Analyzed last 12 years of historical data to check if there are any patterns we can observe to find the best time to invest in stocks for long term. #Nifty50 #investing #stocks 1/10

A thread on Position Sizing #Trading is the only profession where you can see Doctors, Engineers, and many other successful professionals try their luck with stock market, these people excel in their own respective field but struggle a lot when it comes to trading.1/n

Unfortunately, everybody believes that a successful trader always has a secret Technical Skill. But the truth is Technical skill is the least important factor to be a superstar trader.

Then what separates a great trader from the group of average traders? Its their emotion.

This is how most traders think: They first think about the Entry point, at which price should I buy? At which level should I enter? At which point should I get into a trade?

But this is how you must think to be a profitable trader. You have to adapt to trading strategy that suits your psychology, assign trade management rules, keep position sizing and money management rules.

One of the main reason people lose money in stock market is because of their position size. Example: Vicky starts trading with a capital of Rs. 1,00,000 and he finds a trading opportunity and buys Spice Jet share for Rs. 100. At the max, he can buy 1000 shares of Spice Jet stock.

Nifty 14500 CE trade which made day low price of 0.15 and day high price of 2139, due to erroneous order by a broker who lost 250 crores. Some ppl claim few others brokers made 50 to 75 crores profits. But what really happened? Here's the tick data analysis that shows true info🧵

Yesterday being a weekly expiry market was so calm, not making any major movements. Nifty was trading around 16500 but there was a freak trade happened with deep In the money option 14500 CE. It was trading around 2000 levels, usually the liquidity will be very shallow with ITM

it was hovering around 2000 to 2100 levels but suddenly around 2:30 pm, the price of the option went as low as 0.15 paise. Here's the tick data price chart of 14500 CE option strike

What's really interesting about this sudden move is, usually when a freak trade happens it last for few seconds and instantly get back to its average traded price levels. But in this case, there were many buy trades executed at a very low price.

Obviously this a fat finger error trade, where a broker based out of Kolkatta, erroneously placed sell order for 14500 CE instead of 16500 CE.

Over the last couple of years, I did n number of research on systematic investment methods.
What happens if I do SIP only during market corrections ?
What happens if I pick stocks based on momentum rules? Here’s small thread on Why I moved to index fund investing? 🧵

When it comes to trading most of us are busy with backtesting multiple option trading strategies with no code platforms like Stockmock Algotest etc but when it comes to investing very few charting platforms available to test long term investing methods.

I wanted to do SIP but instead of investing in mutual funds, I wanted to develop systematic approach on choosing the stocks and invest in them and rebalance them based on certain criteria.

I have written multiple articles on this topic, like how to find which is the best sector to invest?

Should you invest in 52 week high stocks or 52 week low stocks ?

Earlier many traders were trading based on discretionary without any rules based approach. Now a lot of traders are ready to move to algo trading but confused with a lot of options. When you are bombarded with tons of different trading systems, how do you choose the best one?

Many traders still think winning accuracy is the most important parameter in a trading system. But is it really true? Let's check this example. Consider, we have three different trading systems.
System A,
System B and
System C.

System A has 90% winning accuracy,
System B has 10% winning accuracy and
System C has 50% accuracy.
When given a choice, most traders will opt for System A as it has the highest winning accuracy of all with 90%.

But System A is not the right choice. The average profit in a winning trade is Rs.1000, that is 90% of the time System A is capable of making Rs.1000 profit. But remaining 10% of the time when the system is making a loss, it loses a lot. So after 100 trades, net result is -10,000

System B, The average profit in a winning trade is Rs.10,000, that is 10% of the time System B is capable of making Rs.10K profit, which is ten times higher than its losing trade. The average loss in a losing trade is Rs.1,000 but 90% of the time the system will continue to lose.

On this auspicious day of #GuruPurnima, happy to share an easy to read and an exceptionally worthwhile investment. I plan to make a thread that will hopefully help us invest and live better. Thank you @awealthofcs 🙏🏻

Experience has taught me that less is always more when making investment decisions. Simplicity trumps complexity. Conventional gives you much better odds than exotic. A long-term process is more important than short-term outcomes.

And perspective goes much further than tactics. Tactics are useless to investors in a matter of days—sometimes in a matter of hours. But perspective is something that stays with the investor for a lifetime. It allows you to adapt to the changing market and economic landscape.

While keeping it simple won’t make it any easier to predict the future—no one has a crystal ball—it can give you the necessary capacity to make rational decisions, no matter what happens next.

Perspective is so important because, without it, even the most intelligent of investors can be ruined from a lack of self-awareness in their own abilities. Investors that fail to put the news or market moves into the proper context....[1/2]

How to get rich trading (without getting lucky)

Complete beginner’s guide to wealth of Rs 10 Cr in 10 years

Step 1: start trading live

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Nothing can substitute experience of live trading

No amount of back-test, studies or indicators can substitute training your mind with screen time

As a beginner, In live trading, you will make losses almost everyday

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So here are the conditions which you can’t violate in first year
If you can’t follow these rules, this document is not for you

Start with trading capital of Rs 1 lakhs

Max loss per trade 0.25%, i.e. 250 Rs

Max loss for the day, 1%, i.e. Rs 1000

Max 6 trades in a day

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I know, these conditions will cripple you in terms of what all you can trade and how

But just like any start up, trading is also about making it through initial gruelling constraints of life

You will also learn, how to turn these adverse rules to your advantage

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Btw, you can sell directional banknifty options, obviously you can buy options, can do cash stock trading and much more under these conditions

Think about it, you will be do all kinds of instruments, just that PNL will not be roller coaster ride or exciting like a casino

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In my 20 years of trading I have noticed this cycle play out again and again with traders that "make it":

1. Overconfidently reach for returns
2. Get humbled by the market
3. Simplify + concentrate on clear, high probability edges.

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Nearly everyone starts with a lack of respect for how hard it is to consistently make money trading.

That leads them to pass over high-probability sources of returns in favor of more marginal ideas.

Or they overcomplicate the trading of a good edge.

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Here's an example...

It is 2015. You look at a simple strategy.

You hold an equal dollar exposure to:
- Cap Weighted US Stocks (VTI)
- 20+ Yr US Treasury Bonds (TLT)
- Gold (GLD)

And rebalance each month.

(I've extended back a bit with mutual fund prices.)

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It made money consistently with a few blips.

You'd have 4x your money from 1997 to 2015.

It makes sense. It's harnessing two big sources of risk premia (equity + duration).

It diversifies across 3 macro assets that tend to outperform in different econ environments

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But, naturally, you turn your mind to how you could do better...

And here is where it gets dangerous!

There are good ways to try to "do better", and there are bad ways to try to "do better".

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Overthinking - The art of creating problems which weren't even there.

Thread on How Over-analysis leads to decision Paralysis-

What is Analysis paralysis?

In simple terms, analysis paralysis is a person's tendency to over-analyze or over-think upon a decision to such an extent that he/she fails to make a choice resulting in a paralyzed state of inaction.

How a retail trader trades-

A trader named Rahul, He know all the basics of markets, He also has made a system which gives signals on nifty, he has also encorporated good Risk management and Position sizing into his system.

One day he gets a signal to buy Nifty at 13500 with stop at 13450, he wanted to take the trade, but he wanted to get sure that the trade he has take should be a winner.

So he says just let me check the RSI if its above this level I will buy , he checks it and it was above his

level, then again he wants to check another indicator named MACD, he wanted to get sure man, Now he do the most intelligent thing to get sure he gets right.

He goes to twitter and ask his twitter Friend Trader knight he ask him that should I buy nifty at 13500,

Over the last 18 months, I have scaled my income to around ₹10,00,000 or 10 lakhs per week with drawdowns below 10%.

How?

@niki_poojary taught me how to form a weekly trading plan.

I'm going to share what I've learned in this thread.

Here's the simple 10 step process: 🧵

1. Check on the daily chart if Bank Nifty is in a higher high or lower low:

A higher-high (HH) is a bullish pattern, it signifies that it is difficult for the market to go down.

If that has formed on the daily chart, the market will give all the surprises on the upside.

If the market is in a higher high mode, look for good opportunities to sell puts.

Usually, at a higher high, traders buy on breakouts and also buy the dips.

If you want a good Risk-Reward, you can sell puts on a dip. (Only if it's showing some reversal)

2. Take High Probability Trades

Simply knowing a higher high or lower low does not make money. It gives you a bias for the week.

Still, you should try to take higher probability trades that align with your view of the market.

This will get you consistency and a good mindset.

3. Support & Resistance

I would say Support Resistance is the most important and favorite thing for @niki_poojary.

She keeps updating these levels with charts on her Twitter handle during live markets daily.

Attaching some examples will do a detailed thread on this later.