These are the dirty little secrets of the stock market….
- Always buy a stock which is trading 20% above its 52 weeks low and closing price above 20% of 52 week low should be maintained for consecutive 3 days. Never buy a 52 week low stock till this criteria maintained.
- Exit fully from a stock which is trading 20% below its 52 week high.
- Stock price rises through stairs and falls through elevator so always be prepared for quick exit.
- Retail traders have absolutely no control on stock price. It is under control of big houses those who are hiring best brains including Doctors, Engineers to analyse the trend of market well in advance.
- Buy on rumour sell on news. A stock moves vehemently upwards on rumour and falls on news. Infosys moved on the rumour of good result now result declared, it is time to fall.
- Never listen to the analysts which you are seeing in the TV, you are better analyst than them. Marketing is required for bad products and the reason is mentioned in point no 4.
- Don’t try to use lot of charts sometimes they are contradicting each other if not minutely interpreted. Only price and volume is enough. For price action my favorite is Point & Figure chart which is the oldest and simple, for volume you can see anywhere. The third one moving average crossover should not be ignored.
- Take position on a stock which has made golden crossover means 50 day moving average crossed above 200 day moving average. Don’t exit till it is not making dead cross or as mentioned in point no. 2.
- Exit a position which made dead crossover means 50 day moving average crossed below 200 day moving average.
- Last but not least, never give any consent to your broker to trade on behalf of you. Their goal is not to make you rich but to make themselves rich. So they will use margin to increase the numbers of trading to increase their brokerage. If you are not confident handover your money to Mutual Fund Manager.
- P.S- A stock will never be able to achieve new all time high till it is crossing above 50% of it’s previous all time high.
- Never trust on your Brokers report/call. You can’t expect a butcher will preach to a goat for how to live long.