Wednesday, March 7, 2012

Stock Trading Strategy Part : 1

We are worried about market. Yes, if one is holding stock he certainly has tension about market. But have you ever thought why you are the victim of this fall ?There may be hundreds of reasons behind this. You might blame ___don't wanna mention them here. But my question to you is very simple. Why didn't you sell them when you lost 5% to 10% ? You thought it would be alright again. But no .....it will not ! Firstly, you should think why this loss ....... Certainly people are selling them, supply is more than demand itself. And that's why you lost 5% or so. Why are you waiting? To see a greater fall? Thinking that it would be alright ? Things are not that easy ! If you hold a losing trade, you certainly lose.
And eventually you may encounter an ever biggest loss. This should not be the strategy of a good trader. If you have already lost 5% or so, you should not sit idle. Quit the losing trade, re-enter when the market begins to reverse, not after a certain period of time such as 1week , 2 weeks, 1 month….. just at reversal .......hmmm when you see almost all the stocks being traded with a good volume ,(as seen in dse) every stock has buyers, and the price going up gradually . It is not very important at what price you bought it but you should buy at RIGHT TIME whatever the price is. Suppose, you bought a stock at tk 100 and now it is tk 90. You lost 10% . But if you bought it at tk120 and now it is 132. Next calculation is easy. Think about your buy price. The latter one is profitable although you bought at a higher price. So, set up your trading strategy first. It is always harder to exit a trade than to enter it.
You are not sure when to exit. Please don't forget that only lucky traders sell at highest price. Set up your exit point. But how? You don't know TA, FA or other things needed to trade smoothly. It's ok. Just you exit when price gets down 3% from its peak. Think once why it is getting down, certainly it has reasons behind it. You always don't need to know the reasons and in some cases it's impossible for us to know the same.Just notice the sell pressure.That's enough for you to set up your exit point.

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