[vahss_11]

the best way to find a "a close to proper" trader is the one who is not excited about his trade, as he knows what are the things that would happen, while you can find enough "So called traders" who are extremely excited about their trades and gets killed within 1 year completely.

[Altaf Petiwala]

Originally Posted by vahss_11

the best way to find a "a close to proper" trader is the one who is not excited about his trade, as he knows what are the things that would happen, while you can find enough "So called traders" who are extremely excited about their trades and gets killed within 1 year completely.

A full year? " Thats almost like having a business reach the 3rd generation.

A very reputed data vendor has said, that its next to impossible to get a 3rd month is extremely difficult

[vahss_11]

Originally Posted by Altaf Petiwala

A full year? " Thats almost like having a business reach the 3rd generation.

A very reputed data vendor has said, that its next to impossible to get a 3rd month is extremely difficult

by full year I mean that generally (Majority) traders bet small in the start and when they make some money, they open up and start to leverage big time, and when some time later market starts to correct , they make the trading bet as investment bet (Leverage is still going on), then suddenly market tanks, and they are forced to liquidate their position at a level from where they are having no pants on, and they get kicked out of the market.

generally it all happens within 1 year, I just gave a round figure.

But, you are more experienced then me, hence you would know much better.

[SDP]

Originally Posted by Altaf Petiwala

The bkg you must have is max 2 paise means 0.02 %, means a maximum of about 4 points on the Nifty. 1 paise can be negotiated with some good volumes though. Anything beyond that, and you cant trade. So, the types like ICICI, HDFC, etc go out of the window as choices.

0.02% would be around 60 Rs per NIFTY lot in pure brokerage (i.e. excluding tax and misc etc). Is that for one side of the transaction (Short or Long) OR both sides (squaring-off)? My guess is that it is one-side, just confirming. What about entities like RK Global, which claim 9 Rs per lot. Mis-selling?

Originally Posted by Altaf Petiwala

Data : There are ways to pull data right from the trading platform into the charting software, using 3rd party softwares, for a negligible charge.

Would you recommend any particular 3rd party s/w over others or all are more or less same?

Originally Posted by Altaf Petiwala

Charting Package: Fcharts is a free charting package. I use Amibroker, and it costs about 15000. But it comes empty, in the sense that you have to feed it data, and give it the program that will generate the signals.

By trigger-generating-program you mean a AFL program or something else? Would this need to be programmed yourself, or can it be bought? My guess is that the program would be very specific to 'your' system and would need to be coded yourself. Please confirm.

Originally Posted by Altaf Petiwala

Trading system and strategy: You asked which ones are popular and most used by traders... Are you here to make money or lose it? All systems that are commonly available are at best breakevens to small earners, and at worst, disasters.

Try backtesting popular systems over thew last few years like those based on MA, RSI, Stochastics, Bla Bla.... and you will see that they perform only maybe 20 % of the time.

I got a little worried by this piece of your answer. I mean, even with a flip of a coin one has a 50% probability of being right. So if the most commonly used systems are correct only about 20% of the time, either the prevalent systems are completely incorrect or may be technical-analysis is as complex as predicting weather (where the variables run into thousands). What is your take on 'why' the popular systems would give so dismal performance?

[Altaf Petiwala]

Originally Posted by SDP

0.02% would be around 60 Rs per NIFTY lot in pure brokerage (i.e. excluding tax and misc etc). Is that for one side of the transaction (Short or Long) OR both sides (squaring-off)? My guess is that it is one-side, just confirming. What about entities like RK Global, which claim 9 Rs per lot. Mis-selling?


Would you recommend any particular 3rd party s/w over others or all are more or less same?


By trigger-generating-program you mean a AFL program or something else? Would this need to be programmed yourself, or can it be bought? My guess is that the program would be very specific to 'your' system and would need to be coded yourself. Please confirm.



I got a little worried by this piece of your answer. I mean, even with a flip of a coin one has a 50% probability of being right. So if the most commonly used systems are correct only about 20% of the time, either the prevalent systems are completely incorrect or may be technical-analysis is as complex as predicting weather (where the variables run into thousands). What is your take on 'why' the popular systems would give so dismal performance?

The bkg mentioned is per side, and all inclusive brokerage of 0.01 % should amount to 2.80 points in the Nifty, round trip, including everything.
Yes, RK global is providinf 9 rs per side + taxes, but the servers are not reliable, as when you want to execute, the servers disconnect, and you feel helpless.
There is one more brokerage that is making waves, that charges just rs 20 PER ORDER + taxes, and thats almost a 70 % savings on bkg if you are trading qty, but its a new company and I would like to see it stabalise for a few months before naming it.

Yes, almost all 3rd party softwares are more or less the same, just the comfort factor of knowing the eperson behind the software matters. You could use any of about 4 or 5 softwares available.

There are ways to trade with just patterns also, and may not require AFL's. As for specific AFL's they are best designed by yourself, as almost all AFL's for sale are almost useless. Why would someone sell a money minting machine?

Disclaimer: I used to sell AFL's too, for my seed capital. And yes, the ALF's I sold did work, but the people trading them sometimes dont. As mentioned earlier, I can give you the best system in the world, and even the money to trade it, but its entirely possible, in fact almost confirmed that you will loose money with it. People underestimate the interference of psychology with trading by a few trillion percentage.

Flipping a coin is a misunderstood analogy in the markets. If you can flip a coin and take a position and be right 50 % of the time, you will still loose a lot of money, in brokerage and slippage. Slippage hits you by about 1.50 points in a fast market, and bkg for average traders is about 4 points.

As regards systems built into softwares, each set have different problems. Its an accepted fact that markets trend a maximum of 30 % of the time, and are in a range for the rest of the time.

If you trade oscillators, you will loose heavily when the markets trend, and make money when the markets are range bound. But the money made in range bound markets are small, and many in fact, mot of the time, not able to recover the losses that you would make in trending markets.

If you use tend following indicators and systems, you will be right only 30 % of the time, and be wrong 70 % of the time. This means a lot of small losses, and a few big profits. The drawback, is that you may miss that one big trade in a particular month, that would have made your month profitable, and end up with a loosing month

So, packaged and common indicators are just that. Common.

[SDP]

Originally Posted by Altaf Petiwala

There are ways to trade with just patterns also, and may not require AFL's. As for specific AFL's they are best designed by yourself, as almost all AFL's for sale are almost useless. Why would someone sell a money minting machine?

Disclaimer: I used to sell AFL's too, for my seed capital. And yes, the ALF's I sold did work, but the people trading them sometimes dont. As mentioned earlier, I can give you the best system in the world, and even the money to trade it, but its entirely possible, in fact almost confirmed that you will loose money with it. People underestimate the interference of psychology with trading by a few trillion percentage.

Hey Altaf, Thanks a lot for taking the time out to answer seemingly 'elementary' questions. There are quite a few sites which 'sell' entry and exit calls for NIFTY-Futures for a monthly subscription of ~3000 Rs and claim that they catch 200-300 points in a month. They are not really selling their system, just the output of the system. Seems like a good idea especially for newbies who do not fully understand how to interpret data and make calls. What are your views on them? Are any of them worth their salt?

Originally Posted by Altaf Petiwala

If you use trend following indicators and systems, you will be right only 30 % of the time, and be wrong 70 % of the time. This means a lot of small losses, and a few big profits. The drawback, is that you may miss that one big trade in a particular month, that would have made your month profitable, and end up with a loosing month

I completely agree with the part about limiting your losses (strictly respecting your Stop-Loss should help in this). Is their a way to better the success rate? I mean, if technical analysis is a science, hasn't it matured to a level, where the analysis (and the calls that you make from that analysis) are right at least 50% of the time?

[Altaf Petiwala]

Originally Posted by SDP

Hey Altaf, Thanks a lot for taking the time out to answer seemingly 'elementary' questions. There are quite a few sites which 'sell' entry and exit calls for NIFTY-Futures for a monthly subscription of ~3000 Rs and claim that they catch 200-300 points in a month. They are not really selling their system, just the output of the system. Seems like a good idea especially for newbies who do not fully understand how to interpret data and make calls. What are your views on them? Are any of them worth their salt?


I completely agree with the part about limiting your losses (strictly respecting your Stop-Loss should help in this). Is their a way to better the success rate? I mean, if technical analysis is a science, hasn't it matured to a level, where the analysis (and the calls that you make from that analysis) are right at least 50% of the time?

Let me put things into perspective
If you can consistently make 100 points a month, in a few years time you will be asking about how much a particular locality in entirety costs, not about a flat in a particular locality, such is the power of compounding. If these people claim to make 300 points a month, thats almost 60 % return on investment. PER MONTH. Now, compound that over a year. And over 5 years..... heck, you could buy your wife a bigger plane than Mukesh bought for Neeta. In just 2 years, a 100 rupees reaches 80,00,000.

Not that it cant be done....... I have exhibited 2 trades in the last few pages that have made a little bit more than a 100 % this month. But hey, this was a good month, what can I say. Such vertical days are few in number.

Let me give you an example.

I target 24 people on TEAM BHP
I advise only on Nifty.
Of these 24, I ask 12 to buy Nifty and 12 to short Nifty.
By default, 12 people will make money the next day.
Now, I will discard the 12 people who lost money.
And of the 12 who won today, I will ask 6 of them to buy the Nifty and 6 of them to short the Nifty.

Again, by default, 3 of them will make money. Discard the 3 loosers.

Now of the 3 winners, I will ask 1 of them to Buy the Nifty, one of them to Short the Nifty and ask the third not to trade as today the solar flares from pluto are conflicting with the gamma rays from venus, and the rings of saturn are revolving in opposite directions.

Of these 2, one will make money by default. Now, this person has won consecutively for about 3 to 4 times, and feels that he has discovered the God of wealth in me. And then, I say, " From tomorrow, you will have to subscribve for my yearly package, as I want to pay attention to only my bigger clients. I cant handle hte rush of monthly clients and am shutting them down..

And then that one person payes me for a whole year in advance. Now, what do I care if he wins or looses. I have made my money.

And, this 24 people, as a group, there are a 100 such groups jandled at a time by these people. So, note hi note, paisa hi paisa.

Though there may be a very very very few genuine people who do sell signals that are good, the chances of finding such people is like one in a gazillion. You stand better chances with your coin flip

PS: You must be knowing a few names of such tips sites. Do google the name of the site with the words "cheated"

You may find yourself a few hours worth of entertainment.

Second answer: If technical analysis had matured to a perfect science, I would be relaxing on my own island, with 500 computers auto trading in all the markets in the world.

[Altaf Petiwala]

The Holy Grail of trading systems would be a system that gives the following statistics.

Winning % --- 70 %
Win/ Loss ratio 2:1

Now, I need a few answers from people just reading here, without comments.
Tell me, whats the missing element in the above statistics?
If I get less than 15 answers, I will not continue, and I mean it

And I will not rebuke anyone, even if the answer is elementary... I just need participation. At this rate, I can just call up SDP on the phone and explain it all. No need to type out things

[SDP]

Originally Posted by Altaf Petiwala

Let me put things into perspective
If you can consistently make 100 points a month, in a few years time you will be asking about how much a particular locality in entirety costs, not about a flat in a particular locality, such is the power of compounding. If these people claim to make 300 points a month, thats almost 60 % return on investment. PER MONTH. Now, compound that over a year. And over 5 years..... heck, you could buy your wife a bigger plane than Mukesh bought for Neeta. In just 2 years, a 100 rupees reaches 80,00,000.

.....

Though there may be a very very very few genuine people who do sell signals that are good, the chances of finding such people is like one in a gazillion. You stand better chances with your coin flip

PS: You must be knowing a few names of such tips sites. Do google the name of the site with the words "cheated"

You may find yourself a few hours worth of entertainment.

Second answer: If technical analysis had matured to a perfect science, I would be relaxing on my own island, with 500 computers auto trading in all the markets in the world.

Altaf, you write really well. Your answer was informative and entertaining in equal parts. Brilliant example and articulation. I have seen enough people/books which are overflowing with genuine knowledge, but are extremely 'dry', which makes it a pain to read and absorb. Anybody who has studied for PMP would understand :-)

Originally Posted by Altaf Petiwala

The Holy Grail of trading systems would be a system that gives the following statistics.

Winning % --- 70 %
Win/ Loss ratio 2:1

Now, I need a few answers from people just reading here, without comments.
Tell me, whats the missing element in the above statistics?
If I get less than 15 answers, I will not continue And I mean it

And I will not rebuke anyone, even if the answer is elementary... I just need participation. At this rate, I can just call up SDP on the phone and explain it all. No need to type out things

Very true. What was planned as an interactive session within this group has reduced to a 'dialogue' between just two of us.
Guys, please share your views and experiences in this area.

[RJK]

Ok,this could be and most likely is completely wrong, but is the three letter word "avg"?. Sorry man, just participating and trying to learn.

[Altaf Petiwala]

Originally Posted by RJK

Ok,this could be and most likely is completely wrong, but is the three letter word "avg"?. Sorry man, just participating and trying to learn.

Oh I am sorry to have put in 3 dashes. I was just punctuating. My bad.
Its not what I meant by inputs .

I meant, what other factors are required to make the system a near perfect system.

More like a few lines...

[SDP]

Originally Posted by Altaf Petiwala

The Holy Grail of trading systems would be a system that gives the following statistics.

Winning % --- 70 %
Win/ Loss ratio 2:1

Now, I need a few answers from people just reading here, without comments.
Tell me, whats the missing element in the above statistics?
If I get less than 15 answers, I will not continue, and I mean it

And I will not rebuke anyone, even if the answer is elementary... I just need participation. At this rate, I can just call up SDP on the phone and explain it all. No need to type out things

My answer -> I guess the missing element in the above statistics is the sample frequency and consistency of the average (standard deviation). I mean, if your winning %age is 70% in a 'month' as against a 'year', it would matter a lot. It would decide if you survive to trade at all the next day or the next month.

PS : My interpretation of win/loss ratio of 2:1 is that on an average you lose 1 'times' for every 2 times you win. That would make my winning %age as 66.67%. So are the 2 statistic measures that you mentioned really different at all? OR is win/loss ratio about the ratio of the actual amount that you make as against lose? Isn't that the risk-reward ratio?

[Altaf Petiwala]

No responses. Discontinuing.

Sorry for not continuing.

[penpavan]

What a fall. Everyone must be bleeding. Of course not the shorters..

[hemanshughia]

My reply --

The missing aspect is how much points you win or loose in each trade -- that could be one of the determining aspects