Sunday, November 30, 2014

Rakesh Jhunjhunwala's ten commandments for trading in Stock market

Rakesh Jhunjhunwala's ten commandments for trading in stock market
  1. Be realistic. Make trading price dependent, not opinion dependent

  2.  Trading is a full time profession, not a part time job. It cannot be half-hearted

  3. Know the rules and verify them for they may not to what you assume

  4. Never aspire to be the market's master. It's best to be its slave. Leverage your skills, not your capital

  5. Have a broad idea of direction. Remember, trend is your friend

  6. Don't be afraid to make a mistake. Only ensure you make one that you can afford so that you may love to make another

  7.  Play 'Seen', not 'Blind' for the market offers many an opportunity even after the cards are open

  8. Know what and how much to risk. Assess risk

  9. Take a loss. The first loss is the best loss. Pyramid your profits

  10. Good judgment comes from experience. Experience comes from bad judgment. Trading can only be learnt, it can't be taught






    Good trading requires three qualities:

    1. Broad idea of direction

    2. Knowing what and how much to risk

    3. Knowing when and how to take a loss





    Rakesh Jhunjhunwala's ten commandments for investing in stock market

    1. Make exit an independent decision, not driven by profit or loss

    2. Have conviction, be patient. Your patience may be tested but your conviction will be rewarded

    3. It's important what you buy, it's more important at what price you buy

    4. Contrarian investing: not a rule, not ruled out

    5. Be flexible for investing is always in the realms of possibilities

    6. Be disciplined. Have a game plan

    7. Caveat emptor. Never forget this four letter word: R-I-S-K

    8. Invest on broad parameters and the larger picture. Make it an act of wisdom, not intelligence

    9. Expect a realistic return. Balance fear and greed

    10. Be an optimist: the necessary quality for investing success


      A list of qualities of the mindset of a successful trader :

    1. Sense of calmness
    2. Ability to focus on the present reality
    3. Not caring which way the market breaks or moves
    4. Always aligning trades in the direction of the market, flowing with the market
    5. Not caring about the money
    6. Always looking to improve
    7. Profits now accumulating and flowing in as your skills improve
    8. Keeping an open mind, keeping opinions to a minimum
    9. Accepting the risk in trading
    10. No Anger
    11. Learning from every trade
    12. Winning and losing trades accepted equally from an emotional standpoint
    13. Enjoying the process
    14. Trading your chosen approach or system and not being influenced by the market or others
    15. Not feeling a need to conquer or control the “market”
    16. Feeling confident and feeling in control of “yourself”
    17. A sense of not forcing the markets or yourself
    18. Trading with money you can afford to risk
    19. No feeling of ever being victimized by the markets
    20. Taking full responsibility for your trading



    (Maverick investor Jim Rogers founded the Quantum Fund hedge fund in 1973 along with George Soros. Rogers made his fortune early and retired at 37. He later traveled on a motorbike around the world in 1990, and then visited six continents over three years in 2003, chronicling his adventures in books. In "Hot Commodities," Rogers argued that commodities, which include oil, metals, agricultural goods and other natural resources, would boom for at least a decade. He started his own commodities index fund in 1998, known as the Rogers International Commodity Index.)

    * Ultimately everything is supply and demand. If tapering occurs, that certainly influences demand, if nothing else.

    * Gold went up 12 years in a row, which is very strange and unusual for any market. When the correction came, it too was an anomaly.

    * I still am not buying gold in any big way yet, because there are still too many mystics, too many people who think that gold is holy. I don’t see how the markets can make a bottom until a lot of those mystics get shaken out of the market. Once they throw in the towel, then gold will make a significant bottom, and I hope I’ll be buying a lot more at that time.

    * Rio Tinto and BHP Billiton and others have cut back substantially on their capital spending programs because they think they should not be bringing a lot of new [mining] supply on stream yet. So until we have significant permanent new supply, I don’t see the bull market (in commodities) coming to an end.

    * Agriculture is very exciting for many reasons. We’re running out of farmers worldwide. More people in America study public relations, not agriculture. The average age of farmers in America is 58. In Japan, it’s 66. So if you want to get rich, become a farmer, not a stock broker.

    * Stock brokers will be driving taxis in the next few years. The farmers are going to be driving Lamborghinis. Sugar prices, for example, are down 75 percent from all-time highs. Learn about agriculture, don’t learn about finance.  


    Intraday Trading  

    Rules to Trade Intraday :

    Best intraday movers are stocks which are with sound fundamentals and undervalued or stocks bought or sold by FIIs, HNIs, Promoters, MF or stocks which have witnessed break out on charts.
    Best Trading Strategy:
    Sell your own holding in parts intraday on every rise and buy back at 3.25, just check there is no spurt in volume intraday.
    Strictly trade with sensex movements, sensex starts falling more then 25 points from high, then exit your positions ;

    Buy the stocks for delivery only after 3.25 PM, Intraday traders are desparate sellers.
     Intraday whenver you buy a stock, if you wish to buy 1000 shares just buy 300, mostly it would be down once any buying happens, then buy few more again unless the stock is in rally;
    Even best Intraday calls may not work sometimes when the sensex starts falling,
    Golden Rule:
    Sellers are usually winners in day Trading


    Also Read full life story of Rakesh Jhunjhunwala here

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