rules of PowerPoint are: The Goldilocks Rule, The Rudolph Rule, The Rule of Four, and the Birds of a Feather Rule. Here's how they work. The Goldilocks Rule refers to presenting the "just right" amount of data. Never include more information than your audience needs in a visual image. As an example, Kosslyn showed two graphs of real estate prices over time. One included ten different numbers, one for each year. The other included two numbers: a peak price, and the current price. For the purposes of a presentation about today's prices relative to peak price, those numbers were the only ones necessary. The Rudolph Rule refers to simple ways you can make information stand out and guide your audience to important details -- the way Rudolph the reindeer's red nose stood out from the other reindeers' and led them. If you're presenting a piece of relevant data in a list, why not mak...
Post a Comment
Read more

Value of dollar - Part 1

A Simple Perspective Will Do The date is 2000-05-28. Don't you get tired of all the bad news bears reminding you of all these instabilities, excesses, and 'potential' tensions in the global economy? After all, hasn't it always been like that? Yes it has, but not in money it hasn't. Increasingly, investors find it harder to know where to put their savings. What about Government Bonds? Wrong. Their recent record of capital losses have wiped out your guaranteed yields, probably because the stock market keeps crowding them out, and this even in a strong dollar and low inflation environment. Furthermore, there is no reliable liquidity and potentially poor quality debt in the corporate sector. Foreign assets? Wrong. Most of the world's economies are riskier, have been under performing, and also, there is this thing called currency risk. Like how is the average person gonna cope with currency...
Post a Comment
Read more

Depreciation of British Pound 1900-2000

When the Bank of England was formed the powers to create money was finally transferred to private hands. The creation of Fed in US, was just a part of this cycle. Though it is a common knowledge US Dollar has depreciated nearly 100% since the creation of Federal Reserve, the same is the case of all the currencies across the globe. For example, below is the UK Parliament data that highlights the depreciating value of Pound.
2 comments
Read more