The
concept of stop-loss was probably developed at the
beginning of the 19th century. So is it less
effective because it is old? Or is it sacrosanct as all analysts
say the same thing - Don't trade without stop-loss?
There are hundreds of technical theories and
rules dating back to 1920s, 1930s and even
later like 1960s and 1980s (one
dates back to 1892 which still works
beautifully).
Latest ideas involve highly complicated
calculations, almost similar to rocket science. For one of the
modern age Guru of technical analysis is Tushar Chande,
a PhD in Engineering and
an MBA of Pittsburg University. He holds
patents in creative solutions to
manufacturing process using high powered
laser and optical fibre. His VIDYA trading
system is a powerful concept that some modern traders use. It is
one of my tools.
Contrast that scenario with our analysts who
still swear by the same old indicators and stuff which were
developed for positional trading during a period when people did
not even knew what intraday trading was all about.
The market has changed too.
From Sensex level of 118-149 in 1980 to 1992
level of 4240 was a jump of 2845%. Then history was created as
for the first time in 130 years of its life, the market went
through a 4 year long bull-run. It took the
Sensex up from 3500 level to almost 22000. A
whopping 600% plus jump.
At this level, a simple correction in
Nifty's intraday up-move drives down a Rs
1200 quoted Nifty listed stock by Rs 15-18 or some times even
more.
Naturally, the novice trader brought up on
the free advices provided by the analysts
and experts on TV channels and print media,
extolling the absolute need for stop-loss; would have already
exited at a loss.
And an hour or so later, the same stock
would be
trading at a much higher level and the
stop-loss-ed traders would blame their bad
luck.
Actually, it is not bad luck. It is the
inability to understand that the trading
game has changed. No longer the old ideas
and strategies work in the new scheme of
things.
At my training you will know how in my
system, you learn 2 unique method of aplying stop loss so that you need not have to wait for a
loss of Rs 5-10 or even Rs 20 in case of higher priced momentum
stocks (normal stop-loss amount applied by novice
traders). This allows you to re-enter a stock as it
recovers with the market. In case of Nifty Futures, the
most you can wait is 15-17 points, exiting a bad trade
within as low as 4-6 points many a times.
My system will give the SELL signal as it had given BUY
signal. You can exit a trade as soon a sell has been
signaled, perhaps at a slight loss, instead of waiting
to price to decline substantially and hit your normal
stop-loss level. You will see how strongly you can
control loss. |
|
|
|
|
