Sensex Technical View :
As being mentioned for few days it needs to be seen how Sensex behaves around 16900-17100 range. Technically all the ma's are near this band and a bounce back is possible from these levels. There is whole lot of action in stocks apart from the index and till sensex manages above 16800 traders can continue to look for stock specific opportunities with lower exposures. Investors who generated cash by booking profits can search for oversold funda stocks.
Stocks to watchout for :
GSPL not moving keep a stop of 68 for traders and 64.5 would be a support which should hold for 3 mths view. Tata Steel moves up even after govt announcement... BPCL above 395 and HPCL above 255 would mean reversal . WEBEL Sl does 10 % upper freeze and looks good for 360-400 zone where one can book profits and wait for dips to buy for investment.Sugars volatile as usual buy on dips and reduce on rise. Assam co and Mcleod russel charts updated in post below.
With increasing volatility traders should go for smaller quantity compared to their general style to manage risk.
Lot of buying seen in Oil drilling and exploration stocks --High risk Traders can keep watch on Aban Lloyd , Great offshore , Alpha geo for short term.
Bottom fishing candidates which have corrected a lot and can bounce 20 %+ : ( do ur own research as low liquid stocks ) The stocks are fundamentally sound stocks so can be accumulated on dips too by patient investors.
GE Capital transp.( 500398 ) Petron Engg ( 530381 )
Some thoughts :
There are some unusual ways of calculation myths which i have noticed in my starting trades and in many of the new traders as well as old time traders.
a) Tendency to buy a fixed no of shares or qty --
Many times its been noticed a general trader would put his bids like
buy 1000 shares of ABC at 400 and at the same time buy only 3000 shares XYZ co at 70 ... And both the trades he would be similarly bullish....
Now do u feel there is anything wrong in the above trade ?????? Well it doesnt seem so but mathematically in 1st trade he is allocating 4 lacs and in second 2.1 lakhs and still he would still be looking at the 2nd trade more ...
Why does this sort of anomaly happen !.. Whenever we try to put a trade the reason is generally a pop up tgt is in our minds. In that sense trader might be looking at a tgt of say 415-420 and starts calculating it would be a gain of 15k-20k ... At the same time he may also think of buying the stock at 70 and sell at 74 -76 and gain 15k + ....
So in such a calculation the trader doesnt realize he is looking for a 4-5 % jump in one trade with larger exposure and at the same time looks for a 8-9 % gain in other with a lesser exposure... And this is what i have noticed over a long time with the bids placed by a day or swing trader !!!..
So in the end even if a trader finds a good trade ( say second trade ) still he tends to make much less on his good picks.... This reduces the probaility of a trader making good money !! although he may be a good stock picker ............ So alongwith great stock picking u need to be an alert trader to optimize !!!
In simple words a trader starts looking at absolute gains and tends to forget about percetange move and the equity exposure n leverage !!!
This is just an example which may fit some cases only but if u r doing something like this u better look at ur strategy in trading .... As short term trading is one serious business !!!
b ) STOPLOSS
STOPLOSS means STOP ur LOSS ( or stop ur trade at a point decided on tech or risk apetite so u are safeguarded from something major )
Lets take an analogy
It can be stated We pay premiums for MEDI CLAIM isnt it !! Do we expect the money back !!! NO NO isnt BUT u know this Financial exercis ( DISCIPLINE ) keeps us safe from unknown major accidental expense ( CRASH ) which can hurt u double one the accident stops u frm working ( LOSS ) and also the expense stops u from recovering financially ( CAPITAL ) ...
Just read the above line carefully and u will know why we emphasize on STOPLoss .
In simple words a Good trader is more worried about the RISK !!! and containing losses ....DISCIPLINE is what differentiates a good trader from a loser....
Above all a stoploss hit doesnt make a trader ineligible to take exposure in the stock again when he is comfortable !!!!
People can give their view on the views and if this thing relates well to trading do let me know so would put up more such views on STOPLOSS , Profit Booking , Allocation of Money , Reducing exposures etc.......and many more topics !!
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