sometimes i feel that we guess the market right but don't let it do what it wants and unfold completely. we do what it wants us to do before it does what we guessed it wants to do.
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trading days are to the week and month what pages are to a chapter and book. they have continuity which we fail to see in trading atleast, wrongly taking every day as a fresh standalone trading day....
buy right, sit tight in trading also....
imho trading and investing are same....just a difference of time of holding....rules are same. if we trade the way we invest, we will lose less and win more.
the only visible difference is that we leverage in trade which makes all the difference in behaviour, and hence results.
reverse is also true imho. u can invest by trading methods, eg using charts. fundamentals as well as anti-fundamental-cartel-longterm-backing (like ACC in harshad mehta times) plus any other factor is reflected in the chart.
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binus thoughts...
- only by compounding one can become rich. without that only expenses can be met at best
- check all charts for trade entry decision but stick to the same one chart for exit
the way i try and hold to multibaggers all the way is this
lets say i buy 1 lac in a stock and it becomes 1.3 lacs when i sense discomfort against what assurance chart is giving me
i book stock worth 30000 and invest it elsewhere, holding 100000 still in the same old stock
this cycle continues.
it is like taking out the seed from plant as safety but leaving the plant planted. u have got one more seedling which becomes plant. the crucial factor though is...where are u investing that 30000? it has to be in a stock as good as the priginal one from where u took it out.
this way u can hold onto any stock as per your system while letting the forest grow without anxiety
one of the investing methods which tickles me a lot is the
"coffee can investing"
buying 20 promising small cap stocks worth rs.10000 each (total rs.2lacs), "putting" them in an empty coffee can and opening them after 10 years.
strong likelihood that 9 will be zero or more after 10 years while 1, if 100x....is likely to be worth 10 lacs (worth 40 lacs if 400x)
Mohnish Pabrai's career is filled with many such stories
suppose we buy 30 stocks. on the day of buying they are like a bundle of sticks tied with a string.
because in reality, it is often seen that the bundle of stocks behave like a broom.
In fact, even if market (index) dips, it momentary disturbs/ distorts the good stocks which again come back to their original track
Something like this
Pick good stocks in bull trend and don't worry about the broader index
Just because the world is going to hell doesn't mean good people and stocks are not living in heaven already. They are merrily marching to happiness and wealth
One of the oldest cliché we used to listen more than a decade ago when we got serious about trading was
Trend is your friend.
We underestimated the value of friends for so long.
Just because you lose because of friends for some time doesn’t mean he’s not worth gold in remaining times.
To be with the trend requires little brains and big guts.
If you can’t be with 1 minute chart trend, befriend 5 minute trend. If not 5 then 15 or 30 or 60 minute trend. But, for heavens sake, trust friend in market. Don’t leave his her hand.
Maybe he she can see something which you can’t...
i always kept on bleeding till I started hedging.
hedging is like insurance to the trade. it costs something, but it gives safety cover. it reduces/eats from the profit but it ensures that you don't lose big plus you profit more often due to less stress and panic.
after the safety cover of hedging, i focused on better prediction of the direction in short and medium term.
many say it can't be predicted. well, that's what operators want us to think. while it may not be possible to predict accurately or everything, like rain....but you can always find a way to predict the chances of rain vs snow
learning to predict better and better takes a lots of time. i once equated it in one of my articles to drug discovery. it is painful, costly, exhausting and time consuming. many don't survive that arduous journey. that's why i say to myself that surviving is crucial to winning.
hedging takes care of our longevity till we discover the wonder drug
if you want to take short positions, eg, take 200pe vs 100ce position...or similar traps....
of course, i have seen operators play premium eating games even there and it may appear that if market moves down, 200pe would gain much much less than 100ce would gain....reducing, apparently, the logic behind the trap. but that is temporary and is part of the trap....operators are desperate to get you off their side. they carry the helplessness of going against the weight of the broad macro fundamentals of companies/sectors/economies.
master any 1-2 indicators and mix them with game theory....observe the historic moves over different time lines and start betting small in hedges....that's a good path to pro-trading imho....
you have to do Ph.D. in 1-2 indicators than matriculation in 10. no wonder, the richest funds and operators are called "hedge funds".
