Sunday, July 8, 2012

Hitting the Bulls Eye

The title for this post should be "How Sachin hits a sixer on every ball", but bulls eye sounds a little more professional.

SantoshG asks the method for identifying two stocks that will likely gain 10% the next day.

This is like asking Sachin to hit a six with every ball he faces in his cricket games. I have two points:

First: Why should Sachin hit a six on every ball? His career is one of the best in the world of cricket. That does not mean he has to be a superman.

Second: The expectation then is that Sachin will not get out. We expect the Master to keep on hitting six after six after six, because if he gets out that will prove that he is not a good cricket player and we all know that he is a good player.

Now I come to the method of identifying two stocks likely to move 10% the next day.

We cannot predict how Sachin will play in the next game. So, also, we cannot predict which two stocks will move up tomorrow.

We can predict that over a period of time, Sachin will play the best game among all players. So, we can predict that over a period of time, stocks x,y and z will outperform the market.

But, tomorrow? On a day to day basis, outcomes cannot be guaranteed.

So, we should go with market flow.


Dinesh said...

Dear Sir,
Excellent explanation!
I agree following the trend is the key to success, for a trader.
One of the methods, I use is to look at the strength of the trend taking into account the volumes associated with the trend. It may take a while to establish that but I think that is the surest/safest way to making profits.
Hope you agree ?

SantoshG said...

Thank you Sudarshan sir, very well explained. Also thanks for promptly taking up my question- appreciate it. Look forward to getting answers to my other 2 questions.

Thanks again and have a great day!

daytrader said...

Dear Sir,

request your comment on axis bank ,mostly i trade this stock for day trading ,if nifty and banknifty agree with the price action i take the trade on that direction, but today i am bit confused , i am long on , have carried this trade, as this is only stock that is trading below 200dma among 4 stock that have more than 70% weight age in bank nifty, (icici sbin hdfc axis)
request ur view
ur follower

Technotrader said...

Sir, I am trading in stock market from last two and half years and since two years in futures. I trade on the basis of my study of TA. I wish to get part time job as a Trainee (without any salary as I am doing a business & I am 38 yrs old). I am finding it difficult to trade in Futures and I wish to be a full time technical trader in next one or two years time. I would be very grateful if you can help me, or suggest me something which can help me to develop as a Technical Trader.
Thanks Sir

Dinesh Rishi said...

Excellent post Sir