01/01/2011 - 02/01/2011 | Finance and Trading Made Easy

NSE Index Technical Levels Update - 01 February 2011

Nifty Futures - February Contract
Swing : DOWN
SAR : 5700
Low risk entry : 5580
Target : 5420

http://financeandtradingmadeeasy.blogspot.com/

Bank Nifty Futures - February Contract
Swing : DOWN
SAR :10950
Low risk entry : 10700
Target :10420

Online Forex Futures Trading Strategy - 31 January 2011

http://financeandtradingmadeeasy.blogspot.com/

EUR USD
Swing : UP
SAR : 1.3540
Low risk entry : 1.3620
Target : 1.3790

Commodity Futures Trading Analysis Report - 31 January 2011

Gold Futures - February Contract
Swing : DOWN
SAR : 1348
Low risk entry : 1325
Target : 1301

http://financeandtradingmadeeasy.blogspot.com/

Crude Oil Futures - March Contract
Swing : UP
SAR : 85.25
Low risk entry : 87.75
Target : 91

USD INR exchange rate versus long term stock markets trends

I have attached charts, highlighting long term trends of USD INR along with monthly charts of Nifty and S&P 500
We can clearly see that during challenging economic conditions in India, the US dollar tends to gain strength. While during the periods of economic prosperity, Indian national rupee (INR) gains in value over time. Dollar still remains as a hedge in case of economic crisis in India.US is perceived to be an economy which is better equipped to handle any sort of political or economic shock hence we see this “flight to safety” trade, every time there is panic in the D-Street.

USD INR

USD INR

Nifty

S&P 500

Charts Courtesy : Quote.com

Related Post
5 Factors Affecting Currency Exchange Rate

5 Factors Affecting Currency Exchange Rate

Trends in currency exchange rate should be studied on a comparative basis. We can have different trends in foreign exchange values, if we compare currency “A” with that of Currency “B” and” C”. Following are the factors which influence the value of a currency over time.

1) Economic growth outlook - Typically, the more healthy and robust a country’s economy, the better its currency’s performance with its peers.

2) Inflation Trend- Generally, a currency will experience a drop in its value if there is a high level of inflation in the country or if inflation levels are forecasted to rise in future.

3) Government Policy - The currency exchange rate market usually reacts negatively to expanding government budget deficits, and positively to contracting budget deficits.

4) Balance of trade – Unfavorable balance of trade tend to have a negative impact on a nation’s currency and vice versa

5) Political conditions - Generally, political instability will have a negative impact on a nation’s currency.

In short, any factor that affects the health of a nation’s economy positively will have a positive impact on the country’s currency and vice versa.

These factors should not be studied in isolation; one should do a comparative analysis with the other country in focus. For example, while analyzing the US Dollar with the Japanese Yen, one should study the above five factors with respect to the economies of US and Japan.

Indian Markets Futures Trend Update - 31 January 2011

Nifty Futures - February Contract
Swing : DOWN
SAR : 5720
Low risk entry : 5640
Target : 5460

http://financeandtradingmadeeasy.blogspot.com/

Bank Nifty Futures - February Contract
Swing : DOWN
SAR :11011
Low risk entry : 10850
Target :10450

Online Forex Futures Trading Strategy - 28 January 2011

http://financeandtradingmadeeasy.blogspot.com/

EUR USD
Swing : UP
SAR : 1.3540
Low risk entry : 1.3620
Target : 1.3790

Commodity Futures Trading Analysis Report - 28 January 2011

Indian Markets Futures Trend Update - 28 January 2011

Nifty Futures - February Contract
Swing : DOWN
SAR : 5800
Low risk entry : 5720
Target : 5600

http://financeandtradingmadeeasy.blogspot.com/

Bank Nifty Futures - February Contract
Swing : DOWN
SAR :11200
Low risk entry : 10980
Target :10650

Commodity Futures Trading Analysis Report - 27 January 2011

Gold Futures - February Contract
Swing : DOWN
SAR : 1351
Low risk entry : 1339
Target : 1316

http://financeandtradingmadeeasy.blogspot.com/

Crude Oil Futures - March Contract
Swing : DOWN
SAR : 89
Low risk entry : 87.80
Target : 85.5

Online Forex Futures Trading Strategy - 27 January 2011

http://financeandtradingmadeeasy.blogspot.com/

EUR USD
Swing : UP
SAR : 1.3540
Low risk entry : 1.3610
Target : 1.3790

Indian Markets Futures Trend Update - 27 January 2011

Nifty Futures - February Contract
Swing : DOWN
SAR : 5816
Low risk entry : 5760
Target : 5650

http://financeandtradingmadeeasy.blogspot.com/

Bank Nifty Futures - February Contract
Swing : UP
SAR :10780
Low risk entry : 10950
Target :11280

Commodity Futures Trading Analysis Report - 26 January 2011

Gold Futures - February Contract
Swing : DOWN
SAR : 1353
Low risk entry : 1339
Target : 1316

http://financeandtradingmadeeasy.blogspot.com/

Crude Oil Futures - March Contract
Swing : DOWN
SAR : 89.5
Low risk entry : 87.90
Target : 85.5

Commodity Futures Trading Analysis Report - 25 January 2011

Gold Futures - February Contract
Swing : DOWN
SAR : 1361
Low risk entry : 1344
Target : 1322

http://financeandtradingmadeeasy.blogspot.com/

Crude Oil Futures - March Contract
Swing : DOWN
SAR : 91
Low risk entry : 89
Target : 87.1

Indian Markets Futures Trend Update - 25 January 2011

Nifty Futures
Swing : DOWN
SAR : 5800
Low risk entry : 5740
Target : 5620

http://financeandtradingmadeeasy.blogspot.com/

Bank Nifty Futures
Swing : UP
SAR :10680
Low risk entry : 10920
Target :11280

Commodity Futures Trading Analysis Report - 24 January 2011

Gold Futures - February Contract
Swing : DOWN
SAR : 1370
Low risk entry : 1355
Target : 1335

http://financeandtradingmadeeasy.blogspot.com/

Crude Oil Futures - March Contract
Swing : DOWN
SAR : 92.4
Low risk entry : 90.6
Target : 88.5

Indian Markets Futures Trend Update - 24 January 2011

Nifty Futures
Swing : DOWN
SAR : 5800
Low risk entry : 5740
Target : 5620

http://financeandtradingmadeeasy.blogspot.com/

Bank Nifty Futures
Swing : UP
SAR :10500
Low risk entry : 10700
Target :11050

Commodity Futures Trading Analysis Report - 21 January 2011

Gold Futures - February Contract
Swing : DOWN
SAR : 1379
Low risk entry : 1359
Target : 1341

http://financeandtradingmadeeasy.blogspot.com/

Crude Oil Futures - March Contract
Swing : DOWN
SAR : 93
Low risk entry : 91.2
Target : 89

Indian Markets Futures Trend Update - 21 January 2011

Nifty Futures
Swing : DOWN
SAR : 5800
Low risk entry : 5740
Target : 5620

http://financeandtradingmadeeasy.blogspot.com/

Bank Nifty Futures
Swing : UP
SAR :10400
Low risk entry : 10650
Target :11000

Commodity Futures Trading Analysis Report - 20 January 2011

Gold Futures - February Contract
Swing : DOWN
SAR : 1390
Low risk entry : 1375
Target : 1351

http://financeandtradingmadeeasy.blogspot.com/

Crude Oil Futures - February Contract
Swing : UP
SAR : 90.10
Low risk entry : 91
Target : 92.90

What is the average profit per trade of an intraday Nifty trader?

I think I am asking again :)

Any idea what is the average profit per trade of an intraday trader?

For example if an intraday trader takes 3 trades, makes a profit of 20 points on all the three trades, his average profit per trade would be (20+20+20)/3 = 20 points per trade.

If another one, takes 3 trades like win 20 & 20 on first two and lose 10 points on the 3rd trade. His average profit per trade would be (20+20-10)/3 = 10 points per trade.

Another example of a trader, win 20, lose 10 and 10 His average profit per trade will be (20-10-10)/3 = 0 points per trade.

I would request traders and readers to please tell what is the average profit per trade of an intraday Nifty trader? This will help in setting the right expectation for our intraday trades, and one can plan the trades, the right way.

As per today's levels a trader would have made approximately 80 points from peak to trough (5740-5660) and approximately easy 50 points (5740-5690) if the position was squared off close to end of the day

So do you feel 50 point per day per trade is fine for intraday, at times we may not get the profit the same day but that's never the intention, as these are swing trading levels. If we get more than 50 points, we should be out of the trade end of the day (EOD)?What is your opinion?

Cheers.

Indian Markets Futures Trend Update - 20 January 2011

Nifty Futures
Swing : DOWN
SAR : 5800
Low risk entry : 5740
Target : 5620

http://financeandtradingmadeeasy.blogspot.com/

Bank Nifty Futures
Swing : DOWN
SAR :10900
Low risk entry : 10700
Target :10350

Commodity Futures Trading Analysis Report - 19 January 2011

Indian Markets Futures Trend Update - 19 January 2011

Commodity Futures Trading Analysis Report - 18 January 2011

Indian Markets Futures Trend Update - 18 January 2011

Nifty Futures
Swing : DOWN
SAR : 5860
Low risk entry : 5760
Target : 5620

http://financeandtradingmadeeasy.blogspot.com/

Bank Nifty Futures
Swing : DOWN
SAR :10950
Low risk entry : 10750
Target :10350

Commodity Futures Trading Analysis Report - 17 January 2011

Gold Futures - February Contract
Swing : DOWN
SAR : 1393
Low risk entry : 1376
Target : 1351

Crude Oil Futures - February Contract
Swing : UP
SAR : 90.10
Low risk entry : 91
Target : 92.90

Trading For A Living – A Practical idea?

Whether trading can be done for living, has always attracted the interest of active traders and people in general. I firmly believe that trading can be done for living provided certain conditions are fulfilled. Below are some of the factors that play a significant part in deciding whether a trader achieves success in his goal of making a living from trading the markets.

1)Experience – As trading is all about probabilities and trading psychology, more the experience better are the chances of success in earning a living out of trading. One should have sufficient experience (years not days), that too should come out of operating in different market cycles (bull and bear markets). If you start to trade for a living from day one, you will fail badly. This point is basically about finding a system and being at ease with it.

2)Capital Requirement – Returns from markets are variable, but let’s take a return of 10-15 percent CAGR for a conservative estimate (some traders will laugh at this number, Larry Williams made 11,376% return in World Cup Championship of Futures Trading!).Your living expenses should be less than 10-15 % return on your capital. As living needs are different for different people, you need to do your own math to find the amount of capital required, before you take a step towards making trading, the only source of income for yourself. This point is all about money management and setting realistic expectations from the markets.

3)Psychological Challenges – Apart from dealing with the madness in the markets, an individual trader has to face psychological pressure from the family and the society as well. Trading is considered synonymous with gambling by a large section of “non trading group”. They will surely ask very difficult questions once a new trader takes up trading as a carrier. Other thing that adds up to the psychological pressure is debt. Make sure you don’t have any outstanding loans, it should be paid off before you start trading your own account. In short, try to minimize the noise and distraction to achieve a focused approach towards your goal.

Odds for achieving success in trading become quite favorable if above conditions are met however experienced traders can work in very demanding conditions as well (Larry Williams made that kind of return in 1987 when many traders went bust). Trading is like a business, just as millions of people are running their businesses successfully, you too can be successful. Quite a lot of businesses fail, you too can fail in trading. Understanding and managing the risk is all you need. Finding your own space in the trading arena is very important, and that takes a lot of time and effort. The sooner we realize this, easier and less stressful, will be our journey towards our goal.

Life (as well a trading) is all about probabilities, when certain things align in certain ways, things tend to look simple. We find an effortless way around things that once seemed complicated, demanding and impossible. Trading for a living is much harder than people assume.

Good luck.

Related Post
Reposting the Holy Grail Post in text format

Opinion and Answers about SAR and Trading.

Piyush has some questions about SAR trading from the previous post
*********************************

hi anuj,
ur sar and volatility is interesting. i actually use sar. but what i know abt ur sar is that it is discretionary where u use certain ingredients (disclosed) in a secret way :-) to bring sar.
for jio sar users which is use of 10 ema as sar. how will volatility be relevant. suppose the example u gave. the short call was closer to top so u increase position size as compared to long call which was far frm bottom. suppose the long call turns more profitable then? can u give any example how sar users can make use of volatility
in skipping trades/position sizing. volatility can be measuerd in vix/atr. how can j 10 sar (10 ema sar)/psar/5sma sar users use vix to position size?
*********************************
My reply

Piyush (Sharda Saheb!)
Nice to receive a comment from a "hawk eyed" critic and a learner.
First of all there is no secret about my trading levels. I rely on classical trading techniques like Trend following and observing price patterns (higher/lower highs and higher/lower lows)not fancy chart patterns. I also use moving averages, RSI, Price pivots (not to be confused with pivot points).ATR is one of my favorites. I am a big time follower of J. Welles Wilder, Jr techniques and really admire his contribution to technical analysis. Very simple and effective approach to trading has been highlighted in his book, New Concepts in Technical Trading Systems.

Agreed...that I don't specifically recommend the use of a particular moving average, or say that this parameter is better than the default setting, or this trend line is more relevant than that one. That’s simply because there are infinite possibilities that exits in a market. There are all sorts of people involved in the market with different objectives like value, swing, day, spread traders etc.There can't be a single formula for everyone.

"The biggest secret of the success in the markets is that there is no secret."

One has to find her/his place in the trading arena and stay committed to the system and the plan. There is no holy grail system or parameter available. Trading is all about probabilities, there will be whipsaws and losses.
This is just my "written trading plan”. I made this keeping in mind that it will be useful for an "office going person" (who can't afford to sit at the system during the intra day trades).One just, has to put a stop loss order in system and forget the intraday price movement.

Regarding J10SAR (10 day EMA)
It will have the advantage and disadvantage of a moving average system i.e. giving excellent returns in trends and poor returns in sideway and volatile conditions. If I am right you and others from OJN have conducted extensive research regarding 10EMA.Check the performance in July and August and compare it with performance in September 2010.There will be huge difference in performance and profit per trade during this time.
We need to have a method that tells us a low risk entry price. One should skip the SAR trades when volatility is high and rising as it will give bad entries.SAR is a breakout trading method. It works excellently when there is a range breakout after a low volatile market condition. For example taking the J10 SAR signal when Nifty ATR is 60 will be better than taking the same trade when ATR is 120.That's applicable for any stop and reverse (SAR) system which is essentially a breakout trading technique.Breakout trade works well when markets move from range contraction to range expansion state.Trends should also last for a sufficient time as well, otherwise we will be chopped out.

I hope it will give you some ideas to work on regarding Stop and reverse trading.
Cheers

Related Post
Should you take all the SAR trades?
How do I calculate SAR ?

Indian Markets Futures Trend Update - 17 January 2011

Nifty Futures
Swing : DOWN
SAR : 5880
Low risk entry : 5780
Target : 5620

Bank Nifty Futures
Swing : DOWN
SAR :11150
Low risk entry : 10880
Target :10350

Commodity Futures Trading Analysis Report - 14 January 2011

Gold Futures - February Contract
Swing : UP
SAR : 1365
Low risk entry : 1376
Target : 1399

Crude Oil Futures - February Contract
Swing : UP
SAR : 89.90
Low risk entry : 91
Target : 92.90

Indian Markets Futures Trend Update - 14 January 2011

Nifty Futures
Swing : DOWN
SAR : 5885
Low risk entry : 5820
Target : 5680

Bank Nifty Futures
Swing : UP
SAR :10631
Low risk entry : 10920
Target :11280

Should you take all the SAR trades?

Hi,
SAR (Stop and Reverse) Trading seem to be quite popular these days with traders. This is an "always in the market" strategy.
Traders believe that if they stay always in the market they will be more profitable. However there is a popular market maxim that "Standing aside is a position"
Without getting into the debate about which is a right or wrong strategy, let’s check this recent trade in ICICI Bank futures that got stopped out yesterday.

ICICI bank Technical Chart Quote trading range SAR Stop and Reverse breakout study important turning points high probability setup volatility loss

In the chart given above we can see two trades i.e. a short trade that concluded yesterday (From here on referred as trade A), and a long trade that started yesterday (From here on referred as trade B)

Check out the range (recent top compared with SAR level, marked with red horizontal lines in the chart) that was broken when the respective stops were taken out.
In Trade A range was approximately 31 points when stop was taken out, a system short was initiated.
In Trade B range was approximately 55 points when stop was taken out, a system long was initiated.

Market conditions during both the trades.
Volatility was comparatively less at the time trade A was initiated on the down side hence giving us a tighter stop loss therefore providing a better risk to reward ratio.

Learning from these trades
1) Initiating a trade based on SAR during low volatility period (Trade A) results in better entries thus better overall profitability
2) If one wants to take every SAR trade that a system alerts, she/he should ideally trade with bigger volumes during low volatility period (trade A) than higher volatility period (trade B).Position Sizing Strategy to be implemented as per trends in volatility.
3) During higher volatility periods (Trade B) one should enter a trade on a pull back (Low Risk Entry) or closer to the range extremes than getting caught in the middle part of the range.

System trading versus Discretionary trading?
Both trading methods have their advantages and disadvantages. Traders, who find it difficult to stay disciplined, should use system trading as it eliminates emotions from trading.
While traders with sufficient market experience should prefer discretionary trading as it gives better entries and exits.Which one is a better method? That’s an endless debate.

Feel free to share your views, strategies and ideas about SAR trading below.
Good luck.

Related Post
How do I calculate SAR ?
How to use the market calls table
Opinion and Answers about SAR and Trading.

Commodity Futures Trading Analysis Report - 13 January 2011

Gold Futures - February Contract
Swing : UP
SAR : 1365
Low risk entry : 1376
Target : 1399

Crude Oil Futures - February Contract
Swing : UP
SAR : 89
Low risk entry : 90.5
Target : 92.90

Indian Markets Futures Trend Update - 13 January 2011

Indian Markets Futures Trend Update - 13 January 2011Nifty Futures
Swing : DOWN
SAR : 5950
Low risk entry : 5880
Target : 5680

Bank Nifty Futures
Swing : UP
SAR :10631
Low risk entry : 10920
Target :11280

Are you using the Buy Only / Sell Only Watch List?

Hi
I was just checking the performance of Buy Only / Sell Only Watch List.The results are incredible.In this downtrend the stocks featuring in the "Sell Only" list are giving a massive down move.
Check the charts and see it for your self. This is a classic example of not trading each and every move in the market but trading specific moves in specific stocks for better performance ie trading the high probability setups.
Really jaw dropping returns :)

"Chance favors the prepared mind"
Cheers

Commodity Futures Trading Analysis Report - 12 January 2011

Gold Futures - February Contract
Swing : UP
SAR : 1359
Low risk entry : 1375
Target : 1394

Crude Oil Futures - February Contract
Swing : UP
SAR : 88
Low risk entry : 89.80
Target : 92

Indian Markets Futures Trend Update - 12 January 2011

Nifty Futures
Swing : DOWN
SAR : 6000
Low risk entry : 5880
Target : 5680

Bank Nifty Futures
Swing : DOWN
SAR :11150
Low risk entry : 11000
Target :10650

ICICI Bank Futures
Swing : DOWN
SAR : 1065
Low risk entry : 1045
Target : 1005

Commodity Futures Trading Analysis Report - 11 January 2011

Gold Futures - February Contract
Swing : DOWN
SAR : 1384.50
Low risk entry : 1375
Target : 1354

Crude Oil Futures - February Contract
Swing : DOWN
SAR : 90.45
Low risk entry : 89.20
Target : 87.10

Indian Markets Futures Trend Update - 11 January 2011

Nifty Futures
Swing : DOWN
SAR : 6020
Low risk entry : 5920
Target : 5725

Bank Nifty Futures
Swing : DOWN
SAR :11324
Low risk entry : 11050
Target :10650

ICICI Bank Futures
Swing : DOWN
SAR : 1084
Low risk entry : 1050
Target : 1005

Smart money sell options...Really?

Check out the following articles.

1) Old Man & the Short Strangle - Aditya Birla Money

2) Shivraj Puri - Citibank

3) Nicholas "Nick" Leeson - Barings Bank

All the above three articles relate to option selling and how traders from what is commonly percieved as the "smart money" ie the institutional trading firms,ended messing up their company's finances and reputation.
It's a very common belief among traders that the people who sell options are the smartests in business.Why?because Options have time value.As option sellers get the option premium, they tend to profit during sideways market conditions as well.

Above mentioned traders probably traded with strong directional biases.They never had a plan and when strong trends picked up in the markets, they ended at the receiving end.
Which ever financial instrument you trade there is always a risk.Before you commit your money to a particular financial product, please be aware of its risk

Hope every one gets something to learn from the above articles and never get complacent with their short options trades.
Cheers

"But your technical analysis/ SYSTEM of SWING TRADING is MIND BLOWING."

I receieved this comment from "amruta" in the previous post.
*******************************
Hi Anuj,
I exited early in NIFTY,
But your technical analysis/ SYSTEM of SWING TRADING is MIND BLOWING.
Banknifty from SAR 11640 --- cmp ..10901 /++ 700 points down!!!!!
********************************
My reply and opinion

Thanks...but
I feel it's not the system but the trends in the markets that gives these kind of "mind blowing" returns.Check out these two post from the past.

http://financeandtradingmadeeasy.blogspot.com/2010/09/total-profits-till-date-nifty-340bank.html

http://financeandtradingmadeeasy.blogspot.com/2010/03/online-stock-trading-made-easy-lazy.html

Similar or better returns were made previously.Check the period mentioned in these previous posts with Nifty EOD chart and see how the markets moved during thosetimes.

In September when market went up like crazy.There was a very stong bias among the traders that Nifty will go down or sideways(there was a multi month channel resistance which every one was watching)
Two very important events happened one at Citibank and other at Aditya Birla Money (Check out this link)
These were related to options selling and a complete disragrd to trend following and risk management

We get these kind of trends a few times in an year.If we trade them successfully our returns will be better than any buy and hold also known as buy and hope...:) strategy (thanks to leverage and trading ie taking both long and short trades)
If we miss out the trades due to strong directional bias which is opposite to the trend(like in the September example) or early booking out of profits, it will make a significant impact(under performance) on our yearly returns

The early bird catcheth the worm ie success comes to those who prepare well and put in effort.

In short it's the trends in the markets that make money for us not the system.Any short term trend trading system would have given great returns during these three specific trends from the past 12 months.

Cheers

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