Friday, 20 September 2013

Day trading-Tips

Day trading and investing are like chalk and cheese,both involve buying of shares but the factors considered are completely different, one takes into acount technical data,while the other looks at its fundamentals. dont try mixing the two.often.if an intraday bets goes wrong,the buyer does not book his loss but takes the delivery of shares and then waits for the price to recover. this can be a costly mistake because the shares were bought with an ultra short term horizon.they may not be worth investing in.

Book profits when targets are met
Greed and fear are the two biggest hurdles for the day trader. just as he should not flinch from booking losses when the trade goes wrong he should book his profits when the shares reach his target. if he feels that there is more upside in the stock he should reset the stop loss. suppose you invest at rs 100 for a target of 110 and a stop loss of 95.if the price goes up by to 110 but you are still bullish raise the stop loss to 108 this will reserve some of the profit.

Dont fight the market trend
Even the most sophisticated analysis cannot predict which way the market will move. all technical factors may be bullish but the market may decline. technical factors only point to the likely movement of the market,they dont guarantee it. if the market is not as per your expectations ,dont try and be a contrarian. you may end up loosing more.

Small is beautiful
While the stock investments can yeild stupendous returns,be content with small gains from intraday trading. day traders get a leverage of almost 13-14 times their investment,so even if your stock goes up 3% you would have earned much on your investment. its rare for large cap stocks to move by more than 5-6% in a day,even if you get return of 10-12% on your capital,its not bad for days work.

Invest what you can afford to loose
Intraday trading carries more risk than investing in stocks. invest only the amount that you can afford to loose. an unexpected movement can wipe out your entire investments in few minutes. In jan 2009 satyam computer scrip fell more than 80% from 188 to 31 in one day,if its leveraged position you could loose more than invested

 choose highly liquid shares
Day traders must square their positions at the end of the trading session. This is easy if you are trading in large cap, index based stocks,which are very liquid and get traded in huge columes. dont dabble in mid cap and small cap shares when the traded volumes are not large you could end up holding shares that have no buyers at the end of the day.

Trade only in 2-3 scrips at a time
Its prudent to diversify your portfolio when you are investing in stocks,but when it comes to day trading confine yourself to just 1-3 stocks. you can have 8-10 in watch list but dont trade more than 3 at a time,some movements need to be tracked closely by the day trader and you wont be able to monitor more than 2-3 stocks at a time.

Research watch list thoroughly
Read up on the 8-10 stocks on your day trading watch list,you should know all forthcoming corporate actions (stock splits,dividends,mergers) as well as technical levels of the stock.

Fix entry price and target levels
Before you buy fix your entry price and target level. The psychology of the buyer changes after he has bought a stock which would interfere with his judgement and nudge him into selling quickly even if the price moves up marginally. this mite cost him the oppurtunity to fully gain from upside. if you set yourself a price target and adhere to it your psychological frame will not change.

use stoploss to contain impact
A stop loss is atrigger for selling shares if the price moves beyond a specified limit, it helps the buyer limit his losses in case the share belies his expectations and moves in either direction.suppose you buy 20 shares of reliance at 940 each and set a stop loss of 920 if the share falls to 920 your shares will be sold.in this manner your losses will be curtailed even if the share drops to 900. A STOP LOSS TAKES THE EMOTIONS OUT OF DECISION TO SELL.

26 comments:

  1. Very informative.gud points to rembr for evryone.sir plz tell me ur view on financial technolgy.I hv 34 shares@188.can wait for few months.plz also suggst if I can entr yes bnk at current levl

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    1. as you already entered ft,hold it for quiet time,once the news of nsel settles,it would bounce back provided no default s there.
      Dont enter banks rite now,lets wait to see how they react on monday!

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  3. Hi, i don't think RBI policy is that much hurting for markets that they reacted (should say overreacted). I thought that market will see 6350, so the investors get some confidence over market, but seeing yesterday's catastrophe, investors will again in fear mounting situation.

    Please tell me one thing what is going happen before 26 September13 expiry, from Monday on words will nifty go little up or will touch earth again? thank you.

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    1. Hie suresh,you are true ,rbi policy was not that hawkish,but it s fear which triggered market fall yesterday and yes profit booking played role,i dont see much downside as many of our so called analysts who gave targets of 5300 earlier.markets would be range bound and most tragedic part of our markets is that we always look at foreign markets for cues..irespective of fundamentals,so it has become very difficult to analyse market for next few days...now a days targets are only valid for next session are utmost few digits more.

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    2. I forgot to ask you about dlf, it was down buy 20 on friday, what do you think will it regain it's status or it is going to fall further before expiry. Thank you.

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    3. Dlf is an interest rate sensitive scrip,cut in interest rates is what they seriously needed,but hike would leave reality sector in troubles,technically also it would further trade weak,and its also an index beta scrip.

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  4. I bought bgr energy @116 and GHCL @ 33 and didnt monitor d market movement. Now I want to minimize the loss. What is the best possibility ???

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    1. bgr energy has gone exdividend,if u bought it before exdividend then u can exit it after book close date.
      GHc chemicals is an short term bet,i personally dont adice to enter those scrips which are not that liquid.

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  5. hi hari bhai...i am just 5 months old in share market and right from the begining i doing day trading continuously...i have invested Rs.10000 and making 50 to 150 rs. on daily basis (included loss)...now my next target is to earn rs.1000 daily by investing rs.1Lakh...pl suggest me the right path to achive my 1st target...how can i minimise risks?...your calls are putting me in profits...and i like only day trading...waiting your reply...one more thing is that...can it be a better way to invest rs. 1lakh in 1 highly liquid,less price(around rs.30 to 35)stock only and AVERAGING it if it goes max. -10% down?? Pl show me the right way sir....thnx.

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    Replies
    1. Hie,as you want to day trading first make sure you are with brokerage house which charges minimmal brokerage,trade with few basic fundamentals like putting mandated strict loss,booking profits in right time,if you plan to trade with 1 lakh dont put entire amount in single liquid scrip,liquid scrip itself implies equal chance of going either sides,trade with perfect strategies using support and resistance levels.

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  6. Hari sir,
    I ve just begun reading and understanding candlestick charts from a month. Since there are many indicators I would like to know which indicators do u mainly use for analysis under the following broad categories :

    Time period of a chart : in months

    Price band : if any

    Simple moving avgs : how many days

    Technical indicators : apart from RSI and MACD if any.

    ReplyDelete
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    1. For intraday trade chart of last 4-5 months is gud,Rsi can be misguiding sometimes,simple moving averages only give a rough idea,go with support and resistance levels and patterns.Breakouts are other valuable source.

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  7. Sir whats your view on petroleum and refinery scrips?? can they be bought with mid term horizon?
    Thanx in advance.

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    1. Hie pradeep,oil and petroleum sector scrips are like cyclical stocks..they are not for long term horizon,one can pick them when hammered along with index and exit when they some petroleum hikes and some reforms are announced..in indian market we can expect atleast three announcements in a month from petroleum ministry,so they are mostly considered as cyclical stocks.

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  8. Hi bro I need to learn chart reading techniques amd tools.Can u guide me any free sotware of website where i can see intraday charts and learn more ..

    ReplyDelete
    Replies
    1. Hie,your brokerage terminal would provide you with charting also. chartink.com is another site which provides charting on eod data basis.

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  9. hi hari bhai...i want to be a intraday as well as VERY short term(max. 1 week) trdaer...can you please suggest me atleast 10 A+ high grade top blue chip stocks in which i could recover my day trading loss (if any) within a week! Thnx for your support...best regards.

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    1. Its not possible to straightly declare 10 scrips that would definitely gain,as such every day stats keep changing,you can visit this blog before market every day,would update intraday calls every morning by 8.30.Good luck

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  10. hie hari sir..i hv bought CAIRN @340...and holding for last 12 days...big loss awating...pl suggest should i average, hold or exit? Thanks.

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    1. hie.cairn unlikely to see 340 levels in this expiry,you need to hold it with mid term horizon.

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  11. Hi, i am unable to understand that how SGXnifty impacts nifty, when ever sgx down every one says our nifty also going to down, and if sgx is up then nifty up.

    And now SGX is down by 77 points.

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    1. Sgx nifty has direct impact on our index,its a tactic played by big shots in our indian market,if they want to manipulate they zoom or hammer sgx nifty,then they make use of pre open session of our market where they buy/sell in huge quantity and make the game one sided.this s how our law is framed.

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  12. Does investing in SGX stocks itself by following intraday SGX signals is profitable or not and is there risk too?

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