Learning Delivery Trading and Investing
- Thread starter rajputz
- Start date
I still remember the time of february to march 2010, when my dad used to tell me that Metal Industry has good scope over coming time. In 2011 they are going to be good. It was a fundamental thing i think. And if would have taken as a mixture of FA and TA then some metal like hindalco tatasteel might have been in ones delivery long trades.
Well i am trying to search for a single stock based on FA. Then i will try to review its entry Based on TA. Will post my analysis here tomorrow. Please review it for mistakes.
P.S. - I am little hard of time cause of a marriage approaching at home.
Well i am trying to search for a single stock based on FA. Then i will try to review its entry Based on TA. Will post my analysis here tomorrow. Please review it for mistakes.
P.S. - I am little hard of time cause of a marriage approaching at home.
Dear AW10 and friends,
Nothing can beat what you have put here. This is simply saying that you cannot be two sides of the same coin at the same time.
In my opinion it would practically not be possible to play both the roles (FA and TA) for a sustained period of times in a life of a traders. Eventually either you are follow FA or TA. Time horizon will not matter, so if you follow TA, you could use it for intraday (5 min data) or a monthly / quarterly / yearly data for longer periods of holdings. Yes there would be tuning required when you look at different periods of data on the same charts, indicators etc. But still it can be done.
I am a true follower of TA and have my own set of charts, indicators and singals which I have developed over a period of time, which holds good for me for short term trades (intraday, swing, monthly trades) and equally for holdings which go a year and beyond. But yes, for longer period holdings, I have a certain set of very simple indicators which assist my basic charts and tools. e.g. 50/100/200 day simple moving average. These are the very basic curved trendlines which can really act wonders if used religiously. And nothing can beat them, it would provide you with much needed information to trade (read invest) for longer periods. Apart from the pivots, moving averages also assist in identifying resistance and support levelsk / indices.
For identifying stocks for long term investments, as AW10 has said that the best thing is to outsource something which is not your core area. Apart from research reports of a few broking house, best way is to check the daily financial news papers and check for stocks which appear regularly in high volume section, then test these stock against the TA and your tools to check if they qualify your TA tests.
To assist me in identifying high momemtum stock I have developed a stock scanner (on the basis of a certain mathematical model) which scans all companies of BSE 200 and BSE 500 and throws 8 - 10 stocks which exhibit tremedous momentum play on the basis of preceeding 3 months data. These momemtum plays can continue for another 6 - 8 months period after which it would die. I would run this scanner at the end of each month and identify such stocks. But again these stock will undergo my basic TA test and only half of these would qualify as worth riding. A large part of my portfolio consists of such momentum stocks.
Another component to build up a long term stock portfolio could also comprise of contrarian stocks i.e. buying into laggards stock of high growth sectors. The investments in such stocks should be with a time horizon of atleast 2 - 3 years +. To augment the contra stocks, the long term stock portfolio could be built with identifying sunrise industry stocks and allocating a small percentage of the portfolio to a few of such stocks. But personally I do not own a contra / sunrise industry stocks.
Guess I have digressed from the main topic, hence cutting it short here.
Regards,
Nothing can beat what you have put here. This is simply saying that you cannot be two sides of the same coin at the same time.
In my opinion it would practically not be possible to play both the roles (FA and TA) for a sustained period of times in a life of a traders. Eventually either you are follow FA or TA. Time horizon will not matter, so if you follow TA, you could use it for intraday (5 min data) or a monthly / quarterly / yearly data for longer periods of holdings. Yes there would be tuning required when you look at different periods of data on the same charts, indicators etc. But still it can be done.
I am a true follower of TA and have my own set of charts, indicators and singals which I have developed over a period of time, which holds good for me for short term trades (intraday, swing, monthly trades) and equally for holdings which go a year and beyond. But yes, for longer period holdings, I have a certain set of very simple indicators which assist my basic charts and tools. e.g. 50/100/200 day simple moving average. These are the very basic curved trendlines which can really act wonders if used religiously. And nothing can beat them, it would provide you with much needed information to trade (read invest) for longer periods. Apart from the pivots, moving averages also assist in identifying resistance and support levelsk / indices.
For identifying stocks for long term investments, as AW10 has said that the best thing is to outsource something which is not your core area. Apart from research reports of a few broking house, best way is to check the daily financial news papers and check for stocks which appear regularly in high volume section, then test these stock against the TA and your tools to check if they qualify your TA tests.
To assist me in identifying high momemtum stock I have developed a stock scanner (on the basis of a certain mathematical model) which scans all companies of BSE 200 and BSE 500 and throws 8 - 10 stocks which exhibit tremedous momentum play on the basis of preceeding 3 months data. These momemtum plays can continue for another 6 - 8 months period after which it would die. I would run this scanner at the end of each month and identify such stocks. But again these stock will undergo my basic TA test and only half of these would qualify as worth riding. A large part of my portfolio consists of such momentum stocks.
Another component to build up a long term stock portfolio could also comprise of contrarian stocks i.e. buying into laggards stock of high growth sectors. The investments in such stocks should be with a time horizon of atleast 2 - 3 years +. To augment the contra stocks, the long term stock portfolio could be built with identifying sunrise industry stocks and allocating a small percentage of the portfolio to a few of such stocks. But personally I do not own a contra / sunrise industry stocks.
Guess I have digressed from the main topic, hence cutting it short here.
Regards,
For Fa i think a start can be from this basic question
What are the basic steps to Define fundamental analysis to any stocks. For example lets say i like suzlon as a good share. And i want to invest in it. then what are the fundamentals value that i should look into it. Apart from news factor that comes everyday in buisness standards economic times etc.
Okay i can use the TA for trading purposes or refining the entry and exit point to some extent.
Here i am taking suzlon as a homework for me to be picked as a good delivery portfolio share. So what are the key terms i should consider to enter it or not to enter it.
Please share and i will search for it then.
What are the basic steps to Define fundamental analysis to any stocks. For example lets say i like suzlon as a good share. And i want to invest in it. then what are the fundamentals value that i should look into it. Apart from news factor that comes everyday in buisness standards economic times etc.
Okay i can use the TA for trading purposes or refining the entry and exit point to some extent.
Here i am taking suzlon as a homework for me to be picked as a good delivery portfolio share. So what are the key terms i should consider to enter it or not to enter it.
Please share and i will search for it then.
Dear Rohit,
Congratulations on this initiative. Delivery based Investing will certainly take you a long way. Just be sure that you indeed want to carry on with this. Many traders or investors fail to realize which style of investing suites them the best. I have seen many good traders who fail to invest for sustained period of times but yet draw similar incomes from the market just by swing trading regularly. Delivery based trading requires a completely different psychological make up and I sincerely hope you have that make up within your subconscious mind.
As AW10 advised, make sure you start maintaining your trading journal and come out with rules. Whatever rules you make, try and let the market give you feedbacks for the same. It is only on markets feedback that you should change or modify your rules. Don't modify your rules based on your own anticipation. Delivery based investing has a lot to do with identifying the broader market, outperforming sectors within that market and finally identifying outperforming stocks within those sectors. It is not as simple as the 20/50 cross or 2/20 cross which traders normally use. It has lot to do with identifying a broad framework and finally working within that framework. Good investors are always aware of what is going on and you need to imbibe that within your mind.
I sincerely hope you are successful in what you want to achieve.
Tc
Congratulations on this initiative. Delivery based Investing will certainly take you a long way. Just be sure that you indeed want to carry on with this. Many traders or investors fail to realize which style of investing suites them the best. I have seen many good traders who fail to invest for sustained period of times but yet draw similar incomes from the market just by swing trading regularly. Delivery based trading requires a completely different psychological make up and I sincerely hope you have that make up within your subconscious mind.
As AW10 advised, make sure you start maintaining your trading journal and come out with rules. Whatever rules you make, try and let the market give you feedbacks for the same. It is only on markets feedback that you should change or modify your rules. Don't modify your rules based on your own anticipation. Delivery based investing has a lot to do with identifying the broader market, outperforming sectors within that market and finally identifying outperforming stocks within those sectors. It is not as simple as the 20/50 cross or 2/20 cross which traders normally use. It has lot to do with identifying a broad framework and finally working within that framework. Good investors are always aware of what is going on and you need to imbibe that within your mind.
I sincerely hope you are successful in what you want to achieve.
Tc
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this is how it goes with suzlon based on my understanding
I tried to look into the profit and loss account of the suzlon. And this is what i got.
From 2006 to 2009 the operating income of suzlon increased from 3000 to 7000 crore nearly. Which in march 2010 again surged to 3000. Decrease in operating Income by 50%.
Taking in account the material consumed, since the operating income decreased, so did the material consumption. On the otherhand Personal Expenses increased as compared to opearting income.
Administrative expenses of 2009 was 8 times as compared to 2006 and then decresed in 2010 to five times which according to me is a bad sign as we look into the Profit loss account. Operating income has decreased, expensis increased and administrative expenses also increased.
As far as the profit is concerened the profit was maximum in 2008 which decresed in 2009 and became negative in 2010. Bad sign again.
Financial Expenses during the year 2010 has increased by maximum where operational income is decreased.
Reported net profit in year 2010 was loss actually -1414 crore apprx.
And there was no dividend issued in the period of 2009 and 2010.
Looking at the quaterly results: -
sales were maximum in the march 2010 period nearly 1810 which then dropped to 500 approximately.
Operating profit loss was maximum -234 in the last quarter.
Conclusion: -
Sales are nearly half as compared to previous years.
Operational profit has turned negative.
Interest rate is maximum.
Gross profit has turned negative for the first time in the last 5 years.
Earnign per share has also declined to -9.
As far as companies pure fundamentals are concerned. even if the company has a large book of orders with it in the last few days, still we need time for it to show some profit potential before going long in delivery or portfolio
Looking at the technicals, the charts are telling to go long on weekly and daily charts. Breakout with volume is there.
Please point out where am i mistaken.
I tried to look into the profit and loss account of the suzlon. And this is what i got.
From 2006 to 2009 the operating income of suzlon increased from 3000 to 7000 crore nearly. Which in march 2010 again surged to 3000. Decrease in operating Income by 50%.
Taking in account the material consumed, since the operating income decreased, so did the material consumption. On the otherhand Personal Expenses increased as compared to opearting income.
Administrative expenses of 2009 was 8 times as compared to 2006 and then decresed in 2010 to five times which according to me is a bad sign as we look into the Profit loss account. Operating income has decreased, expensis increased and administrative expenses also increased.
As far as the profit is concerened the profit was maximum in 2008 which decresed in 2009 and became negative in 2010. Bad sign again.
Financial Expenses during the year 2010 has increased by maximum where operational income is decreased.
Reported net profit in year 2010 was loss actually -1414 crore apprx.
And there was no dividend issued in the period of 2009 and 2010.
Looking at the quaterly results: -
sales were maximum in the march 2010 period nearly 1810 which then dropped to 500 approximately.
Operating profit loss was maximum -234 in the last quarter.
Conclusion: -
Sales are nearly half as compared to previous years.
Operational profit has turned negative.
Interest rate is maximum.
Gross profit has turned negative for the first time in the last 5 years.
Earnign per share has also declined to -9.
As far as companies pure fundamentals are concerned. even if the company has a large book of orders with it in the last few days, still we need time for it to show some profit potential before going long in delivery or portfolio
Looking at the technicals, the charts are telling to go long on weekly and daily charts. Breakout with volume is there.
Please point out where am i mistaken.
Dear Raunak,
You views are baised depicting that for delivery based trading (investing) one has to necessarily follow FA and have a thorough knowledge of the economy, sector, industry, company etc (the top down approach etc etc). A good grasp of PE, EPS, PBV, earnings, discounted cash flow etc etc.
This is just a one sided view, delivery based investing can be done even with TA and just zero knowledge of FA or anything about the ecomony and other stuff. The monthly, quarterly, yearly charts can still give you patterns, trends, break outs, resistance, support and all what we follow for intraday, swing trade and all. Taking delivery means you want to hold it for a large period of time than what the dervatives contract would allow and without levearging so there is no pressure of MTM losses / margin calls.
The charts talk : irrespective of what TF we look at.
On your comment on deciding what TF a trader wants to trade. Refer AW10 comment that short term trading (Intraday, swing) can help meet your living expenses but cannot create wealth. Big money is made in big time frame.. So as the fund size increases, one will have to allocate funds to higher TF investing / trading, which is essentially nothing but delivery based investing, which could be for a period of 6 months, a year or two or more too. e.g. as a day trader, say I have a method which is scalable to use upto 20 L of trading capital, for swing trading I may scale up to use another 50 L, but what if I have 2 - 3 -5 Cr ...at my disposal, I cannot deploy them to day trade because my method and resources are not scalable to handle this amount. Hence necessarily I will have to invest it for larger period (and also 'safer' assets - by not leveraging) through delivery based trading. And there is no conflict in ones mind as you need not track such investments daily, probably once a month or twice a month is good enough.
To sum it up, as I have quite often written elsewhere, it is the fund allocation which is the key for success even for day traders to create wealth. So even for a day trader or a jobber his bread may come from his daily activity, his butter will come from long TF investments / trades.
Regards,
You views are baised depicting that for delivery based trading (investing) one has to necessarily follow FA and have a thorough knowledge of the economy, sector, industry, company etc (the top down approach etc etc). A good grasp of PE, EPS, PBV, earnings, discounted cash flow etc etc.
This is just a one sided view, delivery based investing can be done even with TA and just zero knowledge of FA or anything about the ecomony and other stuff. The monthly, quarterly, yearly charts can still give you patterns, trends, break outs, resistance, support and all what we follow for intraday, swing trade and all. Taking delivery means you want to hold it for a large period of time than what the dervatives contract would allow and without levearging so there is no pressure of MTM losses / margin calls.
The charts talk : irrespective of what TF we look at.
On your comment on deciding what TF a trader wants to trade. Refer AW10 comment that short term trading (Intraday, swing) can help meet your living expenses but cannot create wealth. Big money is made in big time frame.. So as the fund size increases, one will have to allocate funds to higher TF investing / trading, which is essentially nothing but delivery based investing, which could be for a period of 6 months, a year or two or more too. e.g. as a day trader, say I have a method which is scalable to use upto 20 L of trading capital, for swing trading I may scale up to use another 50 L, but what if I have 2 - 3 -5 Cr ...at my disposal, I cannot deploy them to day trade because my method and resources are not scalable to handle this amount. Hence necessarily I will have to invest it for larger period (and also 'safer' assets - by not leveraging) through delivery based trading. And there is no conflict in ones mind as you need not track such investments daily, probably once a month or twice a month is good enough.
To sum it up, as I have quite often written elsewhere, it is the fund allocation which is the key for success even for day traders to create wealth. So even for a day trader or a jobber his bread may come from his daily activity, his butter will come from long TF investments / trades.
Regards,
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Dear Rajputz,
In trading or investing, there is nothing called as cheap or expensive, hence irrespective of the price you buy you aren't a fool as long as you know there is another one willing to pay even higher price for it.
In case of Suzlon, if I were you I would go long if the TA indicated so, however if you are looking at longer period of holding, I suggest you to check out monthly and quarertly charts. Daily chart is strictly no - no.
Regards,
In trading or investing, there is nothing called as cheap or expensive, hence irrespective of the price you buy you aren't a fool as long as you know there is another one willing to pay even higher price for it.
In case of Suzlon, if I were you I would go long if the TA indicated so, however if you are looking at longer period of holding, I suggest you to check out monthly and quarertly charts. Daily chart is strictly no - no.
Regards,
Dear,
My post is related only to TA. It's not related to FA. Moreover, I have interacted a lot with Rohit, hence I think he knows what I meant by writing that post.
Without a framework one cannot survive in Delivery based trading (investing). Framework does not mean P/E, EPS etc. It means awareness about one's own self and how that self is interacting with what is going around. Sooner investors realize this, the better it is for their investments.
It is not an absolute necessity to invest to create wealth. Wealth can be created through regular trading as well. It's just a matter of personal choice. Its just a matter of how skilled you are. There's no definite rule for this. Ultimately, what I think about markets does not have to coincide with what some other trader thinks about the markets. We all can execute our own beliefs and still be successful. In terms of probability, mutual exclusivity in terms of thought process does not exist within any markets. As traders/investors, we never trade our markets. We only trade our beliefs.
Tc
My post is related only to TA. It's not related to FA. Moreover, I have interacted a lot with Rohit, hence I think he knows what I meant by writing that post.
Without a framework one cannot survive in Delivery based trading (investing). Framework does not mean P/E, EPS etc. It means awareness about one's own self and how that self is interacting with what is going around. Sooner investors realize this, the better it is for their investments.
It is not an absolute necessity to invest to create wealth. Wealth can be created through regular trading as well. It's just a matter of personal choice. Its just a matter of how skilled you are. There's no definite rule for this. Ultimately, what I think about markets does not have to coincide with what some other trader thinks about the markets. We all can execute our own beliefs and still be successful. In terms of probability, mutual exclusivity in terms of thought process does not exist within any markets. As traders/investors, we never trade our markets. We only trade our beliefs.
Tc
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