Where do you want to be?

Where do I want to be?

Do I want to look at a stock price and know where things stand with the stock in question?

Yes.

That’s where I want to be.

It’s not going to come for free. 

What’s will it take?

Looking at the stock…

…for an year or two. 

That’s what it will take. 

How boring, you say?

Sure.

When stock market investing seems boring…

…that’s when you’re doing it right.

Excitement and roller-coaster rides are for video-game pleasure, and for making losses.

Money is made when it’s outright boring out there. 

Where do you want to be?

In the money?

I thought so. 

Then, please get used to boring and don’t ever complain again that things are boring.

How does one position oneself in such a manner that one studies a stock for an year or two. 

Hmmm.

Let’s put some skin in the game.

I know, this phrase is becoming more and more popular, what with Nicholas Taleb and all. 

Yeah, we are picking up stock. 

What stock?

The one we wish to observe for an year or two.

Why pick it up? Why not just observe it?

You won’t. You’ll let it go.

Why?

Because it’s not yours. 

So we pick up the stock? What’s the point of observing if we’re picking it up now?

Well, we’re picking up a minute quantity – one quantum – now. That gets our skin into the game. Then we observe, and observe. Anytime there’s shareholder-friendly action by the management, we pick up more, another quantum. We keep picking up, quantum by quantum. Soon, while we’ve kept picking up, we’ve observed the stock for so long, that now, one look at the stock price tells us what kind of margin of safety we are getting in the stock at this point. 

Wow.

Now, future entries become seamless. One look and we have a yes or no decision. Isn’t that wonderful? 

Absolutely.

That’s where we want to be.

Advertisements

It has to be a Dunk

When I shoot…

… it has to be a dunk.

If I’m not getting a dunk in…

… I’m not shooting.

What are the implications?

Imagine only taking market dunks for multiple decades in a row.

Where do you think that’s going to leave you?

Most of the time, though, one’s not shooting.

That’s because, most of the time, dunk trajectoires are not available.

When one is not shooting, does it become boring?

Only if you let it.

Yeah, just don’t let it.

No action is a good thing.

It saves resources.

Then, when opportunity is available, one might get twenty dunk days in a row.

Things can get so active, that one wants activity to normalize again, if not stop for a while.

Actually, not a challenge.

I’ll tell you what is a challenge…

… for me.

Dunk opportunity…

… and travel.

I don’t like this combination.

How do I deal with it?

First up, what don’t I like about it?

Distraction.

Not doing full justice to the trip.

Not doing full justice to the investing opportunity either, as in distracted due diligence.

Hmmm.

What do we do here?

Sure, you’ll argue, today one carries one’s terminal where one goes.

Does one also carry one’s zone, you know, the magical frame of mind, from within which one takes magic decisions?

Very probably not.

When one takes an investment decision, is it not better to be in this magical zone?

Therefore, unless the opportunity is just too pressing, such that it makes me open my terminal even during travel, …

…, yeah, my terminal mostly stays shut when I’m on the move, …

…, because then it’s time to do other things. Yayyyyy!

😀

Happy Eighth Birthday, Magic Bull!

Hey,

Today, we turn eight.

This is an extreme time.

Extraordinary moves have become normal.

How do we react to a world full of upheavals?

Does anyone have a satisfactory response?

We don’t know, and time will tell if our responses are correct.

However, we do know, that we possess common sense…

…, and we are going to hold on to it for all our life’s worth.

It has not come for free.

It has been earned after making costly mistakes.

It is very valuable.

It is going to see us through.

The topsiness and the turvyness is good for us.

It will set up opportunities.

We are only going to grab opportunities.

When there’s no opportunity, we do nothing.

We have learnt to do nothing.

Doing nothing actually means no entry.

We use this time to do due diligence for the future, when entry is allowed as per our entry criteria.

Doing nothing is a steady part of our repertoire.

However, when opportunity comes, we are going to let go of all fear, and we are going to pull the trigger.

We know how to pull the trigger.

We are not afraid.

Why?

We are debt-free.

Our basic incomes are in place.

Our families are taken care of.

Without that, we don’t move.

We invest with surplus.

We implement a small entry quantum strategy.

We enter again and again and again, upon opportunity.

Because of our small entry quantum, we are liquid for life.

Crash?

Bring it on.

We’ll keep going in, small entry quantum upon small entry quantum.

Don’t forget, we have rendered ourselves liquid for life.

And, we’ve got stamina!

Happy eighth birthday, Magic Bull!

Nath on Trading – IV – We’ve got Stamina

61). We’re able to take many, many small losses, without flinching.

62). Only that sets us up for the big wins.

63). We don’t second guess our stops.

64). In fact, we want the stop to hit. As in, hit me, if you’ve got the *****.

65). When the trade moves in our direction, we let it. We’re doing other stuff.

66). When the trade moves against us, we let it. We’re doing other stuff.

67). That’s because we fully understand the function of our stop. It will take us out of the market, whether in loss or in profit. It’s dynamic, you see. It moves with the market as per the definition provided by us while punching in the trade.

68). We’re not afraid that our stop could be jumped. Can happen, in a panic. Hopefully, our technicals will have placed us in the right trade direction before huge and fast moves. It comes to mind that this kind of move occured at least twice in the last six years, once with the swiss franc, and once during Brexit. If we start worrying about such one-offs, we won’t trade at all. 

69). We look at the technicals, and we listen to what they’re saying. The trend is our friend. We trade with the trend, either on fresh highs (fresh lows) or on pullbacks, depending upon the conditions.

70). This is trading, so I personally don’t look at fundamentals. However, cook your curry the way you like it.

71). We might zero into tradable underlyings with screens or searches, but…

72). …we eyeball into final trade selection.

73). Yes, the chart needs to look and feel just right. All but the one tradable entity are rejected by the look and feel of the chart. The one remaining is the one we trade. If none remains, we don’t trade. 

74). Price is king. We’re into price action.

75). Indicators only indicate. Price does the talking.

76). What the price is saying will reflect in the indicator, but with a time-lag.

77). Do we want this time-lag? I don’t.

78). Thus, price action it is, for me. However, everyone is looking at the same price.

79). Therefore, we need to think slightly out of the box, to make money.

80). Edge + out of the box thinking + stamina nails it.

 

 

 

 

Stamina of a Marathon Runner

Yes.

That’s what a small entry quantum approach demands of its player.

To be frank, I’ve not run any marathons on field and track.

However, I’ve done my share in life, and continue to do so. 

If it’s not a marathon, I don’t get a kick.

If you’ve got that in yourself, you’re cut out for the small entry quantum approach.

There’s repetition.

Boredom.

The long-haul.

Life in the background.

No hype.

Going on and on…

…till you break through,…

…and the contents of your portfolio spill over…

…and start to show.

Might take a few decades. 

Do you have it in you?

What will make you hold out?

Stick to the tenets of the small entry quantum approach, and you will not only hold out, but your folio will burgeon too.

Buy with surplus.

Buy with margin of safety.

Learn to sit.

Enter small. Many times.

Keep entering over the years, till there is reason to enter.

Exit on highs. Only get rid of those stocks you don’t feel like holding anymore.

No fear please. Kill it. Create the circumstances for fear to vanish.

No euphoria either. That’s a tough one, especially when the whole world is dancing around you. 

Do your homework. 

Don’t listen to anyone.

You’re set.

 

Nath on Trading – Basics Win

1). Put yourself out there. Again and again. Take the next trade.

2). Keep yourself in a position to take the next trade. How?

3). Take small losses. Have a stop in place. Always. Have the guts to have it in place physically.

4). Trade with money that doesn’t hurt you if it’s gone.

5). Don’t exhaust stamina. Put trade in place with smart stop that moves as per definition, and then forget it. 

6). Keep yourself physically and mentally fit. Good health will make you take the next trade. Bad health won’t.

7). Have a system…

8). …with an edge, and even a slight edge will do.

9). Keep sharpening your system. 

10). Don’t listen to anyone. You’ve got your system, remember? Sc#@w tips. God has given you a brain. Use it. 

11). Let profit run. Don’t nip it in the bud. PLEASE.

12). A big profit doesn’t mean you’re it. It can become bigger. And bigger. Remember that.

13). What’s going to keep your account in the green over the long run are the big winning trades. LET THEM HAPPEN. How?

14). You exit when the market stops you out. Period. Your trailing stop on auto is fully capable of locking in big gains and then some.

15). Similarly, make the market make you enter. Entries are to be triggered by the market. Use trigger-entries on your platform.

16). When a trade is triggered, you’re done with it, till it’s stopped out, in profit or in loss. Can you follow that?

17). Your trade identification skills are going to improve over time. Get through that time without giving up. 

18). Despair is bad, but euphoria is worse. Guard yourself against euphoria after a big win. Why?

19). Big wins are often followed by recklessness and deviations from one’s system that is already working. NO.

20). Use your common-sense. Is your calculator saying the right thing? Can this underlying be at that price? Keep asking questions that require common-sense to respond. Keep your common-sense awake. 

 

 

 

Chancing

How does one discover the missing ingredient?

By chancing it. 

One keeps trying different mixes…

…till something hits. 

The hit is then fine-tuned…

…such that it is reproduced again and again.

Once the hit can be reproduced at will, one has got the strategy all together. 

A successful strategy is then let loose. 

At first it is on manual.

Ultimately, it comes on auto, or semi-auto, whatever best is possible. 

There has come and passed a stage, when this same strategy has not been winning. 

Aha. 

What is the difference between the mix of that stage and the current – winning – mix?

It’s some kind of a twist you’ve discovered. 

Something you are adding, or doing differently. 

This something is making the strategy win. 

Congratulations!

You’ve kept trying. 

You’ve been in the field. 

You weren’t away from the field, ruminating. 

You were getting action. 

Losing action, but action. 

Losing action has huge educational value. 

It tells you how not to do it. 

You keep twisting, fitting, tuning, upon loss. 

You chance new stuff.

Eventually, something clicks. 

You develop that something further and take it to the nth. 

Where does that leave you?

You have to keep chancing it. 

There is no way around this. 

Make funds available for the R&D. 

Have the courage. 

Don’t be afraid of a hundred losses. 

Winning is around the corner.