Friday, June 4, 2010

My Trading Style

As I mentioned in my first post this blog is mainly about my trades and thoughts on Indian Stock Market. I will be disclosing what I do on day to day basis on this blog, but before that I would like all of my readers to know my method of trading and style of trading.

I am NOT a technical analyst. I CAN NOT read charts and nor can I identify patterns. But this does not mean i don’t believe in TA. It’s a good method but in my experience i have never seen anyone making it big in stock market only on TA. (I have been in the market since 1992 – so that’s a long time for this conclusion). I feel if one knows TA then one can get a better entry and exit.

I have been trading in the market since 1992 and one method that has worked consistently for me is following --- Always follow what big people are doing. This is difficult to do as one may not get the right information at the right time but over a period of time I have developed good contacts in the market through which I get good information. This method has helped me multiply my net worth at least 25 times in last 18 years. Most of the rise in my net worth has come from investments (buying and holding for more than 1 year) and not trading, but to invest one has to have the pulse of the market which can only be gained by trading.

Now this does not mean I only do trading on information. Over last many years I have developed a knack for reading ticks. I do lot of intraday trading purely on reading ticks. Another style of trading is the quarterly results trading. In this style I gather the estimates of top 200 companies quarterly results from various institutional reports and since I have access to 2 different news sources (Reuters / NewsWire18), I can actually trade on the result announcements and it does give good opportunities.

I also do lot of trading in options (mostly Nifty), and very moderate trading in futures as i also believe, like great Buffett, that these are weapons of mass destruction.

I usually don’t follow stop loss or nor do I have a stop loss when I enter a trade but I wouldn’t advice this to anyone unless you know what you are doing. So most of the time when I disclose a trade I have taken, I will not mention a stop loss. If you want to follow me then do so at your own risk and do have appropriate stop loss. In case some trades don’t work out the way they should then I am never hesitant to book loss and will also disclose the same.

I usually trade with large number of stocks in my trading portfolio. It’s not uncommon to find more than 100+ stocks in my trading portfolio in a good trending bull market. So it is possible that one may find it overwhelming with the number of stocks that I trade. I will try to point out best of the lot every now and then.

Well that in general is how I trade. Any Questions and Comments are welcome.

Till next time then………………

 

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