Sunday, December 6, 2009

Strategy - Short Term / Intraday Trading

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Dear Readers,

Let me welcomes all of them who joined in the Portfolio Advisory Services in the month of November. This article is in response on certain queries raised by few my clients/readers. Please go through the interesting part or the core of an email query from a client.

[You have mentioned, some of your friends are making good money from intraday/short term trading. Can’t you try this?. As you said, if we all are here to make good money, then why can’t we try that? Can you provide good short term tips to us? I agree, long term investment pays better, but who knows about tomorrow in such an uncertain world? If we make something today that is true! The long term benefits are sometimes equivalent to insurance gains, rewards after death only. I am a person who wishes to live in present. Do you really practice intraday trading? Can you provide tips in this nature? ]

Another motive behind this article is a comment from Mr Venkat on my previous post. Check the link or find his few lines as it is:-

[“As you said in your one of the comment's that, every 6-10 scrips does make 100% return in last 30 days of their sessions. True to everybody word!!! .. But really which basis we can catch hold of these is out of my limit. ;).”]

I always prefer long term investments and still spending most of my time for the purpose. And it is true and an experienced fact that, a minimum of 6-10 scrips does make more than 100% returns in every 30 days of their sessions irrespective of the moves in indices. Some even do it in lesser sessions, any way, it always happens in market.

Let me come to the point. I do short term/intraday trading, based on my own parameters. I can explain the method I follow, but with a bit preface which may helpful for freshers.


The basic theory of demand and supply is the driving force which fluctuate the share prices. The propensity to boost in price of a share means augmented demand whether it is for short term or in long term. The long lasting demand of a stock depends on various factors, which we will discuss later. But for now, what all the factors which amplify the demand of a particular stock in short term? Simply, something is happened or happening behind the screen or certain positive news sparked on the company/scrip like any of the following:-

a) Positive Mergers & Acquisitions.

b) Positive company results .

c) Fresh and commendable orders bagged by the company.

d) Tie ups/collaborations with heavy players in the industry.

e) SIgnificant Awards/recognitions/approvals/patents to the company or to their products.

f) Chairing of well known professionals/intellectuals to the board or as Directors.

g) New or sensitive product launches.

h) Heavy insider buying or promoter’s accumulation from open market/Buy backs.

i) Heavy corporate Interventions/HNIs/MFs/Investor legends/other Financial services.

j) Sometimes, bad news on major competitors, :-)

k) Increasing of assets by the company.

l) Positive media reports/Survey/research results.

m) Dividend declarations.

n) Positive technology advancements in the sector.

o) Favorable Govt decisions/rules/stands to the industry.

p) Positive Industry growth charts/figures.

q) Baseless but temporary positive rumors.

r) Favourable court verdicts in disputes involved.

I have tried to include most of the reasons whatever I remembers right now, please suggest if I left anything.

What basically an intraday/short term trader have to do is, have such positive but genuine news as earliest and prepare the strategy. (I am not overlooking people who trade on analyzing technicals, charts or graphs). I had tried to catch such fiery news in my initial days of investing, and I did few, but in vein… It seems I was the last person who has read the news. Share prices started their journey to south, almost every time after I secured my positions. I always felt frantic as the scrip was waiting my entry to get fall.

But, now things are changed a little. I have learned some precious lessons my own from the market as well as from my earlier lose. I am maintaining a simple and ordinary tactic to carry out intraday/short term trading which I found beneficial and doing not bad.



I have created and maintaining two master files in MS Excel containing Code/ticker and Scrip name of both BSE & NSE. I add everyday closing prices automatically against each scrips under the header of particular date using some database tools. I insert a column in between every date and apply formulas to calculate the differences between every two days.(Current day-minus-Previous day). Now, I have the regular price changes between each days in columns against entire active scrips on BSE/NSE. I have placed formulas to highlight the both increase/decrease figures in different colours, green and red. (see the screen shots)

If I notices consecutive 2-3 green figures at any row or against any scrip, I stuck there. Then I start dig for the news related to the scrip. Or, If I noticed the news first, I searches the 1 or 2 green figures on the corresponding row or wait for that to take place. If I noticed a justifiable UC(Upper circuit) percentage in 1, 2 or 3 days with backing of an apt news (probable demand generator), it leads me to more accurate judgments. Decision making on a buy is based on various factors such as impact of the news, company fundamentals, bit technicals, business model etc.. In most of the cases I place orders with strict stop lose, but in some cases I deliver the scrips which have good potentials, for short term. And the file is also works well for those who intrested in Arbitrage too.

Well, I have decided to answer these queries in this platform cause, I am eager to know what my readers think on this practice. I will not claim this approach is a fail-safe one, but experienced that it is far better than depending fraud tips of unknown people. I am maintaining this database by last few months and updates on everyday basis. I am ready to share this data with my clients for free on mail request.

Any one can try this who wish, but with extreme caution!. I cannot assure any authentic background for this strategy. In addition, I never recommends to play on margins. On the other side I have experienced about 80% accuracy if we go with genuine scrips with a support of logical news.

"If you don't like how things are, change it! You're not a tree"

Jim Rohn

Regards & Happy Investing

Shabu Thachat - sthachat@gmail.com

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15 comments:

  1. Thank you Shabu for coming up right away with a post of possible way catching those "short term treats". :)

    I will def try out this method..

    I catch hold of the below site..

    http://www.daytradingshares.com/bullish_bearish_trend_shares.php

    They give last 7 days bullish stocks..i think 7 days means most of % rise(20% or more) is already seen..so we may catching the train bit late..:), but anyways chances of those high rising scrips(100% or more) should be somewhere among them taking it note fundamental aspects, bullish news etc..

    Thank you
    Regards
    Venkat

    ReplyDelete
  2. Dear Venkat,

    Thanks for the comment. Go ahead and best of luck..

    regards
    Shabu Thachat

    ReplyDelete
  3. Mr Thachat,

    I have accidentally hit your blog the day gone by and found very much handy. I generally do short term trade based on news. I believe the combination you specified with the database and positive news threads on companies will work in a brilliant way for people like me. I was searching such a tailormade data of entire stocks with price changes by months. I think using this I can filter scrips for trading with my own sense in concurrence with news.

    Please guide me to have the file on a daily basis.


    From Toronto.

    ReplyDelete
  4. Dear Sir,

    Thanks for the comment and understanding the potential of the strategy. I am happy to share the content, please mail me at sthachat@gmail.com.

    regards
    Shabu Thachat

    ReplyDelete
  5. Sir,

    Only few stocks recommended in this blog went below your buy range. This is not possible without trading skills. All the best for your trading and investing.

    James

    ReplyDelete
  6. Thank you james...

    Shabu Thachat

    ReplyDelete
  7. Very Good Article and Information Shabu. Thanks.

    -Kumaran.

    ReplyDelete
  8. Great Work Dear but The stock market is an enticing trap. It is so easy to get disillusioned, it's almost like a game in the game room where it looks so easy, you just have to try it. In reality, after you spend your quarter you realize the machine is rigged against you. The same phenomenon occurs in short term strategies. On the surface you see stocks making huge gains right in front of your eyes. In reality when you actually buy the stock the outcome is different, But the person who do the proper study and book profit or do trade with stoploss can make very Huge profit in stock market. So STOPLOSS is the key for daytrading.

    ReplyDelete
  9. Dear Jack,

    Thank You for the comment and I am agree with ur views.

    ReplyDelete
  10. Can u please mail me excel sheet and how u download data from internet....
    I m new to stock market but want to be a systemtic investor...
    I really liked your last article on PAL .. Quite productive way of analysin business nd stk.
    Thanks for your efforts...

    ReplyDelete
  11. Thanks so much for this! I haven't been this moved by a blog for a long time! You’ve got it, whatever that means in blogging. Anyway, You are definitely someone that has something to say that people need to hear. Keep up the good work. Keep on inspiring the people!
    regards:
    Trading Tips

    ReplyDelete
  12. Thanks so much for this! I haven't been this moved by a blog for a long time! You’ve got it, whatever that means in blogging. Anyway, You are definitely someone that has something to say that people need to hear. Keep up the good work. Keep on inspiring the people!
    regards:
    Trading Tips

    ReplyDelete
  13. I really appreciate your post and you explain each and every point very well.Thanks for sharing this information.And I’ll love to read your next post too.

    Regards

    trade4target

    ReplyDelete
  14. I absolutely adore reading your blog posts, the variety of writing is smashing.This blog as usual was educational, I have had to bookmark your site and subscribe to your feed in i feed. Your theme looks lovely.Thanks for sharing.

    trade4target.com

    ReplyDelete
  15. Hey, very nice site. I came across this on Google, and I am stoked that I did. I will definately be coming back here more often. Wish I could add to the conversation and bring a bit more to the table, but am just taking in as much info as I can at the moment.
    Regards:
    stock market tips

    ReplyDelete

Disclaimer

The blog is associated with information on Indian stock market and author’s investment view points on various emerging stocks/sectors. The contents discussed in this blog are purely my own personal opinion and in no case weigh it as any kind of recommendation for stock market investment. The sheer purpose of this blog is to educate the interested community on market related subjects based on my experience and I am, in no way, responsible for investment decisions based on the contents described in this blog.



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