Trading Strategies Before start trade

Before starting the trade, it is the duty of every trader to know the hidden points

1. Risk/Reward ratio - Profit should be atleast 10 points more than SL
Reason : If your provider gives 20 pts SL and 20 pts trgt, then in case of loss ur loss is 24 (with brokerage) and in case of profit it will be 16 (with brokerage).

2. Never trade without SL.

3. Trade intraday (strictly to be followed by small traders)

4. Never try to recover the loss in the same day

5. The less you trade, The more you earn

6. Do not change the trade quantity frequently. Atleast, trade constant quantity for 1 month

7. No. of targets - No. of targets should be only and only 2
Reason : If your provider gives 3 or 4 targets you do not know where to book though "Trial SL method" is recommended (sites will be updated with highest achieved targets but it is never possible to predict the high)

8. Price Deviation - Price should not be more than 3 pts difference while you get the call

9. Accuracy must be at least 70%
These 4 points looks to be small but its unfortunate to reveal that these 4 constitute more than 50% of your profits

CLICK HERE FOR FREE Trading tips on your mobile

What is Nifty and SGX Nifty?

Before Understanding SGX Nifty Let us understand about Nifty and some other technical terms associated with Nifty.

Nifty is basically index of large companies on the NSE (National Stock Exchange on India). It is also referred to as S&P's CNX Nifty or Nifty 50. Its called Nifty 50 because it consists of 9index) 50 stocks divided into 22 sectors of the economy traded on NSE.

Some Features on Nifty: are that it is used for benchmarking fund portfolios, index based derivatives and index funds. Nifty 50 or S&P CNX Nifty is managed by IISL (India Index Services and Products Limited).

I have used various terms like S&P's CNX, IISL, CRISIL etc. Now what are these:

S&P : you might have heard this in news also, actually S&P stands for Standard and Poor's this is an US based financial services company which publishes financial research and analysis on Stocks and Bonds well known for stock market indexes.

IISL : It is a joint venture between NSE and CRISIL and it has a marketing and licensing agreement with Standard and Poor's (S&P's).

CRISIL : CRISIL stands for Credit Rating and Information Services of India Limited. It is ratings, research, risk and policy advisory company. CRISIL provides domestic and internationsl customers with independant information, opinions and solutions related to credit ratings and risk management.

Now What is SGX Nifty - SGX stands for Singapore Stock Exchange, thus, SGX Nifty is nothing but Indian Nifty Traded in singapore stock exchange (SGX) and it moves with respect to Indian Nifty.

Benefit of Tracking SGX Nifty :

We all know that India is 2.5 hours behind Singapore and SGX Nifty opens at 10:30 A.M in Singapore i.e., at 8:00 A.M according to Indian Standard Time(IST) on all working days. Thus, becomes initial direction to Inidan Markets.

Repo Rate and Reverse Repo rate hike by RBI and its affect on Indian Stock Market - Should investors buy, sell or hold

Recently RBI hiked repo rate and reverse repo rate from 5.5% to 5.75% (‘25 basis points’ is another way of saying ‘0.25%’) and the reverse repo rate from 4 to 4.5% and investors are thinking should they buy, sell or hold stocks. First of all let us understand why did RBI hiked repo and reverse repo rate and the obvious answer is to keep the inflation under control. As we all know that access of liquidity in the financial system causes inflation but the main reasons this time were:

1. Reduction in the repo and reverse repo rates by the RBI during the downturn in 2008 and 2009
2. Continuous inflow of large sums of FII money into the Indian stock markets
3. Larger inflow of remittances from NRIs into India (due to the economic downturn in Europe and USA)

A crash in stock market is unlikely. The hike in the repo and reverse repo rates were already ‘discounted’ – which means that it was within expected limits.

Should investors buy, sell or hold

Answer to this question depends on individual invesotrs and traders. Here, I would like to say that it is not favourable for bull market,  as it raises the cost of doing business and affects profitability.

My recommendation here for traders who want to buy is to select only fundamentally strong stocks with a track record of flourishing through several bull and bear phases. If you already have such stocks in your portfolio, hold with trailing stop-losses and ride the bull. Book profits in any second or third rung stocks that you may own.

There is no reason to sell in a panic as long as the Sensex trades above a rising 200 day EMA, we are in a bull market. Setting stop-losses will save portfolios from getting destroyed.

---

Read Daily Technical View on Nifty and Sensex on this blog.

---