Posts Tagged: stock

 

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

 

1. Make Rational, Not Emotional, Decisions – Do you have a plan to enter and exit your trades? Or do you just wing it? If you have a plan, write down your rules, and make sure that you trade your plan. If you don’t, or can’t, follow your rules, hire someone who can.

2. Respect Risk – Stock Market  is not going anywhere. If you risk too much, your emotions will take over, and you will likely go broke. Always know where you are going to exit before you enter and how much you are going to risk if wrong.,

3. Don’t Judge Your Success One Trade at a Time – Losing money is part of trading. It happens to everyone. Once you learn to expect that will happen, you can plan for it and get past normal pitfalls, such as giving up on your system after a few losing trades.

4. Think like a winner – Remember that winning starts within. How you think is everything.,

5. Ask For Help – Making money on Wall Street is simple, but it is definitely not easy. Don’t let your ego get in your way of making money. Most people have a hard time asking for help. That’s just one reason why most people lose money on Stock Market . You don’t have to go it alone. Find someone you trust and are comfortable with, and don’t be afraid to ask for help.

 

In the past financial year, about 819 stock brokers called it quits, driven by declining profitability and the dominance of low-yielding options volumes, according to figures made available by the Securities and Exchange Board of India (Sebi) in its monthly bulletin.

Volumes in the options segment rose further, after accounting for about three quarters of the trading volume in FY13. The proportion of options, as percentage of overall market volumes, has risen from 9.33 per cent in FY08 to 77.43 per cent in FY14. Trades in the derivatives segment earn lower brokerage than those in the cash segment. Within the derivatives space, options earn the least.SCRAP

“The trend of the business has been more towards the derivatives segment,” said Alok Churiwala, vice-chairman, BSE Brokers’ Forum. “The business of stock broking has not been good through the last few years. So, for brokers to have shut shop was expected…at current levels, the economies of business don’t bear out. Costs have also been rising; some brokers who exited could be from regional exchanges, which have been on their way out.” >> Read More

L&T Holdings-An Alert For Sebi !

14 March 2014 - 8:20 am
 
REDALERTHow many times has it happened that two stocks-L&T Finance and Just Dial, have been introduced in the FNO segment mid-way through an on-going series? I do not remember many such occasions or even the necessity that excludes introduction of new stocks with a new series-in these cases from April 2014. But it has been done so. The surprising part was that L&T Finance entered the Futures segment with a 3 per cent ulta badla. Implying the cash market price was higher than the futures price. This led many brokers to send out buy calls on the futures, with simultaneous call to sell demat stock into the cash market. This keeps the orginal buy position intact in the futures market but allows the investor to pocket the difference, should cash and futures price reach parity at the end of the March series on 27th.
 
However it is unclear if the insiders new of a possible ensuing corporate announcement…viz a sale by L&T of 5.5 crore shares at a base price of Rs 70 through the OFS window on March 14, 2014 and hence there were enough people who have shorted the Futures market. And viola, the L&T management has possibly rewarded shorts by making the following announcement at 9.30 pm on March 13, 2014.
 
Larsen & Toubro Ltd (“the Seller”) the Promoter of L&T Finance Holdings Ltd (the “Company”) has submitted to BSE a Notice of Offer for Sale up to 5,55,05,755 equity shares of face value of Rs. 10 each, constituting 3.23% of the equity share capital of the Company (Sale Shares) on March 14, 2014 exclusively through the Seller’s broker on the separate window provided by the BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) (the Stock Exchanges). In addition to the Sale Shares, the Seller may also sell up to 2,77,52,878 equity shares of face value Rs. 10 each of the Company in the Sale on March 14, 2014 (the Additional Shares, and together with the Sale Shares, the Shares).The Sale shall take place at the separate window of the Stock Exchanges and shall commence on March 14, 2014 at 9.15 a.m. and shall close on the same day at 3.30 p.m. Indian Standard Time (the Trade Date).
 
Will the Sebi look into the matter and postpone OFS to April 2014, and cancel all contracts made in FNO on March 13, 2014?

Stock Market Rules to Remember in 2014

01 January 2014 - 7:00 am
 

HNY-2014Technical analysis is a windsock, not a crystal ball. It is a skill that improves with experience and study. Always be a student, there is always someone smarter than you!

• “Thou Shall Not Trade Against the Trend.”

• Let volatility work in your favor, not against you.

• Watch what our “Politicos” do, not say.

• Markets tend to regress to the mean over time.

• Emotions can be the enemy of the trader and investor, as fear and greed play an important part of one’s decision making process.

• Portfolios heavy with underperforming stocks rarely outperform the stock market!

• Even the best looking chart can fall apart for no apparent reason. Thus, never fall in love with a position but instead remain vigilant in managing risk and expectations. Use volume as a confirming guidepost.

• When trading, if a stock doesn’t perform as expected within a short time period, either close it out or tighten your stop-loss point. >> Read More

 

India’s insider trading rules have been tightened just over two decades after they were first framed — raising the prospect that the country will soon have its own gallery of rogues who have made oodles of money by trading on information that only they were privy to.

On Tuesday, a committee appointed by market regulator Sebi overhauled insider trading regulations that were framed in 1992 by widening the definition of the term insider trader. For the first time, public servants, judges and immediate relatives of company insiders have been brought within the ambit of the definition.

The committee, headed by former Chief Justice of Kerala and Karnataka High Courts N.K. Sodhi, today came out with a 74-page report that defined terms such as insider trading, connected persons and unpublished price-sensitive information but admitted that it might still be hard to prove the charges. “The initial burden to bring home a charge could be heavy,” the report prophesied. >> Read More

 

The Securities and Exchange Board of India’s revised norms may bring public servants, such as government employees who may have access to price-sensitive information, under the ambit of the insider trading regulations.

A report prepared by the eighteen-member insider trading committee headed by Justice N. K. Sodhi has recommended bringing such individuals under the ambit of the law.

“A new feature of the Proposed Regulations is that of treating public servants and persons holding statutory positions that are reasonably expected to have access to UPSI as connected persons and thereby prohibit them from trading when in possession of UPSI (Unpublished Price Sensitive Information),” said the report.

Examples of such public servants include those involved in formulating policy which could impact a company’s shares. This could include pricing policy for a natural resource or a decision on the cap on foreign investment in a specific sector. They also cover judges presiding over matters which may have an impact on a company’s stock price or

The report has said ‘public servant’ would have the same meaning as given in the Prevention of Corruption Act, 1988. A member of the insider trading committee confirmed that the draft regulations would also cover members of Parliament/state Assemblies as well as ministers.

The Act defines a public servant as ‘any person in the service or pay of the Government or remunerated by the Government by fees or commission for the performance of any public duty.’ >> Read More

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Technically Yours,
Team ASR,
Baroda, India.