Posted at 11:23 AM , on December 13, 2016
A successful self trader – Rule # 42
THIS RULE IS APPLICABLE WHETHER YOU ARE A TRADER OR AN INVESTOR. THE LARGER THE STOCK UNIVERSE, THE LESS TIME AND ENERGY YOU ARE ABLE TO DEVOTE TO EACH OF YOUR POSITIONS. ALSO, IF YOU ARE LOOKING AT DIVERSIFICATION OF YOUR RISK, IT HARDLY WORKS BEYOND A POINT. BEYOND THE FIRST 8-10 STOCKS, YOU ONLY END UP SUBSTITUTING RISK, NOT MITIGATING IT. YOU ALSO MISS OUT ON SCORES OF OPPORTUNITIES THAT GO DOWN THE DRAIN. WATCH OUT! Continue reading
Posted at 2:17 PM , on March 11, 2015
A successful self trader – Rule # 2
Warren Buffet may have referred to Futures as weapons of mass destruction. But there is a method in the madness. While you can get away with mistakes in the cash market, your margin for error in futures is limited. But it has some amazing advantages. It combines the best of leverage, economy and efficiency. Futures manage your risk and also spur your investment yield. But Discipline is the key!
FROM THE EDITOR’S DESK
Imagine you have bought futures of Infosys expecting a bumper quarterly result. The profits were on course but the guidance turns out to be an absolute disaster (Oh yes, don’t we remember April 2003?). Most likely you are up against a huge MTM loss and a possible wipe out of your capital. That is where intelligent futures trading and the power of discipline come in handy. Continue reading
Posted at 1:52 PM , on March 4, 2015
by- Sunil K. Goyal, CEO – YourNest Angel Fund (A Religare Global Asset Management Affiliate)
It was in early 2001 that I joined Bharti Airtel to work with Sunil B Mittal (SBM), a first generation entrepreneur. SBM opened my eyes to a completely new business – building ethos – he was open to diluting his stake. In other words, he was willing to share his future wealth with the people who shared his belief – and risks – in the early stages of his business. There were multiple risks in the business of that startup, not least of which were the challenges of the regulator, the whimsical market forces, question of building scale, entry of internationally well established competition, need for differentiation, the challenge of building a world class team in an industry in its infancy, risk of technology obsolescence – the list was endless. Continue reading
Posted at 1:12 PM , on March 3, 2015
A successful self trader – Rule # 3
Market breadth has a plethora of interpretations. It can refer to the number of stocks, or sectors or themes. But the moral of the story is simple. Never bet on a market direction that is not supported by breadth. Market breadth gives the legs for the market to stand on. In fact, the final and decisive confirmation of a market trend is always the breadth. Broader the trend, more affirmative the direction!
Understanding market breadth
There may be a variety of ways to understand market breadth, but the best way is through a live market example. On the day of the Union Budget 2015, the market was sharply pulled down by ITC. Higher than expected, excise on cigarettes, led to aggressive selling in the stock. The index which was sharply down in the afternoon had rallied by evening. But, why did this happen? Continue reading
Posted at 7:54 AM , on February 19, 2015
A successful self trader – Rule # 1
The word magic formula may sound quite incongruous in the context of capital markets. But the fact is that not all strategies work for every investor. Can you imagine Warren Buffet as a short seller? Can you visualize Soros as a long term fundamental investor? Can you imagine Lynch as a trend trader? Each of them has identified their own magic formula and has religiously stuck to it. Touché!
FROM THE EDITOR’S DESK
There is nothing really magical about a magic formula in markets. It is simply a formula that has worked for you in the past, is based on sound business logic and delivered returns consistently in most market situations. When a formula works for you, there is nothing superstitious about it. It is just that it is probably a formula that is best suited to your market philosophy. Let me explain! Continue reading