how to deal between stop loss and long term investment

#1
friends,

most of the time i came to listen that follow strict stop loss, and invest for long term .
If i invest for long term what to do about stop loss.:confused:
 
#2
friends,

most of the time i came to listen that follow strict stop loss, and invest for long term .
If i invest for long term what to do about stop loss.:confused:
Follow strict stoploss is the advice for traders ( though investors also need to have some kind of stoploss, however deep it may be....).......invest for long term is for investors.......both are entirely different in respect of their time horizons, returns expected, leverage they take.....

Smart_trade
 

AW10

Well-Known Member
#3

rkkarnani

Well-Known Member
#4
friends,

most of the time i came to listen that follow strict stop loss, and invest for long term .
If i invest for long term what to do about stop loss.:confused:
If you are following FA (Fundamental Analysis) "only" to Invest in a Stock for Log Term do not usually have a SL.
Since you are refering to a SL it has to be that it is about TA, so agree to what is said by ST and AW .
We have smaller SL in smaller TF, the people trading Intraday have smaller SL. People following EOD charts have bigger and those following weekly will have still bigger SL. SL is a must! In case of loooong term it may be a bit deep!
 

deneb

Well-Known Member
#5
Investing does not mean buying and forgetting. Though most people think along that lines. In my view there is no stop loss in investing. You have to make periodic review of your investments and take appropriate decisions based on it. It is not easy as people make it sound.

If you buy a stock for growth investing when you are convinced of the future prospects of the company, after making proper checkups on the background of the company and the promoter. You sell out of the company the growth in your view for which you invested is doubtful or is not possible.

If you buy a stock for the inherent value it is offering ie a stock trading at a much lower price than it should taking all factors into consideration and making adequate management and company debt situations you look to sell out when the companys share price reaches its fair value, unless the company becomes a growth story.

However consider the fact that both value and growth are subjective. And different methods are adopted by different people to calculate the same.

The basic point I wanted to make was that more than stop loss you need to track the current news of the company and evaluate its future as the stock price may take violent swings on some "breaking news".Which you may find in latter days was not so "breaking" for the prospects of the company for which you invested in the first place.
 

praveen taneja

Well-Known Member
#6
Investing means, making more money on your money towards increasing your wealth. An investment is anything you purchase for future income or benefit. In other words, anything not consumed today and saved for future use can be considered an investment. Income earned from your investments and any appreciation in the value of your investments increases your wealth. Before we take a look at the different financial products, it is important to know the basic principles of investing!

Investment refers to a placement of funds in some assets that will be held over some period of time with the expectation that the funds will grow. Each one of us has assets of some kind, ranging from physical assets to financial assets. For our purposes, investment will mean a measurable asset retained in order to increase one's personal wealth.

The prime motive behind investing is that we want to improve our future welfare. Sources of funds may be from assets already owned, savings or foregone consumption or borrowed money. By foregoing consumption today and investing the savings, we expect to enhance our future consumption possibilities. Anticipated future consumption may be by other family members, such as education funds for children or by ourselves, possibly in retirement when we are less able to work and produce for our daily needs. Regardless of why we invest we should all seek to manage our wealth effectively, obtaining the most from it. This includes protecting our assets from inflation, taxes and other factors.


The sooner one starts investing the better. Your investments get more time to grow, whereby the concept of compounding (as we shall see later) increases your income, by accumulating the principal and the interest or dividend earned on it, year after year.


Three rules of investment:

•Invest early
•Invest regularly
•Invest for long term and not short term


•Invest Early: The sooner you start the better. Start investing in small amounts, continuously for a long time, money grows due to the power of compounding. If you start investing when you are single you will be able to save maximum. The best policy is to start saving from the moment you begin earning.
•Invest Regularly: Develop the habit of adding to your recurring deposit / systematic investment plan of mutual fund / deferred annuity account on a regular basis, perhaps monthly or quarterly. By investing regularly with SIP of mutual funds you take advantage of a strategy called rupee-cost averaging. Regular investing, however, does not ensure a profit or protect against loss in declining market scenario.
•Invest for Long Term and Not Short Term: If you decide that your money can work for you over a long period of time, then better compounding works. Consider this: Rs 1,000 invested at 8% earns Rs. 80. Left to compound, the original Rs.1,000, plus accumulated interest, will earn Rs.160 in the 10th year, Rs.507 in the 25th year, and Rs.1,609 in the 40th year -- returns of 16%, 51%, and 161%, respectively, on the initial Rs.1,000.

The proper choice of investment instrument can actually make it almost simple to realize your goals. In other words, right choice of investment will improve your present life and let you look ahead to the future too. It allows you to understand how today's financial decision affects other areas of your finances. For example, buying a particular investment product might help you pay off your housing loan faster or it helps to support your retirement significantly. One must view each financial decision as part of a whole and also consider its short and long-term effects on your financial objectives. Surprisingly, many of us do not have any type of formalized investment plan in place.
 

rkkarnani

Well-Known Member
#7
Investing does not mean buying and forgetting. Though most people think along that lines. In my view there is no stop loss in investing. You have to make periodic review of your investments and take appropriate decisions based on it. It is not easy as people make it sound.

If you buy a stock for growth investing when you are convinced of the future prospects of the company, after making proper checkups on the background of the company and the promoter. You sell out of the company the growth in your view for which you invested is doubtful or is not possible.

If you buy a stock for the inherent value it is offering ie a stock trading at a much lower price than it should taking all factors into consideration and making adequate management and company debt situations you look to sell out when the companys share price reaches its fair value, unless the company becomes a growth story.

However consider the fact that both value and growth are subjective. And different methods are adopted by different people to calculate the same.

The basic point I wanted to make was that more than stop loss you need to track the current news of the company and evaluate its future as the stock price may take violent swings on some "breaking news".Which you may find in latter days was not so "breaking" for the prospects of the company for which you invested in the first place.
Deneb, The basic premise with which the Techinical Analysts work is : "Price discounts all the fundamentals and current News!! TA's believe that the movement in price reflects the "results" before the same are published for general Public!!
 

Similar threads