Note: Part of newsletter sent on 27 & 28 Dec 2015.

Refer my email dated November 11, 2015 which you can find here: Muhurat Trading Tip Happy Diwali 2015. I quote from the article:

I would suggest start buying Sun Pharmaceutical Industries Ltd in stages like some today, some after a decline of 10% and some after a decline of 20% from here. Its looking very strong at 726.00. Its now at 52 week low as well. A very strong company. Though it is having some issues right now, they are short term and the stock will recover very fast when the management will solve those issues. The stock should give you good returns within a few months – but please do not invest a lot, and, invest in stages. If the stock goes down 10% more from here buy more. Or if the stock goes up 10-12% sell and book your profits.

I had recommended Sun Pharmaceutical Industries Ltd at 726.00. You can exit from the stock today and make a profit of around 10% in 45 days. I think stock can go up to 830-850 soon. But due to recent controversies its better to book profits and exit.

See this:

And closing price on 24-Dec-2015:

Note that at the time of writing on 10-Nov-2015, it was trading at 726 but closed at 731.95 that day. The newsletter was sent for Muhurat Trading 2015. See how the stock almost reversed from 726. It made a low of 706.20 on 24-Nov-2015; after that straight up.

What We Learn?

If your basics are correct you will always make money. 10% in 45 days is a great return but still risk-management says only a part of your stock markets investments should have gone into Sun Pharmaceutical Ltd even if you are 100% sure it will give a great return soon. That’s because if by chance you need the money in between when it was down, you would have been forced to exit in a loss. At any cost this situation must be avoided.

Thanks and Enjoy Profits.

Hey isnt 10% in 45 days is BETTER than 3% a month? 🙂 Yes it is but movement of a stock is NOT in your control, but the options are in YOUR control because you can hedge and lots depends on VIX. And VIX can be guessed. Therefore every stock investor MUST learn options trading.

Learn Conservative Options Trading and Enjoy Consistent Profits.

With My Free Tips I Do Not Make A Single Rupee

Yes I do not earn a single rupee with these free tips and I have given many in this site. Yet its 10.30 pm on Saturday night 26-Dec-2015, I am writing this to help you. This is the time when most Indians are watching TV or are having fun at restaurants, clubs or in movie theaters. Why am I telling you this? Just be passionate in what you do and be honest. I can assure you will live a very happy life. I also love to have fun and I do – I was busy today and tomorrow I have some appointments and may not have time, so I have to finish this today. On Monday morning this post will go live so that you can read it before market opens.

Mind it on Muhurat Trading day this website got more than 500 clicks in a single day. It was on top of Google rankings for Muhurat Trading Tips. Plus thousands of subscribers read this through emails. So I am sure many of those must have bought Sun Pharma that day and will make profits today. The stock actually crossed 800 a few days back, but I was waiting for a better rate, unfortunately again it fell. So I think it is good enough for an exit signal. Some people may have booked profits earlier above 800 and may have made more.

I feel very happy when my subscribers make money and feel very bad when someone loses money. That is the whole point of this site, to educate how to invest, and am working towards it. Frankly, I love doing it whether I am compensated for it or not.

Love what you do. Love your job and make sound investing decisions. Do not be greedy and be happy with small profits. And most importantly – When its Work – its Work – forget everything else. You will start having fun while you work. And you will be very happy in your life.

Added on January 04, 2016:

Please see the comments section of this article. Someone asked an interesting question – “It seems you are saying without base but support and resistance. Where are fundamentals of the stock?”

I have shifted the answer to the article itself as I think it is a great question and the answer deserved a place in the article itself. Lots of people do not read comments.

My answer is this:

If you read this article when I emailed everyone to buy Sun Pharma, it is clearly written:

I would suggest start buying Sun Pharmaceutical. Its looking very strong at 726.00. Its now at 52 week low as well. A very strong company. Though it is having some issues right now, they are short term and the stock will recover very fast when the management will solve those issues. The stock should give you good returns within a few months – but please do not invest a lot, and, invest in stages. If the stock goes down 10% more from here buy more. Or if the stock goes up 10-12% sell and book your profits.

When you are buying a stock to make 10% quick profit, then it is more of a swing trading than a long term fundamental trading. And can’t a trader do swing trading in a fundamentally strong stock? It is actually a killer combination. I actually do it, and highly recommend swing trading with fundamentally strong stocks. So even if I need to hold, I know I will NOT hold them for years.

For example even if Jindal Steel & Power Ltd. nose dives 25%, I would not buy that stock. Though a Group “A” stock now – its fundamentals as a company is not strong. I would rather control my greed and never regret not buying the stock even if it jumps back 50% the next day. Greed is a BIG trapper. You will never know when you get trapped. 🙂

Now when Sun Pharma hit the target in 45 days, it DOES NOT matter if there is any controversy in the stock or not – what matters is my investment paid off and I should exit, that’s it. That is why I gave an exit call. Interestingly the stock was up more the next day when my subscribers would have exited the stock with more profits (newsletter was sent after market hours). I wanted to wait for it to hit 820, but since the stock was surrounded by another controversy I thought it is better to exit.

So yes, more to do with support BUT Not resistance because we already made up our mind to exit with a 10% profit.

Now please DO NOT ask how I find support. 🙂

Thanks for a good question.

Predicting stock markets to some extend is easy and we do not need software to make money in stock markets.

We will read that later but before some updates.

Recently 3 of my predictions came true:

Click here to read my previous newsletter.

Prediction 1: INDIA VIX will Fall – INDIA VIX is now at 15.18, down by 9.26%
Prediction 2: Not Much Movement in Nifty after the FED rate hike – Nifty now at 7765 – almost same place as yesterdays’ close, and,
Prediction 3: 7600 will be a great support – Nifty bounces back exactly from 7610.

Note for traders who have done my course: Check your profits and if they are reasonable enough, please close the trade and enjoy the profits for a few days. Read the course document given to you, if the strategy 1 is even slightly close to where we need to book profits – you should close the trade.

Do not enter immediately after a 10% fall in VIX. Wait for a rise and enter again.

Good traders are ones who wait for the right opportunity to make money.

We all know money cannot be made everyday in stock markets – yet we like to trade everyday. Most of us lose. So learn to stop the urge of trading for the sake of trading. Markets for sure will give us enough opportunities. Learn to be patient and wait for that opportunity. Believe me if you do this and take only 15-20 max Strategy 1 trades in a year – you will make money more than 90% of the times, even though I promise only 80%. With practice you should be able to make money almost every time you trade. But patience is required. Remember no one can teach patience. Its ok if the profits are small, at least its better than losing money.

Predicting Markets with Some Accuracy Is Possible. A Software is NOT Required.

Lots of people must be thinking how can I predict things which such accuracy. Frankly it has more to do with experience that anything else.

For example…

VIX will fall after a big news – this is plain common sense. Nothing further to discuss.

7600 a good support: At 7600 almost all good blue chip stocks were at very attractive prices. Some of them were hitting at 52-week low. BUT here is the most important part – there was nothing bad in our economy that led to stock markets falling. Somewhere down the line greed and hope will kick in. You must know that it is mostly the stock buyers and sellers who move the markets NOT the derivative traders. 8900 to 7600 is a great fall in a few months and somewhere Nifty had to bottom out.

It could have gone to 7500, it can go there in Future as well but the news was really not that bad except for the FED rate hike which the markets had already factored in.

Not much move in Nifty: Refer to this article.

Basically Nifty traders would have been worried if FED increased rates by 0.50% or more. But chances of that were NIL. So it is very easy to assume that Nifty will not move much as the markets would have already factored that in by Wednesday’s close.

As you can see for these things software are not required. I fail to understand why people spend lakhs on software to make money in stock markets. I do not see any retail trader making money because a software did a great job while he was having his lunch.

A few years back I invested 5 Lakhs in a properly back-tested system to make at least 5% a month on average whatever happens to Nifty. This was by a GIANT BROKER in stock markets. (I still hold their Demat acc though with zero cash balance). At that time you could invest 5 lakhs in a PMS (Portfolio Management Service) – that was the last 5 lakhs I had. After that I had to take a personal loan to survive. Anyway, I think today the minimum is 10 Lakhs to invest in a PMS. If you are thinking to invest – just don’t do it.

Long story short, after 6 months Nifty was up by 5% and my investment was DOWN by 1%. Hey dint the back-testing say it should have been up by at least 30%? After all I was sold on those lines nothing else. Forget 30 – at least match Nifty, how can they be down by 1%?

When I called and asked them the same questions – all I got was lame excuses like a kid gives to his teacher for coming late to school. I think they are given coaching to lie as well. I got so angry, I closed my account in few days. Even closing MY account was a bad experience. I had to email them 3 times, courier documents and call them 5 times and had to literally shout at them to close MY ACCOUNT TO GET MY MONEY BACK. What a horrible experience. I got back only 95% of the value of my money. There was management fees, taxes and blah blah. You get the point.

I cannot name the company due to legal complications. But what I am trying to say is this:

If Automated Trading Software Made By By A Giant Stock Broking Company With Crores of Rupees and Great Human Resources Did Not Make Money For Their Subscribers How Can You Expect To Make A Sofware With A Few Lakhs That Can Spin Money Out of Stock Markets For You?

Stop dreaming please and save your hard earned money for better things. Invest in knowledge. Buy books or read online about stock markets.

Again I want to apply some plain logic here.

The greatest investors in stock markets NEVER used any software to predict stock direction or markets movements. But they made millions. Other than making smart looking charts, BELIEVE ME, these software can do NOTHING.

Had you bought some great stocks 3 years back and did nothing – your money would have by now more than doubled. Do you need any software for that?

I Get Calls To Sell You Software But I Reject

Who doesn’t want to make easy money? No I don’t. Almost everyday I get calls from someone selling a trading software to market their software to my subscribers. For that they are willing to cough-cough “pay me well” to sell these software to you.

You know what I just need to send one email and at least 10 people will buy. If they are willing to pay me Rs.5000/- for one sale, I make a cool Rs. 50,000 /- per month for doing nothing.

How good is that? But yes I am kicking that Rs.50,000/- per month easy money good bye just because I do not want to make fool of you.

When I am myself against using any software – how can I recommend a software to you?

No I do not need that easy money by fooling people.

You must have noticed – I do not even advertise on my site. That again can make at least Rs.20,000/- per month.

Combine the two and we are talking about saying good bye to Rs.70,000/- per month or more than 8 Lakhs a year.

I am doing ok, I can feed my family well, I can give my two kids good education, and I am very happy in my life. I have set my goals and achieving it. I don’t need more.

Easy money only makes life miserable. One thing will lead to another and ultimately everything will collapse. Greed knows no boundaries.

I know how much I need, when and why and I am working towards my goal and succeeding. Whats the need to change the path? May be I will retire with 20 or 30 lakh more – but that money will not make me happy. So why bother?

Conclusion – What we Learned:

Note: Part of newsletter sent on Wednesday, December 16, 2015. Please click here to register your email to get such newsletters.

As expected, 7600 became a strong support. Nifty bounced back from 7610. Click here to see.

And the good news is that the whole world has taken a 0.25% increase in FED rate for granted and have moved on.

Indian markets are great followers. Once the European markets started moving up yesterday, Nifty also started moving up. Very strange but we traders cannot do anything about it. Intraday traders can benefit from it though.

The good news is worry is over.

And when worry is over you can see that VIX has also started to fall.

At 11.20 am INDIA VIX is at 16.82 which is 3.00% down from previous close.

It will fall further tomorrow. Be ready to close strategy 1 if in reasonable profits tomorrow.

More profits coming. 🙂 I will send an update later tomorrow.

Somebody came to my site today morning looking for “Dilip Shaw Wealth”. Holy shit, really? I mean if I have less or if I have more, why should it really bother you? Your only concern should be if you can really benefit from my course. If yes, then is it worth spending 5k on it once in your life? That’s for you to decide.

Click Here to read the course details.

And here is where you can pay the course fee online or NEFT for the course.

Note: It’s very nice to see a lot of traffic to the site coming from the words “Dilip Shaw” and “TheOptionCourse”. This means you my subscribers, are spreading it through the word of mouth.

THANK YOU SO MUCH!!

My Best Regards,
Dilip Shaw
90511 43004

Note: Extract of my newsletter sent on 14th December, 2015 to my newsletter subscribers. If you want to receive such newsletters please register here.

In-spite of turmoils in the world Market Nifty has shown support at 7600 and actually is moving up.

Refer my email dated Dec 7, 2015 that you can find here:

http://www.theoptioncourse.com/how-to-trade-nifty-now-december-2015/

I had written this:

But I think 7600-7700 is a good support for Nifty. (That does not mean you buy a Future – I do not give suggestions so that you trade without research based on what I say in this blog. Please do your own research before taking an investing decision.)

The recent low is 7610.45. 🙂

BUT the point is this – there is BIG news coming on 15th and 16th December 2015 – The FED rate hike, and markets all over the world, like I have said before will figure the results by today or tomorrow’s closing.

Now, Nifty showing resistant is a GREAT sign. But that does not mean we declare 7600 is the bottom.

But We Can Take Calculated Risks

INDIA VIX is at 17.89 that is 4.13% up from Fridays close.

It may go up tomorrow because we will know the results only on Wednesday or may be Thursday here in India. Once the result is out VIX drops and our trade benefits.

How Can My Paid Subscribers Trade FED Rate Hike?

This part is only for people who have taken my conservative stock option course. Strategy 1 looks the safest. High VIX and not much chance of Nifty moving 5%, but very high chance of VIX dropping.

Risk-Reward is very favorable.

You can trade that. But remember that VIX may increase tomorrow as well so if you have cash, trade some lots today and some tomorrow.

If you are already in strategy 1 and its at break even and if you are trading with a discount broker, I would suggest close some lots and create a new strategy 1. You will profit more in the SAME time. If you are on 5 close 2 or 3 and make a new trade. No need to close all lots as we are looking for risk-management NOT jumping from one trade to another just because VIX is high.

For aggressive traders: Strategy 2 can also be traded directly PUT side – risk slightly more but rewards are great.

Highest Open Interest in Nifty 7500 Strike – So We Can Take Calculated Risks

I have found something interesting. 7500 strike has the highest OI (Open Interest). See this:

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

Increase in OI: 884,000
Increase (%): 14.80%

15% increase means most market participants believe 7500 is a very crucial level for Nifty and it may not break that.

But remember that this is what most of the trades believe – but many time open interests are broken.

Since OI is highest at 7500, Will Nifty break or not break this?

Please remember that anything can happen in markets. But here is some common sense that can be applied.

Someone asked me yesterday what software I use? Well I DO NOT use ANY software – my only software is common sense which comes from experience. No one can device a software to take decisions based on common sense. It is a different story that software do not make money. If they did, we just need a software to trade on our behalf and we enjoy life and the world collapses. That day will NEVER come. 🙂

So people looking for software, please use your common sense and learn to work hard. Ok back to topic.

Applying some common sense:

The whole world knows 25 basis points increase (0.25%) is almost certain. Nifty will factor that in by tomorrows’ closing. If that does not happen Nifty is headed up. If that happens, since its already factored in, on Wednesday or Thursday (meeting is for 2 days) morning, Nifty will NOT show any gaps up or down, but VIX will drop for sure.

Now what are the chances that FED will increase rates by 50 basis points or 0.50%? Very slim. For us the real issue is chances of FED increasing rates by 0.50%. If it happens Nifty for sure will gap open down by at least 1-2% and keep going down. But chances of 0.50% rate hike is NIL. So I do not expect a very huge (like 5%) gap up/down after the news.

And all paid subscribers of my course know that a small movement is nothing for us. We benefit.

I have NOT taken your paid course – What can I trade?

Well of course I cannot reveal the strategy here of my course, but please do not buy options for next two days until VIX is increasing – you will lose money big time. And if you are selling options please hedge. DO NOT sell naked – risk-reward is never in favor of naked option sellers when a big news is expected.

And ask yourself what is stopping you from taking my course? There are many traders who have known about my site since the last 1 year and have not taken the course. After 1 year they email me saying all their money got wiped out, please help. Now when everything is gone and you are left with some 10 or 20k how can I help? Do not let that happen to you. Rest its your call.

Hope you all make good profits.

Best.

==== End of Email =======

Update on 15 December 2015 – 1.30 p.m:

Today INDIA VIX is at 18.06 up by 1.46%.

This was expected as written in my yesterdays email (see top of this page).

Nifty is not showing much movement today which indicates it has already factored in a FED rate hike.

A 25 basis points or 0.25% increase is what it has already factored in and probably will close at current levels of 7650.

If FED does not increase rates – still markets won’t move much as that is the second possibility.

However if FED increases rates by 50 basis (0.50%) points then Nifty may fall 100-150 points.

But VIX will drop for sure even if there is a fall. Quick profits to be made.

Strategy 1 right now looks very safe.

Note that FIIs have taken money out from our stock markets in the hope that FED will increase rates. If it doesn’t I assume they will again start pumping money in our stock markets and Nifty may start moving up again.

So its great time to accumulate your favorite stocks in cash. Make sure not to make lump-sum investments – but keep some cash for further downfall. If the stock moves up you make profits anyway.

Best Regards,
Dilip Shaw
9051143004
Click Here to Learn Conservative Trading and Make Consistent Profits

Part of newsletter sent on 10-December-2015. Register to receive newsletters here.

Some people complain that the cost of my course is too much. Really? Have a look at this – an email of my client I received today morning. In 15 days one of my clients made Rs.6930.00 Profit. And all this with a Full Time Job. You can click on the image if you cannot read it clearly.

Testimonial by Yogesh on 10-Dec-2015 Rs.6930.00 Profit in 15 days after taking the course – Results may vary for users

Tell me, is paying 5k or 6k really too much when you can get your money back + some more in 15 days? On top of that you get my support for 1 year.

Tip For Those Who have taken my course: Have you ever tried Strategy 1 (the non-directional trade) on STABLE STOCKS? You know what, stocks have more volatility, so the premiums are also more – therefore you can make up to 5% a month. However with a slight increase in risk. Let me tell you that liquidity will be a issue, so please try on stocks with good liquidity. Luckily stocks with good liquidity also are VERY Stable – so that is an added advantage.

Try it. If you fear trading stocks, do paper trading for about a month and get in. Please remember that margin blocked may be more. For that consult your broker.

If trading options, it is very important that you trade with a discount broker who charge low brokerage so that you do not feel the pain of paying too much getting in and out of a trade.

Another thing you must keep in mind is that it does not matter if margin blocked is more – ultimately it is the ROI (return on investment) that matters. Return of 3000 on 1 lakh is same as return of 15,000 on 5 lakhs.

As you can see above if you really like the magic of compounding to work on your portfolio, you must try to bring more money into your trading account.

Remember with a discount broker number of lots does not matter as you are paying only a fixed price for one order. Even if you buy/sell 10 or 100 lots you still pay a fixed low brokerage. So I request you to trade with a discount broker to save your money.

If you want to open your account under me with the best and the safest discount broker in India – send me your name, email, and phone number and I will set up you under me.

And if you want to know anything about my course, please contact me.

Learn and trade, else you are in a better position to know whats happening to your account by speculative trading. Please stop your losses and do the course now.

And if you are not taking the course because you think 3% a month is too less a return then think again – is making 3% a month better or worse than losing money every month? All in all your losses may run in lakhs or ever crores in the hope of getting 10% a month and you will never know.

You can pay for my course online here.

Update: Just before sending this email I got update from the client that he traded the stock option strategy 3 (not non-directional) on ITC because of my recommendation on 7-December-2015 here:

http://www.theoptioncourse.com/how-to-trade-nifty-now-december-2015/

People who have taken my course, can you see how strong the conservative stock option strategy is? Check your email where I send the strategies, you will find this written by me – “Do Not Fear Trading Strategy 3 – The Stock Option Strategy – You will leave money on the table”. By not trading the conservative stock option strategy, you are actually leaving money on the table.

Note: In spite of the above my suggestion remains same – you should paper trade the pure non-directional strategy in some stable and liquid stocks like ITC, HDFC, HDFC Bank, SBI and see the results. If you are able to devote a little more time, I guarantee that you will see better results than Nifty in Stocks, as they have a higher premium. Even Bank Nifty options have higher premium than Nifty because of the high volatility. I assure with slightly more risk you can make that magical figure of 5% a month.

Interestingly a lot of people call me and ask if they can get a loan and trade after doing my course. After-all a personal loan is given at 12-14% interest and if they can make 24-36% per year then they can take this profit home after paying back the loan.

Well sounds good but really a bad idea. Go back to history – name 1 person who took a personal loan or borrowed money from general public/banks/lending companies on false promises of great returns, and converted it into stellar returns from the stock markets – returned back the loan and lived happily ever after. No, not a single person has ever done that. What gives you the confidence that you can?

In fact you may have heard a lot of Scams and failures on these lines but not a single success story. Some are actually behind bars.

Why? Why do humans fail to convert a loan or borrowed money into stock market success story? We will explore in this article.

Well here is one email I got that inspired me to write this article. Email slightly edited to hide sensitive information.

Dear Sir,

3) Then using collateral value (approx 8 lakhs) I want to trade every month using below conservative nifty strategy-1.

[Email edited here as the Strategy 1 of the course was written here. However this gave me almost an attack when this person told me that he will trade my strategy AS IT IS BUT WITHOUT PROTECTION (THE HEDGE) – to generate MORE returns.

Here is the main reason why traders fail to convert loans into spectacular returns from stock markets

Since he has to pay 12.99% as interest a 3% return is less, which is quite correct, BUT THIS IS WHY traders all around the world lose money trading.

There is a limit to what you can make trading in the stock markets. Once that is achieved, the mind set once they start making money changes pretty fast to how to trade more aggressively and make money. The “I can never go wrong” mindset comes in. And this is exactly where things starts to change dramatically. Note that the problem is not with their mindsets – the stock markets does not know you or your mindset – all it knows is the trade you have taken. The problem is changing the style of the trade from may be conservative or disciplined trading to very aggressive trading.

With aggressive trading let me guarantee you this – the best of the best traders will get stuck in one bad trades out of 10 trades they take – and the spiral of losses begins. Even he loses 1% trading aggressively remember that he has to return 12.99%. He has already lost 12.99%, now 1% more. This is 14% money already lost. This keeps playing in his mind – to get that he trades even more aggressively this time with more risk and loses even more money, until his account shows a zero balance, or he gets a margin call.

On social front when he loses money the trader gets into a reclusive mode and sometimes even avoids his own family. He knows that his dream of being extremely rich is over and he does not want to face the reality. That’s the reason he starts avoiding everyone, and gets irritated on everything. This is where he recognizes that he did a huge mistake. End result – some go to jail, some suicide, some check into counselling centers.

Aggressive trading means there can be a loss of 20-25% in a single trade. Well there can be gains as well but when do aggressive traders wait for a 25% gains?

However loss of 20% is quite common if there is no hedging. One single loss and his game is over for good.]

4) If Nifty still moves further 200 points then I will stop loss that side options & will enter into your Conservative Strategy-2. I made this modification to gain around 4 to 4.5% per month using conservative strategy. Only risk would be if Nifty give one side moves of around 300 to 400 points in one day then I will in huge loss.

Another bad modification to my strategies which is not required. Modifications are OK as long as there is a strong logic behind it and protections are in place.

So you already know that there can be huge losses, still you want to try. WHY?

I need your advise on below points:

A) Whether risk reward would be favorable on point no 4.

Thanks & Regards,
Dhiren

Mr. Dhiren, you got my answer. DO NOT take a personal loan and trade especially aggressively – you will play with fire. If you lost money trading then you lost it. Remember that when you are making money now please do not think that you are “getting back” your money from the stock markets. This sounds like revenge and revenges do not work in stock markets. Think that you learned from your past mistakes and are now doing better in the business, that’s it.

Now lets discuss your points, point by point.

>> 1) I am planning to have personal loan of 10 lacs @ 12.99% interest rate which I am offered from ICICI bank.

Great. But other than trading or investing in stock markets is there any reason? If not you are better off without the loan. You will have 10 lacs at 12.99% rate for nothing.

>> 2) With this amount I am planning to build portfolio using entire 10 lacs into Axis bank, HDFC, SBI, Coal India, TCS, Infosys, NTPC & L&T at current price with equal fund allocation before 15Th Dec 2015.

Stocks looks good for the long term but still investing in stocks at one go is NOT advisable. Read my articles on investing in Axis Bank, ICICI bank and Sun pharma. In none of these articles I have told buy at one go. I have always maintained that start buying and keep some cash to buy more at a 10% drop – else sell to book profits ar 10-12%.

All 10 lacs investing at 1 go in stocks markets, even if in great companies is a bad idea. Markets are currently falling and we do not know when they will bottom out. Trying to time the stock markets is the biggest mistake of investing. No doubt why option buyers lose.

>> 3) Then using collateral value (approx 8 Lacs) I want to trade every month using below conservative nifty strategy-1.

Strategy 1 – the most conservative strategy in my course is intended to be traded with YOUR MONEY (the money that you own), not your parents or friends or money that you got from a loan. The real essence of the strategy is that you trade peacefully – not with any kinds of stress or panic in mind. On top of that you are tweaking the conservative strategy to become an aggressive strategy. Once you do not buy hedge, it is no more the same strategy.

>> 4) If Nifty still moves further 200 points then I will stop loss that side options & will enter into your Conservative Strategy-2. I made this modification to gain around 4 to 4.5% per month using conservative strategy. Only risk would be if Nifty give one side moves of around 300 to 400 points in one day then I will in huge loss.

Really? Conservative Strategy-2 is not made to be traded like that. You are making modifications to lose 4-4.5% and not gain. Yes a sudden 200-300 points move does come and while traders trading it conservatively will lose only 1-2%, your loss will be at 5-6%. And do not forget that its a loan – so your losses are even more.

>> A) Whether risk reward would be favorable on point no 4.

No. In my book trading without hedge is NO trade. Risk reward is BAD on a 10 lakh account.

>> B) Whether should I use entire capital of 8 Lacs to buy this 8 stocks at current price or should I buy in three steps. Because current level seems very attractive valuations for all these stocks.

Read This – How To Invest In Stocks:

Three four steps to buy stocks is good BUT you cannot and should not do it on entire corpus that you want to invest in markets. At any give time, you can invest in a couple of stocks – not 3 or more. Moreover no stock should be allocated more than 10% of your trading capital. In fact the less the better, but no less than 5%, because if any stock performs its profits should have a meaningful impact on your whole portfolio – else if you allocate too less to any stock even if it becomes a multi-bagger your portfolio will not show a meaningful return.

So basically if you know a little math, you stock portfolio should not contain less that 10 or more than 20 stocks. And investment has to be done gradually NOT at a single time. If possible invest the entire corpus can be into to a liquid fund generating 8% return and take even money out every-moth and invest in any one or two of the stock in your list. Once you have booked profits in any stock, you can wait for its fall to invest again or research another stock.

Remember that the number of shares can differ according to the price BUT the money invested should be the same for entire year.

Looks like I am telling too much for free. Let me stop here. 🙂

>> C) Do you have any view on my stock selection, I mean will it be balanced portfolio or is any stock you feel to eliminate?

Now this is an interesting question. I am an options guy, not a stock guy. I have a close list of 10 stocks that I follow. 20-30% change every year. And these are stocks to be traded/invested for medium to long term. The risk is mine – so I do not tell any one asking for advice on stocks. Barring a few stock investing ideas in my blog I do not usually recommend any stock, until there is a very strong reason to do so.

Frankly, I do not know if you are following any risk-management methods. So someone may invest his entire savings in one of the stocks I recommend and if that stock does not perform – he will scold me for giving wrong information. In reality the trouble was not following the risk-management principals. Just like how it has worked for others – my stock portfolio has worked the same – some returned great, some I had to exit in losses. People who have taken my course know that I do not invest stock and forget – I trade the conservative stock strategy on it so all in all even if the stock does not perform I can make money. However you may not know the strategy and lose money. On top of that why should I do stock research for you?

>> D) In one of your article of How to become smart trader, you mentioned that why not earn more than 3% when you are fully Hedged. Can you please suggest is there any modified version of Strategy-1 which does have little risk but we can earn upto 4 to 5%. This because EMI for my personal loan would be Rs. 22700 & I am planning to earn 35000 from 8 lacs every month using conservative strategy.

Good question. Read that again – I said why not earn more than 3% when you are fully Hedged – NOT when you are NOT hedged. You are doing exact opposite of what I said or you are trying to understand what is not written there in that article.

I have given you the best possible strikes to chose for strategy 1. You know very well how to try to take more risk and try to make more – but that’s an experiment you need to do and that’s not my job. I have done enough research and got to those strike prices. Rest depends on the trader. If you are good trader you can always better that. How can I do research for you?

Now this is VERY Important thing he said that summarizes why you should not take a loan and trade:

“This because EMI for my personal loan would be Rs. 22700 & I am planning to earn 35000 from 8 lacs every month using conservative strategy.”

So you will trade in panic. You have no other choice but to make more than 22,700 per month or you pay money from your pocket. And this needs consistency – every month this person will have to make that amount. There cannot be a single month of losses. And if there is a loss of 20,000, then total money he needs to create a balance is 42,700 the very next month. To cover this up this guy will take even more aggressive trading involving Futures. Now he will get trapped – this 42k loss will convert to 1 lakh and then some more.

>> E) No one would advise taking personal loan to trade in stock market but still I am gaining confidence in earning consistently through nifty conservative strategy so what is your view on taking personal loan for trading conservative strategy in stock market?

Its good and nice to know that you are earning consistently through nifty conservative strategy – its meant for that. But it is meant to be traded with your money and with the money you do not need for next few years not months – so that you can compound. A loan is a money that is not yours and you will have to return it very soon. Even if successful you only get to keep the profit percentage of the trading. You cannot keep 10 lakhs with you – that you will have to return to your banker. All in all the money you make is not substantial as you keep only a percentage of the profits, not all profits. Compare this to the hard work you do – this is not significant. To me the Risk-Reward ratio is NOT in favor.

>> Request for your advice/comment on above points to fight back all my past losses in stock market & Your advise does really have lots of weight-age on my decision making.

Read this “fight back all my past losses” – were you fighting the stock markets when you were trading and losing? You lost the fight, now you want to fight back and win. This is called ego. No egoistic trader has made money trading the stock markets. Not just that. No egotist person has ever won a war, let alone the stock markets. Never trade with revenge in mind – stock markets have humbled 95% of traders and will continue to do so. The rest are highly disciplined traders making huge profits – but they am sure are very humble towards life as well as towards the markets.

Just be happy with the small profits you are making and forget the occasional losses – you can never win always – that is part of trading. If you can get to that figure of 20% return a year from your whole portfolio, remember that your returns are one of the best in this world during the current times.

Conclusion why traders fail to make money on borrowed capital or loan:

1. They are over-confident and think that they can never go wrong.
2. And therefore start taking very aggressive trades and start losing.
3. To recover losses they trade even more aggressively so that they not only recover losses but make huge profits.
4. They make more losses.
5. When they see that their ship is drowning and they cannot sail anymore – they declare bankruptcy or give all sorts of excuses to their bankers/lenders.
6. End is bitter for both the trader and the person/entity that gave them loan.

So the lesson is – Trade with your own money – part of which you can afford to lose. If you find success, only then increase your capital, gradually.

Have you ever taken a loan and invested in Stock Markets? If yes what as your experience?

Note: Part of newsletter sent to my subscribers today. If you need such newsletters please subscribe here.

Since a lot of time Nifty is doing nothing. All my customers of the conservative option course trading the strategy 1 – the non directional trade would have made good profits.

But there are indicators that now any day Nifty may move. Which direction we do not know – but there can be a move. I know there are lot of you who DO NOT trade with the hedge – I recommend for next 30 days be 100% hedged. Those who hedge always need not worry.

If GST bill is passed – Nifty is headed up.

But I think 7600-7700 is a good support for Nifty. (That does not mean you buy a Future – I do not give suggestions so that you trade without research based on what I say in this blog. Please do your own research before taking an investing decision.) You can buy Nifty BeES though, hold them till you make 5-6% profits. Well you can also switch some of your debt mutual funds holdings into equity. But only some of it. Read this article for more information.

Which Stock To Trade?

ITC Ltd. is looking very attractive at 313. Start accumulating the stock. Some now at around 300, then at 270, then at 243 (probably it will not go there). It is going down because GST will severely effect taxes paid by ITC. But we all know if that takes place, ITC will increase the price of their products especially cigarettes. And humans will keep inhaling cigarettes – it does not matter what the price is – habits don’t die easy. 🙂 And ITC will once again bounce back.

If you have cash trade the conservative stock strategy on ITC.

What Will Happen to India VIX:

It closed today at 15.87. Still good for strategy 1. But if you have cash read below:

If FED does a rate hike we may see some correction on worries over FIIs taking their money out from the stock markets. But if you know strategy 1 who cares? The Fed, holds its next policy meeting on Dec 15-16. So I assume VIX will again increase and will be at a good high on Dec 14th (Next Monday). If you have free cash trade strategy 1 on Monday or Tuesday.

You can even trade this Friday, 11th December, 2015. Since we have 2 days off weekend if there is not much increase in VIX then you can get the benefit Theta depreciation during holidays. Remember that Theta also depreciates during days stock markets are closed. 2 days benefit is good if VIX does not swell. If nothing it pays off your brokerages.

What may happen short term to Nifty?

There is a strong signal that FED will hike rate by 0.25%. But if nothing major happens to Nifty and GST bill is passed, Nifty is then headed for 8300-8500. The only issue is the FED reaction – but there are a lot of signs that markets will not panic like they did a couple of years back.

Since the signals of rate hike is very strong I think Nifty will factor it end this week itself.

Remember VIX cannot factor anything before the news except going up, so it will only increase. And even if it does not – it will fall after the news.

Good opportunity – make money. 🙂

Thanks for being my subscriber. More information on my Conservative Options Course is here:

http://www.theoptioncourse.com/learn-how-to-trade-options-for-monthly-income/

Disclaimer: This post is for educational purpose only. If following any advice written above please first do your own research. Stock market investment are subject to market risk so please have a proper money risk management plan.

Some of my visitors ask for stock market advice for free. I help as much as I can, but some emails are hilarious and some impossible. Read this article to know some real interesting people. There is a lesson too.

Now that my site www.TheOptionCourse.com is getting somewhat popular (I still feel a lot more needs to be done), I get regular emails for help.

Let me be very frank. No person on this earth can know everything. I am a human too. Its not possible that I know everything – so its quite obvious that some emails goes into “Ask Me Anything” folder of my account for further research and later reply. My apologies if you do not get a quick reply.

However whatever I know I do try to reply quick. Please also understand that my customers are my first priority and if I find time I do reply the emails asking help for free.

But at the end of the day – I am the same human being as YOU. I have a family, a consulting job and of course this site which keeps me super busy. And I like that.

However sometimes I get strange messages where people take me for granted.

This person claims to be 51 (well could be true). Has 1 lakh in his trading account. I am sure he has saved some money, probably 10x of the cash in trading account – but wants help from me for free. Its not clear what he wants. Does he want me to give him the strategies for free or he needs money – its not clear. And his name is NOT Manas as in some previous emails.

His first email was :

Dear Mr. Dilip Shaw,
I need Rs.50,000 per month to run my house.
And exactly after 28 months I need Rs.30 lac.
How much money I need use as capital?
I want to learn your nifty strategy whether futures or options.
Please help me.

So it looks like he is asking for the course for free. And look at his demands. 🙂

I replied back with:
Currently do you have a job?

His reply was: No.

Then I asked:
And how much cash you have in your trading account?

His reply: 1 lac

Then I did not reply as 1 lac is good to take risk with stock markets if you are slightly younger and have a steady job, but starting with 1 lac at 51 especially if you do not have a job/business is risky.

But today this person wrote something strange that I would like to share with you. Have a look at this email below (all personal information of the sender hidden as usual for privacy):

This is what was written in the email:

If you help me get my financial problem solved, I will keep your photo along with Gods in my pooja room & worship you till I die.

I am in deep problem. Off-course one who will take out of it will be nothing but God for me. Your daily worship video will be sent to by attaching to mail or if you want to see live , I will show live by web camera.

These are words of 51 year old man in huge trouble.

Really my photo along with Gods? I am alive and kicking dude and I am NOT GOD and don’t want to be one. This makes me utterly uncomfortable. Please do not write fake sentiments. That does not work in real world. Let me tell you one fact of life:

“You are the only person who can help yourself in trouble. Not your parents, not friends, not relatives, not even your kids – you are the only one who has to get yourself out of trouble.”

Others can only give you advice, but in trouble it is you who can help yourself the most – no other person on this Earth can.

When I was losing money trading I was in the same spot – wife pregnant, 1 Lakh personal loan, zero balance in bank accounts, sacked from Job, and on top of that whatever was left was taken away by tips providers. My back was against the wall, but Thank God, I turned it around. Who helped me? Of course my parents, friends chipped in with advice and my father-in-law paid for my wife’s delivery (Thank You Papa) – but that’s it – I had no other choice but to work hard and make sure the trouble goes away. And it did.

I looked for a stable job. Any job – it DID NOT matter whether I liked it or not. At that time making money was paramount. I was willing to work day and night, nothing else mattered. Beggars cant be choosers right? In 2 days I got a good job. Then with my first salary I bought books. Did not waste time reading them. Like I was reading books while traveling to office, after coming back from office till late in the night.

Of course I knew this that if I am losing money, there are others losing money too and so I made this website to help the retail traders trade to make a profit. But then I hope you understand I have my limitations too.

If you think someone from the skies will come and take all your troubles away and do nothing – hell you will get into more trouble.

At at 51 if someone thinks like this then its is quite surprising.

This person wants help but has set a time limit for me to reply back. How interesting is that?

The email says this:

I am planning to adopt delta neutral strategy trading in Nifty options from next series. But instead of shorting any option and hedging it by buying the same option(of course different strike price), I am planning to short both put and call options at a far away price i.e. if Nifty at 8300 shorting put of 7900 and call of 8700. Also readjusting my positions according to movement of Nifty to earn full or maximum premium at or near expiry. Please inform whether I am on right track or do I have to take some extra precautions. Please reply before 30th October(start of November series) Thanks in advance.

See how he is to asking me to reply back before 30th October. He is not my customer.

Here is another email, though this is more to do with “you are helping that’s fine – but I need more”. See this email:

It says:

Dilipji sometimes you send regarding vix down or up and your strategy worked for 3 to 6% like that. Its alright but you did not told about which call or put options buy rate and sell rate please next time mention the options rate also.

So basically I kick my service good bye and help this person make money for free. When I requested him to take my course – there was no reply. Basically this person does not want to work hard and just wait for my tips to make money for free. I am sure if I do that he will next ask me to send him SMS on time – again for free. 🙂

If you are not willing to learn – no one can help you. No tip provider can ever make you rich.

This person is an Option Teacher somewhere in Mumbai. So ideally this person should know everything on options since he is teaching options. This is the email he wrote to me:

Hi Dilip,
Can you help me with regards to the below query, also can u share your contact details as I wanna learn more about Options.
With regards to Option I have a question on below mentioned chart.
In this chart Nifty 8300 call option on 1st of June shows settle price of 555.05, at this time there is no contract traded and also open interest is zero.
Question is how exchange has arrived with this price when there is no one trading.

Ok the question is good but silly if an option teacher is asking. Even if not traded an option will have some value. Ask and bid are based on the option premium provided by the market makers. So an option will have some value even if no one is trading. He has also NEVER traded options by the way. 🙂 He called me and told me that.

Here are some other interesting emails I would like to share. I am not attaching a screen-shot as it is not required.

I am 63 year old and retired from Govt. Service in the post of Accounts Officer. I have started trading since 2012 and lost nearly above 40,00,000/-( Forty lakhs) My retirement benefits have gone with in the period of 3 years. Please help me in recovering my loss at least 20% or 25%.

Another email:

Sir,
For a long time from 2005 i am trading in this market and lost RS 12 Lakh in this market by trading option and futures. I have already tried for more than 24 tips provider at last i had faced loss with them ultimately. One day i saw your advertisement on a website and replied. I am watching your mails for more than two months but i could not understand the way by which i can get back my money back which i have lost in this market.

I have only Rs 2500/- in my trading account but having holding of stocks valued RS 130,000/-and for this i can get exposure of the same amount for just 5 trading days only for a single trade. My account is with India Infoline and Brockrage is Rs. 80 for option per lot one side and 5 paisa intraday RS 150 for future one side. Now please suggest me is it possible to trade any option strategies in this kind of situation ? I have stopped trading since six months as i have lost my confidence and guts to loss.

I am 55 year old with practically small savings and on the verge of retirement. Positive thing is that my children are well settled and can look after themselves and can provide only basic necessities of my life. I have got a sickly wife whose medical expenses are 2.5 lacs per annum and which is my 50% of my annual income.

I can offer a risk money of 1 lac for building my retirement corpus which is 3 years away from now. I am interested in options trading and had been learning a lot about them, but I had not taken the plunge. Suggest how you can help me and also approximately how much retirement corpus I can build in 3 years time with 1lac I am going to invest now. Please explain to me in detail. I may be able to spend at least 2 hours for trading every day. Thanking You.

I am sorry if this email hurts anyone – but what I am trying to say through this article is “You Are The Only One Who Can Help Yourself In Trouble”. So just get up and learn to work hard. There is no free help. You either pay money or your pay through your time. Its your choice – but hard work you must do.

Note: Extract from my newsletter sent yesterday. Please register your email here if you like to receive such newsletters. You will also receive a free 5 days course on options.

Yesterday (30-Nov-2015) evening I had emailed my subscribers this:

INDIA VIX today closed at 16.43.

It could increase before the announcement of RBI Policy tomorrow at 11 am sharp.

I assume it will drop after that.

What can you trade tomorrow?

If you have taken my course trade Strategy 1 BEFORE the announcement is made at 11 am – NOT after.

If you are already in Strategy 1 – please see if you are getting reasonable profits at around 1 pm. If yes close your positions and book profits. VIX would have dropped and index stable. Great time to take profits out.

Enter again when VIX increases. Looks like 17 is the best to enter. But there is no need to keep waiting. There are no major news at least for the next 15-20 days – so it looks like VIX will be more or less in a range 15-17. So any day you see a spike, enter Strategy 1 again.

If you are an Intraday trader – SELL ATM (at the money) options (both calls and puts at 9.30 am) and book profits end of day or if Nifty moves 1% from the time the options were sold (this is actually stop-loss in profits). Do not sell after 11 am tomorrow.

A 1% move will NOT damage the positions – VIX drop means you will still be in profits.

========== End of Email ==========

Why I asked to sell options before 11 am today?

The reason is this that VIX will be high before the announcement is made and after that it will fall. Sellers can make quick profits trading Intraday.

As you can see VIX today opened at 16.43 – same as yesterdays close – but at the time of writing has dropped significantly.

All Intraday option buyers will lose money today as I do not expect huge movement after this news.

And remember – options buyers, especially the short-term ones or Intraday traders, get very active on these days as they expect huge movements. When nothing happens they close their positions in losses. Sometimes even when the move comes – they still lose money because of the drop in Volatility which leaves them confused as to why they lost money even when Nifty moved in their direction.

Well now you know why. 🙂

Why There Will Not Be Huge Movement?

That is because what happened was expected anyway and now the traders DO NOT know whether to buy or to sell and that could be stocks/options/futures whatever. In situations like these there is going to be a balance and markets will not go anywhere ensuring losses for the buyers.

In today’s case the markets expected no rate cut and exactly that happened. Reserve Bank Governor Raghuram Rajan held repo rate steady at 6.75 per cent in his monetary policy announcement today. When markets expects something, it factors the movement much BEFORE the news is out probably a couple of days before. So markets move huge ONLY if what they expected did NOT happen or something very unexpected happens.

For example if RBI would have decreased rates, then markets would be flying high now. Had it increased rates, markets would have nose-dived. But since the news met expectations nothing major happened – except the drop in volatility.

What is INDIA VIX now?

When I started writing this article at 11 am it was 15.97 (-2.80%) down from yesterday’s close.

Now at 11.45 am it is 15.88 (-3.35%) down from yesterday’s close.

The fall may continue today so the best time to book profits is after 1 pm.

Update at 1.50 pm: Like I said it will keep dropping at 1.50 pm INDIA VIX is at 15.70 (-4.44%) since yesterday’s close. Nifty also did not show much movement for the day – just 10 points is virtually NO movement. Book Profits NOW and close your Intraday positions. If making reasonable profits in strategy 1 close it too. Do not wait more.

We will wait for another opportunity to enter markets. Good traders are NEVER always in the markets. Enter when there is an opportunity and exit with profits as soon as you can.

Update at 3.30 pm: INDIA VIX closed today at 15.63 which is -0.80 from previous day’s close or -4.87% down from yesterday. Nifty also did not move much – closed at 7954.90 or 19.65 (+0.25%) points up from yesterday close.

I think a lot of you would have booked good profits.

Build Wealth Slowly Should be Your Mantra.

Enjoy the profits.

I hope you are enjoying my newsletters and profits too. 🙂

All The Best.