Engineer's Finance

Please read the first part and second part before you go further.

Q: What about the other way around when you are making money, we often hear that people bought at Rs 100 and sold at Rs 110 and the stock moved from Rs 100 to Rs 200, they made small chunks of it but could not hold for the entire rise or doubling of the stock. Is it also to have that maturity to say that I am not playing for small gains and maybe something good is happening out here and I will play for a bigger game?

A: Yes exactly, they need to define, at the end of the day you have to define yourself, you have to define your system. Just as when people trade for Rs 10 and are able to take Rs 50 hit on the downside, similarly it should not be the other way round that I am ready to stand for Rs 50 on the upside, but my stop losses are very thin, so immediately the stop losses get triggered or there about. You really have to have great perspective in terms of time, in terms of entry, exit, stop losses and there’s always this ratio. You cannot have a stock that is a sure short and risk-free. Then why are you in the equity market? You should be having money in FD because that’s the only sure short method. So there has to be a balance and there has to be the risk-reward profile and it maybe 2:1 or 3:1 but the ratio always has to be there. Continue reading →

Please read the first part before you go ahead.

Q: Can you be both – a trader and an investor?

A: Yes. I also had these doubts till I met some successful people, where I found that they were able to keep a very different mindset as a trader, as a investor. I really think that’s a really fairly advanced stage in the whole mental makeup, maturity, intellectual and psychological. For example, as a trader you may be short but as an investor you would be having some long-term bets. So the conflicts that are there within you, would really come up. So you have really been a very good evolved person psychologically to be able to have this conflict. It’s possible but definitely very challenging.

Q: How important is it to just concede that the market is always supreme? Do you have to start by saying whatever I am seeing on the screen is a right price and I am often wrong? Continue reading →

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Psychology to seek out good deals is an intrinsic quality that cannot be taught to potential future traders. Investors need to decide, whether they are in the stock market for excitement or to make money.

CEO of Marathon Trends Atul Suri told CNBC-TV18 that successful traders used a fair amount of psychology to seek out good deals for themselves. It’s an intrinsic quality which cannot be taught to potential future traders but it does determine how much risk they may chose to take or a while striking deals. Investors need to decide, whether they are in the stock market for excitement or to make money. Continue reading →