CA Rudra Murthy B V - Mind Markets And Money

Notion Press

Old No. 38, New No. 6

McNichols Road, Chetpet

Chennai - 600 031

First Published by Notion Press 2019

Copyright CA Rudra Murthy B V and Indrazith Shantharaj 2019

All Rights Reserved.

eISBN 978-1-68466-774-1

Paperback 978-1-68466-773-4

Hardcase 978-1-68466-772-7

This book has been published with all efforts taken to make the material error-free after the consent of the author. However, the author and the publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.

No part of this book may be used, reproduced in any manner whatsoever without written permission from the author, except in the case of brief quotations embodied in critical articles and reviews.

Preface

As you know, intraday trading is one of the most difficult types of trading, which requires persistent effort to be successful in this field. Usually, most of the exchanges across the world operate within a time window and due to this, one can witness many distinct repetitive day patterns most of the times. Most of the indicators or systems fail to identify these repetitive day patterns as it requires careful observation of price action keeping in mind not only Price and Volume but also TIME. Besides, many traders focus only on the price and volume, and they tend to ignore the importance of time in intraday trading where we believe, TIME is a profitable Opportunity for an intraday trader. Time plays a crucial role in intraday trading, and a simple example of that is a price that is not accepted over time is the sign of rejection of that price level. For example, the long liquidation or short-covering rally generally happens due to the result of time running out for day traders, rather than a lack of volume.

Most intraday traders use the concepts of market profile as a confirmation tool to analyze the sentiments of overall market, and they fail to derive trading ideas from it. Besides, many traders claim that market profile is just a theory and it cannot be applied for live trading. Moreover, there is a big myth with few traders that, it can be used only for scalping and not for directional trade. In fact, market profile can be used in many other ways which includes trend trading, mean reversion trades and scalping for different time frames. In this book, we explain how to use market profile beyond scalping, how to obtain intraday trades and short-term trades for trend following & mean reversion traders, when to avoid trades, etc. This book is a feast for all the intraday traders, scalpers, short-term traders, market profile traders, and to all the traders who are using Order Flow Analysis to gain conviction into their current trading systems. We believe that, if ignorance gives you fear in trading, knowledge gives you the required conviction to make big money through right trading.

We are using Market Profile and Order Flow for over a decade now, and this book is the product of our extensive research and practical trading experience. As far as we know, there is not a single book that explains the order flow concepts (regarding executed orders) concerning market profile and intraday/positional trading for trend followers, mean reversion traders & Scalpers. This is the first book of its kind that describes the practical aspects of the market profile and how to use market profile along with order flow to get a distinct edge in intraday trading and short-term trading. This book establishes a connection to all the market profile concepts that are explained in this book so we dont think its a good idea to skip any chapter or idea.

The Human Side of Every Person Is the Greatest Enemy of the Average Investor or Speculator

Patterns Repeat, Because Human Nature Hasnt Changed for Thousand of Years

Jesse Livermore

If you look at the above quotes from the world-class trader Jesse Livermore, it indicates there is a strong connection between the human mind and skill to get success in trading. This book helps traders to take their expertise to a new level by providing complete clarity on the price auction and to develop the right mindset to benefit from it.

Are you ready to implement and take action as we have done?

Acknowledgements

Many have made this book possible. It would have been impossible to write this book without the encouragement and everlasting support of loving family members. We also thank all our gurus who have encouraged us to write this book. This book is a dedication to all our committed traders & investors who want to reach the next level of market understanding.

We also thank big players of World and Indian stock markets like Sundar Iyer, Radhakishan Damani, Nemish Shah, Rakesh Jhunjhunwala, Jesse Livermore, George Soros, Paul Tudor Jones, Ramesh Damani, Prem Sundar, Gunvanth, TVN Rao, Santhanam and many more who have directly or indirectly influenced us in the big learning curve.

Special thanks to H. R. Ranganath of Public TV and team VACHANA, who has always been an inspiration and well wisher in our life.

We also thank our editors who have edited the book in quick time which helps all our readers for seamless reading. Last but not the least, this book wouldnt have released without the overall guidance and support from Notion Press team.

Chapter 1

What Are the Biggest Myths in Intraday Trading?

There Is Nothing New in Wall Street.

There Cant Be Because Speculation Is as Old as the Hills.

Whatever Happens in the Stock Market Today Has Happened Before and Will Happen Again.

Jesse Livermore

A few years ago, when I was struggling to become a profitable intraday trader, I had the opportunity to talk to one of the top traders, who is also a great investment advisor in India. During my conversation with him, he was very skeptical about intraday trading, and he said he always prefers taking positional trades and long-term bets. I extended the argument by showing some evidence of a few intraday trades taken by my fellow successful (or so-called) intraday traders, but he dismissed my case with one strong statement, In the long run, intraday trading doesnt work! It was a devastating statement for me as I really wanted to become a successful intraday trader and at that moment, I thought every successful trader would make money (or at least believes its possible to make money) through intraday trading.

It took a few days for me to digest this statement, but I didnt lose hope as my heart was still beating for intraday trading. I continued to work on my intraday trading techniques, and I explored Market profile along with a friend. We began decoding the market profile techniques to the Indian market conditions and began to witness good results with our intraday trades. Meanwhile, my friend stayed in touch with that investment advisor, and he used to share regular updates with us during live market hours. After several days, I got another opportunity to interact with the famous investment advisor alone, and once again our discussion started with intraday trading. This time, though, I was equipped with results and proof of success in intraday trading.