Posts Tagged: stock

Zen of Trading- 10 Rules

03 December 2014 - 15:35 pm
 

1. Have a Comprehensive Plan: Whether you are an investor or active trader, you must have a plan. Too many investors have no strategy at all — they merely react to each twitch of the market on the fly. If you fail to plan, goes the saying, then you plan to fail.
Consider how Roger Clemens approaches a game. He studies his opponent, constructs his game plan and goes to work.

Investors should write up a business plan, as if they were asking a Venture Capitalist for start-up money; just because you are the angel investor doesn’t mean you should skip the planning stages.

2. Expect to Be Wrong: We’ve discussed this previously, but it is such a key aspect of successful investing that it bears repeating. You will be wrong, you will be wrong often and, occasionally, you will be spectacularly wrong.
Michael Jordan has a fabulous perspective on the subject: “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. Twenty six times, I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”

Jordan was the greatest ball player of all time, and not only because of his superb physical skills: He understood the nature and importance of failure, and placed it appropriately within a larger framework of the game. >> Read More

 

With Apple at record highs, its market capitalization is now bigger than Russia’s entire stock market (the 20th largest market in the world). What’s more : there would be enough money left over after selling Apple and buying Russia to purchase over 190 million contract-free 64Gb iPhone6 Pluses (enough for every Russian). 

 

Russia, the 20th largest among the world’s major markets, is not the only one Apple has surpassed. The company, which forecasts a record holiday-sales quarter and has $155 billion in cash, is also bigger than 17th-ranked Singapore and 18th-ranked Italy.

 

“It has often been pointed out that any of several different plans of operation, if followed consistently over a number of years, would have produced consistently a net gain on market operations. The fact is, however, that many traders, having not set up a basic strategy and having no sound philosophy of what the market is doing and why, are at the mercy of every panic, boom, rumor, tip, in fact, of every wind that blows. And since the market, by its very nature, is a meeting place of conflicting and competing forces, they are constantly torn by worry, uncertainty, and doubt. As a result, they often drop their good holdings for a loss on a sudden dip or shakeout; they can be scared out of their short commitments by a wave of optimistic news; they spend their days picking up gossip, passing on rumors, trying to confirm their beliefs or alleviate their fears; and they spend their nights weighing and balancing, checking and questioning, in a welter of bright hopes and dark fears.

Furthermore, a trader of this type is in continual danger of getting caught in a situation that may be truly ruinous. Since he has no fixed guides or danger points to tell him when a commitment has gone bad and it is time to get out with a small loss, he is prone to let stocks run entirely past the red light, hoping that the adverse move will soon be over, and there will be a ‘chance to get out even,’ a chance that often never comes. And, even should stocks be moving in the right direction and showing him a profit, he is not in a much happier position, since he has no guide as to the point at which to take profits. The result is he is likely to get out too soon and lose most of his possible gain, or overstay the market and lose part of the expected profits. >> Read More

Don’t Marry Hot stocks, Just Date Them

13 September 2014 - 10:08 am
 

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  1. Hot stocks are only good when they are in up trends, when the party is over you have to break up with them.
  2. Hot stocks are great to trade in and out of but you don’t want to turn them into a life long investment.
  3. A good stock might look great on the outside with it’s price action but it may not have the best fundamentals for getting serious with.
  4. Hot stocks are great for the short term but for the long term you want a solid investment.
  5. Be careful with hot stocks they may look great on the outside but they can break your heart at any moment.
  6. A hot stock can be a lot of fun for awhile but they can be a lot of drama when no one wants them anymore.
  7. As long as a hot girlfriend is very popular  she will be happy but when no one wants to date her she goes into a downward spiral. This applies to hot stocks as well. 
 
  • FTSE -0.4% today -1.67% on week
  • Cac -0.1% today -1.36% week
  • Dax -0.3% today -2.18% week
  • Ibex +0.3% today -3.82% week
  • FTSE Mib +0.3% today -5.74% week
  • PSI 20 -0.8% today -6.76% week

European bonds

  • Italy 2.82% -5bp
  • Spain 2.56% -6bp
  • Portugal 3.85% flat
  • Germany 1.05% -1bp

A lot of red this week in stocks and the only marginal positive you can take from the close is that they are mostly closing up from the lows, which has mainly been driven by a rebound in US stocks.

 

No reasons given but Moscow Stock Exchange has just suspended trading with no reasons specified…

 

 

I was just rereading Nicolas Darvas’ How I Made $2,000,000 in the Stock Market and came across this interesting summary of his trading method and risk management approach in the author’s intro. I’d like to share it with you.

Quoth Darvas: 

“I built a fortune with serenity by avoiding premature selling yet making an exodus from most of my stocks with the use of a single tool: the trailing stop-loss. 

I have discovered no loss-free Nirvana. But I have been able to limit my losses to less than 10 percent wherever possible. My stop loss method had two effects. It got me out of the wrong stock and into the right one.”

Full passage in the image below:

Darvas

10 Steps-Every Trader Should Take

22 June 2014 - 13:27 pm
 
  1. Trade in a conceptually correct manner
    Trading because Mars lines up with Venus might work occasionally, but there is no real basis for trading in this manner. Patterns you trade should make sense and have some sort of statistical edge. It does not have to be complex. In fact, simpler is better (e.g. I’m known as the trend following moron).
  2. Trade small
    Any ONE trade should NOT have a material impact on your life. ANY one loss should be viewed as an “expense”—no different from what you do in any other business. Remember, It’s a marathon, not a sprint! You’ll only be smarter in the future. If you’re in the learning phase, I can promise you you’ll look back years from now and say “what the heck was I thinking!”
  3. Ignore the news
    Ever have a stock you’re long come out with good news and then you watch in agony as it drops? Every be short a stock that comes out with bad news and then you watch in agony as the stock rises? The news is irrelevant. It’s the reaction to the news that’s relevant. What is, is.
  4. Forget about logic—Don’t worry about the “whys”
    Stocks trade on emotions–period. There often is no logic as to why a stock rises or falls. Again, what is, is.
  5. Know YOUR Methodology
    Each method will have its sweet spot. I can’t speak for every methodology, but I can tell you this about momentum based swing trading: It works well in trending markets (duh!) and doesn’t work so well in choppy markets (duh duh!).
  6. Don’t deal in mediocrity 
    Pick the best and leave the rest. Stocks should be in an obvious trend (or transition) and set up. The stock should also trade “cleanly.”
  7. Do NOTHING unless there is something to do! 
    Your performance is based on the good trades less the bad trades. By avoiding the markets in less-than-ideal conditions, you’ll have fewer bad trades hence, better performance! My favorite thing to do is to take the “can’t stand it test.” If you can’t stand NOT taking a trade because all the signs are there, then you probably should take it. Otherwise, don’t trade.
  8. Stack the odds in your favor: Market/Sector/Stock
    Your odds will greatly improve if only trade when the market, sector, and stock are all trending in the same direction.
  9. Let things work 
    Results in trading (especially momentum based swing trading) are often skewed—most of the gains come from a few big winners. Therefore, it’s crucial to catch these occasional homeruns. And, you’ll never catch any big winners if you micro manage your trades ( i.e. exit early).
  10. Money management 
    Trade small, use stops, take partial profits when offered, trail stops.
 

1) Markets Do as They Please Regardless of What You Do

“I left Williamson’s and tried other brokers’ offices. In every one of them I lost money. It served me right, because I was trying to force the market into giving me what it didn’t have to give – to wit, opportunities for making money.”

After Livermore made a fortune speculating, he subsequently lost a great deal of that fortune in the stock market. He began borrowing money to fund his stock trading. Of course, he had trouble making money because he was too concerned about paying his creditors back. He began to try to “force the market” to give him profits. The markets will do what they will regardless of where you got in or got out. The question is are you going to be along for the ride.

2) Trading to Pay Your Bills is Harder Than It Looks

“As I studied the problem I saw that it wasn’t a case that called for reading the tape but for reading my own self. I quite cold-bloodedly reached the conclusion that I would never be able to accomplish anything useful so long as I was worried, and it was equally plain that I should be worried so long as I owed money.” >> Read More

 

NF-HOPEDoes the stock act right? This can easily be affirmed if a stock respects basic technical rules. If it forms a bullish flag it should break out without having the tendency to trap traders. Support should be respected and a stock should bounce off those levels without instilling too much doubt into those holding a position.

Does the stock meet my expectations? Whenever you buy stocks you typically have very specific expectations as far as future performance is concerned. Being flexible and not letting your opinions guide your trading decisions is the way to go. But that’s another story. So whenever a stock meets or ideally exceeds your expectations it is a sign of strength. Strong stocks tend to be extremely resilient and move way higher than you would typically expect.

Does buying pullbacks get rewarded? If you buy at support you typically act in a way most technicians would describe as sound trading. Strong stocks tend to reward this kind of behaviour.

Does the stock make it easy for market participants on the sidelines to enter? Windows of opportunity tend to close very fast with strong stocks. The more difficult it is to enter the stronger the buying pressure. Smart money typically doesn’t wait when an opportunity for a good entry presents itself.

MODIDAY

Last Close :7382

Today ,Just watch ………………………7421

Decisive Crossover with volumes and stays above for 15-20 minutes.

We see Rally upto 7508——7537 level in hrs only.

& There after Retest of 16th May -7625 not ruled out.

TRADER-GIF

Above  7421 level……….Minor Hurdle for Traders @ 7454 level.

3-7DEMA-CRUCIAL SUPPORTFrom 12th May :Nifty Future had not closed below 3 DEMA ,Forget Breaking 7 DEMA !

7332 & 7260 will act as Support levels.

OPTION STRATEGY-ANIRUDHSETHIREPORT

Yes :Buy July 8000 Call ……………Now at 29-30.Two Days back it was 40 ,Then it Crashed to 27 & Again on Friday it zoomed passed 40+

Yes ,Total Risk 30-40 only.(This much fluctuation  u see everyday in NF )

More Details ,Intraday levels to our Subscribers ,Updated at 7:09/26th  May/Baroda/India

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Technically Yours,
Team ASR,
Baroda, India.