Returning to blog...

It has been a long time since I have been away from this blog. Let me now be regular, at least once in a week.

Now I trade Nifty options using diagonal spread. I derive trading signals based on EoD charts , using simple but effective 3 days SMA for high and low of the day. I look at ADX value to understand if the Nifty is trending or moving in a side-ways fashion.

I shall record my actions here, more as my trading journal, but would be happy to answer any questions that any one in cyber-space has...

I have missed current rally ! So, shall wait for initiating fresh position.

Actions taken Today : Tata Steel

Well friends, as laid out in the "rule book", Tata Steel provided buy signal at around 2.30 pm today. Buy price ~ 466. To protect the position, I plan to have Rs. 390 (~ 15% away from buy price) as SL on a closing basis (i.e review at approx. 3 pm and if trading below 395, exit).

SBI just managed to touch ema34,30m before closing.. Hence need to wait for another 60 minutes before taking entry. Infosys remained far away.

Well, that is the end of investing activity for the day. Does not sound too exiciting,  right ? Yes, but what is important excitement or value creating ? Reflect ove and have a great day.

Creation of Wealth - Fundamental Analysis + Technical Analysis

Well, let me continue my journry and share the progress with you and as well get your feedback to make the same more enriching.

I have selected 3 stocks, Tata Steel, Infosys and SBI for validating the approach. These are fundamentally strong, blue chip company and can not be manipulated by operators / promotors due to sheer size as well as great credentials till now.

1. Infosys: LTP (19th Aug 2011) is 2224, Its ema34 on daily chart is 2626 and on 30 min chart is 2289. Well. I will wait for ema34, 30m to be crossed over from below and will buy when it remain more than that value for at  3 periods. Hence, no action now. Gap between these values ( 2224 and 2289) is quite high and hence one may have to wait for a few more days or weeks , as the events unfold.

How about Tata Steel ?

2. Tata Steel: LTP: 460 (19 Aug 2011) , ema34,daily is 534 and ema34,30m is 462. Well, looks close by. May get a signal on Monday to enter.

3. SBI: This stock closed at 2038, ema34 daily is 2293 and ema34,30m is 2106. This stock has some distance to cover(may be) before one can get buy opportunity.

Hang on. How much do I plan to buy ?

That is a good question. I am allocating equal capital to all three scripts, say Rs. 1 lac each. Will buy 100% once I get the signal.

How about stop loss ? Okay, that is another bouncer :).

I will keep 15% of the buy prioce as initial SL and than keep changing as the price moves up. Do not worry, I plan to share all this at the same place.

Well, bye till we meet again. Have great value investing...

View on Long Term Value Creation Through Equity

As we watch mayhem all around us, we question wisdom of investments in equity. My experience suggests that at Nifty PE of ~ 18, one will not regreat new investments ! Select a few good stocks (read through Fundamental analysis, review parameters like ROCE, d/e etc) and invest using technical analysis. For example, positiver crossover of ema34 on a daily chart (on eod basis) is a good indication that the stock will move up. If want even better confirmation, wait for ema34 crossover on a weekly chart.

When to exit ? Well, wait for negative crossover of ema34 (or some people suggest ema8 but that will increase transactions due to whipsaws).

One final view: Do not have too many stocks ! Select @ 10 to 12 stocks across industries (like IT, auto, banking, pharma, FMCG etc.) and stay focussed.

Happy Investing.

Learnings on Investments

People who habitually purchase common stocks at more than about 20 times their average earnings are likely to lose considerable money in the long run." - Benjamin Graham & David Dodd

Learning 18th May 2009

Stability Leads to Instability : A. A long period of healthy growth convinces people to take bigger and bigger risks B. When great many people have made risky bets, small disappointments can have devastating consequences ! How True :)

First Day at My Blog ...

Hi... everyone out there ! It is interesting to communicate to a PC, with hope that many unknown friends will join this communication...

Elections for parliament in India are just over and entire country seems to be having found a new enthusiasm for bright future. No, it ois not the ruling party, but it is the clarity of thought and sense of responsibility that uneducated, but fully knowledge "common man" of India has demonstrated, which brings about this immense optimism.
I plan to share my experiences, mistakes, advises on this space to make this "journy of life" full of jou and fun. Do stay tuned...