A plunge in Indian Stock market
- Thread starter sspms2002
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A question to all the seniors here:
I have been pondering on this for quiet some time now..
Suppose there is a company A and it has a free float of 2000 shares in market..and its share price is Rs 10..
4 different groups hold 300 shares each and rest 800 are with retail/public...
Suppose a good news comes in that company that Obama(read obama as US president here) will be investing in it..
How will the price of shares go up? Because everyone knows that it is a very good news and now every one wants to buy it..but there are no sellers available at Rs 10..may be some will become seller once it reaches Rs 20..but how can a move be initiated at Current price..?
would the 4 big group conglomerate and start selling 10..10 shares unless general public joins the selling and then at some point say at Rs 7..when the feeling is all short ..they again start to accumulate...now they may have total
1700 shares with them and retail only left with 300 shares..
I just get a feeling that when retail starts selling the sell off stops..and accumulation starts..
Now they can start buying from market..and spend 300 shares to get to Rs 10 level again...in turn they have made some profits..and now they have some left to even take it further..so they can sell their 200 till Rs 15 to retail..now price is fixed at Rs 15...
But public has sold there shares of values Rs 10 at around 9 or 8 or 7 when the stock was going down...and in turn incurred losses...
Also public bought again after rs 10 or Rs 11 when they got confirmation that stock is going up..and and lets says they sold off at Rs 14-15..and in turn were just break even...
There were small winner in retail public, who just bought the shares at RS 8 or Rs 9 and held it in the up move..
I am still not too clear how Market makers/ Smart Money manipulates to get an advantage..
Any thoughts on it from Senior Pros..
I have been pondering on this for quiet some time now..
Suppose there is a company A and it has a free float of 2000 shares in market..and its share price is Rs 10..
4 different groups hold 300 shares each and rest 800 are with retail/public...
Suppose a good news comes in that company that Obama(read obama as US president here) will be investing in it..
How will the price of shares go up? Because everyone knows that it is a very good news and now every one wants to buy it..but there are no sellers available at Rs 10..may be some will become seller once it reaches Rs 20..but how can a move be initiated at Current price..?
would the 4 big group conglomerate and start selling 10..10 shares unless general public joins the selling and then at some point say at Rs 7..when the feeling is all short ..they again start to accumulate...now they may have total
1700 shares with them and retail only left with 300 shares..
I just get a feeling that when retail starts selling the sell off stops..and accumulation starts..
Now they can start buying from market..and spend 300 shares to get to Rs 10 level again...in turn they have made some profits..and now they have some left to even take it further..so they can sell their 200 till Rs 15 to retail..now price is fixed at Rs 15...
But public has sold there shares of values Rs 10 at around 9 or 8 or 7 when the stock was going down...and in turn incurred losses...
Also public bought again after rs 10 or Rs 11 when they got confirmation that stock is going up..and and lets says they sold off at Rs 14-15..and in turn were just break even...
There were small winner in retail public, who just bought the shares at RS 8 or Rs 9 and held it in the up move..
I am still not too clear how Market makers/ Smart Money manipulates to get an advantage..
Any thoughts on it from Senior Pros..
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Nice thread..!! Will be following it .
Even i am new to markets and have been trading with small capital since a few months and building my basics on TA. Wishing to learn from the forum threads and other seniors.
I'll also be posting my observations, so that seniors here can correct me whenever i am wrong.
Even i am new to markets and have been trading with small capital since a few months and building my basics on TA. Wishing to learn from the forum threads and other seniors.
I'll also be posting my observations, so that seniors here can correct me whenever i am wrong.
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Just stumbled upon this thread. you seem confused but trying to understand how markets work. So here it is
Market are not manipulated like most retail trader here think. They think its manipulated because they lose.
You need to understand that market is made up traders. Traders come in various sizes, by size i mean their account sizes. Institutions like hedge funds,Mutual funds,Banks...etc have big a/c sizes and they have the power to move prices and they use this power to their advantage.Some better than others.
E.g. if say some stock is trading at Rs 10. you need someone to keep buying above 10 to keep pushing the prices higher and someone to keep selling lower than 10 to keep prices pushing prices lower.
For a retail trader who don't have a big a/c cannot afford to this. you can only afford to buy at one price while Institutions can afford to keep buying higher and higher or lower and lower as they see fit.
e.g lets say there is only one institution and say 10 retail traders for a market. The institution can buy or sell from these 10 retail trader and lets say he buys at some price level to fill his positions and and then he can say buy higher than current prices to move the prices. So as prices move higher , he average buy price is getting lower , BUT he is still on the winning side(net buy price is lower than current market price).
Now lets say the institution want to take profit. He needs to find sellers and lets say he does find 5 of them. He will sell it to them at higher prices and take his profit.
But in reality you have lots of institutions doing this to each other and not necessarily to retail traders. All retail a/c size combined will not come close to a a/c size of a institution.
Think of market like a ocean with plenty of big fishes(institutions) and plenty of small fishes.
Many traders here when lose blame it on institutions saying they are manipulating the market not knowing that institutions don't even care about retail.They only care about orderflow. There only job is to find orderflow to fill their positions and move markets as they see fit to make a profit. The orderflow could be comprised of other institutions or retail. Either way retails is very small.
So if you want to make money, you have to trade with institutions and not against them. Every time you lose money when your SL is hit you went against the institutions.
Take away from this post is that institutions DON'T manipulate markets , they move it as it is necessary to make profits.That movement cannot be called as manipulation. you or I cannot make profits if they don't move prices in our favor, in such case do you call it manipulation. ? NO.
Reading what institutions are doing is a different topic for discussions.
Have a nice weekend!.
Market are not manipulated like most retail trader here think. They think its manipulated because they lose.
You need to understand that market is made up traders. Traders come in various sizes, by size i mean their account sizes. Institutions like hedge funds,Mutual funds,Banks...etc have big a/c sizes and they have the power to move prices and they use this power to their advantage.Some better than others.
E.g. if say some stock is trading at Rs 10. you need someone to keep buying above 10 to keep pushing the prices higher and someone to keep selling lower than 10 to keep prices pushing prices lower.
For a retail trader who don't have a big a/c cannot afford to this. you can only afford to buy at one price while Institutions can afford to keep buying higher and higher or lower and lower as they see fit.
e.g lets say there is only one institution and say 10 retail traders for a market. The institution can buy or sell from these 10 retail trader and lets say he buys at some price level to fill his positions and and then he can say buy higher than current prices to move the prices. So as prices move higher , he average buy price is getting lower , BUT he is still on the winning side(net buy price is lower than current market price).
Now lets say the institution want to take profit. He needs to find sellers and lets say he does find 5 of them. He will sell it to them at higher prices and take his profit.
But in reality you have lots of institutions doing this to each other and not necessarily to retail traders. All retail a/c size combined will not come close to a a/c size of a institution.
Think of market like a ocean with plenty of big fishes(institutions) and plenty of small fishes.
Many traders here when lose blame it on institutions saying they are manipulating the market not knowing that institutions don't even care about retail.They only care about orderflow. There only job is to find orderflow to fill their positions and move markets as they see fit to make a profit. The orderflow could be comprised of other institutions or retail. Either way retails is very small.
So if you want to make money, you have to trade with institutions and not against them. Every time you lose money when your SL is hit you went against the institutions.
Take away from this post is that institutions DON'T manipulate markets , they move it as it is necessary to make profits.That movement cannot be called as manipulation. you or I cannot make profits if they don't move prices in our favor, in such case do you call it manipulation. ? NO.
Reading what institutions are doing is a different topic for discussions.
Have a nice weekend!.
You know what, everyday, I rue about 100 trades that I should have taken and didn't.
It's a part of the work, leaving some trades that feel right. Difficult to figure out why, easy to blame oneself
. Look at them, and move on. Very slowly, in due course of time they will add to your experience and contribute to future trades.
It's a part of the work, leaving some trades that feel right. Difficult to figure out why, easy to blame oneself
. Look at them, and move on. Very slowly, in due course of time they will add to your experience and contribute to future trades.
)I would like to share my experience.When i started , i used to follow "news based trading " . Early morning i would surf financial sites like moneycontrol and economic times and look for "stocks in news"for that particular day.
Few months back news came out that SC had imposed a fine on DLF.
I decided that that i would short DLF as soon as market opens. But somewhere inside i had the fear that what if the opposite happens . So i just kept looking at my screen , watching DLf go down and down..
At one point stock was 5% down...and i had placed sell order for 100 shares ( at that time i had no idea what position sizing is..i just traded 100 shares in each trade
) .....but again emotions ruled my mind and i cancelled the order.Again i could see price go down but did not enter the trade. That day stock went 12+% down...and at end i was just thinking what if i had shorted...i could have made xys rs profit....
So emotions are a major hurdle that bring drawdown for traders. I'm still fighting them.
And coming to the point of news based trading...i've totally stopped it. At that time there was no one to guide me, so committed the mistake.
Now as i'm building basics of TA , i'm getting to know what price action is...finding support and resistance...no over trading...keeping strict stop losses ...and most important money management ..
There's still long way to go..but i'm very confident that patience will pay off..
For news based trading, JP Associates is selling 2 more cement plants to Ultratech (maybe that's why it jumped from 25.2 to 26.8 yesterday) and Jindalstel has some court hearing on 29th, and there is some negative news about Hindalco (something in relation to the coal scam, I forgot the exact news).
I guess this is the experience of every new trader ( including me )
I would like to share my experience.When i started , i used to follow "news based trading " . Early morning i would surf financial sites like moneycontrol and economic times and look for "stocks in news"for that particular day.
Few months back news came out that SC had imposed a fine on DLF.
I decided that that i would short DLF as soon as market opens. But somewhere inside i had the fear that what if the opposite happens . So i just kept looking at my screen , watching DLf go down and down..
At one point stock was 5% down...and i had placed sell order for 100 shares ( at that time i had no idea what position sizing is..i just traded 100 shares in each trade) .....but again emotions ruled my mind and i cancelled the order.
Again i could see price go down but did not enter the trade. That day stock went 12+% down...and at end i was just thinking what if i had shorted...i could have made xys rs profit....
So emotions are a major hurdle that bring drawdown for traders. I'm still fighting them.
And coming to the point of news based trading...i've totally stopped it. At that time there was no one to guide me, so committed the mistake.
Now as i'm building basics of TA , i'm getting to know what price action is...finding support and resistance...no over trading...keeping strict stop losses ...and most important money management ..
There's still long way to go..but i'm very confident that patience will pay off..
)I would like to share my experience.When i started , i used to follow "news based trading " . Early morning i would surf financial sites like moneycontrol and economic times and look for "stocks in news"for that particular day.
Few months back news came out that SC had imposed a fine on DLF.
I decided that that i would short DLF as soon as market opens. But somewhere inside i had the fear that what if the opposite happens . So i just kept looking at my screen , watching DLf go down and down..
At one point stock was 5% down...and i had placed sell order for 100 shares ( at that time i had no idea what position sizing is..i just traded 100 shares in each trade
) .....but again emotions ruled my mind and i cancelled the order.Again i could see price go down but did not enter the trade. That day stock went 12+% down...and at end i was just thinking what if i had shorted...i could have made xys rs profit....
So emotions are a major hurdle that bring drawdown for traders. I'm still fighting them.
And coming to the point of news based trading...i've totally stopped it. At that time there was no one to guide me, so committed the mistake.
Now as i'm building basics of TA , i'm getting to know what price action is...finding support and resistance...no over trading...keeping strict stop losses ...and most important money management ..
There's still long way to go..but i'm very confident that patience will pay off..
Thanks sir..!! but now i refrain trading only based on news, bcoz of my mixed experiences ( mostly resulting in wrong trades
)What i observed is be it positive or negative news...we will get a reaction but that cannot be the basis of our trade.....also we can't judge the magnitude of reaction..coz mass psychology may differ...there have been instances where good news is out...but that is already discounted in the price..so we can't exploit the moves.
Also one point i observed is that understanding the nature of the security will help in taking good trades...like tracking 1-2 stocks over a period of 3-6 months and trading it...on the other hand news come out for many companies...and studying each and every company will be a tedious task( atleast for beginner like me )
I'm sure being a senior you already have knowledge of all this, but please add your inputs and correct me if i go wrong
Thanks.!
@timepass - Sir , now that we are discussing this ..i would like to understand the reaction of external news on markets/companies. This question is coming to my mind since many days.
For eg if there is a war in the west...we find a reaction on our markets and all global markets...but why does that news affect "a particular company" ..say a banking stock.
Is is because of the mass psychology...that markets will fall and we see a sell off in all major stock...whether it is connected with the news or not....or something else.??
Can you please explain this..
For eg if there is a war in the west...we find a reaction on our markets and all global markets...but why does that news affect "a particular company" ..say a banking stock.
Is is because of the mass psychology...that markets will fall and we see a sell off in all major stock...whether it is connected with the news or not....or something else.??
Can you please explain this..
Maybe the company has exposure to that country (involved in the war). Maybe they are exporting something to that country. or maybe importing something.
If the company earns money in dollars, then rupee appreciation may hurt the company. If the company has foreign loans then the rupee depreciation will hurt the company.
If the company earns money in dollars, then rupee appreciation may hurt the company. If the company has foreign loans then the rupee depreciation will hurt the company.