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One Good Trade

One good Trade by Sanando Das

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lucky_brijesh
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607 views16 pages

One Good Trade

One good Trade by Sanando Das

Uploaded by

lucky_brijesh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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One Good Trade

Saanando Das
One Good Trade -

•This trade has an immense profit making potential – 5-6 times return or more –
depending on the risk appetite – Even safest retail players can generate 3-4
times return
•Mother of all sell trade & Mother of all buy trade
•Which trade is that? – everyone talks about it – movies are made about that
trade
•Not just one trade but a series of trades
Catch in this trade
•This trade usually comes once in 8 years/decade but be assured that it would
come
•if you are lucky enough – you get two such opportunities within a span of few
years once in maybe 30/40 years – this decade could be the one
Requirements of securities, data & capital

• U.S. 10-year bond yield


• U.S. 2-year bond yield
• U.S. 3-month Libor
• Crude oil
• Equity indices (Nifty50, S&P500,NASDAQ100, Hang Seng, FAANG etc.)
• Gold
• Japanese yen
• Silver
• NFP report
• Options
• Sentiment analysis & USDJPY
• Capital requirement – more the merrier but do not mortgage your home – 5-10 lacs
would be good. If you have less – you have to adjust your trades accordingly.
Can we predict future?
•Fundamental analysis have the potential to predict not the future but certain parts of it and we
are going to take advantage of that.
•Which market has the ability among the most to predict the future – guess?
•Every major downturn in the market has been associated with a recession in the United States –
why U.S. matters? - 60% global reserve of USD – world’s biggest bond market followed by Japan
– share in global equity market capitalization - 40% - example 2020, 2008, 2000
•So, we will try and predict a recession in the United States
How to predict a looming U.S. recession?
How to predict a looming U.S. recession?
How to predict a looming U.S. recession?
How to trade?
•Keep a lookout for the recession omen.
•Step 2 – confirm the negative value in 10-year U.S. treasury yield and 3-month Libor spread
•Step 3 – sell the market? – No. A euphoria would be reached in the market before selloff – so
buy not sell
•Step – 4 – start building long positions in gold (petal/guinea ETF etc.) and silver –depending
upon your capital and risk appetite but not aggressively as we would continue this for the next
1-2 years
• step 5 - buy the equity market after omen is confirmed using 10y – LIBOR spread– using call
options/future- outlook minimum 3 months for those risk averse – those with higher risk
appetite can wait for the sell signal.
Sell signal -
•Wait for the 10y-2y to return to positive territory – somewhere around 20 bps.
•Sell signal -Monthly sell breakout in Nifty50 on closing basis.
•Key confirmation 1– monthly sell breakout in S&P500, DAX, NASDAQ100, Eurostoxx50, Dow
Jones
•Key confirmation 2– monthly sell breakout in NYMEX crude oil
•Key confirmation 3 – Upside break in INDIAVIX and USVIX (monthly)
•Characteristic of the selloff – all break will come very close to each other. Possibly same month.
First there will be a two-week break followed by the sell break in the same month or early next
month
•Check sentiment indicators for follow-up confirmations and NFP reports which should keep on
reporting job losses
What to trade after sell signal?
•Buy Nifty put options and sell call options to fund the puts/ sell nifty future – longest month
possible and continue to add short positions in every month breakout and every 2 week support
break
•Buy crude oil put options and sell future
•Continue to buy gold at a moderate pace and aggressively when the USD starts to decline later
after central banks’ action
•Buy Yen against USD and INR
•Those who are risk averse can do covered put or bear spread trades
•Extremely risk averse people – avoid selloff
•You don’t book quickly as this is the mother of all sell except for roll overs
Exiting the sell trades
•First exit –
•Exit 30% short positions in indices as monthly Relative Strength Index in Nifty reaches 30-25
level – exit 20% crude oil short positions– if you are a cautious player – more risk aggressive
people can exit higher quantity in second exit.
•Second exit – Exit 60-70% equity short positions as RSI reaches 25-20 area. Exit 60% short
positions in crude oil –
•Final exit – RSI reaches in below 20 level in Monthly Nifty and in price monthly high break by the
bulls of previous month on a closing basis. The candle should be a strong buy candle.
•Key confirmation – key downside break in weekly chart of VIX
Is it over?

Nope. Now, we need to do the opposite.


How to trade?
•Once you get all the exit confirmation – RSI at 30, VIX downside break in Weekly, Monthly break
in Nifty – best is two months –
1. Aggressively buy Nifty50 call options and bull call spread for the next 6 months-1 year at
every monthly high break and two weekly high break – buy large quantities of out of the 3-
month calls for aggravated return
2. Start building long positions in crude oil futures/options with a target of 6 months to 1 year
rollover
3. Buy ETFs of Hang Seng, NASDAQ100, FAANG
4. After 3-6 months of equity breakout, you start winding your gold portfolio within next 3-5
months and reinvest in individual stocks
5. After 9-months to 1 –year liquidate all your derivative positions and invest the money in
stocks
Now, its done

Enjoy your early retirement fund


HOMEWORK

•Add securities to your different portfolio – 3 portfolios in


investing.com – bonds, commodities and currencies
•Bonds – UK/US/Germany/Japan/ India – 1,2,5,10 year
•Commodities – precious metals and base metals –
LME/COMEX and MCX
•Dollar index and USDINR

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