[SmartCat]

Originally Posted by eq24

is it worthwhile doing the day trader, since you said you have taken up stocks full time. How do you do it.

Just like there are different ways to get to your home to from your office, there are different ways to make money in the financial markets - day trading is just one such method. It's very popular among the people who have retired because it is considered less risky since you don't carry overnight positions. Hence, large moves in the markets overnight won't clean out your capital in a few days. But then, there is a possibility that you will lose your money bit by bit, if you don't know what you are doing when you are day trading!

Do you play long and short or go Full time long.

Living off the markets with just long positions is possible, but you need to have tons of cash. If you don't have large capital, you need to be flexible enough to short the markets.

Also how much do you allocate and any tips on how you discipline yourself.

Money management is very crucial. You need to think about risks in your portfolio all the time. If you can't sleep well or even slightly fearful, then you need to lighten up your positions. Maintain an excel sheet and log your daily profit & loss statement. If the red ink makes you uncomfortable, lighten up.

Do you Play the forex markets as well, I have heard both sides of the coin to forex but still not sure.

Start trading with equities first, then expand into commodities and currencies. More asset classes you trade, the better will be your performance. Because all the asset classes move differently (that is, if stock market is down, currencies or commodities might be up).

Pardon the word "Play" as this is anything but a game but somehow no other word does justice to this activity, do you use another verb, do let me know.

Trading is not a game. And you are not a player. It's not a casino and you are not a gambler.

Trading is a BUSINESS, and you need to think like a BUSINESSMAN. You need to think about risks first. You need to decide how much capital you want to invest. You need to think about just breaking even in the first year.

Now a fixed deposit offers 8% a year. So you should be happy with 18 - 25% per annum on your capital through the trading business. Remember that in trading business, if your returns are unusually high, that means you are taking massive risks (which might not be visible to you).

[eq24]

Originally Posted by smartcat

Just like there are different ways to get to your home to from your office, there are different ways to make money in the financial markets - day trading is just one such method. It's very popular among the people who have retired because it is considered less risky since you don't carry overnight positions. Hence, large moves in the markets overnight won't clean out your capital in a few days. But then, there is a possibility that you will lose your money bit by bit, if you don't know what you are doing when you are day trading!

Living off the markets with just long positions is possible, but you need to have tons of cash. If you don't have large capital, you need to be flexible enough to short the markets.

Money management is very crucial. You need to think about risks in your portfolio all the time. If you can't sleep well or even slightly fearful, then you need to lighten up your positions. Maintain an excel sheet and log your daily profit & loss statement. If the red ink makes you uncomfortable, lighten up.

Start trading with equities first, then expand into commodities and currencies. More asset classes you trade, the better will be your performance. Because all the asset classes move differently (that is, if stock market is down, currencies or commodities might be up).

Trading is not a game. And you are not a player. It's not a casino and you are not a gambler.

Trading is a BUSINESS, and you need to think like a BUSINESSMAN. You need to think about risks first. You need to decide how much capital you want to invest. You need to think about just breaking even in the first year.

Now a fixed deposit offers 8% a year. So you should be happy with 18 - 25% per annum on your capital through the trading business. Remember that in trading business, if your returns are unusually high, that means you are taking massive risks (which might not be visible to you).

Thank you for the excellent tips. One question comes to mind, when you say short, isn't shorting risky and also is it legal. I have heard that shorting can be construed as illegal. Although with my quantities I doubt it will make a dent.
Another question is when you day trade you usually watch the trends and adapt accordingly. But then how do you account for brokerage charges because one would assume that a lot of shares would change hand in the span. I use HDFC which I feel is expensive. Can you recommend some one else.
Thanks again.

[SmartCat]

Originally Posted by eq24

Thank you for the excellent tips. One question comes to mind, when you say short, isn't shorting risky and also is it legal. I have heard that shorting can be construed as illegal. Although with my quantities I doubt it will make a dent.

Shorting carries slightly less risk than going long. Nifty/Sensex have fallen 4% plus in a single day more number of times than they have gone up 4% plus in a day. That's because the frequency of "market crashes" are more than the frequency of "market euphoria".

If anything is illegal, your broker wouldn't allow you to do it. Actually, the whole concept of derivatives is based on one set of people going short and another set of people going long.

Another question is when you day trade you usually watch the trends and adapt accordingly. But then how do you account for brokerage charges because one would assume that a lot of shares would change hand in the span. I use HDFC which I feel is expensive. Can you recommend some one else.
Thanks again.

Like any business, trading too involves costs - brokerage costs being one of them. To reduce the effect of brokerage costs on my bottomline, I've actually changed my trading style over time so as to reduce the number of transactions.

Brokerages belonging to large banking institutions generally have higher costs than pure broking companies like Edelweiss, Sharekhan, Motilal Oswal, etc. Ask for "brokerage prepayment plans" if you notice that brokerage costs are eating up your profits.

[VindyWheels]

Hi,

Most people are not long term, they just pretend to be

I do not do day trading, forex or shorting. I had done some of these in the beginning and quickly realised that its not my cup of tea

Quite happy with the returns I am making through the concentrated portfolio of mid and small caps and strongly believe that there are some real gems out there for the hardworking disciplined stock picker. I think if one is really passionate about equity investing he/she will learn that discipline and temperament are critical for long term success. Reading the investment classics (reading the right way like you study) and listening to what seniors have to share will slowly help one "evolve".

Allocation - did you mean how much per stock or how much to the whole equity portfolio?

Originally Posted by eq24

Hey VW,

I have done OK, I guess but what I really enjoy is the short play than the long game most people go for. Just wanted some pointers from you, is it worthwhile doing the day trader, since you said you have taken up stocks full time. How do you do it. Do you play long and short or go Full time long. Also how much do you allocate and any tips on how you discipline yourself.

Do you Play the forex markets as well, I have heard both sides of the coin to forex but still not sure.

Many thanks once again.

[VindyWheels]

Hi,

Agree with smart cat that to live based on income from full time stock investments one will need a lot of cash. But once you learn the ropes you will have ample time to build other streams of incomes like freelance teaching, working as a financial adviser etc. You can even sell your research to wealth management companies.

If your spouse has a stable income or if you have good amount of rental income it becomes easier to become a full time investor.

I do not have tons of cash. I took a big risk and time will tell if that was a right step. Should also add that taking up a world renowned course like CFA also helped me learn faster and add to my CV during this time. That was a backup in case I need to return to the corporate world, I can still chase a role in investment research or wealth management. Really desist going back to what I was doing earlier.

Ultimately its your own passion which will open doors for you. To borrow from the Alchemist - for the determined seeker the whole universe will conspire to make him succeed.

Cheers

VW

[JLS]

Hi All,
With the 300+ point crash on Sensex today - few stocks are near to their lowest price of 12 months or so.
So any recommendation for any from the following for long term investment (1 year +):
- JP Associates
- DLF
- SBI
- BHEL
- L&T

Please suggest
Thanks in advance.
JLS

[ajmat]

JP - avoid - huge debts 13000 cr if I recollect

L&T have strong order book and a good long term bet

[PatienceWins]

The market is down 650 points, I am loving it.

I bought 100 shares of BHEL at around Rs. 110 today.

I will get into FMCG once the valuations become attractive.

JP - I like BHEL and L&T from the list.

Originally Posted by PatienceWins

The market is down 650 points, I am loving it.

I bought 100 shares of BHEL at around Rs. 110 today.

I will get into FMCG once the valuations become attractive.

JP - I like BHEL and L&T from the list.

I am crying

I was planning to close my ULIP tomorrow.
I wanted to do it last week, but forgot to carry the policy document. Already lost ~6K. By tommorrow, i might loose another 2-3K~ today. Dont know whether i should wait or encash it ? Thinking..

[PatienceWins]

Originally Posted by gemi_kk

I am crying

I was planning to close my ULIP tomorrow.
I wanted to do it last week, but forgot to carry the policy document. Already lost ~6K. By tommorrow, i might loose another 2-3K~ today. Dont know whether i should wait or encash it ? Thinking..

I sold my ULIP when the market was trading at 18,500 last year, if that makes you feel better. I wanted to get rid of it for a long time once I learnt that insurance and investment should not be clubbed together. So I got rid of it last year when there was an urgent need for the cash.

The stock market quote and volatility do not matter, it is all relative, for a long time investor. What matters is the margin of safety - The difference between the estimated business value of the stock and the market price - of a stock. Buy right and sit tight.

Recently I have realized the importance of behavioural intelligence in equity investing. I just finished reading Predictably Irrational by Dan Ariely and started with The Act of Thinking Clearly by Rolf Dobelli. Highly recommended. It helps to evaluate our thinking and decision making in all facets of life.

Other shortlisted books on the same topic (yet to read):
Thinking Fast and Slow by Daniel Kahneman
Influence by Robert Cialdini
Black Swan by Nicholas Taleb
Fooled by Randomness by Nicholas Taleb

[lambuhere1]

Ok Guys, Something to Ponder.

George Soros Takes a Giant Put Position Against the S&P 500

http://www.moneynews.com/investingan...8/15/id/520613

http://blogs.marketwatch.com/thetell...on-the-sp-500/

My preference : Sit on Cash Cow Now

[S_U_N]

FundsIndia/ Wealth India is asking for signing of "Power of attorney" as part of the demat account setup.





Question is if that is normal.

Do other brokers/ demat service providers also ask you to sign this?

[JMaruru]

Originally Posted by S_U_N

FundsIndia/ Wealth India is asking for signing of "Power of attorney" as part of the demat account setup.

Question is if that is normal.

Do other brokers/ demat service providers also ask you to sign this?

I vaguely remember providing one for ICICIDirect. It seems to be the norm.

[eq24]

Any good books or websites on technical analysis. Does anyone know?

Would be good if it covered from the basics.

Thanks

Need answer !

Now, 24 carrat gold is at 34815/- per 10 gms. Source money control
http://www.moneycontrol.com/
(As of now. It keeps on fluctuating. Dont blame me if it drops later on. )

Now, The 22 carrat gold is being sold at 29710 /-. source
http://www.livechennai.com/gold_silverrate.asp
http://rates.goldenchennai.com/
(As of now. It keeps on fluctuating. Dont blame me if it drops later on. )


If the price mentioned in Money control is correct, (I believe this), then 22 carrat should be costing 34815 *22/24 =~ 31913.

I dont understand, why gold jewlers are selling at lesser price.
The same is the case with wholesellers too. Gold is being sold at less than the actual price. I have been observing this pattern from the past 2 days.

Ofcourse, selling less than market price doesnt give any profits. It is a LOSS.

However, Selling at current price would definitely give them more profits.

Why would anyone would sell it at a loss. Or am i missing anything?

I am not planning to buy any gold, but trying to understand why it is being sold at less price.