This is the 2nd part after I had started investing which was mentioned in my earlier post.
As I earlier said that the chances of re visiting the 8555 low made at that time was high and it so happened that we did hit 7500 and I made sure I had more capital to invest at that level.
The chart below shows my doing or changes in my portfolio in the chronological order.
Now, this is the flexibility I believe one needs to have to be either an investor or a trader. I was wrong I admitted it and corrected my mistake quickly.
I was waiting for the mid test of the Bullish engulfing pattern, As soon as it closed below the middle for the day I cashed out booking some minor losses.
The strength and volume of retest also has to be judged.
Further Scenario – I think its now very difficult to breach 7500 again but we might have one sharp correction. We are 20% high from the bottom and currently at Wave-B. Wave B should be over by the end of this month according to wave lengths and then we might see another drop (not necessarily, markets are all about probability), a final perhaps.
Below are the name of the stocks that I am currently holding in 2 portfolios.
One portfolio just consists of 1 stock.
There are few names from my portfolio that I have hidden because of very high risk and circuits limit where one if entered would not be able to get out (if things turn bad) because of liquidity issues.
I am trading in options these days heavily, with back tested data. I will post about it soon.
It’s been a while since I last posted here at my blog. I had been pre-occupied with some work earlier and since last one week I had been observing the markets and was away from trading heavily intraday and had totally stopped swing trades because I wasnt comfortable trading my own style of dual positions of long and shorts because there were no buying sign.
Today, I did get the opportunity to buy some quality stocks and I had been very lucky with it and the markets have been kind.
I was at 100% cash on Wednesday, and had deployed 30% of the capital on Thursday (12/03/2020) and put in 50% more today (13/3/2020). Now, I am left with 20% cash for mostly hedging or buying the further dip.
There is less chance of us visiting the low of today of 8555 at nifty the recovery volume was very very healthy. But again there is indeed a chance.
Probability of hitting the low of today should exponentially decrease after this month. If we are to re-test those levels it should be within this month.
As I earlier said Technical Analysis had stopped working a few weeks ago and now that the markets have cleansed out most of the traders TA should be back again working soon.
Below is the screen shot of the stocks I bought and at what price.
Well we all know the Buffet quote, “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”. Everybody quotes Mr. Buffet all the time but what I learned today is that hardly anybody have the guts to actually be greedy at times such as now.
In the book, Reminiscence of a stock operator, Livermore had clearly said when everybody is fearful or just waiting to buy, know its time for a bottom. And for this very reason I did ask more than a dozens of pro traders about their market view and all of them were saying it is going to go further down and nobody was buying, so I just went according to Livermore 😛
Well, this was a mix of luck and quick thinking.
SO, What to do if you’ve missed the Train?
Most of the people who bought have bought it at 9500-9700 Nifty range and their pain will begin once those levels are tested again. And because of this I feel we might see some panic sells.
So, nothing to worry you will again get the opportunity to buy the safe investments.
The left chart shows the 1 Min recovery which was very strong and the chart at the right shows BULLISH Engulfing.
The half of this candle could be retested.
I will resume writing about Systems and new trading techniques soon.
Updating about my current running positions, I had already booked some of it and on 3/01/2020 I booked 70% of the remaining positions as my target for the month (15/12/19-15/01/2020) had crossed.
Initially I had booked 1.2% on AshokLeyland and few from BEL positions
The above screenshot is of Friday when I booked 70% of everything.
Total ROI generated around 4.7%
Holding period – 16 Days
Now, I will be running the overall positions and SL have been shifted to Break-even my 3.5% target will still be intact with 30% positions left.
I will be looking forward for new positions to be taken.
MARKET OVERVIEW
The market looks a bit shady. I will be looking for Fibonacci levels retracement till 12,085/12,016 Nifty levels. If that breaks we might be poised to head more downwards.
Shorting looks favorable at this point in time.
Meanwhile, contrary Nifty Midcap have given breakout from higher frame bear trend line.
I will be looking for an opportunity to go long on quality stocks with proper setups at the retest of the falling bear trendline.
In this section I will be sharing few of my trades which are either to be taken or trades I am currently into the position and holding it.
NOTE: THE BUY and SELL POSITIONS ARE NOT RECOMMENDATIONS. Please do your own due-diligence before taking any positions. I will not be responsible for your profits or losses.
My method of Swing Trading:
My style of Swing Trading is a bit different, I usually go for a target of 3 – 4% per month (conservative side). If my target is done in less than a month’s time then any trades during that month I take are often conservative which means I trade with 50% of my original capital. My system for swing trading is meant for mostly “Buy” Only side. In futures I at max, stick to 2 lots only or according to the position sizing. With 1 lot futures your 1% risk should come to around Rs. 12,000 atleast per trade. If your capital is below 15Lakhs (Rs. 15,00,000) then go for delivery only because you might not be able to hedge the position and maintain and manage more positions.
My system generally generates 10+ trades a month and holding time is less than 3-4 weeks. I use 3 different systems for swing trading.
CURRENT POSITIONS
I have taken 4 long positions currently.
Trades initiated on DATE – 12/12/2019
ASHOKLEY
FEDERAL BANK
GLENMARK
GRASIM
Few stocks that I am looking to enter are:
BEL
Marico
DISCLOSURE: To be honest I am not comfortable with present markets because of the fact that we are at all time HIGHs with strings of bad news coming in. Therefore, I am trading with 60% of my positions only and will be looking for few stocks to short to hedge my current positions.
Hey guys, if you’ve been missing out on posts I am now active in telegram channel, sharing trades etc. Feel free to join the channel for which link is given below
My last update was on Sep-20, since then Nifty & Bank-Nifty have rocketed to 14347 & 32084.
I had in my previous update said, that I wasn’t comfortable with Nifty moving up without correcting, and luckily after that post nifty went down by 700 points where I got in and deployed my full capital in both of the Portfolios.
I had also mentioned about how I liked Banknifty setting up, and went heavily long in it and since then it has returned 48% in less than 3 months’ time.
My primary portfolio (will be referred as P-1) after the changes have delivered ~60% returns. It would have been much higher but I booked out profits on a lot of stocks and entered many new ones. Currently, after churning up the portfolio with new entries and increased exposure, my return since march (realized profit and adding it back) has been 109%.
Details about both Portfolios:
Following are the changes that I have made in P-1:
I began this portfolio on June-2020, Since then unrealized returns stands at 23% but overall (after taking out profit from 30% of total investment) is at 38%.
This portfolio basically incorporates momentum play and it is churned quite often according to my system.
Below is the snapshot of P2.
Stocks with highest returns in P2:
JSW STEEL – 100%
Titan – 92%
Tatasteel – 89%
CDSL – 80%
Trident – 77%
HDFC – 70%
Talking about Cryptocurrencies, they have delivered stupendous returns in short span of time. I do not actively engage with them but I had made some investments earlier via Binance. My major holding in crypto are
BTC (Bitcoin) – 36.21%
ETH (Ethereum) – 32.15%
BNB (Binance Coin) – 26.5%
Others – 5.15%
I do not per se, have any system on Cryptocurrencies but I am never to shy away from an opportunity as and when they present themselves, for additional alpha. My investments in cryptos is not much when compared to both my portfolios & trading capital (~6%).
Cryptos, I believe are hyper risk asset class (if they are) and I am not sure what they represent any more. However, FOMO in cryptos are very real and many whales are taking concentrated bets. I think in the end, there’s a very high chance it will turn out to be a pump and dump scheme but who knows if BTC could actually move past 100k $. In markets nobody knows when the craziness is coming to an end.
My crypto portfolio have returned 300%+ return since July-2020 till date.
Road Ahead:
If one is too see the global scenario, not all markets have done well compared to India, US etc. European markets have still not recovered from March-lows. They are yet to deliver positive returns. London is still 10% down.
Whereas, India’s rally has been more of a liquidity driven than fundamentals.
Recently, MSCI have decided to remove 3 telecom companies of China from their index, which lead to 14 bn $ erosion in a day as investors rushed to sell the 3 companies. This could trigger additional inflows in Indian equities especially blue chip companies like Reliance, Infosys, TCS, etc. The additional inflow could be in tune of over 300 million $.
That would catapult Indian market further more.
If you see, the crashes since 1900s are becoming less frequent (earlier every 8 years), more violent and recovering way faster. This is due to the fact, that feds are becoming better in handling the money.
I do not know where the market is headed from here, but I strongly feel present market is totally buy on dips and if one has 5-7 years investment timeframe, then one should certainly get in the game with every dip. This is a young bull run, there might be some months of sideways swings, but in couple of years we could actually witness one of the biggest bull runs of our times.
It has been a while since I last updated this thread, my last update was of Part-4 in July. Since then Nifty have went up another 7% while Banknifty has been lagging way behind it.
In this update I will also be introducing my second portfolio, as I had mentioned in last post. I still haven’t completed the full allocation on that portfolio but it has been coming along just fine.
The last 4 articles of this thread have been based on my main account, to which I will be referring as portfolio – 1 (P1) and the second portfolio which I began constructing in June, will be referred to as portfolio – 2 (P2) here on.
There will be certain changes in regard with avg. buy price of P1 when compared to last articles as I have added a lot of momentum stocks on their way up.
Capital Deployment %
P1 – have deployed 65% of allocated capital
P2 – have deployed 70% of allocated capital
Portfolio Comparison and Details
For in depth analysis refer the below snapshots.
The console does not take Gold as commodity so, they included gold etf in equity % so do not get confused checking equity % in the snap shot below and above table.
For P1 individual holdings and % return refer below.
I am still not comfortable going all out at once to buy various scripts as I feel now markets are really frothy. I do not like the way it is setting up with no strong foundation on its way up.
On the other hand, I am getting comfortable with how Banknifty is behaving, just like a typical bear market scenario. It is consolidating and I will be focusing on banking sector more as the structure looks pretty good to me to go long in a step wise manner as it has been making various support pockets on its way up earlier and now falling back on it.
In, my last update (10/6/2020) Nifty had closed at 10116, and today CMP is at 10724 ( Around 6% gain). Although, my portfolio have gained only 4.5% with respect to Nifty but main reason for laggard performance is that I added more stocks of certain companies.
Currently, I am invested with 55% of my capital and now I am going to wait and watch t deploy another 45%, till then have bought Liquidbees (Generates slightly more than bank’s saving accounts return, with minimal risk).
Had I not added these extra stocks my portfolio would have been up by 40%+
Dividend yield of the portfolio with respect to invested amount and 3 years average dividend yields of individual stocks comes at around 3.1%
Below screenshots show the stocks and their buy prices.
For highest weightage Sector and individual stock refer below:
Beta of the portfolio is 0.87 (low risk)
The second portfolio is still work in progress I will update about it when I have deployed 100% capital in it.
The second portfolio is medium to high risk profile.
Road Ahead
Nifty is at very strong resistance zone, but as we see the strength from last 4 days, Nifty is almost ignoring all bad news, the moment it comes down people waiting in the sidelines are jumping to get on board and push it up further.
This should continue till the clients (retail) have money, considering the fact that SIPs have dropped to its lowest levels and an astronomical increase in number of trading accounts being opened explains a lot about the unstoppable rally.
Infact, since last 3 weeks (margins rule changed), the underlying market structure seemed to have changed a bit, retailers are having upper hand against FIIs and PROs according to daily data analysis and derivative positions.
Now, that the second round of results begins with TCS having a sluggish performance, the results will be very bad for few big companies as there was a complete lockdown during March-June.
It is quite possible that we might see a slow correction when the results of the companies accelerates.
I will look to buy again when Wave C unfolds (the Downmove).
I have closed the position although I still have a good range to still be profitable but today PM is going to address the nation at 4pm so, taking off the excess risk is best way to manage risk.
For more information refer the screenshot at last.
Technical Analysis
Nifty looks bearish on charts with immediate hurdle at 10412 level. Next resistance is at 10500 level. Nifty has very huge support at 10,000 and it is a psychological level as well.
Banknifty looks mildly Bullish.
Open Interest (OI)
Nifty has highest CALL OI at 11,000, and highest OI on PUT side is at 10000.
Aggressive fresh writings at 10,500 CEs.
Banknifty has highest CALL OI at 23,000 while on Put side 20000 level.
Fresh writings at 22000 on CALL side and 20000 on PUT side.
FIIs DATA
While looking at their open interest they are short on Nifty and neutral in stocks future.
The data is negative in nature.
NEWS
Covid cases continue to rise across India
India-China stand off tensing again
Fuel Prices increased yet again
PCR
NIfty 0.89 = negative
MAX Pain – 10,300
Banknifty 0.77 = -ve
MAX Pain – 21,500
GLOBAL Cues – Neutral
Have Initiated the following strategy in Banknifty. It is a Ratio Spread, will try to close it at 50% max profit on Monday if i get the chance or will adjust as the market reacts on Monday.
Having received a lot of requests about the strike prices I had taken in this trade, I decided to put up the closed screenshot so you can have a look at it.
Update 4 (16/7/2020)
After multiple adjustments in this trade I have closed it, as it was pressuring one side of the trade again and again, this trade was one of those trades which put the adjustment theory to the test.
This trade lasted for around 21 days and was a typical example of trade going wrong yet somehow managed to turn it around.
Delta during close of this trade was around 2000. I closed this trade because no matter what this stock failed to move up even in a strong market.
Profit booked +10010
RoI around 4% because of multiple adjustments done and extra capital deployed.
Update 3 (7/7/2020)
Finally, after a long wait green shoots appear in this trade.
Delta is at 1150
Theta is at 449
Downside protection 5.5% and upside 17.4%
If this stock falls 2% from 134.5 (CMP) I will be adjusting it further aggressively.
Current Profit +1295
Update 2 (2/7/2020)
This trade triggered adjustment yesterday when it was at Rs.8000 loss, therefore I made the adjustment as per my system.
Now Delta is at 976 ( I will gain Rs. 976 if Coalindia moves 1Rs up)
Current Profit/Loss -4810
UPDATE 1 (30/6/2020)
This trade might need an adjustment soon, it still haven’t triggered any adjustments as per my system.
Closed the trade as have gained 80% of maximum profit no point keeping the risk for 23 days more (till expiry).
Profit +20480
Holding period – 12 Days
RoI +20%
UPDATE 2 (2/7/2020)
Holding it with no adjustment, refer the snapshot below for further details.
Delta is closing in near neutral, current delta is now just 230
Current Profit +14080
UPDATE 1
(30/6/2020)
Holding it with no adjustment for now
Current Pofit +8000
ITC |July Expiry|
Date initiated – 26/6/2020
Trade Details
Days left to expiry – 31
Legs – 4
IV – 46
Results – To be announced after markets
Open Interest :
MAX PUT OI – 190
MAX CALL OI – 200
Put Call Ratio 0.49 = indicates bearishness
Technically – Sideways to Bullish
External Factors – Bullish
Option Pain at 195
Probability of Profit when initiated – 86%
MAX Profit – Rupees 25,280
MAX Loss – Rupees 38,720
Stop Loss @ -12,500
Capital Required – 1.1L
Projected RoI – 24%
Delta – 584 ( I will make Rs 584 for each 1rs move in ITC share prices)
I had initiated this trade at afternoon with upside protection of 21% and around 12% protection on the downside.
Reason for trade was HIGH IV and good range to be profitable. The stock moved almost -4% during the day and now Upside protection is at 16.87% and downside at 7.58%
My plan is to hold the trade till results are announced or till IV crashes.
I will look forward to make adjustments if the trade goes against me.
I have made the trade a bit on the bullish sides, probably with good results announced it will be back in range.
I will update the adjustments if done and how it goes like I had updated on all the previous LIVE trades.
1:45 Pm – Banknifty down by 1.9% I have closed my position.
Yesterday I had bought 22000 CE 1x to hedge the upside as Bank Nifty was very wild due to which profits came down
Closed for +Rs. 10,000 Profit total.
Update 1 – 22/6/2020
3:10 PM – Banknifty went upto 3.5% up but came down from that level. CMP 21670 (1.58%)
My trade did not trigger any adjustment and because the implied volatility increased to 53% (When I took the trade it was at 44.77%) I did not receive the premium as it were expected.
Current Return +5315
Upper Protection 5.52%
Lower Protection -9.15%
For 25/6/2020 expiry
Nifty looks bullish on charts with immediate hurdle at 10330 level. Next resistance is at 10500 level. Nifty has very huge support at 9500 followed by 10000.
Banknifty looks mildly Bullish.
Open Interest (OI)
Nifty has highest CALL OI at 10500 which will act as immediate resistance, and highest OI on PUT side is at 9500 and 10000 (a tad bit shy of 9500 OI)
Fresh writings at 10000 and 9900 on the PUT side and 10500, 10400 on Call side.
Banknifty has highest CALL OI at 22000 while on Put side 20000 level.
Fresh writings at 22500 on CALL side and 21000 on PUT side.
FIIs DATA
They bought around 1.2k cr. in cash segment. While looking at their open interest they are heavily long on Nifty and stocks future.
The data is very positive in nature.
NEWS
Highest spike in covid cases across India
India-China stand off easing
Fuel Prices increased
Finance ministry has proposed putting restrictions on pension fund investments from any of India’s bordering countries.
PCR
NIfty 1.25 = positive
MAX Pain – 10000
Banknifty 1.17 = Mildly +ve
MAX Pain – 21000
GLOBAL Cues – Neutral
Have Initiated the following strategy in Banknifty. It is a variation of Ratio Spread, will try to close it at 50% max profit on Monday if i get the chance or will adjust as the market reacts on Monday.
I had to wait for quite sometime for the stock to drop and theta to come at play.
Finally booked my position in this stock.
Profit Booked Rs. +30,000
Return on Investment +17.6% in 8 days.
Update 2 (24/6/2020)
This trade had just 1 adjustment till now, and the peak profit is estimated to be about Rs. 38,000. If the stock closes 1% down tomorrow I will be making Rs. 38000
Current Profit – Rs 18,112
Probability of Profit – 99.2%
Update 1 (18/6/2020)
As of 10:53 AM the stock have moved 12%+ in a day, I had made the following adjustment in this stock where I made the Upside Fully Profitable.
Now, I just have to manage the downside.
Although, as earlier mentioned every adjustments made to the strategy disrupts the original essence, and similarly here my risk has gone up.
Please find the Snapshot below for more details
If one does not know how to make adjustment make sure you exit the trade at little profit or loss.
I always make adjustments when my Probability of Profit goes down below 70%.
I had initiated this trade in morning with upside protection of 13% and around 13-14% protection on the downside.
Reason for trade was HIGH IV and good range to be profitable. The stock moved 2.8% during the day and now Upside protection is at 10% and downside at 17.91%
My plan is to hold the trade till results are announced or till IV crashes (which it did to an extent today)
I will look forward to make adjustments if the trade goes against me.
As per the previous analysis done we did witness a very sharp move today, during the expiry day.
This is the most difficult part of trading, in the end, even if you are proven right ultimately you still have to go through a roller coaster ride and maintain your composure and adjust positions as per rules you define, don’t just sit on hope.
Accept what the market gives.
UPDATE 2
16/6/2020
As of now (10:52) Banknifty is up 3% and I have closed my trade with VIX drop. I do not intend to carry forward the trade till expiry or do adjustments in it as the unlimited upside protection is gone due to yesterday’s adjustment.
Below snap shot will show realized profit and how much protection on each side this strategy still had left.
I wanted to make it a NO-LOSS strategy but the option prices were not up to my expectation.
Below screenshot shows the the adjustments in this strategy to a NO-LOSS strategy.
Minimum profit is 9000 Rupees. and Maximum profit is 27,000 Rupees no matter where Banknifty goes.
Why I did not go for this adjustment? Because I do not want to risk the realized profit for extra 5000 Rupees.
Details of the trade:
Capital Required – Rupees 2,90,000
Return on Investment + 7%
Days – 6
Lots (Put side 10 lots and Call side 9 lots )
Initial range – No loss on Upside and 11% downside protection.
Total legs in this strategy – 6
UPDATE 1
15/6/2020
Banknifty went down by 3.6% as mentioned below it had an ATR of 870 points and it reversed when it hit almost that much range.
There is a cabinet meeting and supreme court hearing scheduled tomorrow and day after.
Earlier I had a downside protection of 11% today I made some adjustments and tried to increase downside protection. The below snap short will show the CURRENT RETURN and updated downside protection.
Adjusting is always painful and one have to do it when there is one side movement like today, it hurts because it takes out most of the initial advantage you had, now the risk is higher, return if unchanged is reduced and both sides are capped.
You would ask why the adjustment?
Well, without adjustment the Probability of Profit would have been down to 52% only and now after adjustment my winning probability is still 83% as mentioned above in the snap shot. You have to maintain the delta to be on the winning side.
With the Vix crash after the event, I would look to book profits on this tomorrow or day after.
Technical Analysis for Nifty and Banknifty
NIFTY AND BANK NIFTY 2 Hours – Time frame
Nifty looks bullish on charts with with immediate hurdle at 10000 level as there is high open interest. Next resistance is at 10185 level. Nifty has built a very strong support at 9500-9600 levels while 9500 has the highest OI.
Banknifty on the other hand looks mildly positive to sideways. Average true range for Banknifty (BN) is 870 points which means BN on a typical day will move close to 870 points (+/-) give or take.
Open Interest (OI)
Nifty has highest CALL OI at 10000 which will act as immediate resistance, and highest OI on PUT side is at 9500.
Fresh writings at 9700 on the PUT side and 10000 on Call side.
Banknifty has highest CALL OI at 22000 while on Put side 19000 level.
Fresh writings at 21000 on CALl side and 20000 on PUT side.
FIIs DATA
They sold around 1.3k cr. in cash segment. While looking at their open interest they are mildly short on Nifty but heavily long on stocks.
The data is positive in nature.
NEWS
Surge in covid cases across India
US markets gave a sharp down move on Thursday and a slight pull back on Friday
India economy is deteriorating
JIO lining up investors one after another
China is seeing surge in virus cases again
PCR
NIfty 1.21 = positive
MAX Pain – 9900
Banknifty 1.09 = sideways
MAX Pain – 20500
GLOBAL Cues – Negative
A good Options Strategy which is Bullish in Nature and no loss on UPSIDE while have a downside protection till 18500 Banknifty levels.
Hedged position and have a Probability of Profit (POP) of 95%
Watch this space for update till expiry. I will be adjusting position if it moves against my direction.
The Mechanical Trader 