INTELLECTUAL TRADING

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In the recent past there have been calls for boycotting Chinese goods. The question is: Whether this can be executed? Or to put it more specifically, whether it can be executed by a middle class Indian? Consider my personal situation. I am writing this column on a Lenovo laptop, which is Made in China. The Kindle book reader which I use to refer to many books that I quote in my regular columns, was assembled in China. My internet connection is provided by Reliance 4G Wi-Pod. The device has been made by the ZTE Corporation, which is based out of Shenzhen in China. I use the Moto g4 PLUS mobile phone, which is Made in China. I own the most basic model of a Hewlett Packard printer, which is Made in China. I own a Toshiba television, which also happens to be Made in China. This shouldn't be so surprising. In 2015-2016, 36.6 per cent of Indian imports from China constituted of electronic products. Engineering goods came in second at 28.9 per cent and chemicals came in th

Backtesting  is a process of Testing the trading conditions with respect to the past historical data, evaluating not only the profitability of the system but the underlying risk factor associated with the Trading/Investing Model. Proper Backtesting gives belief and enough confidence to a trader to trade a set of rules. But are the newbie traders really doing proper backtesting? The Answer is Nope! Some of the common misunderstanding among the newbie traders are 1) Backtest a trading system with limited dataset  and if the system gives 60-80% winning ratio or 10% guaranteed returns every month then the newbie trader expect the same to extend in the future. In reality you cannot simply beat the market every month on month consistently and get guaranteed returns. Moreover the shorter time duration of backtesting (3-6 months) doesn’t cover most of the trading scenarios. Testing a strategy with small test data is dangerous and more possibe that it could provide misleading results.

 The Directional Movement Indicator actually comprises two indicators. One is the Positive (+) DMI and other is the Negative (-) DMI. +DMI measures the strength of the uptrend while -DMI measures the strength of the downtrend. The +DMI is found by calculating the Upmove or +DM, which is current high minus the previous high. If the upmove is greater than the downmove and greater than zero, the +DM equals the upmove else it equals zero. The -DMI is found by calculating the Downmove or -DM, which is current low minus the previous low. If the downmove is greater than the upmove and greater than zero, the -DM equals the downmove else it equals zero. Now one has the daily values of +DM and -DM. These values are then smoothened out by averaging over a longer period typically 14 days to calculate the +DMI and -DMI. These values are then plotted as an indicator. Don't worry if you are overwhelmed by the calculations. We don't have to calculate all this manually. We just need t

( To prevent the dissemination of manipulative stock tips, SEBI is trying to prevent the use of modern means of communications) Market regulator SEBI has proposed that equity analysis on all modern means of communications be banned if it comes from persons or companies it hasn't authorised. This is what a consultation paper from the regulator says: ...it is proposed that: a) No person shall be allowed to provide trading tips, stock specific recommendations to the general public through short message services (SMSs), email, telephonic calls, etc. unless such persons obtain registration as an Investment Adviser or are specifically exempted from obtaining registration. b) No person shall be allowed to provide trading tips, stock specific recommendations to the general public through any other social networking media such as WhatsApp, ChatOn, WeChat, Twitter, Facebook, etc. unless such persons obtain registration as an Investment Adviser or are specifically exempted from obtaini

The ADX  measures the strength of the trend irrespective of its direction . It doesn't matter if the trend is up or down. All that matters is whether the trend is strong or weak. The ADX compares the directional movement of one day to the previous day to measure the strength of the stock's trend. Directional movement is considered positive if the current high minus prior high is greater than the prior low minus current low. It is considered negative if the current high minus prior high is less than the prior low minus current low. The ADX uses the smoothened directional movement values over the last few days to measure the strength of the trend. Ideally, it is measured over the last fourteen days, though you can use a different period if you want. ADX is a banded indicator and moves between 0 and 100. A high ADX value (above 25) indicates strength in the trend. The trend is considered strong and getting even stronger if the ADX value is above 25 and rising. An ADX value

The Organization of the Petroleum Exporting Countries (OPEC) agreed for a modest output cut during the week. OPEC countries will reduce output to a range of 32.5-33 million barrels per day (bpd) from the present output of 33.24 million bpd.  The deal was struck during talks in Algeria to ease global supply fears.  This is the first such deal since the 2008. Iran too has decided to decrease production by around 0.7 million bpd. Despite these modest production cuts, this move could help oil prices recover.  Until a few years ago, US$100 per barrel was the new 'normal' for oil prices. And then this capricious commodity proved everyone wrong. Early this year, crude oil prices hit US$30 per barrel for the first time in twelve years. The root of this turmoil has been the global supply glut.  OPEC is a major source of the turmoil we've seen in crude oil prices. Crude Oil Surges after OPEC Deal   Crude oil witnessed most of the buying interest during the week. It opened in the