Kyle Bass hopes he is wrong, and so may everyone else, as the danger predicted by the founder of Dallas based Hayman Capital is nothing less than a full blown financial crisis in the world’s third largest economy, Japan.

While the hedge-fund trade of the year has been to short the yen and buy Japanese stocks placed for an export boom, Mr Bass sees in “Abenomics” – stimulus from Japan’s new prime minister Shinzo Abe – signs of stress that he has been predicting for three years.

 The length of that call might see him labelled as just another bear pushing a tired case. Shorting Japanese bonds has been the “widowmaker” trade for a decade: as interest rates moved ever lower it destroyed investors betting on a rise. >> Read More

What does it mean to be a hero in trading?

In poker, a “hero call” is sometimes appropriate. It refers to the call of a very large river bet with medium strength — or even Ace-high — based on a strong read that your opponent whiffed on a draw and is representing a huge hand to steal the pot.

In markets and trading, there is no official definition, but we can more or less surmise being a “hero” looks like the following:

Putting your foot down and saying “markets will do X, I’m sure of it!”

Pointing to the sky like Babe Ruth — “this is where my profits on this trade are going to go!” >> Read More

Jhunjhunwala, who is often referred to as India’s Warren Buffett, has a following on Dalal Street who swear by his investment and trading skills. At the same time, he has been rapped by a bunch of staunch critics, who had written him off amid the sharp decline in equities this year. Then, the market was abuzz with speculation that the investor lost heavily in some of his derivative bets and that he was forced to trim some of his long-term holdings to make up for the margin payment. A sharp decline in mid- and small-cap shares during the period also contributed to the chatter.

However, oldtimers and supporters say it is folly on the part of the critics to write off Jhunjhunwala, who, according to them, had seen far more testing times in the 1990s.

Henry Howard Harper: ‘The Psychology of Speculation – The Human Element in Stock Market Transactions’

The Disconcerting Effect of Sudden Losses and Gains, page 17 – 19

There are but few things more unbalancing to the mind than the act of suddenly winning or losing large sums of money. A few years ago at Monte Carlo I was in company with a friend, a well known man of affairs who while there played at roulette nearly every day, merely as pastime. He was of mature age, naturally methodical, conservative, temperate and cool-headed. He made it an unalterable rule to limit his losses to $200 at any one sitting, and on losing his amount he always stopped playing. His bets were usually limited to two dollars on the numbers, and never doubled except for one turn of the wheel when his number won. He generally played three numbers at a time; never more than four. For ten consecutive sittings luck was against him and each time he had lost his stake of $200. I saw him get up and leave the room, apparently in a state of disgust. An hour or so later I discovered him at a roulette table in another room stacking his chips in piles on a dozen or more numbers. >> Read More

Futures market speculative positioning data from the CFTC as of the close on Tuesday:

• EUR net short 66K vs short 49K prior
• JPY net short 78K vs short 89K prior
• GBP net short 65K vs short 66K prior
• AUD net long 84K vs long 85K prior
• CAD net short 65K vs short 63K prior
• NZD net long 18K vs long 17K prior
• CHF net short 10K vs short 13K prior
• US Dollar Index longs at 54K vs 54K prior

Looks like the “smart money” was adding to EUR/JPY shorts just as it was about to go on the biggest run in years…ouch.

The Desire : If you are trading just for the money you will quit before you are successful, Why? Anyone without a love for the game will quit during the long difficult learning process. After hundreds of hours of work and years of trading with nothing but a loss to show for all the effort anyone with common sense will think it is too hard and just quit. Those with a love and passion for trading will eventually succeed and usually make six figures or become a millionaire for their efforts. Those that do a cost benefit analysis in the first few years will generally quit due to the math.

The Skill :A trader must have the skill to trade in three dimensions. The management of the mind,  the method, and money management are all crucial for success. Traders must have the discipline and perseverance to trade robust systems through different market environments without giving up. They must have the ability to accept and deal with their thoughts and emotions as they arise during both winning and losing streaks. Risk must be managed on every single trade without the ego causing bets so big that they put your future trading at risk. The trader must also have the skill to not let fear take away the traders ability to pull the trigger on a good entry.

Last Close : 5766.60

From Last 2 SESSIONS ,We were writing : Above 5718 will see Rally upto 5786—–5809 level.

Yesterday written :Once crosses Y.High of 5743 we see Rally upto 5757 ,5776. (It kissed 5773 level )

Yes ,Our Upper Targets are intact of 5786—-5809 level very soon.

Now Once crosses and closes above 5809 level for 2 sessions will take to 5877—–5900 level.

Today’s Support level if not crosses (High of Yesterday ) i.e 5773 and trades below 5763 level with volumes will take to 5731-5721 level.

3 & 7 DEMA will act as Crucial Support.Again writing……………Don’t panic @ lower levels.

Will it First Kiss 5880–5900 or Will it Tumble to 5680 level ??????

More Details to our Subscribers ,Updated at 7:25/03rd April/Baroda/India

Every trader knows trading is a probability game. However, very few can internalize and live by the true meaning of what it means to be a probability game.

Mark Douglas, the author of “Trading in the Zone”, explains it well.     Someone who masters the probability game produces uncertain outcome but consistent result.   The best example to illustrate this concept is the casino business.     The casino holds on the average 4.5% probability advantage over the player. It does not know whether the next hand will be a winner or a loser against the player, but the casino is certain that they always win given enough bets.     Therefore casinos do not care if a player is going through a winning streak, as long as he is not cheating.

That’s exactly how traders need to think about his trades.    Market is random.    Anything can happen to the current trade.   A trader can increase his probability of winning either through fundamental or technical analysis but the best analysis can never produce a 100% certainty.  In reality, the highest win rate that the best analysis can produce is far from 100%.   However,  as long as the trader has a trading plan that can produce positive expected value,  he can expect consistent result over a reasonably large number of trades,  just like the casino. >> Read More

As gold breaks through death crosses and so forth, falling below $1600, sentiment against the precious metal is changing rapidly. People are more comfortable getting bearish on it.

 Dow Jones reports that, according to CFTC data, fund manager short bets are hitting record levels (via Nicola Duke).

Money managers held a record number of bets on lower gold prices on the main U.S. gold exchange, according to data released Friday by the Commodity Futures Trading Commission.  

Hedge funds and other investment managers tracked by the commodity regulator boosted their bets on lower Comex-traded gold futures and options by 33%, to 65,617 contracts, during the week ended Tuesday. That is the most in weekly CFTC data going back to June 2006.

For more on the next direction for gold, check out this epic post from All Star Charts, examining the full gold technical analysis.

(So you didn’t have a clear exit point) In other words, the only way you could stop trading was by losing.

If you can’t take a small loss, sooner or later you will take the mother of all losses.

There are old traders and there are bold traders, but there are very few old, bold traders.

Dramatic and emotional trading experiences tend to be negative. Pride is a great banana peel, as are hope, fear, and greed. My biggest slip-ups occurred shortly after I got emotionally involved with positions.

I prefer not to dwell on past situations. I tend to cut bad trades as soon as possible, forget them, and then move on to new opportunities.

The elements of good trading are: 1. Cutting losses, 2. Cutting losses, and 3. Cutting losses. If you can follow these three rules, you may have a chance.

Trying to trade during a losing streak is emotionally devastating. Trying to play “catch up” is lethal. >> Read More

The Knowledge

If we don’t do the homework to know what we need to know we will fail due to ignorance. Understanding historical price action, reading books by and about the best traders, seminars, mentor-ships, and  systems testing is all part of the homework we must do to get the needed knowledge.

The Resources

While trading with a small account is a good place to start it is not a good place to stay. Traders must be adequately capitalized for meaningful trading. We must have an affordable broker that does not charge bloated commissions and gives great execution on orders. A trader must have a platform and charting service that is adequate for his trading style. Trading a small account with an expensive broker with poor execution is a path to eventual failure. >> Read More