by Dilip Shaw
Date: December 21, 2020
Here is a list of things you can prepare before the year ends so that you trade stocks well in the year 2021.
1. Check you past trades of 2020. See what mistakes you did. Write them down and try not to repeat those mistakes.
2. In the trades that you were right and book profit – write what happened that you made profits and what you could have done to get better results. You can do these corrections in the trade taken in the year 2021.
3. If there was more than 10,000 loss in a single trade – write down why you did not take a stop loss. Even if your reasoning is correct, it is 100% WRONG not to take a stop loss at minimum 2 and maximum 5% of the margin blocked in a trade. read more
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by Dilip Shaw
Date: December 19, 2020
Nifty intraday movement has become very volatile now. For intraday traders, this is a problem.
Check this intraday movement of NSE on Friday, 18-Dec-20. Intraday movement is more than 100 points:
Source: https://money.rediff.com/index.html
What you can do if you are an intraday trader?
Keep your profit target more than stop-loss every day. For example, if your profit target is 50 points a day then your stop loss should be 25 points.
Personally, I do not like intraday trading. I was caught doing it while in a job in 2007 and was sacked. read more
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by Dilip Shaw
Date: November 30, 2020
This post was written & posted on Monday, 30-Nov-20, therefore you may read some words as Today/Tomorrow etc. Please keep this date in mind while reading.
Some help was taken from these sources to write the article:
1) ZERODHA – India’s No. 1 discount broker, &
2) UPSTOX – India’s No. 2 discount broker.
If you click on the above link and open an account mapped to me I will teach you a good equity investment strategy where you will learn how to choose stocks for short term investment and how to choose stocks for long term investment. You will feel good choosing and investing yourself rather than depending on advisory services. read more
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by Dilip Shaw
Date: November 22, 2020
Yesterday I had written that the current rising stock market is news based uptrend.
The question is how good news has to be that it keeps going up? Well, the answer is that there can be no news good enough that the markets will keep going up always.
WHY?
Well lets us go back to how stock markets work.
Very Simple Logic:
If Demand is more than Supply (there are more buyers than sellers), then the stock moves up.
Similarly, if Supply is more than Demand (there are more sellers than buyers), then the stock moves down. read more
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by Dilip Shaw
Date: November 9, 2020
When markets are near all-time high one should try to invest as little as possible. Or you can wait for a few days and then re-invest.
NSE as on 09-Nov-20:
NSE as on 09-Nov-20
Source: https://money.rediff.com/index.html
Why wait for a few days?
Because markets may retrace back / fall by about 2-3% and give you an opportunity to invest again.
When markets are at all-time high it is better to book profits and wait for a reversal back to mean.
Mean is the average of the numbers. It is easy to calculate – add up all the numbers, then divide by how many numbers there are. In other words, it is the sum divided by the count. read more
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by Dilip Shaw
Date: October 20, 2020
There is a limit to invest your money in stock markets. Yes, ideally you should save 20-25% of your income and out of that 40% can be invested in stock markets.
Still, I do not advocate investing too much money in stock markets?
Let me give you an example.
Vijay’s take-home salary is 1 lakh a month.
– 25% saving is 25,000
– 40% of 25000 is 10,000
– In a year Vijay can invest 10,000*12 = 1,20,000 in stock markets which in other word is 10% of his take-home salary.
Assuming his salary is same for the next 30 years, or he invested Rs.1,20,000 for the next 30 years in stock markets and makes a return of 25% a year. read more
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by Dilip Shaw
Date: September 14, 2020
In this article I will discuss when to trade Long Straddle and Long Strangle.
When should we trade Long Straddle and Long Strangle?
When the markets are volatile (very volatile) then Long Straddles and Long Strangles work well.
What is Long Straddle trade?
A Long Straddle is a combination of buying a call and buying a put, both with the same strike price and expiration. Together, they produce a position that should profit if the stock makes a big move either up or down. I have written in details about Long Straddle here that you can read. read more
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by Dilip Shaw
Date: September 8, 2020
Today I received an email from one of my subscribers that I believe most of the traders think most of the traders think the same way. So I have shared his email here.
What he believes?
That the stock operators and brokers control the stock market price action. Since they want traders to lose money – most of them play against them and operate the stock in such a way that it almost always hits the stop loss – thus making them money.
However, let me tell you that this is simply not true. Assuming that even if its true, stock price manipulation by any mean other than demand and supply is illegal in India. One day or the other they will get caught and their license will be cancelled. No broker can take a risk with their business license for a few thousands rupees a month. But the main reason is that stock brokers are just that stock brokers, they can help us to get a trade go through, they do not have access to main sources/resources where final transaction between a seller and a buyer is done. Therefore there is no way they can manipulate the prices. read more
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by Dilip Shaw
Date: August 31, 2020
This is INDIA VIX on 31-Aug-20 at 1.19 pm (Source: https://www.google.com/search?q=india+vix):
INDIA VIX 31-Aug-20
INDIA VIX 31-Aug-20
This is NSE on 31-Aug-20 at 1.24 pm Source: https://money.rediff.com/index.html:
NSE 31-AUG-20
Can you see that both are inversely proportional?
Check out this post where I had also given a caution of India VIX surging and NSE falling.
What can you make out from a surging India VIX?
That when India VIX surges NSE will fall and vice versa.
How can this help the directional traders?
Well, this will not help 100% of the times, but if from 11 to 11.45 am you see that India VIX is surging then you can short Nifty futures and if from 11 to 11.45 am you see that India VIX is filling then you can buy Nifty futures. However, this trading must be done Intraday only. Next day the situation can change and you may see the position reversing. read more
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by Dilip Shaw
Date: August 7, 2020
People all over the world do absolutely no planning on how much to invest in stock markets. They just keep investing on gut feelings, as much as possible, to recover losses. This is a poor money management skill. In this article I will help you learn how to properly plan investing in stock markets. This post will help you a lot to plan your investments in future in stock markets, especially if you are young.
Contrary to traditional belief, you do not need too much money to start investing in stock markets but you must know where to invest. In fact it is very important for a beginner not to invest too much money at the very beginning. It is important that you separate the cash that you want to invest in stock markets from what is needed to live a life. Never take a risk with the money you cannot afford to lose. read more
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