Hi,
You are going great guns, good to see that.
I have a few questions:
1] Out of 1000s of scrips, you follow only 4-5 at a time ?
2] The system you follow, can not be programmed for seeing data at least for a 100scrips in parallel ? Because you would be missing out on opportunities. Because your capital is kept idle for sometime.
3] Currently, You dont seem to be having many shorting candidates. Why ?
Thanks n BR
SA
Hi Sanjay. Here are the answers to your queries in the order that you asked them:
1) Thats not true. I follow many scrips but TRADE only 4-5 at a time. Basically, we have a 3 step filteration process. Step 1 - The software scans all stocks available on NSE / BSE and which are tradeable as per system criteria. Step 2 - From this list we have system experts who further refine the stocks to around 30 in all (shorts + longs) after taking into account factors such as volume, chart pattern etc. This refined list is published every weekend on the system forum for subscribers to trade from. Step 3 - From this refined list, subscribers (like you and me) choose as per our comfort, around 4-5 stocks that we would like to trade. So this way we are trading only the best stocks & hence, have the highest probability of success.
2) Part of this is answered above. All stocks on NSE / BSE / FNO are scanned initially by the software. You can also do your own screening through the software at anytime since the tools that you or any system expert has access to, are the same.
Our capital is not kept idle as we invest all our money equally in these 4-5 positions. So if you have 5 lacs, you will invest 1 lac in each position. The strategy employed is concentration as opposed to diversification.
Diversification (investing in 15-20 stocks) is a strategy generally employed for long term investing where you are not really sure which stock will perform over that time period. It is also advised as most people dont know what they are doing i.e. they dont know why they are entering a particular stock and even if they enter, they dont know when to exit. Once you have a system (any system) that you are confident about and one that you have thoroughly backtested, concentration of positions is a better bet for superior returns. In any case, with this system, as you would have seen, we are entering only the best and fast moving stocks so 4-5 positions is ideal.
Easy to manage as well. The more the number of stocks the more time and effort is required to manage your portfolio.
One very imp. thing is that since we require only 4-5 good stocks at any given point in time, we really do not need the broader markets to be trending in one direction. If you notice from 2011 onwards you would have struggled to find 15-20 stocks that you are comfortable entering as the markets were directionless for a large part. In fact, such markets will under-utilize your capital if you diversify
3) Its a personal choice. We do have some great stocks for shorting in our weekly list. In fact, Adani Ent would have been shorted somewhere around 230-235 as per the system and would have given great returns. I personally short only when the opportunity is really good (like Suzlon) or the markets seem like breaking down. Also, I saw more compelling buys than shorts hence the bias towards the bulls
Hope this clarifies a few things. Cheers.
