SINCE LAST MANY DAYS WE WERE NOT BEEN UPDATING OUR WEBSITE.
WE REGRET FOR THIS BUT WE HAD POSTED A VALUED ARTICLE ON RPL WHICH HAS HELPED MANY PEOPLE TO CLEAR THIER VIEWS FOR THAT STOCK.
THE STOCK HAD A DECENT RALLY IN THE LAST TWO DAYS.
WE WOULD BE BACK SOON.........
Friday, 30 November 2007
Tuesday, 27 November 2007
RPL Share Sale - Useful Analysis
Looking into the interest of so many RPL investors, ..........what I could make out is that due to some vested interests stock is likely to show weakness till 29th Nov, but should gradually begin it's upmove thereafter.*
Reliance Industries Ltd. (RIL), holding company of Reliance Petroleum Ltd. (RPL), has sold about 4.01% stake of RPL, being 18.04 crores equity shares, for Rs.4,023 crores, at an average price of Rs.223 per share. This has reduced stake of RIL in the RPL from 75% to 70.99%.
The share price of RPL has witnessed a lot of volatility, especially in F&O segment, in the current month series of November, when share price fell from Rs.295 to now at Rs.215. The scrip RPL, was also under ban, till Friday, in F&O, due to Market Wide Limit having crossed 95%. But now, from today, the scrip has resumed trading again in F&O. This was also first instance when a scrip of NIFTY 50, came under ban in F&O segment.
The market report indicates that about 12 crore shares are in open interest in future segment, apart from additional open interests for Put and Call, in options segments at various rates for three months. While taking a feel of retail investors' position, majority of them are long on the scrip, and since the scrip was under ban, they kept continuing with open position, even after paying mark to market losses and incremental margins, imposed due to higher volatility. Conversely, informed circle is reported to be short in the counter, for matching open interest.
Initially, short positions seems to have been created by the informed circles, at the higher levels of Rs.275 plus, obviously, finding these price levels as unrealistic, and subsequently, actual sell has been triggered by RIL in cash market, thus realizing an average of Rs.223 per share. This has resulted in reverse arbitrage, till last week, when cash segment ruled higher than F&O. This also indicates paucity of floating stock.
Shareholding pattern of RPL is as under :--*
1) RIL 337.50 cr shares being 75% Rs.3,375 crores
2) Chevron 22.50 cr. shares being 5% Rs.225 crores
3) Public *90.00 cr. shares being 20%* *Rs.900 crores*
Total *450.00 cr. shares being 100%* *Rs.4,500 crores*
RIL has acquired its 75% stake as under :--*
1) 270 cr. shares at par Rs.2,700 crores
2) *67.5 cr*. shares at Rs.60 per share *Rs.4,050 crores* *337.50 cr*. Total *Rs.6,750 crores*
RIL has almost realized its cost of Rs.4,050 crores for subscribing 67.50shares, in April 2006, at Rs.60 per share. Since, investments sold are based on FIFO (first in first out) basis, shares having subscribed at par were presumed to have been sold, on which long term capital gain of Rs.3,842 crores, has been earned by RIL, which is tax free.
So, effective cost of 71% stake in RPL, for 319.46 crores shares are Rs.2,727 crores, translating into, cost per share at Rs.8.54 . The market value of this is close to Rs.67,000 crores.
One may recall, that Chairman of RIL, Mukesh Ambani, in company's 33rd AGM held in October in Mumbai, had stated that the company would be capitalizing on the investments held, including that of RPL. Nobody, could predict this move, likely to be taken by RIL at a future date.
Now what could be likely move and developments, post this minority stake sale: -
1) The control of RIL on RPL is not affected as this is a minor dilution, and 71% stake is quite reasonable, in the mega refinery, which would vastly improve the consolidated results of RIL.
2) RIL would have an other income of Rs.3,842 crores, in quarter ending December 07, which would give an extra EPS of Rs.26.50, on enhanced equity of Rs.1,453 crores, post IPCL merger.
3) RIL has been able to mop up close to Rs.4,000 crores (tax free) when it needs funds, for its capex programme at K G Basin.
4) RIL may further decide to offload .99% stake, being 4.46 crore share, and realize close to Rs.1,000 crores, and keeping its stake in RPL at 70%.
5) Chevron, presently has 5% stake in RPL, with an option to raise it to 29% by June 09, post commencement of refinery. The preferential allotment can only be made, based on SEBI formula, which would be at Rs.200 plus, (presuming market price to remain above Rs.200). At this rate, Chevron may not be interested in raising its stake to 29% as it would need close to Rs.30,000 crores. *Hence, Chevron, would opt to offload its 5% stake in favour of RIL, at Rs.60 per share, as per the terms of the share subscription Agreement*.
6) On happening this event, RIL would be able to raise its stake, back to 75%, at a cost of just Rs.1,350 crores.
7) The informed circles, having initiated shorts in F&O at an average of Rs.275 per share, are repored to have made a gain of Rs.1,000 crore plus.
*Now, let's take a call, how share price of RPL is likely to behave, in coming times.*
* *
1) As majority of retail investors are long, they would opt to roll over their positions in December series, as bullish outlook on the stock, continues, for various reasons (no need to elaborate them).
2) Informed circle, holding short position of close to 10 crore shares, may not be interested in rolling over, as market perception has changed positive, on the stock. But, in this case, they may be interested to see a lower rate, on closing day, (Thursday 29th November) to enable them to have a better close out.
3) Since, no more, delivery based selling is expected on the counter, weakness may not be seen from beginning of December F&O series
4) If informed circle, tries to bring down the price on closing day, lot of interested buying may be seen, below Rs.200 per share, from investment and arbitrage view point.
In nutshell, this was a calculated move, by RIL, whereby, huge cost has been recovered, coupled with retaining majority and respectable stake. Also, the market (cash and F&O) is in full control of the management, which would take direction, on the next move of the management, as that will have far reaching consequences.
Regards,
Axit Shah
Wealth Advisor ~ Allies Financial Services
Mobile Gsm : ( 0091 ) 9820191219
Yahoo ID : alliesfin9
Website : http://alliesfin.blogspot.com
Group : http://groups.google.com/group/alliesfin
Sms Service : http://www.smsgupshup.com/groups/AlliesFin
Reliance Industries Ltd. (RIL), holding company of Reliance Petroleum Ltd. (RPL), has sold about 4.01% stake of RPL, being 18.04 crores equity shares, for Rs.4,023 crores, at an average price of Rs.223 per share. This has reduced stake of RIL in the RPL from 75% to 70.99%.
The share price of RPL has witnessed a lot of volatility, especially in F&O segment, in the current month series of November, when share price fell from Rs.295 to now at Rs.215. The scrip RPL, was also under ban, till Friday, in F&O, due to Market Wide Limit having crossed 95%. But now, from today, the scrip has resumed trading again in F&O. This was also first instance when a scrip of NIFTY 50, came under ban in F&O segment.
The market report indicates that about 12 crore shares are in open interest in future segment, apart from additional open interests for Put and Call, in options segments at various rates for three months. While taking a feel of retail investors' position, majority of them are long on the scrip, and since the scrip was under ban, they kept continuing with open position, even after paying mark to market losses and incremental margins, imposed due to higher volatility. Conversely, informed circle is reported to be short in the counter, for matching open interest.
Initially, short positions seems to have been created by the informed circles, at the higher levels of Rs.275 plus, obviously, finding these price levels as unrealistic, and subsequently, actual sell has been triggered by RIL in cash market, thus realizing an average of Rs.223 per share. This has resulted in reverse arbitrage, till last week, when cash segment ruled higher than F&O. This also indicates paucity of floating stock.
Shareholding pattern of RPL is as under :--*
1) RIL 337.50 cr shares being 75% Rs.3,375 crores
2) Chevron 22.50 cr. shares being 5% Rs.225 crores
3) Public *90.00 cr. shares being 20%* *Rs.900 crores*
Total *450.00 cr. shares being 100%* *Rs.4,500 crores*
RIL has acquired its 75% stake as under :--*
1) 270 cr. shares at par Rs.2,700 crores
2) *67.5 cr*. shares at Rs.60 per share *Rs.4,050 crores* *337.50 cr*. Total *Rs.6,750 crores*
RIL has almost realized its cost of Rs.4,050 crores for subscribing 67.50shares, in April 2006, at Rs.60 per share. Since, investments sold are based on FIFO (first in first out) basis, shares having subscribed at par were presumed to have been sold, on which long term capital gain of Rs.3,842 crores, has been earned by RIL, which is tax free.
So, effective cost of 71% stake in RPL, for 319.46 crores shares are Rs.2,727 crores, translating into, cost per share at Rs.8.54 . The market value of this is close to Rs.67,000 crores.
One may recall, that Chairman of RIL, Mukesh Ambani, in company's 33rd AGM held in October in Mumbai, had stated that the company would be capitalizing on the investments held, including that of RPL. Nobody, could predict this move, likely to be taken by RIL at a future date.
Now what could be likely move and developments, post this minority stake sale: -
1) The control of RIL on RPL is not affected as this is a minor dilution, and 71% stake is quite reasonable, in the mega refinery, which would vastly improve the consolidated results of RIL.
2) RIL would have an other income of Rs.3,842 crores, in quarter ending December 07, which would give an extra EPS of Rs.26.50, on enhanced equity of Rs.1,453 crores, post IPCL merger.
3) RIL has been able to mop up close to Rs.4,000 crores (tax free) when it needs funds, for its capex programme at K G Basin.
4) RIL may further decide to offload .99% stake, being 4.46 crore share, and realize close to Rs.1,000 crores, and keeping its stake in RPL at 70%.
5) Chevron, presently has 5% stake in RPL, with an option to raise it to 29% by June 09, post commencement of refinery. The preferential allotment can only be made, based on SEBI formula, which would be at Rs.200 plus, (presuming market price to remain above Rs.200). At this rate, Chevron may not be interested in raising its stake to 29% as it would need close to Rs.30,000 crores. *Hence, Chevron, would opt to offload its 5% stake in favour of RIL, at Rs.60 per share, as per the terms of the share subscription Agreement*.
6) On happening this event, RIL would be able to raise its stake, back to 75%, at a cost of just Rs.1,350 crores.
7) The informed circles, having initiated shorts in F&O at an average of Rs.275 per share, are repored to have made a gain of Rs.1,000 crore plus.
*Now, let's take a call, how share price of RPL is likely to behave, in coming times.*
* *
1) As majority of retail investors are long, they would opt to roll over their positions in December series, as bullish outlook on the stock, continues, for various reasons (no need to elaborate them).
2) Informed circle, holding short position of close to 10 crore shares, may not be interested in rolling over, as market perception has changed positive, on the stock. But, in this case, they may be interested to see a lower rate, on closing day, (Thursday 29th November) to enable them to have a better close out.
3) Since, no more, delivery based selling is expected on the counter, weakness may not be seen from beginning of December F&O series
4) If informed circle, tries to bring down the price on closing day, lot of interested buying may be seen, below Rs.200 per share, from investment and arbitrage view point.
In nutshell, this was a calculated move, by RIL, whereby, huge cost has been recovered, coupled with retaining majority and respectable stake. Also, the market (cash and F&O) is in full control of the management, which would take direction, on the next move of the management, as that will have far reaching consequences.
Regards,
Axit Shah
Wealth Advisor ~ Allies Financial Services
Mobile Gsm : ( 0091 ) 9820191219
Yahoo ID : alliesfin9
Website : http://alliesfin.blogspot.com
Group : http://groups.google.com/group/alliesfin
Sms Service : http://www.smsgupshup.com/groups/AlliesFin
Saturday, 24 November 2007
Market View 26 November 2007
Markets have become highly volaitle as we had seen in the last few days. This will also continue in the days to come. We should change our mentality & get use to with such kind of short term movements as long term story is gr8.
Please refer our previous posts/articles on this website around Diwali days when markets are @ 18300 levels & we had asked people to buy. The chart above shows @ wht levels we had asked to buy & wht levels we booked profits.
In this week we again saw the levels of 18300 & again we had initiated a buy call in the markets for short term. Our Sms group members is knowing this fact & u can also be our sms group member as its free of cost, just send this sms from ur mobile Join AlliesFin to 567673434 & u will receive a welcome sms from our side but do not reply to that sms. U will then receive sms from our side as & when we send them.
In short term we can again place the targets for sensex @ 19200 , 19500 & 19850. Today we are @ 18850 levels. On Monday we expect the markets to cross 19200 levels which is more then 350 points from current levels.
For nifty the same levels are 5710 , 5775 , 5850. This week there is F & O expiry due to which markets will remain volatile but in times of panic do not throw away stocks @ dirt cheap prices.
Sectors which look good in short term are :-)
RELIANCE PACK ( OUR ALL TIME HITS )
BANKING STOCKS : SBI, ICICI, KOTAK, ETC.....
ENGINEERING STOCKS : LNT, BHEL, SIEMENS ETC.......
STOCKS SPECIFIC APPROACH WOULD BE BETTER IN THE DAYS TO COME.
MORE UPDATES DURING LIVE MARKETS WILL BE ON OUR SMS SERVICES ( COST FREE ) & ON YAHOO MESSENGER.
We do manage Private Client Group ( PCG ). Intraday / short / mid / long term calls are being given to them. For all that services we do charge Professional Fees for just Rs 9000/- per quarter & Rs 27000/- anually.
Interested persons can contact personally.
Good Day, Happy Investing
ALLIES FINANCIAL SERVICES
09820191219
MUMBAI
E Mail : alliesfin@gmail.com
Friday, 23 November 2007
Understanding Stock Market / Finance Terms.... FUNNY
We thought it would be useful to explain some common financial terms which may have been previously misunderstood by many of us :
EBITDA: earnings before I tricked damn auditor.
EBIT: earnings before irregularities and tampering.
CEO: chief embezzlement officer.
CFO: corporate fraud officer.
NAV: normal Anderson valuation.
FRS: fantasy reporting standards.
P/E: parole entitlement.
EPS: eventual prison sentence.
BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius.
BEAR MARKET -- A 6 to 18-month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no.....
MOMENTUM INVESTING -- The fine art of buying high and selling low.
VALUE INVESTING -- The art of buying low and selling lower.
P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing.
BROKER -- What my broker has made me.
"BUY, BUY" -- A flight attendant making market recommendations as you step off the plane.
STANDARD & POOR -- Your life in a nutshell.
STOCK ANALYST -- Idiot who just downgraded your stock.
STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves.
FINANCIAL PLANNER -- A guy who actually remembers his wallet when he runs to the 7-11 for toilet paper and cigarettes.
MARKET CORRECTION -- The day after you buy stocks.
CASH FLOW -- The movement your money makes as it disappears down the toilet.
YAHOO -- What you yell after selling it to some poor sucker for Rs 890/- per share.
WINDOWS 2000 -- What you jump out of when you're the sucker that bought Yahoo @ Rs 890/- per share.
INSTITUTIONAL INVESTOR -- Past year investor who's now locked up in a nuthouse.
PROFIT -- Religious guy who talks to God
THIS IS CONTRIBUTED BY ONE OF OUR FRIEND NAMED : VISHESH PAREKH
EBITDA: earnings before I tricked damn auditor.
EBIT: earnings before irregularities and tampering.
CEO: chief embezzlement officer.
CFO: corporate fraud officer.
NAV: normal Anderson valuation.
FRS: fantasy reporting standards.
P/E: parole entitlement.
EPS: eventual prison sentence.
BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius.
BEAR MARKET -- A 6 to 18-month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no.....
MOMENTUM INVESTING -- The fine art of buying high and selling low.
VALUE INVESTING -- The art of buying low and selling lower.
P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing.
BROKER -- What my broker has made me.
"BUY, BUY" -- A flight attendant making market recommendations as you step off the plane.
STANDARD & POOR -- Your life in a nutshell.
STOCK ANALYST -- Idiot who just downgraded your stock.
STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves.
FINANCIAL PLANNER -- A guy who actually remembers his wallet when he runs to the 7-11 for toilet paper and cigarettes.
MARKET CORRECTION -- The day after you buy stocks.
CASH FLOW -- The movement your money makes as it disappears down the toilet.
YAHOO -- What you yell after selling it to some poor sucker for Rs 890/- per share.
WINDOWS 2000 -- What you jump out of when you're the sucker that bought Yahoo @ Rs 890/- per share.
INSTITUTIONAL INVESTOR -- Past year investor who's now locked up in a nuthouse.
PROFIT -- Religious guy who talks to God
THIS IS CONTRIBUTED BY ONE OF OUR FRIEND NAMED : VISHESH PAREKH
Thursday, 22 November 2007
Market View 22 November 2007
Updating few sms sent to group member's of Allies Financial Services :-)
Jai Jinendra
Pranam
Namaste
Good Morning
Axit Shah
09820191219
Equity Advisory Desk
Allies Financial Services
Mumbai
Email : alliesfin@gmail.com
Market Outlook : GOOD SUPPORTS CAN BE SEEN @ 18200 - 18300 LEVELS. FOR NIFTY THE SAME IS 5425 - 5450. WE EXPECT BOUNCE FROM THIS LEVELS ( 9.50 am )
ONE MAN ARMY RELIANCE INDUSTRIES STARTS TRADING IN +VE ZONE, BEST SAFE BETS : RELIANCE PACK, BANKING STOCKS & ENGINEERING STOCKS.
HAPPY INVESTING ( 10.30 am )
MARKETS ARE HIGHLY VOLATILE WHATEVER U HAD ENTERED MARK FOR SURE SHOT DELIVERY, INTRA SESSIONS WOULD BE VOLATILE , JUST CHANGE UR VISION FROM INTRA TO DEL. ( 11.00 am )
LOOK AT BANKING STOCKS & RELIANCE PACK ( RELIANCE CAPITAL : JUST UP BY RS 100/- FROM YESTERDAYS CLOSE PRICE OTHER STOCKS IN RELIANCE PACK JUST DOWN BY 1 % ) , SENSEX R JUST 130 POINTS DOWN,
mkt rumour : lic's pension funds approved to invest in stock markets, just 5% of Aum ( pls confirm ur source )
Rpl f&o positions open ( 2.50 pm )
SENSEX UP BY 100 POINTS FROM LOW OF 350 POINTS , SAY THX TO LIC PENSION FUNDS, TIMELY SMS HOPE HELPED TODAY TO BUY ALMOST @ BOTTOM ( 3.28 pm )
MARKETS CLOSING UPDATES : SENSEX CLOSES DOWN BY 76 POINTS @ 18526 WHILE NIFTY CLOSES DOWN BY 42 POINTS @ 5519. NIFTY FUTURES IN PREMIUM, MARKET BREATH -VE BUT MOMEMTUM +VE ( 3.45 pm )
TODAY GR8 PICS WERE RELIANCE PACK, BANKING STOCKS, ENGINEERING STOCKS : JUST SEE TODAYS BOTTOM PRICES & CLOSING PRICES, ALSO PLS CHK WHT WILL HAPPEN TO THEM TOMM.
SENSEX @ 2.50 PM WERE TRADING @ 18265 LEVELS WHEN WE SENT THE SMS FOR OUR MKT RUMOUR AFTER THT SENSEX JUST ROSE BY 400 POINTS & ALMOST TOUCHED 18699 LEVELS. SO HW WAS UR DAY ?
A WELL WISHER SAID :
An investor without subscribing ALLIES FINANCIAL SERVICES Premium Picks is like a traveler without a destination.
Smooth roads nvr make gud drivers,
Smooth sea nvr make gud sailors,
Clear sky nvr make gud pilots,
Problm free life nvr make a gud person.
It's only when the tide goes out that you learn who's been swimming naked. -- Warren Buffett
Thought 4 stock markets :
The fear of the market is the beginning of wisdom.
( so wht happened today )
ALLIES FINANCIAL SERVICES
Jai Jinendra
Pranam
Namaste
Good Morning
Axit Shah
09820191219
Equity Advisory Desk
Allies Financial Services
Mumbai
Email : alliesfin@gmail.com
Market Outlook : GOOD SUPPORTS CAN BE SEEN @ 18200 - 18300 LEVELS. FOR NIFTY THE SAME IS 5425 - 5450. WE EXPECT BOUNCE FROM THIS LEVELS ( 9.50 am )
ONE MAN ARMY RELIANCE INDUSTRIES STARTS TRADING IN +VE ZONE, BEST SAFE BETS : RELIANCE PACK, BANKING STOCKS & ENGINEERING STOCKS.
HAPPY INVESTING ( 10.30 am )
MARKETS ARE HIGHLY VOLATILE WHATEVER U HAD ENTERED MARK FOR SURE SHOT DELIVERY, INTRA SESSIONS WOULD BE VOLATILE , JUST CHANGE UR VISION FROM INTRA TO DEL. ( 11.00 am )
LOOK AT BANKING STOCKS & RELIANCE PACK ( RELIANCE CAPITAL : JUST UP BY RS 100/- FROM YESTERDAYS CLOSE PRICE OTHER STOCKS IN RELIANCE PACK JUST DOWN BY 1 % ) , SENSEX R JUST 130 POINTS DOWN,
mkt rumour : lic's pension funds approved to invest in stock markets, just 5% of Aum ( pls confirm ur source )
Rpl f&o positions open ( 2.50 pm )
SENSEX UP BY 100 POINTS FROM LOW OF 350 POINTS , SAY THX TO LIC PENSION FUNDS, TIMELY SMS HOPE HELPED TODAY TO BUY ALMOST @ BOTTOM ( 3.28 pm )
MARKETS CLOSING UPDATES : SENSEX CLOSES DOWN BY 76 POINTS @ 18526 WHILE NIFTY CLOSES DOWN BY 42 POINTS @ 5519. NIFTY FUTURES IN PREMIUM, MARKET BREATH -VE BUT MOMEMTUM +VE ( 3.45 pm )
TODAY GR8 PICS WERE RELIANCE PACK, BANKING STOCKS, ENGINEERING STOCKS : JUST SEE TODAYS BOTTOM PRICES & CLOSING PRICES, ALSO PLS CHK WHT WILL HAPPEN TO THEM TOMM.
SENSEX @ 2.50 PM WERE TRADING @ 18265 LEVELS WHEN WE SENT THE SMS FOR OUR MKT RUMOUR AFTER THT SENSEX JUST ROSE BY 400 POINTS & ALMOST TOUCHED 18699 LEVELS. SO HW WAS UR DAY ?
A WELL WISHER SAID :
An investor without subscribing ALLIES FINANCIAL SERVICES Premium Picks is like a traveler without a destination.
Smooth roads nvr make gud drivers,
Smooth sea nvr make gud sailors,
Clear sky nvr make gud pilots,
Problm free life nvr make a gud person.
It's only when the tide goes out that you learn who's been swimming naked. -- Warren Buffett
Thought 4 stock markets :
The fear of the market is the beginning of wisdom.
( so wht happened today )
ALLIES FINANCIAL SERVICES
Tuesday, 20 November 2007
Trading Tutorials
For a day trader, each day is war.
Just as a general with a detailed plan of action who eventually wins the war, the more the preparation that is put in prior to the commencement of the trading day, the greater the chance of a success.
Many a time, a trade is terminated prematurely, only to face the mortification of seeing the price zooming up. A well-drawn trading plan can help avoid such a situation. A trading plan should have: (a) entry level, (b) exit level and (c) stop loss.
Previously, we dwelt at length on the stock selection criteria. That would be the genesis of the trading plan. It would be a good idea to have a list of stocks for going long and another list for shorting. As the trading day unfolds, the stock that can be traded that day will become apparent.
Determining the entry levels in the stock should be done with the help of intra-day charts. Technical tools that are used during day trading should not be too many, either. Each day-trader should make a trading system comprising one or two oscillators to generate a buy signal. Oscillators can be combined with trend lines and patterns on the bar chart or candlestick charts. The price reversing from supports would also be a good place to initiate a buy. It would be best to stick to one or two oscillators alone, as greater the familiarity, the greater the degree of comfort.
Exit levels in day trading can also be determined with the help of technical tools. Some examples are sell signal in the oscillator, trend line and reversal from previous peaks, to name three. Apart from these technical levels, the trader can also determine exit levels with the help of a certain minimum expectation per trade. For example, the minimum expected return per trade could be 1 per cent.
Stop loss levels are the most important part of a trading strategy. The minute the entry point is decided, the stop should be placed a few points below. As soon as the trade moves in to profit, the stop should be moved up to protect profits. Day traders who excel in taking losses dispassionately definitely win big in the end.
Just as a general with a detailed plan of action who eventually wins the war, the more the preparation that is put in prior to the commencement of the trading day, the greater the chance of a success.
Many a time, a trade is terminated prematurely, only to face the mortification of seeing the price zooming up. A well-drawn trading plan can help avoid such a situation. A trading plan should have: (a) entry level, (b) exit level and (c) stop loss.
Previously, we dwelt at length on the stock selection criteria. That would be the genesis of the trading plan. It would be a good idea to have a list of stocks for going long and another list for shorting. As the trading day unfolds, the stock that can be traded that day will become apparent.
Determining the entry levels in the stock should be done with the help of intra-day charts. Technical tools that are used during day trading should not be too many, either. Each day-trader should make a trading system comprising one or two oscillators to generate a buy signal. Oscillators can be combined with trend lines and patterns on the bar chart or candlestick charts. The price reversing from supports would also be a good place to initiate a buy. It would be best to stick to one or two oscillators alone, as greater the familiarity, the greater the degree of comfort.
Exit levels in day trading can also be determined with the help of technical tools. Some examples are sell signal in the oscillator, trend line and reversal from previous peaks, to name three. Apart from these technical levels, the trader can also determine exit levels with the help of a certain minimum expectation per trade. For example, the minimum expected return per trade could be 1 per cent.
Stop loss levels are the most important part of a trading strategy. The minute the entry point is decided, the stop should be placed a few points below. As soon as the trade moves in to profit, the stop should be moved up to protect profits. Day traders who excel in taking losses dispassionately definitely win big in the end.
Friday, 16 November 2007
A GOOD CARTOON
Don't go against the hungry money
Don't go against the hungry money. It will destroy you. Forget about the trend of the market. Don't try to rationalize the situation. Just follow the hungry money and capture the moment.
I guess this is the phase we are in. The more you think, the more stupid you appear. There are times when you should just stop analyzing and watch the market in awe. I am shocked to say the least. It seems nothing can stop this market for now. All the worries have been thrown out of window.
The way stock prices are moving up - clearly communicates that buyers are more desperate than sellers. It is the desperation of buyers that is causing the sudden spike up in the prices. Nothing else can explain the mad movement in stock prices. The market is now knocking on the doors of all time high of 6000-6010; and considering the momentum and positive global cues, it seems the market may make a new high today. In good times, it is very easy to get carried away but remember there is no harm in being aware of the risk.
Positive Developments
FIIs are applying for registration - This is good news for Indian markets. It means more market participants and higher liquidity.
Emerging Markets are looking good once again - Despite overnight weakness in US markets, Brazil and Mexico closed firm. Brazil's Bovespa stocks index closed higher on account of strong showing in commodity and utility sector shares. Utility sector - that's interesting. Mexico's IPC index of 35 most-traded stocks closed up 0.6% at 29655.68 following Tuesday's 4.6% climb.
Rate the newsletter on the website and I will also appreciate any feedback on email : alliesfin.@gmail.com or on cell by sms : 09820191219
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