Trading Strategies Using Technical Analysis
- Thread starter SwingKing
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That's why I said, if its moving let it move.
Volumes are very low though. It's a Z category stock. Not worth a single penny. Can be and should be tracked for some entertainment.
Tc
Volumes are very low though. It's a Z category stock. Not worth a single penny. Can be and should be tracked for some entertainment.
Tc
Bubble of any sort is identified quite easily with the kind of leverage underneath. There has to be something substantial for the bubble to form and for it to burst. Words like crash, bubble are used so frequently by the media these days that even a common investor now understands these terms. In my opinion, any information which is out with the masses has no value at all. Remember, it is information asymmetry which causes markets to move. Not symmetry of information.
As far as PE goes, I think world wide in all economies, PE bands have shifted range. This happens in a growth stock so why can't it happen in a growing economy. When the band shifts, the momentum and prices are bound to expand. I feel currently we are witnessing the same. I don't rule out the possibility of a correction, but I won't anticipate it. If it comes, so be it. I am prepared.
Tc
As far as PE goes, I think world wide in all economies, PE bands have shifted range. This happens in a growth stock so why can't it happen in a growing economy. When the band shifts, the momentum and prices are bound to expand. I feel currently we are witnessing the same. I don't rule out the possibility of a correction, but I won't anticipate it. If it comes, so be it. I am prepared.
Tc
Hi Raunak,
pls confirm me on my Understanding.
1) You anticipate 100% to 300% growth in these stocks in next 2-3year
2) You will have next investment of 10k, only after you see 10% rise on your current investment. You will keep on doing so till you invest 50k in each stock. (With this logic Vis Finance & Wockhardt should have deployed with next lot of 10k)
3) You will come out if you see 20% loss in any script.
I am not clear on following points.
1) We have invested all 50k. Let us take your example & assume our avg price is Rs119. our target is min of Rs200 for this stock. If stock starts falling down before target is hit then what should be SL? Is it Rs95 (20% lower than avg buying price of Rs 119)? or Rs120 (20% lower than your last purchase @Rs150)?
2) What will be exit strategy after hitting target of 100% growth? Will it be, exiting 20% amount everytime in five steps or exit with all the qty in one shot.
- Rahul
pls confirm me on my Understanding.
1) You anticipate 100% to 300% growth in these stocks in next 2-3year
2) You will have next investment of 10k, only after you see 10% rise on your current investment. You will keep on doing so till you invest 50k in each stock. (With this logic Vis Finance & Wockhardt should have deployed with next lot of 10k)
3) You will come out if you see 20% loss in any script.
I am not clear on following points.
1) We have invested all 50k. Let us take your example & assume our avg price is Rs119. our target is min of Rs200 for this stock. If stock starts falling down before target is hit then what should be SL? Is it Rs95 (20% lower than avg buying price of Rs 119)? or Rs120 (20% lower than your last purchase @Rs150)?
2) What will be exit strategy after hitting target of 100% growth? Will it be, exiting 20% amount everytime in five steps or exit with all the qty in one shot.
- Rahul
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Rahul,
For Wockhardt, next lot of Rs. 10,000 has already been deployed today. As far as VLS finance is concerned, I have mentioned earlier that I don't invest in Z category stocks and hence no 'actual' money has been put in the stock. In the given sheet, the scripts given in green color are the one's where actual money has been put in.
Rahul, as we scale in at every 10% jump, we begin to scale out when our positions start coming to the price where we added lots. Only loss we take on add ons is the brokerage loss. For the first lot (Rs. 10,000), I take a loss of X% depending on the volatility of the stock, which typically ranges from 10 - 30%. For every stock this is different.
Regarding exit, if our investment gives 100% return, we start keeping a trailing stop loss. Now this again depends on the volatility the stock is exhibiting. I would never get out of a investment just because it has doubled. On the contrary, once I have 100% returns, I would think about deploying more money in that stock.
We keep going in and out, we keep scaling in and scaling out and this is all done to adjust the alpha and the beta of our portfolio.
Lets see how it goes, we are just testing a new model with real money. We are confident of the performance, lets see what markets have to offer. My aim is to outperform the market. That's it.
Tc
For Wockhardt, next lot of Rs. 10,000 has already been deployed today. As far as VLS finance is concerned, I have mentioned earlier that I don't invest in Z category stocks and hence no 'actual' money has been put in the stock. In the given sheet, the scripts given in green color are the one's where actual money has been put in.
Rahul, as we scale in at every 10% jump, we begin to scale out when our positions start coming to the price where we added lots. Only loss we take on add ons is the brokerage loss. For the first lot (Rs. 10,000), I take a loss of X% depending on the volatility of the stock, which typically ranges from 10 - 30%. For every stock this is different.
Regarding exit, if our investment gives 100% return, we start keeping a trailing stop loss. Now this again depends on the volatility the stock is exhibiting. I would never get out of a investment just because it has doubled. On the contrary, once I have 100% returns, I would think about deploying more money in that stock.
We keep going in and out, we keep scaling in and scaling out and this is all done to adjust the alpha and the beta of our portfolio.
Lets see how it goes, we are just testing a new model with real money. We are confident of the performance, lets see what markets have to offer. My aim is to outperform the market. That's it.
Tc
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Just a word on Investing and trading.
If we have a portfolio, in which alpha is generated with given set of stocks. We need to make sure that when the market goes into volatile phase or starts to correct, short selling becomes an instrument to rebalance the alpha lost by market correction on portfolio.
This is where a trading technique or a system comes in handy. During consolidation, our alpha won't be affected much and we must not get into the frenzy of trading. However, when signs emerge of correction, then we must be prepared to short sell in order to restore the alpha lost in correction. This is how one can be a long term investor and at the same time be a short term trader in order to balance alpha. In other words, Trading instrument simply becomes another portfolio vehicle ensuring alpha generation capability.
Tc
If we have a portfolio, in which alpha is generated with given set of stocks. We need to make sure that when the market goes into volatile phase or starts to correct, short selling becomes an instrument to rebalance the alpha lost by market correction on portfolio.
This is where a trading technique or a system comes in handy. During consolidation, our alpha won't be affected much and we must not get into the frenzy of trading. However, when signs emerge of correction, then we must be prepared to short sell in order to restore the alpha lost in correction. This is how one can be a long term investor and at the same time be a short term trader in order to balance alpha. In other words, Trading instrument simply becomes another portfolio vehicle ensuring alpha generation capability.
Tc
Hi Raunak,
I am tempted to try this out.
But having fear as market at two year's highest level. I am sure you might have discussed this point before starting investment.
Just want to know should I start now? Or wait for couple of months to get one correction phase?
pls let me know which are Z category stocks in your list which are not worth investing.
Also let me know, can I try this with lower value. say Rs2000/lot/stock. Will it be OK? OR I will be spending more on brokrage (Using ICICI)?
I think your aim is much bigger than just out performing. You are aiming for 100% to 300% returns in 2-3 years. Nifty will not be @11000 - 20000 in 2to 3 years.
I think that is the reason I do not see any Index stock in your list.
I am tempted to try this out.
But having fear as market at two year's highest level. I am sure you might have discussed this point before starting investment.
Just want to know should I start now? Or wait for couple of months to get one correction phase?
pls let me know which are Z category stocks in your list which are not worth investing.
Also let me know, can I try this with lower value. say Rs2000/lot/stock. Will it be OK? OR I will be spending more on brokrage (Using ICICI)?
I think your aim is much bigger than just out performing. You are aiming for 100% to 300% returns in 2-3 years. Nifty will not be @11000 - 20000 in 2to 3 years.
I think that is the reason I do not see any Index stock in your list.
Rahul,
Let me answer your query in parts.
1. Index stocks - I am a value investor and there are so many small sized companies which are going to do wonders ahead. Yes, I trade and invest a lot based on Technicals. But, I am very sound on fundamentals too. Most of the companies I buy are either good fundamentally or are expecting a turn around. However, some of the companies which I buy are not so good on fundamentals but are still rallying ahead due to momentum. I still prefer to ride those. In short, I am aiming at growth stocks, momentum stocks and value stocks. This in itself is diversification within diversification.
2. Correction - I am very bullish on India. And I assume India's good years are yet to come. We have our own risks, but I think we will sail through all the hurdles. An economy with every individual wanting to be rich can never go off track. Hunger to survive and to do well in life is what India is all about. Dreaming is essence to enhanced performance and my dear India is full of dreams and aspirations. So, when corrections come, I will trade those to balance my portfolio. But till anything catastrophic happens, I will continue buying. We are investing and we should not be scared of a 10-20% correction. Should we? Keep strict money management rules and be disciplined.
3. Trying this concept - I will strongly encourage you to try this concept and you can comfortably try it with any fixed amount you want. But stay in equities and try this entire sizing concept with your own system and own stocks. I have mentioned earlier, we are trying out things with real money. So, just be careful picking out stocks directly based on the sheet given. We are here to stay for long term and I am not expecting returns in a day or two.
4. List of stocks - When you open the sheet, the list of stocks whose rows are in Green are A category stocks. List of stocks highlighted in orange are Z category stocks.
Tc
Let me answer your query in parts.
1. Index stocks - I am a value investor and there are so many small sized companies which are going to do wonders ahead. Yes, I trade and invest a lot based on Technicals. But, I am very sound on fundamentals too. Most of the companies I buy are either good fundamentally or are expecting a turn around. However, some of the companies which I buy are not so good on fundamentals but are still rallying ahead due to momentum. I still prefer to ride those. In short, I am aiming at growth stocks, momentum stocks and value stocks. This in itself is diversification within diversification.
2. Correction - I am very bullish on India. And I assume India's good years are yet to come. We have our own risks, but I think we will sail through all the hurdles. An economy with every individual wanting to be rich can never go off track. Hunger to survive and to do well in life is what India is all about. Dreaming is essence to enhanced performance and my dear India is full of dreams and aspirations. So, when corrections come, I will trade those to balance my portfolio. But till anything catastrophic happens, I will continue buying. We are investing and we should not be scared of a 10-20% correction. Should we? Keep strict money management rules and be disciplined.
3. Trying this concept - I will strongly encourage you to try this concept and you can comfortably try it with any fixed amount you want. But stay in equities and try this entire sizing concept with your own system and own stocks. I have mentioned earlier, we are trying out things with real money. So, just be careful picking out stocks directly based on the sheet given. We are here to stay for long term and I am not expecting returns in a day or two.
4. List of stocks - When you open the sheet, the list of stocks whose rows are in Green are A category stocks. List of stocks highlighted in orange are Z category stocks.
Tc
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