Opposite of Exciting? Answer: Trading

I am short on the Nifty with a stop at 5187. The short positions had been initiated at 5174 levels. The problem clearly is that despite being in the money by a significant amount I know I could lose it all if the market moves back up. Being a slave of MyTS I have no choice but to follow the rules of the system.

The world markets have all got very strongly correlated. So we have a situation where most indices in the world are trended down. Only Gold and Crude (on the basis of MyTS) are trended up. Dollar too. Copper and Silver are trended down.

The problem with any system that I have used has been the fact that the HIT ratio has been never more than 50%. It has infact normally ranged in the high 30s to the mid 40s in terms of percentage of the time that the system is right. I clearly depend on making more money when I am right and losing less money when I am wrong to make any money through this activity of trading. The only problem with this way of making money is that it is not a very exciting activity. I do not hit 10 baggers nor do I make any sexy calls to BUY right at the bottom of the move and never do I ever put a SELL call right at the top. In fact trading a system is the antithesis of exciting. It is actually dull and boring.

That is why you will find that I am an expert at a lot of computer games! My current favorite is Random potting on the Facebook.

Staying Power

As I write this note, Asia is up. S&P ended higher by another 1% and it is natural to assume that India should open up too. You know how Gordon Gekko says to young Bud Fox in the movie Wall Street "You had what it took to get into my office. The real question is whether got what it takes to stay there". In our case too we know the Indian markets can open up. The real question is whether it has got what it takes to stay there! We are currently short on the Nifty and have a stop now at 5193.

Yesterday, two assets changed their trends. Gold and Crude turned from SELLs to BUYs. Dollar remains a BUY. Other equity indices and commodities remain SELLs.

In the last couple of weeks there were a few things I missed writing about. Nothing more important than the 16th Grand Slam win of Federer. It boggles the mind when one realises that any player will need to be at the top of his game for 8 years at least to beat this record (assuming he wins 2 out of the 4 grand slams on an average every year).

The Party Goes On

I was going through my earlier Market Musings and realised what I was missing for the last couple of weeks. Those notes were so good and they felt so good to write!!! I think I need to revisit them and go back to capturing the mood of those notes.

I have a feeling that since I started doing the TABLE, the notes have become more and more difficult to write. It is almost as if the moment I started getting serious and started looking the world markets through the filter of my system, I have been unable to write my Market Musings.

But first about the world markets. Almost all asset classes are short currently as per MyTS. The Dollar Index is in an uptrend. This is the absolute opposite of what we were faced with in the second half of last calendar year when all asset classes were in an uptrend and the Dollar Index in a downtrend.

Remember the parties that we had when we were in college? After a few rounds of drinks people would be feeling really good. Invariably the drinks would run out but none would want such a great party to end. Some smart guy would know of a place where drinks could be found even during the late night hours and somehow the party would continue. This need to continue a party which should have logically ended would invariably result in excesses which stopped only when a few student's stomach refused to accept more alcohol.

But then those were the good old days because the worst that could happen even with lot of excesses would be a splitting hangover the next day. It is scary to imagine what happens when Govts across the world refuse to let parties end and run to get some more alcohol in the early hours of the morning. It would be great if the worst that can happen when these parties end is a splitting hangover.

Not a great way to restart Market Musings I am sure. I am still short the Nifty from 5174 levels and the stop and reverse levels for this short position is 5207 now.