My stupid trading strategy

It is a contra strategy. It is good that so early in your trading you are practising target and stop loss. Now try the "trend is friend" trick for breakeven after expenses. If you can sustain it, you will learn cherry picking by instinct.

yes its stupid strategy. if 1% reaction occurs it will be fast that you might miss it....and logic of since they fallen by huge margin....such things dont work in market.

my advice is ...watch and observe market and few stocks for few days. observe thier movements...rallys, corrections...familiarize your self with stock behavior and market. then start thinking about 1% rallys and corrections....you will do better...
you can do this by charts or just by reading price volume change.....


Nevertheless if you want try that strategy than go ahead and do it....with limit of 10 trades and than review the performance and see if it suits you. again 10 trades and review...do this 2-3 times to see if this strategy works or not..

I am a finance student and a newbie at trading. I have just thought of a simple trading strategy and want your advice on it. Suppose, I have around 1 lakh rupees for trading. Now, I look at previous day's top losers. For example let's say yesterday's top losers in nse were Sail and SBI. So I expect the stock to appreciate by at least 1% today (since they have fallen by a huge margin yesterday). So I buy any 2 such stocks in 2 different industries (in my case, steel and banking which I feel minimizes risk) at Rs 50,000 each. Then give a sell order for 1% above purchase price and stop loss 1% below purchase price. If the markets are good both stocks would appreciate by 1% giving me a profit of Rs 1000. Thus, I can hope to make a Rs 1,000 everyday. If the markets are bad then a loss of Rs 1000 but if 1 stock performs well and other doesn't they will have a negating effect as both stocks are form different industries.

I just want to know what you experts think of my trading strategy? I know it's stupid but please do advice me as this a learning phase for me. Thank you.

Hi

You should not talk about a stupid strategy. You better call it a question about a strategy.

Have you ever thought to use options instead of putting 50'000 R on the table for one or two shares?

With one option your risk is less as you need less money. If you think the stock will go up, so buy one at the money option and place a limit sell order by you broker, which includes the one percent move you expect.

If your orders are placed, then you will be filled at the moment your price is hit and not after three hours.

By the way, check this links:

http://www.investopedia.com/dictionary/#axzz1ehjMaRFV

This is a dictionary with hounder'ts of topics to read on.

http://www.investopedia.com/articles/forex/09/trade-with-the-trend.asp#axzz1ehjMaRFV

http://stocks.investopedia.com/stock-analysis/moneyshow/WhatitMeanstoBeContrarian.aspx#axzz1ehkR03wP

Just some thoughts from an option trader.

Good luck

DanPickUp