Intraday Swings In Index Futures
Trading Divergences With Ashwani Gujral
Ashwani Gujral first got acquainted with technical analysis when he was studying for his master's degree in business administration in the US during the mid-1990s - and since then, there's been no turning back. These days, Gujral is an India-based technical analyst, commentator, author, and trainer who follows both Indian and US markets; he's also an active short-term trader and a money manager. He is a frequent contributor to various US trading magazines and makes regular weekly appearances on Indian business television channels. Not only that, he has an Internet presence, as he runs an index futures trading chatroom, as well as a print presence, since he has just published a book called How To Make Money Trading Derivatives: An Insider's Guide. He can be found at www.ashwanigujral.com.STOCKS & COMMODITIES Editor Jayanthi Gopalakrishnan conducted the interview with Gujral via instant messaging on the Internet, starting on January 4, 2005.
Basically, one thing led to another, and it's become my life's mission to create successful traders.
How did you get started in technical analysis?
I did my master's in business administration (MBA) in the US in 1995, which was when I became fascinated by the money management business. The first real gurus I wanted to emulate were Warren Buffett, George Soros, and Peter Lynch.
Not a bad place to start!
Being an engineer and having an MBA in finance certainly helped. As an engineer, I was trained to build frameworks and models to solve problems, and this helped in developing a quantitative and a logical approach to forecasting stock price movements. As an MBA, I was trained to understand business models, so that helped me understand the business of companies whose charts I picked for analysis. This is important because I advise investing in only fundamentally sound and pedigreed companies, even if it is done on the basis of charts. In addition, when I returned to India, I found that technical data was much more easily available than fundamental data. This was one of reasons I chose technical analysis as my methodology for analysis. Back in 1995, I had a hard time just finding annual reports, but of course that has changed. And that's how my fascination with charting began, because that put me on a par with large investment banks with thousands of analysts making the same forecasts.
How so?
I learned that I did not have to decide the trend - all I had to do was to catch the major part of the move. Meanwhile, reforms in Indian capital markets took place, so like the rest of the financial markets around the world, we totally turned away from physical delivery. We had 100% electronic trading in India, followed by the big software boom all over the world. Then, of course, the subsequent bust also affected us.
Again, like the rest of the financial markets.
Earlier, the margin trading and cash markets in India were interlinked, and we had a local financing system called BADLA for buying and selling securities. The problem with that was when people used to build large positions on the margin trading side, the cash also used to come crashing down. Then in 2001, the Indian market was hit with the Ketan Parikh scam.
...Continued in the March issue of Technical Analysis of STOCKS & COMMODITIES
Excerpted from an article originally published in the March 2005 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2005, Technical Analysis, Inc.
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