CA.RUDRAMURTHY.B.V ACA, MCOM, MFM, M-PHIL, PGDBA, PGDMM Research Head: Vachana Investments Pvt Ltd. Ph: / vachanainvestments.com 1 “SHORT TERM TRADING STRATEGIES IN CAPITAL MARKETS”

Short term trading is a Professional Business of Buying and Selling financial instruments within a year so as to benefit from Market Inefficiencies. These instruments can be Index, Stock Equities, Commodities, Currencies, Bonds etc. Short term trading is a High Risk – High Return Business which requires an Edge to suit your trading style and profile. 2 SHORT TERM TRADING:

TREND FOLLOWING. CONTRARIAN TRADING. RANGE TRADING. SCALPING. CHART PATTERNS. INDICATOR TRADING. CANDLE STICK PATTERNS. FINANCIAL MODELLING. 3 SHORT TERM TRADING STRATEGIES:

Trade with the trend and trend is always your friend. Select the time frame which suits your trading style. It can be Day trade, Swing trade, Positional trade etc. Rules of Support, Resistance, Gaps etc form important part of analysis. 4 TREND FOLLOWING:

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Contrarian Trading involves trading against the trend expecting a reversal. Traders try to catch the Exhaustion Signals of the current trend and lack of momentum fuelling it. They try to Profit from retracements. Requires high Discipline and flexibility. 6 CONTRARIAN TRADING:

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Range Trading involves defining brackets in the existing markets and trading the bracket expecting markets to remain in the range. It involves responsive buying at the lower end of the range and responsive selling at the higher end of the range. One should avoid trending markets to do range trading. 8 RANGE TRADING:

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Scalping or Spread Trading involves exploiting the Bid – Ask spreads. Highly liquid underlying assets are selected for trade and huge quantities are traded for small moves. Scalpers try to exploit short term market inefficiency and they liquidate positions very quickly in few seconds/minutes. 10 SCALPING:

Continuation patterns like Triangles, Flags etc are used on day charts. Reversal Patterns like Head and Shoulder, Double tops and Bottoms, Triple tops and Bottoms, etc are also used on day charts. 11 CHART PATTERNS:

Moving Average. Stochastic. MACD. Bollinger Band. Relative Strength Index. 12 INDICATOR TRADING:

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Doji Patterns. Hammer and Hanging Man. Piercing Patterns. Engulfing Patterns. Star Patterns. White Soldiers and Black Crows. Counter Attack Patterns. 14 CANDLE STICK PATTERNS:

These are own model and techniques created by the professional trader so as to suit exclusively his trading style. These are done only at Proficiency level of trading where you contribute your idea of market analysis to the future traders world. 15 FINANCIAL MODELLING:

Trading should be a Profession and not a hobby. Successful Trading requires great Money Management Skills. There should be a Definitive Basis for trading and it should not be Instinctive. High level of Flexibility and Emotional Control. Understanding Yourself is more important to understand Markets. 16 Rudramurthy’s Trading Sutras!!!

Your trading models are the footprints of money. Determine the Entry, Target, Stops and time frames before entering into the Potent trade and stick to it come what may. What markets are doing is more important than Why it is doing so? Never argue with markets and try finding reasons for trading against what the ticker says. 17 Rudramurthy’s Day Trading Sutras!!!

Don’t Imagine, Guess and Hope to trade, just believe on the model and process the data. Monitoring the Performance on Expected lines is very important. Failure to accept your mistake and taking small losses quickly will be the biggest sin what a trader can ever commit. Switching Time Frames is very dangerous. It is a rationalized way of correcting your earlier mistakes. 18 Rudramurthy’s Day Trading Sutras!!!

When you are in form trade BIG but when you are not in form, reduce the quantity of your trade by atleast half and also the frequency of your trade. If you don’t know what to do with an initiated trade and that too if it is a losing one, answer is EXIT. Don’t try the escape route by searching all possible reasons to hold your trade. 19 Rudramurthy’s Day Trading Sutras!!!

Keep a trading journal and write your comments on that days experience. Note reasons for your profits or losses and improvise on the same. Inactiveness is the best tool what successful traders have on their winning positions and hyperactive when they are at losses. Don’t take small profits when you are sure of big profits and cut your losses as small as possible. 20 Rudramurthy’s Day Trading Sutras!!!

When you lose over 5times in a row then you require a relook into your trading strategy. When you are ill, confused, uncertain, have personal problem and you are trading on hope, then you require a break from trading. Professional traders Sell HOPE and Average traders Buy HOPE. To become successful trader you should work hard, study markets, practice, review, analyzse and organize your trading skills. 21 Rudramurthy’s Day Trading Sutras!!!

22 What Differentiates between Winning and Losing in Trading ?????

23 RUDRA’S 10 SYMPTOM’S THAT DIFFERENTIATES B/W AVERAGE AND SUCCESSFUL TRADERS !!!!!

Having no TRADING PLAN. Using Successful Strategies that don’t suit your Personality. Having Unrealistic assumptions. Taking foolish risk. Not having any rules to follow. 24 Symptoms of a Losing Trader ?????

Not being flexible to market conditions. Failing to take responsibility for your results. Getting addicted to volatility. Not having a process to keep track of performance. Not controlling emotional risk. 25 Symptoms of a Losing Trader ?????

Have a TRADING PLAN. Use Strategies that suit your Personality. Have a Realistic expectation. Take Calculated Risk. Have Trading rules before taking positions. 26 Symptoms of a Successful Trader !!!

Be flexible to market conditions. Take responsibility for your results. Trading should be a Profession and not hobby or place of excitement. Keep track of performance. Control your emotional risk. 27 Symptoms of a Successful Trader !!!

Who is an Intelligent Investor/Trader ??? Stock market is not a game for the stupid, the mentally lazy, the man of inferior emotional balance, not for the get rich quick adventurer persons. THEY WILL ALWAYS DIE POOR. How can I make some quick money in law or surgery. Similarly in markets too. Learn markets which is the cause, result will follow. 28

Who is an Intelligent Investor/Trader ??? “No one can give you better insights about the market than market itself. If an average Investor/Trader looks at reasons for markets behavior, Successful Investor/Trader will just follow the markets movement without arguments” Prof.CA.Rudramurthy.BV ACA, M.COM. MFM. M-PHIL, PGDBA, PGDMM. 29

“IF YOU FEEL, EDUCATION IS EXPENSIVE, THEN TRY IGNORANCE” CA.RUDRAMURTHY CA, M.COM, MFM, M-PHIL, PGDBA. PGDMM. Ph: ,