SANDY TECHFANATIC

Rule No.1: Never lose money.
Rule No.2: Never forget rule No.1

If past history was all that was to the game,
the richest people would be librarians !!

Warren Buffet


• Target & Time Frame is something beyond any one out there.. 'cos there are
too many global forces influencing the markets & added to these are our own
domestic concerns..

• Whenever you enter a stock.. you HAVE to mentally decide howw much
downside you can digest (happily !!) & then place stop loss accordingly.. & that
stop loss has to be the traditional support level for that counter..

1. Example.. You decide to buy 1000 shares of RPL @ 120... If u can easily digest
a loss of 10 rupee per share.. the Stop loss is 110 but historic support for RPL
has been @ 105.. so u can stretch that much more & place your stop @ 105...

• Similarly on the upside.. Greed Kills a Trader!! Regularly book partial profits...
once u feel the returns u have got is decent.. exit & switch over to another
promising stock.

• For heavens sake.. learn to PAUSE trading as well !! Intra day / short term
trading is succesful ONLY when there is a direction to the markets. There may
be few stocks here & there which defy gravity or which moves on its own terms,
but Broadly... MOST of the actively traded stocks follow the short term trend of
the markets in general.

1. DONT trade or trade veryy small quantities on days when the market moves
haywire without any direction.
2. DONT trade or trade veryy small quantities When there are major contradictory
market views.
3. DONT trade if u feel your stop loss will be easily hit.
4. DONT buy / short a stock which is trading with very very low volumes.

• NEVER trade a stock which has a High Impact Cost. When a person buys or
sells shares he is pushing the price up or down depending on the relative
volume and thus buying and selling these shares at a higher or lower price. The
difference between the original price and the new price is known as impact cost.
For instance if a person buys 1000 shares of company A at Rs. 100 because of
the demand created by it the price rises to Rs.101..eventually he would have got
the shares at a price between 100 & 101 depending on the liquidity position of
the stock at that particular time. If he gets it @ Rs.100.5 you may consider the
50 paisa as a loss.. 'cos intent was to buy @ 100.
Go through the following link to find out the impact cost of all the listed stocks
http://bseindia.com/mktlive/impact_cost.asp

• As you can see in the list, impact cost varies from 5% in stocks which are hardly
traded to as low as .01% of high volume stocks. THIS IS THE MAIN REASON
YOU HAVE TO COMPULSORILY STAY AWAY FROM PENNY STOCKS &
UNHEARD OF STOCKS !! Unless you get some THRILL in seeing the stock
price go up when you buy & come down when you sell !

• Trading is NOTT gambling nor is it a Game of LUCK !

It is a specialization whick takes into account & deciphers hundreds of
factors which influence stock price & movement. Trading without basic
knowledge of technical analysis, functioning of stock markets, macro
economy etc. is like trying to solve a complex equation without knowing
how to add & subtract numbers ! However if you dont have the time or zeal
to start learning the essentials but still want to trade, opt for expert advice
& subscribe to trading calls of leading technical analysts or just follow the
advice of your online broker blindly (by blindly i mean buy only if you get
at the recommended price & place the STOP LOSS at the
recommended level & strictly exit when asked to ! ) In short leave things
to someone who knows much much better than you do !