Yesterday FIIs were net sellers of Rs.715.30 crores and DIIs were net buyers of Rs.534.20 crores in cash market for last trading session.

I read this everyday and after medium term I see that most of the times it is DIIs who win and FIIs lose. So for me personally I track what DIIs do and where they invest. This sets the actual trend of Indian markets for the medium term.

When it comes to medium term trading I trade mutual funds large caps or Index funds which nearly tracks Nifty and since the last 2 years my portfolio has been doing pretty well.

You must be thinking why an Option Trader does not trade options but trades mutual funds for the medium term?

Please understand and read about risk-diversification.

Options should be traded if the view is maximum for 30 days. If it exceeds that holding it required which Options cannot do and time value erodes it, but there is nothing as time value in mutual funds and stocks.

I hope you now you understand why and how I diversify the risk – Greed controlled and logic applied.

This is why education and research helps.

More to come.

In this article you will learn:

What may happen to banks after the RBI Introduced Incremental CRR Of 100 Per Cent.

CRR is Cash Reserve Ratio. CRR is the percentage of money the banks have to keep with Reserve Bank of India (RBI).

Let me take an example. See the image below:

What is CRR Cash Reserve Ratio

In the above image, the CRR is 6%. A man deposits Rs. 1000 in his bank. Since CRR is 6% and 6% of 1000 is Rs.60/-, the bank has to keep Rs.60/- with RBI and is left with only 1000-60 = Rs.940/- to be given as loans and make money.

What is the CRR as On 28-Nov-2016?

The CRR is 4% NOT 6% as mentioned in the image. It is just given as an example. So right now if Rs.1000 is deposited banks have to give RBI Rs.40/- as CRR.

Why CRR is Done by RBI?

RBI the head of all banks in India has a job to control the money flow in the system and to keep a check on any wrong doing in the system.

These are its primary job:

1. To control the supply of money in the economy. That is how much money is available for the industry or the economy.

This is the money with which the banks to loan to people and do business. Do not forget that banks are also a business not just banks to keep your money safe and pay you 3.5% on your savings account.

2. The cost of credit. It means the price that the economy has to pay to borrow that money. For example personal loan comes at a certain percentage per year which is more than double of the saving accounts deposits and also more than current inflation. Why? Because that person does not own that money but has borrowed it from the system so he has to pay a price.

Banks charge 1 or 2 percent more than their own costs like infrastructure management, salaries to their employees etc. That 1 or 2 percent extra is their profits. Please note that one or two percent more has to be more than inflation too, else there is no profit.

For example a loan of 1 lakh. Inflation cost = 7%. Cost of the bank like salaries and management = 3%. This is 10%. Now anything extra changed is their profits.

Same is the case with home loans and car loans. Since risk is low in home and car loans the rate also gets lowered but is always above inflation.

Another reason is if all money is allowed to be kept with the banks, they can fall for greed and do a lot of things which can lead to losses.

For example let’s assume a bank get a deposit of Rs. 1000 crore in a month and the management gets a bit greedy. They now give loans to everyone for 1 year at an extra discount without proper check the credit quality of to whom it is given to (like KingFisher).

After one year the bank gets only Rs. 800 crore. Instead of making profits the bank is now in the loss of Rs. 200 crore. Add 10% inflation and expenditures to this. So a total loss of Rs. 220/- crore in one year.

The bank closes after one year. Like this if allowed, all banks in a country can vanish in one year. This neither the government not RBI can allow or want to happen.

Does it Still Happen?

Yes it does. KingFisher example has already been given. That company owns around Rs.2000/- corers to SBI and public sector bank. A through quality check probably was not done and this may have happened.

Since this was big it came under media eyes. But losses like 10 or 20 crores are not reported in media so we do not know. But it does keep coming in newspapers now and then that finance ministry and the RBI governor always keeps telling the banks to keep a quality check on companies and people whom they are giving loans to.

That said as long as receivables are more than the amount given as loans, the bank is in profit. This happens with almost all banks. But I hope you remember sometimes a bank or financial institution closes. The reason is the same – loans that were given never came back – in fact the principal itself does not come back, and the bank got closed or was bought by another bank.

Can you see what greed can do?

It has the power to destroy companies, institutional, businesses and even banks.

It is already destroying wealth of 95% of stock traders in the world. Do not forget that stock trading is a business. Business is written above.

What Will Happen to Banks After RBI Introduced Incremental CRR Of 100 Per Cent

On Saturday 27-Nov-2016 RBI in an attempt to absorb some of the surplus liquidity available in the banking system, asked banks to maintain an incremental cash reserve ratio (CRR) of 100%.

This rule applies to deposits between September 16, 2016 and November 11, 2016 fortnights. This move is estimated to suck out around Rs 3.24 lakh crore excess liquidity from the system.

Why RBI has done this?

RBI data says total deposits rose from Rs 97 lakh crore in the September 16 fortnight to Rs 101.1 lakh crore in the November 11 fortnight. For the rest, central bank said the CRR remains unchanged at 4% of net deposits.

For deposits in the above mentioned dates banks cannot give then as loans as they have to keep 100% of it as CRR with RBI. They cannot do business with this until RBI revises this again.

For this money banks have to pay savings interest rate as promised in their terms and conditions but cannot do business with this money.

So What may happen to banks?

In the short term for at least 2-3 months there is going to be a liquidity crunch, so the loans limit will get reduced. Of course withdrawals limits may not get effected as it is a very small percentage of the money taken out from the banks. But business, home and personal loan limits will defiantly get reduced.

As a result of this, the next quarter results of banks is surely going to be less than the same quarter of the previous year.

Learn if managing or adjusting a trade can turn a loss making trade into profits.

In short the answer is yes and no. But technically speaking answer is NO.

First of all why I am writing on this topic. Refer my yesterdays post. I got at least four inquiries asking me why they should do my course when the strategies are not 100% guaranteed?

I was a bit surprised. All these four people were highly educated – as the way they were speaking fluent English I guess they were well educated.

In general this is what I answered:

Do you invest in equity mutual funds? All of them said Yes. Then I asked but they clearly say in disclaimers that “stock markets investments are subject to markets risk and returns are not guaranteed”, then why you invest your money there?

All four had no answers. Then I said, look when you trade, buy a stock or do any trading in stock markets in cash, derivatives or commodities, risk is always there. What is more important is that after one year of trading if you can beat inflation in the country where you are trading, then you are making money else you are not.

For example currently in India inflation is in the range of 6% to 7%. So if in trading or mutual funds investments you end up making more than 7% after paying brokerages and taxes you are doing better than a Fixed deposit in banks.

In USA inflation is close to 0%. So there even if you make 2-3% a year from stock trading you are making money not losing it.

But in India if you are making 2-3% a year you are losing money because inflation is 7%, and you have to beat that else inflation will eat your money.

Indian government has made strict rules that other than fixed deposits no one else can say that this much return is guaranteed. That is the reason even mutual funds never say the results are guaranteed, but results do come we all know.

The guaranteed word if used is illegal and I just cannot do anything illegal. This is the reason why I am against giving tips though I get many calls everyday asking me to give tips and these people are willing to pay instantly. I refuse instantly and keep the phone down.

I am also morally against providing tips as it makes people lazy. There are thousands of lazy people willing to pay to make money without working hard. These are targets of tips providers. I am sure a lot of you know after paying them what happens. You lose money trading their tips, you lose money giving them their fees every month, you waste your precious time, you learn nothing. All in all FOUR losses.

I am also totally against telling anything illegal in my site therefore in every testimonials you will see these lines: Results may vary for users.

Since it is a course it is common sense that results will differ from trader to trader, as they enter and exit at different times but at the end of the year if they made above 7% return they made money. It does not matter if one made 25% and the other made 35% in one year. What matters is they both got the course’s worth and their money’s worth what they paid for the course.

Refer my yesterdays post where I had written – The right path to success in increasing order – is patience, persistence, knowledge, hard work and humbleness.

The wrong path are – greed, dishonesty, illegal means of making money, taking short cut to success (speculative trading).

If you take the right path and have patience, success will touch your feet one day. But to compound it, you still need to keep walking in the same direction called the right path.

If you take the wrong path, you may see small success pretty soon, but that’s called beginners luck after that destruction will take over, and you will start losing money fast.

Lazy people looking for tips to get rich take the wrong path and the results they see in six months or less. Just read the above paragraph – this exactly happens to them.

Next question most ask is Can Adjustments or Managing A Trade Turn Losses Into Profits?

Let me take an example. A lot of people trade the short strangle or short straddle. And keep moving it as per the stocks movement and they think they are adjusting or managing it. Really? What if you close a trade that made a loss and got into another trade? In technical terms you took a loss in your first trade, you did not manage it, and then got into a second trade. The second trade has nothing to do with the first trade.

The result of the first trade is that it made a loss that is all. If the second trade made a profit you took 2 trades and the first made a loss the second made a profit.

You did not manage it or adjust it. This is what you think. But the fact is you traded two trades. The first went for a loss the second result is unknown until you close it.

So please do not live on the thinking that managing a trade means there is some trade in the world that guarantees profits 100% of the times.

Let me tell you loud and clear.

THERE IS NO AND THERE WILL NOT BE ANY STOCK DERIVATIVE STRATEGY IN THE WORLD THAT GUARANTEES A PROFIT EVERY-TIME IT IS TRADED. THERE IS NO 100% GUARANTEED TRADE OR STRATEGY IN THE WORLD.

If someone is telling you this please be warned – they are just telling you a lie and please stay away from these people.

With my Strategy 1 in the course the success rate is 70-80% in one year and the rest of the time there is a small loss of 2% on margin block due to powerful hedge and then we move to Strategy 2 to recover the loss. This is called a well planed strategy not managing the strategy to convert a loss making strategy into profitable one.

I will never tell a lie to sell my course nor over-state it. I just tell the truth because honesty and client servicing is much more important to me than the money that I make from the course.

If I become dishonest one day either the laws will punish me or Gods. I fear both. I just want to live a peaceful and happy life which I am living now. Money cannot buy love, peace or happiness it only buys luxury. I have my own home and a lovely family. I want more love, peace or happiness and thank you messages from my clients (which I get plenty everyday). Thank You Very Much. 🙂

I am very happy the way life is going and due to greed I will not destroy it. I would rather destroy greed which I have already done.

To conclude managing or adjusting a trade does not mean turning a loss making trade into a profitable one. It only means taking a limited loss in a trade and getting into another trade.

My Strategy 2 is not just another trade, it is a well planned trade, for that to beat, Nifty has to show some ego – which it does not have. Strategy 2 is basically taking benefit of a situation in a well planned way which is very rare to give loss.

Read to know how hedging your Option and Future traders can help protect your capital.

Note: Expiry Day Today For November 2016 Options and Futures. Please Close All In The Money Options and Futures of Current Month. Today is expiry day for all options and futures expiring on 24-Nov-2016. Please make sure to close ALL Options and Futures trades.

All Options expiring today, whether Buy or Sell, if In the Money (ITM) by 3.15 pm please close them at the best rate possible.
You may or may not close Options that are Out of The Money (OTM), buy or sell. You can let them expire worthless. This will save you brokerages and STT (taxes) involved. Since they will expire worthless they will be ZERO so no need to close. If you do not, you will save money.

All Futures expiring November 2016, whether Buy or Sell, by 3.15 pm please close today at the best rate possible to avoid being closed by the broker or the risk management team. They close at market rates and you cannot do anything about it. So please close yourself.

People who have done my course must be tension free today as they are least bothered about expiry. For conservative traders like us there is nothing called tension as far as trading is concerned. Moreover there is nothing as greed also, as we are happy even if we make 2-3% profit a month.

They have learned through the conservative strategies in my course, proper hedging methods that keeps their money safe over the long term. Even if there is a loss it is at most 2% of margin blocked. On top of that there is Strategy 2 to recover most part of that money lost or even make a profit.

A lot of people say why don’t you keep losses in your testimonials pages. The reason is pretty simple – losses are there but rare so why keep it. Any way I am not like others that I will hide the losses. Here is one loss trade, but see yourself how happy he is even after the loss, as he recovered it almost all, in Strategy 2 at a time when the markets were going through a lot of Volatility and movements and when directional traders were counting their heart beats when everything they were doing was going wrong.

Before seeing the below image let me tell you one thing clearly that there is no strategy in the world that can guaranteed 100% times profits always when traded. And there is no way to manage a trade and turn a loss making trade into a profitable one. If someone is telling you that they have a strategy that guarantees 100% times profits it is a plain lie. Risk is always there in trading the stock markets, but a strategy is good if it makes money over a period of 6 months no matter how many losses or profit percentage is there in that trade. If in 6 months you have made a profit trading that strategy at least 6 times consider it to be a good strategy. So losses will be there but over all it should show a profit after trading at least 6 times.

Click here to read why managing a trade or adjusting a trade does not guarantees a profit.

WhatsApp Testimonial – 22-Nov-2016 – Results may vary for users

Here is one very important information for traders doing directional trades thinking they will make a lot of money very soon: Only one person knows what will happen tomorrow. He is called as GOD.

We are humans, oh sorry – ANIMALS. How much ever we study about future, we cannot predict what may happen tomorrow, even for our own life. I request you to shed your ego and become a non-directional trader. Take your call it is your money, but I care for you, else my course fees would have been 30k and people would have still paid.

Fortunately Gods have given me the extreme power to control greed.

No, I am not saying that money is not important and you should not try to make more. You should, but always take the right path to make money not the wrong direction.

The right path to success in increasing order – is patience, persistence, knowledge, hard work and humbleness.

The wrong path are – greed, dishonesty, illegal means of making money, taking short cut to success (speculative trading).

If you take the right path and have patience, success will touch your feet one day. But to compound it, you still need to keep walking in the same direction called the right path.

If you take the wrong path, you may see small success pretty soon, but that’s called beginners luck after that destruction will take over, and you will start losing money fast. One recent example is the demonetisation effect which has already gripped our country. I am sure there must be lakhs of people who have not slept well since our Prime Minister announcement of demonetisation of Rs. 500/- and Rs. 1000/- notes. Years of illegal money made turned into a piece of trash within seconds. Black money holders were rich before 8-November-2016, from 9-November-2016 they have become middle-class or poor. This is what wrong path can do and an attack can come either from Gods or from laws or by your own foolish or greedy mistakes.

Earning money in stock markets is not different. Name me one greedy option trader who only bought options and became a millionaire in one year. There is NONE and there will NEVER be ever one.

Learn to make money slowly and become a millionaire in a few years, or, try to make money fast and lose all in few months the choice is yours.

I was in the “make money fast” group of loser traders from 2007-2010 and lost more than 7 lakhs (100% of my savings gone). I then took a job and a loan to survive with a pregnant wife at home who also left her job as she was 8 months pregnant then.

Imagine my situation. And I hope you understand now, why I left greed in 2010 and turned to books and knowledge seeking.

Today I am not even in the “make money slow” group. I am in the “make money very slowly but compound it safely” group, and believe me I am very satisfied and happy with the results.

Yesterday morning when you all traders were busy looking at Nifty and tensed with losses or profits, my wife and me were watching a movie (we usually go morning shows as we get the best seats at the lowest price in the best multiplex in Kolkata). I was least bothered with what is happening to my traders, as I know I have bought protection (hedging) for my trades and it is their job to take care of my capital. Who cares for trades when a security guard (hedge) is employed to take care of the capital invested? Yes there is a small price to pay for hedging options or futures, but if it can save my money then why not pay

Of course during the interval I come out of the theater and check the trades on my mobile, if the desired profits have come, I call my broker on phone and ask them to close my trade. How much time does it takes? Less than 5 minutes. Happily I go and buy some popcorn and watch the rest of the movie with my wife while enjoying the popcorn. 🙂

This is called living a rich life. Rich life is not about how much money you have in your bank account or in your locker. Rich life is about how much least bothered you are about money and how much time you have to enjoy a portion of your money without ever feeling guilty of spending it on things you love and when you want to spend it.

Rich life is doing what you want to do and when you want to do without taking permission from anyone. Of course I always do good things in my life. I do not even smoke to hurt others.

We do not buy anything we do not need even if it comes with a huge discount, but we buy anything that we need without looking at the price tag. This is what earning and spending money in the correct way can do. There is no tension in life at all.

Hope you understand the benefits of trading with hedging and not trying to trade the direction to make a lot of money but actually losing a lot of money.

Read this article to know during a huge fall mid-cap companies perform better.

I did some research today to find out what kind of companies will perform better in a rally if it comes after a huge downfall.

Here is what I found out.

Please have a look at the two images below taken on 22-Nov-2016 (Tuesday) at approx 1.10 pm to do a detailed research on what companies will participate most in a rally.

Here is image of last 30 days best performing companies on 22-Nov-2016 (Tuesday) from list of ALL stocks that are traded in NSE (National Stock Exchange):

Top Gainers 30 Days on 22-Nov-2016-NSE

Here is image of last 30 days best performing companies on 22-Nov-2016 (Tuesday) from list of Nifty-50 stocks only that form the basis of Nifty movement and are also traded in NSE (National Stock Exchange):

Please note that Nifty will move on the basis of these Nifty-50 stocks only. If they move positive and the rest move negative still Nifty will move positive. If Nifty-50 stocks move negative and the rest move positive, Nifty will move negative. From time to time the market makers of Nifty decide which stock to keep in Nifty 50 and which to move out as only 50 stocks are kept in Nifty 50. There is a selection criteria based on which a company qualifies to be in that elite group.

Here is the image of top Nifty-50 performers since last 30 days as on 22-Nov-2016:

Top Gainers Last 30 Days Nifty 50 Stocks on 22-Nov-2016

Here is the image of top Nifty-50 losers since last 30 days as on 22-Nov-2016:

Top Losers NSE Last 30 Days As On 22-Nov-2016

WARNING:

Greedy traders buy these stocks as they think a 90% fall will give them a 90% return as soon as the stock bounces. And they think it will happen in 30 days because the stock fell more than 90% in 30 days. This is nothing but pure speculation and greed which you MUST AVOID. Never enter an unknown stock if it has fallen huge. Only buy stocks that are well known among all stock traders and a company with a strong ECONOMY MOAT.

Update: I got a good response as a comment in this post so I have added it in the post itself as very rarely people read the comments:

Question: The top loser in your list like Viji Finance & Karur Vysya Bank is not looser to such a huge amount. Data for Viji finance is wrong in your source, & Karur Vysya Bank is down due to sub division of face value from 10 to 2.

The same is with Indo count stock split from 10 to 2.

So the thing is before jumping to conclusion we have to think for reasons of fall also.

My reply:

Yes I agree, before coming into any conclusion a research is a must, but even the topic of the research is also important to see whether it deserves our time or not. In fact I got a few emails also about the same things which I will upload. But frankly please try to understand what I am saying which is the essence of the article that:

Do Not Get Greedy and Buy any Unknown and Less Traded Stock Under Any Circumstances Even if There Was a Split. A Split Does Not Justify Buying A Stock.

In fact all the stocks that you have mentioned, I heard for the first time. 90% of the stocks in that list I had no idea about and heard for the first time.

For example my website name is The Option Course – as soon as someone reads they will understand what it offers – it does not offer tips on Options, it offers a course on Options.

Hope it is now clear why I have said we need to stay away from these penny stocks.

What did I find out:

1. Not a single Nifty-50 company is in the top-performing list.
2. The top gainer of all companies is PNB Gilts Ltd. As of writing it has hit an upper circuit and trading is halted on this stock. In the last 30 days it is up by 67.37%. This is huge.
3. The top gainer of Nifty-50 companies is Hindalco Industries with a gain of just 8.17% in the last 30 days. Compare this to 67.37% of the top gainer.
4. Only 5 companies out of 50 are in positive the rest 45 have given negative return in the last 30 days. That is the reason Nifty is down since last 30 days.
5. Top loser in Nifty 50 is Asian Paints Ltd. sitting at a loss of 22.31%.
6. Top loser in all NSE companies is Viji Finance – from a high of 170.95 to trading at 12.00 today, which is a loss of 92.98%. Almost all money gone in 30 days. Which means unknown companies fall like there is no tomorrow.

IMPORTANT ADVICE WITH A WARNING:

DO NOT ever buy shares of companies that are not known at all to common people. In fact just today I knew about a company called Viji Finance. Even if it has fallen by 92.98% – I will still not buy it even if I want to buy just one share which is trading at Rs. 12/-. I would rather buy a chocolate for Rs. 50/- and give to my kids than buying even one share of an unknown company. Please NEVER EVER LOOK at these companies when you think of buying stocks. There are plenty of companies which are well known among retail traders and if you still have no idea please do research on only the Nifty 50 companies if you want to invest for long term in stock markets. Rest of the shares buy only after gaining some experience.

Here is where you can find list of Group Wise companies traded in BSE and NSE. Your research should be limited to Group A and B from NSE or BSE. The rest of the groups please do not even open the link so that by mistake you invest in a bad company.

http://money.rediff.com/companies/groups
http://money.rediff.com/companies/nseall
http://money.rediff.com/companies

STAY AWAY FROM GREED. IT NEVER MAKES MONEY.

What does my research says?

Bigger rally will be in Group B stocks. Unfortunately or fortunately they DO NOT contribute in the movement of Nifty so when Nifty will start moving up the move will be slow not like the way Group B shares will move.

This is Good News For What Kind Of Investors?

Those who are doing a SIP (systematic investment plan) monthly equal investments in 4 or 5 star rated mid-cap mutual funds. Within 4-5 months they are going to enjoy huge profits. If you are invested in mid-cap mutual funds please do not sell and exit now. This is time for some patience testing and more investing rather than losing patience and selling. Do not do it. Stay invested. It is matter of just some more time.

What others can do who have not invested in mid-caps?

Frankly it is better you sit on the sidelines and start investing in a good mid-cap fund by the SIP route. It is automated so there is not much work involved except just once when you decide to start.

Now days you can invest online in mutual funds as well. Of course you need to do KYC (Know Your Customer) which they will inform and collect the requisite documents from your home.

Please try to invest in direct-funds rather than through a broker in a normal fund. Direct funds give almost 1% return more than a normal funds where a broker is involved because some percentage is given to him for bringing a client and part of profits are also shared with him. That’s the reason I have shifted all my mutual funds holdings to Direct-Funds.

My returns are almost 12% per year since 2011. When I started investing in mutual funds, I did a few mistakes but that was due to bad advice by my broker who invested all my money in an NFO (New Fund Offer) which lost 10% in one year.

Of course this loss again forced me to do research on mutual funds as well. Now I do not invest in any fund which is less than 5 years in existence. Also I make sure it is rated a good fund 4 or 5 stars by CRISIL or Value Research or Money Control. And of course I invest in direct-funds only so that no broker takes my share of gains. Please click on the above links and research.

Strong Disclaimer:

This is NOT a tip providing website. The above article is for educational purpose only. Before investing in any mid-cap mutual fund or a company please do your own research. Stock market investing is subject to market risks so please invest carefully and control your greed. Systematic investments is the best way to invest in any stock or a mutual-fund.

You see markets are struggling to recover. The reason is pretty simple.

Traders are still confused. One is the Donald Trump win, and, the Second is the demonetization of the 500 and 1000 notes.

Some media people say, people supporting but economy crumbling as retail shopping is getting sluggish sales, and some media people say, people not supporting but over the long term economy will get a boost. It is matter of just a few months of inconvenience.

Fact is media is media and reality is reality. Fact is traders are currently uncertain about the future and when traders are confused markets usually falls.

As you can see it is falling but not like sudden fall. Confusion arises greed as well. Opportunistic traders with lots of cash waiting for a fall, actually come into action when markets sees a 10% fall. This is the time they enter into the markets and buy good quality stocks.

Through my newsletters to my course subscribers I have been telling this since last one week. I am sure the ones with a lot of money must be buying the stocks.

Let me also give you some more real facts which will explain the situation.

For this month of November till now FIIs (Foreign Institutional Investors) were big sellers in the market. Till now they have sold more than Rs. 12,000 crores worth of stocks in equity cash market.

On the other hand DIIs (Domestic Institutional Investors) were actually net buyers. Which means they bought more worth of stocks than they sold.

Even though a lot of money in Indian stock markets is invested by FIIs (Foreign Institutional Investors), if you go back and track performance history in Indian stock markets, the DIIs (Domestic Institutional Investors) have performed much better in terms of returns than the FIIs (Foreign Institutional Investors).

Why?

Because in India DIIs (Domestic Institutional Investors) are mainly the people’s money invested in Equity or Hybrid mutual funds. Someone gets in, someone gets out, but overall the investments in mutual funds in India has seen a tremendous growth especially after the stock and shock meltdown of 2007.

Hope you remember that the world over stock markets crashed by almost 40% in 2007. A lot of investors and derivative traders lost money in that fatal year. Hey, even I was one of them. Unfortunately year 2007 was when I started trading and lost heavily.

Unlike a lot of other people, beginners luck did not support me but with God’s grace I am still here because of knowledge, dedication, persistence and patience to make money from the stock markets. Out of the above four, it is knowledge which has helped me a lot.

A lot of people have asked me if there are videos in my course. It is strange people think videos can teach trading.

Name me one person in the history of the world who has become a great investor, trader or a great businessman watching movies and videos? NONE.

Name me person(s) in the history of the world who have become a great investors, traders or a great businessman reading books and applying knowledge. MILLIONS.

In fact almost all of the great businessmen and investors have read hundreds of books and still keep reading. They never go to YouTube to watch videos on how to improve their business or become great traders. All they do is keep buying good books.

Another example is if videos actually gave knowledge, then why schools and college going students are given books to read? Why they are not given a mobile and asked to watch videos? They can even do away with teaches and their salaries and make more money. Fact is they know very well videos cannot impart knowledge. They can only help, but real knowledge comes from reading books. I can tell you with guarantee that even hundreds of years from now videos will not be able to take over from books in schools and colleges. They will be kept as helping tools only, the main source of knowledge will still be books.

If you want to know about me. I HAVE NEVER WATCHED A SINGLE VIDEO till now on trading. If I do watch videos it is mainly to understand a subject (which I already know) well, or to teach my kids or interviews of great personalities, listening to their speech etc. When I find something interesting, I pause the video and write it down on a piece of paper.

But, I can understand why people ask me if videos are available in the course, because its is a leisure to see them, whereas reading is hard work. Which one brings better results? Hard work or leisure? I hope you know the answer.

Conclusion:

INDIA VIX is continuously falling giving strong signals that Indian Stock Markets have started to stabilize.

Please refer my yesterday email for more information on why INDIA VIX keeps changing.

INDIA VIX today is down by 4.65% and is currently at 17.84. This is a clear indication that Nifty is getting very stable.

It is a request to directional traders please do not take any directional bets as you may suffer huge losses.

If profits are coming, due to panic and excitement, you will take it out in 10 or 20 points maximum, but if in loss, in the hope of a recovery, you will wait till expiry and lose 50-100 points. That’s the real life of a directional trader. It is sad but true. Hey I was a directional trader once from 2007-2010 and lost everything I had in savings in 3 and a half years time. Please read the mistakes I did too. I am sure some of you are doing the same mistakes I did years back. Please do not do them you may see the same results I saw.

That’s the reason I converted from directional trader to a VERY Conservative Non-Directional Trader.

I know you are a free subscriber but since you have given me your email it is my duty to ensure you do not lose money trading.
But unfortunately my job is limited to tell you the truth. I have no control over what you do, so to trade the directional or not, is your choice, but frankly it is a very dangerous life for a directional trader.

Read the following articles to know why directional traders lose money over the long term:

Aggressive trader loses more than Rs. 2 Crores trading options

Some other articles to know the realities of stock markets and to increase your knowledge on trading:

In this article learn what Is INDIA VIX And why it changes in the stock markets.

As you can see INDIA VIX Is Continuously Falling, what does it indicates?

India VIX 17-Nov-2016

You can see INDIA VIX here.

First what is INDIA VIX?

INDIA VIX is measurement of Indian Stock Market Trading Volatility.

VIX is Volatility Index in stock markets. It is measured the way patterns in trades changes in the markets, or are expected to fluctuate in coming days. If too much trading is done or is expected due to some event, which is above normal trading days, Volatility Index increases. It usually increases before some big news is announced because it is a clear sign that too much trading may happen. Like the recent US elections.

Why does it increase before the news is announced?

The reason is obvious that too much trading will happen because traders get panicked and to save their positions start investing in speculative shares (greed following), or buy/sell too much calls and/or puts (again greed following). It does not matter to markets who wins or who loses money, but Volatility Index sees or is expecting to see abnormal trading patterns and increases accordingly.

Once the news is announced it starts to fall.

Why does it falls after the news is announced?

It is simple, traders start to close their positions. Buyers become sellers, and sellers become buyers and trading slowly starts to get back to normal. And frankly this is expected after the news is announced so VIX starts to fall.

When the VIX measurement software sees trading patterns getting back to normal it starts to fall. Of course it takes some time for the trading pattern to get back to normal as not everyone closes their positions the next day. Some do the next day itself or same day so most VIX falls the next day itself of the news announcement day.

You can go back to INDIA VIX history and see that the max fall of -6.99% was on 10-Nov-2016 when the final results of Donald Trump winning the US elections was clear by night of 9-Nov-2016.

India VIX from 1-Nov-2016 to 17-Nov-2016

After that there was an increase of 12.34% but it had to do with a different news – The Demonetization of Rs. 500 and Rs. 1000/- notes and its effects in Indian economy. People were confused and trading patterns changed.

This is a good question in the comments section and I think this must be included for everyone to read.

Question: Is the increase or decrease of India VIX associated with bullishness or bearishness?

Answer: No. Usually VIX and Nifty are inversely related as far as direction is concerned. If you see Nifty and India VIX history, whenever Nifty falls India VIX increases and whenever Nifty rises India VIX falls. But it has nothing dodo with Nifty as VIX is least bothered about what is happening to Nifty. As written in the article above VIX increases due to panic among trades and expectation that speculative trading will start. Sometimes you will see Nifty will rise still VIX will also rise and vice versa. So basically VIX movement has its own set of rules and Nifty has its own. Inverse relation is mostly just a coincidence.

Hope it is now clear why India VIX changes everyday. If you have any more doubts please ask in the comments section given below. If the question is good it will be included here in the article for everyone’ benefit.

Read to know why Nifty or any stock market in the world moves up and down.

As you can see today (16-Nov-2016 at 11.23 am) Nifty is at 8156.20 just 47 points up or 0.59% up from yesterday’s close.

This is the beginning of stability. Please refer my yesterday’s post where I had written not to panic as Nifty will soon get stable. As you can see sign of stability has arrived.

You see a simple thing called Human Psychology working here. People who wanted to go short have given their best. There is something called as risk management. You can’t sell your home and short Nifty right? That limit for maximum people if arrived then stability will come, then these same people will start booking profits.

How do traders who have gone short on markets book profits? They need to buy back what they have sold. Which directly means to invest money in stock markets.

For example those who have sold Calls may be in profits but those who have sold Puts may be in huge loss. Now they must be getting phone calls from their brokers to invest money as their trade is in loss and margin blocked over. Some will infuse more money in their demat account in hope of a recovery, some will not, and their broker will close their positions as soon as max margin block gets close to nil as a risk management measure.

Which means infusing or investing money into the stock markets. Many ask for collateral from their brokers to trade derivatives. These people will buy more stocks to increase their collateral margins so that brokers do not sell their shares at a loss to cover the damage as a risk control measure.

Similarly those who bought Calls will be in huge loss, and those who bought Puts will be in huge profits. They will see their Puts to take out profits and who pays them money? The traders who sold Puts.

If no shares were bought money is not invested in stock markets. just derivative trading is done. But if stocks bought to increase collateral or just to make a profit then yes money invested in stock markets and Nifty will rise if money invested is more than money withdrawn that time.

If everyone starts selling shares – the Nifty 50 stocks, Nifty will fall down fast. And if everyone starts investing in shares – the Nifty 50 stocks, Nifty will start to rise. If both buy and sell are almost same, stock markets will be stable that day. This happens 80% of the days. Please remember that this is applicable to all stock markets in the world not just in India.

Hope the logic of why stability comes in markets and why stock markets goes up and down is clear.

Please ask me questions or leave a comment below if you have any doubts.

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