Re: Stocks To Keep A Close Eye On - Chapter II
Hi Trader_man,
The stop loss figures are calculated using a simple formula suggested by Savant. Initially, the figures may appear to be too big. But the real picture is different. You have quoted the Excel file in your earlier post. But apparently you have not gone through the file completely. There is a second sheet named "Trades". If you see the losses mentioned there, in case of SL or SELL trigger you will find that the losses are below 10% except a few(about 6-8). Only in three cases the losses are huge. They are REIAGRO, HARRMALAYA and RNRL. I have mentioned the reasons for such a fall on the respective days. These are due to corporate actions. REIAGRO was due to the EX-RIGHTS, HARRMALAYA due to demerger and RNRL due to merger with Reliance Power. These corporate actions have affected the value of the shares on stand alone basis. But if you consider the benefits brought in by these actions such as the price of Rights shares (the average price of the holdings is also drastically down after rights shares are added) or the additional shares allotted due to demerger the real loss is not there. When you add up these benefits there is a real gain. But these additoinal gains can not be added to the price of the original holdings. The program does not discount these factors and the output is shown as a heavy loss.
In the same sheet you can compare the overall gains versus losses both in terms of number of loss making triggers against the number of profitable triggers and also the monetary gains versus losses you can find that the balance tilts decisively in favour of overall gains.
I am not defending the system or claiming it to be the best. It is left to the individuals to draw their own conclusions and decide either use the AFL and the triggers or reject them.
-Anant
Hi Trader_man,
The stop loss figures are calculated using a simple formula suggested by Savant. Initially, the figures may appear to be too big. But the real picture is different. You have quoted the Excel file in your earlier post. But apparently you have not gone through the file completely. There is a second sheet named "Trades". If you see the losses mentioned there, in case of SL or SELL trigger you will find that the losses are below 10% except a few(about 6-8). Only in three cases the losses are huge. They are REIAGRO, HARRMALAYA and RNRL. I have mentioned the reasons for such a fall on the respective days. These are due to corporate actions. REIAGRO was due to the EX-RIGHTS, HARRMALAYA due to demerger and RNRL due to merger with Reliance Power. These corporate actions have affected the value of the shares on stand alone basis. But if you consider the benefits brought in by these actions such as the price of Rights shares (the average price of the holdings is also drastically down after rights shares are added) or the additional shares allotted due to demerger the real loss is not there. When you add up these benefits there is a real gain. But these additoinal gains can not be added to the price of the original holdings. The program does not discount these factors and the output is shown as a heavy loss.
In the same sheet you can compare the overall gains versus losses both in terms of number of loss making triggers against the number of profitable triggers and also the monetary gains versus losses you can find that the balance tilts decisively in favour of overall gains.
I am not defending the system or claiming it to be the best. It is left to the individuals to draw their own conclusions and decide either use the AFL and the triggers or reject them.
-Anant
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