TRADING PSYCHOLOGY 101

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If you’re new to the field and trying to make sense of it, good.
The charm of seeing numbers flickering on your screen can be exciting and shattering at the same time.

1. The ability to hold these emotions from the beginning will give you an edge.

When you’re just starting, it’s tempting. The thought of conquering it all in a day just gets imprinted on our brains. Because of this, the risk of overdoing pops in.

2. Stick with what works for you and keep adding in along the way.

3. Be self-aware. Know yourself and develop a system that tunes in with your personality and risk appetite.

Let’s say If you can manage many open positions and make adjustments at a quick pace, you might want to give scalping technique’s a shot.

On a similar note, if you feel that this is a hassle for you.
You can try swing trading techniques to lower the pressure and trade with a calm mind. It’s more of a mental game.

4. One aspect that we generally tend to ignore is out lifestyle and priorities.

If you’re in a job due to which you can’t be in front of your screen all the time, you might want to opt for strategies that make it trading possible for you under such constraints swing trading.
Any particular skill set will take time to master. So be responsible for each move you make and even if it goes wrong, try to learn from it.

5. Trading psychology > emotions.

We’re all human beings and the tendency of living in greed and fear sometimes overpowers and clouds our judgements and we make poor decisions.

6. Understand that it’s okay and hold yourself accountable for it.

The trick is to stay focused on what the market is telling you rather than what you’re telling the market to do.

7. Stay disciplined as it goes hand in hand with trading psychology
This enables you to stick to your strategy and risk management rules.

It can be tempting to deviate from your plan when the markets are going haywire but with the right mindset and discipline~ You’ll be able to ace it.

Keep a trade journal to work on your trading psychology.

This is a habit that must be started by traders from the very start.

This allows you to keep track of your profit and loss, trading decisions, trade strategies, and even the factors that influenced your decisions.

To conclude, Developing the right psychology is a long thorough process which includes repetition, review and continual improvement.

 

RISK MANAGEMENT

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“Risk is inseparable from return in the stock market arena.“

If risk can be managed, traders can open themselves up to making money in the market. It is an important but often overlooked pre-requisite to successful active trading.

Point being~ Anyone who has earned decent profit can lose it all in a split second without proper risk management. So how do we develop the best techniques to curb the risks of the market?

Let’s dive right in.

1. PLAN YOUR TRADES

It’s said~ Every battle is won before it is fought.

Having a plan & key pointers to focus on before executing a trade gives an edge.
~Does it meet the entry criteria?
~Is RR in favor?
~Does it fit in with the trend?

This helps to key emotions at bay.

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2. FOLLOW MARKET TREND

Markets are dynamic and constantly changing.

Identifying & riding the trend is one of the most rewarding strategy in itself to mitigate the risk.

Sometimes it’s a task to do so but once you get your hands on it, things will get simplified.

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3. PORTFOLIO DIVERSIFICATION

Making sure you make the most of your trading means never putting your eggs in one basket.

The diversified portfolio protects you from the market fluctuations in a specific sector or the specific company.

This ensures a balanced equation.

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4. ASSESS YOUR RISK TAKING CAPACITY

The markets are uncertain & you might end up loosing all your wealth due to one wrong trade.

You should assess your income sources & determine an amount which you feel you can trade with or invest to get saved from this blow-up.

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5. STOP-LOSS & TAKING PROFIT

Determine open & close position.

Stop Loss is the price at which a trader sells a stock & takes loss on the trade.

Taking Profit point is the price at which a trader sells a stock & takes profit on the trade.

These 2 factors are the key drivers of risk management.

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6. ONE % RULE

Even if everything goes wrong in a row & if we are risking just 1% of capital in each trade.

It’ll take 100 trades to lose it all.

Many traders lose entirely in just 5-7 trades.

They trade with position size way bigger than their risk management should allow.

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We should always know when we plan to enter or exit a trade before executing.

By using SL; We can minimize not only losses but also the number of times a trade is exited needlessly.

In conclusion, make your battle plan ahead of time so you’ll already know you’ve won the war.

TRADING PSYCHOLOGY

Posted on 0 Comments

If you’re new to the field and trying to make sense out of out, good.

The charm of seeing numbers flickering on your screen can be exciting and shattering at the same time.

The ability to hold these emotions from the beginning will give you an edge.

When you’re just starting, It’s tempting.

The thought of conquering it all in a day just gets imprinted on our brain. Because of this, The risk of overdoing pops in.

Stick with what works for you and keep adding in along the way.

Be self-aware. Know yourself and develop a system that tunes in with your personality and risk appetite.

Let’s say If you can manage many open positions and make adjustments at a quick pace, you might want to give scalping technique’s a shot.

On a similar note, If you feel that this is a hassle for you.

You can try swing trading technique’s to lower the pressure and trade with a calm mind. It’s more of a mental game.

One aspect that we generally tend to ignore is out lifestyle and priorities.

If you’re in a job due to which you can’t be in front of your screen all the time, you might want to opt for strategies that make it trading possible for you under such constraints swing trading.

Any particular skill set will take time to master. So be responsible for each move you make and even if it goes wrong, try to learn from it.

Trading psychology > emotions.

We’re all human beings and the tendency of living in greed and fear sometimes over powers and clouds our judgements and we make poor decisions.

Understand that it’s okay and hold your self accountable for it.

The trick is to stay focused on what the market is telling you rather than what you’re telling the market to do Stay disciplined as it goes hand in hand with trading psychology, as this enables you to stick to your strategy and risk management rules.

It can be tempting to deviate from your plan when the markets are going haywire but with the right mindset and discipline~ You’ll be able to ace it.

Keep a trade journal to work on your trading psychology.

This is a habit that must be started by traders from the very start.

This allows you to keep track of your profit and loss, trading decisions, trade strategies, and even the factors that influenced your decisions.

 

NYKAA IPO

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Key points

IPO Open Date~ Oct 28, 2021
IPO Close Date~ Nov 1, 2021
IPO Listing Date~ Nov 11, 2021
IPO Price~ ₹1085 to ₹1125 per equity share
Minimum application amount~ ₹13,500
Maximum application amount~ ₹189,000

Summary of financial Information (Restated Consolidated)


Loss making to marginal profitable company

Strengths:
1. Promoted by Nayar Family. Yes, Sanjay Nayar of KKR. Sanjay Nayar is the Chairman & CEO of the Indian arm of the private equity giant~ KKR.

Sanjay Knows this game of private equity & IPO like back of his hand. He has had many mega exits for KKR in last 10 years.

2. Lead managers
Because of Sanjay’s connections, lead managers are top banks with awesome track record of IPO listing.

Below is the list of lead managers:
1. Bofa Securities India Ltd
2. Citigroup Global Markets India Private Ltd
3. ICICI Securities Ltd
4. JM Financial Consultants Private Ltd
5. Kotak Mahindra Capital Company Limited
6. Morgan Stanley India Company Private Ltd

Lead managers are known for mega IPOs.

For example~ Morgan Stanley, BOFA, Citi were lead manager’s for Zomato, HDFC AMC & HDFC Life among others. That’s a icing on the cake for an IPO.

Things to consider before applying:

Today is the last day & IPO is already oversubscribed, So chances of allotment itself are very low. Also money will be stuck till refund which is on Nov 9,2021.

In spite of all the hype, employees have not shown much enthusiasm, that’s a sizeable flag for long term but not for listing gains.

Below is the subscription so far: Category Subscription (times)

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As a matter of fact; in many overhyped IPOs like Reliance power, overall market sentiment is prime for listing gains.

As yet, Nifty is in a back & forth momentum. Mid cap and small cap stocks have taken beating, left right & centre.

If market tanks further, IPO will tank on the very first minute of listing.

Overall a good bet if you are into the IPO game & are applying in many IPOs as a type of trade & you have the discipline to square off at the first hour of listing, even if at a damage.

Remember~ Hope is biggest enemy of IPO trader.

Position sizing in IPO is crucial, yes in IPO too.

So be ready for 30% dip from listing price [If any], that’s 3K loss per lot. Do consider your risk appetite before hopping right in.

If you have a capital of 1~2 Lacs, Just apply for 1 lot.

Capital protection is the pointer here, Allotment is secondary.

Also so many more IPOs are coming in next 10 days including Paytm, You need to keep the powder dry.

Happy Listing. Cheers!

What are the different types of analysis a trader must be conscious about?

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By the above statement different types of analysis, it simply means how a trader or investor estimates the future price movements as it is a high probability game not gambling. 

There are a large number of organizations who pay to Equity and derivative analysts to do the analysis for them and if they were gamblers those bankers would be picking anyone randomly from the streets and get the job done.

So, in this blog post we are going to learn about the different types of analysis one Trader or Investor must learn before diving into the stock markets. Have you guys ever wondered that how these big players earn constantly from the markets? The reason is they are good at analyzing and estimating the market movements and if you’ll look at their trading or investing style, you’ll find that they are masters at so many different kinds of methods which are available for everyone. 

The main goal of Trade Tales is to cut the noise and provide you with new and back tested modern methods of trading and investing so don’t forget you leave without scouting.

The different types of Analysis used by Traders and Investors are as follow-

1.Technical Analysis.

2.Fundamental Analysis.

3.Derivative Data Analysis.

Well, all of these are very vast methods so we’ll try to cover them in small parts with different blog posts but just to give you a glimpse about them let’s continue…

Technical Analysis is all about studying the charts and estimating the price movements solely based on what charting has to say. There are a lot of methods which are used by traders to anticipate such moves ex- Price action, Harmonics, Fibonacci, Elliot wave theory and much more. Some people often get confused when technical guys on their social media uses terms like RSI of ABC stock is 55, Stock might take support from the moving average 20 well all these are types of technical analysis indicators. In the past a lot of research has been done in this field and it has produced a lot of methods to trade Intraday, swing or even invest money solely based on technical analysis. 

But why does technical analysis work?? The answer to this question is “HISTORY REPEATS ITSELF”. Now what do I exactly mean by History repeats itself? So, in technical analysis basically we study the behavior of price action patterns in the past and how it played out after that because of the greed and fear we humans have. The way people reacted to those patterns because of Fear and Greed in the past we estimate that the same way they’ll react to it again as the psychology never changes only time does. 

Have a look at this Nifty 50’s chart how a previous channel breakout led to 2 years of Bull market and after that same thing happened over again in 2020 so what is your view about this chart do comment below. There is always a debate going on between technical analysts and fundamental analysts that technical analysis focuses on short time frames but here we can also estimate a long-term view as Technicals are somewhere displaying what fundamentals have to say. It basically depends on you what kind of analyst you aspire to become as both of them will definitely help you make money if you use the right approach.

Fundamental Analysis is a totally different approach from technical analysis as here the analyst has to study the business from various aspects like Demand supply scenario in the economy, peer comparisons, politics as one has to forecast a long-term view over the asset class in which the investor is interested. For short- term gains technical analysis is a much reliable method or one can adopt Techno – Funda analysis a mixture of both.  It’ll take you some time to get comfortable around Fundamental analysis as there are a lot of Data points which needs to be decoded to make a view over the markets. The basic knowledge about the business, financial reports, balance sheets, ratios etc. will get you started in Fundamental analysis.

Derivative Data Analysis is a completely different approach from both of these types of analysis and Traders are the ones who mostly prefer this type of analysis in sync with Technical analysis. Derivative data also called Futures and options data helps us on having a view that what are the big players doing in the market are they net sellers or buyers in the index future & options and stock futures & options. Further, more some people also use Open Interest to determine the support and resistance levels based on OI data. We’ve discussed about derivative data analysis in detail click here-

So, these were the main types of analysis a Trader and Investor must learn before starting their expedition in the stock markets and if you go through them slowly and nicely, you’ll be able to figure out which type of trader you are. 

Types of Traders- 

 

 

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