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Stop loss trade does it make sense

Stop loss trade does it make sense and how much should be the loss a trade can carry and what reward it gives do traders follow this is always a big debate. Traders play a big role in markets and there are big time revenue to brokers and Govt but they losing money has started to worry many big broking house as lower volumes means lower revenue so now many new method are being adopted to make then earn. I see many calls given where the risk is more than the reward which doesn’t make sense for traders and they should immediately reject those kinds of calls are else wait till the stock comes near stop loss to buy. In my view if the reward is 3% and more a risk of 1% would be reasonable but many over the net give calls where risk is higher than the reward and many traders suffer losses due to these kind of calls. There is a thumb rule which one should follow never go short on a stock and bad news and never go long on a stock based on a good news as the bad or good news is already and almost discounted I would quote SBIN where I saw many sell calls based on the outlook of the results and the stock after touching a low of rs.725 spurted to rs.799. Stop loss is meant to protect u r capital erosion as short trades are done to earn more profits with less capital and holding capacity so basic should be always right and one should know if u can arrest u r losses to bare minimum profits would start to flow.

Source: Mr.Prabhakar's Blog... url: http://prabhakar-views.blogspot.com/2006/07/stop-loss-trade-does-it-make-sense.html

Great Spirit of a True Mumbaikar

Dear Terrorist,Even if you are not reading this we don't care. Time and again you tried to disturb us and disrupt our life - killing innocent civilians by planting bombs in trains, buses and cars. You have tried hard to bring death and destruction, cause panic and fear and create communal disharmony but everytime you were disgustingly unsuccessful. Do you know how we pass our life in Mumbai? How much it takes for us to earn that single rupee? If you wanted to give us a shock then we are sorry to say that you failed miserably in your ulterior motives. Better look elsewere, not here.We are not Hindus and Muslims or Gujaratis and Marathis or Punjabis and Bengaliies. Nor do we distinguish ourselves as owners or workers, govt. employees or private employees. WE ARE MUMBAIKERS (Bombay-ites, if you like). We will not allow you to disrupt our life like this. On the last few occassions when you struck (including the 7 deadly blasts in a single day killing over 250 people and injuring 500+ in 1993), we went to work next day in full strength. This time we cleared everything within a few hours and were back to normal - the vendors placing their next order, businessmen finalizing the next deals and the office workers rushing to catch the next train. (Yes the same train you targetted)Fathom this: Within 3 hours of the blasts, long queues of blood donating volunteers were seen outside various hospital, where most of the injured were admitted. By 12 midnight, the hospital had to issue a notification that blood banks were full and they didn't require any more blood. The next day, attendance at schools and office was close to 100%, trains & buses were packed to the brim, the crowds were back.The city has simply dusted itself off and moved one - perhaps with greater vigour.We are Mumbaikers and we live like brothers in times like this. So, do not dare to threaten us with your crackers. The spirit of Mumbai is very strong and can not be harmed.Please forward this to others. U never know, by chance it may come to hands of a terrorist in Afghanistan, Pakistan or Iraq and he can then read this message which is specially meant for him!!!With Love,From the people of Mumbai (Bombay)

Huge retail push from Reliance

CHANDIGARTH – [03.07.06] Reliance Industries, India‘s biggest conglomerate plans a massive $5.6 billion investment in the country‘s retail sector to open stores in 1,500 towns and cities.

At the company‘s annual general meeting, company chairman and managing director Mukesh Ambani said Reliance will set up a 100%-owned subsidiary, Reliance Retail Ltd, to handle its retail venture, which will sell a vast range of products from food, clothes to consumer durables through a range of store formats.

The move by Reliance follows on from the Indian government’s decision earlier this year to allow foreign retailers selling single brands such as Nike and Adidas to own up to 51% of a store or chain. At the moment this excludes foreign mass merchandisers such as Wal-Mart, although market rules are expected to relax later this year.

The announcement by Reliance should give it a head start in the market as major foreign retailers wait for the green light from Delhi before they can fully enter the estimated $200 billion Indian retail sector.

Both Wal-Mart Stores and Germany‘s Metro have been lobbying the Indian government to open its retail trade to foreign investment. But opposition from communist coalition partners and domestic businesses has forced the government to move slowly.

Wal-Mart has applied to the government to open an office in Bangalore, and the company has suppliers in India, having bought $600 million in goods in India last year.

BLAMING OTHERS FOR YOUR LOSSES

A beginner entering the markets soon finds himself surrounded by a colorful
crowd of gurus—experts who sell trading advice. Most charge fees,
but some give advice for free to drum up business for their brokerage
firms some give for fun some for hype but very few you will find who are
genuine. Gurus publish newsletters, are quoted in the media, and many
would kill to get on TV. Masses are hungry for clarity, and gurus are
there to feed that hunger. Most are failed traders, but being a guru is not
that easy. Their mortality rate is high, and few stay around for more than
two years. The novelty wears off, customers do not renew subscriptions,
and a guru finds it easier to earn a living selling aluminum siding than
drawing trendlines.Traders go through three stages in their attitudes
towards gurus.
In the beginning, they drink in their advice, expecting to make money
from it. At the second stage, traders start avoiding gurus like the
plague, viewing them as distractions from their own decision-making
process. Finally, some successful traders start paying attention to a few
gurus who alert them to new opportunities.
Some losing traders go looking for a trainer, a teacher, or a therapist.
Very few people are experts in both psychology and trading. I’ve met
several gurus who couldn’t trade their way out of a paper bag but
claimed that their alleged expertise in psychology qualified them to
train traders. A teacher who does not trade is highly suspect.
Traders go through several stages in their attitudes towards tips.
Beginners love them, those who are more serious insist on doing their
own homework, while advanced traders may listen to tips but always
drop them into their own trading systems to see whether that advice
will hold up. Whenever I hear a trading tip, I run it through my own
computerized screens. The decision to buy, go short, or stand aside is
mine alone, with an average yield of one tip accepted out of every 20
heard. Tips draw my attention to opportunities I might have overlooked,
but there are no shortcuts to sweating your own trades
Being an analyst is a hard job but being a trader is
more harder.BOTOMLINE:-never trade blindly on anyones call

Discipline is Worthful

A friend of mine used to have a dog-training business. Occasionally a
prospective client would call her and say, “I want to train my dog to
come when called, but I do not want to train it to sit or lie down.” And
she’d answer, “Training a dog to come off-leash is one of the hardest
things to teach; you must do a lot of obedience training first. What
you’re saying sounds like, ‘I want my dog be a neurosurgeon, but I do
not want it to go to high school.’”
Many new traders expect to sit in front of their screens and make
easy money day-trading. They skip high school and head straight for
neurosurgery.
Discipline is necessary for success in most endeavors, but especially
in the markets because they have no external controls. You have to
watch yourself because no one else will, except for the margin clerk.
You may put on the stupidest and self-destructive trades, but as long as
you have enough money in your account, no one will stop you. No one
will say hold on, wait, think what you’re doing! Your broker will repeat
your order to confirm he got it right. Once your order hits the market,
other traders will scramble for the privilege of taking your money.
Most fields of human endeavor have rules, yardsticks, and professional
bodies to enforce discipline. No matter how independent you
feel, there is always some agency looking over your shoulder. If a doctor
in private practice starts writing too many prescriptions for painkillers,
he’ll soon hear from the health department. Markets impose no
restrictions, as long as you have enough equity. Adding to losing positions
is similar to overprescribing narcotics, but nobody will stop you.
As a matter of fact, other market participants want you to be undisci-

plined and impulsive. That makes it easier for them to get your money.
Your defense against self-destructiveness is discipline. You have to set
up your own rules and follow them in order to prevent self-sabotage.
courtesy:rish trader-come into my trading room

How not to lose money in the current VOLATILE scenario

People lose money and sometimes a lot of money. There is a method of deploying funds into the equity markets. If you follow this method you just cannot go wrong.

Place your hand on your heart and ask yourself, have you really made money? Are you happy with the way your investments have performed? Was something missing? Could things have been better? The stock markets are down about 25% from the peak levels they touched in mid-May. People lose money and sometimes a lot of money. This shakes confidence. Just a couple of months back, every expert on stock market investments was shouting from the top of the roof, that India is on a growth trajectory not witnessed before in our history. India is a growing economy and that every statistic available to us, signals more growth and positive development in years to come. But suddenly, the tide turned and the stock market crashed and now the experts are giving us reasons as to why the stock market fell. As a result, people feel cheated. They lose confidence in the stock market and start believing that the stock market is like a gambling den and it is a place, where you lose money. Hence they decide to cut losses and cash out from the stock market. There is obviously something wrong somewhere. Either the experts were wrong or your investment decisions went wrong somewhere down the line. However, the funny thing is nothing is wrong here. If there is something that is wrong, it is our planning or rather the lack of planning. There is a method of deploying funds into the equity markets. If you follow this method you just cannot go wrong.

Here is the method:One fundamental assumption, always to be kept at the back of your mind is that 'equity investments are assets that will generate the maximum returns over a fairly long period of time.' If you trust this, you will not go wrong, that is certain. Volatility is just part and parcel of investing in the equity market. 20%-30% volatility is implicit for equity investment at any time. If you cannot stomach this, then you should not even look at the stock market. If you do not like the rules of this game, then obviously you should not play it.

Once, you've decided to play the game, then here is a method on how to deploy your funds:
1. What is your surplus? How much can you save from your gross earning after deducting all expenses ie. your taxes, loan installments and all living expenses? If it is above 20%, it is good. 20% is a minimum and if you cannot meet this, you must take serious note and reassess your expenses.
2. From this amount, deduct the amount you require for meeting your basic financial requirements like insurance, medical contingencies etc?
3. The balance amount is what is available for managing long term, medium term and short-term financial goals. For short term goals ie. for goals of less than 3-4 years, it would not be wise to commit any money to the stock market.
4. For goals beyond 4-5 years, you may use equity investments. What you need to control here is your greed and expectations of the future. Expect no more than a return of 12% to 15% or so per annum, but remember you many not get this each year. However, if you were to look at your portfolio after 5 to 7 years, you will see that on an average your wealth has grown by 15% or so. In reality, you may land up getting much more as well. What you must not forget is that you must invest with discipline. You can choose to invest in equity mutual funds or shares as you like. For shares, you have to be sure that you have done extensive research.
5. Finally, how you actually place your investments is also important. A systematic investment plan, SIP, of investing directly into equity mutual funds may be a great idea but is not foolproof. In the intermediate, you could lose significantly in SIP also. Ask your advisor/broker to help you do a bit of asset allocation and thereby risk management.
That is all there is to it. It is not like learning rocket science, it is just simple financial discipline. Forget about IPOs, fancy derivative strategies, futures, options, arbitrage etc., all these big words are nothing but trading instruments and trading is a zero sum game. This essentially makes your broker and advisor, far richer than you will ever be.Here is a figure to chew over: Just Rs 10,000 invested per month for 20 years that earns 12% returns can easily give you your first crore! It's really so simple. And it was just such simple strategies that helped the Bhandaris to amass their fortune.

Gold: A very long term chart

Click to view clearer & large chart..:)
Gold A Long Term view...
Watxh carefully & decide as the HISTORY is witness the moreee steep is high the more painful is lowwwwww

Happy Trading
Abhishek