My Learning - Vallabai

WildFire · Rich + + Posts: 42 Join date: 2008-01-17

My learnings on recent crash
1. Never trade without stoploss, don't afraid to take a small loss else might lose your capital itself.
2. Never trade in penny stocks which keeps hitting UC/LC all the time. If you do, don't be greedy watch closely and get rid of it when u smell reversal.
3. Always keep and eye on the indexes where the shares you hold belongs, look for global cues and market history. Just because you are pretty new to share trading, there is not exception on you for the market, market treats everyone the same.
4. Don't ever trade in F&O, yes, it looks attractive but it's a trap.

arnav_rulz · Rich +++ Posts: 58 Join date: 2008-01-28

good points there my friend... although i have different views than you.

1. Never trade without stoploss, don't afraid to take a small loss else might lose your capital itself.

Momentum/short term trade with stop-loss, otherwise in voilatile situations or a small corrections many a times your stock may easily hit the stop loss and cover back again.

2. Never trade in penny stocks which keeps hitting UC/LC all the time. If you do, don't be greedy watch closely and get rid of it when u smell reversal.

Couldn't Agree more !!

3. Always keep and eye on the indexes where the shares you hold belongs, look for global cues and market history. Just because you are pretty new to share trading, there is not exception on you for the market, market treats everyone the same.

Yup, you should chose stocks from favourable sectors/indices, or many a times just because a sector is not fav and even though the stock is very good, it may not give the desired returns in the short term.

4. Don't ever trade in F&O, yes, it looks attractive but it's a trap.

Sorry mate, almost completly disagree with you here.

The key to investing in F&O is having a strategy and not investing on borrowed funds.

F&O is a great way to earn more.But if your Short term here... A very strict stop loss may be required.

Also there are soo many strategy's you can use in F&O that may give you outstanding retuns with limited risk.

If you have less cash in hand you can always trade in Options, but you must have complete knowlege about F&O in order to gain handsomely.

Even in falling market you may earn a lot !!

There are soo many strategy's in F&O. Here are a few -

1) If you are bullish/long on a stock, Buy a future and sell an out of the money(higher spot price) call.
2) But 1 AT the money(current price) Call & see 1 Out of the money call
3) Best in volatile markets - Buy 1 call And buy 1 put.
4) if Put's arnt active, then buy 2 calls and sell 1 future !(its equal to buying 1 call and 1 put !)
5) People who have less cash, but are very bullish on a stock in the short run may just buy a call(limited money, limilted loss & unlimited profits !!)
6) If your expecting a fall, just buy a Put !

If your not very greedy, I feel if you want, you can make F&O even safer than Cash stocks using strategy's !

** These are just my views, as i feel there are always 2 sides of a coin

WildFire · Rich + + Posts: 42 Join date: 2008-01-17

Quote:

Don't ever trade in F&O, yes, it looks attractive but it's a trap.

Sorry mate, almost completly disagree with you here.

The key to investing in F&O is having a strategy and not investing on borrowed funds.

F&O is a great way to earn more.But if your Short term here... A very strict stop loss may be required.

Also there are soo many strategy's you can use in F&O that may give you outstanding retuns with limited risk.

If
you have less cash in hand you can always trade in Options, but you
must have complete knowlege about F&O in order to gain handsomely.

Even in falling market you may earn a lot !!

There are soo many strategy's in F&O. Here are a few -

1) If you are bullish/long on a stock, Buy a future and sell an out of the money(higher spot price) call.
2) But 1 AT the money(current price) Call & see 1 Out of the money call
3) Best in volatile markets - Buy 1 call And buy 1 put.
4) if Put's arnt active, then buy 2 calls and sell 1 future !(its equal to buying 1 call and 1 put !)
5)
People who have less cash, but are very bullish on a stock in the short
run may just buy a call(limited money, limilted loss & unlimited
profits !!)
6) If your expecting a fall, just buy a Put !

If your not very greedy, I feel if you want, you can make F&O even safer than Cash stocks using strategy's !

** These are just my views, as i feel there are always 2 sides of a coin

Arnav,
Combining futures and options together works great. But the leverage you get from small amount is the attractive part and that's the one which eats away your investment quickly. I had strict stop loss and manytimes i ended with small losses and some times with small profits, with a net loss, crash like this always takes the investment away and sometimes i ended up paying more even after losing the current capital.

And then the time you spend in front of the terminal looking at it's movement is not worth, may suit for a full time or a professional trader. Time consuming and too much pressure, and my decision making was driven by emotional most times. I don't say this will be the case for everyone.

Anyone i know who traded in F&O were either in loss or just no loss, profit stays with them only until the next crash arrives. I'm in the first type i mentioned.

Thanks for your views, helps me to look at the other side of the coin but it's not my time to start with F&O again.

arnav_rulz · Rich +++ Posts: 58 Join date: 2008-01-28

Another Learning,

What the market expects, the opposite is going yo happen And traders would be hurt the most !!

Like today only, after RBI announcement of No change in rate cut was a bad news for the market and thus the market fell quickly for 2 mins.

Those who shorted(in futures) got trapped AS the market rebounded and went higher thus trapping the bear !!

**THINK Diff from the market, Try to think the way broker's/ big players think !