With Dow Jones Industrial Average only 1.71% away from the previous ATH looks like if it manages to cross above the Bearish Harmonic Butterfly Point B it can swiftly move on the upside for a target of 37261 and 38147.
RISK MANAGEMENT
“Risk is inseparable from return in the stock market arena.“
If risk can be managed, traders can open themselves up to making money in the market. It is an important but often overlooked pre-requisite to successful active trading.
Point being~ Anyone who has earned decent profit can lose it all in a split second without proper risk management. So how do we develop the best techniques to curb the risks of the market?
Let’s dive right in.
1. PLAN YOUR TRADES
It’s said~ Every battle is won before it is fought.
Having a plan & key pointers to focus on before executing a trade gives an edge.
~Does it meet the entry criteria?
~Is RR in favor?
~Does it fit in with the trend?
This helps to key emotions at bay.
2. FOLLOW MARKET TREND
Markets are dynamic and constantly changing.
Identifying & riding the trend is one of the most rewarding strategy in itself to mitigate the risk.
Sometimes it’s a task to do so but once you get your hands on it, things will get simplified.
3. PORTFOLIO DIVERSIFICATION
Making sure you make the most of your trading means never putting your eggs in one basket.
The diversified portfolio protects you from the market fluctuations in a specific sector or the specific company.
This ensures a balanced equation.
4. ASSESS YOUR RISK TAKING CAPACITY
The markets are uncertain & you might end up loosing all your wealth due to one wrong trade.
You should assess your income sources & determine an amount which you feel you can trade with or invest to get saved from this blow-up.
5. STOP-LOSS & TAKING PROFIT
Determine open & close position.
Stop Loss is the price at which a trader sells a stock & takes loss on the trade.
Taking Profit point is the price at which a trader sells a stock & takes profit on the trade.
These 2 factors are the key drivers of risk management.
6. ONE % RULE
Even if everything goes wrong in a row & if we are risking just 1% of capital in each trade.
It’ll take 100 trades to lose it all.
Many traders lose entirely in just 5-7 trades.
They trade with position size way bigger than their risk management should allow.
We should always know when we plan to enter or exit a trade before executing.
By using SL; We can minimize not only losses but also the number of times a trade is exited needlessly.
In conclusion, make your battle plan ahead of time so you’ll already know you’ve won the war.
TRADING PSYCHOLOGY
If you’re new to the field and trying to make sense out of out, good.
The charm of seeing numbers flickering on your screen can be exciting and shattering at the same time.
The ability to hold these emotions from the beginning will give you an edge.
When you’re just starting, It’s tempting.
The thought of conquering it all in a day just gets imprinted on our brain. Because of this, The risk of overdoing pops in.
Stick with what works for you and keep adding in along the way.
Be self-aware. Know yourself and develop a system that tunes in with your personality and risk appetite.
Let’s say If you can manage many open positions and make adjustments at a quick pace, you might want to give scalping technique’s a shot.
On a similar note, If you feel that this is a hassle for you.
You can try swing trading technique’s to lower the pressure and trade with a calm mind. It’s more of a mental game.
One aspect that we generally tend to ignore is out lifestyle and priorities.
If you’re in a job due to which you can’t be in front of your screen all the time, you might want to opt for strategies that make it trading possible for you under such constraints swing trading.
Any particular skill set will take time to master. So be responsible for each move you make and even if it goes wrong, try to learn from it.
Trading psychology > emotions.
We’re all human beings and the tendency of living in greed and fear sometimes over powers and clouds our judgements and we make poor decisions.
Understand that it’s okay and hold your self accountable for it.
The trick is to stay focused on what the market is telling you rather than what you’re telling the market to do Stay disciplined as it goes hand in hand with trading psychology, as this enables you to stick to your strategy and risk management rules.
It can be tempting to deviate from your plan when the markets are going haywire but with the right mindset and discipline~ You’ll be able to ace it.
Keep a trade journal to work on your trading psychology.
This is a habit that must be started by traders from the very start.
This allows you to keep track of your profit and loss, trading decisions, trade strategies, and even the factors that influenced your decisions.
NYKAA IPO
Key points
IPO Open Date~ Oct 28, 2021
IPO Close Date~ Nov 1, 2021
IPO Listing Date~ Nov 11, 2021
IPO Price~ ₹1085 to ₹1125 per equity share
Minimum application amount~ ₹13,500
Maximum application amount~ ₹189,000
Summary of financial Information (Restated Consolidated)
Loss making to marginal profitable company
Strengths:
1. Promoted by Nayar Family. Yes, Sanjay Nayar of KKR. Sanjay Nayar is the Chairman & CEO of the Indian arm of the private equity giant~ KKR.
Sanjay Knows this game of private equity & IPO like back of his hand. He has had many mega exits for KKR in last 10 years.
2. Lead managers
Because of Sanjay’s connections, lead managers are top banks with awesome track record of IPO listing.
Below is the list of lead managers:
1. Bofa Securities India Ltd
2. Citigroup Global Markets India Private Ltd
3. ICICI Securities Ltd
4. JM Financial Consultants Private Ltd
5. Kotak Mahindra Capital Company Limited
6. Morgan Stanley India Company Private Ltd
Lead managers are known for mega IPOs.
For example~ Morgan Stanley, BOFA, Citi were lead manager’s for Zomato, HDFC AMC & HDFC Life among others. That’s a icing on the cake for an IPO.
Things to consider before applying:
Today is the last day & IPO is already oversubscribed, So chances of allotment itself are very low. Also money will be stuck till refund which is on Nov 9,2021.
In spite of all the hype, employees have not shown much enthusiasm, that’s a sizeable flag for long term but not for listing gains.
Below is the subscription so far: Category Subscription (times)
As a matter of fact; in many overhyped IPOs like Reliance power, overall market sentiment is prime for listing gains.
As yet, Nifty is in a back & forth momentum. Mid cap and small cap stocks have taken beating, left right & centre.
If market tanks further, IPO will tank on the very first minute of listing.
Overall a good bet if you are into the IPO game & are applying in many IPOs as a type of trade & you have the discipline to square off at the first hour of listing, even if at a damage.
Remember~ Hope is biggest enemy of IPO trader.
Position sizing in IPO is crucial, yes in IPO too.
So be ready for 30% dip from listing price [If any], that’s 3K loss per lot. Do consider your risk appetite before hopping right in.
If you have a capital of 1~2 Lacs, Just apply for 1 lot.
Capital protection is the pointer here, Allotment is secondary.
Also so many more IPOs are coming in next 10 days including Paytm, You need to keep the powder dry.
Happy Listing. Cheers!
NESTLE INDIA
Post breakout at 18 month’s long resistance, Now In Monthly TF; NESTLEIND is heading for a retracement towards the breakout level which gives it a bullish indicative after it takes support at those levels.
Major Fibonacci support levels: 17803.95 ~ 18339.60
In the Weekly TF; A series of price movements can be observed that graphically form the shape of a “U”.
Also It can be observed that; The down ward move started at the Potential Reversal Zone of Harmonic pattern. Now that the short side target’s will soon be hit. It shall take a bounce from those levels.
The overall setup looks quite interesting and bullish.
For queries related to this post or Technical Analysis you can mail us here at-Info@tradetales.in
Disclaimer~ This post is shared for educational purposes only kindly consult your financial advisor before taking any decisions we’re not liable for anyone’s profit and loss.