Is it possible to make profits , without predicting the direction of Market ?

Most common belief is that if you want to make money in stock markets, you must be able to predict the direction of market. So ,if you predict that markets will go up, you buy and then sell at higher price when it has gone up. Very Simple Logic.

But markets are far far away from something as simple as that. 

Logic is correct but how do you predict where the market is going ?

Up ? Down ? Sideways ? 

There are huge number of softwares/ technical analysts claiming to predict the direction and correctly doing it almost 50 % of times. 

But what about 50 % of times when they go wrong ? 

Then you use STOP LOSS. 

This is a very common way of trading in the markets . 

But let me ask -

Do you require a special software to be wrong 50% of times ?

Anybody can do it anytime. Also , mind it - Stop Loss is a good tool but ultimately it is also a Loss only.

So , what is the way out ?

Most of you will be very sceptical if I say that you can make profits in stock markets without predicting the direction of the market ?  Because we are used to think in a particular way and that way is predict and take position and take stop loss.

Most of you will again have huge doubts in your mind if I say that you do not require stop losses to protect your positions. So you don't loose money through stop losses.

I am talking about strategic hedged positional trading.

This is NON-DIRECTIONAL trading. Non - directional trading means, we are neither bullish , nor bearish about the market. But if we are Non-directional, that doesn't mean , markets are also non-directional. Markets will definitely make their moves . Nifty , Banknifty will keep on moving up and down. But we will not get ourselves stuck in a process of predicting  the direction of the market. We know markets will move and accordingly we will set up the trading strategy and do adjustments as and when required. No software, No market prediction, No stop loss and No intra-day trading. 

For doing this, we must understand basic strategies in futures and options, need to have a proper trading plan, proper adjustment plan and keep our positions hedged through usage of Greeks. Ok, its not as complex as it sounds and yes , making money can never be as simple as buy on dips and sell on highs! Its more of a wishful thinking.

Pradeep Singla

www.theoptionschool.in

(We conduct options trading workshops in following cities of India -  Bangalore,Hyderabad , Chennai, Mumbai, Delhi and Kolkata.  Online workshop is also available)

Why to invest in stock markets at all?

Many of my friends always ask - Why should we invest in stock markets at all ? You do not have any control on how things work and more often than not , you loose money , so we are better off with bank fixed deposit only.

Yes, Agreed that stock market is not an easy place to make money. But then , Nothing comes easily. Do you think doctor's job is easy ? Do you think Engineers's job is easy ?

We study for years. Spend lots of energy, money and time on our studies and land a job. And yes, No job is less than 12 hours a day. What after that ? Insecurities ! Boss ! Work - life Balance ! KRAs!

When it comes to stock markets , we say 

- I do not want to spend time
- I don't have much money to invest.
- I do not want to learn as nobody knows anything.
- I have never attended any training, but follow my neighbour's advice.
- I do not have patience.

BUT

I want extraordinary results.

HOW IS THIS POSSIBLE ?

Stock markets are no more part timers space.

You are happy with a bank fixed deposit which doesn't give you returns more than inflation. Plus you also pay taxes on that. In real sense, value of your money is depleting.

So , what to do. INVEST WISELY.

Investing in stock markets only can give you returns which will beat inflation plus taxes and in real sense , your money will make something for you. 

So, its not a matter of choice, but for any intelligent person with some financial acumen, its a compulsion.

Now , the question is not whether I should invest in stock markets but the question is how I should invest in stock markets. 
-What are the tools required ? 
-What are the instruments i should use ? 
-What kind of knowledge is required ? 
-What other inputs are required ?


Ok , we will talk about these details next time! 

Next blog :- Why to invest in stock markets at all ? - part 2


Pradeep Singla

www.theoptionschool.in


(We conduct options trading workshops in Bangalore,Hyderabad , Chennai, Mumbai, Delhi and Kolkata)