Saturday, April 25, 2015

FEARS OF TRADING AND HOW TO OVERCOME THEM

While some traders are more likely to fall victim to greed ("How much could I make?!"), others have experienced loss in the market to the point where all they can see is the fear and anxiety ("How much could I lose?" or "How much could the market take away from me?").
Let's look at some resources to help us cope with these fears.
I recommend beginning with article " Fears of Trading" which lists and explains each type of fear - it's more than just being afraid to lose money. lists the fears as the following:
1.Fear of Losing Money
2.Fear of Missing Out (on a Move)
3.Profit Turn into a Loss
4.Fear of Being Wrong (or not being right)

Thursday, April 23, 2015

Technical Analysis: The Basic Assumptions

What Is Technical Analysis? 
Technical analysis is a method of evaluating securities by analyzing the statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity. Just as there are many investment styles on the fundamental side, there are also many different types of technical methods.like rely on chart patterns, use technical indicators and oscillators, and also use combination of the two. technical analysis exclusive use of historical price and volume data is what separates them from their fundamental counterparts. Unlike fundamental analysts, technical analysts don't care whether a stock is undervalued - the only thing that matters is a security's past trading data and what information this data can provide about where the security might move in the future.

The field of technical analysis is based on three assumptions:

1. The market discounts everything.
2. Price moves in trends.
3. History tends to repeat itself.
4. Art over science
5. No need to know 
6. Self-fulfilling prophecy 
7. Momentum reverses 

Tuesday, April 21, 2015

How we can analyze Fundamentals of a stock

Fundamental Stock Analysis is typically more closely tied to buy and hold investors, whereby day traders use solely technical analysis and most swing traders use both fundamental and technical stock analysis. Technical analysis is specifically important for swing traders with a very short time horizon (that is, a couple of days or just a few weeks).

Stock Fundamental Analysis (Value, Growth, Income, Quality, GARP)

Many people rightly believe that when you buy a share of stock you are buying a proportional share in a business. As a consequence, to figure out how much the stock is worth, you should determine how much the business is worth. Investors generally do this by assessing the company’s financial’s in terms of per-share values in order to calculate how much the proportional share of the business is worth. This is known as “fundamental” analysis by some, and most who use it view it as the only kind of rational stock analysis.
Value. A cynic, as the saying goes, is someone who knows the price of everything and the value of nothing. An investor’s purpose, though, should be to know both the price and the value of a company’s stock. The goal of the value investor is to purchase companies at a large discount to their intrinsic value – what the business would be worth if it were sold tomorrow. In a sense, all investors are “value” investors – they want to buy a stock that is worth more than what they paid. Typically those who describe themselves as value investors are focused on the liquidation value of a company, or what it might be worth if all of its assets were sold tomorrow. However, value can be a very confusing label as the idea of intrinsic value is not specifically limited to the notion of liquidation value . These value investors tend to have very strict, absolute rules governing how they purchase a company’s stock. These rules are usually based on relationships between the current market price of the company and certain business fundamentals. A few examples include:
·         Price/earnings rations (P/E)
·         Dividend yields above a certain absolute limit
·         Book value per share relative to the share price
·         Total sales at a certain level relative to the company’s market capitalization of market value
 Growth. Growth investing is the idea that you should buy stock in companies whose potential for growth in sales and earnings is excellent. Growth investors tend to focus more on the company’s value as an ongoing concern. Many plan to hold these stocks for long periods of time, although this is not always the case. At a certain point, “growth” as a label is as dysfunctional as “value,” given that very few people want to buy companies that are not growing. Growth investors look at the underlying quality of the business and the rate at which it is growing in order to analyze whether to buy it. Excited by new companies, new industries, and new markets, growth investors normally buy companies that they believe are capable of increasing sales, earnings, and other important business metrics by a minimum amount each year. Growth is often discussed in opposition to value, but sometimes the lines between the two approaches become quite fuzzy in practice.
Income. Although today common stocks are widely purchased by people who expect the shares to increase in value, there are still many people who buy stocks primarily because of the stream of dividends they generate. Called income investors, these individuals often entirely forego companies whose shares have the possibility of capital appreciation for high-yielding dividend-paying companies in slow-growth industries. These investors focus on companies that pay high dividends like utilities and real estate investment trusts (REITs), although many times they may invest in companies undergoing significant business problems whose share prices have sunk so low that the dividend yield is consequently very high.
Quality. Most investors today use a hybrid of value, growth, and GARP approaches. These investors are looking for high-quality businesses selling for “reasonable” prices. Although they do not have any shorthand rules for what kind of numerical relationships there should be between the share price and business fundamentals, they do share a similar philosophy of looking at the company’s valuation and at the inherent quality of the company as measured both quantitatively by concepts like Return on Equity (ROE) and qualitatively by the competence of management. Many of them describe themselves as value investors, although they concentrate much more on the value of the company as an ongoing concern rather than on liquidation value.
GARP. Investors combines the value and growth approaches and adds a numerical slant. Practitioners look for companies with solid growth prospects and current share prices that do not reflect the intrinsic value of the business, getting a “double play” as earnings increase and the price/earnings (P/E) ratios at which those earnings are valued increase as well.One of the most common GARP approaches is to buy stocks when the P/E ratio is lower than the rate at which earnings per share can grow in the future. As the company’s earnings per share grow, the P/E of the company will fall if the share price remains constant. Since fast-growing companies normally can sustain high P/Es, the GARP investor is buying a company that will be cheap tomorrow if the growth occurs as expected. If the growth does not come, however, the GARP investor’s perceived bargain can disappear very quickly.


Monday, April 20, 2015

Things Which Every Online Investor Should Know

Things Which Every Online Investor Should Know
The resources on this page have been designed to help you develop an understanding of how to stay safe when investing online.
1.     Start small. 
If you are new to online investing, don't put your entire life savings into an online account. Start with a smaller sum, which will be easier to handle and keep track of. Once you feel confident, you can then decide to add more money to your online account.
2.     Stay diversified. 
Once online, many investors tend to concentrate on stocks, specifically large-cap domestic stocks. While these stocks should make up part of your portfolio, they shouldn't be ALL of it! Take into account your time horizon and risk tolerance to develop a well-balanced portfolio of stocks, bonds, and cash.
3.     Don't bail on mutual funds. 
Most investors are in mutual funds for a good reason. They don't have the expertise to make their own investments calls on individual stocks. They also are too preoccupied by work, family and other concerns to spend every minute watching the market. So keep your mutual funds; it probably is an unwise move for you to cash out your long-term fund holdings so that you can start "playing the market" in individual stocks!
4.     Costs may not always be obvious. 
Even if online brokerage costs are lower than those of full-service brokers, they can still add up, particularly if you do a lot of buying and selling. Online brokerages firms also impose a number of other fees and charges that you should study closely. The federal capital gains tax is also something with which you must reckon. Before you start buying and selling stocks or mutual funds online on a large scale, you should give careful thought to what the tax bite would be as a result of such trading.
5.     Make orders work for you. 
If you are going to do your own investing online, you need to learn how to use the tools available to avoid potentially steep losses and to buy or sell a stock at attractive prices. Here are three "orders" that you should use to your advantage:

A MARKET order is an instruction to buy or sell a specified amount of a stock (or other security) at the current market price. The advantage of a market order is you are almost always guaranteed your order will be executed - as long as there are willing buyers and sellers. Depending on your firm's commission structure, a market order may also be less expensive than a limit order.
 

A LIMIT order allows you to avoid buying or selling a stock at a price higher or lower than what you specify. A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. By contrast, a market order only guarantees you the best available price -- not the limit order's specified price.
 

A STOP-LOSS order sets a sell price for a broker. When the price of the stock drops below this level, it automatically is sold. Also: Take the time to learn about "stop orders," "day orders" and "good-till-cancelled" orders
6.     Mind those market orders. 
Limit orders are often used to guarantee that an investor will not pay over a certain dollar level for a stock. If no limit is placed, the trade is considered to be a market order. Placing a market order means you won't necessarily get the price you see when you buy or sell online. Here's how that works: an investor places an order for a fast-moving stock at $10 share price, but the order does not reach the market until the stock's price is at $15 a share.
7.     Problems are inevitable. 
Trading online is not foolproof. There will be times when you can't access your account. You could be away from your computer when the market makes a major move. Your Internet connection could be down. The online brokerage firm's server could crash due to heavy trading, unexpected software glitches or a natural calamity. Know about the firm's alternative trading options. This could include automated telephone trading or calling a broker.
8.     Information is power. 
If you are going to buy and sell individual stocks online, it is your duty to keep as well informed as possible about what is going on with the company in question. Don't just settle for the hype about hot stocks! Go to the company's Web site and download its prospectus. Check out the company's publicly available filings through the U.S. Securities and Exchange Commission's
 EDGAR system. Take advantage of free services that allow you to get automatic e-mail messages whenever there is news about your stock.

Thursday, April 16, 2015

RESULT OF RELIANCE ON 17-04-2015

RESULT OF RELIANCE ON 17-04-2015

Positive result of  RELIANCE may take it above 970 tomorrow or let it fall till  820 if it turns negative as per expectations.

Speculation over Saudi Aramco and Reliance Industries oil deal
After mentoring 11 start-ups, Saudi Aramco and  Reliance Industries BSE 0.40 % have not yet concluded a term contract to import diesel and gasoline, three industry sources said, fanning market speculation that the long-standing annual deal may not be renewed. A deal has normally been signed by the first quarter, but negotiations have gone on longer at a time when Saudi Arabia has become less reliant on imports following refinery expansions. The term deal talks had stalled because the companies had not been able to agree a price yet, said the sources who were familiar with the negotiations. "Even if the Saudis don't import from Reliance, Reliance will be able to sell in the domestic market due to firm summer demand and low underlying crude oil prices.

RESISTANCE: 940, 950, 969

SUPPORT:  921, 912, 893

RESULTS IMPACT ON MARKET

IndusInd Bank falls by 1.6%
IndusInd Bank Q4 profit jumps 25%
IndusInd Bank matched street expectations on Thursday with the fourth quarter (January-March) net profit rising 25 percent year-on-year to Rs 495.3 crore. Asset quality of the bank improved too, during the quarter.
TCS FALLS BY 2.2%
TCS Q4 revenue seen flat at $3.94bn.Forecast the firm’s dollar revenue to grow 0.2 percent to USD 3940 million versus USD 3931 million in the previous quarter, while rupee revenue is seen declining 0.1 percent, from Rs 24,501 crore to Rs 24,456 crore. Operating profit (earnings before interest and taxes) is seen falling 1.2 percent to Rs 6,540 crore while net profit may fall 0.6 percent  to Rs 5,410 crore. The fall in profit may result in TCS’s EBIT margin come from 27.04 percent  to 26.74 percent.
MINDTREE FALLS BY 3.4%
Mindtree Q4 profit falls 8.4% to Rs 129 cr, $ revenue flat Mindtree's fourth quarter consolidated net profit declined 8.4 percent sequentially to Rs 129 crore that fell short of expectations on Thursday, impacted by forex loss. Profit was expected at Rs 134 crore for the quarter. Mindtree missed on operational front as operating profit dropped 5.3 percent to Rs 179 crore and margin declined 120 basis points to 19.5 percent in the quarter gone by. Those were expected at Rs 181.5 crore and 19.8 percent, respectively.
UPCOMING RESULTS ARE

Monday, April 13, 2015

WHAT IS STOCK SPLIT

WHAT IS STOCK SPLIT
Stock splits get many investors all excited, but in many ways they're really non-events. One reason companies split shares is so that the price will remain psychologically appealing. Reducing a stock's price makes some investors think  that it's a better value.
All publicly-traded companies have a set number of shares that are outstanding on the stock market. A stock split is a decision by the company's board of directors to increase the number of shares that are outstanding by issuing more shares to current shareholders.
A stock's price is also affected by a stock split. After a split, the stock price will be reduced since the number of shares outstanding has increased.
A stock split is usually done by companies that have seen their share price increase to levels that are either too high or are beyond the price levels of similar companies in their sector. The primary motive is to make shares seem more affordable to small investors even though the
underlying value of the company has not changed.
A stock split can also result in a stock price increase following the decrease immediately after the split. Since many small investors think the stock is now more affordable and buy the stock, they end up boosting demand and drive up prices. Another reason for the price increase is that a stock split provides a signal to the market that the company's share price has been increasing and people assume this growth will continue in the future, and again, lift demand and prices.
For example, if Infosys shares were worth Rs. 40000 each, investors would need to purchase Rs. 4000000 in order to own 100 shares. If each share was worth Rs. 4000, investors would only need to pay Rs. 400000 to own 100 shares. Lower share prices allow retail investors to invest in the stocks. There is also a mental barrier that higher priced stocks will not increase as much as lower priced stocks.
LIST OF COMPANIES STOCK SPLIT IN 2015 

Friday, April 10, 2015

RULES FOR FUTURE TRADING

       1. Stay out of trouble, your first loss is your smallest loss. 
2. Analyze your losses.
3. Survive! In futures trading, the ones who stay around long enough to be there when those "Big Moves" come along are often successful. 
4. If you are just getting into the markets, be a small trader for at least a year, and then analyze your good trades and your bad ones.
5. A speculator should have enough excess margins in his account to provide staying power so that he can participate in big moves.
6.Take windfall profits (profits that have no sound reasons for occurring).
7.Periodically redefine the kind of capital you have in the markets.
8.Do not use the markets to feed your need for excitement.
9.Always use Stop Loss
10.Intraday trading should be done without any ego.
Flexibility and discipline are key for a successful trader.
11.Do not be afraid to be a sheep. Do not overtrade.
12. Take a position only when you know your profit goal and know when to stop if the market goes against you.
13. Use technical signals (charts) to maintain discipline - a vast majority of traders are not emotionally equipped to stay disciplined without some technical tools