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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 9, 2011

9 Golden Rules for Trading Stocks

In my quest to get a practice into trading stocks first by playing on chartgame.com before putting real money at risk, I had learned several strategies which I found to be not working after a day and also faced massive frustration each time profits evaporated and losses went above  90%.

It was time on last Sunday that I looked at my post on July 1 and tried to observe things from the perspective of the lessons learnt from the book (How I Made 2 Million in Stock Market). I gradually began to notice consistency in my results after following those lessons or rules. If I did not remember them before I start on a new chart @ Chartgame.com, I was immediately going into negative spiral. So these became mantra of stock trading. Hence I decided to summarize the 9 golden rules for trading stocks and imprint them deep in my memory.



9 Golden Rules for Trading Stocks

Objectives: 

  1. Right Stocks
  2. Right Timing
  3. Small Losses
  4. Big Profits

Weapons: 

  1. Price and Volume
  2. Box Theory
  3. Automatic Buy-order
  4. Stop-loss Sell-order

Unobtanium (highly important) Rule:
 
Despite following above 8, there is no such thing as gaurantee in the stock market. We can go wrong anytime on any stock. So keep losses small, take breaks often, chillax & develop high frustration tolerance with the willingness to learn all the time, from all mistakes/losses.

Because the learning curve never ends for a stock market operator.


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Friday, July 8, 2011

Moneycontrol Price Trigger Alerts for 8 July 2011.

MC Price Trigger Alerts for 8 July 2011. Not all are for up trend. Some are for checking support after pullbacks.



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Thursday, July 7, 2011

17 Stocks for 7 July 2011 With Price Trigger Alerts


These 17 stocks are picked for having large white candlesticks and after crossing previous day's high. I am studying these by placing price trigger alerts on Moneycontrol. Actually Insecticides India is not similar to other stocks. I just had a trigger alert already which is still waiting.

The upper price trigger will be the automatic stop buy. If executed the lower price trigger will be the stop loss trigger that needs to be placed immediately after the buy stop trigger alert.

I would be paper trading with 10000 capital divided into 5 parts with 2000 for each. On margin (as this is for swing trading and diversification across stocks) I might go upto 34000 maximum in case all 17 are triggered. I think this is rather too much to start first. I didn't want to spend more time shortlisting down to 7 or 8 stocks.
Let me study how they do in next few days.

In the last two days, POLARIND had gone up by 10% in three consecutive sessions as it has a circuit breaker at 10%. It had gone up by more than 30% since it is discovered and 87% in a month. This shows how rewarding penny stocks can be at the same time with huge risk.

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Tuesday, July 5, 2011

10 Stocks to Watch for Intraday and Short Term

Volume and volatility are the important criteria for intra-day trading. Below are some stocks screened for volume and volatility from icharts.in. All these stocks may also show a second leg upwards after this first one fades as these are all above 10 day, 20 day & 50 day moving averages but most potential may be RELINFRA & SEINVEST.


DISHTV

DLF

HEXAWARE

KRBL

MRPL

POLARIND

REIAGROLTD

RELINFRA

SEINVEST

TTML





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Two Stocks for 2 Weeks : PAPERPROD & PETRONET

Below are two stocks I discovered through certain criteria using EOD screener on icharts.in. Both are potential candidates to rise if they cross above high of yesterday. 50 day EMA or the last day's low (whichever is closest to LTP) is a good point for stop loss.


PAPERPROD


PETRONET







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Monday, July 4, 2011

7 Stocks to Watch for Intraday Today

Below are 7 stocks I got from EOD screener from icharts.com using a set of criteria. Let us see how they will perform today.

BANG
Bang Overseas Limited


DEEPIND
Deep Industries

PATINTLOG

PEACOCKIND

PFOCUS

POLARIND

PUNJABCHEM




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Friday, July 1, 2011

Revisited: How I Made 2 Million Dollars in the Stock Market

As I mentioned in previous post I have been trying to get back into stock market since then. My desire to trade or invest has grown considerably in the last few weeks. Especially after I read my most favorite book the second time. It is “How I Made 2 Million Dollars in the Stock Market”.

The book is not only a classic; it is also packed with very powerful advice and analysis. As I was reading it second time I had noticed certain things that I had conveniently ignored when I read the first time. First time, I had only focused on things that I had just learned at that time and that matched pretty well with bull market and my few exceptionally successful trades – 154% in RNRL, BHUSANSTL 13%, POWERGRID 15%, ARVINDMILL 14% in that year. There are other very few swing trades in my portfolio that resulted in profits but not so much.



As the bear market started in 2008, I really didn’t have a particular strategy for entry or exit. I somehow ignored the main strategy taught in that book and got excited about short term profits through swing trading. These profits were neither many nor large enough to cover the losses of failed operations in a down trending market. My profit-loss worksheet is full of the losses that followed this time and their total overshadowed everything mentioned above. The deepest loss was 90% in SELMCL.

As I read the same book again this time I was able to notice the most important analysis and reasons for both entry and exit strategies for the only best way (long term) to gain in the stock market.

Nicolas Darvas wasn’t just some dancer cum investor. He was reported to be awesome at whatever he does. Atleast I learned he was “super” awesome at stock market investing not just for pulling 2 Million Dollars in a 18-month period but for the powerful analysis behind his moves. I should have learned this atleast two years back. Now I sincerely regret this.

In his 7 year long investing journey, Darvas summarizes below points as he develops his famous box theory after first 5 years.

My objectives in the stock market:

Right stocks

Right timing

Small losses

Big profits

My weapons:

Price and Volume

Box theory

Automatic buy-order

Stop-loss sell-order

The entire 200 page book could be summarized in those 10 lines. But it was not all. The most important and most often repeated advice was that we can go wrong despite all our analysis and strategies. There is no such thing as guarantee in the stock market. This is very powerful information at times to let us avoid small losses from turning into large losses. You must have heard yourselves saying, “no way this can be happening”. For those with little or no experience in stock market, this might appear like something at hindsight but for the serious investor it is like a universal law and makes a lot of things clearer.

Now suddenly a lot of things became clear to me. Why it was felt so exciting to trade for short term (a week to a month), later why I got caught up in false swing traps, etc. But every time I made the decision to stop investing, after a string of losses, was the only right decision I had made since the beginning. I should also have avoided diverting attention away from stock market. I can just spend time sharpening the saw if I got fed up with a string of losses.

“Small losses and big profits” was the most striking idea of Darvas. It is easy to know it at hindsight but difficult to apply in practice. That is why he adds other objectives and weapons. When all of these are combined one can develop a powerful strategy. For a long time I wasn’t able to understand one of the Q&A at the end of the book (you bought smack in the middle of a trading range). It was on page 184. This time I was able to get the reason behind this answer.

I am taking these 9 points from Darvas’ book and trying to materialize my own trading/investing strategy that can improve consistency. I liked this book a lot not only because of insightful analysis but also because it is entertaining like a novel. I made a point to keep reading it from time to time.

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