Sunday, April 24, 2011
Thursday, April 21, 2011
TRADING MISTAKES - 2
Mistakes are the usual bridge between inexperience and wisdom. ~Phyllis Theroux
Emotional Trading :Due to lack of experience, novice traders trade with emotions. Sometimes their ego is on stake. They enter into trade with hefty greed and close it with exaggerated fear. They trading instinct is easily stimulated by rumors, news and decision is made in haste without the backing of rationale. Sometimes greed comes into trade and profits dwindle to eventual loss with a hope of larger profit. One thing is very common among novice trader is a panic reaction with price fluctuations. If a trade is fail they are unable to accept that they committed a mistake thus carry a position to a level where the losses swells to uncontrollable level. They always rejoices even the smallest profit with great fanfare and gets dejected if they incur any loss. And this attitude severly affects their trading temperament for upcoming trades. Greed, fear, haste, impatience, dejection, exaggeration all these emotions hamper the trading activity.
Emotional Trading :Due to lack of experience, novice traders trade with emotions. Sometimes their ego is on stake. They enter into trade with hefty greed and close it with exaggerated fear. They trading instinct is easily stimulated by rumors, news and decision is made in haste without the backing of rationale. Sometimes greed comes into trade and profits dwindle to eventual loss with a hope of larger profit. One thing is very common among novice trader is a panic reaction with price fluctuations. If a trade is fail they are unable to accept that they committed a mistake thus carry a position to a level where the losses swells to uncontrollable level. They always rejoices even the smallest profit with great fanfare and gets dejected if they incur any loss. And this attitude severly affects their trading temperament for upcoming trades. Greed, fear, haste, impatience, dejection, exaggeration all these emotions hamper the trading activity.
CONFUSION
Yea confusion prevails regarding the course of action. I havent tracked global market for straight 3 days. Not even the political scnerio that has significant bearing on market movement. Yesterday I recommended IT stocks though they gave good opening today but lower volume in index in second half pulled them back to lower than yesterday level. Still most of the indicator still suggesting to keep long positions in IT stock thats what Im doing. One important signal I witnessed at the end of the day is the baseline that infosys is forming at 2900 level. Its a value buy at this stage and after 4-5 months people will regret not buying at cheaper price. And surprisingly what I saw in IT yesterday found in Banks today. These two sectors are going to lead Nifty to 6000 level in next 2-3 trading days.
Wednesday, April 20, 2011
IT RESURRECTED
After Infosys' lower than expected results and stepping down of Mohandas Pai , Wipro good results brought investors faith back to IT stocks. Negative sentiments among IT stocks led the index to the current fall. Wipro came to rescue and with buying spree in IT, we can expect a small rally in index.
I strongly recommend IT stocks for tommrow. Specialy TCS and Wipro. For a longer term Infosys can be a value buying.
See the striking similartiy in trend in these IT stocks. A clean reversal, from black to white. Lets see why this happened.
COMMON TRADING MISTAKES
If you don't make mistakes, you're not working on hard enough problems. And that's a big mistake. F. Wikzek
Mistakes are inevitble in life. No matter which stream we are pursueing we ought to make some mistakes. So do traders. Mitakes in trading brings rahter bitter consequences because it cost our deary money. Hard earned or borrowed. Novice trader are prone to such mistakes. Im trying to sort out those mistakes and starting a series on such mistakes. Present one is the first in this series.
1. Trade Without Trading Plan : People often enters into this market with big dreams but before startging
they dont make any plan. They are not sure of their risk appetite and dont define even their objective thus their trades are marred by indiscipline. Trading withough discipline has only one destination- disaster. Trade witout objective makes them clueless about where they are going. Obviously they are not prepared, not prepared to assess their profit or bear the losses. Trade without target and stoploss will eventually go haywire. In other words we must know why we are entering into this trade? We must have solid reasoning behind making that trade? On a protective measure we must know on which condition we have to close this position? These are very simple and proven steps that can dramaticaly change your success ration. Do have a trade plan before you trade.
Mistakes are inevitble in life. No matter which stream we are pursueing we ought to make some mistakes. So do traders. Mitakes in trading brings rahter bitter consequences because it cost our deary money. Hard earned or borrowed. Novice trader are prone to such mistakes. Im trying to sort out those mistakes and starting a series on such mistakes. Present one is the first in this series.
1. Trade Without Trading Plan : People often enters into this market with big dreams but before startging
they dont make any plan. They are not sure of their risk appetite and dont define even their objective thus their trades are marred by indiscipline. Trading withough discipline has only one destination- disaster. Trade witout objective makes them clueless about where they are going. Obviously they are not prepared, not prepared to assess their profit or bear the losses. Trade without target and stoploss will eventually go haywire. In other words we must know why we are entering into this trade? We must have solid reasoning behind making that trade? On a protective measure we must know on which condition we have to close this position? These are very simple and proven steps that can dramaticaly change your success ration. Do have a trade plan before you trade.
Monday, April 18, 2011
ONGC
- Its has resistence at 305 and support at 285. It can be rangeboud for sometime.
- People who bought it at upper level can wait for some time.
- Fresh long position can be made with a stoploss of 278 and immidiate target of 310
Sunday, April 17, 2011
GO LONG BROTHER
Some people might be scared of going long at this juncture, specially seeing a small dip after a single day rally of 13th April which lifted Nifty from 5748 to 5900. Well, Im still bullish because of the two signals I found on this chart.
1. Previous resistence of 5600 which was tested twice on 18th Feb and 4th March was breached on 25th March with a significant gap up.
2. Occurance of bullish engulfing pattern on 12-13th April. The relative size of the bodies in the first and second days is very crucial. 12th is characterized by a very small real body but 14th is characterized by a very long real body, this strongly indicates that the bearish power is diminishing and the disparity of white versus black body is indicative of the emerging bull power.
I would suggest to make fresh long at 5725 level or at current level with a stoploss at 5725.
HAPPY TRADING.
Friday, April 15, 2011
Wednesday, April 13, 2011
LET THE SILVER SHINE
Cosidering extremely bullish trend in silver one may easily carried over and stuck into the complex territory of commodity trading.
Silver is very volatile commodity and prices fluctuate on global cues. You may be introduced rather say lured to commodity by your broker by the prospect of making awesome profits. And chances are great you could be easily decived by the number and figures he presents before you. If you are a recluse and impusive trader then there 100% chances that you will lose your capital or worse may end up in debit. Steep and abrupt rise and fall are very common in silver prices. Lack of rational behind any trade can cost you some money. After incurring heavy losses in commodity esp silver trading I introspected and realised that there are some common characteristic traits of lost trades. I would like to share with you the lessons I learnt from my early setbacks.
1. Enter a trade only if you see any reason. You must have a rationale behind every trade. In simple words you must be able to answer few quesions like, why are you entering into this trade? To which extect you can bear loss? what will be the stoploss? Why and when I should quit this trade?
2. Quit as soon as you realise its a fail trade. Not every trade reap profit. Successful traders too have very poor success ratio. Quit the trade as soon as you realises that its going against your expecatation.What makes difference is their habbit of keeping the lossess at minimum. There are ample chances of making profit but once you lose your capital you wont be able to make another trade. So in a bid to minimise losses you must close the trade once you find it opposite of your anticipation.
3. No impulsive trading. Dont trade when you are angry,sad,frustated,disappointed. Dont make a trade to recover your previous losses. Forget any loss in you had any. Better stay calm and keep yourself out of trade if you incur any loss. Forget the previous trade. You are reborn with every new trade.
4. Maintain your trade log. You must be knowing what you are gaining and losing in each and every trade. It will also helpful to evaluate your trading pattern and finding faults with it. You can review it on daily,weekly or monthly basis and sort out the problem areas. It will not only improve your performance but boost up your confidence as well.
All The Best. HAPPY TRADING
Silver is very volatile commodity and prices fluctuate on global cues. You may be introduced rather say lured to commodity by your broker by the prospect of making awesome profits. And chances are great you could be easily decived by the number and figures he presents before you. If you are a recluse and impusive trader then there 100% chances that you will lose your capital or worse may end up in debit. Steep and abrupt rise and fall are very common in silver prices. Lack of rational behind any trade can cost you some money. After incurring heavy losses in commodity esp silver trading I introspected and realised that there are some common characteristic traits of lost trades. I would like to share with you the lessons I learnt from my early setbacks.
1. Enter a trade only if you see any reason. You must have a rationale behind every trade. In simple words you must be able to answer few quesions like, why are you entering into this trade? To which extect you can bear loss? what will be the stoploss? Why and when I should quit this trade?
2. Quit as soon as you realise its a fail trade. Not every trade reap profit. Successful traders too have very poor success ratio. Quit the trade as soon as you realises that its going against your expecatation.What makes difference is their habbit of keeping the lossess at minimum. There are ample chances of making profit but once you lose your capital you wont be able to make another trade. So in a bid to minimise losses you must close the trade once you find it opposite of your anticipation.
3. No impulsive trading. Dont trade when you are angry,sad,frustated,disappointed. Dont make a trade to recover your previous losses. Forget any loss in you had any. Better stay calm and keep yourself out of trade if you incur any loss. Forget the previous trade. You are reborn with every new trade.
4. Maintain your trade log. You must be knowing what you are gaining and losing in each and every trade. It will also helpful to evaluate your trading pattern and finding faults with it. You can review it on daily,weekly or monthly basis and sort out the problem areas. It will not only improve your performance but boost up your confidence as well.
All The Best. HAPPY TRADING
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