Monsoon Forecast

It is a normal forecast but the room for error is quite low

The preliminary monsoon forecast for the year 2018 was put out by the Indian Meteorological Department (IMD) during the week at 97% of the long-term average (LTA). By definition, this is classified as a normal year. The IMD defines normal monsoons as the range of 96-104% of the LTA. By that definition, the monsoons this year are going to be certainly at par with the previous year. But that only means that the room for error is quite low. Here is why! Continue reading “Monsoon Forecast”

Equity SIPs

What explains this huge traction in SIPs?image1 (2)

The latest data put out by the Association of Mutual Funds of India (AMFI) on mutual fund SIPs is quite encouraging. There has been a sharp 53% growth in total SIPs in fiscal 2018 compared to fiscal 2017. What explains this huge traction on SIPs especially considering that the Nifty and the Sensex are already fairly valued? Continue reading “Equity SIPs”

Trading Rule – “Watch out for those silent early warning signals”

THE BEAUTY OF THE MARKETS IS THAT NOTHING STRIKES WITHOUT A WARNING. BE IT THE DEFAULT BY VIJAY MALLYA OR THE BANKRUPTCY OF SATYAM COMPUTERS OR THE CONFLICT OF INTEREST CASE IN ICICI; THE STORY IS ALWAYS THE SAME. THE MARKET GIVES AN EARLY WARNING SIGNAL IN A NUMBER OF WAYS. FOR EXAMPLE, THE MARKET SIGNAL COULD COME IN THE FORM OF LOWER P/E VALUATION DESPITE ROBUST PROFITS. ALTERNATIVELY, THE SIGNAL COULD COME IN THE FORM OF PRICE WEAKNESS EVEN WHEN THE OTHER STOCKS IN THE SECTOR ARE GIVING POSITIVE RETURNS. SIGNALS ALSO COME IN THE FORM OF SPURT IN VOLUMES AND AT TIMES EVEN AS WEAK VOLUMES Continue reading “Trading Rule – “Watch out for those silent early warning signals””

Trading Rule – “Don’t try to get even with the market”

REMEMBER THE OLD APHORISM, “REVENGE IS SWEET BUT ITS RESULTS ARE BITTER”. YES, THAT APPLIES TO TRADING IN THE MARKETS TOO. BUT HOW DO YOU EVEN TAKE REVENGE ON THE MARKETS. IT IS CALLED TRYING TO GET EVEN WITH THE MARKETS. THERE ARE VARIOUS WAYS IN WHICH TRADERS TRY TO GET EVEN WITH THE MARKET. SOME TRADERS TRY TO GET EVEN WITH THE MARKET BY TAKING A CONTRARIAN VIEW. OTHER TRADERS TRY TO AVERAGE THEIR POSITIONS TO GET BACK AT THE MARKETS. STILL, OTHERS SIMPLY OVERTRADE IN THE MARKET TO TRY AND REDUCE THEIR LOSSES. ALL THE THREE ACTUALLY RISK LOSING MONEY IN TRYING TO AVENGE MARKETS Continue reading “Trading Rule – “Don’t try to get even with the market””

Trading Rule – “Always maintain a Trading Diary”

WHAT DO WE UNDERSTAND BY A TRADING DIARY? IT IS BASICALLY A RECORD OF ALL YOUR TRADES WITH AN ANALYSIS OF THE THOUGHT PROCESS BEHIND THESE TRADES AND YOUR EXPLANATION OF THE OUTCOME. THE TRADING DIARY IS NOT JUST ABOUT DOCUMENTING YOUR TRADES; THAT IS SOMETHING YOUR CONTRACT NOTE CAN ALSO DO. THE TRADING DIARY IS ALL ABOUT CRYSTALLISING YOUR THOUGHTS ON A TRADE AND EVALUATE IF YOUR TRADING PROCESS IS PROPER OR NOT. ABOVE ALL, IT HELPS YOU TO CREATE A TRADING CHECK LIST AND GIVES YOU IMPORTANT CUES FOR YOUR TRADING STRATEGY NEXT DAY

Continue reading “Trading Rule – “Always maintain a Trading Diary””