Wednesday, December 31, 2014

Last trading day of the year 2014

Headlines: Govt. withdraws EXCISE sop to Auto companies.
All news channels are indicating that Auto sector will be under pressure today.
Should I look for opportunity to Short Sell AUTO stocks today?
I want to trade liquid stocks which are priced below 500
How about TATA MOTORS? What should I do? If I think of Shorting TATA MOTORS where should I short it?

TATA MOTORS has an ATR of 13 points. From yesterdays close it is likely to move 13 points up or 13 points down. Adjust it according to todays open and add 13 points up/down.

Yesterday (30Dec-2014) TATA MOTORS made a High of 499.5, Low was 490.25 and it closed at 493.75

Today since the overall market will be looking to sell auto stocks I want to join them too. I will be most comfortable to short sell at these price levels 494.90, 497.4 and 499.40 keep stop loss of  500 and book profit/cover my shorts at these price levels 491, 486 & 481. I will avoid trading anywhere in between.

My view point about financial markets trading

I once read a quote somewhere about financial read "Its not about TIMING the market but its more about TIME IN the market"

Recently one of my friend asked me whether his favorite stock will reach his desired price in next 3/6 months. I told him, nobody can predict the time, but yes if you analyze the stock properly you will know where the bulls and the bears are likely to take trading decisions. If you are planning to go long on a stock, keep a close eye on bearish price moves and try to trade where the bears are likely to exit their stop loss. As a trader I always try to spot the price at which maximum order flow is likely to come. It could be bullish order flow or bearish, it doesn't matter. With sufficient try out one will eventually get aligned to market trend. The real challenge is to know "when you are wrong where to get out" if you are consistently scratching your trades and coming out at breakeven that means you are a very disciplined trader and soon you are building a strong personality as a trader to become profitable, because you have never allowed yourself to go in a loss, that itself is a big achievement.