Looking Back at 2019 and Looking forward to 2020

Apologies for the long break from blogging, and sad to say that moving forward the frequency of blogging will be low, the reasons for which are shared below. Here is/are a few of my reflections on 2019 and my plans as I look forward to 2020

What I learnt in 2019

1. Trading wise, it was an average year, nothing exceptional, however, with close to 5 years in trading and increasing capital base, my ability to size bigger on the same intraday time frame was a concern.

2. Diversification across time-frames in trading can help in smoothing out the P&L curve.

3. Diversification is also necessary as your capital base increases.

4. % of Snake oil sellers in Trading is way more than what I thought. So learning to spot one can in itself be a major edge in trading.

5. If you are after big money, and have serious intentions to make a business out of it, look at a scale-able business model, there are limits to how much you can grow your own money. Unless of course you are a billionaire yourself, then your concern should be to diversify your investments to achieve a optimal risk-adjusted return. But then if you are a billionaire you would not be reading this.

6. Design Trading strategies and systems, with consistent but a moderate alpha in mind.

7. Look for structural edges, for example “Theta decay” in Options is a structural edge, meaning its largely independent of other factors.

8. Avoid people who sell one set of Indicators/Indicator based strategies like plague. That will save you a lot of time and time is money.

9. Social media can be a great place to connect with some great minds, but its your sizing skills that matter, the ratio of good to bad is close to 1:1000. Blindly block people who tweet motivational and inspirational quotes, its akin to porn, gives you a delusional high. A lot of people who actually are subject matter experts wont have time to tweet, so they are not going to clutter your feed.

10. I lost my mother this year, and that made me realize the importance of taking care of one’s health, seeking medical attention on time, and thinking fundamentally about what is it that you want to do to be remembered by others when you are gone, and its absolutely fair to ask the question - How does it matter if I am remembered or not? Its personal at the end of the day.

Time flies and as you get older it flies faster. 2020 is there and we are almost 2 weeks into it. Anyways.

1. On the trading front this would be a year of diversification, on both product and time frames. I intend to trade Stocks as well in Short Time-frames and Options on Longer time frames.

2. I would also be testing and trading variants of the traditional StatArb and Relative Value Arb. strategies.

3. Automation is another major area of focus, meaning I would work on making all my strategies fully automated. This is the reason I expect to be more time constrained this year than earlier. That would also mean, a restriction on the intake for my mentoring program.

4. I would also be cutting down on Social Media interaction and time, so expect to see much lesser tweets, not that I am big on it.

5. Moderate focus on Health, again its a matter of time and priority, would be focusing more on function than form.

Thanks again for your time and reading about what I had to say. Will keep you all posted as I move forward on this journey.

Launching NiftyScalper Day Trading Room!

I am happy to let you know that we at NiftyScalper are taking the next step to bring the day trading community in India closer through our slack based NiftyScalper Trading Room.

In the past few months, the number of coaching requests were quite overwhelming, and it was taking too much of my time, on top of it I could focus only on 1 or 2 people at a time.

Also, I realized there were several people who could not afford my coaching offering, based on my interactions with a few people I realized, a Trading Room would be a much better way of bridging this gap.

So this is what I intend to offer in the room (From 6th Nov'17)

1. Live Trade Alerts - Yes its not easy to follow, but the idea is to learn from observing so that in future you don't have to depend on the alerts at all. These alerts also act as references for any questions that you may have. Apart from alerts, I also provide live observations on the developing market structure, which includes aspects like Range, Range expansion levels, Points of invalidation for positions, Mean reversion areas etc. Watching the market and the reading the updates would help budding traders connect the dots. Which over the long run would help traders develop an independent sense of the market.

Do note, that I do not use any proprietary indicators, or exclusive and expensive technologies like order-flow/footprint charts. I would perhaps share my rationale sometime soon on the blog as to why I don't see an edge in it. Nevertheless, whatever indicators and references that I use, are (almost) freely available to everyone.   

2. Discuss Trade Rationale & anything else that wold help you become better at the game - Nothing like collectively discussing set-ups and clarifying by asking questions. I may not always be an expert at everything, the group over time will have several experts with different specializations, which would help you gather the wisdom of the crowds. 

3. Discuss/Share Articles/Books - Learning should never end, and if its does, thats the end. With that perspective, the idea is to share and discuss best of the books and articles in the Day trading space

4. View Daily Performance Logs - They say, what gets measured gets managed, so the idea is to post our daily performance logs so that we know how we are doing. This is more from an indicative purpose. One may not be able to post all scalp trades, but we will post trades which can be predicted well in advance. 

5. Specially curated blog posts and NIFTY data analysis reports only for members (after commercial launch) - There is a lot of effort and investment that goes into data analysis and related strategy formation, which is what would be shared with members. I also have data scientists on retainer contracts who help with testing various set-ups. All such data and reports would be available exclusively to the members.

The larger focus of the room will always be Quant/Statistics based scalping strategies. 

Given that I would be hiring people to manage the room and other associated costs, this would be a paid service, however we would make sure the costs are pretty nominal. Initially till the end of 2017 the room would be run on a beta mode and would be free for you to access.

I am also working on creating a detailed glossary and faqs which would help you and others understand the #scalp-alert messages and other conversations better. 

Look forward to your joining the slack group and would request you to type in a short intro (Location/Trading Exp./Etc.) about yourself in the #Intro channel once you join. 

Please use the link below to join

https://join.slack.com/t/niftyscalper-tr/shared_invite/enQtMjgwODY4ODk2MzM5LTJlMDA0NDQ4N2UxYzY0N2IxMjM0YjNlYmNmNGVhZjliOTc4YzhjZmQ1MDEwM2VkODMyMDhhZjI2Mjc4ZTE3ZTE

Article Excerpt & NiftyScalper Data Analysis - Fundamentals of Short-Term Trading : Part Two | Dr. Brett N. Steenbarger

Ever since I began my journey in the world of trading, articles and books by Dr. Steenbarger has been of great value to me.

Coincidentally I came across this excerpt where he is alluding to the idea of looking at markets horizontally, something that one of my team members' tried analyzing sometime back. First things first, here is what Dr. Steenbarger has to say.  

Article link - http://www.brettsteenbarger.com/Short-Term%20Trading2.doc

All the seasoned day traders that I have interacted with, either intuitively or through analysis, have said the same the thing, ie Not all time slots are the same.

Lets look at the volatility spikes on an Intraday basis for NIFTY. This was 2 years data, and we tried to do the same horizontal analysis by normalizing each day's move. You would clearly see two peaks and a trough. Of course this does not give a nuanced picture as a Monte Carlo analysis would, but still tells us quite clearly where the "meat" is. 

On a closing note, I was once told by a developing trader that he take trades only after 10:15 am IST in NIFTY, as he "believes" that's when you get an opening range breakout. Needless to say, he would get stopped out more often than not, and perhaps would see his trade move in the intended direction, couple of hours later. 

A simple horizontal analysis can help you time and size your trades optimally. Try it out.

Why and What of NiftyScalper?

Genesis of NiftyScalper

It all started a few years back, when I began searching the web for information on Scalping. I did find some information in bits and pieces. One of the most relevant ones was by TastyTrade, yes, the one that I am currently reviewing on the blog.

There were a few others in bits and pieces but none spoke from an Indian context. None talked about the best products to scalp in India. I had to do a lot of "recontextualization" to make that knowledge/information relevant for me. A little more than a year went into it.

Given that we have thousands if not millions of aspiring traders and scalpers, I felt quite strange that there is such a dearth of information, I mean quality information in the context of scalping.

That's when I decided, let me be the person who puts the content together, the idea was to use my experience to reduce the learning curve for others. By this time I also had made copious amount of notes from various sources, which I wanted to share with those interested.

That's how niftysalper.com was born.

What can you expect from NiftyScalper?

Content - We would bring scalping related content with an Indian context. It's important because Indian markets are very different from other geographies in terms of data availability, tools/technologies and break-even costs of various products and hence we cannot blindly follow what works in those markets.

As shared earlier, there is a huge gap in terms of availability of quality content, we would try to bridge that gap as well.

Lastly, there are several facets to trading. Its the combination of these facets that makes or breaks a trader. Everything from Product Selection, Execution Mechanics, Market Awareness to Trading Psychology plays a role in refining our trading skills. 

The aim is to structure the content on the blog in a framework that connects all these aspects.

Coaching - The second piece which we would focus on at NiftyScalper is Coaching. When I started my journey a couple of years back, I literally didn't have anyone I could go to. And those who were accessible discouraged me from scalping., calling it a wild goose chase. In retrospect I think it would have helped if they had shared with me the possibilities and risks associated with this trading technique and let me choose if it was suitable for me.

One of the thing a lot of developing and aspiring traders/scalpers look for is some sort of framework i.e connecting the dots across the various facets of scalping. Secondly, there could be people who are inherently (for various reasons) find it difficult to read and understand, they would someone to handhold them. Lastly, as a trader moves on his or her learning curve we at times need someone to bounce our ideas off to. The purpose of coaching would be to bring all this and more for aspiring scalpers.

Community - As James Surowiecki says, "Many are smarter than a few", and that holds good for us too. At the end of the day there is only so much that I can do and there is only so much that I know. But to broaden the horizon of our learning, we would also need to reach out to others who are on the same pursuit, perhaps at various levels on the learning curve. At NiftyScalper the attempt would be to bring this community of scalpers/traders and learn from each other.

Guess that's pretty much for this BLOGCAST. Do write in.  

Why do I Scalp?

This is the my first blog post on the site and let me be overwhelmingly honest. I have no clue as to how its going to shape up. But one has to start somewhere and here it is.

I thought of writing the first post about something that the whole site is dedicated to i.e "Scalping", and more importantly as to - Why do I do what I do? in other words - Why do I Scalp?

To understand that, we will look at Scalping through three lenses.

Personality - I think this is one of the key aspects of trading success, in the sense one has to find a strategy or method that suits their personality. One element of my personality is Risk Aversion, yes before you make that obvious expression, let me explain. Here I am referring to "Overnight Risks". I just cannot sleep in peace with open positions. That's me. Even if its just  two piddly lots, it weighs on me.  

A related aspect is, scalping or day trading gives you the freedom to close your day, when you want to trade and also to choose how many days you would like to trade. And as I said earlier, when you are not in trade you not in trade - its as simple.

Opportunity Cost - Since I am a full time trader, if I do not make the best use of my time, its not fair. And Scalping is the only strategy for which there are opportunities practically every minute the market is open. So to make the best use of my presence in front of the screen, I scalp and scalping gives me the best relative yield for the time invested.

Developing Expertise - This one needs a bit of an explanation. When I reflect on all the other careers/jobs I've had in my life, one thing that made me leave those jobs was the fact that most of them had changing expectations from me. One year it was some work and the other year something else, at the end you become sort of, a jack of all trades. Perhaps all corporate jobs are like that. At end you do not feel a sense of satisfaction which you get from refining and improving on a specific skill. This is where I use to envy trades/professions where there is a constant use of the hand and head, where variables in the context of practice are well within your control. In the context of trading, the markets are not in your control but everything else that you do is indeed in your control. That I think is very critical for expertise development.

So what's all this got to do with Scalping? - Well the line of reasoning goes like this - I intuitively felt that I need to be working at something where I can constantly practice a skill, and refine it over a period of time + In an environment where a fair number of variables are in my control + and (Borrowing from Malcolm Gladwell's 10,000 hour rule) - I wanted to get past the 10,000 hour threshold as early as possible. - So as to develop expertise.

Since scalping gives you innumerable opportunities to practice your craft, and if you do practice and make use of the opportunities, I guess there are fair chances that you would be able to develop some sort of expertise in it. You are not dependent on the opportunity to show up. This for me is one of the biggest advantages.

Think about it. How many professions give you such a structured and predictable opportunity set to practice? 

So that's pretty much for this post. More later.

Please Note - Each of the blog posts which are categorized as "BLOGCAST" would have an accompanying audio both on SoundCloud and YouTube