Stock markets have recently seen growth in huge percentage. This kind of amazing growth comes after at least three range bound years.

Nifty – the most popular stock Index in India has grown from 8000 to almost 9900 in few months. From 26-Dec-2016 to 14-Jul-2017 it has increased from 7908.25 to 9886.35.

In percentage terms this is: 9886.35-7908.25 = 1978.10 = (1978.10 / 7908.25) * 100 = 25.02% growth in 6 and half months.

Now what is the question in most traders mind. In fact at the time of writing it is 9918.50. Highest in the history of stock markets in India.

What you can do in rising markets? Here are some ideas that you can do:

1. Book Partial Profits: If you are a long term stock investor, this is the time to book profits. Yes stock markets may go even higher but at least take some part of your money out and book partial profit if not all. Now the partial profit depends on how much you want to book profits on your investment. This can vary from 10% to 80%. This comes purely under your financial management plan. Decide and book partial profits on your holdings.

2. Do Not Stop Your Mutual Fun SIPs: History is proof that most mutual fund investors stop their monthly SIP when they see that markets have hit high. This is trying to time the markets. Stock investing is different that mutual fund investing. In mutual funds you allow your fund manager to take decisions on your behalf with you money. Give them a free hand. Mutual funds are always for the long term not short term. Let them grow with time. Do not stop your SIPs in a down market or an up market. Let them continue. However it is very important to chose the right mutual funds that can do wonders to your saved hard earned money. If you do not chose the correct mutual fund you may end up getting returns less than stock markets. This is not good. Therefore choosing the correct mutual fund to invest is very important.

Read: How to choose the correct mutual funds to invest.

3. Futures and Options Traders Must Hedge Their Positions: Naked trading is financial destruction for 95% of traders who lose money. If you are not good at naked trading then it is better you stop trading or learn how to hedge your trading. Hedging is a big arsenal in the hands of stock trader. Hedging not only limits the losses but gives confidence required for trading.

Hedging is a kind of insurance for a trader. It protects your capital to a large extend. Learn good hedging strategies in this course. Once you know hedging methods then you can scale up your trades as you will be confident and fearless in trading. Once you know that 98% of your capital is protected then the fear of trading will go away and you can bring in more money to trade and make more. Naked trading will not allow you to bring more money to trade because of the fear of losing it. Hedging will ensure the fear is gone.

4. Do Proper Financial Planning Even If Trading On Charts: Some traders trade seeing technical charts. Do not forget that charts can also go wrong therefore financial planning is important. Just because your chart says this stock is headed up you must know before investing how much you are willing to risk. My advice is do not risk more than 25% of your capital in one stock. Anything more can be dangerous if the stock does not perform. Moreover you still have 75% capital left to invest in other stocks. So even if the first one does not perform you have some money left to try another stock.

5. Do Not Go Against The Trend: There are many contrarian traders. Contrarian traders bet against the trend. There is nothing wrong in doing but be willing to take a stop loss if markets prove you wrong. I am sure at 9000 – a huge psychological mark of Nifty – a lot of Future traders must have gone short on Nifty. They must have huge lots of money. Contrarian traders have a lot of ego discussed in next point.

6. Do Not Be Egoistic In Trading: Especially the contrarian traders have a lot of ego in rising markets. They think that speculators have taken the markets up and it is bound to fall huge and they take large bets without hedging. Because they are absolutely sure stock markets will fall. Understand that stock markets does not have any ego or does not favour or is against any trader. Stock market is a non-living thing. They will do what most investors do. There is no point showing ego to stock markets. Plan your trades take a stop loss or take out your profits when they come. Trading without a plan is a great way to failure.

Date: 13-July-2017

This bull market is not showing any decline at all. It is getting frustrating now. I think GST has a big role to play.

Current position Nifty as on 13-07-2017 at 11.22 am:

Last six months graph of Nifty:

India VIX also hovering from 10-12.

So what are option traders trading?

The answer lies in trading volume or most active options open interest. This information can be obtained from the NSE site here.

According to today’s data as of 11 am:

Highest open interest at Call Options (most active option):

OPTIDX NIFTY 27JUL2017 CE 10000: 41,71,575

Highest open interest at Put Options (most active option):

OPTIDX NIFTY 27JUL2017 PE 9600: 68,13,525

Highest Open Interest means both option buyers and sellers are doing the most trading in these 2 strikes.

What do you infer with the Highest Open Interest?

You see open interest only tells where most people are trading. But for every buyer there is a seller.

So here the most speculative trading is going on. 50% of them are buyers and 50% of them are sellers.

Now which side will you take? That is the problem with open interest.

Lot of traders see daily open interest and trade there. Obviously 50% become buyers rest become sellers,.

50% of them make a profit, 50% make a loss.

Here is where it can create a confusion. You can’t flip a coin and become seller or buyer right?

Open interest will give you data of where most traders are trading but it never reveals what is going on in their minds. So there is not much to do with open interest. Just trade conservatively without being biased for any direction and keep making profits consistently. Though conservative trades make small profits – but a profit is a profit not a loss. Even a small profit is better than a small loss for a big gain right?

You can read about the conservative option course here.

Lots of traders do not know where to take a stop loss. This article discuses where to take stop loss.

85% of the traders who enter the stock trading business (not stock investment business) start with day trading. In India it is known as Intraday trading.

The reason is pretty simple.

They know that risk is involved in derivative trading. Derivative trading is trading options and futures. They start with Intraday equity trading. Once they start making losses they enter into derivative trading. In both the trading losses are there, therefore they do not want to take the position forward and try day trading.

Moreover the satisfaction of day trading, to see they made (or lost) money each day excites them. However they forget that making money is important. Whether it is made from positional trading or day trading is not important. They realize this fact only after losing money.

More Intraday traders lose money than positional traders. In Intraday trading money has to be made the same day or within hours, however in positional trading the trader has one month or more to make money.

Do you know even stock investments for long term is positional trading? For example if Ravi invests Rs.10,000 in a stock 40 years ago and when he reaches retirement sells that stock at 800 crores which is absolutely tax free, then this is positional trading. This is possible read this: How to Make Crores from the Stock Markets.

For positional trading in long term investments stop loss is not required. However for equity or derivative trading stop loss is required.

Some people do take stop loss in long term equity trading also. Like holding a stock for six months but then selling it at a loss of 10%. This is stop your loss.

For derivative and short term equity traders stop loss is very important. In fact it is compulsory. You cannot be in the game if you do not take a stop loss somewhere.

This article discusses where to take a stop loss.

Whenever traders read some bad news about a sector or a company they tend to believe that their stock may fall. Intraday traders short the stock in equity markets and positional traders may short a future or buy a put. What strike put they buy is their decision. But it is seen on most days that most active options are at the money options. This means most option sellers or buyers will trade the ATM options. So most option traders buy ATM puts if they feel the stock may fall.

Short selling is selling a stock that the trader does not own. But they have to buy it back one day. Derivatives traders have time to buy it back before or on expiry day. However equity traders have to buy it back the same day. Positional short selling in equity is not allowed in India, only Intraday is allowed.

Difference Between First Buy Then Sell And First Sell Then Buy

When a trader buys a stock or option all they want is Buy Low – Sell High.

Similarly when a trader sells a stock or option all they want is Sell High – Buy Low.

If the above happens it is profit, else it is a loss.

Who Are The Biggest Short Sellers

The biggest short sellers are the institutional investors. They short sell to hedge their positions. Among institutional investors hedge funds are the most active short sellers.

They use short selling mostly buying puts, not shorting calls, in some stocks that they hold to hedge their long positions in these stocks.

This strategy is known as married put.

But Where Do They Take A Stop Loss?

Institutional investors and hedge fund managers know very well their risk appetite. Unlike retail traders non of their trades are without a plan. Retail traders if they short do not do anything if the stock keeps rising. They trade on hope. Trading on hope and without a plan is not trading, it is gambling. All speculative trading is gambling.

How many times retail traders buy an option and see it expire worthless? This is the case with most new comers in option trading.

Do not let this happen. Never even average your buy position in options if it is making a loss.

All your money will go down the drain – it will become ZERO.

Decide a stop loss position and exit there.

Hedge funds also have a plan. It is obvious what they do is not known to anyone.

But I am sure this is what they do:

Suppose they have 10 crores worth shares of XYZ company and they fear it will fall.

These are the things hedge fund managers may do when they fear a fall in the stocks they hold:

1) They may short sell shares of another company in the same sector to the value up to 10% of their current share holdings.

2) Buy puts to the extent of 5% of the current holdings. In this situation it is 50 lakhs. They may take a stop loss at 25 lakh. Which means all they are putting at risk is just 0.25% of their holdings.

3) Sell Futures with a proper stop loss (though this they do rarely).

As you can see they have a proper money management plan they succeed to make millions from trading.

In US hedge funds are very popular, however in India hedge funds are not that popular. Equity mutual funds are very popular. If you do not know how to select stocks or mutual funds for the long term you can do my course here:

https://www.theoptioncourse.com/stocks-and-mutual-fund-selection-course/

Where Should A Retail Trader Take A Stop Loss?

If you keep your profits at 5% then your stop loss should be at 2.5% of the margin blocked.

If you are successful 10 times trading, it will take 20 times for you to get back to no profit no loss zone.

As you can see with such a simple planning in place your trading results will become better than what it is now without a proper money management plan.

Hope this article helps you in deciding taking a stop loss while trading stock markets.

Article Written on: Thursday, 08 June 2017

Learn how volume in stock or derivative trading can help traders set up their winning trades.

What Is Volume?

Volume is a count of total trading done at a given period of time.

See today’s highest volume in Bank Nifty:

Source: https://www.nseindia.com/live_market/dynaContent/live_analysis/most_active_contracts.htm

You can find historical contract-wise price volume data of NSE here:
https://www1.nseindia.com/products/content/derivatives/equities/historical_fo.htm

As you can see as on June 08, 2017, 11:31:22 Indian Standard Time:

Most volume of trading can be seen in BANK NIFTY of strike 24,000 CE.
Volume: 2,74,121
Turnover in lacs: Rs. 26,31,617.52
Open Interest: 15,83,280
Value of Underlying: 23,631.30

Bank Nifty at the time of writing is currently at 23,610.45:

Source: https://www.google.co.in/search?q=banknifty+share+price

Today – Thursday, 08-06-2017, is Bank Nifty weekly expiry. As you can see since strike CE 24000 is Out of The Money Call Option, a lot of traders are trying to make money here there.

Read The Reality Of Very Far OTM Out Of Money Options, to know why Out of The Money options are highly traded on expiry day.

I that article I had written – They get attracted by low premium and low risk options.

This you can see comes true in every expiry day.

Volume is overlooked because not many trades know how to utilize it.

Volume is created because for every buyer there has to be a seller, and for every seller there has to be a buyer. When in a certain stock or derivative too much volume is created, there is definitely something going on.

In stocks with high volumes the ask and bid prices are very close. In low volume stocks the ask and bid prices are far.

Especially in stock options, the out of the money options have very low volume. Sometimes are volume are so low that there are buyers but no sellers, and the trade cannot take place.

Volumes can be great indicator to trade a stock.

How To Use Volume as an Indicator of Direction?

Before reading I need to add a disclaimer: Volume itself is not the only indicator of the direction of the move. It is just one part of the indicator of the direction.

Most traded stocks, option strikes and futures can be found in many websites. One link I have already given above, but there are many brokers who show the high volume stocks for their clients to take a decision to trade. Here is another link to see the volume, most active stocks traded during the day, last 5 day performance, Gain Percentage, SMA, Deliverables, live when the markets are open:

http://www.moneycontrol.com/stocks/marketstats/nse-mostactive-stocks/nifty-50-9/

As traders it is better to participate in stocks with more volume than stocks with less volumes. This is better for a short term trading not long term investing in stocks.

Long term investing can sometimes produce stellar returns, I offer a course on selecting stocks for long term investing. For long term investing volume is not important.

However for short term trades, volume is a strong indicator of trading though it is not a strong indicator of success of trading.

Indicators to help you take a trading decision

If the price of a stock is decreasing, but its trading volume is increasing then there is a chance of the stock price rising. Reason – good interest by trades. This is signal of an uptrend.

Possibility of success is high if the volume in the above situation is very high. In low volumes it may be a wrong signal as in low volume trading the volume can change any time.

Example:

When a company comes out with great quarterly result, there is a very high chance of high volume and rising stock price of that company. Similarly when a company comes out with bad quarterly result, there is a very high chance of lack of interest, low volume and falling stock price of that company.

What is the problem with the above volume based trading?

Volume has to be constantly monitored. This is a serious drawback as within seconds volumes can change. This is the reason we see a high volume stock suddenly falling, or a high volume stock suddenly rising.

Have a look at Yes Bank trading chart on 09-June-2017:

At 1.41 pm the stock suddenly started moving up from a intraday low of 1475.20. Exactly here the volume must have increased.

This is where is the problem with volume based trading. Seeing the decreasing volume some intraday traders must have shorted the stock at 1.40 pm only to see the stock going up from 1.41 pm and must have exited in loss.

In extraordinary volumes some stocks become very volatile. They move up and down in a rapid way leaving the traders in a frenzy mode. When volume increases it goes up, when volume decreases it goes down. This happens intraday.

It is seen that most intraday traders get caught in the market tops seeing the volume and vice versa.

Is Historic Volume is Of Any Help?

No. Historic volume will produce irrelevant data. If traders need to compare volumes then maximum they can go back to 14 trading days.

Conclusion:

Lots of traders trade only out of the money options. Read to know the reality of trading Out of The Money OTM options.

There are two types of speculative option traders:

1. Those who trade only ATM (At The Money) options, and
2. Those who trade only OTM (Out of The Money) options.

Very few trade In The Money ITM options.

Most traders start with At The Money options then move to Out of The Money Options to try their luck.

Buyers when they lose become sellers and sellers when they lose become buyers. And most option traders start trading with Index options. In India Nifty Options is the most traded options.

Therefore there is rarely low liquidity in Nifty Options trading.

Option Buying or Selling is a Game of Probability

NSE spot price is 9,642.15 as on 01.01 pm, 06-June-2017.

Today NSE is falling, so for most traders probability of success of selling Call Options is more than that of probability of success of selling Put Options.

Tomorrow the story may change.

To avoid taking chances traders try to sell very far Out Of The Money options, especially near expiry. This is more fun oriented than logic oriented.

One plunge down on expiry day can even push far out of the money options into at the money options and it may take away years of profits of the far out of the money option sellers.

Story is same with far out of the money option buyers.

They get attracted by low premium and low risk options. On expiry day or a few days before expiry when option premiums are low, these traders buy very far out of the money options hoping the stock may take a drastic move and they can make a lot of money.

Most of the times it does not happen and they end up losing money.

When move actually comes they are either not trading that side, or they exit in a small profit.

Buying low premiums out of the money options is like buying a lottery. At least if they win a lottery, they end up making a few lakhs or even crore, but in options trading maximum profit also has a limit. One trade cannot make lakhs of profits.

Unfortunately by the time a trader understands it’s too late.

Once they realize they are doing a mistake they look for tips – again a huge mistake and they lose more.

Then they start looking to educate themselves or do a course. Some of my clients have been though the above hell then did my course.

Conclusion:

Educated yourself before trading options and getting into the game of speculative trading or playing the game of probability.

Date: Monday, 05-June-2017

Nifty has rallied from 8000 levels to the highest in history today: 9685.15

Today highest:

Learn why you should avoid temptation to buy stocks in a bull rally, wait for a fall and then buy stocks as per your choice.

In a bull rally most investors get lured by temptation to participate in the rally and make quick money and end up getting caught at the peak.

In the history of stock markets which bull rally ran permanently? None. What goes up has to come down and what comes down has to go up. This is the nature of stock markets.

Mistakes To Avoid In a Stock Rally

1. Temptation to Buy Stocks – Too many investors are now in a buying frenzy mode as if stocks will never fall. This is a huge mistake. This is the time to sell not to buy. Of course to sell you must have stocks in your portfolio that are making good profits. If you did not buy earlier when the stocks were at attractive prices, you did a mistake. If you buy now you will do a double mistake. Avoid your temptation to buy stocks now.

2. It is A Very Costly Market Now You are getting a deal but its very costly. Will you go for this deal? Yes there is a feeling that Nifty may touch 10,000 who knows but the deal is costly and the risk is too much. It is better to leave a costly deal and wait for a better deal.

3. Chance of a Bubble – Agreed now government across the world have taken considerable steps to avoid the recession like situation in 2007-08, but who knows what is happening? Why risk your money when it can be avoided. There is little chance of a bubble, but its better to sit sideways.

4. Aggressive Shorting – There are a lot of contrarian traders. They always short the markets whenever they see a bull market. Positional shorting cannot be done on stocks so they take aggressive bets on options shorting. I am sure a lot of traders are now shorting at the money options or just out of the money ones trying to capture the maximum profit. They forget that in a bull market option premiums are very low so the risk reward ratio is very bad. See India VIX on 05-June-2017. It is less that 11. Range of 9-12 is considered low for VIX. VIX or Volatility Index has a big role to play in deciding option premiums. It forces trader to come near the money to short options to make more money. They do not even hedge and if the rally continues they end up making huge losses.

India VIX as on 05-June-2017:

Learn proper option hedging methods in my conservative options trading course.

5. Depending on Trading Software – I am sure all trading software must be giving a buy signal. A software does not have a brain. When it sees no downfall for days it will obviously make a straight line up. The software cannot predict a fall. No software ever predicted a bull run or a great fall and they will never do. I have never traded based on any software because I believe business is done by humans not machines. The article you are reading now is written by me not a machine. Similarly, the money you will keep to trade will be yours, the profit and losses will be yours – then why follow a software? Like your place in your job/business cannot be replaced by a robot or a machine, what makes you think software can trade?

Read this how automated trading systems can fail big time. Here are the disadvantages as per the wiki article:

Disadvantages of Automated Trading System:

An algorithm that performs very well on backtesting could end up performing very poorly in the live market. This point is very important for traders who backtest a strategy, get great results and think the strategy will work in future as well. This is simply not true. Good performance on backtesting could lead to overly optimistic expectations from the traders which could lead to big failures.

The following text has been taken from Futuresmag.com:

The system wins only 38% of its trades. The average winning trade lasts 153 days, whereas the average loser lasts only 55 days. If we look at monthly returns, however, six out of 10 months make money. Our winning months average $7,028, and our average losing month is –$5,805. At first glance, this may seem like a paradox—how can only 38% of the traders make money, while 60% of the months are winners? The answer lies in the role of time. This is a trend-following system; as such, a large percentage of trades shows an interim profit at some point even though (per the rules of the system) only 38% are closed out as winners.

Because the average winning trade lasts 153 days, we can assume we must trade for at least 600 days before we make money. That would be just four winning trade periods. Even though it may seem like a long time (almost two years), it is still a short period measured in terms of trade time frame.

The following text has been taken from https://en.wikipedia.org/wiki/Automated_trading_system:

On May 6, 2010, the Dow Jones Industrial Average declined about 1,000 points (about 9 percent) and recovered those losses within minutes. It was the second-largest point swing (1,010.14 points) and the largest one-day point decline (998.5 points) on an intraday basis in the Average’s history. This market disruption became known as the Flash Crash and resulted in U.S. regulators issuing new regulations to control market access achieved through automated trading.

On August 1, 2012, between 9:30 a.m. and 10:00 a.m. EDT, Knight Capital Group lost four times its 2011 net income.[14] Knight’s CEO Thomas Joyce stated, on the day after the market disruption, that the firm had “all hands on deck” to fix a bug in one of Knight’s trading algorithms that submitted erroneous orders to exchanges for nearly 150 different stocks. Trading volumes soared in so many issues, that the SPDR S&P 500 ETF (SYMBOL: SPY), which is generally the most heavily traded U.S. security, became the 52nd-most traded stock on that day, according to Eric Hunsader, CEO of market data service Nanex. Knight shares closed down 62 percent as a result of the trading error and Knight Capital nearly collapsed. Knight ultimately reached an agreement to merge with Getco, a Chicago-based high-speed trading firm.

One small mistake by the software and the trader loses his shirt or may have to sell his home to at least put food on the table.

Never do these mistakes in your trading life especially in a Bull Run which attracts most investors to stock markets.

Conclusion:

Do not let Automated Systems take ownership of your trading money – if they do mistakes you will pay the price not automated systems. Take control of your money yourself. God has given you a brain and two hands to take control of your future so do not let anyone else either a machine or an unsolicited advisor or tip provider take control of your finances.

Today on Saturday, 03-June-2017, at 7.07 am morning I received an SMS which was quite shocking.

Here is the screen shot:

Here is the text (spelling mistakes corrected):

Good morning Sir, I am from Telangana. I lost so much amount know, I am in Suicide condition sir please help me, I am coming to Kolkata. Please give me your address.

Please train me as yours brother and I will message through what’s up is showing yours, can I talk for 10 minutes on phone call when I call after yours time please tell me and help me sir.

Imagine seeing this first message as soon as you get up on your phone.

There are a lot of things which are clear:

1. Emotional blackmail: Well I keep getting such messages and calls. But such emotional messages are mostly from South India (please do not take it personally if you are from south India, I am just telling a fact). 60% of my customers are from South India. Yesterday I got a call from someone speaking in very good English. He said. “Sir I am a farmer selling vegetables. It is very hard to survive, please help me. I will pay Rs.1000/- please send me your strategies.”

Speaking English like well educated person, but giving an excuse to save 4000. Obviously I said, “No rules is same for all, when you sell vegetables to a poor man, do you give him 80% discount?” He kept down the phone.

But this morning SMS was shocking. Not even once he said he will pay the course fee, but he is willing to come to Kolkata from Telangana and learn personally from me.

Lets calculate the approximate cost to some to Kolkata from Telangana and learn the strategies personally from me without paying the course fees:

1. Travel cost by Airplane: Rs.7000/- or more approx (2000 more than the cost of my course)
2. Stay at a hotel for 2 days: Rs.4000/-
3. Food for 2 days: Rs.2000/-
4. If he decides sightseeing in Kolkata: Rs.3000/-
5. If he decides sightseeing near Kolkata like Darjeeling and Gangtok: Rs.12000/-
6. Course Fees he is not willing to pay: Rs.0/-

Total cost: 7000+4000+2000+3000+12000+0 = Rs.28,000/-

This guy has lost lot of money in stock trading so much so that you know what. He needs my personal coaching to learn my course strategies. For that he is willing to spend Rs.28,000/-, but is not willing to pay the fees of the course. Strange.

After taking the screen shot, I deleted the message. I did not reply, nor called him.

2. What is the truth behind the SMS? May be he is a crorepati who knows?

3. Giving a shot to emotionally blackmail to get the course for free.

A few months back one person called me. He was crying and said he is retired, aged 65, and lost 80% of his retirement money trading stock markets and he needs my help. Read – he wanted the course for free.

For 6-7 months, end 2013 to mid 2014, I gave a lot of advise for free, but no one bothered. Then I realized I am wasting my time, no one cares for free knowledge. Here is some proof. Only 13.1% read my absolutely free emails. This data is since 03-Aug-2013, when I started helping people for free. Paid course started in May 2014 only after I realized free is not valued. See this image:

Well I have more than 10,000+ mobile numbers in my database and I can easily keep one marketing guy to call people to do my course. I NEVER do it and will NEVER do it. Did you ever got a call from me after filing the form in my site? No, you will never get a call from me ever.

The email is taken to send you free emails that is all that too if you are interested and filled the form, and the phone number is taken to help you save money on brokerage, there is no other reason.

Both are to help you. But everything is your choice.

– You can unsubscribe from my emails anytime,
– You can reject the offer to save money on brokerage, though you will be doing a mistake. Saving money is making money, and,
– And you can enroll for my paid course or not enroll – it’s your choice.

In fact all of the above is your choice.

Frankly at least 70% of my customers have done my course after 1 or more year of being my free subscriber and am sure after losing money trading, then thinking ok let me try to recover the lost money by doing this course. Most of them do my course as a “Last Chance” to recover lost money from stock markets.

And then this happens.

Any new and young aspiring investor or trader while opening a demat and trading account dreams big of making at least 10% return a month from stock trading. Almost all of them think they will double their money in one year, and then compound it.

Well same here, that’s the reason I lost money heavily when I started trading in 2007.

At that time people were not that smart or educated (though I am an MBA in Finance), I thought maybe this is the reason people think this way. Later India developed, our education system developed and I thought now people might have changed in ten years time in 2017.

But hey I was wrong.

Last week end May 2017 I received an email from one of my site followers. Here is the email:

=====
Subject: Inquiry for the option course from a very serious professional

Hi Dilip,

I am an entrepreneur and the founder of (company name hidden for privacy).

Since the last 2 months I have invested in learning and practicing charts, technical analysis in international forex trading. Later I found that Indian trading platforms are not suited for forex.

My note not in email: Forex, also known as foreign exchange, FX or currency trading, is a global market where all the world’s currencies trade. The forex market is the largest, most liquid market in the world with an average daily trading volume exceeding $5 trillion. In India forex trading is done mostly in USD (United State Dollars).

I am interested in your course, but here are the issues:

I have been practicing charts and trading a nominal amount, using this brokerage firm, but lack the basics. Like after every successful trade, still why I am losing money?

I need to understand the basics – money management, commission, ideal trading platform, etc. Also, though I have read a lot, I really don’t understand the difference between options and futures and I have not traded Nifty etc.

My question are:

1. Will you be able to start training from basics? I am a very diligent and fast learner, and will catch up really fast, as my technical understanding is good. I am willing to invest in education.

2. I am not looking to ‘get rich quick scheme’ and willing to learn and put the hard work just like I have did for my digital agency which is among the fastest growing now. I have 75000 capital to invest and looking at a decent 15000-20000 profit per month.

Waiting for your reply.

Name Withheld

This e-mail was sent from a contact form on http://www.theoptioncourse.com.
=====

Everything seemed fine but what surprised me was the last paragraph – I have 75000 capital to invest and looking at a decent 15000-20000 profit per month.

Please note that he is an entrepreneur which means he is highly educated, on top of that he has read technical charts etc.

Calculating the returns he is expecting every month.

(20000/75000) * 100 = 26.66% a month.

In that way he is expecting 26.66*12 = 319.92% return a year from stock markets. IMPOSSIBLE.

Let is see what 319.92% a year return can do to Rs.75,000 if compounded for 10 years.

Rs.127,857,692,121.36 that is Rupees 12 Thousand 7 Hundred & 85 CRORES and 692,121.36.

In ten years time this will make him the RICHEST person on Earth, probably much before.

In our times most people used to dream of 10% return a month, but look at this 26.66% a month.

I was like scratching my head after reading this. Now what to reply? Anyway I did reply. Here is the reply:

=====
Hi,

The course does not deal with basics as it is assumed that the person knows options and futures trading basics, like what is Call, Put and Future. What is the difference between buy call, sell call, buy put, sell put, buy future and sell future. If you know these things you can do the course. If you do not know still, the basic is very easy to learn.

I can send you basic course on options but support is not given in basic course. Support is given in the paid course only. If I start giving support on basic option course for free I will not be able to sleep.

>> I have 75000 capital to invest and looking at a decent 15000-20000 profit per month.

This is NOT decent. You are expecting something that is impossible to achieve. Max is 3-5% return a month. You are targeting 25% return a month. Sorry to say but from your point of view Mukesh Ambani is a fool. He should immediately close Reliance Ltd and start trading.

Dilip
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I could have lied telling some months its possible or something like that, like most tips provider lie to take your money. But the problem with me is that I cannot tell a lie to take your money.

Do my course if you are satisfied with 3% return a month, otherwise there are many people ready to take your money away by telling you a lie or sending SMS that 1 lac a day is possible by options trading. Hey even I get these SMS everyday. I delete them immediately.

Beware of them.

Anyway he replied again:

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Hi Dilip,

Please pardon if some of my questions are too naive, as I am a newcomer and trying to explore the scenario.

I have 3 points to highlight:

I am willing to invest more if you help me to learn basics as well.

5% return is fine. Does that mean if I invest 5 lakhs , I would be generate a profit of 25,000 return monthly ?

I am really willing to learn. Please help me. I would always remain a newcomer if no one handheld me in the initial days.

Regards,
Name Withheld
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My reply:

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>> I am willing to invest more if you help me to learn basics as well.
I can just give you a document on option basics but no support on that. Support is only in the course strategies.

>>5% return is fine. Does that mean if I invest 5 lakhs, I would be generate a profit of 25,000 return monthly?
No 3% is average, which means 15000 monthly.

It is not your fault. Too many people think it’s easy to make 10% return a month from stock markets. When they lose lakhs then realize even 2% a month is good enough.

You are in the first zone.

Best Regards,
Dilip Shaw
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I am sure a lot of you are in the first zone dreaming to make 10% or more return a month. Let me tell you bluntly if you trade aggressively to make 10% return a month, may be one month you will make, but next month you may end up losing 20% or more.

Over a year you will be in loss.

I get phone 5-6 calls daily inquiring about my course and 100% of them are losing money trading options.

If you are also one of them do my course and learn something. Lots of traders have benefited from it since 2014. My first client paid on 12-May-2014, for the course – the very first day I updated a paid service. Before that I was helping traders for free but no one cared or listened. Then I realized that free is not valued in this world.

It is three years now and you can see the results yourself:

What traders say about my course
Latest testimonials
Testimonial page 2
Testimonial page 3
Testimonial page 4
Testimonial page 5
What people say just after reading my course

The above are real testimonials not fake Photoshop generated random images or a fake made excel sheet uploaded as monthly performance in many websites that you see online.

It took me three years and three lakhs to research and make these strategies that is why there is a charge.

If you think you will be happy with small profits trading options you can pay for my course here.

Read to know why many option sellers sell options on expiry day and try to make money.

A few months back I got an interesting email from one of my subscribers:

Dear Dilip ji,

Hi Sir,

I am your follower, though I am new to your course joined some days back, also familiar with market.

I wish to know from your vast experience, about:

1) Why bears/shorter select the expiry date or day before/near expiry only, for heavy selling?

Last time, on some expiry day only, the reason was Bank of Japan’s rate policy & on today’s expiry, reason is India’s surgical attack on LOC, whereas these reasons were already known for these bear community.

2) Why Long straddle / strangle is useful in the expiry week?

3) Can one go for Long straddle/strangle in this type of vertical fall?

Request your expertise comments, at your convenient.

Thanks.

I replied him the reasons, but I want to share with you as well.

It is true that on derivative expiry day a lot of selling / shorting of options (not futures) takes place.

But why on Expiry Day?

The reason is pretty simple. This is the day ALL the out of the money options will expire worthless. If they expire worthless all the buyers money will be eaten by sellers.

But there is a condition – it has to expire worthless. If it does not then there can be heavy losses for the sellers.

The problem with greedy sellers is that they forget what if they lose.

If you observe India VIX, on the expiry day, you will see that it almost always increases on expiry day. VIX is directly associated with panic in the markets. On expiry day most sellers and buyers are in a panic mood until the trade is closed. Biggest mistakes by option and future traders are done on expiry day.

These are some of the mistakes done on expiry day by option traders

Sellers hope that the option they sell will expire worthless and they can keep all the money they got for selling. On top of that they know if it expires worthless they will not have to even close the trade as when the option expires worthless there is no need to close. Though if they do not expire worthless you must close them.

Basically this trade is on hope. But the sellers forget that if there is even slight jump in the last minutes of the market closing they may lose years of profits in a jiffy.

On last day of trading even 200 points OTM out of the money options open at very low premium like 2 or less. Not worth selling.

100 points out of the money will be approx 3-5, again not worth selling.

So the only option left is to sell ATM at the money options. Now this gets a bit risky. This opens at around 15-20 to attract trading. Please understand that if option prices are not worth to sell, the sellers will not sell and trading cannot take place.

Therefore to make sure trading does takes place, market makers keep some attractive premiums in only at the money options.

Here is Historical Contract-wise Price Volume Data of Index Options, Index Futures, Stock Options, Stock Futures and Volatility Futures (very low volume here in india).

https://www1.nseindia.com/products/content/derivatives/equities/historical_fo.htm

You will see that volume of trading in ATM options is always high on most trading days, but exceptionally high on the expiry days.

One reason is obvious that traders are closing their positions. But the biggest reason why trading is done in ATM options on the expiry day is the most traders close their positions in other strikes and try their luck in ATM options depending on their view. Some become buyers and some sellers.

Recommended Reading:

Close Futures And Options Before Expiry Day to Save Securities Transaction Tax STT

Why Expiry Day Trading Is Not Good