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How to do SIP (Systematic Investment) in Stocks?

“History is written by the winners” -Napoleon Bonaparte I won’t be writing about the SIP which is already covered in the public doma...

Saturday, July 19, 2008

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Zandu Pharma Did It Again

After taking a loss in the recent times for not putting stop losses early on, I had decided that short term swing trading is not really good in this bear market. So I started looking at old ways. There are two or three stocks making new highs.

One was SELMCL. But it gave up. It is stabilizing near its 50 day moving average. I am waiting for a normal white candlestick to take a position. The other one was Zandu Pharma. But I had ruled it out because it has a circuit limit of 5%. We cannot enter when it goes up and we cannot exit when it goes down. We can only gamble in this stock. That is enter/exit when it is calm hoping in the uncertainty that entry will be below exit.

I was watching this stock from 17000. It went almost every day by 5%. I stopped tracking it when it reached 18000. Now it reached above 20000. Quick 10% move. New highs stocks will always make these kind of moves. Also the risk in these stocks is limited unless they suddenly fall by big amount in single day. That marks the end of their strong uptrend.

I had a dream in which there was a special trading session in the evening on the NSE, similar to that on the day of Diwali. I remembered this stock – Zandu Pharma. I felt like shorting as it doubled in these two months from 10000 to 20000. So a strong correction can be expected anytime as it is going up pretty fast now indicating boom in the near term. As I am not sure when it will change direction, I thought of resorting to futures to short sell. I was about to check this stock in the futures list to find out what is the lot size, what is the margin required etc. But suddenly the dream changed the topic.

After waking up I had realized that this stock will not be in futures list because it has circuit limit. Very bad.. I cannot take advantage of it in either direction.

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