No one saw it coming.
On Monday, October 01, at one stage NIFTY was down 100 points. It started gaining upward momentum from there and shot up smartly to cover all the deficit and then go up by more than 100 points. It ended the first trading day of the week 77 points higher.
People thought bulls are back to take control of the market.
After the holiday on October 2, 2018, we were back to business on Wednesday. From then on, it has been a downward journey at a frantic pace.
Stocks have lost value as if investing is going out of fashion. Every stock is being sold. Only relief seems to be in IT and Pharma space. Everything else is just sell and forget.
I have seen such events earlier on multiple occasions. Traders generally do not possess good memory. They do not remember events from the past and do not learn from those events. The most recent example of this kind of decline was in March 2015 when NIFTY made the then all time high of 9119 on March 04, 2015 and then lost its way to come down to 8342 on March 26, 2015 ( Expiry Day).
Present trend is something similar.
A trader can not chose the market. We have to take our trades whether the trend is bearish or bullish.
This was NIFTY over last 5 days:
With this kind of steep decline, our trades should have done well. Fortunately for us, they did.
Star of the week and extremely weak stock was HINDPETRO.
We had entered into PUT 240 option on the first day of this series. The stock made both side moves almost everyday. The Option kept gaining value every morning and then giving it away by the end of day. On Thursday, the Finance Minister put a financial burden on Oil Marketing Companies and stock prices went down like a pricked balloon.
From the normal price range of around Rs. 250, the stock fell to Rs. 194 in the last 10 minutes of trading on Thursday and went down to Rs. 163 yesterday.
For a PUT buyer, it was a stroke of luck.
The readers of this blog are aware of this move and those who were in this trade made good exits at Rs. 67-68 range after the trading opened in this Strike Price after some technical glitch by NSE.
I too got out after waiting out the full day at Rs. 76.00, the last price and high price of the day.
A good trade already in the bag, we expect to do well this month.
Ashok Leyland made a quick down move after the RBI policy announcement. In fact, most of the stocks made such moves but we can only be concerned about our trades. Unfortunately, I got out of this trade ( PUT 110 ) at Rs. 5.50 and then saw it going up to Rs. 9.50. Finally it ended the day at Rs. 7.90.
This was another example of not following my own advice of being patient in a trade that is doing well.
But it happens. We are humans, we make errors. The key is to note these errors and avoid them next time. I was patient with HINDPETRO but could not sustain that patience with ASHOKLEY.
Well, that is done now and noted for future.
IDEA made another 52 week low at Rs. 32.95 and PUT 37.5 is now at Rs. 5.00.
TATASTEEL and ZEEL also came down . ZEEL too made new 52 week low at Rs. 415.10.
This is the summary of our trading positions:
All the prices are the last traded prices. I know many readers have exited at lower prices ( I too have done that) but some may still be holding the trades. This is what the week did for us.
I have said it earlier and will say it again– Let us be grateful to the market for such events and profits. Our job is to initiate a trade as per our method. After that it is for the market to deliver. The moment we start believing that we are smart, market teaches us a lesson which proves very costly.
As most of the readers have exited from HINDPETRO, this option will be considered closed from now and its further performance will not add or subtract anything from the above chart.
A good week overall and we look forward to coming week with anticipation.
Enjoy the weekend.
Disclaimer: This post and examples are for teaching purpose only and are not meant as advice/suggestion to trade in these stocks. Trading in Futures and Options can lead to big losses and should be done with appropriate knowledge and advice only. Mentioning the stocks here does not imply that I have a trading position or likely to take a trade in these stocks.
Tharik October 6, 2018 at 9:28 am
Dear Promod Ji,
I could not believe when you say that you exited from ASHOKLEYLAND 110 PE. Since this is just the first week, I am holding all of them except HINDPETRO. Exited HINDPETRO only due to the fear that we might not see suitable buyers for our swollen premium as it did earlier in the day (observed the same even during the last 30 mins, even though I closed my position at around 11.00am)Reply
admin October 6, 2018 at 9:40 am
Thanks for your comments. I am just another trader with little more experience and patience. But I am not immune from the mistakes what all traders make. It was a mistake and I am accepting it on a public forum so that I will remember it. These things happen.Reply
But I kept patience with HINDPETRO till Rs. 76.00.
It was not practical to stay patient over the weekend.
Tharik October 6, 2018 at 7:32 pm
We love your humbleness Sir. And you are imparting the same to your fellow followers like me. Thanks a lot for teaching us the way trading has to be done.Reply
Alok Chaudhary October 6, 2018 at 10:42 am
Pramod sir you are becoming hero for all of us thanks for teaching all these lifelong teachings, based on your teachings I have taken your favourite put BHEL 67.5 put @1.35 and it is doing good, It gives an immense pleasure to select winning trades at our own apart from the profits.Reply
Thanks again for all your guidance.
admin October 6, 2018 at 10:56 am
Thanks for the kind words. I am happy if my posts have helped.Reply
Thank the market for the profits.
Tharik October 6, 2018 at 7:35 pm
Had you been following this blog for a while, you will yourself get the answer. Nobody knows where it will go, when it will turn back.Reply
Ravi kumar October 6, 2018 at 11:34 am
I too made HEROMOTO selection based on ur techniques…and it worked well..sold and entered next strike also.thanks sir
Where do u think this market bottoms out… at what level Sir? Just curiousReply
RK October 6, 2018 at 2:32 pm
I am new to this blog and started following last month and too HINDPETRO Trade this month.
Thanks for this trade suggestion. As other mentioned they learned from your teaching and stock selection methods. I tried to look on your blog for such blog entry but unable to find it.
Please share link for your stock selection technic
admin October 7, 2018 at 7:08 am
Please read the new post today.Reply
Link of earlier post is given there.
RK October 7, 2018 at 9:13 am
Thank you very muchReply