Hello everyone..
This is my first post in traderji..
I have been studying the work all the seniors have been putting in..
This thread is a marvelous treasure of knowledge for amateurs like me..
Kindly keep enriching this thread with your thoughts like always..
I ve been trading in the market for the past one year and am left with less than half of my starting capital..
One question though...
I ve tried to work on the procedure illustrated by ghosh sir in the beginning of the thread.. I find myself more comfortable trading futures.. The reason is the involvement of many factors which affect the change in price of the option..
I tried to paper trade applying this method but on many occasions the market did move in the direction of the trade but the movement in the options was not that much..
Every time i targeted a 20-25 point move in the nifty..
Because many of my trades i guessed the direction correctly, at the correct time.. This i know because i ve been checking up with tj sir's reporting (brilliant work) every evening.. But my trades are much shorter in duration i believe..
Am i going wrong somewhere??
I also wrote down the corresponding futures value when trading..
I found it to be more directly related to nifty spot values..
When in futures i ve kept a target of 20 points and sl of 10 points.. Is this correct.. Because the market either hit the sl or went into profit upto 40-50 points..
Guess this is too many doubts for the first post..
Kindly enlighten me..
Any response from anyone would be highly appreciated..
Thanks..
Let me try to answer your questions.
About OPTIONS : - You are very right that just the movement in underlying security is not enough to make money on OPTIONS. There are at-least 4 variables that one trades in conjunction. Sometimes OPTIONS are expensive so even if we get the direction right the OPTION might not move , etc etc.
About FUTURES : - Futures is directly related to SPOT movement, be it NIFTY of any STOCK. The only variable in the premium , which is relatively easy to understand and deal with. The flip side is, with a future your losses can be unlimited. With options you only take the risk you can afford (unless you are writing a call or put).
a 10 point SL for gains in excess of 30 points is a good risk to reward ratio so I think you are doing great if you are achieving that. The system Ghosh Sir has explained is quite a tried and tested system given how many years it has run. I've also incorporated rules from that system into mine and they seem to work well.
Good luck with your trades and keep posting !
TJ
