The most important aspect of Price Action Trading is You need to know when to do a complete reverse gear. Trading is like War.
The Art of Way says -
- “If you know the enemy and know yourself, you need not fear the result of a hundred battles.”
- “If you know yourself but not the enemy, for every victory gained you will also suffer a defeat.”
- “If you know neither the enemy nor yourself, you will succumb in every battle.”
The day started with an extremely bullish view of BankNIFTY because -
- All other World Indexes are up.
- It is again at Resistance zone trying to breakout.
- This time it is different; There was an extreme 4000% surge on Change in OI on ATM Put Options.
So, This is my view -
Posted in https://in.tradingview.com/chart/BANKNIFTY/b0pajiGn-Diary-BankNIFTY-Trading-Plan/
But as my most models are based on volatility spreads. My call options spread had their BEP breached. So, I had coded to convert all to MIS and short Put options to offset some of the loss of the call spreads.
Anyways, Before the end of the expiry, I didn’t want to bet huge on BN Fut buy either. The loss of call spreads can be seen clearly from the losses here -
If you have seen the Youtube Live video, the whole entry, the exit will be properly visible.
Click on it and Download
You can see the proper intervention today saved nearly 60K. It is extremely important to know when your strategies have been screwed and Your obligation to act towards it.
Anyways, Here is another approach of today.
In between of today’s - I had a bearish view as the market was on consolidation.
What happened next is - Both of them triggered. But we got sharp reversals too.
Due to my trading style, I had already closed one future trade on TSL. Another I hedged aggressively assuming a 300 point upside.
Either You have to hedge or You have to cut the trade. In net, You need to be able to act on Risk Management.
The net premium in Puts is 32+62+88 ~ nearly 200 points. We can manage the rest tomorrow.
Also, there is a third way of management which is how this Aunty is exercising. This majority of Homo Sapiens in this trading community does this only. That’s why 95% of traders lose money. -
Writing an update after a long time. Despite staying in lockdown with my laptop even before Corona arrived, God gifted me with MRSA. It took quite a stress. Usually, I keep working even on my illness. So, the work was fine.
But, My father got affected by corona. It took quite a time for diagnosis because people (and, doctor) of my small town thinks here every single disease on Earth happens because of Gastric Problems. (Well, Bengalis do have stomach problems because they are quite fancy about eating, You know stuff!)
That shook me terribly. Specially Emotionally. There are some things in life, You won’t understand until it happens to you. Before this stuff, I was basically invincible, immortal with my helm. Corona lifted my businesses into a quantum leap of super profitability. (My businesses are all online!).
But, the feeling of losing never hit me ever. This was the first time. Not the first. Second.
I think I got gifted with MRSA because I spent last month crucifying my own health and immunity to save and treat my brother - My alsatian. If you know me, Tiger is (was) with me for the last 16 years. As I am 27 and I got my head straight after 10 years, He was pretty much my everything - A brother who will be my side even if I lose my soul.
But, I never knew I would end up losing my soul afterward. A vacant place emerged so deep so there that it stops resembling the depth of darkness in. It scars over, prevents inflation, creates a numbness which you will feel alone. But then again, You remember the happy days and You remember the importance of the moments. The loss of time and the fact - That you can never own it. It’s free to spend. But Once You have spent it, You won’t get it back.
Anyways, Zerodha does not allow to take an option spread with the buy leg first in Index Options. It has specific rules on OI restrictions. You need to happen to have enough margin for the sell leg to get executed first. Now, People like us who use the multi-broker terminal will have a serious problem.
- You need to change the order of taking a multi-leg strategy. Otherwise, it will end in rejection.
- You need to keep a higher margin.
Also, this account had good growth and it is better to diversify the risk metrics of an asset. The risk being the broker and its execution itself. As we all know, all Indian brokers are very much encapsulated with the problems of execution and downtime. So, as the asset size is not small, it is better to split it up among two brokers.
So, I have kept 25Lish in Zerodha and transferred the rest to Alice. Each has its own advantage.
- Aliceblue has a lesser margin.
- In Alice, API makes a lesser problem. Zerodha logs you out when You log in to your account from some location.
- Zerodha is robust when it comes to stock options. It takes a lesser exposure margin of stock options when the margin starts expanding at the end of the month.
Being a sub-broker has its own advantage, so the margin part is not a huge issue for my clients with any broker but Aliceblue doesn’t allow to take delivery of the stock. Sometimes, there are nice arbitrages in Adani Ent, Torrent Power on the expiry day.
Now, My initial plan was to stream the live trades as usual as I was doing. As I am a man of complete automation. I have taken a Digital Ocean VPS and used python to automate the entire process. Now, there are dozen of changes in Youtube API all the time whose documentation is not well-drafted and there is no subsequent community where you can fiddle your solution out.
Now, it is hard to manually do any stuff when You’re stuck at the hospital with dozens of thoughts and Your live video is streaming a dang black screen.
So, I started trading in that account again in December. Note - There are 242 investors of such and similar amounts and it is quite a headache to explain to them the necessity of this broker bifurcation. No big margin guy likes a small broker because of security and more importantly - What were the guys thinking when they named the firm “Aliceblue”?
Sounds like an Irish Porn Movie.
Anyways, here are the PL and details of the trades that happened in December; You can check the trade pattern and tally with Tradingview and Slack where I keep talking about my trading views.
Also, in the epic era of Photoshop, You are free to verify the account over Teamviewer. It will cost you 10K for wasting my 10 mins but Let me know in Slack if there is any such necessity. (Telling because the Youtube Live Stream went on and off!)
We are option sellers. We sell insurance. And, Insurance went rampage with Covid in 2020.
But, I think, Now the next few years will not be as volatile as 2020. My strategies and models are now trained with highly volatile scenarios. (We, are all, after all, animals following the mathematical induction.) My view on December was extreme consolation and I was rewarded handsomely for being right. We had Reliance straddle in 2000 and it really stayed there too!
The view was the fall of IT stock, Tyre stocks (Or atleast consolidation.) but what I overlooked is the appreciation (read, over appreciation) of certain stocks ahead of results. The entire IT stocks went fire despite muted USDINR.
The view on BankNIFTY was again on consolidation. So there was a stellar profit which was sacrificed in the losses made in the views of stocks. Here are the current open positions -
I practice the sunk cost fallacy. It is good for me psychologically. I am generally stubborn in my views unless the core fundamentalism of it breaks. Like - Although You see MRF in profit in this above screenshot I have actually made a huge loss in it this month.
So I booked the loss of 57K with profits made in my index options.
This is my core-satellite approach. Remember, Shorting irrationality is always painful. Damani said, “If Harshad would have kept his position open for seven more days then there was a possibility I would have turned bankrupt .”
In this case, although I have a short bias in the overall market, I am compensating my bankruptcy with the profits of index options which are more mathematically (read, technically with a probabilistic approach) designed giving me a capacity and time of keeping my view open.
Anyways, if there is solid news in Rubber or there is any rule of import duty or there is any news that can impact the Tyre sector or the stock overall, I will not hesitate to close it. I also close the position and scalp it. (Whatever makes the money, makes money!)
Hence, comes the invincibility if you have an account with a sizable margin. With a margin like 1cr or more, the probability of making a loss is exponentially low when it comes to a smaller margin like 1L.
You have the flexibility to design lots of instruments and positions that can act as a hedging instrument to your current screwup without increasing the risk of extreme movements.
As in God’s design - “Rich get richer more easily.”
PS: Sorry if you find any grammatical mistakes or structural inefficiency in this write-up BUT although I have time to fix that itty bitty stuff, I will rather leave it as it is already conveying what I am trying to utter. Anyways, I am back to work. Will announce courses, seminars… etc other bs… or not!
Take care and Let’s keep trading!
From 17th Jan to 1st March there was a brief pause taken due to Covid issues as said above and more importantly bifurcation of the account to Alice.
Then with 18L, this continued back from 1st March - Live Trading in Youtube Live - Theta Model 18L