The author is a SEBI Registered Research Analyst (INH000004796) and a NISM certificate holder in Equity Derivatives Market. The certification is provided by National Institute of Securities Markets.

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Tuesday, July 25, 2017

Trading cash stocks on a breakout!! How I do it??

There are several methods using which one can trade financial markets. No method is perfect and there is no holy grail. One has to find a method which suits his working style and brings mental peace.

Here I discuss one such method which I have been using for positional cash stocks long only type. I have been using it for some time now and I have happy with the results. With markets obliging and with proper position sizing, one can double account within an year using this method.

Disc: I am just mentioning what is working for me and in no way an advise to start using this method for yourself.

Chart Example: VINDHYATEL

The above is VindhyaTele stock chart, weekly scale. In this post I am explaining what I do after I spot a breakout and once in a stock how to ride it.

The stock gave a breakout on a close above Rs. 723. Now there are two ways to enter, if the breakout is a runaway breakout, its prudent to wait out for a retracement or search for another stock. Or one can enter if the breakout is not runaway like this one.

I usually buy quantity worth Rs.75000 per stock.

After entry my Stop loss is 8-10% or the nearest swing low, which ever is closer. In this case 650 which also coincides with the up sloping red trend line.

I have found that in momentum stocks, 8-10% SL seldom gets hit and one can get good value for money.

Next, is the hot question: Target kya hai??

I am not a big fan of targets. So I do not believe in Multibaggers.

After entry and having a SL with which I am comfortable with, I tend to book out half tranche at 10-11% profits. So my R:R for the first tranche is a tad above 1:1 and it works. Nothing like making the cash register ring.

Once out of half position I raise my SL to dynamic 21ema levels. Till it does not close below it at 3.25 PM on any day, I am riding half of the position.

So in the above case, first booking target for me would be Rs.800. And then the trailing is on. Now the stock is above Rs.1000. I may have lost Rs. 200 on the first tranche, but as I said ,I believe in taking money off the table at regular intervals.

So this is how I approach any cash long position. The above can be used on daily charts also.

Hope you found value in the post. Discussions are welcome.

Thursday, July 13, 2017

SATIN Chart!!

One can buy here and also add around 300. The immediate swing low marked by the red line can be a Stop Loss!!