Trading Strategies Using Technical Analysis
- Thread starter SwingKing
- Start date
- Tags trading strategies
Hi,
Out of 1 lac, @ 2% risk on each stock, @ 6% of total risk, @ 1/5th of capital on each stock, how to manage 100% deployment of full capital ?
Help is appreciated.
Doubt is eloborately posted here.
http://www.traderji.com/beginners-guide/39632-come-into-traders-den-57.html#post479791
Out of 1 lac, @ 2% risk on each stock, @ 6% of total risk, @ 1/5th of capital on each stock, how to manage 100% deployment of full capital ?
Help is appreciated.
Doubt is eloborately posted here.
http://www.traderji.com/beginners-guide/39632-come-into-traders-den-57.html#post479791
Veluri,
Good question. Let me answer this from two perspectives.
Perspective 1
Assuming I have Rs. 1 Lac to invest, I would not be using What Elder has prescribed. Every trader has a different style of trading and position sizing and hence what Elder has described suites his style. In my opinion, most of the traders misinterpret what Elder has explained.
His way of position sizing deals with accounts which are of much higher rupee value. For portfolios of smaller rupee value, it is always better to position size by fixed equity method. That is, dividing 1 lac into 4 equal parts and investing the concerned amount in 4 different entities. I won't be too concerned about the 6% or 10% or X% rule. If the methodology is robust, then rest of the things automatically fall into place.
See, When I trade, I need to ensure that my wins are meaningful to me. Now If I position size conservatively on 1 Lac and win Rs. 1000 (1%), then that win is not that meaningful to me. This is precisely why making higher returns is much easier if one has portfolio of higher rupee value.
Perspective 2
Here's another way one can approach position sizing in small rupee value portfolio. Lets say I select 4 scripts on 1 lac Portfolio. I will start off by investing only Rs. 5000 on each. Since winning % of most methodologies is 30-40%, I would expect only one to do well in this list. I would keep adding 5000 on every 5% move in the winning stock. This way, in the end my gains in portfolio % terms will be very high and if neither of them work, then I will take a loss of X% on only Rs 20,000 (5000 * 4). Remember, we are only averaging up and not averaging down. I personally follow this position sizing method with some minor altercations when I invest. This way I loose less and gain a lot more.
Tc
Good question. Let me answer this from two perspectives.
Perspective 1
Assuming I have Rs. 1 Lac to invest, I would not be using What Elder has prescribed. Every trader has a different style of trading and position sizing and hence what Elder has described suites his style. In my opinion, most of the traders misinterpret what Elder has explained.
His way of position sizing deals with accounts which are of much higher rupee value. For portfolios of smaller rupee value, it is always better to position size by fixed equity method. That is, dividing 1 lac into 4 equal parts and investing the concerned amount in 4 different entities. I won't be too concerned about the 6% or 10% or X% rule. If the methodology is robust, then rest of the things automatically fall into place.
See, When I trade, I need to ensure that my wins are meaningful to me. Now If I position size conservatively on 1 Lac and win Rs. 1000 (1%), then that win is not that meaningful to me. This is precisely why making higher returns is much easier if one has portfolio of higher rupee value.
Perspective 2
Here's another way one can approach position sizing in small rupee value portfolio. Lets say I select 4 scripts on 1 lac Portfolio. I will start off by investing only Rs. 5000 on each. Since winning % of most methodologies is 30-40%, I would expect only one to do well in this list. I would keep adding 5000 on every 5% move in the winning stock. This way, in the end my gains in portfolio % terms will be very high and if neither of them work, then I will take a loss of X% on only Rs 20,000 (5000 * 4). Remember, we are only averaging up and not averaging down. I personally follow this position sizing method with some minor altercations when I invest. This way I loose less and gain a lot more.
Tc
Code:
Script Comment Traded Price Current Price Exit Gain/Loss
ACE Buy 66 65.25 -1.15
Ahmednagar Forgings Buy 126.68 141.85 10.69
Ansal Prop Buy 95.84 89 89 -7.69
Bata India Buy 345.05 331.55 -4.07
Finolex Cables Buy 59.74 64.3 7.09
National Fertilizers Buy 128.9 125.75 -2.5
Sesa Goa Buy 374.81 353 353 -6.18
KPIT Buy 169.54 164.25 -3.22
MunjalShow Buy 62.28 64.3 3.14
Parsvanath Buy 70.27 68.55 68.55 -2.51
Patni Buy 467.13 470 470 0.61
Banco India Buy 112.01 111.5 111.5 -0.46
TCS Buy
Lupin Labs Buy
Ing Vyasa Bank Buy
JB Chem and Pharma Buy
Gemini Communication BuyWill be buying,
Lanco Inds
JK Cement
3i Infotech
Bharti Shipyard
Vardhman Acr
Sona Koyo Steer
Jain Irrigation
Graphite
From above list, we will be exiting Gemini Communication. Bought a Z grade stock accidentally.
Tc
dear raunak,
now, all are investing in gold. so...i am also thinking same, but it is very high ( life time ) now, that's why, instead buy at once, i am thinking to make sip.what is your openion about this stock to make sip for long time investment. and if it is not correct choice, pls. suggest good one.
tnx,
now, all are investing in gold. so...i am also thinking same, but it is very high ( life time ) now, that's why, instead buy at once, i am thinking to make sip.what is your openion about this stock to make sip for long time investment. and if it is not correct choice, pls. suggest good one.
tnx,
Gold mining business is just like the oil exploration business, where there is a high degree of uncertainty involved. Nobody knows whether the amount that is being spent for the exploration process will really yield any results or will have to be written off.But these company is something which can yield windfalls of gains in the long run.
Even if deccan gold gets no mines people would always look at it to be the proxy play.The management has guided a revenue figure of around 300-400crs for 10-11.
As the industry has got a very high operating margin even if deccan gold delivers half of that revenue it would attract tremendous buying attention from all sorts of investors fraternity.So a company which would reward you on hope and if its gets any gold mines,be rest assured this would be your next multibagger then.
Despite all these one can still prefer to stay away from this stock.
Saivenkat
Deccan gold mine is the only listed company engaged in the gold exploration sector.Deccan gold has got close to about 10,000 square kilometer of prospective blocks in different states.India produces just 3 tonne of gold per annum as compared to 300 tonne, produced by Australia.
Gold mining business is just like the oil exploration business, where there is a high degree of uncertainty involved. Nobody knows whether the amount that is being spent for the exploration process will really yield any results or will have to be written off.But these company is something which can yield windfalls of gains in the long run.
Even if deccan gold gets no mines people would always look at it to be the proxy play.The management has guided a revenue figure of around 300-400crs for 10-11.
As the industry has got a very high operating margin even if deccan gold delivers half of that revenue it would attract tremendous buying attention from all sorts of investors fraternity.So a company which would reward you on hope and if its gets any gold mines,be rest assured this would be your next multibagger then.
Despite all these one can still prefer to stay away from this stock.
Saivenkat
Gold mining business is just like the oil exploration business, where there is a high degree of uncertainty involved. Nobody knows whether the amount that is being spent for the exploration process will really yield any results or will have to be written off.But these company is something which can yield windfalls of gains in the long run.
Even if deccan gold gets no mines people would always look at it to be the proxy play.The management has guided a revenue figure of around 300-400crs for 10-11.
As the industry has got a very high operating margin even if deccan gold delivers half of that revenue it would attract tremendous buying attention from all sorts of investors fraternity.So a company which would reward you on hope and if its gets any gold mines,be rest assured this would be your next multibagger then.
Despite all these one can still prefer to stay away from this stock.
Saivenkat
I rely more on common sense. I like to be late but I like to be sure. To me Chart 2 and 3 appeal more. Chart 1 I guess I won't even think of entering. I have 300+ stocks in my database fully fundamentally researched which should move. But they don't. Hence, I think it is my naiveness that I prefer to stay in charts 2 and 3. Chart 1 I feel is for pro's to bet on.
Hence, I will let this Multi Bagger move first before trying to enter.
Chart 1
Chart 2
Chart 3
Tc
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