INDIAN EQUITY TRADING

1 Trade like a guerilla warrior

You must learn to adapt quickly to changes. If the winning side is

changing, don’t hesitate to join the new party and to commit all your

forces to this side (capital ,mental, emotional)…until the market

conditions change. Don’t get married to trades.

2 Be disciplined

Create a game plan then stick to it. A trade does not simply consist of

a position. It consists of a position plus reasons for having the

position plus a stop loss level plus profit taking levels. In the long

run your discipline will save you when markets get rough.

3 Buy high…Sell higher – Sell Low…Buy Lower

Do not try to bottom fish or pick tops. When you think you know the

trend then follow it.

4 Think big picture but trade like a technical analyst

You must understand the fundamentals behind your investment ideas but

you need to understand the Technical Analysis too. When your fundamental

and technical signals point to the same direction…you have a good

chance to have a winning trade.

5 Do not use excessively tight stop losses

Spend more time identifying a good entry point. Be patient. Give some

freedom to the market. Place your stop losses carefully.

6 Hit your stops

The first stop is the cheapest stop on a losing position. Do not follow

the temptation to “hang onto” a losing position that has gone through

your stop loss level. It might work a few times but one day you will be

hammered if you trade without discipline.

7 In a Bull market…Be Long or Neutral – in a Bear market …Be Short

or Neutral

A lot of people forget this rule and trade against the trend by calling

for short term changes in market conditions. This usually causes

psychological imbalance and frequently leads to losses.

8 Go for the most powerful market trend

Do not focus too much on markets where the trend is not strong enough or

the market is range bound or choppy. Commit your forces to the stronger

trend.

9 Accept losses they are part of the game

Prepare yourself mentally and emotionally for this eventuality. Take

some time off and come back fresh if you have been hit hard. Do not

fight with the trade, curse the market or make some bargain with

yourself (…if the market goes to my initial level I will get out… ! ).

10 Resist the urge to trade against the trend too early

The trend is usually right (fundamentally). Be patient. Wait for the

trend to turn. When the fundamentals and technicals are turning to the

other direction, wait a bit longer then enter.

11 Never add to a losing position

This is a recipe for disaster. Just add to winning positions especially

when the market is retracing.

12 Do not make a winning position lose

Use trailing stop losses. You must learn to take profits.

13 Bear markets are more violent than bull markets

You can trade bear markets with smaller positions. Expect violent

retracements so get in the habit of taking profits.

14 Keep all your technical analysis simple

Use simple support and resistance, Fibonnaci retracement and reversal

days. A good tip: When yesterday’s daily trading range is the smallest

of the previous last 11 days trading range…be ready for a big move and

some volatility.

15 Be aware of market liquidity at all times

Assets do not just have prices. They have liquidity levels too, and just

as prices change so too does liquidity. Illiquid assets do not trade in

the same way as highly liquid assets. Only trade lower-liquidity assets

if there is sufficient compensation for the lack of liquidity and you

are a true expert in the asset class.

16 Be intellectually honest

When you are wrong admit it , learn from it and go on to the next trade.

The market rewards intellectual arrogance with losses and pain. If you

want to stick to your point of view no matter what the evidence may be

to the contrary… become a politician.

17 Wall Street climbs on a wall of worry

Be aware that the most likely time for a bull market to end is when

everyone is bullish and the bottom of a bear market occurs when

everybody is bearish. When everyone is on the same bandwagon… be careful

and get ready to get out.

18 Be aware of Psychological biases in the markets

Bond traders tend to make most money as economies slow and dip into

recession. Stock traders tend to make most money when the economy booms.

So many bond market participants are always pessimistic and many stock

analysts are perpetual optimists. Try to remain objective and observe

which market commentators appear objective too.

19 Be patient

The more profound your ideas the longer it will take for others to see

them as well and thus the longer it will take for markets to move your

way. Be patient and give yourself and your trades time.

The 20th rule

If you have to…break the rules.

Some delevery pics are:
            1. Buy ABG Ship at 410 with stoploss of 374(closing basis) for target of 540
            2. Buy Brigade at 167 with stoploss of 160 for target of 193
            3. Buy ETC at 230 with Stoploss of 193 for target of 288
            4. Buy IBN 18 at 94 with stoploss of 87 for target of 120+
            5. Buy Venus remidies at 385 with stoploss of 375 for target of 439
            6. Buy Sobha Developers at opening(last close was 397.75).No stoploss required.Add this to your core portfolio
            7. Buy syndicate bank at 59.No stoploss required.Add this too to your core portfolio.
            8. Buy DLF at 480 with Stoploss of 470(below 470 it can go to 445) for target of 600.
            9. Buy IVR prime at 214 with stoploss of 192.Open target.
           10.Buy GDL at 88 with stoploss of 81 for target of 102.

We would review these recommendations in next week.

Nifty Pivots fr Monday are

Sell side stocks

Buy side stocks

My obligation is to do the right thing. The rest is in God’s hands.   - Martin Luther King
            

Whether you think you can or think you can’t, you’re right.   - Henry Ford