Why I Recommend Not to trade in Futures: A Case Study

1. I received a comment from MR Piyush Jain and his comment is listed below for the benefit of all the readers:

HI i m piyush jain & i had put my self in big trouble i had bought a RIL Feb Future (two lot) few day ago in 3120 now market has fallen so plz can u suggest me what to do & what would be the target of ril in feb & also i had power grid feb future (one lot) around 145 so let me know about this if possible.

2. I have deliberately never recommended trading in Futures because it is a systematic way of losing wealth and above comment shows the mental agony of the reader.

3. Dear Piyush Jain; I fully understand that you must be undergoing mental agony but now error commited can be only rectified if one has cash as I have always suggested that trade in Futures only if you have the cash to buy the whole lot.

4. I do not think that you have cash to buy the whole lot because if you had cash probably your agony would have had become notional.

5. Option I: Buy both lots in cash and hold as both stocks have a good future.

6. Option II: Reliance has a strong resistance at 2852-2923-3046 and thereafter it can take off. Wait with Reliance as market will again peak prior to budget i.e. before the end of february month.

7. Option III: Wait for Listing of Reliance Power IPO as Reliance may show a run up when people cash out of Relaince power IPO with listing gains and will reinvest in Reliance as reliance is a better bet than Reliance Power.

8. Option IV: Holding Reliance has a tatget of Rs 3800 with a one year time frame. alternatively wait for few days to let market show its clear direction but presently both NIfty and Sensex are in down trend.

9. Option V: Book loss when it breaks by 8% as suggested in cutting losses in my previous post.

10. Ray of Hope: Reliance Power IPO has sucked Liquidity and our market has mirrored the trend of Asian market. It is possible for market to show a technical bounce back.

11. Warning: Major support for Reliance was 2839 and same has been broken and thus till the time it moves above that level Reliance will remain bearish.

12. Power Grid major supports are 134-137-141 and if it sustains above 135.1 than one may think of some recovery.

13. Take your decision with a cool head and if you can manage finances than nothing can beat it as both stocks are good stocks in cash segment.

14. Dear Piyush, I am mentally anguished & I stand by with you during the need of hour and thus ask you to feel free to post your any query and I will try to be most prompt to help you get out of the problem and will give you a researched reply. Do let me know your holding capacity in terms of cash to finalise any further strategy. Do not consider me wrong by putting your comment in show window as my aim is to ensure that lets all learn from each other mistakes and do not commit same mistakes again.

15. Note : I have given important key levels for the stock and your fresh strategy can be only devised dependent on your cash holding. Moreover stop trading forthwith as you will accumulate losses and make it a point not to trade in any fresh stock till this problem is resolved as you are bound to commit more mistakes.

16. On the lighter side "Each one among is in Shit but only the depth varies". Try to have a sound sleep which I know is difficult but let us all get together and post experiences in form of comments and any insider information so that our esteemed reader can get out of the problem. Do not worry about not following mine advice regarding not investing in futures as had one not been breaking advices and rules probably we may not have had advanced so much as inquisitiveness is the key to growth.
Regards