Saturday, October 11, 2008

Manage your Risk, let the market decide its low point

From Behind the Headlines comes advice that perfectly echoes what I think & say.

"And shame on everyone who thinks they know where the market will bottom, when the market will bottom and how it will bottom. Nobody knows, not even technical analysts.

Nobody knows what the market will do. But what the good technicians can do better than anyone else is assess market risk and market reward and take a position - figuratively or literally.

And in today's market, Larry Williams said it best that the best risk control is in position size.

If it is wrong, they stop out for a limited loss. If it is right, they add to the winner and ride it until it no longer has a good risk/reward profile. "

The Kirk report Says:
While all of us would very much like to return to business as usual, unfortunately there's little reason to believe that will happen anytime soon. The best we can do is manage our risk, stay opportunistic, keep our emotions in control, and keep our eyes open for signs that the worst is really behind us. As long as you do that, you'll be fine no matter what comes our way next.

3 comments:

Kaushal said...

Easier said than done.
In order to achive this it is an agreed condition that Position has to be small, and in order to achive
BIG PROFIT the timeframe will definately not be short, as the position has to be held with till it starts going against . In
these times what on earth is that small position which can achive such results. The longs cannot yet be opened as the direction of the market is not visible and at this
low level it really needs wits to
go short and maintain these positions for the BIG Profits. The
only trades visible r nifty trades
that too on the basis of movement
of dow , asia and europe and these
positions change 2-3 times in a
day. An interesting thing in our market on Friday was that it just stopped short of hitting the Lower circuit at least 2 times, it seems some forces did not want it to halt.
At this juncture I am interested to
create long positions in stocks which will pay me a dividend of 12- 18
percent per annum on the invested
amount, the more frontline they are,the better it will be. So I seek your generous opinion of the
finds.
I also feel that private telecom
stocks and companies making equipment for harnessing solar power/ wind power may see good times. What do u say and can u suggest some names.

Lastly in a recent blog u have written that NSE has come up with a
software whereby retail clients can
log in directly ..... etc. Can u tell me where I can get more details on this , I have tried to contact NSE but efforts bore no fruit.

You may directly reply to me at
dipuy2k@gmail or on yr next blog.
Regds

sajal said...

Dear Sir,
1st of all plz know that i respect only your views among millions that are creating noise around.that is why i am writing to u .
2ndly i am short in nifty from 4300 level though in options only.and as a seasoned customer i always hedge my positions. here in this case i maintained 1 call against 2 puts.as a result i didnot make much profit.now on friday i made puts in stocks and hedged with nifty call.
i want to know your valued opinion in this strategy.if you could give me some of your valuable minutes either in your next blog or in my id -- nsajal@gmail.com,i will be greatly obliged to you.
with regards and happy dussera

satheesha_kn said...

Dear sir,
On sep 12th Mr.Suja rouf told
that the nifty down to 3400 range.
How he calculate the timeframe.Plz
guide me about that.My Email Id is
satheesha.kn@gmail.com