Scaling - is for extremely small durations. A dealer or jobber is essentially a scalper. He buys in this instant and sells in the next instant for even a one tick profit.
Day trading: Day traders do their trading within a day and go home without any outstanding trading positions. They may have some inventory of shares. But they are not trading positions. Strictly they may not have any inventory also.
Position trading: Position traders carry their trading positions for number of days.
Momentum trading: It identifies very short term trends and tries to trade in the direction of the trend
Swing trading: It extend from one to four days.
Trend trading: It identifies intermediate trends which may last up to three to four months. But identification takes time and hence average time of a position can be a month.
Saturday, December 13, 2008
Monday, October 27, 2008
Where is the market headed?
Some market guru informally talks of 5000 for sensex.
Economic times carried 7500 level. It was touched yesterday.
My strategy remains the same. Buy in small lots and acquire a big holding in this downtrend for long term portfolio.
I wrote my 400th knol yesterday on bearmarket side speculation using longterm equity portfolio.
http://knol.google.com/k/narayana-rao-kvss/narayana-rao-kvss/2utb2lsm2k7a/400
Economic times carried 7500 level. It was touched yesterday.
My strategy remains the same. Buy in small lots and acquire a big holding in this downtrend for long term portfolio.
I wrote my 400th knol yesterday on bearmarket side speculation using longterm equity portfolio.
http://knol.google.com/k/narayana-rao-kvss/narayana-rao-kvss/2utb2lsm2k7a/400
Monday, October 20, 2008
Stay Safe, Don’t Trade
Stay Safe, Don’t Play is the caption that Shakti Shankar Patra (shakti.patra@timesgroup) gave to his commentary on the derivatives market on 2010.2008 in the ET Investor’s Guide.
This caption is interesting to me to clearly bring to the notice of investors an example where traders are running away from the market thereby providing bargain offers to investors. Benjamin Graham advises investors to buy when traders are running away from the market. This is a clear example of the possibility that Graham indicated in his book.
Dangers of picking bottoms for traders: Picking a bottom for a trader is risky. Momentum is safer for a trader than a contrary position. The present market is one such where any trader who entered a long position suffered innumerable times. Shakti echoes other technical analysts when he writes all traditional forms of analysis and conventional indicators have become absolutely useless.
Put call ratio was of no use. Analyzing the build-up at various strike prices has become even more redundant. CBOE VIX hit an all time high of 81.17% which means that S&P 500 option contracts are bought or written with an implied expectation that with a 68.2% confidence (one standard deviation interval) a 81.17% move in S&P 500 over the next year. This means S&P 500 can be below 200 or above 1600 in a one year span. In terms of Dow Jones, it translates to 1700 or 15,300.
Shakti says his trading call for the second successive week remains the same – Just stay out of this madness. Don’t trade.
These are interesting times for investors. Fearful times for traders.
Plan and make your investments.
This caption is interesting to me to clearly bring to the notice of investors an example where traders are running away from the market thereby providing bargain offers to investors. Benjamin Graham advises investors to buy when traders are running away from the market. This is a clear example of the possibility that Graham indicated in his book.
Dangers of picking bottoms for traders: Picking a bottom for a trader is risky. Momentum is safer for a trader than a contrary position. The present market is one such where any trader who entered a long position suffered innumerable times. Shakti echoes other technical analysts when he writes all traditional forms of analysis and conventional indicators have become absolutely useless.
Put call ratio was of no use. Analyzing the build-up at various strike prices has become even more redundant. CBOE VIX hit an all time high of 81.17% which means that S&P 500 option contracts are bought or written with an implied expectation that with a 68.2% confidence (one standard deviation interval) a 81.17% move in S&P 500 over the next year. This means S&P 500 can be below 200 or above 1600 in a one year span. In terms of Dow Jones, it translates to 1700 or 15,300.
Shakti says his trading call for the second successive week remains the same – Just stay out of this madness. Don’t trade.
These are interesting times for investors. Fearful times for traders.
Plan and make your investments.
Assets still not cheap; Sensex should be 7,500
Assets still not cheap; Sensex should be 7,500
It is also where you come from. In 2002, it was around 3,000. Six years, we have grown at an average in nominal terms of about 15%. 1f one compounds it will be in the range of 120 or 130%. If one takes this calculation, then the index should have gone to 6,000 or 6,500. Instead it reached 21,000. So we can make ourselves very happy or unhappy. All I am saying is assets even now are not very cheap.(Rahul Bhasin, Barings Equity Partners)
In 2002, average profits after tax as a percentage of sales in India was 1.77% of GDP (gross domestic product). Last year it was 6.77% of GDP. So we are off a cyclical high.
If you look at the liquidity situation globally and you look at how global capital is in India the probability of them pulling out is high and therefore I see more downside.
The real GDP has grown 15-16% a year since 2002, maybe slightly more. Maybe the index should be 7,500.
I am happy to see these statements from Rahul Bhasin. I already wrote in my eariest posts that 7500 could be taken as a fair value level. With this expectation announced by Rahul Bhasin, one can hope for index level to touch fair value level.
But still acquiring a portfolio involves tactical action to do various trades and acquire the portfolio. Mya advice is to start acquiring bits and pieces before the big bang buying at a level considered as very close to the lower level.
http://www.livemint.com/2008/10/19234336/Assets-still-not-cheap-Sensex.html?h=E
It is also where you come from. In 2002, it was around 3,000. Six years, we have grown at an average in nominal terms of about 15%. 1f one compounds it will be in the range of 120 or 130%. If one takes this calculation, then the index should have gone to 6,000 or 6,500. Instead it reached 21,000. So we can make ourselves very happy or unhappy. All I am saying is assets even now are not very cheap.(Rahul Bhasin, Barings Equity Partners)
In 2002, average profits after tax as a percentage of sales in India was 1.77% of GDP (gross domestic product). Last year it was 6.77% of GDP. So we are off a cyclical high.
If you look at the liquidity situation globally and you look at how global capital is in India the probability of them pulling out is high and therefore I see more downside.
The real GDP has grown 15-16% a year since 2002, maybe slightly more. Maybe the index should be 7,500.
I am happy to see these statements from Rahul Bhasin. I already wrote in my eariest posts that 7500 could be taken as a fair value level. With this expectation announced by Rahul Bhasin, one can hope for index level to touch fair value level.
But still acquiring a portfolio involves tactical action to do various trades and acquire the portfolio. Mya advice is to start acquiring bits and pieces before the big bang buying at a level considered as very close to the lower level.
http://www.livemint.com/2008/10/19234336/Assets-still-not-cheap-Sensex.html?h=E
Friday, October 17, 2008
Benjamin Graham Articles on net
A Conversation With Benjamin Graham
http://www.bylo.org/bgraham76.html
http://www.wisertrader.com/watchlistf.php
http://www.moderngraham.com/
What History Tells Us About the Market
http://www.filife.com/stories/what-history-tells-us-about-the-market
http://www.bylo.org/bgraham76.html
http://www.wisertrader.com/watchlistf.php
http://www.moderngraham.com/
What History Tells Us About the Market
http://www.filife.com/stories/what-history-tells-us-about-the-market
Investment Strategy October 2008
Authority and Disclaimer
I am not a registered investment advisor.
I teach investment analysis courses and hence thinking about investment is incidental to my profession of teaching.
According to me everybody is an investor in various types of assets. Most of the people invest in financial assets. Even holding cash itself is investment in financial assets.
Investment strategy is an issue for many people at various points of time. Like in any other activity, there can be a change in strategic direction.
I personally felt in India the runaway rise in share prices from sensex level of 2800 to 21000 was unwarranted and it was to the detriment of people with genuine savings. Asset inflation was created by governments and central bankers and people who buy assets at inflated prices have to repent later on. But as the might of the government and central banks was behind the asset inflation, there was huge publicity and advertisement and many must have got trapped in the asset price bubble.
For people who avoided asset price bubbles and kept their savings with them, an opportunity is on the horizon for investing in assets at more reasonable levels.
What is limit of downturn. People say Dow will test its 2001-02 lows of around 7200. Indian market one still does not know. People started talking levels of 9000. The levels may be decreased if foreign capital goes out still.
What is the fair value level. We do not have a rigorous fair value level because broking companies who are the purveyors of research and analysis in the country are not consistent in their fair value thinking.
A rough calculation that I did some time back gave me a level of 6000 an year or so back. From that level if I add 12% return the value may come to a level betwee 6700 to 7500. But will the market touch the fair value level in this downturn? Will it breach and still go down? At this stage the answers are not clear.
Can somebody have a strict policy of buying very close to or below the fair value? If the market does not come close to the fair value but goes up once again they may miss the investment opportunity once again. Investors may have to start buying small quantities in this downturn to acquire some equity component in the downturn. If the market goes to fair value levels they can invest bulk of their resource. They may keep small amount of money to invest further if the market breaches fair value levels.
They have to be ready for a disappointment if market goes to lower levels after their investment. Benjamin Graham, the dean of security analysis, guru of Warren Buffett said Mr. Market is very funny player to play with. He will sometimes quote you 21,000 and some times 2000. So you have to take a well thoughtout decision and stick to the decision as Mr. Market throws challenges at you and makes fun of your decision.
Do I follow the policy that I am advocating. Yes I made my purchase of international fund scheme when Dow was less than 11000 and now I increased my commitment further as Dow has gone below 9000.
I keep the knol under open collaboration mode and I invite other investment specialists and investors to contribute their opinions.
My knols on investment analysis
Fundamental Analysis – Graham–Rao Method
http://knol.google.com/k/narayana-rao-kvss/fundamental-analysis-grahamrao-method/2utb2lsm2k7a/7
Target Prices of Equity Shares – Concept and Utility
http://knol.google.com/k/narayana-rao-kvss/-/2utb2lsm2k7a/147
Charles on Dow on Trading and Speculation - Dow Theory
http://knol.google.com/k/narayana-rao-kvss/charles-on-dow-on-trading-and/2utb2lsm2k7a/148
This article was originally published on Knol.
Investment Strategy October 2008 Onward
http://knol.google.com/k/narayana-rao-kvss/-/2utb2lsm2k7a/273#
You can edit the article on knol and the knol version may contain additions by other visitors to knol.
I am not a registered investment advisor.
I teach investment analysis courses and hence thinking about investment is incidental to my profession of teaching.
According to me everybody is an investor in various types of assets. Most of the people invest in financial assets. Even holding cash itself is investment in financial assets.
Investment strategy is an issue for many people at various points of time. Like in any other activity, there can be a change in strategic direction.
I personally felt in India the runaway rise in share prices from sensex level of 2800 to 21000 was unwarranted and it was to the detriment of people with genuine savings. Asset inflation was created by governments and central bankers and people who buy assets at inflated prices have to repent later on. But as the might of the government and central banks was behind the asset inflation, there was huge publicity and advertisement and many must have got trapped in the asset price bubble.
For people who avoided asset price bubbles and kept their savings with them, an opportunity is on the horizon for investing in assets at more reasonable levels.
What is limit of downturn. People say Dow will test its 2001-02 lows of around 7200. Indian market one still does not know. People started talking levels of 9000. The levels may be decreased if foreign capital goes out still.
What is the fair value level. We do not have a rigorous fair value level because broking companies who are the purveyors of research and analysis in the country are not consistent in their fair value thinking.
A rough calculation that I did some time back gave me a level of 6000 an year or so back. From that level if I add 12% return the value may come to a level betwee 6700 to 7500. But will the market touch the fair value level in this downturn? Will it breach and still go down? At this stage the answers are not clear.
Can somebody have a strict policy of buying very close to or below the fair value? If the market does not come close to the fair value but goes up once again they may miss the investment opportunity once again. Investors may have to start buying small quantities in this downturn to acquire some equity component in the downturn. If the market goes to fair value levels they can invest bulk of their resource. They may keep small amount of money to invest further if the market breaches fair value levels.
They have to be ready for a disappointment if market goes to lower levels after their investment. Benjamin Graham, the dean of security analysis, guru of Warren Buffett said Mr. Market is very funny player to play with. He will sometimes quote you 21,000 and some times 2000. So you have to take a well thoughtout decision and stick to the decision as Mr. Market throws challenges at you and makes fun of your decision.
Do I follow the policy that I am advocating. Yes I made my purchase of international fund scheme when Dow was less than 11000 and now I increased my commitment further as Dow has gone below 9000.
I keep the knol under open collaboration mode and I invite other investment specialists and investors to contribute their opinions.
My knols on investment analysis
Fundamental Analysis – Graham–Rao Method
http://knol.google.com/k/narayana-rao-kvss/fundamental-analysis-grahamrao-method/2utb2lsm2k7a/7
Target Prices of Equity Shares – Concept and Utility
http://knol.google.com/k/narayana-rao-kvss/-/2utb2lsm2k7a/147
Charles on Dow on Trading and Speculation - Dow Theory
http://knol.google.com/k/narayana-rao-kvss/charles-on-dow-on-trading-and/2utb2lsm2k7a/148
This article was originally published on Knol.
Investment Strategy October 2008 Onward
http://knol.google.com/k/narayana-rao-kvss/-/2utb2lsm2k7a/273#
You can edit the article on knol and the knol version may contain additions by other visitors to knol.
Wednesday, February 6, 2008
Wednesday, January 16, 2008
Crash Course in Market Mania
Mint carried an article under the above title on 2 October 2007 by Narayan Ramachandran, MD of Morgan Stanley Investment Management.
It mentions a book "Can it happen again? Essays on Instability and Finance" Hyman Minsky.
Minsky identified seven stylized stages in bubble formation and bust: preference for risky assets increase, prices rise, cheap credit fuels the rise further, overtrading begins, leads to euphoria, insiders take profits, and the herd begins to panic.
People are talking and writing about bubbles. But many are not listening
It mentions a book "Can it happen again? Essays on Instability and Finance" Hyman Minsky.
Minsky identified seven stylized stages in bubble formation and bust: preference for risky assets increase, prices rise, cheap credit fuels the rise further, overtrading begins, leads to euphoria, insiders take profits, and the herd begins to panic.
People are talking and writing about bubbles. But many are not listening
Sunday, January 6, 2008
Dow an advocate of value trading?
It seems so.
Dow concludes one his editorials with the statement 'To know values is to comprehend the meanings of movements in the market."
More details are posted in http://nrao-sapm-handbook.blogspot.com/2007/12/technical-analysis-topic-1.html
Dow concludes one his editorials with the statement 'To know values is to comprehend the meanings of movements in the market."
More details are posted in http://nrao-sapm-handbook.blogspot.com/2007/12/technical-analysis-topic-1.html
Saturday, January 5, 2008
Dow Theory and Editorials of Dow -Nelson's Book
This topic was covered in detail in my blog Handbook of Security Analysis in the post
http://nrao-sapm-handbook.blogspot.com/2007/12/technical-analysis-topic-1.html
http://nrao-sapm-handbook.blogspot.com/2007/12/technical-analysis-topic-1.html
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