Option Traders:Avoid this mistake Part-I

In this article I’ve analyzed  common option trading mistakes. Options are by nature a more complex than simply buying and selling stocks. For example, when you buy options, not only do you have to be right about the direction of the move, you also have to be right about the timing.Also, options tend to be less liquid than stocks. So trading them may involve larger spreads between the bid and ask prices, which will increase your costs. Finally, the value of an option is made of many variables, including the price of the underlying stock or index, its volatility, its dividends (if any), changing interest rates, and as with any market, supply and demand.Option trading is not something you want to do if you just fell off the turnip truck. But when used properly, options allow investors to gain better control over the risks and rewards depending on their forecast for the stock. No matter if your forecast is bullish, bearish or neutral there’s an option strategy that can be profitable if your outlook is correct.

Mistake 1: Starting out by buying out-of-the-money (OTM) call options

It seems like a good place to start: buy a call option and see if you can pick a winner. Buying calls may feel safe because it matches the pattern you’re used to following as an equity trader: buy low, sell high. Many veteran equities traders began and learned to profit in the same way.
However, buying OTM calls outright is one of the hardest ways to make money consistently in the options world. If you limit yourself to this strategy, you may find yourself losing money consistently and not learning very much in the process. Consider jump-starting your options education by learning a few other strategies, and improve your potential to earn solid returns as you build your knowledge.

What’s wrong with just buying calls?

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Nifty May Expiry Forecast

• FII's bought 19.3K contract of Index Futures worth 714 cores (34.6 K  longs were added and  15.3 K shorts were added in Index Future) with net OI increasing by 50  K contracts.FII's went aggressively long in Index Futures, are they preparing themselves for RBI policy on 3 June.

Nifty is forming a triangle on daily charts, height of triangle comes at 434 points. Now to complete the triangle formation market has to give one rally on upside nea

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Is Trading the most difficult profession ?

In this cutthroat world we live in, we often follow the motto, "The ends justify the means." Blind ambition, self-sacrifice, and extreme self-control are valued. If you can work tirelessly, wait long enough, and quickly recover from endless setbacks, you'll be one of the select few who survive and reap the rewards. It's true in many walks of life and it's true in the competitive world of trading. Trading is difficult. Of the many that try, few realize enduring success.
To be successful as a trader, you must be willing to do whatever it takes, no matter how exasperating. The risks and sacrifices are many. You may not be able to spend as much time with your family as you prefer. You might have to work extra jobs to build up capital and pay for trading expenses. It is often necessary to focus exclusively on trading. You can't be wishy-washy. Only the persistent and dedicated will survive. But in the final analysis, you must ask yourself if the ends justify the means.
It's possible to make huge profits in trading. The difficulty is surviving. Many of the "Market Wizards" from the 1980s, for example, aren't in the business today. You can be at the top of your game one year, and looking for a new profession the next. Survival is important. What's the sense of reaching the status of a master trader if you just burn out after a year? It's an unpleasant truth. Few achieve lasting success, and of those that do, many traders burn out. The stress is enormous. Your money and ego

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Apollo, Havells and Tech M trading strategy

Apollo Hospital

Any close above 932 stock is heading towards 953 and 964

Buy above 924 Tgt

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Nifty forming triangle, FII data Analysis

• FII's bought 187 contract of Index Futures worth 15 cores (2.1 K  longs were added and  1.9 K shorts were added in Index Future) with net OI increasing by 4.1  K contracts.FII's playing for range bound moves till expiry.

Nifty is forming a triangle on daily charts, height of triangle comes at 434 points. Now to complete the triangle formation market has to give one rally on upside near

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Let Market be your boss

• LET THE MARKET BE YOUR BOSS. Hold your opinions loosely and your discipline tightly. Trade in the direction of the trend for your time frame. Be quick to admit when you are wrong but hold your winners for as long as they keep going in your favor.

• You stop trading your plan and start “shooting from the hip” you are losing or winning so you believe that you are above your own rules, you start trading your opinions instead of your plan.

• STAY DISCIPLINED AND ONLY TRADE YOUR METHOD. If you do not have a robust system, method, or strategy do not trade again until you have one.

• You are about to take a trade you are 100% sure of, you have no doubt that it will work out. Trades that feel good to do and feel like can’t lose trades rarely win because everyone is already positioned in those trades.

When you ignore your first stop............

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Nifty Weekly Analysis for May Expiry

Last Week we gave Chopad level of 6873, Nifty did 1 target on upside and 1 target on downside .Lets analyze how to trade Nifty before Modiji PM swearing ceremony and expiry week.

Nifty Hourly Chart

Nifty Hourly charts has given a breakout above 7320 and now heading towards 7414 and 7500.

Nifty Elliot Wave Analysis

As per EW analysis it shows short term correction is over till

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Bank Nifty Weekly Analysis for May Expiry

Bank Nifty will be on traders radar next week, with announcement of new FM, Bank Nifty will likely to see a good trending move.

Bank Nifty Hourly

Bank Nifty hourly charts is poised for a breakout above 15320 for a traget of 15750.

Bank Nifty Daily Elliot Wave Analysis

Bank Nifty on daily chart as per Elliot wave gives a target of

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Mistakes Option Traders Make

“Fish see the bait, but not the hook; men see the profit, but not the peril.“
Options are both one of the greatest wealth building tools ever created and a quick way to lose all your trading capital if you over leverage and disregard the odds of your trade. Options can literally go to zero or up 1000%. They can be used to over leverage and blow up your account or can be tools for asymmetric risk management by only deploying small amounts of capital but capturing full moves in your favor.
Today let me discuss the  biggest pitfalls traders may encounter if they are not familiar with how options work.

•  New option traders buy out-of-the-money options without fully understanding how far the odds are stacked against them. If the delta is only .10 on your option then you have less than a 1 in 10 chance of your option expiring in the money. This is not trading, this is gambling, always try to be the casino and not the gambler. There are much better odds with at-the-money and in-the-money options. Save out-of-the-money for very high probability set ups Eg. Election Results

 Many new to options do not understand that you can not trade options on all stocks, only a few have liquid options. You need option trading volume to create liquidity so the options have a tight bid/ask spread. It is not wise to trade illiquid options because you can lose 10% or more of your capital

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FII Data Analysis for 22 May

• FII's bought 10707 contract of Index Futures worth 394 cores (12.4 K  longs were added and  1.7 K shorts were added in Index Future) with net OI increasing by 14.1  K contracts.FII's are going long in Index Futures.

Nifty Hourly chart has formed a pennant pattern which suggests a breakout/breakdown is round the corner. As its Bull market the emphasize lies on breakout on upside. 7320 should be broken for nifty to move toward

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Best Practices For Traders

Keeping risk-taking down until you see markets clearly- Losing small and gaining big is what makes for excellent risk-adjusted returns.  Accepting that you’re not seeing things well is half the battle.  By continuing to actively engage markets in small size, you give yourself an opportunity to regain perspective.  Trading larger or more often out of the frustration of losing is a recipe for disaster.
*  Focusing on yourself - Very often, losses occur because market patterns have changed.  Slumps occur because your mindset has changed.  By working on yourself before you go hard at markets, you place yourself in an optimal mindset to press your advantage


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How to deal with Stress during trading

Recently During my training session trader asked me the following question:

How to cope and manage the stress that comes with trading. I have been able to cope with the stress for a while now, but in times of market volatility I have more trouble with dealing with stress and it spilling over into my personal life.
It's a great question; let's tackle it first by clarifying our terms.
Stress is the result of challenge.  When I lift 5 Kg more than my normal workout weight in the gym, I create stress for my body.  Distress is a breakdown resulting from a poorly managed stress.  If I try to lift twice my normal weight, I can damage muscles: that is distress.
Or, to take another example, If I want to take a vacation.  either I could go to a familiar location like Goa  and have a relaxing week.  That would be stress free.  Or we could go to Himalayas , navigate cold

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Nifty FII Data Analysis for 20 May

• FII's bought 16231 contract of Index Futures worth 581 cores (39.4 K  longs were added and 23.2 K shorts were added in Index Future) with net OI increasing by 62.6 K contracts.

I firmly believe stock market work on historical price pattern, thats why i always analyze what has happened in past event. We did an exhaustive analysis on past election which gave a clear picture of bullish move coming, Now many traders are asking has Nifty formed short term top and going down. I did analyze how nifty reacted after

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Nifty trading stratergy for Election day

• FII's bought 6428 contract of Index Futures worth 232 cores (9.3 K  longs were added and 2.9 K shorts were added in Index Future) with net OI increasing by 12.2 K contracts. So FII's going on D day with positive bias.

Nifty continued with its consolidation before the D-Day Today was a perfect day of consolidation after 3 days of run up, Breakout of this range comes above 6172 and breakdown below 6067. Price Action is

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Nifty close above 7100, Elliot wave analysis

• FII's bought  42023  contract of Index Futures worth 1500 cores (50.3 K  longs were added and 8.2 K shorts were added in Index Future) with net OI increasing by 58.5 K contracts.FII's were big buyers today once exit polls were out yesterday.

Nifty continued its run and very comfortably closed above 7100, How far this run can go Is 8000 on cards , Will we see a panic decline, Will be again go back to 6700 odd levels are the question asked by traders to me. My answer I have shared my analysis using Elliot wave showing target of 7229, As per Harmonic pattern  around

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Manage Your Stress to Manage Your Trades

Raju couldn’t believe what was happening. Actually, the trade began on a positive note, as per his analysis.
He had seen what he thought was a price pattern; an ascending triangle, which looked to hit the top of the resistance line several times and the bottom trend line was about to touch. He heard herself say, “This is about to break up.”
He entered long believing that this continuation pattern was “definitely” on its way up so as usual he would keep a mental stop and that a mechanical stop wasn’t necessary. After order got executed, the price action did venture upward for a while, Raju was more confident in her decision and was patting the back for taking the right trade.
But, then the price action hit a supply zone that had not been identified or anticipated and it began to drop. In fact, the plummet of the price happened so fast that He felt herself become quite confused as to what to do. He began to panic as the tick dropped straight down leaving his stomach in knots along with feeling fragmented, frustrated and frazzled. Furthermore, his heart began to race,felt tension throughout his body. He tried to manage the trade by determining where to put in a stop order to liquidate the position, but He found himself frozen with the fear of losing so much money; but additionally He also loathed the thought of staying in as He was gripped by another fear of being really stupid. his brain was caught in a deluge of stress related brain/body chemicals that distorted his judgment and distracted his thinking.
Stress is a natural part of living; but when you are caught in a highly stressful situation your brain begins to release a number of neurotransmitters, hormones, peptides and other che

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Nifty closes above 7000, How FII's are building position

• FII's sold 7265 contract of Index Futures worth 258 cores (4.8 K  longs were squared off and 2.3 K shorts were added in Index Future) with net OI decreasing by 2.4 K contracts.FII's were square off more today.

• This is what we discussed in  past analysis As per classic TA Bulls market take support at 50% or 61.8% which in our case is 6587 for bounceback. To test of Bull market will be seen in next 2 trading session. As per EW if 6580-6618 is strong support zone holding the same we can see 7000-7200 levels. Nifty made a history today by closing above 7000, Tomorrow looking at exit poll reaction SGX trading at 6174 suggesting gap of 150-200 points on cards, Near 7220-7250 range traders should book some profit.
  

     Time taken by Nifty to cross

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Profitable - Trading Concepts

Every day money  flow from trader to trader, from market to market. Many traders are just happy to dip their bucket in and take a share each day for themselves. But where does the money flow? Every day options lose time value, options sellers blow up, shorts cover for a loss, trends take place, people lose, people win, but who walks away with the pocket full of cash. When the stock market crashes their are people sitting in cash that kept their profits and short sellers making more money. On the day options expire there are many option buyers that are holding worthless options and others forced to buy them back for a loss. Opportunities abound, who are the 10% who consistently capitalize on these opportunities?

•     Capital flows from those who fight trends to those who follow them.

•     In the long term money flows to those who manage risk and are able to hold on to their profits from those who don’t manage risk.

    Traders that persevere through the

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Bank Nifty Weekly Analysis before Exit poll and Lok Sabha election results

Nifty has gained 38 % since Sept. 13 when NaMo was officially anointed as Prime ministerial candidate. Exit poll and outcome of the election. IIP, WPI and CPI data due next week. Lets analyze how to trade Bank Nifty before the Lok Sabha election results.

Bank Nifty Hourly Elliot Wave Analysis

Bank Nifty hourly charts is shown with Short term Elliot wave analysis,Initial Target of this upmove comes around 13950-14000.

Bank Nifty Daily

Bank Nifty on daily chart was constantly taking support at its

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Nifty Weekly Analysis before Exit poll and Lok Sabha election results

Last Week we gave Chopad level of 6726, Nifty did 2 target on upside and 1 target on downside .Nifty has gained 17 % since Sept. 13 when NaMo was officially anointed as Prime ministerial candidate. Exit poll and outcome of the election. IIP, WPI and CPI data due next week. Lets analyze how to trade Nifty before the Lok Sabha election results.

Nifty Hourly Chart

Nifty Hourly charts took a flying start as soon at 6700 got broken and reached new high. Hourly chart shows potential to up till 6946 on MOnday.

Nifty Elliot Wave Analysis

As per EW analysis it shows short term correction is over till 6640 is not broken and bounce back till

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Circuit Limit for NIFTY

The index-based market-wide circuit breaker system applies at 3 stages of the index movement, either way viz. at 10%, 15% and 20%. These circuit breakers when triggered bring about a coordinated trading halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by movement of either the BSE Sensex or the NSE CNX Nifty, whichever is breached earlier.
The market shall re-open, after index based market-wide circuit filter breach, with a pre-open call auction session. The extent of duration of the market halt and pre-open session is as given below:

Trigger limit	Trigger time	Market halt duration	Pre-open call auction session post market halt
10%	Before 1:00 pm.	45 Minutes	15 Minutes
	At or after 1:00 pm upto 2.30 pm	15 Minutes	15 Minutes
	At or after 2.30 pm	No halt	Not applicable
15%	Before 1 pm	1 hour 45 minutes	15 Minutes

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2014 Lok Sabha Election:Can NDA win 272 seats, Political Analysis

Lok Sabha Election results will be out of 16 May. Lets discuss the possibility of NDA gaining the magic Figure of 272
The NDA performance in 2009 election was  BJP (116 Lok Sabha seats), Shiv Sena (11) and Shiromani Akali Dal (4). To achieve the magic figure of It must more than double its present seat-tally to reach the half-way mark. This means raising its percentage-share of the national vote from 21.2 to over 30.
This is a far bigger task than the highest jump in seats and votes ever achieved by the BJP, when it rose from 161 seats and 20.3 percent (1996) to 182 seats and 25.6 percent (1998) and collected enough allies to form an opportunist coalition.
For the NDA to come to power in 2014, the BJP must win about 200 (if not 210-220) Lok Sabha seats to create a nucleus around which smaller parties can coalesce and form a winning alliance. NDA is now again of 25 parties which has done pre -poll alliance.
Winning 200-220 seats, up from 116, is a tall order. So where can the seats come from?
BJP’s success will hinge primarily on making huge gains in three major states—Uttar Pradesh (80 seats), Bihar (40) and Maharashtra (48).
In addition, the BJP must further improve on its

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FII FnO data analysis for 09 May

• FII's sold 8987 contract of Index Futures worth 300 cores (11.2 K  longs were squared off and 2.2 K shorts were squared off in Index Future) with net OI decreasing by 13.4 K contracts.FII's were square off more today.

 6656 got broken and Nifty moves down to 6638 which is near 50% Fibo retracement. Any break below 6638 support exit at 6618 and 6580 As per classic TA Bulls market take support at

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Nifty ready for Big move, FII data Analysis

• FII's sold 13139 contract of Index Futures worth 444 cores (10.1 K  longs were squared off  and 3 K shorts were added in Index Future) with net OI decreasing by 7 K contracts. So today's FII's first time in the series added substantial amount of longs in index futures.

Nifty closed below its 20 DMA for 5 day in row which is bearish in short term, but momentum is missing on downside suggesting bears are unable to capitalize on the downside. As per time analysis  bulls will make a rally of...

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FII FnO Data Analysis for 06 May

• FII's bought 2668 contract of Index Futures worth 86 cores (5.7 K  longs were added and 3 K shorts were added in Index Future) with net OI increasing by 2.6 K contracts. So today's FII's first time in the series added substantial amount of longs in index futures.

Nifty closed below its 20 DMA for 4 day in row which is bearish in short term, but momentum is missing on downside suggesting bears are unable to capitalize on the downside. As per time analysis  bulls will make a...

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Nifty Harmonic pattern and Crab Pattern Analysis

Lets analyze Nifty future move for May month using Harmonic pattern using AB=CD and Crab Pattern.

Nifty Harmonic pattern

The Harmonic pattern bearish AB = CD formation

1.  AB leg is from 5118 to 6415 took 16 Weeks to form with a rally of 1313 points.
2. BC leg is from 6415 to 5933 (which is 38.2% retracement of 5119 to 6415)
3. CD leg will take another

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FII FnO Data Analysis for 02 May

• FII's sold 7936 contract of Index Futures worth 267 cores (963 longs were added and 8.8 K shorts were added in Index Future) with net OI increasing by 9.8 K contracts. So today's FII's continued adding shorts in Index future.

Nifty closed below its 20 DMA for 2 day in row which is bearish in short term, As discussed in last analysis  Elliot wave  give target if 6675 , Nifty made a low of 6656 and bounce back. As per latest EW analysis if 6640 is not broken we can see bounceback till

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Rules for Successful Trading

1). Preparation
Once you get your trading system and position size in place you must use the amount you will risk on each trade to determine your risk of ruin. If your risk of ruin is not zero then you will eventually blow out your account. Risking 1% to 2% of your capital in any one trade usually gives you a zero percent risk of ruin but it also depends on your systems win/loss ratio. But the point is to test any system with a minimum of 30 trades first then determine your risk of ruin. I would advise a larger sample size in multiple market environments a trend following system that looks brilliant in a trending market may result in a 50% draw down in a choppy or range bound market.

2). Enlightenment
Your most important goal is to lower your risk ruin to zero. In trading, the trader with the best ability to cut losses short wins. Simple trading strategies work the best based on traditional support and resistance levels while trading with the trend on either reversals or break outs. The 10% of winning traders in the market win by treading where others fear, buying on break outs when they first occur and going short when a new low is made, or buying into key reversals when a security finds support or resistance and reverses at the end of a monster trend.

3). Developing a

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