Nepse Trading Advisors

FAQs

FAQs- FREQUENTLY ASKED QUESTIONS​

Our courses are for anyone who is interested in building the foundational understanding supply/demand concepts and institutional order flows and risk management. This is NOT for those who are looking for a get rich quick scheme.

 

No, premium classes is not free. 

There is modest fee for this course, because we need to cover costs to maintain the website and other additional hosting costs etc.

We are running an exciting promotion for first set of paying customers for limited time only!

For those of you who are determined to master these concepts, we believe our courses provide tremendous value! You are welcome to try and cancel it once you master the concepts. 

We recommend that you take the free classes first, attend free live webinars, and then if you like our approach try the premium class. 

Joining Premium Class is optional but we think will give you tremendous value in a long term.

Yes, we offer a free course. You can access the content directly by signing up for the free class.  Sign up and try it for yourself.

 

No. There is no shortcut to success. If you want to master these ideas, you need to learn the concepts, practice by applying them and then build the mindset and work towards improving yourself. We will give you the tools that you need to succeed.

We repeat- some of these concepts come naturally and quickly to some people. But to master a skill, everybody needs to put in the time. Remember learning how to ride a bicycle!

No, this is not the only approach to do technical analysis. But this is the process used by  large fund and money managers to make risk-managed trading decisions.

High time frame structure gives the current sentiment of the market sentiment. These techniques will give you a solid foundation for you to build a profitable system. 

This is not a signal service. We offer education & training  and give you conceptual framework.We basically teach you how to fish and become successful on your own.  

We have also built a community who are eager to learn and improve.

Trade ideas are valid until the invalidation (or stop loss) level has been hit. If you are not familiar with these concepts, you can check out the course materials to build your understanding. 

No, in our opinion, there is no 1 size fit fits all solution for everybody and it differs based on your own risk appetite & goals. In our personal opinion, there are 3 different approaches (or any combinations of them) that you can do while using technical analysis to guide your decision making:

  1. Fundamental Analysis – Investing in a business venture with solid macro fundamentals and consistent revenues and cashflows increases your probability that the business may continue to do well in future
  2. Diversification:  It is never a good idea to put all the eggs in a basket, even if it does a 1000% one time. You can allocate you portfolio across sectors (for example, diversifying across industries or different companies within an industry may become more profitable
  3. Risk Management or Money Management: Risk Management Risk Management Risk Management. We are repeating this for over-emphasis. It is the only way that will help you limit your downside losses while increasing your upside potential. Do not bet your house on 1 trade idea no matter how good you are. 

No, but it definitely helps to build a foundational process applied by seasoned professionals.

As  we have emphasized in our classes, technical analysis is a discipline that allows you to take higher probability risk-defined trades and help you understand the market psychology and market structure and cycles.  Technical Analysis definitely assists you to gauge the market psychology of seasoned market participants.

Having a foundational understanding in market psychology simply increases your probability that the trade you are taking has a high chances of working. This is because we believe broader market sentiment is captured in the price charts. 

Learning and understanding technical analysis helps you become a better risk manager, in my opinion, a trader is a risk manager regardless of the size of your account.

As we cover in our introductory videos, lines/zones are price regions simply mark out price regions where broader market may have some interest in initiating positions.

Note, they do not have to be precise numbers and perfect. In our backtesting and study of the markets,  where large market participants that trade in a size that can make directional moves in the market. By identifying these zones, one can increase the probability of being on the right side of the markets and winning a trade or position.  

No, there are many ways to build a profitable trading system.

Any  investor/trader can build  profitable trading systems that uses many different tools like MA and Oscillators like RSI/MACD.

So, if you would like to use that into your system, then there is nothing wrong with adding these toolsets. But you should master the core reason why market moves and understand common pattern that occur in the markets and WHY they occur.

Our approach here is focused on  demand/supply and key high time frame (HTF areas) to increase the likelihood of trade ideas working out.

Remember, market is an ocean of possibilities. DO NOT go looking for certainty, because no one can predict future with 100% certainty. Technical analysis just helps improve your chances of being right more often.  Having said that, you can still build a profitable system by managing your risk properly. 

We recommend mastering the basics first before exploring indicators.

Trial and error and getting training in market fundamentals as well as discipline like Technical Analysis.

When you are trying out and building your system, please make sure that you are risking very small portion of your account and observing how the market participants respond to certain fundamental news and  more important how the price either changes directions or breaks out (continues) in the direction of previous swings in key high time frame price levels, areas/zones/pivots.

You can also paper trade and track your results before risking your real hard-earned money.

If you have a fundamental knowledge of the company/companies you are investing in, then you are already starting out from a good place. 

No. While this is not a signal service and we do not give investment advice,  Trade plans are simply ideas and high probability trade ideas. The best way to think about this is, if this happens, we anticipate that market is highly likely to follow this path. But if entry conditions are not met, the trade is not triggered.

It is very likely that the market moves in a completely different direction. 3 things could happen to a trading plan:

  1. It will never trigger (the market has different ideas and moves in a completely unpredictable way (due to fundamental news, political situations, or from a number of underlying reasons we do not know of(only insiders, large players) could have such information. 
  2. It will trigger and once you initiate the position, it will hit the take profit in some time period (a positive outcome)
  3. It will trigger but instead of a positive outcome, it will hit the Stop loss or invalidation price level leading to a negative outcome. 

Just remember we do not control the outcome of the market.

Let go of that illusion that you control the outcome and simply accept the results you get from the market. If you manage risk, you may become profitable over time. 

  To understand market psychology and become a better risk manager (only thing you can control) and take advantage from it. 

A technical trader is well versed in broad market fundamentals/dynamics and knows his/her plans precisely  before doing business (or taking a trade). Technical trader has all this planned well in advance: Thesis/reason, Conviction, Entry, Invalidation and Take profit targets and properly manages risk. 

To elaborate, thesis is simply a reason for being interested in a stock, trigger – a condition that the market/price should satisfy to give a green light to initiate a position.

Technical trader documents everything, reviews what works, backtests, and hones his/her skills to increase his/her probability of being on the right side of the outcome.

Stop loss- Price level/area where my idea for initiating position is wrong.  This simply means that (other market participants that trade in considerable size that can move the market) are making a bet in a different direction. If stop loss is hit, your thesis/idea for being in a position is wrong and you are better off not being in the position.

If you had bought a stock and used stop loss to exit the market, that means you are selling the stock with a loss.  It simply means that market had different ideas that invalidated your thesis and conviction.

As an illustration, think of entering markets as taking a bus blind folded and you do not know which direction you are headed. Stop loss is the station that you had pre determined and if you arrive there, then you want to exit that bus  and try another trade because you think that the bus is headed the wrong way.

If you risk just a small portion of your account in a trade, then exiting a position should not be a problem. However, it is a completely different story if you have invested a large portion of your net worth in a position.

That’s why risk management/money management is the key tool for a technical trader or frankly any investor. If you are a long term investor, and have a high conviction then having a stop loss of 0 is ok. If that’s how you plan your trade, then you should accept the result or do not let short term fluctuations cause emotional pain. 

As a risk manager, stop loss helps you to help calculate how many shares you should purchase based on your account size. It is perfectly ok to have a  stop loss=0, if you are a long term investor. 

A commonly used practice is to risk a certain % of your account in a trade idea. Refer to the lesson, Position sizing and risk Management to understand this concept better.

Please go through our  lessons on Deep Dive into Risk Management to learn about what a trading system is.

You will build a foundational understanding of  Risk Reward Ratio, Statistical Edge and why you do not need to win every trade to be profitable (as long as you have back tested your system and it has proven to be profitable overtime.

The reason for why it works is conceptually when you are wrong, your downside is limited and your wins exceed your losses which slowly will help you grow your balance. Your system means your decision making, types of set ups you take as you make similar decisions per your system and you consistently make similar decisions that eventually lead to positive outcomes from the trades you take.

Technical Traders can not predict price with 100% accuracy everytime. In fact noone can and you should not attempt it either.

Technical traders are market participants just like everybody else. Traders that utilize technical trading for short term trading/investing have a system backed by data that helps them become consistently profitable in the market and make trades that lead to favorable outcomes (not hitting stop loss but hitting take profit).

Being consistent requires broader understanding of macro economic factors, interest rate, market sentiment and profitability of company/companies that you are interested in and making risk managed decisions to protect downside while taking high probability set ups and winning over-TIME NOT over-NIGHT.

Typically if you take a position and stay with it for days/weeks/months that you are a swing trader. My trade ideas are usually swing trades and take a long time to trigger.

Trigger means the condition “IF” it happens than the conditions are met for one to initiate the position by managing risks.

Trigger basically gives me or any other trader the go-ahead to take action with the possibility that the market may move in a favorable direction for my trade. If a trade is triggered and you initiate a position because risk-reward favors you to take the position you had planned well in advance.

After taking a position,  there are only 2 possible outcomes. It either hits the take profit targets eventually or stops out and takes me out of the position. Of course, you can always close your position. 

Trading psychology is a big focus in everything we do here.  Good traders or  veteran traders understand that entering in a trade does not guarantee a positive outcome.

However even for a veteran traders, there can be a series of consecutive losses or drawdowns. This leads to feelings of self doubt (mental anxiety) and uncertainty about your tools and techniques that you have developed over time and established it to be profitable.

That’s why it takes a very strong discipline to trust your system(not just your gut) even though your system is backed by data. Failing to master the psychology, junior or developing traders are likely to double down their risk during a string of consecutive losses and dig a much deeper hole where it may be very hard to come back from.

It will continue as long as Demand> Supply of assets in the market. In other words, it will last until there are still larger number of buyers in the market  willing to buy an asset at a higher price.

Once this ends, then sellers (people who take short positions) or who simply sell at profit or loss will win and market will go down. This is oversimplification of course, but lots of other macro factors(interest rate, market sentiment, liquidity, leverages come into play). 

Best way to understand this in price chart is to revisit the market psychology chart. 

I refer to the market shifting as – when the music stops, the dancing stops.

The key concept to understand is that market moves in cycles and what should matter to you is that you need to make decisions based on your personal preference,  time horizon and risk profile.  For instance, money secured in your pension account/retirement accounts vs a small portion of your account could be used for trading purposes. 

BUY and HOLD for the long term is also a perfectly profitable strategy. Most famous investors in the world have made their fortunes by buying and holding on to great cash-generating businesses, which is why they are not fazed by a slight blip in the market cycle. 

Government and Nepal Rastra Bank’s monetary policies may impact the market cycle because they control the money supply and set interest rate policy that is critical in determining the fate of the markets. If you are not familiar with these concepts, please review the Risk On Off lessons and the associated Ebook to research this topic further along with detailed blogs and lessons. 

I believe this is typical human behaviour. When we are in a position (you  have bought share in a company), we tend to be more sensitive to price movements because our profit and loss fluctuate based on current market price.

Self-doubt, fear, uncertainty and doubt creep in. But AFTER the move has happened, it becomes obvious that either the buyers or sellers have stepped in. After getting solid training in TA and market cycles, you have the tools and techniques to “anticipate the move” before it happens with a higher accuracy rate.

Again, there is no certainty. You just improve your chances of getting the moves right.

In other words, it allows you to build a system that gives you an edge over the market. You can learn from those market moves/reactions and recognize the pattern such as which side between demand or supply has won. Then, you can use it as a guide when you see a similar market structure in the future.

Do note: Market moves may have triggered due to some fundamental news or earnings that may have given a catalyst to the market to make such decisive moves as well. Or moves could just be random because some big buyers/sellers settled into that market. 

According to Investopedia,  Liquidity refers to the ease with which an asset or security can be converted into cash without affecting its market price. 

More liquid an asset is easier it is for it to be exchanged. 

That’s why market tends to move towards levels/areas/regions/zones where there is liquidity (where more number of market participants are willing to enter/exit the market.

We will also refer to liquidity as “orders” or price levels/zones where there could be potential liquidity for simplification. 

Another way of thinking about liquidity is “orders” in the market. The more orders there are at a particular price point, the higher the liquidity is at that price point. Markets tend to “be attracted” to the orders. 

Source:  https://www.investopedia.com/terms/l/liquidity.asp

Like the majority of transactions in life, it requires a willing buyer and seller. Online trading platforms provide an open and efficient marketplace where buyers and sellers come together to express their views in the market and take a side (buy or sell side) in a security with an aim to maximize their profits or limit their losses. 

It just means that market is finding buying interesting or buyers/bulls are supporting price at a certain price area/region. In simpler terms, market finding support means that there are buy orders in that region keeping the price up. 

No, make sure you take the ones that are ready and meets your entry criteria and rules and time frame. I do the same thing. I may analyse a few and will take only the best set ups that meets my rules.

KEY here is RISK management, diversification and avoiding cross correlation. What I mean by cross correlation is, if you are wanting to buy big banks, it is likely that they “may  move” in the same direction unless fundamentals do not support it.

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