BACK TO BASICS PART-I
• I am in markets for last 9 yrs, earlier i was a novice and lost 30 % during BJP defeat in 2004 elections. Then i started investing in IPOs and at that time PSU IPOs and FPOs like ONGC, GAIL, PTC, IDFC and Petronet etc recovered my money.
• Since then i got into reading books and presentations on investments and first thing I did was that I used to wait for falls and started fundamental analysis and investment keeping in mind capital expansion and cash flow . I multiplied my money by 5 to 7 times in stocks like adlabs, sujana, reliance, patel eng ,bayer etc.
• By end of 2007 my greed took over and i started to leverage my money and bought naked futures of idbi and ifci and i started to make 20,000 to 50,000 in a day just with an amount of around 8 lacs, i thought very soon i will be a crorepati but then came jan 2008 and i lost 40% of my networth earned over years in just 3 days, luckily i had started learning technicals by then so i came out of markets when nifty crashed from 6300 to 4500 and protected my cash.
• After that i witnessed stocks correcting by 90 to 95 %, consequently my belief on fundamentals started to reduce, they are good only for sunny and good times as at a whisker of bad news stocks like ifci unitech suzlon correct by 40%. So it is better to be in a fundamentally good company and keep technicals in place.
• Since 2009 entered into hedge trading and have doubled my cash and increasing it during market falls also simply by shorting calls and futures based on my technical knowledge. Technicals might not make money for u but surely will save ur profits.
• SOME OF THE LESSONS LEARNT
• Never leverage, if u have 10 Lacs divide it into 5 parts of 2 lacs each and trade in 2 lots maximum in 3 lots at a time. keep strict stop loss or buy puts with exit rates
• Do opposite of the masses. Masses look towards price increase and traders amongst them have an everlasting tendency of going against the trend.
• Be patient wait for right opportunities, compete with urself not others.
• Make a complete plan by writing it on paper and evaluate all contingencies.
• Never trade or invest money which u require for important work, u will surely lose it.
• Be mechanical, dont let ur emotions drive u and if ur a fundamental investor then be with the stock for 5 to 15 years and not for 2 or three years, till three years i feel a person is a trader and not part of the company’s growth.
• Most important is to take out some profits regularly enjoy it with ur family and buy good things for urself, donate some part of ur profits or help a needy pers. I personally like to help children animals and plants. Till the time u dont give u will not receive in abundance.
• REMEMBER
• Dont fully trust websites and reports go buy your gut feeling.
• Market will give indications, what it wants to do next try and read it.
• Dont try to outsmart markets.
• Go with the grain of the markets not against it.
• Two of the biggest mistakes most traders generally commit are. Firstly, they do not follow the trend, having an ever lasting tendency of always trading against the existing trend whether intraday or daily or weekly. Secondly, not holding on to their gains thinking that gains will go away thus quitting early from likely great gains and at the same time boldly holding on to their loss making trades for days, weeks & months together thinking that loss will be reduced or will turn out to be a gain in a few days.
• For option trading, game is 90% beneficial on shorting side because it decays. A patient having an incurable disease will melt slowly and in rarest cases will survive, yes it will show signs of recovery at times. That’s why my game is set on shorting unless I find a great opportunity on channel analysis.
• Companies Which Will Give Good Trends for Trading And Investing
• Untapped market availability.
• Working capital requirement is moderate.
• Business superiority.
• Consistency in cash flow.
• No or less debt.
• Scalability of business.
• Other then my periodic analysis on markets I will keep posting this series BACK TO BASICS in various parts in which I will cover various technical analysis topics and some of the research work that I am carrying out as I firmly believe that most important tenets of Fibonacci ratio, Elliott Waves and Gann analysis are hidden from the commoners intentionally. I shall also try and encorporate a series on psychological grooming of an investor and a trader through right homework, meditation, and creative thinking.
The same angles have been applied to 15 min chart....and if u compare both the charts then we are in similar zone and if this zone is broken on down side then bears will be in power...
The chart above shows the wave channels in this corrective phase.. the white ones are governing present wave.. breaking the narrower white channel will take nifty to the wider one...if the wider one is broken convincingly then we might as well go to 4721 and 4590 zone..