I do not run away from the fact that my strategies can lose money. Till now in this month we are in red. But we will see what can be done to get back our money and overall what may happen to our portfolio if we keep trading conservative strategies.

On the other hand some of the experienced trades who have done my course, must have traded the directional strategy and made good profits. Unfortunately not many inform me. Please let me know (via email) if you traded and made money.

Nifty from 7000 to almost 7700 in 21 days. 10% in 20 days is considered fast and not normal. This is NOT usual and Nifty cannot rise or fall 10% in 20 days more than 5 times in a year. Keep this in mind while reading this post. This is where our strategies will have issue but most of the time Nifty goes nowhere and we keep making money. 🙂

Had VIX fallen more our strategy 1 could have been in profits. Until RBI policy is not out VIX will hover around 16-18 range, then fall to 14-16 range.

But its OK we only suffered a 10-12 point loss which is manageable.

Now lets see what happens to naked traders in these kind of situations

(Naked traders are traders who do not hedge their positions and try to make as much as possible)

Traders who were short when Nifty was at 7000, lost huge money. For option traders all puts bought at 7000 or 6900 is worth almost ZERO now. So all money gone. If you had done that trade please take back whatever is left, because it is now guaranteed these options will expire worthless. Do not wait for some magic to happen. Magics do not happen in stock markets in few days. Magic does happen over the years though.

Traders who were long made money – BUT how many went long at 7000 and booked profit now at 7700? I do not think even a single trader out there would have taken this odd 700 points. IMPOSSIBLE.

EXACTLY Above is the life of a naked trader. Take huge losses but, when its time for profits take 20-30 points profit and out. Overall they are losers – BIG LOSERS. Be happy for a short term – live a miserable life for the long term.

Forget profits – they bring money to their account to gift it to smart traders and their brokers. 🙂

Ok so what about our conservative strategy?

Yes those who were on Strategy 1 would have also lost. Question is how much? 10-12 points that is it. Manageable? Very much. Because we know our next trade may make more than that.

So basically assuming we lose 5 trades in a year – we lose a maximum of 50-60 points in a year. But for the rest of the times there are going to be profits. 2-3% in every trade and some 20-24 trades in a year – do your own calculations. And do not forget the Strategy 2 which helps to get our money back.

So what can you do now if Strategy 1 hits stop loss – or will hit stop loss today?

India VIX currently around 16.33.

This will surly drop once the RBI interest rate policy is announced next month. So I would suggest do the following:

1. If SL hit, exit and then wait and watch the markets till the RBI news is out. Trade the same day (Strategy 1) just before the news (1-2 hour the best) or trade 1 day before. VIX will be very high – small movement cannot damage our strategy. Once the news is out falling VIX will help us tremendously.
2. Go to strategy 2 today itself, but DO NOT double the no of lots. If not hit you get back the money lost in few days only. Remember that its only 10-12 points we need back so do not get too aggressive. Be realistic.
3. Shift the Strategy 1 to safer position with 7700 as base – we want to be safe on the call side. Nifty may go up further.

I hope this will help.

Thanks Everyone for very nice comments on my last post on “People Hate Free Advice Even By Experts On Stock Markets“.

Please understand that I will keep writing on Options and share whatever little knowledge I have on options on this blog with you. The only thing as you can see in this newsletter is that I will not directly tell you which option to buy or sell. I will try to help my paid subscribers more henceforth. But since they are less than 1% of my newsletter subscribers – I cannot totally ignore the ones who have not paid. I love writing about options strategies and I will keep writing.

If you trade options then it is very important you know proper hedging methods. You will never make money trading naked futures or options. You may not know but the institutional investors NEVER trade naked options – they use options to hedge their portfolio worth crores. And if they ever want to make money through options then they ALWAYS hedge it with other option.

You can also learn some great hedging methods in my course.

Learn Proper Hedging Methods In My Conservative Course:
http://www.theoptioncourse.com/learn-how-to-trade-options-for-monthly-income/

Testimonials are here:
http://www.theoptioncourse.com/what-traders-say-about-this-course/

I have been explaining for long why I do not offer my course for free, because people do not give value to anything free. This post will prove the point. This is an interesting post, nothing to do with options but human psychology. Please read and let me know what you think. There is something I have decided which you will know in the end.

Even before I started this blog, I acquired good knowledge of finance, money management, investing, stock markets etc. So whenever my friends talked about their financial advisers/bank managers giving them investing advice – I used to give them free advice – usually telling them not to go by their advice. I do not like advice from these people as most sell ULIP (Unit Linked Insurance Plans – A Unit Linked Insurance Plan (ULIP) is a product offered by insurance companies that, unlike a pure insurance policy, gives investors both insurance and investment under a single integrated plan) to generate commissions. Customers make almost nil returns when these plans mature, while the agents/employees make hefty commissions. Customers realize only when these products mature. Most do not even pay the full term and close the plan in 3-4 years making huge losses.

Unfortunately they used to confront me asking how come I know more than them, and invested in what their financial advisers sold them. So I have stopped advising my friends. Even if they ask for advice, I tell them to do what they think is the best for them, because deep down I know they will not listen to me.

When I started this blog in 2014 unknown people started asking me questions, of course stock markets in general and options in particular. At that time the site did not have my contact number, only the contact us form. Initially it was a couple of emails a day, but as the traffic grew, emails grew to 20-25 a day. I used to spend some 3-5 hours daily helping people for free. I was very happy doing it. I thought this time the pattern will differ, people will listen to me, but no Sir I was wrong. These people started sending me their own trades and “victories” in one or two trades. I did not receive a single thanks email in those 4-5 months of helping people for free. In fact I got back questions on my answers like – “why you think so?”, “what if this happens – so I am not heeding to your advice”, and when I used to give them good hedging advice I got answers like, “this will reduce my profits I don’t like it.”

I was started to getting frustrated when one day when my wife told me I was just wasting my time, I realized I really was. I therefore started a paid conservative option course.

What I found that when you advice for free, the pattern of response remains same. Friends or unknown people, no one appreciates free advice even if it comes from an expert.

However I kept giving free advice occasionally on my site to my subscribers. But recently something strange happened. Whenever I send emails to my 7000+ email subscribers (email subscribers only, not paid customers) a couple of them unsubscribe. That’s OK, this is quite natural. But on 15th March 2016 more than 15 unsubscribed. This was my last email to book profit on 7000 PE sold that I advised to sell on 8th Mar 2016.

See this – I deleted a few emails could be around 5, as I thought it to be normal but then this happened:

15 unsubscribed in a single day – I was shocked. I mean here I am doing research like a fool, trying to help you to make money just because you subscribed to my site and told you an almost guaranteed trade to make money without taking a single paise from any one, and when I asked to booked profits you get annoyed. Strange.

Some in fact thought I am cheating people. See this:

Basically he does not believe I sent an email on 8th. The email would have gone into SPAM folder, or he may not have opened it – is that my fault? So thought may be this person subscribed after 8th so I politely asked him the subscription date. His answer – if you do not remember then do not send email. Am I suppose to remember when 7000 people subscribed to receive my newsletters? How is that possible? Ok I could have seen it in my system but I thought he could be a recent subscriber so asked just to know what happened. But I got this strange reply. 🙁

One person thought this to be a joke.

🙁 🙁 Joke??? Really???

I have given free advice on my site a lot of times:

ICICI Bank book profits 11.32% rerun in 35 days.
10% in 45 days.
India VIX Dropped book profits
How to trade the Budget Day 2016/
6800 bottom for Nifty and other ideas to trade
Puts Costly than Calls, Arbitrage Opportunity
Long Strangle book your profits
Book profits in Put Credit Spread/

And many more. Had people taken them seriously they would have made good profits. But did they?

After so many free advice I got only one response here:

Puts costly than Calls, Arbitrage Opportunity. See the comment there someone made 1016 bucks:

Could be 2 more people who did not bother to inform me. So out of thousands of subscribers only 3-4 actually made money off these free advice. The rest never bothered with free advice. Which proves free advice is useless.

One of my advice failed though:

http://www.theoptioncourse.com/buy-axis-bank-trade-the-directional-strategy/

This was buy Axis bank at 484. It is currently around 430. But frankly I doubt anyone invested, and if someone actually did they can hold their investments. After all its a good company like Axis bank and you are sure to make a profit – its just matter of time.

Looks like someone was waiting for something I said to fail. So I got a WhatsApp message a few days later when Axis bank stock fell 10% from that level – “someone with too much ego fails – what happened to your Axis bank”?

That message is deleted. I felt very embarrassed and was like scratching my head. I told him politely that I am no super computer and I can fail – this is part of our life and you are free to take my advice – after all its free. He then messaged me – “then do not advise”.

One failure out of so many and you get scolded. 🙂

A few days back I got an email from a retired 60+ doctor. At the age of 60+ he involves in dangerous aggressive trading – selling naked puts. He was in huge losses. I thought I should help him and ask him to stop this aggressive trading as this can destroy his wealth that he made through years of savings. I also wanted him to do my option course as it is best suited to retired people – at least the conservative strategies. It is properly hedged, returns beat inflation by far, it makes passive income plus it gives time to enjoy life without too much stress thinking about the stock markets. In due course of time lots of emails got exchanged between us. Neither he listened to my advice, nor he did my course.

He wasted his time, I wasted mine. 🙁

When I emailed him after a few days telling him that he forgot me after the help, he replied by saying he did not forget, but he learned a lesson from the loss. Do not know what lesson he learned, but at the age of 60 you do not have time to learn lessons or do experiments with stock markets. Suppose he learns the perfect strategy by the time he is 65, where is the time to get the lost money back plus make a profit? It is strange he is not wiling to pay just 5000 for the course and learn a few conservative strategies. He is rather willing to lose lakhs of money and time trying to do things on his own. This at the age of 60. Strange.

Whatever happened, I felt like a fool. 🙂

See his email:

I have come to the conclusion that Free Advice is NOT respected or given value and none of my subscribers is trading them, so basically I am wasting my time.

Therefore hence:

“I will NEVER publish any Free Advice to Buy/Sell a Stock, Option or Future.”

I may trade myself and make money, but never write in this site. I will also not offer free advice to anyone by emails.

Henceforth, my full attention will be my paid subscribers of the course.

And therefore all my future newsletters will ensure my paid subscribers get help to trade my strategies better. This includes when to trade my strategies and VIX related newsletters.

Of course I will keep writing articles on stock markets, options and futures, but I will NEVER directly endorse buying or selling a stock or option.

On all of the above free strategies, had I charged you even Rs. 1000/- you would have taken it very seriously, given it value and actually traded and made a profit. You would be happy and I would be happy too.

A lot of people make fake stories of losses and email me to send them the strategies for free to help them recover lost money. Emotional blackmail. Of course I ask them politely to pay so that they give it value. I hope all those people now understand why did not send them the strategies for free.

If you are thinking of doing my course you should pay to get the course otherwise you will never give a serious thought to it and you will not have the motivation to seriously trade them. If you do not pay the fees you will never have any respect for it and it will just by lying in your inbox just like all other dead emails.

Hundreds of customers testimonials. 80% success rate, 3% a month looks like joke when some people make lakhs per day. (Yes Ravi still doing great. I will share his latest email later this month.) Stress free trading. 5000 is not a big deal and my service for 1 year makes this a no brainier.

So please do not keep waiting for free tips, when you will get it, you will not value it. Learn to pay, buy the course today.

Disclaimer: I have never thought myself as an expert of stock markets. I consider myself a very conservative and hard working trader that is it. The topic of the post is to help you understand the basis of the post, because a lot of people think I am guru or expert but still do not give value to my free advice – that is why “expert” word is used in the topic of this post. When I started trading I was even worse than you. Knowledge changed me completely.

The idea to write this article came from a single comment from someone very educated, experienced and a senior person.

Of course I will not give the link to that article to hide the identity of that person. It is more about how most of us think – the collective human mindset (especially Indians) and not about that one person. Please also note that this is not a political post. It is rather my point of view on blaming someone else for our own misfortunes in stock markets or in life.

Recently someone told me that people in India do not invest in good companies shares, instead they get their hands burned by investing in blade companies like Saradha Chit funds, Rose Valley Scam, Pearls Ponzi Scheme, Agri Gold Scam, Sahara etc. So the government should launch some kind of Personal Finance Education. When will our rulers wake up to the reality and do the needful, he asked.

In the hindsight, he is actually blaming the government for the losses faced by some of the investors who lost money investing in such scam companies.

The point is should we blame the government for losses we face in the stock markets? If yes then shouldn’t we also give credit to the government when we make profits? (I mean credit which is like a Thanks not Income tax).

You know why people invest in such companies? It is out of greed, nothing else. Their greed of making more in less time is the root of this evil which I think they deserve. Forget stock investing – how many of you speculate options and try to double your money in every trade. If you are the one ask yourself – since how long you have been doing this? 1 year, 2 years, 3, 10? There is 99% chance that you lost money all these years. If you were not successful for these many years what are the chances you will be in the years to come? NIL.

Now compare the above two. BOTH ARE SAME. One person is not very educated – invested in Ponzi schemes due to ignorance and greed and lost money. Another well educated but buy options on pure speculations and loses money continuously. An instrument which is not meant for gambling is being used for gambling. Both are sides of the same coin – they cannot control greed.

Is it government’s job to teach you to control greed? No, it has to run a country. If you are greedy, government is least bothered. And the educate investors initiative by the government is already there. We see so many advertisements in trains, bus stops, stations and other public places to invest carefully. But we ignore, don’t read, don’t even care and end up investing in a bad company and lose money. How can the government be blamed for that?

When financial institutions have investment educational campaigns, we attend, make notes, come out and are back to what we are best at – speculate and lose money. Tell me what can government do now?

Launch hundreds of campaigns, but still people will keep doing these mistakes out of greed again and again. We should not blame some other entity for the failures in our lives. If we cannot control greed we are only welcoming misfortunes in our lives – and they won’t stop until you stop being greedy.

If someone really want to get education in investing then there are a lot of things available online for free. They do not read that. Then there are magazines, online journals, forums, webinars, seminars, news channels, discussions on TV by experts etc. Still you want the government to start teaching. What difference will it make if they start another investor education initiative. Hundreds are already there but you don’t care.

Here are some of them:

SEBI Investor Awareness Website:
http://investor.sebi.gov.in/

Here is financial literacy for school children (gift it to your kids today if they are young enough to understand finances):

http://www.sebi.gov.in/cms/sebi_data/investors/financial_literacy/Financial%20Education%20for%20School%20Children.pdf

And a lot more are already there. If you have the desire to learn something no one can stop you.

Ok lets take example of some great investors of our times. Did the Government of USA teach Warren Buffett stock markets investing or did the Government of India teach Rakesh Jhunjhunwala stock investing? Its your money and you will have to work hard to acquire knowledge and help it grow. If you don’t want to work hard or cannot control your greed, then please do not blame the government. And this applies to everything in our life.

Some people blame their luck. When the trade goes wrong – they will say it was my bad luck – next time it will not happen. Well next time the result is the same – bad luck.

Why leave your trades to luck? Its better to buy a lottery than trying to buy options and make money. Option buying is pure speculation, it will never make you money.

We have a tendency to blame others for our failures. Luck, government, brokers, sometimes even Gods – but deep inside we know we did this mistake – blaming someone else will only take the pain out of us temporally – but the damage has been done – blaming will not get your cash back. Its gone.

Blaming others gives us a “virtual” excuse to escape from reality. Try and if you fail just blame your luck and move on. But does that solve the problem in your life? NO. It still exists.

You could not succeed and no one has any role to play. You can blame anyone but the truth remains – YOU FAILED – and that truth will not die by blaming others.

There are a lot of issues in our lives – not getting promotion in a job, office politics, salary not increasing, price rise, investing in a bad company, trading losses, issues in the family – there are hundreds of issues in our lives. Blaming luck will not solve the problems – facing the problems will.

Let that office politics go on, you do your job. Ultimately you will be rewarded. Over the long run reality comes out. If salary is not increasing then get more knowledge, acquire more skills and get a better paying job. There are a lot of ways of making your life better, blaming others is not a way.

I think we all read about basics of stock markets in school – from there we have to do research and educate ourselves. Government did its job – now its your turn to work hard.

I have seen that we Indians love to blame our leaders or luck for everything. I think its an easy way out to give yourself an excuse for failures. After my losses if I kept blaming my luck, or, if I waited for that “subsidized course on stock market investing” by the government, then I would be living a wasted life now.

But I took my life in my own hands – sat in the drivers seat and rode the path I wanted to travel.

I read about stock markets at least 5 hours a day, everyday, for about one year while having a full time job which had nothing to do with stock markets. You know how much is that? 5*365 = 1825 hours or 76 days or 2 and a half months of continuous reading without sleeping.

And the results is there for all of you to see. I transformed from a negative person living a life on loans to debt free full of energy positive guy. This website that you are currently reading is probably the best website in India teaching options for free to at least 350 people daily. Thousands read my newsletters and email me to write if three days passes without an email. This site is in fact ranking better in search engines than many big websites launched years back. To top it all my option trading course has been bought by Technical Analysts, MBAs from renowned universities in foreign countries and in India, CAs, Brokers, Government Officers, Investment Advisers (some much senior to me), Retired people, IIT professors and top executives holding high positions in big name companies. All this I was able to achieve single-handily in just a few years.

When I lost 7 lakhs trading stock markets – like most others I would have easily gone the “blame luck for your misfortunes” path and would be living a life full of miseries by now. But I faced it – without blaming anyone except myself and tirelessly worked hard, day in and out to achieve what I wanted to achieve in life and got it – much before time. I still work some 12 hours a day – I can get lazy – but I know if I get lazy then whatever I have done till now will get destroyed. I won’t let that happen.

The point of this post is – if you have issues in life – do not blame anyone for that. It will only get more complicated. Face it and stop it right now before it gets out of control. Learn to work hard, get knowledge, and improve your life day by day.

There are a lot of people who think they are too old to learn anything. Hey dude you may be 40 or 50, but if you give up learning now then for sure you will live a mediocre life for the rest of your life.

So start learning about investing as much as possible. If you are option trader then learn to trade properly first. If you do not want to do my course, its OK do some other but a good course or read books, but please stop speculating. Trading without knowledge is very dangerous – you will never make money.

The more you learn the better trader you become, and for some strange reason, you also become a better person.

Disclaimer: This post is not to show off about me or my achievements – it is more about trying to teach you that education and hard work can bring magical returns to your life, blaming others wont help.

Thank You for reading this long post.

We will discuss about the Highest Open Interest at 7000 PE and why its a great option to sell, but first some news on Nifty.

Nifty Is Back To Normal Behavior

Last few days were bad for option sellers. Even though the call options did not explode as expected (in fact they are trading at a discount compared to puts) – the put options did not go down in value the way it usually happens whenever there is a rally, and to rub salt into the wound Nifty rallied and how.

From 7000 to almost 7500 in matter of days

Naked option sellers may have lost at least three months of income. They will start selling again to “recover” lost money and in another 3-4 months again a tide will come and wipe away their entire profits. They will start selling options again to “recover” lost money … and the story will NEVER end in their entire life. 🙂

If you have done my course, this is a great time to learn what kinds of losses you can expect. This rally was that which falls under the 20% of the times when our trade loses small money. As you can see its very small compared to what you used to lose prior to doing the course.

Now everything looks fine, and we will start making profits again. We take small steps forward, a lot of them, and after a few months one small step back. Overall in a year we are in profit and that is what counts in the end.

If you have still not done my course its highly recommend you do it now. Do not waste your time and money selling naked options.

Always keep some extra cash to buy quality stocks when there is a crash

If you have cash there is no better time than buying your favorite stock when the markets crashes. This is the time when I don’t mind investing some extra money buying some great stocks. As per my risk management rules since I have spent extra last two months buying stocks, I may not bring in any money next two months to create a balance. In the end, I am still only investing what I am comfortable with investing in the stock markets. This is risk management – buy more when there is an opportunity – buy less when you speculate – but average out your investments over the year. Do not invest more than you are comfortable with.

Hey that was a very important lesson in risk management. Did you learn anything? I hope you did and henceforth will be more disciplined in your approach to money-management.

Of course I have a time horizon and most of you know that when I invest in stocks I look for 10-12% return in a year. (Well we can make more – I have discussed below). When you make that profit – get out and deposit that cash back into your bank – or increase your investing capital next year. Yes no doubt sometimes I exit in a loss in some stocks. But overall this method of regular investments (more when there is crash) has worked out very well.

Frankly there is nothing special about it – I just follow the basics of investments that is it. Most of you get swayed by emotions – I don’t. 🙂

This the reason you must have some extra cash to buy your favorite stocks whenever markets crashes.

Here is how you can make more than 10% a year

Once you buy, ask collateral against shares from your broker and trade. If you are trading well this will have a great effect.

One – you make money from the stock when it rises and,
Two – you make money from the options too. What more do you want?

Disclaimer: Here is one trade that you can do tomorrow but please trade with proper research and risk management. Please understand I do not get paid by giving these free advice so the risk in the following trade is entirely yours. I have given reasons why I think this could be a successful trade. Though most of my predictions come true, you must understand stock markets investments are subject to market risks and my advice may go wrong. So please trade after doing proper research.

Highest Open Interest

Highest Open Interest is at 7,000.00 PE both for March and April 16. Though I do not care much about open interest – this time opportunity looks very attractive.

You can see highest open interest here:

http://www.moneycontrol.com/stocks/fno/marketstats/options/high_oi/index.php

What you can trade?

Those who have done my course if you have free cash you can sell 7000 PE current or next month and hedge it with the way its written in strategy 2 of the course. You know where to take a stop loss.

Those who have not done my course sell 7000 PE at your own risk. I highly recommend hedging it with some other strike option. Since this email goes to all who have taken my course and also to who have not, I cannot reveal which strike is the best to hedge. If you like to learn do my course now.

Now here are some reasons for the 7000 PE sell:

1. Though not a big indicator or any assurances – Highest open interest lies at 7000 PE in both months. So markets expecting Nifty Not to fall below 7000 at least for the near term. And probability looks very high.

2. INDIA VIX is currently at 18.46 and is falling slowly. There is no reason for it to rise. 18.46 is good Vega to sell. VIX is not falling sharply due to the RBI news expectations next month.

3. Nifty had a great rally and is now looking stable and bullish. There is an expectation that RBI will once again ease interest rates during its policy meet next month. This expectation will ensure less fall for Nifty. Means speculators will buy stocks in expectations that it will give them profit if RBI actually eases rates – and this will stop huge fall for Nifty – which is exactly we want.

4. Nifty is still looking bullish and usually a trend does not reverse for no reason. There has to be strong reason for a trend-reversal. Right now I cannot see a strong reason. RBI policy is next month and if Nifty does not fall 7000 PE will lose its value this month itself. Current month will expire worthless and next month will lose a lot of its premium.

5. Why fear when you have bought protection? Calculated risks needs to be taken when probability looks high.

Lot size comes under risk management and it is up to you to decide how much risk you are willing to take.

Warning: If you trade naked options (whether you buy or sell it does not matter), its highly recommended that you learn how to trade conservatively. Aggressive trading makes more but losses double. Result is that your trading capital makes losses year after year. This is not why you are trading for. You are not trading to lose, you are trading to make money. If you can lose money slowly why you have a problem if you make money slowly? Think which is an better option – losing money slowly or making money slowly.

If you think making money slowly is a better option learn to trade conservatively today.

Update on 15-Mar-2016:

Book profit on 7000 PE sold on 8-Mar-16.

See this on 8th March 2016 it was going at around 26-24:

Today on 15th March 2016 it is currently below 10:

That is a profit of 16 points in 7 days or 16*75 = 1200/40000 = 0.03*100 = 3% return in 7 days.

Please remember that selling naked options is dangerous therefore you must learn hedging techniques. What if this trade went wrong? Losses could be unlimited. On top of that there was stress to close this trade in profit as soon as possible to get rid of unlimited losses. Therefore I highly recommend my course where you learn proper hedging techniques to not only limit losses but also make consistent profits month after month.

Puts are Costly than Calls – Arbitrage opportunity:

Nifty is currently at 7450. Considering 7450 as ATM (At The Money) here are the prices.

31-Mar-16 PE 7,450.00 158.50
31-Mar-16 CE 7,450.00 109.20

There can be lots of reasons why one call is costlier than puts (70% of the times), and why puts are costlier than calls (30% of the times). Every time the reason can be different but this time I think since Nifty was falling sharply since long, the Puts became costly and it will take some time for both the Options to get normalized.

But we are least bothered about it, because those who love arbitrage here is an opportunity:

Do ATM credit spread on the Put, and with the money you get buy a near Call. Three things can happen now:

1. If Nifty does not move then there is nothing much to lose as you did not pay anything from your pocket.

2. If Nifty goes up – great you make money for free. Best situation and very likely. 🙂

3. If Nifty goes down there can be loss. Right now it looks very difficult that Nifty will fall suddenly. But if that happens you must be ready to take a stop loss. Remember that credit spread means there is a protection so the losses are limited.

Disclaimer: Since the above strategy is Free For All – No support will be given on this. Please trade on your own risk. I am very busy helping my paid clients grow their income.

For those who have done my conservative course – What to do now?

Stop Loss Hit In Strategy 1 After Long Time.

So basically this unexpected swift movement of Nifty caused some damage and our Strategy 1 hit a Stop Loss after a long time. Remember my article of “6800 Bottom For Nifty” – well it reversed from there and how. 🙂

Please do not panic. The success rate is 80% anyway and as traders we should know that sometimes stop loss will be hit and we have to take a small loss. Those who are seeing this Stop Loss for the first time must be overjoyed. Why? Because earlier when they used to take stop loss (when they traded on tips or on their own) – the stop loss took away months of profits. But here with our highly conservative strategies, the losses are small and manageable. At max we go back 5-6 days. So we get enough time in the same month to recover our losses by trading Strategy 2.

Remember when you called me and inquired about the strategies, I told you the same that there can be losses but they will be far and few and small and manageable. This is the time to experience it. This is pretty normal and may happen 2-3 times a year.

Strangely some of my clients do not see losses for a long time. But lets not count them. Even I consider myself an average trader. But I have learned to control greed – that itself makes me much better than 80% of the traders. The rest the conservative strategies and discipline takes care.

Today I am happy with even 1% profit in a month. When I make only 1%, I tell myself 1% return a month is 12% return a year, which is much better than Fixed Deposit in a Bank, and is certainly much much better than losing money trading.

Fact is over a period of time we know we will make more than 12% a year. 🙂

When VIX is high usually I do not go to Strategy 2 if the SL is hit. We are still getting great premiums – so why not just shift the whole Strategy 1 to new strikes with 7400 as ATM?

Do that now if the stop loss is hit. Please shift the whole Strategy 1 to 7400 as ATM. Those who did not trade can still trade Strategy 1 now.

When we started this trade, VIX was high – but now it has fallen. Because of this the losses also gets small.

That’s the beauty of this strategy – if VIX falls then we also lose less even if the momentum of Nifty movement is high.

Once the movement stops – there will be calmness for months and we keep making money again for months.

Keep trading and enjoy the journey, and please do send me feedback by email.

Many Thanks.

Today is one of the most important day for our country. It’s the Budget Day 2016.

Traders get too excited today to trade. And almost everyone trades. The reason? It’s the budget day. Ask yourself if you are the one who is forcing yourself to trade – will one day of trading make you very rich? Is budget day a good enough reason to trade? If the answer is no – then ask why are you trading at all?

How much will you make even if you win? 10k, 20k, 30k how much? Even if its 30k, will it change your life? And you know what odds are NOT in your favor to win, risk-reward is not good today so you might come out as a loser at 3.30 pm. On this day its easy to lose 10k, 20k, 30k may be more. Why take the risk at all. Why not stop all urge of trading just for today. Stock markets will again open tomorrow. 24 hours of waiting is not a big deal right?

If you are absolutely certain you will make above 50k in today’s trading then trade – else just sit on sidelines and listen to budget. That’s more fun than actually trading fun. Yes if you are forcing yourself to trade then you are trading for fun – not to make money – not to create wealth.

People who trade for fun in reality want to escape from reality. Stress from job, family stress etc, and when you trade you get some fun – it relaxes your mind because you are eager for a result. You think you are working hard for your family, creating wealth for them. In reality its an excuse to trade. Most of the time you end up losing money, but you still want to trade because you have that excuse to escape from reality. Be practical – ask yourself the price you are paying for it. Is losing lakhs and crores of money trading just for some fun worth it?

If you really want to create wealth for you and for your family, then the only way out is conservative trading. Yes it ain’t fun, yes is boring, yes it makes small money slowly, but at the end of the day it makes money – and that is what counts. This is what you want from trading isn’t it?

Almost all brokers will block FULL margin today. There is no MIS (Margin Intraday Square-off – i.e. Margin for Intraday trading) allowed today. Only NRML will be allowed, which is margin blocked for delivery based trading or positional trading. There is going to be huge swings today, and with the swings your profits will turn into losses and losses will turn into profits and you will not understand when to take profits or when to get out with loss. That is the reason brokers will block full margin today.

Ultimately you may get out in loss. So yes you may have some fun, but you pay a heavy price for it.

So What To Trade On The Budget Day?

1. If you are a conservative trader and if you see a real good opportunity to trade for the medium term, you should trade. VIX will be high and dropping as the speech by the finance minister progresses. But there will be huge swings as well. Be ready to take your stop loss if that level is reached the same day. But remember you are not trading for Intraday, it’s for the medium term with proper protection. If everything looks good and you are not trading to become rich in one day of trading (I guarantee this – no one will suddenly become rich today and there is a 99.99% surety at least that person is not you), then please go ahead and trade.

2. It’s better to avoid trading today but if you cannot stop your urge to trade then try the Long Strangle not Long Straddle. You pay a lot for Long Straddle that’s why it must be avoided. March options are not going to expire tomorrow. There is still a lot of time left. But VIX will fall, so be aware. The only thing that favors you is a huge swing. As soon as you make 20-30 points profit – exit. And take the day off. No more trading. Enjoy the budget. This is pure Intraday trade. Do not take this trade to next day – you are guaranteed to lose if the opening is not with a huge gap.

3. Avoid selling naked options AT ANY COST. Do not press the SELL button today. Those who have taken my course, its better you trade strategy 1 tomorrow, not today. Yes there will be a drop in VIX, but its better to be safe than sorry for a few points. And it will still take some time for the VIX to come to the level of 15-17. It won’t happen in one day. A 10% VIX fall in next few days is guaranteed though.

4. Those who trade VIX, sell VIX today and enjoy the profits. A 10% fall will make you good money. Give me my commissions when you take the profits out. 🙂 OK, I am joking. At least send me an email that you made a profit – that’s enough for me.

5. DO NOT TRADE FUTURES. PERIOD. I cannot explain further why.

6. Technical Analysis, Candle Sticks, Bollinger Bands or whatever will NOT work today. Even the best of TAs will fail today. If they win it is pure fluke/luck.

7. Credit / Debit spreads on ATM options with 100 points gap in 1 or 2 lots for fun is OK. There is either 10-12 points to be made or lost. But do not try to time your exits – which is like taking profits out in one leg then trying to take profits out in another – stock markets will make you fool if you try that. Get in and out of both legs at the same time.

All in all its better not to trade – just because it’s a budget day. If you force yourself to trade, it doesn’t matter if its budget day or not, risk reward will not be in your favor.

I got too many messages on my WhatsApp to give some trade for the budget day, that’s the reason for this article. I hope you got the answer and will trade with caution on the budget day.

If you trade for fun, it’s OK keep trading and losing. But if you are serious in creating wealth trading conservatively in the long run, then I highly recommend do my course. It will help you not only to make money trading but also change your approach towards the stock markets.

This course is not just about making money, but about peaceful life and happy trading.

Happy Trading!!

Those who have taken my course know that 100-200 points move DO NOT bother us. Strangely this is a budget week and Nifty is moving in a narrow range. 7100 on the lower band, and 7300 on the upper band.

But when things are calm and cool, there is a storm waiting in the hide-out. This will break this week for sure either on the Railway budget day or before.

Is it the right time to do the directional strategy?

Lots of people who have done my course called me and asked if this is the correct time to do Directional Strategy?

Yes it is. Nifty movement can come any day so try it. Directional strategy should be set BEFORE the move comes. If move comes in a day or two, you make money and end the game.

If you are setting up the directional strategy today, Monday is the Final day of results. You either make a profit before the budget or on the budget day. Be happy with a 30-50 points profit though and exit.

Those who are more comfortable with Bank Nifty can try the directional strategy there. Bank Nifty is known to move pretty fast and the profits may come earlier.

Do not trade this week without a hedge

It is suicidal to trade either Options or Futures this week without the hedge. Unfortunately most traders right now are on an non-hedged naked Futures trade. I just hope I am proved wrong – but these people are going to lose a lot of money in days to come. If they make a profit, it is going to be limited though.

Never bet on something you do not know. Budget times are uncertain and losses can be heavy. Profits will still be limited. Why? Because of the simple mistake of traders taking small profits out, and letting the losses run unlimited. When “unlimited profits” is ONLY in your mind and not while trading, then why you are doing a trade? Ask yourself – when was the last time you took “unlimited profits”? I mean unlimited profits by using your skills, not as a gift by markets with a gap up or down opening. I think the answer will be NEVER. If you do not have the skills to let the markets decide the profits – then you are trading with a bad formula. This:

“Limited Profits and Unlimited Losses.”

You should actually trade with:

“Unlimited Profits and limited Losses.”

But not many have the skills to learn that, so at least trade with:

“Limited Profits and Limited Losses.”

Tell me – Where Is The Money?

If you trade with the formula “Limited Profits and Unlimited Losses.” – where is the money?

And this you keep doing for your life. You only compound your losses and not your profits.

With stock market losses you are only reducing your Salary every month. A 1 Lakh loss in a year means your actual salary is 8000 less per month than what you actually get. But you pay taxes on what you get on paper, right? That’s double loss if you are not reporting your losses while filing your taxes. I am sure many do not. Strange! Please report your losses and at least get a tax refund.

Do not live on hope and trade

You will be 100 and you will still “hope” of the that day when you will make a lot of money trading. Trading on hope is the most foolish thing to do in a business. Aggressive traders without a plan, trade on hope. When they lose they bring more money and again “trade on hope”. This goes on for life.

Do not trade anything that you cannot compound

I hate any strategy that cannot be compounded – however good it is. What is point in making 5000 per month if you fear putting more capital into the strategy to trade?

With my course the non-directional strategies can be compounded. It means you can re-invest the profits in the strategies back again and again.

But the most important part about my strategies is trading with a peace of mind. Nothing for me is better than making money with a peace of mind. On top of that you make small profits almost every month. What more do you want? To become the richest man walking on Earth by trading?

Email me to know more about the course. If you do not know anything about Options and Futures please tell me, I will try to help you for free.

The budget week is a very dangerous week for option traders. Nifty can go anywhere and the options premium will reduce very fast.

We have entered into a dangerous week – the Budget Week.

Tomorrow the Budget Session of Parliament starts and government will present the General Budget on February 29, 2016.

Huge volatility can be seen in the markets.

It looks like expiry will be as usual, this Thursday the 25th of February 2016.

Are you buyer of Options?

If yes, it is better to shift to the next month – March 2016. Last 5 days are worst for options. It does not matter how much the VIX increases, theta will have a big effect on options and their premiums will decrease no matter what.

March options still have 38 days to expire and VIX not going down at least till Friday means chances of making money increases. Please note that risk is always there, but this one looks like a calculated risk.

As an option buyer it is very hard to fight melting premiums, therefore I highly recommend avoid trading current month options.

On the other hand February 2016 options will now be cheap and will lure buyers, unfortunately still they will lose money.

For example currently Nifty is at 7220 and the ATM Feb call option of 7200 is quoting at 59.40. That’s quite cheap isn’t it? But since only 4 days are left for expiry, even at 59.40 this is too costly.

If you are sure of a move then buy March 7200 Call option NOT February’s.

But remember VIX drops like a knife falling from Monday onward. So if you plan to buy options today you must close it on or before this Friday – 26th of February 2016.

So should you sell these options?

No selling now is even more dangerous. Why? Because you dont know what is in store in the budget day or any news coming before the budget day. There can be a sharp rally or a sharp fall. We dont know. So it will be better to stop selling this week.

When should I start selling options again?

From Monday onward. In fact Tuesday is the best day. All the news and movement will be out, and frankly the traders will be too tired to trade the rest of the week. So selling can be very lucrative from Tuesday – 1st of March 2016. Nifty will not move much at least from one week from 1st March, and VIX will keep falling – so premiums will drop heavily.

For People Who Have Done My Conservative Course:

Its highly recommended that you start trading strategy 1 from 1st of March 2016. If you are keen on trading now its better to trade with reduced lot size. Please show some patience and take less risk this week. Years are left to make money, one week cannot reduce your profits however this week has the potential to take away a lot of your profits you already made in last few trades.

Note: I have decided to send more newsletter henceforth. Probably 3-4 every week. When I don’t send a newsletter for a few days then people WhatsApp me to send newsletters. 🙂

Please also read my newsletters. I have to pay for the emails in the database. And its not cheap. If you do not read, unfortunately I will have to delete those emails.

Disclaimer: Views and opinions in this article is my personal opinion. Please do your own research before entering into any trade as suggested in this post. This is part of newsletter sent to my subscribers today. If you want to receive such newsletters please register your email here.

I got quite a lot of questions on my yesterday’s email on ideas to trade.

One of them was interesting and I would like to share with you:

This was the question:

Hi Dilip,

Hope you are doing good. I learned a lot through your conservative attitude & greed control articles. Thanks for your awesome conservative strategies.

I have one silly question to ask that in this article you recommended ICICI Nifty Index Mutual Fund.

When I see the top portfolio of such front line index funds I see that almost all mutual funds have mostly similar blue chips in their top holdings.

My question is what difference it takes if we directly invest in such blue chips which are already 40 to 50% down from their 52 week high instead of investing in same sticks via mutual fund which charge us yearly expense ratio.

Can you please share pros & cons between investing into index mutual funds than directly investing into stocks?

Thanks for your valuable guidance as always.

Best Regards
===============

Well good question. No question is silly question. Here is my answer:

When you invest in Nifty Index Fund for a short term, then you are rest assured that if Nifty rises then the Index Fund or Nifty Bees will also rise in value and you will surly make a profit.

It is but commonsense that one day or the other (and that day is not far) when Nifty will be around 8000 – which is almost 12-13% from current levels.

In that case your investment in Nifty Index Fund or Nifty Bees will give a guaranteed return of 11-12% (1% deducted for expenses) in few days or months.

On top of that you don’t have to do research for Stocks that may rise. You just cannot invest in ALL the basket of stocks that these mutual funds invest in. Tracking them is very difficult too. So you will chose 3 or 4. This will take time. And the worst part is there is no guarantee these stocks will beat returns of Nifty in a short period.

So when you invest in an Index mutual fund, your time is saved and your investment is also diversified. You can live in peace, and you can invest as much as you can, the money that you don’t need for 1 year.

Remember that this particular investment is for 1 year and our target is to make 12-15% return in one year. With investing in a stock it gets risky. You may choose a correct stock and make a stellar return from that stock, but there is a high chance that your chosen stock does not perform. Or if you are invested in 4-5 different stocks then one bad investment can pull down return from the entire portfolio. In the end your profit may be less than an Index fund even after deducting 1% of the expenses.

So if its for short to medium term I would rather invest in an Index fund or Nifty BeEs rather than a few stocks, to feel safe. I am ok with a lower return but with a very high chance of success.

You Mean To Say We Must NEVER Invest In Stocks?

I never said that. Nifty is currently 20% lower than its recent high about an year ago. Nifty for sure will try to reach its mean within months. Let us not get into math, but 8000 looks certain in few months. We are talking about making more or less 10-12% in 6-12 months. At present investing in an Index fund looks the safest option to me. That is it. Yes in a few months from now some good stocks will double and you will rant on me for giving a bad advice.

But do you know the name of that stock today? NO. If you don’t know then it is always better to sacrifice some greed to make more or less what we want to make. How many people you know have stuck in a bad stock for years? Many. How many people do you know are stuck in Index Funds or Nifty Bees for years? None.

Its simple logic. 🙂

Note: Some greedy trader out there might be thinking I am a fool. Why am I not investing in Nifty Future when I know Nifty will be at 8000 some day. Thank You Sir. Every investment has an objective and this one is to make 12% in 6-12 months only with low risk. For investing in Nifty Futures I have different cash, a bit lower amount though, through which I can take aggressive bets. But not buying a Future now and selling it when Nifty reaches 8000. That’s a foolish trade in my books.

So When Should You Invest In Stocks?

Yes you must have a portfolio of good stocks. It could be anywhere from 10 to 15 stocks max. And you should every month invest in them in equal amounts for ALL your earning life, which is 30-35 years.

80% of them will prove to be losers, after 30 years of investment. But 20% of them will be worth crores. I mean multi-crores. The dividends itself will far surpass the invested amount. Just this small investment every month can take care of your retirement years. Read this article on how to make crores from the stock markets.

Note that this is one part of diversification – a very small part indeed. Some money should get into trading for regular income. Some money in liquid funds or fixed deposits that you may need urgently.

What I am trying to say is that if you can save 100 rupees a month you should know what percentage of it to invest where. And you should stick to the rule – no matter how good you are doing with your trading.

Even after making good profits since last few years in trading I am not going to invest ALL my investments in trading. I believe in diversification and this is how I do it.

Diversifying your money is very important when its matter of investments. You must know how much you need in few months, years and decades from now. Ok you may not be perfect but you must have an idea. Its always better to invest and work towards achieving those goals in time or slightly before that time. Over all 20% return a year from all of your investment will be huge.

Frankly if you don’t need that money now – its really a useless exercise to try to make that RIGHT NOW. That’s the reason I believe in making small profits on a consistent basis, rather try to make a lot in couple of months. That’s the exact reason I do not promise anyone more than 3% per month from the strategies in my course. Its a different matter that some of my customers are making more than that, but I really don’t care.

These small steps will become BIG STEPS in matter of years. And it is possible for every trader. Unfortunately this website will keep getting traffic for making 5000 per day from stock markets, or 1 lakh per month. Some even search for 50 crore a year – lol. Well nothing wrong in having such targets after all we trade to make money – but the problem lies somewhere else. The problem is when I get calls from such people, all they have is paltry 25000 in their account. These people are the targets of the tips providers. In a couple of month their account shows ZERO rupees. Hope you are not one of them.

Dilip, I don’t have patience to wait for 20-30 years to make crores, I want it now

Really? Then you must have lost a lot of money in stock markets. 🙂

People who don’t have patience are the biggest losers in stock markets. And they still don’t learn and keep losing for years. And you know what, they retire at 60 with heavy losses. Believe me world is full of them. At least 10 emails I get from such people every month. 🙁

You know what – it does not matter if you have patience or not. If you survive then you will turn 60 anyway – you can’t stop the aging process, can you? And if you don’t, then even all the money in the world if given to you is worthless. Hope you get the point. This attitude of “I need more and I need it now” is a sure shot way of destroying your wealth.

So learn to be happy with small profits. Occasionally if big profits do come be happy – but don’t lose it again to make big profits.

Smart trading and patience is the key in making money in stock markets. When I didn’t have patience I lost a lot. When I started being happy even with 1% return a month, I started making good money. If you don’t know 1% return a month is NOT 12% return a year – its 15% return a year compounded.

For most of us even 15% a year is a great return.

This is an email by one of my paid customers of the course. I added this as I think it can add value to this post:

I genuinely believe its a real good write-up with the links to support it. There’s a multitude out there still groping with little or no knowledge about investments or trading, and yet venturing out to boldly make some ‘easy money’. Life is tough out there. Perhaps its not their fault – we were once like that too – I believe – not so long ago – but wiser after all the setbacks and failures.

Whatever, I think people should invest in knowledge, if not at least learn from their costly mistakes, and not keep repeating the same mistakes again. It reminds me of a quote: “Learn from your losses. They are expensive lessons. You paid for them”.

Whatever is written here may please not be made public. (At least not with my name) It was written in confidence only for your reading after seeing so many of my friends continuing to remain the same despite their setbacks. Some don’t want to learn, I suppose.

Some want to learn but don’t want to spend, and some just want it all ready-made.

Well the world has all types.

That’s all for now.
Best Regards

Please note that the person who wrote the above email is my paid customer of my course. Did you notice the change in his attitude towards the stock markets? He is now very happy with the small profits he makes every month. The course will not only teach you five conservative strategies, but will also change your view towards the markets. In other words, it will help you control greed which is one of the biggest enemy of the stock markets.

His last sentence is very correct. “Some want to learn but don’t want to spend, and some just want it all ready-made.” More than 99% of people who visit this blog do not pay for the course. I think the biggest reason is they don’t want to spend money to learn something that can make them 3% a month. For most its too less. Its strange that they keep losing money month after month, but are still looking for strategies that can double their money in few months. Let me tell you such strategies do not exist. You will keep looking for it for years and still will not find it. And mind it, 3% a month is not a low return, compounded this can be great return in years to come.