Reblog: The 6 Stages Of A Trader’s Development Part 1


Stage One: The Clueless Trader

Image result for clueless trader

  1. Heard of a day trader making millions, or buying options is safe and can make you rich quickly
  2. Beginner Luck in first few trades.
  3. You will buy just to see the market reverse and you will short just as the market starts to rally. Someone is tracking my trades and making me lose money.
  4. Most of your trades are done emotionally. You buy just because the markets feel strong without any logical reason
  5. You have no clue how the mechanics and psychology of trading works. What’s worse? You are not aware that you don’t know.
  6. Most traders will blow their entire account multiple at this stage.
  7. Mostly you start your trading in fag end of bull market
  8. You will spend more time finding a broker charging least brokerage.Tracking World Markets, Bitcoins instead of making a trading plan for next day.
  9. A big majority of people will leave trading and blame the randomness of markets, or say markets are always manipulated
  10. You don’t know what is short selling or have never tried it, no idea of stop loss as well
  11. You are in the unconscious incompetence stage, at this stage, your capital is at maximum risk

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Reblog: How to Value Invest in a Bull Market: Advice From Irving Kahn


You might not be aware of him, but Irving Kahn is one of the best value investors to have ever lived.

Unlike other, more famous value investors, Kahn kept a relatively low profile during his career, but that does not mean his advice is any less relevant.

Born in 1905, Kahn’s investing career began in 1928. He continued value investing until his death a few years ago. Kahn was one of the few value investors who were able to learn from the godfather of value investing himself, Benjamin Graham. In fact, Kahn worked closely with Graham over his career, even assisting as Graham’s teaching assistant at Columbia University Business School. He went on to contribute to Graham’s bible on value investing, “Security Analysis,” by providing some statistical help.

Such a close relationship with Graham helped Kahn build his value mentality, and he was able to add to this base education over the course of his career as he rode through the peaks and troughs of the market.

Indeed, Kahn’s long life gave him an unrivaled knowledge of the market, stocks and trading psychology. Kahn’s career started in the days when it was not easy to find an undervalued equity; you had to do the hard work yourself:

“I understand that net-net stocks are not too common anymore, but today’s investors should not complain too much because there were only a handful of industries in which to look for stocks in the old days. Now there are so many different types of businesses in so many different countries that investors can easily find something. Besides, the Internet has made more information available. If you complain that you cannot find opportunities, then that means you either haven’t looked hard enough or you haven’t read broadly enough.”

Kahn wrote few thought pieces over his career but those he did pen are fascinating. In 2012, a letter to Kahn’s investors from himself was published on Bloomberg. It contained some advice on the state of the market and thoughts on the market rally that was in place since 2009:

“I’ve seen a lot of recoveries. I saw crash, recovery, World War II. A lot of economic decline and recovery. What’s different about this time is the huge amount of quote-unquote information. So many people watch financial TV—at bars, in the barber shop. This superfluity of information, all this static in the air.

There’s a huge number of people trading for themselves. You couldn’t do this before 1975, when commissions were fixed by law. It’s a hyperactivity that I never saw in the ’40s, ’50s, and ’60s. A commission used to cost you a hell of a lot; you couldn’t buy and sell the same thing 16 times a day.”

With many decades of experience behind him at this point, Kahn’s views on the level of trading being conducted by investors are fascinating. This was only a few years ago, and in that time trading volumes have picked up further still. If Kahn thought there was too much information around in 2012, what would he have thought today?

What was his advice at the time? Well, Kahn warned readers that, considering the level of the market and overtrading, it’s best to look to protect the downside, don’t take on too much risk and stick to the basics because you never know when the decline will come:

“You say you feel a recovery? Your feelings don’t count. The economy, the market: They don’t care about your feelings. Leave your feelings out of it. Buy the out-of-favor, the unpopular. Nobody can predict the market. Take that premise to heart and look to invest in dollar bills selling for 50¢. If you’re going to do your own research and investing, think value. Think downside risk. Think total return, with dividends tiding you over. We’re in a period of extraordinarily low rates—be careful with fixed income. Stay away from options. Look for securities to hold for three to five years with downside protection. You hope you’re in a recovery, but you don’t know for certain. The recovery could stall. Protect yourself.”

The original article is authored by Rupert Hargreaves and is available here.


Indices decline for 4th session on Friday, Sensex down 301 points


Benchmark indices declined for a fourth straight session on Friday, amid caution over uncertainty over the formation of government in Karnataka, developments in US-China trade negotiations and firm crude prices.

In a major political development, the Supreme Court held a hearing in the Karnataka government formation matter, directing that the Bharatiya Janata Party (BJP) leader and the state’s new chief minister, BS Yeddyurappa, must conduct the floor test on Saturday at 4 pm.

The S&P BSE Sensex ended at 34,848, down 301 points while the broader Nifty50 index settled at 10,605, down 78 points

Among sectoral indices, the Nifty Bank index fell as much as 0.6%, extending its drop into a third session. ICICI Bank declined 2.9%, while HDFC Bank slipped 0.8%.

The Nifty PSU Bank Index also shed 1.6%, in what could be its fourth consecutive session of fall, on continued concerns about disappointing quarterly results due to a jump in bad-loan provisions.
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Reblog: Calendar Spread Definition – Day Trading Terminology


Calendar spread is an options strategy that allows traders and investors to enter long and short positions simultaneously for the same underlying and strike price but different expiration dates.

Option traders can utilize calendar spreads as a way to get into a long position at a cheaper price by selling the other leg and bringing in a credit. As a result, the option trader has the choice of owning longer-term calls or puts for less money. Keep in mind that this strategy can be used with both calls or puts.

How To Trade A Calendar Spread

Calendar Spread

As said earlier, the calendar spread is an option trading strategy where a trader opens two legs with different expiring dates for the same security. In the picture above, you can see that we are selling the earlier expiration (aka the front month) in January and buying the longer expiration set for February. Your max loss on this trade is your net debit you paid to open the position while your max gain is theoretically unlimited.

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Reblog: The Secret Ingredient If You Want To Become A Full Time Trader – What Nobody Talks About


Looking back, I now realize that what allowed me to finally establish consistency into my trading was not a better trading strategy or a different method, but something I never expected when I started out as a trader.

In today’s society where the average attention span has dropped to 8 seconds, where 140 character tweets seem too long (#TLDR) and people skip YouTube videos after just a few seconds, we easily lose the connection to ourselves…

The concept of “self-awareness” has a woo woo ring to it and most traders will not listen to you if you start a trading conversation by referring to self-awareness. However, if you really want to make this work and if you want to finally realize your goal of becoming a pro trader, you have to listen and I am 100% certain that you will be able to relate to my story as well.

What is self-awareness? Forget the spiritual mumbo-jumbo

Unfortunately, most people, and especially traders who are often numbers driven and very rational, associate the term self-awareness with something spiritual and connect the wrong assumptions with it. This is very unfortunate because I have never met a successful trader who is not also very self-aware. You’ll see soon that self-awareness is something very different from what you believe it is.

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Sensex ends 289 points higher ahead of Karnataka polls


The markets ended higher on Friday ahead of the Karnataka Assembly elections. The southern state will vote on Saturday and the poll outcome will be known on May 15.

The S&P BSE Sensex ended at 35,536, up 289 points while the broader Nifty50 index settled at 10,807, up 90 points.

Among individual stocks, Asian Paints hit a record high on strong March-quarter results and was among the top contributors to index gains. Stock was the top gainer of the broader Nifty50 index.

Shares of Fortis Healthcare ended 3% lower at Rs 148 on the BSE, after the company said the board chooses the Hero Enterprises-Burman Family Office offer as the best for the hospital and diagnostic chain.

Shares of select pharmaceutical companies were under pressure, falling by up to 6% ahead of US President Donald Trump speech today about controlling prescription drug prices. Sun Pharmaceutical Industries slipped 6% to Rs 468 on the BSE in noon deal on back of heavy volumes. Novartis India, Marksans Pharma, Ajanta Pharma, Morepen Laboratories, Alkem Laboratories, Sun Pharma Advanced Research Company (SPARC) and Aarti Drugs were down in the range 3% to 4% on the BSE.

PC Jeweller on Thursday announced its board has approved buy-back of shares worth Rs 4.24 billion amid a sharp plunge in stock price in recent weeks. The shares will be bought back at Rs 350 per unit, which is 67 per cent higher than the closing price of Rs 209 apiece on the BSE on Thursday. Promoters will not participate in the buy-back process. In a regulatory filing, the jeweller said the board at its meeting held on Thursday considered and approved the buy-back of up to 1,21,14,286 fully paid-up equity shares of Rs 10 each.

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Reblog: How to Act in a Bear Market: Part 2


Last time, I wrote an article discussing a valuable piece of advice from Seth Klarman (Trades, Portfolio) on how to act in falling markets.

The key message of the article was that in a bear market, the best strategy to follow is to continue as you always have. As Klarman notes, “Controlling your process is absolutely crucial to long-term investment success in any market environment.” The last thing you should do is try to time the market:

“While it is always tempting to try to time the market and wait for the bottom to be reached (as if it would be obvious when it arrived), such a strategy has proven over the years to be deeply flawed…the price recovery from a bottom can be very swift. Therefore, an investor should put money to work amidst the throes of a bear market, appreciating that things will likely get worse before they get better.”

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Reblog: Review IndoStar Capital Finance Limited IPO


After a lull in the month of April 2018, long wait for main board IPO for financial year 18-19 is over with a non-banking finance company breaking the ice with its float of around Rs. 1850 crore. Details of the first main board IPO of this fiscal is given hereunder:

Indostar Capital Finance Ltd. (ICFL) is a leading non-banking finance company (“NBFC”) registered with the Reserve Bank of India as a systemically important non-deposit taking company. It is a professionally managed and institutionally owned organization which is primarily engaged in providing bespoke Indian Rupee denominated structured term financing solutions to corporate and loans to small and medium enterprise (“SME”) borrowers in India. ICFL recently expanded its portfolio to offer vehicle finance and housing finance products. Although, the company operated in a challenging credit environment in the initial years of our business operations business has experienced growth since the commencement of operations in 2011. Between fiscal 2013 and 2017, its total credit exposure, total revenue and net profits grew at a CAGR of 30.0%, 31.4% and 23.7% respectively. Its corporate lending business which was at 99.8% in FY 2015 declined to 76.8% for the period ended 31.12.17 and for the said periods, its SME lending business grew from 0.2% to 22.7%. Vehicle financing operations started from November 2017 and housing finance operations started from March 2018.

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Reblog: Seth Klarman: How to Act in a Bear Market


In today’s market, after nearly a decade of low volatility and steadily rising stock prices, it is easy to forget the turmoil that gripped the stock market, and the world, in 2008-09.

Even though a crash might seem a million miles away currently, you never know when the next decline might arrive, so it is always best to prepare for the worst. The best way to prepare is to read accounts of investors given at the time.

This will not give you answers as to when the next crash will arrive (all but impossible to predict), but it will provide a sort of template as to what goes on.

Learning from Klarman

One of the most fascinating accounts of investing during the crisis comes from Seth Klarman (Trades, Portfolio). In February 2009, Klarman wrote an article in Value Investor Insight titled, “The Value of Not Being Sure.” Within the article, he detailed how he was investing in the crisis and why he thinks fear is such a great motivator.

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Sensex ends below 35,000; metal, pharma stocks drag


Benchmark indices dropped on Friday tracking global markets, while metal and pharma stocks pulled down the indices ahead of elections in the key state of Karnataka.

The S&P BSE Sensex ended at 34,915, down 188 points while the broader Nifty50 index settled at 10,618, down 61 points.

Among sectoral indices, the Nifty Metal index was trading over 1% lower led by a fall in shares of Hindustan Zinc and Hindalco. The Nifty IT index, too, was down led by a fall in shares of Mindtree and Wipro. Among the FMCG counters, ITC, Emami, GSK Consumer slipped over 2% on the NSE.

Pharma stocks pushed both indices lower, with the Nifty Pharma index falling over 1.5%.

Bajaj Auto, Mahindra & Mahindra (M&M), ITC, Reliance Industries (RIL), Mahindra & Mahindra Financial Services (MMFS) and JSW Steel are the six stocks that Morgan Stanley is betting on in India to play its ‘growth at reasonable price’ (GARP) investment strategy.

An Indian jeweller that saw its market worth reach $3.6 billion at the start of the year is now floundering at about a quarter of that value after one of its founders gifted some shares to family members, raising concern about the company’s governance. PC Jeweller Ltd. slumped by about half after the company said last week that one of its founders P.C. Gupta made the gifts through off-market transactions. The stock has plunged 75 per cent from a record on January 19, taking its market capitalization to Rs 58.3 billion ($873 million). It climbed 21 per cent to Rs 146.85 as of 12.31 p.m. in Mumbai on Friday.

Realty firm Godrej Properties on Friday reported over two-fold jump in its consolidated net profit at Rs 1.41 billion for the January-March quarter of last financial year on higher sales. Its net profit stood at Rs 625.9 million in the year-ago period, the company said in a filing to the BSE.

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