1. Do not over trade - If your trading capacity is Rs. 2,00,000 then avoid using margin. Infact trade with 1.5 Lakhs only.
2. Diversify- One should diversify his portfolio, invest in different sectors.
3. Buy when vibes are not good that is when stocks are on decline in other words buy at bad news. Sell when prices are high that is when there is good news.
4. Have realistic targets - Don't thinks of making crores in one single day. Market will open daily have realistic targets in your mind and trade with patience.
5. Stoploss - Always follow stoploss. Don’t be afraid of loosing sometime that is also learning experience.
6. Strategy - Don't cut positions in loss before stoploss and don’t exit in minor profit before target. Always wait for target.
7. Don’t always think of buying at low price and sell at higher price. Do not be afraid to buy at high price and sell at lower price.
8. Sell when everyone is buying and Buy when every one is selling.
9. Don’t be a buyer or seller always, Work as per market trend. Always follow market trend.
10. Take Long positions only in companies having strong fundamentally. For short term position find some good stock from speculation point of view.
Tips and advice for smart investors
1. Beware of companies displaying weak accounting.
2. Unintelligible footnotes usually indicate untrustworthy management.
3. Be suspicious of companies that trumpet earnings projections and growth expectations.
4. Suspect those CEOs who regularly claim they do know the future –and we become downright incredulous if they consistently reach their declared targets.
5. Managers that always promise to “make the numbers” will at some point be tempted to make up the numbers.
6. A director whose moderate income is heavily dependent on directors’ fees is highly unlikely to offend a CEO or fellow directors, who in a major way will determine his reputation in corporate circles.
TIPS FOR BEGINERS
Do not expect to become an expert day trader right away. It takes considerable time, practice and effort to learn the ropes.
Paper trade or use a simulated trading Web site to practice your trading techniques before you use your own "real" money.
Eliminate the fear of losing because "scared" money rarely profits.
Always limit your losses - use stop orders.
Learn from your losses - take advantage of each loss to improve your knowledge of the market.
Never allow large profits to turn into losses. Consider selling if the market moves against you by about 25% or so from your peak profit point.
If the markets on a given day are not performing or reacting the way you expected, it is best to simply get out.
Never add to a losing position. It is a prescription for disaster.
Try to predict the general direction of a stock price but do not try to pick tops and bottoms. You will rarely succeed in accomplishing this.
Remember that standing aside is a position and often the best one to take if you cannot form an opinion as to where the market is heading on a given day.
The key difference between winning and losing day traders is the ability to exercise discipline to avoid mistakes or bad trading tactics.
You must subordinate your will to the will of the market. The market is always right.
Always keep records of your trading results and analyse the results.
Good day traders generally sell into good news and buy on bad news.
Patience, perseverance, determination and a rational trading plan are the key attributes of a successful day trader.
Never get emotionally involved with your trades as emotions often work against you.
Do not try to profit on every trade. It is the total profit you make that matters not the number of individual wins.
Learn when you can rely on instinct as opposed to analysis.
Don't chase momentum if you are unsure as to the exit point. Assume the market will reverse itself as soon as you open a position.
Be flexible. Remember that different strategies suit different days and different stocks.
Decide each day how much risk you are willing to take and stick to your decision.
Access to timely information and fast execution of trades is essential to day trade successfully. Subscribe to a good financial information service and open an account with a Direct Access Trading firm or an online broker that caters to day traders.
Do not try to focus on too many stocks at once. Limit your focus to a manageable number.
Always think positive no matter how much you lose. Accept your losses gracefully, try to learn from them and move on.
If you do not find day trading fun or find it too stressful you will not likely be successful. Try some other activity.
DEAR VISITOR PLEASE OFFER YOUR OPINION AND SUGGESSTIONS TO
Most of us are confused where to put in our money and where not to invest our hard earned money. I fount the rules mentioned below quite helpful. My suggestion is just follow the directions given below and I am sure, some of you may save lot of money going down the drain. Here it is:
Rule 1: Don’t buy unlisted shares There are over 20,000 public limited companies in India, of which only around 7,000 are listed on the country’s various stock exchanges. The first rule of profitable share investment is to confine your buying to these 7,000 listed companies only.
Stock exchanges do not permit trading in unlisted shares, nor do they permit their registered members, i.e. brokers to deal in unlisted shares. Therefore, if you want to buy unlisted shares you won’t get the protection of the stock exchange authorities; nor will you be able to use the services of your stockbroker in handling such transactions. Moreover, in the absence of stock exchange quotations you won’t be able to assess what the market price of an unlisted share should be. All these factors create complications and risks, which you are not likely to be in a position to handle. As a basic rule, therefore, you should avoid investing in shares of unlisted companies.
How does one know whether a share is listed or not? It’s simple; all shares whose prices are quoted in daily newspapers or websites are listed shares. Unlisted shares are quoted. Therefore, the fact that a share is quoted means that it must be listed. This is the easiest and surest way of fining out whether a particular share is listed or not.
Rule 2: Don’t buy inactive shares Active shares are those in which transactions take place every day, or almost every day, on the stock exchange. At the other extreme are shares in which transactions take place rarely, if ever. The latter are called inactive shares. In this book, an inactive share has been defined as one, which is transacted less than two times a month, or not at all.
The main reason why shares are inactive is because there are no buyers for them. They are mostly shares of companies which are not doing well and whose future prospects appear to be dim. Naturally, nobody wants to buy their shares. As a result, existing shareholders of these companies find it difficult to get rid of their shares, even at very low prices. And, if nobody wants to buy these shares, why should you? Why should you allow yourself to get stuck with an investment, which you can’t offload at will, whenever you want to? We would strongly advise you to avoid investing in inactive shares.
How does one find out whether a particular share is inactive or not? The simplest way is to regularly scrutinise the stock market quotations, which appear in the daily newspapers. If you find that a particular share has not been quoted for a long time, you can presume it is inactive. Some newspapers, like The Financial Express not only indicated the last quoted price of each of share, but also the date when it was last transacted. This information can help you to confirm whether a particular share is inactive. Check out BSE or NSE Websites
Inactive shares can generally be bought at very low prices. This is obvious since such shares generally find no buyers. Inexperienced investors looking for bargains are often attracted to such shares by virtue of their low prices. This is how beginners are normally trapped in to making disastrous investments, Beware of such bargains! If you come across a bargain, remember there has to be catch in it somewhere. It is better to hunt for value, and pay a fair for it than to look for such apparent bargains.
Every time you buy a share, you must remember that one day you will want to sell it. If you are likely to face difficulty in selling it – don’t buy it! This is a sound investment principle, which you should never lose sight of, no, matter how cheap or attractive a particular investment may appear to be. Never allow yourself to get caught with illiquid share. They are only pieces of paper without any value. Shares have value only when they are readily encashable.
Of course, it is possible that a share, which is inactive today, could become active tomorrow; just as a share, which is active today, could become active tomorrow. It all depends upon the degree of buying interest in a particular share. If buying interest builds up in a share, it can easily move from the inactive to the active category.
Rule: 3 Don’t buy shares in closely held companies: Whether a company is widely held or closely held depends upon the number of shareholders it has. In this book, we will draw the line at 5,000 shareholders. Companies with less than 5,000 shareholders will be considered as closely held.
Shares of closely held companies tend to be less active than those of widely held ones since they have a fewer number of shareholders and, thus, a smaller floating stock of shares. Shares of such companies tend to be ignored by the general public. Large institutional investors also tend to avoid closely held companies. As a result their shares do not get sufficient price support, which they would otherwise have got if they had been widely held. Moreover, it is always much easier to manipulate the share prices of a closely held company than those of a widely held one.
Share prices of closely held companies also tend to be more volatile than others. When they rise they rise very fast, and to a very high level. Conversely, when they fall they do so very fast and to a very low level. As a result, it is generally very difficult to buy shares in a closely held company when prices are rising, and very difficult to sell them when prices are falling. Investing in such shares requires a high degree of expertise, knowledge, alertness and quick thinking, which take years of active investing to acquire. We would, therefore, strongly urge you to keep away from such shares.
GOLDEN RULES FOR TRADING
Divide your Risk Capital in 10 Equal Parts.
As part of the Successful money management, it is always advised to divide your Risk Capital (which you can afford to lose) into 10 equal Parts and at any given time none of your Single Trade should have more than 3 parts of your capital in it even if you are in a winning position. At the same time always keep some spare money for any Buying Opportunity, which may come any time.
Trade ONLY in active & high Volume Stocks/ Futures.
Many Traders get stuck with stocks for want of liquidity. Always rely upon Stocks which have reasonably high volume over a period of time. High Volume are always advised for easy Entry, Exit and Stop Loss. In low volume stocks the spread is too high and chance of Stop Loss limit getting failed is too high as there would be no Buyer or seller at your Stop Loss Level.
Come Prepared with a Trading Plan
Successful traders always keep their Trading Plans ready before entering into any transactions. One must prepare a Watch List or Probable candidates for Day's trading and remain focused on the movement of those stocks only. For example a Stock 'X' is on verge of a Bullish Breakout from any pattern or stock 'Y' has declined substantially after an initial sharp upmove or stock 'Z' is close to an important support level. Successful trader would concentrate on the movement of those stocks only and enter the trade as soon as stock 'X' gives the anticipated breakout or stock 'Y' starts an upmove or stock 'Z' breaks the support level to initiate a trade for quick gains.
Never Over Trade
This is the most common mistake committed by Traders, particularly after a Streak of winning Trades. This mistake Generally not only wipes off all the profits, but puts traders in heavy losses. In order to remain in market while making consistent Profits, under no circumstances, traders should go beyond their Risk Capital.
Trade in 2 to 4 Stocks at a time with strict Stop Loss.
In a Bull move, most of the stocks move up and similarly in any Bear Move, most of the stock moves southwards. As a Trader you know this fact but can you Buy 20 Stocks and try to make profit in all the 20 stocks just because all are moving up or vice versa in a Down trend? What will happen if market reverses without any indication on any bad news? Would you be able to monitor all your trades in such situation? Smart and Successful trader would trade in 2 to 4 stocks with strict Stop Loss and keep a strict vigil to avoid any misfortune in case of any eventuality.
·Sell Short as often as you go Long.
More than 90% of common investors/ Traders are 'Bulls' by nature. Because they love to see prices going up only. Stocks are bought by anybody/ corporate/ financial institutions/ Mutual Funds to make profit on rise. They have large holdings and mentally they wish and pray for the market to rise only. But facts are different. History shows that Bull Phases have shorter duration that Bear phases. So every stock that moves up will retrace back to 38%-50%-66%. Since 90% investors are Bulls by heart they normally do not book profit at higher levels to re-enter later at lower levels instead they prefer to increase their portfolio at lower levels. Successful Traders know how to capitalize such correction. They are always prepared to go 'Short' as often as they trade on 'Long' side.
Don't Trade if you are not Clear.
Many Traders, because of their daily habits trade even when there are no signals to buy or short. Normally such situation arrives after a sharp rise or decline when stocks are adjusting their values. While some stocks attempt to move up, few may be taking breather before next move. Such situation are often confusing. There is no harm in taking rest for a day or two or short period if the trend is choppy, unclear or doubtful, instead of putting your money at higher risk.
Don't expect Profit on Every Trade.
If you consider you are a smart trader who can make profit on every trade, you are 100% wrong. Always be flexible and accept the fact as soon as you realize that you are on wrong side of the trade. Simply get out of the trade without changing your strategy during the market; it may cause you double losses.
Withdraw portion of your profits.
The business of Trading is excellent as long as you are making profits. Unlike other business your losses can be unlimited and rapid if market does not move as per your expectations. While in other businesses you may have other remedial measures available but in trading it is you only who has to control it. Traders have large egos particularly after series of successful trades and their tendency to enlarge commitments in overconfidence may cause major financial set back. There fore it is must that trader must take a portion of the profit and put it in separate account. This is absolutely must for long term stability in the market.
Why gold is a commodity and a currency-
1. Is gold trading as a commodity, a currency, or both?
2. I believe the answer is: Mainly as a currency, but the fact that aprox 70% of mined gold usually goes into jewellery cannot be ignored.
3. Another fact is that gold seasonals dictate a possible intermediate top in late December. This time it topped in early December.
4. The gold price has been “ruled” by the massive head and shoulders pattern on the weekly chart (Gold Weekly Chart), so the usual late sept/early oct hard sell off not occurring is most likely a function of the action of two factors: a. The hedge fund momentum buying, trying to milk the technical chart pattern. b. The action of Barrick acting in the comex open market buying futures contracts to cover off their hedge position.
5. Theme “numero uno” for me continues to be: Hold the amount of gold you can be comfortable with should price either decline to $700 or rise to $1400. If you bail on current holdings if gold moved towards $700 or started buying crazily as it rallied towards $1400, you likely are positioned very very badly, here and now. Your gold holdings become a crapshoot, rather than an ultra solid investment in the world’s lowest risk market.
6. If gold were to leap $50 in the next second, you should have an overall feeling of comfort regarding your core positioning, and the same should be true should it receive a $50 spanking. How you feel has a lot to do with how you act. Really work hard at getting your holdings into your “comfort zone”. You can then “let that gold flying fish” get away if price spurts suddenly, and if it tanks suddenly you don’t wonder about hitting the sell button. It takes more work and patience than many think to get to that “sweet spot” but it’s a CRITICAL task if you want to do not just well in the market, but have a balanced life.
7. Sammy the bull notes that many major mkts often make significant lows in the mid march timeframe. That’s only a week away from today’s date.
8. I would add that gold as I write this has dropped $30 from the recent highs at $1145, to $1115 this morning, the fact is that $30 of weakness must be bought.
9. How much to buy? If you look at what I term the Liquidity Flows reports, the COT reports, you will see that the banksters typically add in the range of 5000 contracts to an existing 150,000 contracts position. That equates to a 3% addition to their position. Sometimes, they add more into $30 of price weakness, sometimes less, but it isn’t a double of their position, and it isn’t none. They are responding to price calmly, rationally, and modestly.
10. If you look at how most investors operate in the market, they might buy a position in a stock at price A, then do a 2nd buy at lower price B, then maybe a 3rd but more uncomfortable buy at a lower price C. Now they are players in the market at 3 price points. Unless you are a professional trader, I’ll bet you spend 99% of your time at prices below 2 of your 3 price entry points, and most likely below all 3. Most investors don’t even use 3 buy points, they use just one!
11. The head and shoulders pattern on the gold weekly chart has been shown a zillion times in the gold community. The problem has been when it’s time to take action, few have.
12. The breakout upside was viewed as potentially false. That cost them $200 an ounce. Then came the “demands” for a pullback exactly to the neckline. What’s the difference between buying 1050 and 1020, or 980 for that matter? I don’t see any major difference.
13. Sadly, at 1045 the banksters went to work and gold investors put on a classic lemmings show, with their “the banksters say gold is a bubble, so it is, sell everything now!” clown act. And the banksters went on the buy.
14. Gold soared a hundred dollars an ounce from 1045. We’ve retraced about a third of that as of this morning. Once again, gold investors are losing their focus, losing sight of what is happening on the weekly gold chart, the chart that continues to literally rule gold’s price here and now.
15. Price has corrected in a clear parallel down channel and last week closed upside. If you look closely at the red supply line I’ve drawn in, you can see price could correct to anywhere around the 1100-1115 area and create a classic pullback from that breakout.
16. Aggressive options traders should consider using weakness over the next week to take action on gold with longside bets.
17. Seasonally, the upmove that occurs classically from the mid march area (but don’t bet big money that price must bottom in mid march, this is the market and anything and everything is possible) is followed by a significant but choppy upmove.
18. Price can then decline to a lower low or least a significant low.19. Again, given the fact that gold is being ruled technically by the head and shoulders weekly chart bull continuation pattern, price declines are likely to be reasonably shallow.
20. The technical indicators on both the gold bullion weekly chart and the gold stocks GDX weekly chart are showing the market attempting to make a bottom. The daily charts show a short term top. Here’s a look at the GDX. GDX Weekly
21. Notice in particular the short term 4,8,9 time series of MACD has given a buy signal. Usually, that is followed by the other series, including the 12,26, 9 flagship.
22. Looking at the daily chart GDX Daily Chart you can see the exact opposite picture in the technicals, with sell signals being generated on the lead MACD series.
23. What if price doesn’t stop after a shallow sell off, but instead blows back down into the parallel channel and starts taking out lows? After all, this is the gold market, and the charts, in the final analysis, are just lines in the sand drawn at whim by the banksters dangling the funds around on puppet strings to buy and sell to create the charts with their actions. Well, first off, we’re already more than blessed with how this massive head and shoulders has continued to play out in a picture-perfect action of price.
Most of us are confused where to put in our
money and where not to invest our hard earned money. I fount the rules
mentioned below quite helpful. My suggestion is just follow the directions
given below and I am sure, some of you may save lot of money going down the
drain. Here it is:
Rule 1: Don’t buy unlisted
shares
There are over 20,000 public limited companies in India, of which only around 7,000
are listed on the country’s various stock exchanges. The first rule of
profitable share investment is to confine your buying to these 7,000 listed
companies only.
Stock exchanges do not permit trading in unlisted shares, nor do they
permit their registered members, i.e. brokers to deal in unlisted shares.
Therefore, if you want to buy unlisted shares you won’t get the protection of
the stock exchange authorities; nor will
you be able to use the services of your stockbroker in handling such
transactions. Moreover, in the absence of stock exchange quotations you
won’t be able to assess what the market price of an unlisted share should be.
All these factors create complications and risks, which you are not likely to
be in a position to handle. As a basic rule, therefore, you should avoid
investing in shares of unlisted companies.
How does one know whether a share is
listed or not? It’s simple; all
shares whose prices are quoted in daily newspapers or websites are listed
shares. Unlisted shares are quoted. Therefore, the fact that a share is
quoted means that it must be listed. This is the easiest and surest
way of fining out whether a particular share is listed or not.
