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Read to know how a country benefits from stock traders whether they are long term investors or short term traders.

Due to FED not changing rates (especially not increasing rates) we saw markets rally like fire yesterday. Today they are again stable and not going anywhere. Remember what I said yesterday?

Emotions and media have a bigger role to play in stock markets than economy of a country. I would give 50% to emotions, 30% to media and only 20% to economy for rise and fall of markets the world over.

Yesterday emotions were high so there was a rally. Today no news, no emotions, so nothing to do in markets. Isn’t the news still fresh that FED has kept rate unchanged? So why there is no rally today? Because 50% of what makes the markets move is absent – there are ZERO emotions in play in today markets.

It has slightly fallen down because all those who made money in yesterday’s rally are booking their profits seeing no more rally.

This is a useless short term traders life – one day profit another day loss – ZERO fun, full of stress and no money at the end of the month. After one year again look for a job.

This is the reason they are called SHORT TERM TRADERS – it is a very apt term. Their life as a trader is short term, then they stop trading and start looking for a job.

What happens to Long Term traders? They keep trading for long term and keep making money for long term. Short term traders come in the market give a great gift called “money” to long term traders – long term traders take that money and say “thank you” to short term traders and then short term traders tell them “good bye” and leave. 🙂

Then new short term traders join the markets. The story repeats again. This keeps happening for years. Long term traders remain the same whereas short term traders come with cash and go out without cash.

Myself and all my clients we are all medium term traders – we have best of both world. Long term traders make huge profits but it comes after a few months or even years. We make small but consistent profits in a few days. Over all long term traders make money, medium term traders also make money, while short term traders lose money.

You must have heard that 95% of traders are losers. Almost all of that 95% traders are short term traders, rest of the 5% traders are either long term or medium term traders.

If you are a short term trader I highly recommend that please do my course, at least I will show you the path to trade peacefully and make small profits in a few days. Yes too much trading is not involved so this will also make sure you save money in brokerage plus keep making money consistently. If you want to join the 5% club of traders who make money then do my course, if you love losing money and want to remain in that 95% club then do whatever you want.

Anyways coming back to how a country benefits from stock traders whether long, short or medium term traders.

When the news came in that FED will not increase rates people with a lot of money to invest have nowhere else to go except the stock markets for a better return. That’s the reason there was a rally yesterday.

Fact is if low rate for a Fixed Deposit is there which is not very attractive, investors will invest in stock markets for a better return. Do not forget that in most countries income tax in stock investing is much lower than income tax in Fixed Deposit in banks.

Governments do this so that people keep investing in stock markets. Otherwise if FD returns are great which is guaranteed, no one would buy an IPO (Initial Public Offer), or invest in stock markets and buy shares of a company.

In India FD rate is around 7.5% today for an year. Imagine FD rates increasing to 15% a year. Not a single person will invest in stock markets even mutual funds. Everyone will invest in Fixed Deposits. Stock markets will tank which is not good for the companies doing business and listed in stock markets. Not a single IPO will ever come.

If no one invests in stock markets then no company would be able to take money out of the stock markets and increase their business and give jobs which helps in a countries development.

Keep this in mind that taking money from stock markets is not a loan for these companies. They throw an IPO, take millions of dollars from the public through IPO and never return. When you sell a share of a company it is not the company that gives you back the money, it is some other trader like you who buys the stock from you. Whatever money comes from IPO valued in crores is for the company to keep and expand its business. The only thing it gives back to the country is generate employment which helps in development of a nation.

So indirectly when you are buying a stock you are helping in development of a company directly and your country indirectly. Since you are doing a good job, government gives you a tax free return on profits if you keep that stock for just one year.

Why one year why not short term? Two reasons:

1. Technically the market makers like SEBI, NSE, BSE, MCX do not want short term trading and to discourage them 1 year is the minimum investment required to get a tax free return on profits made. Note that the company does not care if its stocks keep changing hands in 1 year or 1 second because it got its money anyway, but market makers do care as they want people who invest in stock markets to make money. They are intelligent people and they know if investors are invested in good companies for 1 year at least there is a very high chance that they will profit, else there is a very high chance they will lose money so 1 year is being lured.

2. Fact is here or there a country needs money for development. And how can they get money from its people? Direct or Indirect taxes. Now when you buy a stock and keep it for one year it is obvious that had you kept than in a Fixed deposit you would have made 7-8% in that one year but you have to pay taxes on that. In short FDs are not tax free because when you do an FD directly or indirectly you are not helping your country but helping to increase business of a bank or that financial institution. Your FD money is given as personal loan, home loan, car loan or business loan to a person or a company to make more money. The banks give you 7 or 8% in return for FD, but charge more than 12% to people who take a loan from them. The difference of 4 or 5% is the banks profits not the county’s profit so the government has kept a tax on Fixed Deposit even if done for 5 years.

However if you buy a stock or invest in an IPO, you are helping a big company to grow which will generate employment which is good for development of a country therefore its tax free. But then how will the government make money if everyone is invested for 1 year? No it will not.

Short term players fill the gap. 🙂

See how even a country benefits from short term or long term stock market investors.

For short term equity investors you have to pay tax on your profits for the entire year. Short means holding a stock for less than 1 year. Of course you cannot hold a derivative like Option or Futures for 1 year so you have to pay a tax on the profits.
As far as I know in stock markets there are short terms taxes, as written above and long term gains. I am not an tax expert as my tax filling is done by an expert and frankly I do not ask him any question as he is very good in his job.
But if anyone of you is an tax expert reading this please email me how taxes are calculated on derivative profits in India. I will do research and write another post someday.

A lot of people have asked me this question but since I do not know, I am unable to help them. By telling me you will help a lot of people so do please tell me if you know how in India derivative profits or loss are being taxed.

Coming back, short term traders in reality give more taxes than long term traders as long term stock investors either through mutual funds or direct investing do not pay tax to the government at all. This the government also knows therefore they tax the short term traders.

It does not matter if only 5% of short term traders make a profit. Fact is take an overall view ultimately the government makes money from stock markets from short term traders and the country benefits from the long term investors. So both help the country to develop.

To Conclude:

1. Long term investors help their country develop indirectly, and
2. Short terms traders help their country develop directly by paying taxes.

Just to add that all profit making companies pay taxes too to help their country develop, so indirectly long term investors are also paying taxes. This is the reason the Dividends are not taxed as the company sends dividends only after paying taxes. So if Dividends are taxed it will be double taxation which is injustice, so it’s not taxed.

But the fact is the worst lot are the short term traders.

Why because those 95% short term traders who lose money are neither taking their family and future forward nor taking their country and its future forward.

In God’s eye it’s a SIN.

There is nothing wrong in trading the stock markets short term but try to use your brains and be in that 5% who are winners. They make money and take their families and future forward and also their country forward.

This is what your Government wants, this is what you and your family wants, this is what the world wants and this is what God wants.

The purpose of my site is only this – to educate short term traders. What did I get by taking two hours to write this article? Nothing. But I know someone will benefit. If yes my job is done else I wasted my time.

But anyway I am so happy that I am trying my best, the results are not in my hands. It is God’s hands. Our job is to work hard and show people the correct path. To follow that path or not is your choice.

So I conclude with this simple sentence.

Work hard, get knowledge and trade well. You will not only take your family forward but your also country forward.

Thanks For Reading.

Due to the Federal Reserve FED keeping interest rates unchanged markets all over the world has rallied.

I hope most of you must have known by now that US Federal Reserve FED has not changed interest rates and kept it same. Due to this news stock markets all over the world have rallied.

I was thinking why this is happening? After all technically nothing has happened. FED interest rates were same yesterday as it is today. So why this rally because of technically no news?

Here is where media comes in. Some of them said, FED may raise interest rates, some said FED may keep it same, some said FED may take a decision so that investors of USA do not go to developing countries like India and China for investments.

THIS CREATES CONFUSION IN TRADERS MINDSET. And a lot of trading starts happening on speculations. Due to this VIX or Volatility increases.

Some buy PUT as per the news they read, some buy CALL as per the information they got. Some try to play Volatility and buy both CALL and PUT. Some sell Calls, some Puts, some both. A lot of useless, knowledge-less trading goes on.

End result is rarely anyone makes money.

Once the news is out again media comes in and says FED keeping rates unchanged is good for stock markets, and wow people start investing like there is no tomorrow. The result? Markets move up.

Emotions and media have a bigger role to play in stock markets than economy of a country. I would give 50% to emotions, 30% to media and only 20% to economy for rise and fall of markets the world over.

I hope you understand now why VIX or volatility increases before a big news and decreases just after that.

Let us see what is INDIA VIX today.

At the time of writing INDIA VIX is at 13.69 or 1.11 less than previous close, or has fallen by 7.50%.

To tell you the fact, I did not see INDIA VIX until I wrote the line “Let us see what is INDIA VIX today” because I knew it is almost certain that INDIA VIX would have fallen as the FED news is out.

This is experience. No media getting into head, or no news getting into head. Just trade as per your knowledge and experience and make money.

Good news for those who have done my course. As we know direction does not matter. Just book profits as INDIA VIX has fallen sharply. And wait for my next instructions on when to enter Strategy 1.

Tomorrow I will tell you how a country benefits from stock traders.

It is a request please read tomorrow’s email whenever you find time. Do not miss it.

Thanks.

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Bank of Japan‘s monetary policy is out. BOJ will keep its rates unchanged for the time being. It is keeping its deposit rate unchanged at negative 0.1 percent. Yes you read that right they have a negative return on investment which means if you deposit your money there in Bank of Japan, you will get 0.1% less than what you deposited. Compare this to what our banks give in a Fixed Deposit – right now it is at 7.75% average a year.

You must be thinking we are so lucky to be living in India. Actually the fact is the rates depends a lot on current inflation.

India’s inflation in July 2016 was 7%. And banks gave a Fixed Deposit return of 7.75%. So if you did an FD your money beat the inflation by just 0.75%.

Now let’s go to Japan. In July 2016 Japan’s inflation was -0.5%. Yes minus 0.5%. So if they keep their money in bank in a savings account all they might get back is may be around -0.3%. So basically if they keep their money in bank they will beat inflation by 0.2%. But if they do a fixed deposit according to Bank of Japan rates they get a return of 0.5-0.1 = 0.4%. Which means their money beats inflation by 0.4%. So in economics terms it is getting a return of 0.4% a year. In India a FD gives a return of 0.75% a year. Do you see a major difference? No.

So my point is that education makes a difference. Those who just read the news that BOJ has kept the interest rate at -0.1% must be thinking to be very lucky to be born in India to get a FD return of 7.75%. So in their minds the difference is 7.85% but the real fact is, keeping the inflation in mind the real difference is only 0.75-0.4 = 0.35%.

Do not forget in a negative inflation prices of everything goes down. It includes prices of land, houses, food items, clothes and everything else that we buy to live. I do not have the knowledge of the salary they get in Japan but frankly salaries also goes hand in hand with inflation slightly beating it. Like in India salary increases anywhere from 8-10% a year I am sure in Japan the salary increase will be negligible or just 1%.

If you compare to inflation vs salary increase of India and Japan, you will see there is not a major difference between the two countries.

This is the difference good education makes. Short term traders read one or two lines news and react instantly – buy a call or a put and force themselves into trading then never read the news again thinking they have done a great trade. Some might have bought calls to day some puts and both are losing money. Long term traders think what may happen next few days or even month or two, then do some more research based on that they take a trade fully hedged.

The results are obvious: Short term traders make 5% return a day next day they lose 10% and this continues for years.
Long term traders make 3% or more return a month and one or two months is a year they lose 2 or 3% – but overall they grow their wealth and are happy.

In fact it effects their health too. Short term traders keep looking at Nifty every second from 9.15 am to 3.30 pm effecting their eyes and heart and increase in stress. Long term traders look at the performance of their trades just once or twice a day and carry on with their jobs or business. The effect is low stress, happiness and good health.

I still fail to understand even now from the people, 90% of the calls I get ask me the same thing – Sir how long it will take to make a profit? I reply 10-15 days average. Then they say why can’t we convert it to Intraday? My reply is name me one Intraday trader who has accumulated a lot of wealth in ten years time but the condition is all the profits has to come from Intraday trading. Then they say Sir we do not know. Then I say do you think you will do it. Then they say not sure. Then I say then why are looking for Intraday trade? They keep mum.

My point is learn to live in real life do not get sucked into virtual world which has a lot of show off elements but nothing in real.

For example a lot of people spend more than 2 hours every day on FaceBook and WhatsApp with friends, but compare this to a person who spends 2 hours every day with friends in person not virtually available on a mobile phone. Who is much happier? Obviously the one who does real socialization not the one who does a virtual socialization.

Same thing applies in stock market trading. Most Intraday traders except people like Ravi, are living in a virtual world where there is no happiness and money, but almost all long term traders live in real world where there is happiness and money.

Therefore I request you to educate yourself as much as possible before taking a trade. Else you know the results. Hope this article teaches you to be more patient with a long or medium time horizon in investing and stock trading, and not become an impatient very short term trader.

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In August FIIs have invested huge money in India. Our country saw an inflow of more than USD $1.3 billion from listed foreign funds. Most of the money has gone into Passive Funds. If you do not know what a passive fund is, then in simple words it is Index Funds. An Index fund is which mimics the Indian markets. Most of them are highly invested in Stocks which constitute Nifty. What an Index Fund managers does is only invest in stocks which are part of Nifty 50. Here you can find the latest Nifty 50 stocks:
https://www.nseindia.com/live_market/dynaContent/live_watch/equities_stock_watch.htm

The ratio in these stocks investments may differ from fund to fund. This is the reason some Index funds mimic exact returns of Nifty, some beat it slightly and some lag behind the returns of Nifty. But mostly the returns of Index funds and Nifty is almost similar over an year.

Foreign investors do a lot of research to know what may happen to their money where they are investing. It is common sense that USD $1.3 billion is not coming from one fund or a person – it is a cumulative decision. Which means a lot of foreign financial experts feel strongly for Nifty and feel it will bring great results in next one year. Please understand that when experts invest a lot of money somewhere it is not for Intraday trading. They are very wise people, not short term players and greedy traders like Intraday traders. Their average investment horizon is for 1 year at least and they are very happy with even a 9% return in one year, unlike Intraday traders who want 10% return everyday and lose 10% everyday but still do not stop trading.

Let us hope what they have researched comes true as I know more than traders money a lot of money is invested in mutual funds by average income group Indians via Systematic Investment Plan (SIP) method mostly in Equity Mutual Funds, who do not have the time nor money to trade stock markets.

These people will benefit a lot. If you are a trader I suggest invest your money in liquid funds for a fixed return and ask collateral against it to trade derivatives or stock markets. I think most brokers allow collateral against mutual funds to trade Intraday Equity Cash, Options and Futures. I do not know whether collateral is given to trade Commodities as well, but if you know please do inform me. Please ask your broker not me if they give collateral against mutual funds, as I do not know about all brokers in India. There are hundreds of them so it is better you ask your broker.

If your broker does not allow collateral against mutual funds I know a broker who charge very less on trading as well as give great collateral against mutual funds. If interested please fill the form below. I will help and send you free basics links of options too to enhance your knowledge on options.

Please make sure that you write the correct Name, Email and Mobile Number in the “Your Message” space correctly else you will not receive any email from me.

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Two important news are coming this week:

1. FED rate increase news, and
2. Bank of Japan policy meetings.

I think Bank of Japan policy meetings whatever is the news, it will not have much impact in markets the world over as Bank of Japan is not a big investor anywhere.

But yes if FED increases rates not small but big like 2%, then there is a likely fall in markets all over the world. I really do not think it will happen as experts all over the world are saying that FED will keep the rate unchanged. Even if it increases it will be at most 1% which will not have much impact.

Most important outcome of the FED meeting is what its chairman says after the meeting. Experts are waiting for Janet Yellen’s speech for clues on the timing of the central bank’s next interest rate increase.

So please do not worry about both the news.

I am sure a lot of traders will be buying the Long Strangle or Long Straddle today. I suggest please do not do it as a huge move is not expected.

Even if you want to trade then why not trade with a hedge? This is the reason I offer a course where you learn how to hedge in the correct way. When you know your max loss will not exceed 2% you will kick fear out of your system and trade peacefully. But the decision is entirely yours as it is your money not mine.

Thank You.

Today Nifty is up 100 points but Strategy 1 is still making profits. I am sure a lot of naked traders would have been short Future on Nifty (Greed taking over) and will be suffering huge loss now. To be frank please do not mind this but no one on Earth can predict Nifty direction the very next day. Yes we are absolutely certain that within 1 year Nifty will certainly see 9000+ but exact date cannot be told by anyone even those who are the biggest Technical Analyst in India, then what makes you think what you think is going to happen?

Those who bought futures may be in huge profits and must be thinking they are great traders. I am sorry to say you are not, you just took a gamble and it worked. I guarantee that this will not happen always and you will lose money over one year. If you are trading for fun, better stop trading and go out and watch a movie and eat in a restaurant it will give more fun then just watching Nifty every day. I do not get fun watching Nifty for hours everyday. I get fun making profits. Watching Nifty and forcing yourself to trade will not make money.

It is your knowledge and proper plan that makes money. Not watching Nifty. That even a 2 year old kid can do. 🙂

Anyways good to see traders who have done my course thanking me every day as they keep making money. Fact is I still have some 150+ testimonials to be uploaded to the site but I am just not getting time.

To me customer service is more important than how much testimonials I put in site.

So those who have done my course keep trading Strategy 1 and go to Strategy 2 if stop loss hit. And yes work hard on your job as well. Let both stock markets and your job or business make money for you over time, and let compounding do its magic on your wealth.

Do not forget to spend time with your family in the evening too.

Those who traded the stock option strategy, if in profit as stocks have risen you can take them away as almost Rs. 15,000 is made in three days – look at the speed of making money in percent terms time wise not how much you made. Let’s not get greedy and take out our profits here.

There is no way to earn lakhs in just few days. Read to know it is a huge myth in stock markets. You can earn a lot of money but it will take time.

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Whenever I go through writers mental block (a situation where a writer does not know what to write next), I get a strange or great email from one of my website visitors who gives me an idea to write and help everyone reading my newsletters or blog.
I do not know how this person reached my site, it could either be by searching on the net or referral though a friend (yes my subscribers do refer their friends to my site. I am really thankful to them for supporting an honest man and not giving support to those greedy people who take money away from people and give loss making tips.)

His question was How Can I Earn Lakhs In Just Few Days From the Stock Markets?

Here is the screenshot of his email I received today morning while going through writers block:

His email was: I want to make money in crores over a year because I want to study abroad in hospitality sector tell me the basics first.

Amazing isn’t it what people think about the stock markets. The perception of the stock markets itself is WRONG. Yes some people do make amazing wealth from the stock markets but only those make who have proper knowledge and understanding of how stock markets work.

As you can guess from his email that he does not even know the basics of stock markets. And if he actually learns how to make crores from the stock markets in one year then why study abroad in hospitality sector to make just a few lakhs in a year? Why not keep making those crores every year from the stock markets?

I do not understand how can an educated person ask a question which does not have a plain logic? Isn’t it really silly to think to first learn how to make crores (not crore, but crores), and then work hard to make just a few lakhs? I find it very strange that educated people think this way. Tips providers look for exactly these kinds of people. And what I will do? After sending this email to you just delete his email.

I do not need money of a greedy person who does not even understand even simple logic of how this world works. You will NEVER achieve success without hard work. If you think hard work is not required to make money from stock markets then I am sorry your basic thinking is wrong.

You only know that Warren Buffett made a lot of money from the stock markets by investing and you become greedy thinking even you can do it. You do not want to know how he made it, this is where is the problem. When I see a kid going to play Cricket, I ask him – what you want to become? He says Sachin Tendulkar. I then ask, do you know how many hours he used to practice when he was of your age? The kid then replies by smiling – I do not know.

This is where the problem is. Average people living an average life only see the ends. They are not interested to know or learn what means were used to reach that ends. All they are interested is in ends. If you do not know Sachin Tendulkar used to get up at 4 am and was there in the field practicing cricket at 5 am almost everyday including Sundays and holidays since childhood. Do you think he was born with these skills? No. He was just born as a normal kid, got interested in Cricket but the way he practiced differed a lot from the way other kids of his age did. The results are in front of you.

Now here is some important information on what made Warren Buffet the best investor in the history of Stock Markets all over the world.

1. He started an insurance business with a partner which did very well.

2. With the money he saved he bought stocks just like anybody else does, like tips from brokers or advice from friends and he lost money just like we do.

3. Quickly he understood that this is NOT the correct way to invest in a stock. The first lesson he learned was to control greed.

4. Whatever was happening he did not lose interest in his insurance business. It kept on growing at a rapid rate.

5. He now started studying about companies that he wanted to invest in. Basically he was interested in the stock of the companies with good economic MOAT.

According to Investopedia:

The term economic moat, coined and popularized by Warren Buffett, refers to a business’ ability to maintain competitive advantages over its competitors in order to protect its long-term profits and market share from competing firms. Remember that a competitive advantage is essentially any factor that allows a company to provide a good or service that is similar to those offered by its competitors and, at the same time, outperform those competitors in profits. A good example of a competitive advantage would be a low-cost advantage, such as cheap access to raw materials. Very successful investors such as Buffett have been very adept at finding companies with solid economic moats but relatively low share prices.

A great example in India of a company with great economic MOAT is PATANJALI. In 5 years a company which had a turnover of just 1000 crore in a year has now reached 5000 crores in 5 years. Now they are planning to reach 10,000 crores by the end of this financial year. 100% growth in one year.
How many companies can even imagine that.

Here is a short description of Baba Ramdev’s company PATANJALI from The Telegraph:

Ramdev, whose Patanjali brand had more than 800 products ranging from herbal toothpastes to noodles to health drinks, became a household name in several parts of the country through yoga shows on his 24-hour television channel, Aastha. After a brief association with an anti-corruption movement, Ramdev has settled down to develop his herbal medicines and toiletries business, expanding into fast-moving consumer goods.

A mix of prices lower than that of the rivals, a sales pitch based on “Ayurveda, natural and healthy products” and point-of-purchase advertising seems to have clicked with the masses.

His toothpaste brand, Dant Kanti, has snapped up a 5 per cent share of the market, eating into the share of a multinational company.

A controversy over additives to Nestle’s popular Maggi brand of noodles last year, which led to its temporary withdrawal from the market, saw Ramdev picking on the opportunity to launch his own brand of “healthy noodles”. (See how he caught an opportunity and used it to maximum gains.)

Last year, Patanjali reported a turnover of Rs 5,000 crore. Ramdev, who lives in a secluded, high-walled compound on the Patanjali campus, said the turnover was expected to touch Rs 10,000 crore by the end of the current financial year.

Market research firm IIFL said in a report that Patanjali was poised to grow to be a threat to existing market leaders in most categories it has entered.

“Our analysis suggests that by 2020, Patanjali will have high market shares in categories such as Honey (35 per cent), Ayurvedic Medicine (35 per cent) and Ghee (33 per cent),” the research firm’s report predicted.

They are now planning to launch an apparel brand, called Paridhaan. I am sure many multinational companies must be shaking in fear as this company is sure to eat into its share of profits.

This is called great economy moat. Unfortunately Patanjali does not have shares. Else I would have been the first person to buy its shares.

So What Worked for Patanjali?

1. Low cost advertisements.
2. Hence low cost of products so entering into the middle calls and lower earning class makes it easier.
3. Image of Baba Ramdev who is his own companies’ brand ambassador.
4. Showing its factories in advertisements.
5. Dant Kanti recently got an award for the best toothpaste in the country.

So these type of companies with great economy MOAT will keep performing well.

Ok coming back to Warren Buffett.

6. Once a company with great economy MOAT was found, Buffett would fix an appointment with its owners or managers just to get their point of view and know the reality of how the company worked. The management, its factories, infrastructure etc.

7. Since he could not afford to go by plane he used to take a train and have a talk with management. Once a company passed all these exams he would discuss with his business partner and buy its shares for years. Yes NOT intraday, like most of India traders are interested in, or one month – he wanted to keep it for years. I am taking about 10 years at least, until it had no more great economy MOAT. It is obvious that once the great economy MOAT gets vanished from that company the shares would certainly fall. The he used to sell and book profits.

Once in an interview someone asked him – when is the best time to sell a share. His answer was NEVER.

Choosing companies with great economy MOAT made him the best investor of all times in the history of stock markets. For three years in a row he was the richest man in the world.

Did you see that the process is more important than the end results? Those who study the process of success perform well in life. Those who see the results and go and have a beer party keep doing that for life.

So if you really want to make money in stock markets first get your logics clear, kick greed out of your system, learn to be patient, have a proper risk management, get education and then start trading.

If you follow the above, results will follow. Else only losses will follow.

Rest it’s your choice.

FED policy making committee will meet next week and may raise interest rates but it will be very small.

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There is too much anticipation the world over whether The Federal Reserve will increase rates or not. Interestingly 50% of the committee members wants an increase in rates, and 50% do not want a raise. Both the parties have some valid points to say.

Those who are against increase in rates say, let the American economy recover fully then increase rates, the other half that favors rate increase says the economy is getting stagnant due to not increasing rates for years and investors are investing money in more attractive and developing markets like India.

To give you an example if they just invest in any good debt fund in India they will get a return of almost 9% a year with ZERO risk. Compare this to 0% return there in America. If you had a lot of money where you would have invested? Of course India.

They are saying if FED increases rates at least some money will be invested in their economy and not go out to countries like India and China.

To some extend it may be true, but I personally feel comparing 1% to 9% is no comparison at all. Agreed they do not get all that 9%, there is some fees and brokerages involved, but still even if they are making 6% a year it is much more than 1% a year. So even if FED increases rates I do not think the investments in Indian markets by Foreign Institutional Investors (FII) will go down. It may go down by 5-10%, but this small dip will not have any effect on Indian markets at all.

So those who have done my course please do not panic. We are least bothered about direction of markets neither our capital is going to be eroded as our capital is heavily protected by hedge. Whenever there is a small 2% loss those who are trading naked will pay for our losses and we will escape a huge loss. Let those greedy aggressive traders lose money while we keep making money. 🙂

Please remember that FED policy making committee is meeting next week and may possibly increase rates as they are too much in pressure to raise rates. Since this is almost known to all markets in the world we are not seeing a huge correction in any stock market in the world. There is just a small dip because of traders who always love to trade in panic. I do not know why educated smart people trade naked and in panic and are willing to erode their wealth for no other reason but greed. These people will come and go, only those who follow the correct path to making money will keep making money. This is how any business works including the stock markets. I fail to understand why they do not understand this for years and by that time lakhs of rupees they have already lost.

Anyway till now due to fear of FED increasing rates, no market in the world has at least till now priced in a rate increase which is almost certain. Which means there is nothing to worry.

Note For Paid Subscribers: Those who were either long or short in the directional strategy may have made great profits. It is advisable to exit now and book profits.
Due to great fall INDIA VIX surged today by 13.53%. It is currently at 15.02 or 1.79 points above last close. So which Strategy to Trade?

[Hidden from free subscribers which strategy to trade is according to the paid course so this part sent to paid subscribers only.]

Now free for all content:

Nifty has fallen down today but there is no need to panic as this is a temporary fall. Within weeks Nifty will recover.

S&P BSE Sensex is currently at: 28,388.89 which is -408.36 or down -1.42% from previous close.

NIFTY is at: 8,736.10 which is -130.60 or down -1.47% from previous close.

Please Do Not Panic This Is a Temporary Fall – Let Us Discuss Some trading Ideas

Banking stocks are seeing major fall. ICICI Bank, Axis Bank, HDFC and SBI. The big banks which constitute major portion of Bank Nifty have fallen.

There is nothing to worry as these banks are quite strong. It is advisable to start collecting shares of these banks over the next few months via the systematic investment plan mode. Please do not trade Futures as there can be more fall in these stocks.

I also see that among other major stocks Tata Motors, ITC and L&T also fell. Out of these ITC and L&T are also good stocks and you can invest in them as well via the systematic investment mode.

Please invest only that much with money which you are comfortable with. Do not let your greed take a decision. You have earned the money so the decision is entirely yours.

Shares price of Lanco Infratech, Siyaram Silk Mills, Jaiprakash Associates and Man Industries have also declined 4-11 percent. I do not advise to collect these shares as the results declared by these companies are not good. If the companies performance is not good it is better to avoid investing in these companies.

How Long Will This Fall Continue?

If feel this week Nifty is going to be weak. So there can either be stabilization or small fall at least this week. Then from next Monday onward people will be out of this sudden shock and start looking positive and start buying shares pushing Nifty up. Fall can be little more 200 odd points and then Nifty will start moving up.

Indian Stocks Still Looking Positive

Globally almost all stock markets are looking positive. This fall looks like traders in India thought resistance has come so pulled back their money. Rest will also follow in the following days. Then these same traders will invest their money back in stocks when they see some kind of support. Nifty will rise again.

Conservative traders like us take full benefit of these short term traders who make nothing at the end of the year while we end up making good profits because we use our brains, not trade with speculations.

When Nifty moves we make profits, when it doesn’t we still make profits. 🙂

July and August 2016 saw amazing investments in Indian markets by the foreign investors. This is mostly to do with domestic factors. GST Bill getting passed, good monsoon and good governance. All these are positive signs for the future of our economy.

In this year itself foreign investors have invested Rs 40,297 crore in both equity and debt. I do not have data of how much has gone into debt and how much into equity. But I am sure a lot has gone into equities as we saw a recent rally which is clear proof that they invested a large amount in Indian Equities.

Like I have said before even if the Fed increases rates it is going to be very small and will not have much impact on global markets including India. So there is nothing top worry.

I hope you do not trade in panic. This is the main objective of this blog.

Disclaimer: This is an educational site. Investment ideas are written above so that you get an idea of what may happen. If you want to invest please do your own research before taking any investment decision. Stock markets investments are subject to market risks and I am sure you know the risks involved.

Thank You For Reading.

Part of my Newsletter sent on 09-Sep-2016.

Tip for my paid subscribers: [Hidden from free for all content. This part is sent only to my paid customers.]

Refer my yesterday’s email Looks Like Nifty Has Reached Its Resistance.

Today as of now NSE is at 8,887.10 which is -65.40 or 0.73% below yesterday’s close.

So Was This Some Kind of Technical Analysis Dilip?

This is what most of you must be thinking. I have said this many times and I say this again – I do not even know even “A” of TA (Technical Analysis).

So How I Came To The Conclusion That Nifty May Fall?

This is plain experience. The problem is experience cannot me written in words it comes only through hard work and knowledge. A huge run of almost 10% in 2 months and its clear that somewhere those who are short term traders will start taking out profits and I felt this is a great time to take out profits as psychology wise there is a huge difference between 8900 and 9000.

But there is not much difference between 7900 and 8000 as Nifty was above 8000 for a long time. Traders psychology plays a huge role here. Most of them remembered that Nifty had a great fall from 9000 levels to 7600 levels. So its apparent that crossing 9000 is a bit difficult and it’s obvious that 80% of traders will book their profits once Nifty will reach 8900.

Now see how it worked. 🙂

Was any Technical Knowledge involved? No. Only logic and human psychology and the way they behave made me to reach the conclusion that at least for now resistance has come.

It does not mean that 9500 will never be reached. One day or the other it will be there, but right now that great fall from 9000 to 7600 levels is still fresh in most traders mind. As time passes and new traders join in the mindset will change. These new traders will not remember much the fall from 9000 to 7600 levels and keep buying even at 9000 levels. This is how stock markets work all over the world. It depends more on traders psychology rather than economy of a country.

India has improved a lot in terms of economy and quality of life since the last 2 years still Stock Markets are there in the same place as they were two years ago. Technically isn’t the Stock Markets should have also been at least 5% higher since 2014? No, its just because traders have a role to play here not economists. Stock Markets is a cash exchange business not a real business that gives any service or products. Yes the companies listed here do give either service or products, but stock markets have an indirect role to play, not direct.

So Why Don’t I Trade Nifty Futures With This Knowledge?

After losing my entire savings a few years back I went into a shock. I promised to myself and my wife that if I ever trade I will try to make the least possible profits and will try my best to protect the losses. That’s the reason hedging knowledge attracted me a lot. Most of you look at 10% profit a month not realizing that not a single trader in the world in the history of derivative trading or even equity trading has ever clocked that returns. So if you do it, you will enter into the record books like Warren Buffett has done. All the media persons will make you a star and take your interview everyday and you will be shown in TV channels every day. But remember one month return will not make you a star. It has to be done for at least 10 years. So 120% return or more continuously for 10 years. Do you this its possible? If you think it’s possible go ahead and try but remember that those 95% of traders who lose money trading stock markets are exactly those who are trying to make 10% return a month. Result? They lose money big time. So it’s your call.

That’s the reason since I became a conservative trader I am happy even with 1% return a month. At least I am not losing money I am growing it. You are trying to make 10% a month and lose 5%, and I am trying to make 3% a month and made 1%. Technically who is a better trader?

So How Do You Use This Knowledge Dilip?

Hey there is another way to trade stock markets even more peacefully. Mutual fund trading. Yes you may not have heard about it but if you have knowledge you can even trade mutual funds. Remember there is no expiry there so there is ZERO tension trading them. In fact now my mutual fund portfolio has become bigger than derivative trading portfolio. I still trade options but I am taking mutual fund trading very seriously now. Those who are my old newsletter subscribers may remember that when I met with an accident in April 2016 and was in hospital for 15 days and in bed rest for next 15 days I was not even able to see where Nifty is. In that month I still made almost 2.5% return while lying in hospital. I am sure many aggressive traders may have lost money working from 9 am to 3.30 pm. I was in hospital battling for life and made a better return. This impressed me a lot. From May 2016 I have taken mutual fund trading very seriously. In the last 10 days itself I booked a profit of more than a lakh. And what I did. Nothing I just decided to book the profits that’s all. I logged in my account online and clicked the switch button and switched the money to a liquid fund. How simple is that? That liquid fund too is making 9.7% return a year. What more does a non-greedy conservative trader want? For people like us returns of more than inflation itself is a great return.

Hope in this article you got some idea of how traders psychology effects the movement of stock markets.