Friday, 12 October 2012

Weekend Special (13-14 Oct 12)


I have started putting some text on it. Would be good if interested people can go Wiki and read the definition of "What is FNO" & "What is hedge" & "What is Technical Analysis"

So discussion point is FNO, Hedge and Technical Analysis as people who knows me for a long knew it very well I am against above all (when it comes to fully depend on any of it). And this series (also Sept.) and today is an excellent example to convey my message.

As went through various message today across different forum and 90% people are talking they have loosed huge money in Infy today. Even check TM board on MCB too, now people are giving guidance once they burnt their fingers. Experience come only through mistakes. :)

Lets see who can catch it (though both was too tired that time) - 

Jimmy Wales, USA, Co-Founder & Promoter of world's no. 1 website - wikipedia
Sandeep Kumar, Mumbai, Founder & Promoter of Brand MudraGuru

Event - MG with Jimmy Wales in Hotel Taj during his India visit, just 2 days prior to Barack Obama's Mumbai visit, & stayed at Taj. Spent a day with him from 11 to 11, while it was difficult for most of person even to meet him.

Good work by all for guessing.

Have Great Weekend.

========== LETS START WITH F&O ==========

Dear All,
Instead of repeated advice & suggestion you are burning fingers with Options. Options are very tricky, you can understand it in simple terms as – Options are like a top spin ball which seems so easy and we feel that we can hit a six, yes if hit correctly could be a six but if missed in calculations then Duck.

I personally experienced that (in traders category) it specially attract defeated players (mean people who have lost good amount in stock market) and then they think that now they can’t cover those losses without FNO because equity will take a long time to recover their losses and they don’t have patience for such a long period. So here I would like to emphasize that FNO are not for impatience people, they will never earn in FNO, and they can make few deals but not result.

Take it this way – Before entering to trade, one need to decide for what he/she is here, i.e. wither he want to play Test Match or One Day or T-20.

Most of players like to play One day, that’s correct, T-20 is also going famous. Well we consider One day. You need to make 250 runs to win (which is your TG in stock market, where everyone come with a dream that he/she will earn xyz amount in xyz days). Now if you are going to play one day then you need proper strategy, that who will open the inning, who will play like Sehwag, who will play like Dravid etc.

But people forget all the rules and just start playing like K Shrikanth or Bhajji, i.e. they want to hit six on every ball, they want to make world record in a single day. Good, then what will be the result? 5 over 5-7 wickets down. Then what? After losing almost all they looks like chasing to 10-15 RPO (runs per over) but we always forget the real mystery that now we dont have sufficient wicket (amount to put on risk) to put on risk, and finally they lose the match. Again after a break they collect confidence and come to trade again, this time they think they will play T20, i.e. either six or out. So this is the process which continuously swallowing the innocent (yes but greedy or say impatience) traders.

In short for unknown people who don’t know few simple basics of derivatives this term FNO is like a ANAKONDA for them. In fact I too make wrong deals in Options and that's remain most of time careful. And more importantly biggest mistake we do is - Once its go up we fall under temptation (greed) and forget basics of stocks and start wishing that it will give you 5X – 10X return, that’s the point and in next 2-3 sessions it convert loss.

Remember there’s no mathematics for this, it’s not market of 90s, its 2012 (Digital world, trades done on single click, within fraction of second SL get hit), its era of tricks, no moral, fake data presentation, loot are few words to define few big crocos of stock market. It do not run on Technical Fundamental (it work in equities and not in derivatives) it run only on how much they can earn by putting down a stock or how much by pulling up the stock, why? Because they know Options are just for a certain period of time while stock – one can hold till hundreds of year or say till company is alive. So lets we try to have a look on what the hell this FNO is.

What is FNO (Futures & Options) Trading –

Derivative trading is also a type of investment which you can do similar as Equity (but you need to register your trade account for doing trade in FNO, your broker do all formalities, you just need to sign separate form for it) at the stock exchange. We buy stock in derivative trading (either future or options) in lot. Like in Equity you are free to buy any no. of Equity but its not case in FNO. FNO comes with a particular lot size (lot size depend on the market cap and decided by NSE according to their formula for calculation, i.e. lot value require a sum of a certain amount), so in short, in FNO you need to buy certain no. of contracts of that stock (lot size) and you can multiple your buying in lot size. This contract comes with a time frame that means you have to sell that stock within that stipulated time frame.

What above info give a thought or say word of wisdom? This mean you need knowledge of that stock’s movement for that time frame, mean, you should know that in that time frame where the stock will go. Like Current series expiry is Sept 28 to Oct. 25 and suppose your stock is Dabur India, on 28 Sept it was opened at 124.25, now you need to study of various facts and moves of this stock till Oct. 25, i.e. now you need to get clue through your study that where this stock will be on 25 Oct. (long view), or say where it can go till 12 Oct. (mid view) or say where it can go on 5 Oct. (short view) or on Intraday basis.

This study is require before entering to FNO because first of all you do not pay the actual price to buy such no. of contracts of stock, you just pay a premium (say only 20%-30%) for that contract and not actual price. So, when time passes premium of Derivatives reduces (regardless of in which direction stock is going). It always calculated on time frame & volatility.
==== TO BE CONTINUED... ===


  1. Sir , Who's the other person in this snap??

    1. Yar everything you wanna readymade? sometimes homemade is also good. Wait for Sunday, lets have a look what other say.

    2. last time just buying put worked very well, but this time hedging screwed up like anything.. as they have manipulated the stock showing the strength.

  2. I made good profit wth infy pe 2450@90, sold at 128. I mentioned MB discussion also. MMB messager also u can check. As i expect coming banks will rock n stage. Bull perform better again.

    1. Great Venkata - ultimate aim is to grab our money from big crocos - I personally congrats you for your winning skill. Keep it up.

  3. Hi sir, I know-the first one with pink shirt is you, but the other one with the black t shirt- the face I cannot realize, but its true- I saw the face somewhere-really I feel like so...Anyhow eagerly waiting the other people's response, same the time your's too..And the subject for me its a nice one since I am new to trading...Anyhow I am trying to get more knowledge especially the three terms -FNO,Hedge and Technical analysis.Meantime looking forward for more knowledge from you too...I can tell you with 100% confidence that you are the one who share me the best ever knowledge related with share market.But I Know I did not give you any Guru Dakshina!!Ha Ha...Anyway today and tomorrow for us(I am from dubai) its weekend.For all the friends who are there in this blog, "CHEEEEEERS......"FRIENDS....Lets celebrate, thanks once again saabji for all your support especially your kind heart.God Bless....

  4. Mudraji,
    Would you like to give any clue?

  5. Saabji, pls provide us a clue...Lets try to find out...?

  6. Hei Arka and Don, personally dont know about you guys,though from your comments and replays can understand something...I think Don is sharing some amazing/interestings news through the blog, is nt it Arka bhai...?

  7. Hi, Thanks for generating interest. Clue is already there, you just need to get it in smart way, else on result day you will say "Oh! Shit!, we could get it"

  8. OMG!!!! I got it for sure.... JW .....Sir I am not disclosing his name now.....But I think you have got my clue also....isnt it Sir???(Well I hv already mentioned his initials:))

    But Sir how did you meet him?

    friends who are trying to get clue..... interested people can go searching the founder.....enough clue...:)

    1. In this world of google,getting to know some one is so easy and ur giving the initials was suffice enuf so Cheers for MG and JW!!!

  9. Arka, founder of what...?JW-what it means, I am new to this field,as you know-so pls, next clue?But saabji given us a clue, Results....?Anyway i have no idea...

  10. this is not related with this field....its general field....try to match lines of MG Sir and My last post' will get it....:)

  11. Sir are you checking the poll result???....expectation by most of us were on the wrong side...out of 70 votes only 19 were all 51 were on wrong side....

    1. Subject very much connected to polls, read lines - "when option go up we start thinking in single direction and fall under temptation that it will go up and up..." operators take advantage of such greed or say of such hopes.

      Same has happened with polls, after seeing Sept. in GREEN we fall under temptation and thought its going to make new high, while on first post of current series I guess it seems to be a 200pt series or max 250 which comes true as on 12. Even you had asked why its 12. Now see why it was 12.

    2. Dear MG Sir, The Photo I can identify,what you are doing here in this blog is similar to what he has done for the world. You are sharing your knowledge and wisdom and make people like Don to contribute their lot here in this blog. I salute both of you.

  12. Sir,I also found that person.the similar thing bt u and that person is both are helping people without any intention for profit.

  13. Hi MG,

    I don't recognise the other person but i recongnise you. We need you more than any other expert. You spent your valuable time replying to each mail. This shows your greatness and politeness.
    God Bless you.

  14. Hey - you all really doing great job. Arka has started breaking cues and then Thankachen and Pradeep. Lets see still people get it or not.

    Thanks again for showing your trust for me. As soon as I will get time will continue to add text on subject.

    I was thinking a long to discuss the but was not getting time to compose such a long text, well we have started it is good and will continue over next few weekends till its not finished. Read the subject with great interest, I am sure for many of you it will guide in future for FNO trade in a different way.

  15. Dear Pradeepji, I have different thought, rather than to make a NGO to do backseat ghotalas, I want to continue as profitable business. Till you will also not grow you can't put your financial worries aside and can't continue with charity for long. To my better view if you are genuine then nothing harm in to take it as business because this way you will atleast know that you have to give best in return. (Like what so called popular paid call services wont do)

    Like I also want to stand a Business NGO which can help people for their day to day life issues. Once you put stamp of NFO, they start getting aids and tax benefit and many more advantages, very few of them working genuine. (Read stories of women and child shelters, beggers and recent corruptions in NGOs)

    1. This comment has been removed by the author.

  16. Hello sir ,
    good info.

    Lesson learnt from yesterdays trade

    Sir , in technical analysis it is said that buy a scrip which makes 52 week high and sell a scrip which hits 52 week low .
    I am amazed to this analysis as , the scrip hitting 52 week high should become UNLIMITED and with 52 week low should become ANDA (0).
    Would like your comment on it.

    Yes recognized the person besides you , is famous for his work .

    Hi , friends ( Thankachen , Ashfak N , Arka Prabha De )
    I am just sharing my view and info which I get .
    By sharing knowledge it increases and we get to know short comings in us when people react to it.

    Golden rule ---
    There is a saying in Marathi (i cant write it as every one cant understand Marathi)
    It means - during flood the trees which are straight and doesn't bend in direction of flow of water ,
    get uprooted , but small trees which are flexible and bend stay unharmed.
    Moral --- don't go against mkt direction (until you are confident) but with its flow .

    Thank you.

    1. Dear Don & All,

      Its always advisable to make your port folio with different themes, it should be like what when you went to go for shopping your monthly grocery shop. There you need every items. Same rule is applicable, rather than to make all position in single stock - always make positions in different stocks, even in different segament - like dont rely only on Auto, make your reach into various sectors like Infra, Auto, Banks etc. This way, if due to some lake of policy reform any one sector go to dip another sector's grow will help you to maintain your portfolio alive. This is what I do in general. And believe it or not, it work far better than so called strategy.

      Don also well said (which I had mentioned many times) - dont go against the wave, always swim with flow else you will be kicked out you wouldn't come to know that now you are out of race.

      Good Luck

  17. Sir, You are doing amazing work!!
    Keep up the good work!!

  18. It is all well said but how to know the market current.

    One more thing .... should we buy in rising market or falling market.?

    I feel that both are correct if we judge the entry point correctly. One should buy in the beginning of rising market while in falling market one should buy at the end, but beginning and end are real puzzles.

    A man in the market like us asked a expert ... Sir, how do you make money in the market, please teach me also.

    Expert ... very simple it is .. buy at low and sell at high.

    He went in the market with new vigour and will, he passed 9.15 to 3.30 there but could not do any thing. He again went to the expert.

    Expert.. must have earned lot today.?

    Person ... No sir. I could not do any thing. I was always puzzled. Please tell me how to know which is the low and high point.

    Expert .. Oh, that. I am here for the last 20 years, but still could not know and trying to learn.

    1. Dear Rajvanshiji,

      Very well explain, yes its true but we people never expect this fact, we always think expert have good knowledge of level, that why when market start falling, experts come up with many low range TG and suddenly mkt start climbing, they just come up with higher TGs. Becoz even Diego Maradona wasn't aware that he will be able to hold the ball next moment or not.

      Thanks for sharing nice info.

  19. hi sir,
    Ofcourse,Every body wants to grow.Like even for taking this board to next level, money is needed.Also i feel if we do something as a business then only we will have the drive to get the very best.

    I think i joined this blog as 2nd or 3rd follower,the way you transformed the blog was great.Now people like Don sharing info, it has become a wonderful place for learning and making profits.I also remember when somebody posted a call, you also said " In future this place will transform into a place only for making profits".

    Personally i feel,the way you give space for the members and make us feel it's our place was something great and i don't think that every one will do.

    Your explanation of FNO by comparing with cricket was interesting.Bcoz people will easily understand anything when it's explained with examples.

    I know stock trading from my age of 14 by seeing my dad.But i'm very much new to FNO.Before 2 months, every night i used to google to learn what is FNO?? and related things.

    Still i don't have clear idea about things like hedging,How they are determining support and resistance levels??How the volatility is calculated?? etc.,

    I also can't understand how they are interpreting patterns from candle stick charts and using the chart details to detrmine market movement.

    Even you said you don't believe in charts and using charts only for Exiting the stock at correct price. I also feel the same way,that market runs on current news and not on charts.

    But i want to learn how to Predict the entry and exit points by using charts.I have downloaded many e-books,but even as a mechanical engineer,as i studied charts during my whole college life,i can't understand it clearly.

    So possible continue this FNO section every weekend by touching those topics.

    Not only MG sir,Even if anybody have any Knowledge on these things,share it here.Even if you know any e-books or website related,name it.It will be very much helpful.

    Sir,i dont have age to wish you, so i salute your work and have a happy weekend.

    1. Thanks Pradeep, Yes its our place and not "mine", Yes I am acting as moderator just keep away monsters from this holly place. Rest, its all yours, without all of you this will be a lonely planet.

      Yes I will continue with FNO education, but due to time limitation I am unable to put whole text at once, secondly putting text at once will be like people are reading book and preparing them for exam, I want practical knowledge.

  20. MG sir, as you've said infra is going to do well in the coming 3 months, jp associates is doing well, and it has crossed its 52 week high on friday.

    1. Dear Uday, Not even Infra,see where banks & cements was 15 days back and see their today's CMP.

      Even IRB went to 155 from 130, IDFC from 130 to 155, JPA from below 70 to 95, SBI from 1900 to 2300, Yes Bank, Axis Bank, JK Cement, Ambuja etx.... a long list.

  21. Sir I posted this on 11 th,Sir need your view...

    Sir I have two more question....
    1. In the year 2009(probably in April May) in some TV program I heard about kajaria ceramics that time it was 28-32 range...they just told it is good bet for long term not quick return but its a slow but steady stock.....I just forgot about it...suddenly today I checked it , now it is @ 203....Sir how they can predict like that(probably its a very silly question,yet)??Sir Can I invest in it now for long term??(If you dont track it then leave it Sir,otherwise it will create un-necessary pressure on you)
    2. On Moneycontrol board I have read this from jacs6401
    "Slightly irrlevant to the general discussion but nevertheless, a very thoughtprovoking fact.

    I have a friend from Pakistan. His father-in-law never invested in any property or jelwelry though he was a well-to-do businessman. Every year or whenever he saved something, he invested in Unilever, Pakistan. Today, he is one of the board of directors there solely due to his holding in the company and his mansion(huge) and household is run solely from the dividend income.

    Something to think about !"

    Sir Can I start an SIP in ITC or if there is other good stocks for long term that you are tracking??...Thanks Sir

    1. Arka, interesting subject will revert shortly.