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One of the best ways to short stocks, nifty or banknifty is on a bad news. I am a great fan of bad news. See this chart of PNB after the news came out of the Nirav Modi scandal. The Punjab National Bank scam came to light on 14 February 2018, and since then it has been a downhill ride for the Indian Banking community especially PNB – Punjab National Bank.
See the downhill chart of PNB from the news came out:
The downhill continues for months for PNB:
It is almost certain that a stock will fall heavily when bad news hits the company. Resignation of a top manager, employee specific scandal, tax hiding getting caught (like Satyam), any illegal activity – even a small illegal activity will take the stock down by 5%.
Remember the Axis Bank scandal during demonetization in 2016? See this how Axis Bank fell from 490 to 432 in about a month:
Then it started to go up slowly.
Basically when a bad news is hit it is almost certain that a stock will fall heavily. However when a good news hits, the stock may rise approx 5% only.
Why this happens?
Because fear of losing money spreads very fast and people take out their money as soon as possible without even reading the news properly. But when a good news has come in a company, people start reading the newspapers to verify the news, try to figure out the outcomes, start seeing business channels – by this time the smart investors (HIIs and DIIs) have already bought the stock in huge quantity – they know very well the late comers (retail traders like you) will join the party at the top of the hill – this is the time they start to sell.
Who loses? Retail investors.
However if you track how a stock behaves to bad news vs good news you will see that impact of bad news is much higher than the impact of good news.
The scandal of Punjab National Bank broke out on 14 February 2018, but the stock has not yet come out of the shock of the bad news till now.
So when to sell a stock?
As soon as a bad news hits the company. Read newspapers looking for bad news in any company and see if there is derivative trading allowed there. If yes do not waste time in shorting the stock. Of course this can be risky. If the management comes out with an announcement to counter allegations, then the stock may rebound within seconds of announcement. Therefore it is very important to hedge your traders to make sure that the risk is minimized.
In my Nifty and Bank Nifty course you will find strategies where you can learn hedging and also get strategies to make monthly income consistently without worrying too much about your money and the direction of the stock. Wherever the stock goes you can make a profit.
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What you should do now1. If you have still not subscribed for my free 5 days course you can do by filling the form above. You will learn a lot about option trading.
2. If you are a new option trader, not much experienced and are making losses you can do my paid course. I recommend Nifty Conservative Option Course for beginners because it is easy to understand and easy to trade. Even a 18 year old young trader or a housewife can learn it and start trading from next day. It will help you to earn consistent monthly income without any software or speculation or stress or big risk. You will learn proper hedging strategies that works in any market condition.
3. If you are banknifty weekly options trader you can do my Bank Nifty Weekly Options & Futures Strategy Course. You will learn future and option hedging strategies that works in volatile market condition.
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Course fees: Click here to know the course fees.
Here is complete process of my course1. Once you pay I will send you the course materials for studying to your email.
2. You read and ask me questions via phone/whatsapp/email to clear doubts.
3. Then you start paper trading and still can ask me questions.
4. After about one month you can start trading.
5. Since doubts can come anytime the support will be there for one year.
Within one month you can start trading on your own. No need to depend on anyone once you are on your own.
If you have any question you can contact me.
You can read about me here and my trading mistakes here.
Dilip Shaw, Founder
INCOME DISCLAIMER: Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However every trade depends on the trader and his level of risk taking capability, knowledge and experience. Moreover stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. My aim is to make you a better & disciplined trader with the stock trading and investing education and strategies you get from this website. Please note that I DO NOT give tips or advisory services by SMS, Email, or WhatsApp or any other form of social media. I strictly adhere to laws of my country. I only offer education on finance, investments on stock markets in the best possible way as much as I can through this website. Still, you must consult an authorized advisor or do thorough research before investing in any stock or derivative before trading any strategy given in this website. I am not responsible for any investment decision you take after reading any article given in this website. Knowledge is the only way to get success in stock markets. I try my best to give stock market investing and trading knowledge through the articles posted in this website. Thanks for visiting my website.