Trading Strategies Using Technical Analysis

[scplindia]

GSPL is doing pretty well the last few days. Should we enter now or not

 

[rrmhatre72]

Final positions which are now open are ABAN, Rel Cap, Tata Chem and Tata Comm.

Tc

            Script               Comment      Traded Price   Exit Price
            Aban                   Buy           872.1           0
          RELMEDIA                 Buy           215.1         279.6
       Reliance Capital            Buy           827.9           0
       Ambuja Cements              Buy           141.4         141.7
      BGR Energy Systems           Buy           813.7         796.5
            Nifty                  Buy          6,214.50       6205
          Tata Chem                Buy            419            0
           PFC (EQ)                Buy            352           372
            Godrej                 Buy            233           227
          Tata Comm                Buy            336            0

Hi Raunak,

As a trader we will have some profit making trades & some loss making trades.
One is ok with it if this is just additional income on top of job. But for full time trader it is important that his losses are always low than his profit.
I assume you are full time trader & this is your main source of income. Appreciate if you can tell based on your experience(& person with your caliber), what trader can get Returns on annual basis?
Normally it is said that MF gives return in the range of 12-15%/year if we consider 5years time frame.
You are in market since long.. You have seen Ups & Downs of market...What is your experience as trader? How much returns are you able to generate practically?
Sorry if I am asking too personal question... But I need to know this as I want to get in this profection full time.... may be five years from now.... & wanted to know if I can fetch returns on my investments which will be sufficienet for my living.... Your actual % returns will also let me know How much funds I should have after five years which will take care of my need.....

 

[scplindia]

GAIL is doing very well today, what do you suggest can we enter today or is it too late

 

[SwingKing]

GSPL is doing pretty well the last few days. Should we enter now or not

GAIL is doing very well today, what do you suggest can we enter today or is it too late

Prem,

GSPL and Gail are both out of my watch list.

Hence, now I am not tracking them.

Tc

 

[drk_411]

Dear Raunak,

Could you kindly have a look at Shiv Vani and advice.
thanks.

 

[SwingKing]

Hi Raunak,

As a trader we will have some profit making trades & some loss making trades.
One is ok with it if this is just additional income on top of job. But for full time trader it is important that his losses are always low than his profit.
I assume you are full time trader & this is your main source of income. Appreciate if you can tell based on your experience(& person with your caliber), what trader can get Returns on annual basis?
Normally it is said that MF gives return in the range of 12-15%/year if we consider 5years time frame.
You are in market since long.. You have seen Ups & Downs of market...What is your experience as trader? How much returns are you able to generate practically?
Sorry if I am asking too personal question... But I need to know this as I want to get in this profection full time.... may be five years from now.... & wanted to know if I can fetch returns on my investments which will be sufficienet for my living.... Your actual % returns will also let me know How much funds I should have after five years which will take care of my need.....

Rahul,

Its a valid question hence don't mind asking it.

Anyway now coming to your actual query. I'll answer your questions in parts and hence it will be easier for you and for others to understand. Your questions are highlighted in Bold black.


Q. But for full time trader it is important that his losses are always low than his profit.

Ans. This actually varies from trader to trader. One of my trader friend (who by the way is a full time trader) gets off the market every time he gets a 3% profit, yet year on year his returns are simply outstanding. He risks 3% and waits for gains of 3%, hence his profits are not bigger than his losses. What saves him is his winning %. As far as I can remember, he has a winning % of over 70%. As far as I am concerned, I absolutely love trends. I like to take small losses (3-5%) in high volatility environment and (1-3%) in low volatility environment and I absolutely let my profits run.


Q. Appreciate if you can tell based on your experience(& person with your caliber), what trader can get Returns on annual basis? You are in market since long.. You have seen Ups & Downs of market...What is your experience as trader? How much returns are you able to generate practically?

Ans. Rahul, I would not like to boast about my returns and hence I would not like to disclose my actual figure. But, let me tell you something which will give you a rough idea. I am a double Master's degree holder from 2 of the finest Universities in the World. Hence, unlike most of my friends, I have left a six figure salaried job in abroad to return back to India to do what I actually love.

Not all years are same. Some years you earn more, some years you earn less. But being a relatively small trader, all I can tell you is that if you keep your emotions in check, then out performing mutual funds year on year is not that difficult. As small traders one always has the advantage over mutual funds. Hence outperforming them is relatively easy. Beyond a certain stage, it becomes more difficult to outperform yourself. That's what one should aim for.

Q. But I need to know this as I want to get in this profection full time.... may be five years from now.... & wanted to know if I can fetch returns on my investments which will be sufficienet for my living.

Ans. Rahul, to make a living out of trading, one has to be realistic. Let me explain this to you. Let's assume one set's a target of earning 10 lacs per year. Now whether that trader will achieve this objective or not will depend on many factors. Let's assume he has a good system, perfect psychological make up and good money management. Now to get this objective realized, the most important aspect after all those factors mentioned above is trading capital. Making a 10% return on a Capital of 1 Crore is relatively easy. 10% of 1 Crore is 10 Lakhs and hence the objective is realized. But making 10 lakhs on a capital of 10 lakhs is very difficult. This is because now the trader needs to make a 100% return. Now, this becomes difficult. This is precisely why trading has a lot to do with other aspects than a trading system.

Tc

 

[SwingKing]

Dear Raunak,

Could you kindly have a look at Shiv Vani and advice.
thanks.

If you are long in it, then stay put, keep a SL of 445-450.

Else wait for sometime.

Tc

 

[crown]

The yesterday sudden downside, is now appearing to be targeted for capturing shorts. Therefore, I am expecting Nifty to face resistance around 6150 levels so that shorts can be invited. And when shorts start entering, they will be allowed to remain happy as Nifty may be going down sharply towards 6000 levels, as if hell broke loose. And from therefrom, we may be watching another upside rally. This process is likely to take maximum three trading sessions including today's session. Therefore, I am expecting to have a long entry again during the last hour of next trading session. Chances of trend reversal are very very meek. Please note that it is all based upon expectation, which seldom work if not evaluated properly on continuous intervals.

 

[rrmhatre72]

Rahul,

Its a valid question hence don't mind asking it.

Anyway now coming to your actual query. I'll answer your questions in parts and hence it will be easier for you and for others to understand. Your questions are highlighted in Bold black.


Q. But for full time trader it is important that his losses are always low than his profit.

Ans. This actually varies from trader to trader. One of my trader friend (who by the way is a full time trader) gets off the market every time he gets a 3% profit, yet year on year his returns are simply outstanding. He risks 3% and waits for gains of 3%, hence his profits are not bigger than his losses. What saves him is his winning %. As far as I can remember, he has a winning % of over 70%. As far as I am concerned, I absolutely love trends. I like to take small losses (3-5%) in high volatility environment and (1-3%) in low volatility environment and I absolutely let my profits run.


Q. Appreciate if you can tell based on your experience(& person with your caliber), what trader can get Returns on annual basis? You are in market since long.. You have seen Ups & Downs of market...What is your experience as trader? How much returns are you able to generate practically?

Ans. Rahul, I would not like to boast about my returns and hence I would not like to disclose my actual figure. But, let me tell you something which will give you a rough idea. I am a double Master's degree holder from 2 of the finest Universities in the World. Hence, unlike most of my friends, I have left a six figure salaried job in abroad to return back to India to do what I actually love.

Not all years are same. Some years you earn more, some years you earn less. But being a relatively small trader, all I can tell you is that if you keep your emotions in check, then out performing mutual funds year on year is not that difficult. As small traders one always has the advantage over mutual funds. Hence outperforming them is relatively easy. Beyond a certain stage, it becomes more difficult to outperform yourself. That's what one should aim for.

Q. But I need to know this as I want to get in this profection full time.... may be five years from now.... & wanted to know if I can fetch returns on my investments which will be sufficienet for my living.

Ans. Rahul, to make a living out of trading, one has to be realistic. Let me explain this to you. Let's assume one set's a target of earning 10 lacs per year. Now whether that trader will achieve this objective or not will depend on many factors. Let's assume he has a good system, perfect psychological make up and good money management. Now to get this objective realized, the most important aspect after all those factors mentioned above is trading capital. Making a 10% return on a Capital of 1 Crore is relatively easy. 10% of 1 Crore is 10 Lakhs and hence the objective is realized. But making 10 lakhs on a capital of 10 lakhs is very difficult. This is because now the trader needs to make a 100% return. Now, this becomes difficult. This is precisely why trading has a lot to do with other aspects than a trading system.

Tc

Thanks Raunak for spending time on answering my query....
I will be planning for 10lakhs/year.
So I will have to generate ~25-30lakhs funds(considering 40-33% returns) in next five years....
Most important I need to get myself develope skills of professional trader in next five years to hit my target.....

 

[crown]

The yesterday sudden downside, is now appearing to be targeted for capturing shorts. Therefore, I am expecting Nifty to face resistance around 6150 levels so that shorts can be invited. And when shorts start entering, they will be allowed to remain happy as Nifty may be going down sharply towards 6000 levels, as if hell broke loose. And from therefrom, we may be watching another upside rally. This process is likely to take maximum three trading sessions including today's session. Therefore, I am expecting to have a long entry again during the last hour of next trading session. Chances of trend reversal are very very meek. Please note that it is all based upon expectation, which seldom work if not evaluated properly on continuous intervals.

The above expectation is based upon psychological reaction of the herd. I don't know whether I have been able to understand the reasons behind movement in market, but I think it is all between the struggle of bears and bulls to have control. The very main concept of TA that believe what you see not what you expect, is somewhat compromised by me for certain specific issues; like I always avoid reacting towards sudden movements, even if I have to take loss. And around 7 out of 10 times, this has saved me from entering or exiting at wrong levels. The latest experience which I had was with Radico Khaitan which I purchased around 177 (i think) on 21 Sept 2010. On the very next day, it was showing some doubt but closed in green. My s/l was between 172-170 depending upon the momentum at that time. on the next day, it went down and closed below 175. I just kept that holding, in the expectation that because the momentum was still positive, it may go up in future. For next few days, the script remained rangebound and was giving red candles continuously. It was really difficult to manage and control my mind because of regular urge of selling the stock and booking the loss. But somehow, I managed not to go by emotions. On 30 Sept, the hell broke loose and the stock made a low of 160 during the very initial hour. I was sweating heavily and the mind stopped working. There was just one thing which kept my confidence that if I had some inside information of that script and that if I had to sell that stock, I wouldn't be doing like that. Anyway, within couple of hours, the script was again trading above 170 and from thereon, it again touched its resistance level of 184; and seeing that it may again fail to breach that resistance, specially in the light of ongoing Nifty movement, yesterday i sold that script @ 182.15.
Therefore, if I have some inside information of future weakness in the market, I wouldn't be diluting my position in a way that it can be noticed so easily. I would be trying to sell at upper levels. Currently, Nifty is trading around 100 points below its recent high, if I start selling now; I would not be getting the appropriate price.
On the other hand, if I have some inside information of future strength in the market, I wouldn't be buying either at these levels. Reason is the same, if I buy right now, I will be getting it at a very high price because any buying at current levels would increase the price to the significant level which will not be suitable for me. Therefore, what I will do is to discard the market in a way that the herd should start diluting their holdings. And, in that moment, I will just do something or will expect something like to happen, which will create panic. And, at some level, which I find suitable, I will make a quick entry and bang.