Bear and Bull Markets

What are Bear?

Bear : An operator who expects the share price to fall

Bear Market : A weak and falling market where buyers are absent, also when there is high supply but demand is low of any asset.

Who are Bulls?

Bull : An operator who expects the share price to rise and takes position in the market to sell at a later date.

Bull Market : A rising market where buyers outnumber the sellers, also the rising demand of any asset.

A bull market is one where prices are rising, whereas a bear market is one where prices are falling. The two terms are also used to describe types of investors.

A stock market bull is someone who has a very optimistic view of the market. they may be stock-holders or maybe investors who aggressively buy and sell stocks quickly. A bear investor, on the other hand, is pessimistic about the market and may make more conservative stock choices. Sometimes, the terms are used to refer to specific funds or stocks. Bear market funds, for example, are those that are falling and faring poorly. Investors sometimes refer to bull stocks to describe securities that are aggressively rising and making their investors money.

Knowing what is meant by the bear and bull market can help you understand whether the market is currently rising or falling. There is no need to get frightened by a bear market indicator however, as experts agree that the market is cyclical. When prices start falling, they will eventually rise too.

So the question arises What Drives Bear and Bull Markets?

The stock market is affected by many economic factors. High employment levels, strong economy, and stable social and economic conditions generally build investor confidence and encourage investors to put their money in the stock market. Often, this can bolster bull markets. Also new technologies and companies that encourage investors to put their money in stocks can create bull markets. For example, in the 1990s, the dot com craze encouraged many investors to put their money in stocks that they felt would keep increasing. In some cases, a bullish market is simply self-perpetuating. Since the market is doing well, it only encourages investors to invest more money or to start investing.

On the other hand, discouraging economic or social political changes in a society can push the market down. Sudden instability or unemployment or even fears of unemployment caused by wars and other problems can start to make investors more conservative and therefore lead to bear markets. Of course, again this becomes a self-perpetuating trend. As the economy slows down, companies begin downsizing. Increased unemployment makes people far less willing to gamble on the stock market. Sometimes, a panic caused by dire predictions about the market can also create bearish conditions.

Bears and Bull can impact adversely to market movement, so always choose to be an investor rather than becoming a Bull or Bear. Investor makes right decisions buying when markets are Bearish and booking profits when markets become Bullish.

Option Trading- A Myth or Boon (Part 2)

Lets start with further myths on option trading

4) Selling option naked
Did you know that selling naked puts has the same P/L profile as selling covered calls? Yet most brokers allow traders to sell covered calls in their  accounts, but not naked puts? I find it extremely ignorant. An alarming number of financial professionals, including stockbrokers, financial planners and journalists are in position to educate the public about the many advantages to be gained from adopting naked put writing (and other option strategies), but fail to do so. Many public investors never bother to make the effort to learn about options once they hear negative statements from professional advisors.
Writing naked put options is a significantly more conservative strategy and definitely less risky than simply buying and owning stocks. As such it deserves to be considered as an attractive investment alternative by millions of investors.

5) 99% of stocks expire worthless

Approximately 10% of options are exercised (The trader takes advantage of their right to buy or sell the stock). Around 55%-60% of option positions are closed prior to expiration. Approximately 30%-35% of options expire worthless.

6) Trading options is a zero-sum game

The truth is that options may be used as insurance policies. They can be used as risk management tools, not only trading vehicles.

As Mark Wolfinger explains here: “If I buy a call option and earn a profit by selling at a higher price, there is no reason to believe that the seller took a loss corresponding to my gain. The seller may have hedged the play and earned an even larger profit than I did. I don’t see anything resembling a zero sum game in hedged options transactions. I understand that others see it as black and white: If one gained, the other lost. But that’s an oversimplification

7) Only options sellers make money

The truth is that both option buyers and sellers can profit from option trading. If only sellers made money, there would be no buyers. With no buyers there would be no market. While options selling does have an edge in many cases, it also exposes you to negative gamma.
As Mark Wolfinger wrote: “Premium buying is the less-traveled road, but it can be profitable for the well-prepared, disciplined trader. It doesn’t mean it is better or worse than premium selling. It just means that there is more than one road to Rome.”

Option Trading- A Myth or Boon (Part 1)

In trading world, there is a general misconception that an option trading is very risky. Options can be risky, but not always. Options can be less risky or more risky, depending on your risk tolerance. They can be used for speculation, but also for hedging and protection of leverage. There is more than one way to make money with options. Here are some of the common myths and misconceptions about options trading.

1) It is easy to make money with options

There are many experts who promise to make you money with no effort, they charge you  thousands and lakhs of Rupees. They present some of the highest risk strategies (like trading weekly options) as “low or no risk”.

The truth is that learning how to trade and invest successfully requires a lifetime of work, dedication, and focus. Not only is there a long and difficult learning curve just to learn the basic fundamentals, but you’ll soon discover that being a student of the markets never ends. To become an engineer you have to study 4 years, and probably another 4 years  to become a good one. So Why do we expect it to be different when it comes to trading?

2) The only profitable way to trade is buying call or put

This is a very common misconception. While it is true that buying calls or puts can be very profitable, it is also a more risky way to trade. When you buy calls or puts, you have to be right three times:

• Direction of the move (direction of trade)
• Size of the move (how much the trade will move)
• Timing of the move (entering at right time)

The underlying has to move in the right direction, and fast. You can predict the direction and the size of the move right, but if the move happens after the options expired, you lose money. Even if everything works in your favor, but Implied Volatility collapses (after earnings for example) you might still lose money.

3) Options are total speculations

The truth is that options can be used in many ways. They can be used for speculation, but also for hedging, protection, income etc. For example:

• An investor who is long a stock but is concerned about short term volatility, can buy protective puts to hedge his investment.
• An investor who believes the market will be trading in a range, can trade range of income producing stratgies, like calendar spread
• An investor who wants to buy a stock at discount can use a naked put strategy

We will continue with more option myths in our next blog.

Psychology of Trading

New traders are concerned only with making money. They celebrate when their trades are profitable and ignore trades that lose money. This is a bad idea. The path to becoming a long-term successful trader requires an understanding of why the trades lost money. Then it becomes possible to reduce the number of trades that failed. In other words, if you buy call or put options, only to see them expire worthlessly, then you should fair better by finding other strategies than buying options.

Trading Psychology

We feel good when we make profit in market and tend to be superior, and it goes reverse when we lose, we tend to feel bad, ignorant and hurt. Trading impacts our psychology totally. Some traders never sell their stocks or profit when they are rewarded handsomely, they get too much attached to their assets emotionally. Emotions in trading can be dangerous and can make big losses.

Most traders including professional money managers have a difficult time outperforming the market averages. Studies have shown that most individual investors fail to understand this simple principle and tend to believe that their results are better than their actual results. In other words, they believe they do better than the market averages when in fact they perform far worse.

How to Trade Fair

Selecting a trade is an art, getting in it and getting out of it is an another art, as i previously mentioned timing of trade matters the most.This all can be improved through practise, which makes a trader perfect to some extent.Also the fact of, you should minimize your loss in lossing trades and maximize your profits in winning trades.

Emotions in Curve

Keys to Success for the Technical Analyst

Learn how to read charts. This takes time and is never something you can learn overnight. Even though there is no guarantee of success, any edge helps. If you get a buy signal, then it is okay to get along even when you know the signal may be wrong. Even if you dont enter in it, dont regret, market gives you opportunity every day, every week, every month. But your success comes from cutting losses and from studying all the signals. Learn which ones work often and which are no better than break even. Study the results and gain an additional edge by knowing which ones work for you.

Success Mantra in Stock Market is never get emotionally attached to your trades, trade with charts doing fundamental and technical analysis

Patience a key for succesfull Trader

Trades in share market are successful only when they are carried out withpatience and peaceful mind. 

Like i said in my previous blogs, before entering into any trade you need to understand the market flow and its direction, this can be identified through price action. After deriving the price action and knowing the pattern you can go for a trade, and to do this all you need to be patient enough.

Markets daily gives you an opportunity to buy or sell any quantity, and daily profits and losses, it is we who choose the margin of both. Sometimes no trade can also be a good trade. Trading is not earning profits daily, it also learning from the looses.

Experience trader learns from his past trades and takes wise decision patiently. Impatient trader often looses and have reason to blame himself after having the bought later the price dropped. Timing is also important for entering and exiting any trade.

Impatient trades lead to unnecessary losses, additional stress, and wasted emotional energy. These factors then cause you to miss valid signals that often occur soon after you get out of a losing trade. If your expectations on price direction are often correct, but you're not usually in a trade when the price moves in that expected direction, your patience is likely off.

Most traders have a strategy they follow that tells them when and where to get into a trade. That strategy, if traded correctly, should help them with a profit otherwise, there's no point in using it. It sounds simple, but traders actually face a problem applying it. When watching a fast-moving chart in real-time, the mind gets tricked into thinking you should get into a trade before the trade setup has fully formed. You don't want to miss a trade, so you get in a bit early and usually end up with a loss. 

How to Improve Patience and Timing

--> This can be done my entering in trade only when setup is formed, not to hurry for any trade

--> If you are entering the trade and from that time price start to drop from your levels, just have brainstorming session and wait for everytime pullback which actually triggers the trade.

--> Try taking limited trades in a week, dont overtrade this can kill your patience.

--> If you'r timing is set to be off, dont hurry for trade, wait for the setup formation and then take short trades and exit with minimal profits.

--> Grow your confidence by booking short profits.

Loosing money is the easiest part in market, rather focus on making it, which requires patience, timing and little bit of study technical and fundamental both

Indian Market to crash soon

Hello Guyz Lets have some review of Nifty for coming 3-6 months.

As i have mentioned in headline Stock market to crash soon, yes this can happen very soon.
The reason i am trying to focus on stock market crash is the data which is showing enormous hike the market has taken.

-->Markets trading to almost life time high and entering into overbought zones, Nifty 50 Index has almost climbed 12000 mark and near to its new lifetime high same is for Bank Index (Banknifty) around 31000 mark.
--> the reason for its highly measured Index is PE ratio which is trading around 27.52 mark on 12th November 2019, which makes it highly expensive.
--> Most of people in Stock Market never trade on PE basis, they just trade on indicators and dont know the real meaning of high PE and low PE.

Let me explain you taking the example of Nifty 50 having a PE of 27.52 which is considered high comparing the current market levels.

PE above 24 is high for Index like Nifty and below 20 can be considered as low for Nifty. we can interpret as markets are expensive currently. the same case happened when markets were trading at high PE during 2008 and then the fall begin..

So how do we interpret PE, PE is price to Earning ratio, like PE is 27 it means for every 100 point rise you have to spend Rs.27
Suppose PE was 13, then for every 13Rs nifty will pay you 100 Rs, at that point markets are cheap.

I will explain you guyz about PE in more detail on some other blog, but lets come to the point of market fall.

Yes the fall is sure, there are many bad news like IIP data is bad, economic slowdown, Moody downgraded the Indian Markets.
But the real reason for fall is something else, will surely share you more data points soon.

See you soon..

Do's and Dont's in Stock Market

Markets are always difficult and makes life uneasy for those who feel they know everything about it.
So small things needs to be always taken care While trading.

-->Market are always unpredictable. So while trading in any security, whether it be buying or selling we should always give a stop loss to our trade. Sometimes the technical indicators give us a wrong signal. In stock market there are both ups and downs. We should manage our risk. If we examine our losses, we may find a solution to avoid losses in the future. We should also examine our gains, we may find a method to increase our gains.

Trade with Safety and equal amount of risk, learn to book profits and cut loss.

--> We should never be emotionally attached to our trade.

-->Don't trade if you are afraid of losses

When we are trading stock market losses will happen, we cannot control those losses. When we gain then we are so happy that we tell everyone about our strategies but when we make loss we keep quiet about it and we will bad from inside. We should control that emotion and establish some strategies to overcome that loss. We should never trade without a stop loss. If we cannot digest those losses we should not trade at all. 

-->Trading should be made as full fledged plan, before we enter into any trade we should make a full research and plan the trade accordingly. We should check the support and resistance level. We should calculate support resistance level, study the security fundamentaly and technically.

-->Trading is not a game of gamble. This is the biggest mistake many traders make while trading in the stock market. It is a business with probability of income and losses. Traders trades to build up the capital for long term investment.

-->There are many advisors who give various forecast on which stock to buy and which to sell. Before putting their advice intro trade, we should study the reason on what grounds he is making the forecast. Rather than blindly accepting their advice and taking a trade we should study the technical indicators and confirm the expert’s advice. Everyone interprets the same indicator in a different way.

--> Keeping all your golden eggs in one basket can be equally dangerous, similar to investing in single sector. Plan of investing should always be diversified, so that if one portfolio doesn't grow others surely will grow.

--> Investments should be done on stocks or Company which has potential to grow long or performing history. Never invest in penny stocks, this may kill your capital in long term.

--> It takes time and dedication to become expert in trading. But becoming expert in trading is not impossible. We can make extraordinary profits from the stock market and also beat the index average return. We just require discipline and dedication to beat the professionals of the stock market.

--> Always understand this, We are not trading in the stock market for amusement; we are trading to make some money. The main purpose of trading is to make money. Trading in stock market is not a game.

Secret of Fundamental Analysis

What is Fundamental Analysis of any Stock/Data???

It is like the background check of a security for short term trade. Investors usually use fundamental analysis for long term investment but not for trading. We can see how security has performed over the years and then we can select the stock to invest or trade.

Fundamental analysis is to study the financial statements of a company and other incomplete definitions. In other words an assessment of a company's value and potential using complete fundamental analysis.

Secret of Fundamental Analysis

Fundamental study of developmental and exploration companies will identify or locate penny stocks for you to watch that are genuine with experienced management, exciting novel products in development, patents, financing in place for at least 6 months, or the ability to obtain such financing, and a number of other fundamentals that this site will cover repeatedly.

Penny stocks generally have no sales and profit statistics on which you can bet, so the only way to discover a potential trend in penny stocks before it happens is by study of the fundamental assets the penny stock has.Fundamental analysis can, therefore, show you which of those target stocks have high potential for explosive upward trends or warn of impending downward trends long before genuine technical signals form. Thus you have time to plan your trades.

Best ways to limit risks when investing in penny stocks:

If the recent share price of a well researched high quality and high potential stock is at an all time historical low, then the likely hood that the share price will break below, or much below, that lowest share price is highly unlikely. This is true if the historic low occurred during the last recession. 

If the stock does not have enough history trading, then the historic low has not been tested by a negative economy. In this case, the true historic low most likely has not been reached yet.

Buying up shares of a confirmed high quality sleeper penny stock at this lowest share price will put you in the best position to minimize risk, take advantage of the risks of other traders, and ride the wave of an explosive trend once media and marketeer involvement take place.

Trend is your Best Friend in Trading

Trend is your Best Friend in Trading

One of the Warren Buffet’s principles is to trade with the trend and that actually is the correct and profitable way to trade. We should first identify the trend whether the trend is upward or downward. There are many trend identifying indicators which tell us about the trend such as moving average. It identifies whether the trend is uptrend and downtrend and according to that we can make buying and selling calls.

We can use the Indicators to determine the stocks trend, like wise we can use crossover pattern in MACD to determine the change of trend.

Market timing is an important factor while trading, the timings of entry and exit is very important. We can make profit than the others if we enter and exit when everybody is still in the trade. We should predict the early signals given by technical analysis indicators and act accordingly

To identify the trend and take a trade with that trend is as important as playing the game and winning it.

Greed should be controlled and always learn to book profit when trade executes, it compliments the technical analysis.

Will talk more on trading aspects and topics in next coming blogs.

Technical Analysis- Basic Need for Financial Market

Technical Analysis is What most of the beginners skip in their early trading days.

Anybody can study technical analysis and apply the technical analysis indicators on the charts. But do all the traders beat the earnings or gain extraordinary profits from the stock market. The answer is no. Not everybody has those trading skills, but one can develop it using techical analysis.

Chart Comprising of Technical Analysis I

Technical Analysis comprises of using Technical Indicators on Chart. 

When we use technical analysis indicators on charts we should use the combination of at least 2-3 technical analysis indicators. We should not only rely on one technical analysis indicator because sometimes the indicator gives a false signal. Remember, that technical analysis indicators only confirm the movements. We can avoid the false signals given by the technical indicator by confirming the signals with the price action.


We should select the technical analysis indicators wisely. We should choose technical analysis indicators that complement each other, instead of those that generate the same signals.

Examples of Technical Indicators

1) RSI (Relative Strength Index)
2) MACD
3) Pivot Levels
4) Bollinger Bands
5) Stochastics
6) Volume
7) Fibonacci




We will be discussing each one of this in later blogs, just to give you an hint at start how technical analysis is very important in knowing the direction of market.