rjm77me's Blog : Investing / Trading is not an Exact Science = Use laws of probability to make money

Most of the folks out there tout magicl formulas, charts, fundamentals and promise 98% accuracy = If you belive in snake oil sales persons - be my guest and follow them.

Trading does involve some chart reading skills, these hold true due to herd mentality. Every one is looking at the same stuff - if it moves above 21 days or 50 days average = buy it. 

Some stocks just move up and down with out fundamentals and any one who decides to join the oarty late ends up holding most risk - check out NFLX or TZOO charts

Most of the money is made using common sense approach and more important trade management. When to sell is some times more important than buying. Sure it takes some conviction to buy, selling at the profit or loss is the aquired skills of a successful trader.

I some times highlite real time trades - I am normally a mid risk and short term trader. Yesterday I decided to buy IBN - an India based bank - leader in its field. Indian market normally follows the lead of US market and is oversold. Yesterday when I saw a big jump in futures - i quickly flipped through few charts and decided to buy IBN and it worked based on behaviour pattern of International market. It moved up anther 2.5% today and some gas still left in the tank.

I did hedge my bet by selling a Dec 30 call and thus limiting my max return to 7.5% in about 18 days - which was acceptable to me. I am ready to take some short term loss if the stock goes down. My trade plan is to sell calls for next 3 months till the stock gets taken out by the call play and I am ok by accepting the pre set profit target. I could have closed the trade for 4% profit and may do so in next few days.

Please do your own home work