Learn to trade in DSE: From mazharzarif.blogspot.com
Sunday, July 20, 2008
EXIT: risk management .... mrtq13WHEN TO EXIT?You have asked the most important questions that a trader could ask…. At the beginning of his trading life,the first question a trader usually asks is “when do I buy a stock?” After some trades this very trader will desperately ask, ”when do I exit when I am in loss or profit”. Why? It is because he finds out after entering a stock he loses his way, he knows nothing of when to exit and nobody else also seems to know that. He finds that exit is more difficult than entry. Any fool can enter into a stock. But it takes a lot of calculations or planning for exit. Let’s discuss some topics here(this one is basically written for beginners or those who are confused about exit/pullback etc.Experience trader may add their view)…….Exit :Depending on your trading style, you should develop a plan of your own on how you want to exit from a trade. There are short term trader,there are long term trader,there are mid term trader. Each has his own style of Exit point.A trader I know exits a trade after entering into it ,be it a winning one or a losing one,just after 4 days of his buying…. That may sound strange. But it is his style. His style is “Time based exit”.There are two different Exit plans needed for trading. One plan is for just after entering a stock/buying a stock. Another for the stock that is in profit. The first one is called “stop loss” or “initial stop”. The second one is called “trailing stop”….Stop loss point :You enter into a stock and it starts to fall. What are you going to do? You have two options- either you keep it on hold hoping that someday it will come to your buy price. Or,you get out of it taking some losses. The choice is yours.But statistically it is found that it is better to exit a losing share taking a little loss. Think about what happened to Rupali Bank. There has been more than 50% retracement in this share. Those who bought at the top lost 50% money. If they exited early taking small lose like 10%,they could save 40% of their invested capital. And the problem is they have to wait for the share to come to their buy price for several months. Which itself is another loss. Because you cann’t invest in other stocks. Your money is stuck into a losing share…………So, if you're stubborn and stick with your falling stock, things could get ugly. You believe the stock will turn around, only it doesn't. Instead, it drops 15%, then 30%, then 50%.Ok, now a simple technique that can be used is percentage stop. The idea is a trader should get out of a stock that has fallen 7% to 8% below his buying price. For example,you buy a stock with 100 taka. And it goes below 93 taka(closing price). You should sell it. Because there has been 7% fall from your buy price.Why is this measurement!!! The reason is simple. Think about it…Why should a stock go below 8% of your buying price if you have bought it at the right situation. It means that the stock’s price is falling.Or,you have bought the stock at wrong time…….. Now is it in correction or pullback? You don’t know. If it is in correction,you are in trouble. If it is in pullback,then it should not go below 8%. Because that would be too much fall……..Why is it falling?Now is 7% or 8% magic number!!! No,they are not. They are just a technique/rule to make you a disciplined trader.-a trader that knows what to DO. A fighter that doesn’t know what to do under fire dies fast…..Depending on your trading style this percentage should be set. For example,if you are a long term trader, you could tolerate 15% fall of price from your buy point. Because you are holding it for a long term. And on your way,the price could fall 15%.........Or,if the stock is good enough,you can tolerate 20% fall of price from your buying price………..So,it is up to you……….If you are a short term trader or your investment capital is low,you could tolerate not more 6% fall from your buy price…….What if you exit after 7% lose and then the stock starts to rise…. You re-enter…..You have nothing to do… And it could be that after you re-enter,the stock could start to fall again…….Trailing stop :Trailing stop is another kind of stop which is also based on percentage measurement. It is used for profit taking.………..When do you take profit if you are in profit and the stock has started to fall from the top price……One simple method is to take profit selling the stock when it falls 10% from the top price…….For example,you have bought a stock with 100 taka. And it went to 120 taka without any trouble. And after it reached 120 taka, it then started to fall. You have to take profit.When are you going to take it…. You take your profit by selling the stock at around 108 if your planned trailing stop is 10%..............Note that the higher a stock goes from your buying point,the tighter the trailing stop should be. For example,your initial trailing stop for the 100 taka’s stock above was 10%. You planned to sell the stock if it goes below 109 taka from 120. Now what do you do if it goes up more than 120 taka,say for example,what if it goes to 150 from 120 taka. You tighten your percentage from 10% to 6% depending your style. So,now if it falls below 141 taka,you get out taking profit………..So,it can be said like this : your price goes from 120 to 130 to 140 to 150. You set your percentage from 10% to 7% to 6% to 5% etc. The higher the price goes,the tighter the trailing stop getsYou have to adjust your trailing stop on periodic basis……And remember that you can’t sell a stock just at the top level…You have to sacrifice some profit.According to Dr. Van Tharp,a great trader in U.S stock, “the ironic part of trading is if you want to maximize your profit,you must be willing to give back a great deal of the profits you have already accumulated……….”There are several other techniques that can be used as exit point. For example,support level,Resistance level,Moving average points, Average true range,etc…... But they are bit complex and you may need Softwares to measure them. One of the famous exit technique is Average True Range,which I personally use……...It is nice if something automatically calculates the exit points for you. You then can be stress free and your time will be saved. A trading software can do it for you and show you the way to exit visually. That’s a great thing. Because computer is always stronger than human brain in the matter of calculation………..You can use Excel for calculation of percentage,too…………..Here are what I told myself before I developed my own style :Have your own plan. Take the best techniques from other traders. Refine and modify them to suite your personality. Write them on paper and periodically polish and update them from your experience……..Manage your risk,manage your exit……….Remember what Zen says :The ultimate Zen trading question: How do I know I'm right? Zen answer: There is no right and no wrong. You manage risk. Do that well, and you're right.
Posted by Mazharul Islam at
10:31 PM MAKE PROFIT IN FALLING MARKET? ....MazharSome particular stocks can go up in a down market. Examples are agni, aci etc... (19-July-2008)But problem is: how to recognize them early? yet very difficult, probably impossible. I saw, so many buy signals in a bad market, only few of them can give good profit like agni and aci. Most of them fail. Percentage is bad. This is why good TAs keep away from the market at bad days. say, u bought 5 companies. Only 2 gave profit and 3 gave loss, may be all 5 can give loss. Only luck can save u. this is the bad point. U have to depend on luck only, not on calculations.On the other hand, in a normal market, hopefully 60% trades give profit. (If u enter with good Tech Analysis).
Posted by Mazharul Islam at
10:00 PM Saturday, July 19, 2008
STOP LOSS (part 1) :mrtq13Depending on your trading style this percentage should be set. For example,if you are a long term trader, you could tolerate 15% fall of price from your buy point. Because you are holding it for a long term. And on your way,the price could fall 15%.........Or,if the stock is good enough,you can tolerate 20% fall of price from your buying price………..So,it is up to you……….If you are a short term trader or your investment capital is low,you could tolerate not more 6% fall from your buy price…….What if you exit after 7% lose and then the stock starts to rise…. You re-enter…..You have nothing to do… And it could be that after you re-enter,the stock could start to fall again…….
Posted by Mazharul Islam at
8:02 PM TA, FA, OR RUMOUR? ..MazharTA, FA, OR RUMOR? ------ MazharSEC is shouting to invest in fundamentally good stocks, and they created a situation in which only fundamentally bad stocks can rise. (They don’t want to see the index rising…….)I have been studying about people's investing strategy for the last few months.I found, almost all guys invest based on "news".What is "news"?Which stock will go up soon? Gamblers will play with which one? ------- This is the news.And many of them have direct or indirect link with gamblers. Some collect news from 'via' source. ---------This is the source of news.This strategy works. And nothing will work as good as this method. Because gamblers are the men who make the market up-down.So what is the role of TA? We can catch/predict the movement of gamblers with the help of TA.So what is the role of FA?Gamblers want to play with fundamentally good stocks. Because those are easy to feed us.
Posted by Mazharul Islam at
7:31 PM DON'T FIGHT WITH MARKET: ....Mazhar1. Buying at falling trend is a suicidal idea, just like catching a falling knife. Rather buy at flat consolidation phase (L-pattern).2. Don’t buy with guess. Only buy when u know that a stock should go up. When a clear sign appears. Like L or W pattern with volume spikes. (See 4 profitable patterns given my mrtq13).3. Don’t fight with the market. You can't drive it. Let it go with its own way. And ride the train at proper situation (don't try to drive the train).a good example: in my broker-house, a man (crore-pati and gambler) bought 2 lakh aims at 18 tk. some other gamblers joined him.He said, "i could buy at the lowest, he he he. I bought before all. This is the lowest of aims. I will drive the market. I will get aims to 29 tk again". (((See, he is under a lump of bull-shit now. Aims is now 12 tk.)))On the next day, he bought again at higher price. But i saw no flat phase. So i did not enter. i thought i missed the train due to V-pattern. but my satisfaction is i don't like v-patterns and i have so many L and W to enter. (Mamun bhai also do not enter at V patterns as far i know. I always try to follow him).Bottom line: even several gamblers togather can't drive a big train. Market movement is influenced by thousands of factors. So don't try to drive it...
Posted by Mazharul Islam at
7:31 PM CAN'T ENTER DSE SITE? ---MazharWe need to enter in DSE site for mst and general index data. Sometimes it is difficult to enter this site due to narrow band-width. Here is a solution:You don’t have to enter the homepage, just bookmark these links--------For mst------
http://admin.dsebd.org/admin-real/mst.txtFor general index high-low-------
http://web.dsebd.org/admin-real/index-graph/companygraph.php?graph_id=genPosted by Mazharul Islam at
7:31 PM TRADER RISK MANAGEMENT: optimizerTRADER RISK MANAGEMENT LORE: Major Rules of Thumb ---------- (COURTESY: OPTIMIZER)Rule 1 - Do not venture in markets and products you do not understand. You will be a sitting duck.Rule 2 - The large hit you will take next will not resemble the one you took last. Do not listen to the consensus as to where the risks are (i.e. risks shown by VAR). What will hurt you is what you expect the least.Rule 3 - Believe half of what you read, none of what you hear. Never study a theory before doing your own prior observation and thinking. Read every piece of theoretical research you can - but stay a trader. An unguarded study of lower quantitative methods will rob you of your insight.Rule 4 - Beware of the trader who makes a steady income. Those tend to blow up. Traders with very frequent losses might hurt you, but they are not likely to blow you up. Long volatility traders lose money most days of the week.Rule 5 - The markets will follow the path to hurt the highest number of hedgers. The best hedges are those you are the only one to put on.Rule 6 - Never let a day go by without studying the changes in the prices of all available trading instruments. You will build an instinctive inference that is more powerful than conventional statistics.Rule 7 - The greatest inferential mistake: this event never happens in my market. Most of what never happened before in one market has happened in another. The fact that someone never died before does not make him immortal. (Learned name: Hume's problem of induction).Rule 8 - Never cross a river because it is on average 4 feet deep.Rule 9 - Read every book by traders to study where they lost money. You will learn nothing relevant from their profits (the markets adjust). You will learn from their losses._ Copyright 1997 by Nassim Taleb.
http://www.fooledbyrandomness.com/jorion.htmlPosted by Mazharul Islam at
8:31 AM Friday, July 18, 2008
BUYING A STOCK.......... mrtq13WHEN TO BUY A STOCK? ---------mrtq13 (22-July-08)A very good method is: don't try to find out any buyable stock in this falling market...........This type of market is like a blade. You want to catch the falling stocks; your hand will cut most of the time. Sometimes you will find some good ones, but most of the time you will fail..............A very good method of buying stock is: at first have a look at general index. It is positive! Ok, then, go for the sectors. Find out the rising sector. Found one? Ok, fine. Then, find out the strongest stocks of that rising sector and buy them................There are two simple method of buy. One is to "buy at weakness" and another is to "buy at strength".................I think buying at strength is a better method............Because it is really difficult to find the low of a stock. Think about Jamuna oil! A low may not be lower of the stock. It could go lower and lower. So, weakness sucks. If the stock is in uptrend, which shows the sign of strength, then, it is a good choice to be in.
Posted by Mazharul Islam at
7:31 AM Friday, July 11, 2008
about amibroker: mrtq13Amibroker is one of the best trading softwares in the world.... You will hear the names of Tradestation or Metastock in trading areas by the experts....But be assured,those softwares are now a matter of past-the gone ones. Amibroker is the "future" of Trading softwares.......The idea of using technical analysis with trading softwares in our country is quite alien... But I have seen that DSE Management uses RSI,Moving Averages etc in their analysis of market...So,I assume they are aware of trading softwares.May be,some others know about trading softwares too.But in a country like ours,knowledge is always kept hidden....Before proceeding with trading softs,keep in mind that there are a lot of problems with trading softwares in our country. The fist one and the most critical one is that you cannot download daily price data from DSE like you can download data of Nasdaq or Bombay Stock Exchange from Yahoo for "Free".You will have to enter the data manually from DSE's funny "Website",which is a time consuming and energy racking thing... Well,guess what...!!! Unfortunately,you are in a country with the lowest knowledge on technology. Those freaks/monkeys in DSE didn't yet develop a simple technology to provide the traders with daily data in Standard Format. DSE always talks about so called transparency,analysis etc,whereas they don't themselves provide the traders with a way to see things accurately,transparently,realistically......Chart in trading is used worldwide. The reason is simple. Looking at a chart you will know where you are standing,where the stock is going... Trading without chart is like walking like a blind man.You don't have any idea of what's going on. Surely,chart is no magic.But It is a helpful tool in trading.You can trade without trading softwares. Even in New York Stock Exchange,they used to trade without Trading Softwares around 1920.However,technology was not so improved back then......I have read that even the world's richest stock investor Warren Buffet(who is apparantly a fundamentalist)uses charts too.....!!!!!Anyway,Amibroker can't be found anywhere in BD,I guess. It is not available in underground world of pirates in Net too. Recently,they have taken it away.Metastock and Tradestation can be found......Fibotrader is also the best among the free trading softwares. In fact,there are not many free trading softwares in Net like Fibotrader and FC chart. You will get all trading tools and indicators in Fibotrader that can be found in Amibroker....From RSI to ADX,you get everything. You can also program your trading system/rules in the software.......I have actually come to know about Fibotrader after I have known about Amibroker. And I am involved so much with Amibroker that I don't have time and energy to change my tool now from Ami to Fibo.However,Fibotrader has its own built in trading system that is based on retracement of Fibonacci Ratios.........You should consider the pros and cons of using Trading software in your trading. The problem is once you start to use Trading software,you can't just go back to your old style of trading....So,think if you really want to change your trading style. If your current style is profitable,there is no reason to change it..........
Posted by Mazharul Islam at
8:31 PM BUY AFTER RECORD DATE: mrtq13The first method :1. Buy after the book closure of a share that declares bonus,especially banks. Ok,this setup is one of my favourite. And this has been hugely profitable for me and my friends. You will see that when a bank declares 30% bonus,after book closure its price falls 30%. So,we have an undervalued share after book closure. And undervalued shares(if everything is fine with it) is always an attractive buy for traders. Traders jump into it.All you have to do is to jump before all.This is an anti-trend trading approach.........This approach combining with technical analysis can give you great profit each year in bank sectors...I bought NBL,Uttara,Pubali,Prime bank,Southeast bank,Dhaka Bank,City Bank,Atlas,Usmania,Heidelberg following this technique just after their book closure. All were profitable.Some are 100% profitable.Recently,I bought Jamuana,Abbank and Islamibank because of this setup after their book closure. All were profitable. I am keeping an eye on Standard bank too. But it looks like it will take some more time to ripe :)Now how reliable this technique is!!! too reliable...I have studied five years of data of all banks and applied this method. It worked each year. Only once this method failed.And it was in Dhaka Bank's case.May be,the bank was in low profit then.....Your invested capital will get returned within 5 to 6 months with profit by this method.I combine technical analysis(charts and indicators) with this method; So,I can understand the best possible entry time. You might have difficulty in entering at right time........The second method:2. The second method is a well known method. This method is buying before a company's bonus/dividend declaration time.........This one is not as reliable as previous one. But if you can calculate things well,you may be able to profit.....But this is a more complex situation....As you can see Napolymar,Aftab,Pran,Keyacosmetics,Keydetergent are rising now..Why?Because their declaration is near.You might see a rise in DESCO too.Because its declaration is nearing too.........I found that big traders mostly know beforehand what the company is going to declare. So,when they buy,try to buy with them.......I have nothing much to say about this setup...This one works,but not as effectively as the first one........I have some other setups for entry :1. I would buy a share when it goes up a certain percentage from previous days close. For example,if tomorrow Jamuana's opening starts to trade 3% higher than today with pretty good volume,I would take a notice of it. Such a move means Jamuana is in Trend. And I like to go with trend.2. I wouldn't like to buy a share if it hasn't gone through a pullback. I like to buy on pullback.3. I like to buy breakout. It means when a stock starts to trade above a certain price range,I would buy...........4. I also feel good buying at support level.There are other setups. Depending on your trading styles,you should determine your entry and exit setups...........And you will see that when you have your own defined setups,you will have less loss than before.........
Posted by Mazharul Islam at
8:31 PM STOCK MARKET CRASH: mrtq13"REASONS FOR STOCK MARKET CRASHThere are many reasons that have been responsible for the crash of stock markets across the world. First reason is ?huge frauds?. There are many types of frauds that are associated with the stock market. Normally, the stock market does not crash on incidence of minor frauds. But if huge frauds are unearthed, the stock market normally responds to this by crashing down. It is to be noted here that stock market crashes because of heaving selling. When all the stockholders, whether individual or institutional, start selling their holdings, the stock market index comes down heavily and it is said that the stock market has crashed. In the past, many stock market indexes had crashed due to these scams. One of very famous scams is the Harshad Mehta scam that is associated with the Bombay Stock Exchange, when the Bombay Stock Exchange Sensex, also called BSE Sensex, came down heavily and the stock market crashed within few minutes.The other reason that can be citied for the stock market crash is toppling of government. If due to any reason, the government of the nation is toppled, the stock market is one of the most immediate markets that react to the event. It comes down heavily and in most of the cases, it gets crashed. There are many reasons for the toppling over of government and stock market responds to these reasons quite sharply. One of the reasons that are responsible for the stock market crash is the announcement of budget for the next financial year. Normally, the budget is announced by the central government for the succeeding year and along with budget, the economic policies of government regarding the development of industry etc are also announced. If it is felt that the policies announced in the budget are not conducive to industrial development, stock market reacts quite heavily to this and gets crashed sometimes. As we all know, there are many foreign companies that make investments in the stocks of companies listed at the stock exchange. When these foreign institutional investors go for heavy shelling, the stock market crashes. The foreign institutional investors, also called as FII in the stock market, go for heaving selling due to number of reasons. It can be political instability in the country where the investments have been made or finding of green pastures elsewhere. Whatever is the reason, if FII go for heavy selling, it is seen that the stock market index closes 3-5% lower than the previous day closing and it is said that the stock market has crashed.Another reason when the stock market reacts shapely is the death of any prominent political leader. The decline, however, is temporary in most of the cases.Apart from the above, there are some more reasons that are responsible for the declining of stock market. These are crashing down of contemporary stock markets, big corporate and business houses announcing their loosing annual or monthly numbers etc. Thus, there are many reasons that are responsible for the crashing down of stock market. Whatever is the reason, it can be said that as the stock market crashes, the prices of stocks of listed companied come down sharply. Let us now discuss some of the aspects related to stock market crash.RELATED ASPECTS OF STOCK MARKET CRASHThere are many aspects related to stock market crash that need to be understood. First of all, as the prices of stocks come down during stock market crash, it provides good opportunities for various investors to make investment in the coming days. However, a person has to be vigilant because it has been seen in many circumstances that the once a stock market crashes, it take many trading sessions to follow an up-trend. For a small stock market crash, the word ?correction? is often used. But in such cases, the stock market comes down due sharp rise that has been observed in the past few days and there are no fundamental or technical reasons for that. Sometimes, the stock market crash is so sharp and deep that the regulatory authorities may take decision to stop trading so that no further drop is observed. This cessation in trading can be few minutes, hours etc and the decision is taken only after conforming the sentiments in the stock market. Before a person goes for buying of stocks after the stock market crash, he must confirm that the stock market is really showing signs of recovery. This is because if the rise in the stock index is temporary, the stock market index can close at even lower levels as compared to the previous day close. Thus, there are many aspects that need to be understood regarding stock market crash.THUS, STOCK MARKET CAN CRASH FOR MANY REASONSAfter reading the above article, the stock market can crash due to many reasons as cited above. Whatever is the reason, it is certain that the price of stock listed at the stock exchange would definitely come down. There are also some aspects related to stock market crash that need to be understood completely before a person goes for making investments."
Posted by Mazharul Islam at
8:31 PM MA: mrtq13For bangladesh stock market, 16 days WMA is great for trend shows. Then,50 days SMA,100 SMA,and 200 days SMA are fine. I have backtested them all on DSE's stocks and found them work well in DSE stocks.
Posted by Mazharul Islam at
7:31 AM TA learning short list: mrtq13Narrow down your study to the following :1. Candlesticks. 2. Trends 3. Trendlines. 4. Chart patterns. 5. Fibonnaci ratios. 6. Pullback 7. Breakouts. 8. Moving Averges. 9. Bolliger bands. 10. Stochastics. 11. Volume. 12.Stop losses. 13.Trailing stops etc...........That way you will learn more with little efforts. It is a waste of time to put your energy on RSI,Stochastic,MACD at the same time. Becauese these are same in the sense that they are oscillators. So,learn one of them,you will understand all..............I don't know why you are studying Amibroker's help file. I think you should take the help of google. Choose a topic and search articles on it. There are plenty of good articles in google. Save them in your pc or print them out. Read them,and study,and research...............
Posted by Mazharul Islam at
7:31 AM USING AMIBROKER: MazharUSING AMIBROKER:ARRANGEMENT OF MAIN SCREEN:1. Drag and drop toolbars to upper area for bigger view of chart.2. In the left panel, put 3 things at least: symbols, charts, information. (in the menu bar – view--- check those 3). Make those auto hide.==========================ARRANGEMENT OF SHEETS:At the bottom, there are several sheets. You can change the number of sheets from: menu bar – tools – preferences. Keep 2 or 3 charts in a sheet. Candle chart as largest, one oscillator and one volume chart as small. Drag to change the size.Example:Sheet 1 --- heikin ashi chart with trailing stop, RSI chart, volume (color).Sheet 2 --- normal candle chart with moving averages, stoch, volume (color).Sheet 3 --- heikin ashi chart with moving averages, MARSI, volume (color).AFL:Collect afl (amibroker formula language) from your friends or from amibroker afl library on the internet. Afls are used to create charts. Different afl makes different kind of chart.Paste afls on: c — program files --- amibroker --- formula --- (any folder u like).Now open the amibroker. Look at the left panel. Click charts. Open any folder there. Afls will be shown. Right Click on any afl u choose, click on insert. Ok. Now chart is inserted in the sheet. In this way u can insert many charts in a sheet.
Posted by Mazharul Islam at
7:31 AM DSE GEN INDEX DATA: MazharDSE GEN INDEX DATA:We update it manually. Open the csv file named ‘00 dsegen’ and write data manually.Open = yesterday close.High and low = click on ‘gen index graph' at dse homepage. you will get high and low.Close and volume = written on the homepage and on mst.txtVolume also found on today’s news. I use 8 digits as volume. If today’s total volume (in tk) is 240,25,13, 677.25 taka, I write it as 24025136 (8 digits). If today’s volume is 78,25,13,677.25 tk, I write it as 7825136 (7 digits). You can use all digits, but make sure that, previous data is like so. Otherwise, your graph will be distorted.Volume means the value in tk, not the number of shares traded. Because, number of shares here make no sense. We just want to watch how much money is handed over. In Bangladesh, Mamun bhai started using charts first. He uses volume=value in tk (in case of 00dsegen file).In case of specific stock files, we use the number of shares handed over.
Posted by Mazharul Islam at
7:31 AM USING DDU .....MazharHOW TO SET UP DDUHOW TO UPDATE DSE DATA USING DDUYou have to update 00DSEDATA after each trading day. For this u need DDU and mst.txtCollect the DDU. It is a folder containing 2 files amibrokerddu.exe and richtx32.ocx. Another help file is also there. Read it.Keep the folder anywhere in your computer. (Keep both files (amibrokerddu.exe and richtx32.ocx) in the same folder).======================================================DDU IS NOT WORKING? DON’T WORRY:READ ONLY: Are the csv files read-only? Make sure that, each and every csv file is not read only. {Select all > properties > uncheck ‘read only’}.JAVA RUNTIME: You need java runtime installed in your computer. If not installed, install it from internet, it’s free. (Search for java runtime in google)COMDLG32.OCX: Another one thing may be already in your computer, it is comdlg32.ocx . It lives in c > windows > system32. If not there, DDU will not work. In that case collect it and paste it in that folder. Then go to start > run > browse > (show it) > ok.=============================================================***********USING DDU ***************Click to open the amibrokerddu.exeSource file is the mst.txt of a specific date. Browse to open. You already saved mst in your computer from
http://admin.dsebd.org/admin-real/mst.txt . collect and save it every trading day after 3 pm. *************************Destination is the folder: 00DSEDATA. Browse to show it.Write down the date as shown on the skin.Click transfer > Ok > Exit.Your data folder is updated. Now import ascii as described above.=====================================================EVERYDAY TASK: (do it STEP BY STEP after every trading day)****************1. Collect and save mst.txt2. Update data using ddu3. Import ascii
Posted by Mazharul Islam at
7:31 AM TOOLS TO COLLECT FOR TA: MazharCollect those:1. AMIBROKER WITH CRACK (AMIBROKER5_BABONJI.EXE) courtesy: mrtq13(Mamun bhai)2. DDU (created by maxether)3. DSE DATA TILL TODAY (SINGLE FILE FOR EACH STOCK AS CSV FORMAT, all in a folder named “00DSEDATA”). This database is created by Mamun bhai upto 17-Dec-2007. He collected data CD from DSE then compiled it as csv format. After 17-12-2008, this database is being updated by DDU.4. MST.TXT (collect it every trading day after 3pm from www.dsebd.org à market statistics.
http://admin.dsebd.org/admin-real/mst.txt )
Posted by Mazharul Islam at
7:31 AM DON'T HAVE HI-TECH TRADING SYSTEM? ....MazharWANT TO BUY TRADING SYSTEM AFL?NEED HI-TECH AFL?If we follow some free afl, it will be sufficient. In my view, use those:1. heikin ashi candle chart,2. EMA trading system for exit,3. volume (color). ---------------That's all.Now when to buy? Look for buy patterns (4 profitable patterns with volume). Mamun bhai discussed it in forums.When to sell? EMA trading system.
Posted by Mazharul Islam at
7:31 AM AMIBROKER SET UP ------MazharHOW TO SET UP AMIBROKERHOW TO CRACK ITClick the exe file ((AMIBROKER5_BABONJI.EXE)). You will see 2 options----- install and crack. Click install. Be sure to install in C:\program files. Don’t install in other site. After installation completed, again click the exe file. Now click on crack 4 times. You are done. Now open the amibroker through desktop icon or start>amibroker. Go to help>about. See it is registered to starzboy\iCU . That means you are registered now. You are ready to use it.==============================================================HOW TO CREATE NEW DATABASE IN AMIBROKERFirst of all make a new database folder. Go to c > program files > amibroker. Make a new folder here (inside the folder ‘amibroker’). Name it as “00 my database” (you can choose any name). Now open amibroker program. Go to file > new > database > browse > (here show the empty folder 00 my database) > open > create. Ok===========================================================HOW TO IMPORT DSE DATA IN AMIBROKERNow you have to import data. Paste the folder 00DSEDATA in anywhere in your hard drive, better avoid c drive. In this way u can save it from accidental crash and consequent formatting c drive.===============================================================************IMPORT ASCII:****************Open amibroker. Go to file > import ascii > ( here open the folder 00DSEDATA select all files by pressing ctrl+A ) > open. If any error msg appears, ignore it, don’t have to see the error log.
Posted by Mazharul Islam at
7:31 AM STOP-LOSS (part 3): mrtq13MORE ON STOP-LOSS:Now-the stoploss stratyegy-well,that is another skill thatone needs to acquire!!!For example,it was reasonable to put 10% or morestoploss in a stock like NCC.................Why????because of its price level and future.............It was at itslow considering FA and TA. And how low can it gomore.......? So,in such situations putting 10% or even15% makes sense............It gave whipsaws. And thathappens........In TA's term,this is called "ReTest of Bottom". Whathappens is,before going up strongly,many times a stockgoes below from its normal trading range. This wayweak buyers get shaken out.Thus,it creates whipsaws.This is a very strong signal for upwardmove...............See the Retest of bottom Atlasbelow..........How do you know that it is aretest............??? Actually,you never know...........But what we can do is to setup the stoploss in such away that it will keep us alive,or we won't get stoppedout..........And again,this stoploss has to do all with pricelevel and stock's Fundamental condition in manyways............If we put lose stoploss for Banks,it will make sense. Butif we put lose stops for Insurance or mutual funds likeAims and Grameen at the moment,well,then we canexpect some bad experience..........
Posted by Mazharul Islam at
7:31 AM STOP LOSS (part 2).... :mrtq13This is a very elaborate topic,and needs extensive discussions.............There are several things we need to focus while discussing this whole issue........Say for example :1. How is the market condition now.......2. Are you at the top of market-we are at the top of the market............Aren't we??? Did anyone notice this? DSE isn't expending upward,right???3. How do you feel about large fall or short fall........?4. Your risk tolerance level..........Do you have another sources of earning money and can take too much risk?5. Your total capital...............6. Your trading system. Is it set for short term swings or long term trades..........7. Your experience............--------------------------Let's discuss the above in a very short manner..........DSE isn't in good condition. Too much inconsistency is there. Any trader should remain cautious in such situation...........So,your stops should be tight......Right......? I have seen that in the last fall recently,many became freezed and started to think if they will hold on to their stocks or sell..........There is nothing to think......The market is falling....And that is a fact! Accept the fact and act accordingly........We are at the top of DSE's history. And this is the riskiest zone! Believe it.Don't be too brave at this level!! Whatever your big brothers/so called gambler brothers say,only care about your money and be scared!! Think about it. Let's say,you have invested ur whole amount in the market. Tomorrow market has fallen 90 points like it did recently..........Then,market stops. You feel good,though ur total lose is 4% at the moment! Market stops some times,but crashes upto 300 points. Your lose reaches 15%. Now what are you gonna do? You would become freezed! You wouldn't be able to sell,because the lose is huge. The market doesn't stop.And you lose more and more everyday.Think about the Jamuna oil's holders. Everyday they lose. For last couple of months,they have been having pain............What was the point of such holding............Some are down 40%!!! Wow,what if they took 7% lose and got out this loser stock initially............???The same applies to the whole market.........Now bravity can be shown when you are at the low of the market. If you showed bravity last year,you would gain hell lotta profit..........Because the market was at its low,and going upwards...........Now we are at the top...........So,a lot of correction is expected. But alas,market never goes straight up,or down. It comes down goes up,comes down and down.............What are you gonna do!!!!Try to understand that market's situation changes,and with the changing scenario we should change our strategy...................How much you can bear in a single trade............? Did you ever give it a thought..........?I think I can take 7% lose in every trade and total 3% lose in my total equity on each month..........But what about you...........What kind of trader are you..........? Are you a very short term trader. In that case,you should not bet more than 6% lose or even 5% lose............But if you are buy and hold type of trader............You can bet 30% and even 40% lose sometimes..........But the question is where the hell you have entered the stock........If you have entered at the low of a fundamentally good stock,then taking 40% lose makes sense..........But if you have entered at the top of a fundamentally weak company,taking 40% lose or betting 40% doesn't make sense,does it.........How about your trading system...........How did you set it............I have seen all of our trading systems are for very short term trade............So,our exists should be no more than 6%..............How much experienced are you...........How much you are pshychologically capable of handling a drawdown situation............Now this seems to be the most important point..............When I begin trading with system or TA,I had hard time trading. Sometimes I used to lose my faith in it,because it just didn't give what I expected.........Year ago I bought Intech Online. I put 6% stoploss in it. After I bought,I saw it falling. And even though It didn't go below 6% lose,I sold it. Because I didn't believe that it will work,my system would work.........I got scared,and very indisciplined. After I got out,I saw Intech rocked. I got fucked up,and frustrated................I had more than 4 losing in a raw in a month sometimes. I got frustrated. I thought I may not be able to recover those loses. I felt like kicking the Trading Systems and TA. But later,I saw I not only recovered my loses,rather I was up more than the lose with the same system and strategy.Why do those happen............? Think about it.........There are several factors that work here......Lack of plan is the most crucial,and controlling mind is another important thing.........Anyone telling you that he had never a losing trade is great lier! So,except the fact that lose is a part of our trading. If we can accept it,we will be able to overcome it...........Fear matters! Did you practise your trading style and strategy in real life trading.....That is a very important thing.....Sometimes it is wise to take loses for the shake of practise only. Believe me it works.Trading seems to be a matter of experience too.Oneday will come when looking at a chart you will be able to feel what may happen and act accordingly............Whatever happens,preserve main capital..................When we are at the top of the market,long term hold strategy doesn't make sense,does it..........We never know about future. So,what's the the point of thinking about it.........We should go by strategy,and change our strategy when the market changes.........DSE has changed.......So,it is better to change our old strategy,and be quick to take profit and cut loses...
Posted by Mazharul Islam at
7:31 AM HY BANK PROFIT: JUNE 2008Posted by Mazharul Islam at
7:31 AM FAFundamental Analysis TechniquesOne of the most popular ways of studying stocks is called fundamental analysis. Investors who use this approach like to look at basic information about a company, such as the growth of its sales and profits, in an effort to figure out what they think is the true, or "fair," value of that company's stock. By comparing the current stock price to that fair value, you can determine if it might be a good time to buy that stock -- or if it's a stock to avoid like the Black Plague.Some of the best-known investors in history have been fundamental analysts, including Peter Lynch, the legendary manager of the Fidelity Magellan mutual fund. Under his management, Magellan was the best performing mutual fund in history. Another famous fundamentalist is Warren Buffet, the brilliant investor behind Berkshire Hathaway. Berkshire Hathaway was once a textile company, but Buffet turned it into a vehicle in which he could invest in other stocks, with phenomenal success. A single share of Berkshire Hathaway now trades for over $60,000!Most individual investors use fundamental analysis in some way to pick stocks for their portfolios. If you're looking for a way to build a "buy-and-hold" portfolio of stocks, made up of companies that you can purchase and then own for years without losing too much sleep at night, you'll probably use the methods of fundamental analysis.Investors who use fundamental analysis usually focus on two separate approaches to picking stocks: growth or value (or sometimes a combination of both).Price/Earnings RatioTHE P/E is hands down the most popular ratio among investors. It definitely has its limitations (as we'll see in a minute), but it's also easy to calculate and understand. If you want to know what the market is paying for a company's earnings at any given moment, check its P/E.The P/E is a company's price-per-share divided by its earnings-per-share. If IBM is trading at $60 a share, for instance, and earnings came in at $3 a share, its P/E would be 20 (60/3). That means investors are paying $20 for every $1 of the company's earnings. If the P/E slips to 18 they're only willing to pay $18 for that same $1 profit. (This number is also known as a stock's "multiple," as in IBM is trading at a multiple of 20 times earnings.)The traditional P/E -- the one you'll find in the newspaper stock tables -- is what's known as a "trailing" P/E. It's the stock's price divided by earnings-per-share for the previous 12 months. Also popular among many investors is the "forward" P/E -- the price divided by a Wall Street estimate of earnings-per-share for the coming year.Which is better? The trailing P/E has the advantage that it deals in facts -- its denominator is the audited earnings number the company reported to the Security and Exchange Commission. Its disadvantage is that those earnings will almost certainly change -- for better or worse -- in the future. By using an estimate of future earnings, a forward P/E takes expected growth into account. And though the estimate may turn out to be wrong, it at least helps investors anticipate the future the same way the market does when it prices a stock.For example, suppose you have two stocks in the same industry -- Exxon and Texaco -- with identical trailing P/Es of 20. Exxon has a stock price of $60 and earnings of $3, while Texaco has a stock price of $80 and earnings of $4. They may look like similar investments until you check out the forward P/E. Wall Street is projecting that Exxon's earnings will grow to $3.75 a share -- 25% growth -- while Texaco's earnings are only expected to grow by 6% to $4.25. In that case, Exxon's forward P/E slips to 16, while Texaco would be valued with a forward P/E of 18.8. Assuming the estimates bear out, Exxon would clearly be the better buy.The biggest weakness with either type of P/E is that companies sometimes "manage" their earnings with accounting wizardry to make them look better than they really are. A wily chief financial officer can fool with a company's tax assumptions during a given quarter and add several percentage points of earnings growth.It's also true that quality of earnings estimates can vary widely depending on the company and the Wall Street analysts that follow it. The bottom line is that despite its popularity, the P/E ratio should be viewed as a guide, not the gospel.Price/Earnings Growth RatioAS WE'VE NOTED frequently, stocks with strong growth rates tend to attract a lot of investors. All that attention can quickly drive their multiples above the market average. Does that mean they're overvalued? Not necessarily. If their growth is superior, they may deserve a higher valuation.The PEG ratio helps quantify this idea. PEG stands for price/earnings growth and is calculated by dividing the P/E by the projected earnings growth rate. So if a company has a P/E of 20 and analysts expect its earnings will grow 15% annually over the next few years, you'd say it has a PEG of 1.33. Anything above 1 is suspect since that means the company is trading at a premium to its growth rate. Investors usually look for a PEG of 1 or below, although as we explain in a minute there are exceptions.Here's how to put the ratio to work. Say Dell Computer is trading at a forward P/E of 35 times earnings. After making the comparison and discovering that rivals Compaq Computer and Gateway 2000 are both trading at multiples around 20, you might begin to think Dell looks awfully expensive. But then you look at earnings growth. First, you see that Dell's earnings are expected to grow at 40% annually over the next three to five years, while analysts are predicting Compaq will grow at 15% and Gateway at 20%. That would give Dell a PEG of 0.88, while Compaq weighs in at 1.33 and Gateway at 1. Looked at in that light, Dell doesn't seem so pricey after all.Generally you use a forward P/E in the PEG ratio, but a low PEG using a trailing P/E is even more convincing. Anything below 1 is of interest, although there really are no rules of thumb. Like the P/E, different industries regularly trade at different PEGs. It's also true that the PEG works less well for large-cap companies that by nature grow at a slower rate despite strong prospects. As always, the key is to compare a company to its peers.The PEG ratio's weakness is that it relies heavily on earnings estimates. Wall Street tends to aim high and analysts are often dead wrong. In 1998, for instance, some companies in the oil-services sector routinely had projected earnings growth rates in the 35% range. But by the end of the year, the crash in oil prices had them swimming in losses. Had you been impressed by their bargain-basement PEG ratios, you'd have lost a lot of money. Our advice is to shave 15% from any Wall Street growth estimate out of hand. That provides a good margin of error.Price/Sales RatioTHE ONCE-OBSCURE price/sales ratio has become an increasingly popular method of valuation for a few reasons. First, quantitative investor James O'Shaughnessy demonstrated convincingly in his book, "What Works on Wall Street," (McGraw-Hill, 1998), that stocks with low PSRs outperformed stocks with low P/E multiples. Second, as we mentioned in the section on P/Es, many investors don't trust net earnings, since they are often manipulated through writeoffs and other accounting shenanigans. Sales are much harder to "manage." Finally, the explosion in Internet stocks forced investors to look for ways to value companies with lots of potential, but no earnings.As the name implies, the price/sales ratio is the company's price divided by its sales (or revenue). But because the sales number is rarely expressed as a per-share figure, it's easier to divide a company's total market value by its total sales for the last 12 months. (Market value = stock price x shares outstanding.)Generally speaking, a company trading at a PSR of less than 1 should attract your attention. Think about it: If a company has sales of $1 billion but a market value of $900 million, it has a PSR of 0.9. That means you can buy $1 of its sales for only 90 cents. There may be plenty else wrong with the company to justify such a low price (like maybe it's losing money), but that's not always the case. It might just be an overlooked bargain.O'Shaughnessy found that PSRs work best for large-cap companies, perhaps because their market values tend to be much closer to their massive sales to begin with. The ratio is less appropriate for service companies like banks or insurers that don't really have sales. Most value investors set their PSR hurdle at 2 and below when looking for undervalued situations. But, as always, we'd counsel that you compare a company's PSR value to its competitors and its own history.Price/Cash FlowLIKE THE PSR, this ratio is another response to investor distrust of net earnings. Many stock analysts think it gives a better picture of a company's true earning power than does the net income figure. The problem is, there are several ways to define cash flow and it is always a little tricky to calculate. And to understand how it works, you first need a quick lesson in how earnings and expenses are recorded.So here goes. Accounting rules require that a company lay out its profits or losses in a standard table called the Income Statement. At the top of the table is a figure for total sales (revenue). Expenses of various types are subtracted as you move down the page. The "bottom line" is net income.Some of those expenses represent the direct cost of producing a company's goods or services. Others -- like depreciation on equipment -- are costs, but don't involve a cash outlay of any sort. Still others -- like taxes and financing costs -- are more administrative in nature. The farther down the income statement you go, the more a company's accountants can fiddle with assumptions to make their net earnings look better. So analysts look for a number -- called cash flow -- that is higher up the statement and that backs out everything but the real cost of doing business.As we've said, there are any number of cash-flow formulas that add and subtract various types of expenses. Cable-television companies, for instance, carry a lot of debt to finance the ongoing construction of their networks. So when comparing them, analysts tend to use a cash-flow formula that backs out the cost of that debt. Why? They want to know how much money the companies generate from their networks, not how much their debt costs. That they examine separately.Our view, however, is that most companies should be compared with the impact of their financing costs showing. What qualifies as a low number? Anything below 20 is worth a look. But, as always, you have to compare a company to its industry.Price/Book ValueBOOK VALUE is a company's assets minus its liabilities. It's accounting jargon for what would be left over for shareholders if the company were sold and its debt retired. The price/book ratio measures what the market is paying for those net assets (also known as shareholder equity). The lower the number, the better.Price/book was a lot more popular in the age of smokestacks and steel. That's because it works best with a company that has a lot of hard assets like factories or ore reserves. It is also good at reflecting the value of banks and insurance companies that have a lot of financial assets.But in today's economy many of the hottest companies rely heavily on intellectual assets that have relatively low book values, which give them artificially high price/book ratios. The other drawback to book value is that it often reflects what an asset was worth when it was bought, not the current market value. So it is an imprecise measure even in the best case.But the price/book ratio does have its strengths. First of all, like the P/E ratio it is simple to compute and easy to understand, making it a good way to compare stocks across a broad array of old-line industries. It also gives you a quick look at how the market is valuing assets vs. earnings. Finally, because assets are assets in any country, book-value comparisons work around the world. That's not true of a P/E ratio since earnings are strongly affected by different sets of accounting rules.Short InterestLEAVE IT to Wall Street to figure out a way to profit from a falling stock. It's called "selling short" and it's becoming increasingly popular among individual investors. It works like this: Say an investor analyzes Intel and decides that all signs point to a decline in the stock price rather than an increase. Intel is trading at $60 a share, so the investor borrows shares of the stock at that price and immediately sells them. After the stock falls to maybe $40 a share, he buys it back on the open market to repay his debt. But since the price is lower, he pockets the difference -- in this case $20 a share. (Of course, if the price goes up from his original price, the investor loses big time.)There are entire companies devoted to selling stocks short and they make it their job to seek out companies that are in trouble. They pore over financial statements looking for weaknesses. But sometimes they merely think a company is too highly priced for its own good.Happily, the stock exchanges track "short interest" in a stock and report it each month so other investors can see what the short-sellers are up to. We track the short-interest ratio (short interest/average daily volume of the stock) on our Investor Snapshots, and it is always worth a look.A high (or rising) level of short interest means that many people think the stock will go down, which should always be treated as a red flag. Your best course is to check the current research and news reports to see what analysts are thinking. But high short interest doesn't necessarily mean you should avoid the stock. After all, short sellers are very often wrong.The short-interest ratio tells you how many days -- given the stock's average trading volume -- it would take short sellers to cover their positions (i.e. buy stock) if good news sent the price higher and ruined their negative bets. The higher the ratio, the longer they would have to buy -- a phenomenon known as a "short squeeze" -- and that can actually buoy a stock. Some people bet on a short squeeze, which is just as risky as shorting the stock in the first place. Our advice is this: Use the short-interest ratio as a barometer for market sentiment only -- particularly when it comes to volatile growth stocks. When it comes to gambling, you're better off in Vegas.BetaHOW MUCH volatility can you expect from a given stock? That's well worth knowing if you want to avoid being shocked into panic selling after buying it. Some stocks trend upward with all the consistency of a firefly. Others are much more steady. Beta is what academics call the calculation used to quantify that volatility.The beta figure compares the stock's volatility to that of the S&P 500 index using the returns over the past five years. If a stock has a beta of 1, for instance, it means that over the past 60 months its price has gained 10% every time the S&P 500 has moved up 10%. It has also declined 10% on average when the S&P declines the same amount. In other words, the price tends to move in synch with the S&P, and it is considered a relatively steady stock.The more risky a stock is, the more its beta moves upward. A figure of 2.5 means a gain or loss of 25% every time the S&P gains or loses just 10%. Likewise, a beta of 0.7 means the stock moves just 7% when the index moves in either direction. A low-beta stock will protect you in a general downturn, a high Beta means the potential for outsize rewards in an upturn.That's how it is supposed to work, anyway. Unfortunately, past behavior offers no guarantees about the future. If a company's prospects change for better or worse, then its beta is likely change, too. So use the figure as a guide to a stock's tendencies, not as a crystal ball.MarginsLIKE ROE and ROA, calculating a company's margins is a way of getting at management efficiency. But instead of measuring how much managers earn from assets or capital employed, this ratio measures how much a company squeezes from its total revenue (sales).Sounds a lot like earnings, right? Well, margins are really just earnings expressed as a ratio -- a percentage of sales. The advantage is that a percentage can be used to compare the profitability of different companies while an absolute number cannot. An example should help. In the spring of 1999, Sears had net income of about $1.1 billion on annual sales of about $41.2 billion. Wal-Mart, meanwhile, was earning about $4.7 billion on sales of $143 billion. Comparing $4.7 billion with $1.1 billion wouldn't tell you much about which company was more efficient. But if you divide the earnings by the sales, you'll see that Wal-Mart was returning 3.3% on sales while Sears was returning just 2.7%. The difference doesn't sound like much but it was worth about $839 million to Wal-Mart shareholders. And it's one of the reasons Wal-Mart was trading at about twice the multiple of Sears.Analysts look at various types of margins -- gross, operating, pretax or net. Each uses an earnings number that is further down the Income Statement (see Price/Cash Flow for more on how the Income Statement works). What's the difference? As you move down the statement, different types of expenses are factored in. The various margin calculations let you refine what you're looking at.Gross margins show what a company earns after all the costs of producing what it sells are factored in. That leaves out a lot -- marketing expenses, administrative costs, taxes, etc. -- but it tells you how profitable the basic business is. Consider that Wal-Mart's gross margin was about 22% in the spring of '99. Sears' was 34%.Operating margins figure in those selling and administrative costs, which for most companies are a large and important part of doing business. But they come before interest expenses on debt and the noncash cost of depreciation on equipment. The earnings number used in this ratio is sometimes called cash flow or earnings before interest, taxes, depreciation and amortization (EBITDA). It measures how much cash the business throws off and some consider it a more reliable measure of profitability since it is harder to manipulate than net earnings.Pretax margins take into account all noncash depreciation on equipment and buildings, as well as the cost of financing debt. But they come before taxes and they don't include one-time (so called "extraordinary") expenses like the cost of shutting a factory or writing off some other investment.Net margins measure the bottom line -- profitability after all expenses. This is what shareholders collect (theoretically) and so closely watch.Margins are particularly helpful since they can be used both to compare profitability among many companies (as we demonstrated with Wal-Mart and Sears above) and to look for financial trouble at a single outfit. Viewing how a company's margins grow or shrink over time can tell you a lot about how its fortunes are changing. Between early 1995 and January of 1999, for instance, Dell Computer's net margin doubled from 4.3% to 8% even as the cost of a PC declined markedly. What does that tell you? Dell was driving down prices and manufacturing more efficiently. Rival Compaq Computer, meanwhile, went disastrously in the opposite direction -- 8% to -8% -- as the company ran into trouble digesting several acquisitions and began to lose money. That helps explain why Compaq's shares rose about 250% during that time while Dell's roared ahead almost 8,000%InventoriesIF YOU ASKED the average company president what he (hey, don't blame us for the averages) thinks of inventory, he'd likely sigh and tell you it's a necessary evil. Manufacturers have warehouses filled with raw materials, component parts and finished goods to help fill orders. Retailers have stock waiting to be sold. For every moment any of it sits idle on the shelves, it costs the company money to store and finance. That's why managers strive with all they've got to have as little inventory on hand as possible.Certain types of companies (manufacturers, retailers) by nature must carry more inventory than others (software makers, advertising companies). So as an investor you want to look for two things here: First, does one company in a given industry carry more inventory as a percentage of sales than its rivals? Second, are its inventory levels rising dramatically for some unexplained reason?You can't look at inventory in isolation. After all, if a company's inventory level increased 20% but sales grew at a rate of 30%, then the increase in inventory should be expected. The warning sign is if inventory spikes despite normal growth in sales. In 1997, for instance, the stock of high-flying apparel maker Tommy Hilfiger got nailed when its inventories suddenly rose 50% spooking Wall Street analysts, who figured the popular men's wear maker had lost its edge among teenage boys. Tommy eventually righted the situation (it had more to do with inventory management than fashion sense) and the stock recovered. But a lot of investors lost money along the way.A helpful number to look at is the inventory-turnover ratio. It's annual sales divided by inventory and it reflects the number of times inventory is used and replaced throughout a year. Low inventory turnover is a sign of inefficient inventory management. For example, if a company had $20 million in sales last year but $60 million in inventory, then inventory turnover would be 0.3, an unusually low number. That means it would take three years to sell all the inventory. That's obviously not good.There's no rule of thumb when it comes to turnover. It's best to make comparisons. If a retailer had a turnover of 4, for example, and its closest competitor had turnover of 6, it would indicate that the company with higher turnover is more efficient and less likely to get caught with a lot of unsold goods.Current Assets/LiabilitiesThese statistics are always worth a look to take a company's short-term temperature. Current assets are things like cash and cash equivalents, accounts receivable (money owed the company by customers) and inventories. They are defined as anything that could be sold quickly to raise money. Current liabilities are what the company owes in short order -- mostly accounts payable and short-term debt.The thing to look for here is a big change from period to period. If the current assets number grows quickly, it could mean the company is accumulating cash -- a good thing. Or it is having trouble collecting accounts receivable from customers -- a bad thing. Precipitous growth in current liabilities is rarely a good thing, but it might be explainable due to some short-term corporate goal.If you see a spike in either category, it's worth further explanation. Check the analyst research, news reports or get the financial statements and read the notes. Management is required to explain changes in the company's financial condition.Efficiency RatiosIF ONE GROUP of managers was able to squeeze more money out its assets or capital than another, you'd go with the first one, right? Of course. That's why accountants and stock analysts long ago began looking for a reliable way to measure management efficiency. Return on equity (ROE) and return on assets (ROA) are what they came up with.Both ratios are an effort to measure how much earnings a company extracts from its resources. Return on equity is calculated by taking income (before any non-recurring items) and dividing it by the company's common equity or book value. Expressed as a percentage, it tells you what return the company is making on the equity capital it has deployed. Return on assets is income divided by total assets. It gives you a sense of how much the company makes from all the assets it has on the books -- from its factories to its inventories.As measures of pure efficiency, these ratios aren't particularly accurate. For one thing (as we've mentioned repeatedly), earnings can be manipulated. It's also true that the asset values expressed on balance sheets are (for various reasons) not entirely reflective of what a company is really worth. Microsoft or an investment bank like Goldman Sachs, as they say, rely on thousands of intellectual assets that walk out the front door every day.But ROE and ROA are still effective tools for comparing stocks. Since all U.S. companies are required to follow the same accounting rules, these ratios do put companies in like industries on a level playing field. They also allow you to see which industries are inherently more profitable than others.Dividend/YieldA DIVIDEND is a payment many companies make to shareholders out of their excess earnings. It's usually expressed as a per-share amount. When you compare companies' dividends, however, you talk about the "dividend yield," or simply the "yield." That's the dividend amount divided by the stock price. It tells you what percentage of your purchase price the company will return to you in dividends. Example: If a stock pays an annual dividend of $2 and is trading at $50 a share, it would have a yield of 4%.Not all stocks pay dividends, nor should they. If a company is growing quickly and can best benefit shareholders by reinvesting its earnings in the business, that's what it should do. Microsoft doesn't pay a dividend, but the company's shareholders aren't complaining. A stock with no dividend or yield isn't necessarily a loser.Still, many investors -- particularly those nearing retirement -- like a dividend, both for the income and the security it provides. If your company's stock price falters, you always have a dividend. And it is definitely a nice sweetener for a mature stock with steady, but unspectacular growth.But don't make the mistake of merely searching for stocks with the highest yield -- it can quickly get you in trouble. Consider the stock we mentioned above with the $2 dividend and the 4% yield. As it happens, 4% is well above the market average, which is usually below 2%. But that doesn't mean all is well with the stock. Consider what happens if the company misses an earnings projection and the price falls overnight from $50 a share to $40. That's a 20% drop in value, but it actually raises the yield to 5% ($2/$40). Would you want to invest in a stock that just missed earnings estimates because its yield is now higher? Probably not. Even when searching for stocks with strong dividends, it's always crucial to make sure the company clears all your other financial hurdles.When you're searching for stocks with high dividend yields, one quick check you should always make is to look at the company's payout ratio. It tells you what percentage of earnings management is doling out to shareholders in the form of dividends. If the number is above 75% consider it a red flag -- it might mean the company is failing to reinvest enough of its profits in the business. A high payout ratio often means the company's earnings are faltering or that it is trying to entice investors who find little else to get excited about.
Posted by Mazharul Islam at
7:31 AM PAID UP CAP: FEB 2008Posted by Mazharul Islam at
7:31 AM Volume interpretation: mrtq13Posted by Mazharul Islam at
7:31 AM SWINGER: mrtq13his is simply a swinger. Nothing much,nothing less. Itis with lowest whipsaws,and remarkable to catch everyentry..............This one is easy to understand trend andreversal,and also breakout............Like I said,this swings-very different from any otherchart type...........!!!! I created this,because I wanted toknow for sure that there is a reverse in trend looking atthe chart(a sure fire kind of thing). It is really difficultto determine the exact reversal point(to pin point it).Iwanted to pin point my entry! Also,I wanted to have aclutter free chart,a clean and smooth chart where themost important things will be combinedtogether..............See the chart below. All you have to do is to enter whenthe system tells you to do that...........It is easy andtrouble free. It is automatic. Several different rules havebeen put into it through coding. There are threedifferent trading systems into it.............I hope the chart defines itself. But a short brief is,aslong as there are green candles,the trend is up and wehold the stock. When there is red candles,we don't tradeit. When there is cross,we know tht the trend hasreversed............When there are rings,we know thattrend is gonna change soon.........Bottom line is even a fool can trade with this thing..
Posted by Mazharul Islam at
7:31 AM 20 RULES FOR SWING TRADERS: SOUTHWIND20 RULES FOR THE MASTER SWING TRADERBy Alan FarleyLast Updated: Jan. 2, 2002Swing trading can be a great way to profit from market upswings and downswings,but as I’ve always said, it’s not easy. Mastering the swing- trading techniques takestime and effort. To help get you started, I am giving you 20 Rules to think about asyou begin – and ultimately master – swing trading.Rule 1: If you have to look, it isn’t there.Forget your college degree and trust your instincts. The best trades jump out ofnowhere and create a sense of urgency. Take a deep breath, then act quickly beforethe opportunity disappears.Rule 2: Trends depend on their time frame.Make sure your trade fits the clock. Price movement aligns to specific time cycles.Success depends on trading the right ones.Rule 3: Price has memory.What happened the last time a stock hit a certain level? Chances are it will happenagain. Watch trades closely when price returns to a battleground. The prior action canpredict the future.Rule 4: Profit and discomfort stand side by side.Find the setup that scares you the most. That’s the one you need to trade. Don’texpect it to feel good until you take your profit. If it did, everyone else would betrading it. Wisdom from the East: What at first brings pleasure in the end gives onlypain, but what at first causes pain ends up in great pleasure.Rule 5: Stand apart from the crowd at all times.Trade ahead, behind or contrary to the crowd. Be the first in and out of the profitdoor. Your job is to take their money before they take yours. Be ready to pounce onill-advised decisions, poor judgment and bad timing. Your success depends on themisfortune of others.Rule 6: Buy the first pullback from a new high. Sell the first pullback from anew low.Trends often test the last support/resistance before taking off. Trade with the crowdthat missed the boat the first time around.Rule 7: Buy at support. Sell at resistance.Trend has only two choices upon reaching a barrier: Continue forward or reverse. Getit right and start counting your money.Rule 8: Short rallies, not selloffs.Shorts profit when markets drop, so they start to cover. This makes it a terrible timeto enter new short sales. Wait until they get squeezed and shaken out, then jump inwhile no one is watching.Rule 9: Manage time as efficiently as price.Time is money in the markets. Profit relates to the amount of time set aside foranalysis. Know your holding period for every trade. And watch the clock to become amarket survivor.Rule 10: Avoid the open.They see you coming, sucker.Rule 11: Trades that work in hot markets destroy accounts in cool ones.Stocks trend only 15% to 20% of the time. Price ranges cause grief to momentumtraders the rest of the time.Rule 12: The best trades show major convergence.Watch for the bull’s eye. Look for a single point in price and time that pointsrepeatedly to a trade entry. The market is trying to tell you something.Rule 13: Don’t confuse execution with oppo rtunity.Save Donkey Kong for the weekend. Pretty colors and fast fingers don’t makesuccessful careers. Understanding price behavior and market mechanics does. Learnwhat a good trade looks like before falling in love with the software.Rule 14: Control risk before seeking reward.Wear your market chastity belt at all times. Attention to profit is a sign of immaturity,while attention to loss is a sign of experience. The markets have no intention ofoffering money to those who do not earn it.Rule 15: Big losses rarely come without warning.You have no one to blame but yourself. The chart told you to leave, the news told youto leave and your mother told you to leave. Learn to visualize trouble and head forsafety with only a few bars of information.Rule 16: Bulls live above the 200-day moving average, bears live below.Are you flying with the birds or swimming with the fishes? The 200-day movingaverage divides the investing world in two. Bulls and greed live above the 200-day,while bears and fear live below. Sellers eat up rallies below this line and buyers cometo the rescue above it.Rule 17: Enter in mild times, exit in wild times.The big move hides beyond the extremes of price congestion. Don’t count on theagitated crowd for your trading signals. It’s usually way too late by the time they act.Rule 18: Perfect patterns carry the greatest risk for failure.Demand warts and bruises on your trade setups. Market mechanics work to defeat themajority when everyone sees the same thing at the same time. When perfectionappears, look for the failure signal.Rule 19: Trends rarely turn on a dime.Reversals build slowly. Investors are as stubborn as mules and take a lot of painbefore they admit defeat.Rule 20: See the exit door before the trade.Assume the market will reverse the minute you get filled. You’re in very big troublewhen it’s a long way to the door. Never toss a coin in the fountain and hope yourdreams will come true.
Posted by Mazharul Islam at
7:31 AM candlesticks, system trading: mrtq131. You will always need Candlestick..........But the question is to what extent you will use Candlestick in your trading decision...........That you will have to decide on your own...........Personally,I don't give too much emphasis on Candlestick now a days.As a beginner,I used to give emphasis on Candles,because I thought and read they work like a charm.They do,but not as charmfully as we think in DSE. As I got more and more involved in TA,I found there are several different things that are superior to chandlestick.......... I only look at candlestick just to know how the day was-bearish,bullish,neutral or what........That is it..........! My trading decision is not dependent on candles mostly...........2. Besides knowing about normal candlestick,you need to know about Heikin Ashi. It is the most important one for DSE,as DSE is a volatile stock exchange. Traders sentiment is inconsistent here..........So,normal candlestick would confuse you,you need something that smooths out the whipsaws here.............3. Use only one oscillator. Using more than one oscillator for the same purpose is technically wrong..........Macd is a bit slow. Besides,you can see the crossover of Macd(to an extent)in your candlestick chart with Moving Average............I prefer Stochastic. And STochRSI is better than Stochastic..........The choice is urs.........4. You need to learn about Volume and how volume influence price action...........It is very important...........5. Moving Average is important. They represent past price action and future price too! So,one should give emphasis on them..........6. You should work on Buy,Hold,and Sell together..........We emphasis on Buy too much,whereas Hold and Sell are also important.............Especially,exit is more important than entry..............7. You need to know about Pullback, Breakout,Reversal,and Rangebound trading style. And you need to find out which one is suitable for you to trade!8. You need to find out a guide who will show you the way to TA. That way,your life will get easier in TA's world.It is a huge area,you will surely get lost in this world.........However,there is no guide around. So,you will have to do things on your own. So,keep going......... --------------------- ** ---------------------Now System Trading...........!Let's make it simple..................! However,I don't know how to define it in simple term........Well,let's see some rules..........Rule 1 : Experienced traders here might have seen that when a price moves up,say for example 6%,from previous day,probability is it will rise further............Rule 2: Again,some experienced traders here might also have noticed that when a stock has high volume with rising price movement,probability is it will rise further.Rule 3: TAs here might have noticed that when MACD crosses the zero line,probability is the stock will rise further.Rule 4: TAs here might have noticed that when short term moving averages crosses mid term moving averages,probability is the stock will rise further.................Now,we have got four trading rules. We know when these rule appear in a stock,the stock usually rises...........We memorise those rules. See them in charts. We are happy...........Because we promise ourselves that whenever they will appear,we will enter into the stock........Unfortunately,many times we can't...........Because we are driven by Brain. And Brain has limitation in processing data...........That is why,computer can defeat us in chess game..............So,as computer can process data well and can give us the most perfect output,so let's use computer to process the data for us to trade...........Now let's feed our trading software with the above four rules. And let's program it in such a way that whenever those four rules appear computer will tell us to buy...........Now all we have to do is to buy after the computer tells us to buy..........That is it..............By system trader I mean,I program the software and give it the rules of my trading style. It then start to give me Buy/Sell/Hold signal. And I go by those signals............This way,I don't have to think and get confused.............Brain is a weak machine when it comes to data processing,computer isn't............Below is an example of a trading system I am recently with...........I hope it will give you an idea of Trading System...........-------------------**------------------ _________________1. Cut your losses short........... 2. Take your decisions on your own.... 3. Future can't be predicted.So,don't fight the market! 4. When in doubt,don't trade......... 5. Be aggressive with Bulls,be defensive with bears...
Posted by Mazharul Islam at
7:31 AM PREMATURE SELL? SOLUTION IS HERE: mrtq13This type of problem happens when :1. you don't have defined rules which you have to follow in trading.2. you don't use "initial stop" to trade and stick to that initial stop.3. you get concerned about your position.4. you look at "normal candlesticks" too much and give them too much value.Now here is the problem..................1. One has to have all rules defined in a note..........What I personally do is that I record all my rules of certain situations/patterns in a video tutorial. I mean,say for example,I have come discovered a pattern to trade. What I do is to video in which I try to define the exit,entry,market condition,failure,initial stop,trailing stop,profit taking stops,and so on.........I run and watch the video in my leisure times,or whenever such patterns appear. That way,I feel confident to trade the pattern,as I know what may happen next.......I make the patterns a part of me like that so that I become natural to trade them...........etc...................Give this idea a thought. It does improve trade substantially..........You can easily memorize complex things with this idea...........I apply this idea of tutorial not only in trading,but also in other aspects of learning.............2. we have serious confusion of stops.............The trailing stops you have shown in the chart are for "trailing" purposes only. They are not to be used for your initial stops. When you launch a trade,you need to have your own stop loss zone,which if violated,should tell you to exit the trade. And this should be defined by your total investment/equity. Or,your risk tolerant percent..............I can tolerate risk of 10% on each trade. So,I don't care if a trade goes down 10% from my buy price. But it violates 10% and reaches to 11%,I surely exit..........By 10%,I mean I can tolerate 10,000 loss on each 1 lach taka bet on a trade in one month. That won't hamper my total investment,my lifestyle,and above won't hurt my emotion.............How one should determine one's initial exit depends on his own personality and livings,and also the stocks one is trading..................We need to have an elaborate discussion on this stop loss. Note that trailing stops are generally for profit locking! After a trade goes on your way,you should use trailing stops............Also,you need to consider "position sizing",which is a very good and important idea to know...................3. Did you ever find that you become emotional after you launch a trade................! And sometimes a lot of negative thoughts clutter your mind. Sometimes you feel you just don't know what to do..........You need to control your emotion.Pls,read ebooks on this matter..............You can do some kind of visualisation to give your mind positive suggestion.............But from my experience,I will say again,if you have defined rules and patterns,you will be able to trade with confidence and avoid negative thoughts of mind...............4. You must use Heikin Ashi............I surely don't,again "don't",support to trade only by candlesticks. They are very very deceiptive. Use normal candlestick only for interpret the days movement or for the movement of a particular patterns. Pls,go through what I have written about ICBislamic's trade in this forum( viewtopic.php?f=6&t=13 ). I surely used normal candlestick to interpret the movement of that stock.But above all,I knew that there is a pattern(upmove and consolidation) in which all the buying candles are appearing. I actually emphasised the pattern more than the candles. Surely,candles are good. But they show short term move. For a longer term move,you need to see the pattern,where the stock is now...........The critical problem with candlestick is they will bluff you unless you haven't practise them hour after hour. You see a red candle,and you become concerned. Though that candle has not much meaning..........But the problem arises because you become concerned and you start to get emotional. Negative thoughts come into your mind............Pls,note the difference of stocks and trading between bangladesh and other countries...............I can easily trade by normal candlesticks in U.S market. But they become very much confusing in our market. Because our market is very much volatile............U.S market follows logic and calculation heavily. By the way,forget Warren Buffet. It is very much silly,imprudent,and childish to follow a huge investor like him. He alone can crash/shake part of U.S market(not whole). Small traders like you and me can't and should not follow him. This is unrealistic and unmatched thing! He is institutional investor...................BD market is all about trend and smoothing out trend. Note that there is a critical difference between other market and ours. And that is timing. We have to wait two days after our buying to sell. But in other countries,you can buy sell anytime. So,one should have different style to trade our market. I have learned this truth the hard way...............I must add one last note : give value to support and resistance in our market. Because they work.......
Posted by Mazharul Islam at
7:31 AM CANSLIM: FUNDAMENTAL ANALYSISCANSLIM Is a Key Word of Fundamental Analysis CANSLIM is a philosophy of screening, purchasing and selling common stock. Developed by William O'Neil, the co-founder of Investor's Business Daily, it is described in his highly recommended book "How to Make Money in Stocks".The name may suggest some boring government agency, but this acronym actually stands for a very successful investment strategy. What makes CANSLIM different is its attention to tangibles such as earnings, as well as intangibles like a company's overall strength and ideas.The best thing about this strategy is that there's evidence that it works: there are countless examples of companies that, over the last half of the 20th century, met CANSLIM criteria before increasing enormously in price. In this section we explore each of the seven components of the CANSLIM system. 1. C = Current Earnings O’Neil emphasizes the importance of choosing stocks whose earnings per share (EPS) in the most recent quarter have grown on a yearly basis. For example, a company’s EPS figures reported in this year’s April-June quarter should have grown relative to the EPS figures for that same three-month period one year ago.How Much Growth?The percentage of growth a company’s EPS should show is somewhat debatable, but the CANSLIM system suggests no less than 18-20%. O’Neil found that in the period from 1953 to 1993, three-quarters of the 500 top-performing equity securities in the U.S. showed quarterly earnings gains of at least 70% prior to a major price increase.The other one quarter of these securities showed price increases in two quarters after the earnings increases. This suggests that basically all of the high performance stocks showed outstanding quarter-on-quarter growth. Although 18-20% growth is a rule of thumb, the truly spectacular earners usually demonstrate growth of 50% or more.Earnings Must Be Examined CarefullyThe system strongly asserts that investors should know how to recognize low-quality earnings figures - that is, figures that are not accurate representations of company performance. Because companies may attempt to manipulate earnings, the CANSLIM system maintains that investors must dig deep and look past the superficial numbers companies often put forth as earnings figures.O’Neil says that, once you confirm that a company's earnings are of fairly good quality, it's a good idea to check others in the same industry. Solid earnings growth in the industry confirms the industry is thriving and the company is ready to break out.2. A = Annual Earnings CANSLIM also acknowledges the importance of annual earnings growth. The system indicates that a company should have shown good annual growth (annual EPS) in each of the last five years.How Much Annual Earnings Growth?It's important that the CANSLIM investor, like the value investor, adopt the mindset that investing is the act of buying a piece of a business, becoming an owner of it. This mindset is the logic behind choosing companies with annual earnings growth within the 25-50% range. As O’Neil puts it, "who wants to own part of an establishment showing no growth"? 3. N = New O’Neil’s third criterion for a good company is that it has recently undergone a change, which is often necessary for a company to become successful. Whether it is a new management team, a new product, a new market, or a new high in stock price, O’Neil found that 95% of the companies he studied had experienced something new.McDonald’sA perfect example of how newness spawns success can be seen in McDonald’s past. With the introduction of its new fast food franchises, it grew over 1100% in four years from 1967 to 1971! And this is just one of many compelling examples of companies that, through doing or acquiring something new, achieved great things and rewarded their shareholders along the way.New Stock Price HighsO’Neil discusses how it is human nature to steer away from stocks with new price highs - people often fear that a company at new highs will have to trade down from this level. But O’Neil uses compelling historical data to show that stocks that have just reached new highs often continue on an upward trend to even higher levels. 4. S = Supply and Demand The S in CANSLIM stands for supply and demand, which refers to the laws that govern all market activities.The analysis of supply and demand in the CANSLIM method maintains that, all other things being equal, it is easier for a smaller firm, with a smaller number of shares outstanding, to show outstanding gains. The reasoning behind this is that a large-cap company requires much more demand than a smaller cap company to demonstrate the same gains.O’Neil explores this further and explains how the lack of liquidity of large institutional investors restricts them to buying only large-cap, blue-chip companies, leaving these large investors at a serious disadvantage that small individual investors can capitalize on.Because of supply and demand, the large transactions that institutional investors make can inadvertently affect share price, especially if the stock's market capitalization is smaller. Because individual investors invest a relatively small amount, they can get in or out of a smaller company without pushing share price in an unfavorable direction.In his study, O’Neil found that 95% of the companies displaying the largest gains in share price had fewer than 25 million shares outstanding when the gains were realized. 5. L = Leader or Laggard In this part of CANSLIM analysis, distinguishing between market leaders and market laggards is of key importance. In each industry, there are always those that lead, providing great gains to shareholders, and those that lag behind, providing returns that are mediocre at best. The idea is to separate the contenders from the pretenders.Relative Price StrengthThe relative price strength of a stock can range from 1 to 99, where a rank of 75 means the company, over a given period of time, has outperformed 75% of the stocks in its market group. CANSLIM requires a stock to have a relative price strength of at least 70. However, O’Neil states that stocks with relative price strength in the 80–90 range are more likely to be the major gainers.Sympathy and LaggardsDo not let your emotions pick stocks. A company may seem to have the same product and business model as others in its industry, but do not invest in that company simply because it appears cheap or evokes your sympathy. Cheap stocks are cheap for a reason, usually because they are market laggards. You may pay more now for a market leader, but it will be worth it in the end. 6. I = Institutional Sponsorship CANSLIM recognizes the importance of companies having some institutional sponsorship. Basically, this criterion is based on the idea that if a company has no institutional sponsorship, all of the thousands of institutional money managers have passed over the company. CANSLIM suggests that a stock worth investing in has at least three to 10 institutional owners.However, be wary if a very large portion of the company’s stock is owned by institutions. CANSLIM acknowledges that a company can be institutionally over-owned and, when this happens, it is too late to buy into the company. If a stock has too much institutional ownership, any kind of bad news could spark a spiraling sell-off.William O’Neil also explores all the factors that should be considered when determining whether a company’s institutional ownership is of high quality. Even though institutions are labeled "smart money", some are a lot smarter than others.7. M = Market Direction The final CANSLIM criterion is market direction. When picking stocks, it is important to recognize what kind of a market you are in, whether it is a bear or a bull. Although O’Neil is not a market timer, he argues that if investors don’t understand market direction, they may end up investing against the trend and thus compromise gains or even lose significantly.Daily Prices and VolumesCANSLIM maintains that the best way to keep track of market conditions is to watch the daily volumes and movements of the markets. This component of CANSLIM may require the use of some technical analysis tools, which are designed to help investors/traders discern trends. Conclusion Here’s a recap of the seven CANSLIM criteria:1. C = Current quarterly earnings per share - Earnings must be up at least 18-20%.2. A = Annual earnings per share – These figures should show meaningful growth for the last five years.3. N = New things - Buy companies with new products, new management, or significant new changes in industry conditions. Most importantly, buy stocks when they start to hit new price highs. Forget cheap stocks; they are that way for a reason.4. S = Shares outstanding - This should be a small and reasonable number. CANSLIM investors are not looking for older companies with a large capitalization.5. L = Leaders - Buy market leaders, avoid laggards.6. I = Institutional sponsorship - Buy stocks with at least a few institutional sponsors who have better-than-average recent performance records.7. M = General market - The market will determine whether you win or lose, so learn how to discern the market's overall current direction, and interpret the general market indexes (price and volume changes) and action of the individual market leaders.CANSLIM is great because it provides solid guidelines, keeping subjectivity to a minimum. Best of all, it incorporates tactics from virtually all major investment strategies. Think of it as a combination of value, growth, fundamental, and even a little technical analysis.Remember, this is only a brief introduction to the CANSLIM strategy; this overview covers only a fraction of the valuable information in O’Neil’s book, "How to Make Money in Stocks". We recommend you read the book to fully understand the underlying concepts of CANSLIM.
Posted by Mazharul Islam at
7:31 AM EXIT: mrtq13WHEN TO EXIT ?................TA side for exit...........But before that,let me say this........ Stock market,as you already know,is a matter of uncertainity. What we all try to do in the market is to keep the odds in our favor. And to do that,we implement different techniques-rumors,fa,ta,news,speculations etc.......TA is one of the techniques that Traders use. It has good side,bad side. Like any other aspects of trading methods,TA is sometimes deceptive and unsuccessful in some aspects.Still TA has over everything else,as you can understand yourself now.Think how you used to trade in past,and how you see trades at present.........There are several stages that you are going to go through,after you start your journey in TA world.......One of them is you would sometimes think,you have known all aspects of TA and now you are ready to profit. But later you will realise,your ideas are not enough. Again,you will see,you don't believe TA from the bottom of your heart.So,you don't trade depending on your trade decisions. Again,you will see oneday that you can't just trade without TA. You will lose everything without your chart.You will get addicted to it.You will realise traders around you are simply fools,because they are trading the wrong thing at wrong time.....At a certain level,you will realise that you have to do things on your own.You will then develop your own strategy,though you may test and try to understand other traders's strategy.Then,oneday you would realise,it is your mind that is disturbing you,that should be controlled,and disciplined............Well,you then become a real TA.........Why I have written all those has a reason...........-------------------------------------------------------A good entry will surely give you a lot of comfort. But a good exit will give you a sure fire kind of profit. A planned,disciplined,and tested exit will save you from going to hell........And exit is as important as entry..........And actually,trading can be divided into three catagory from TA's point of view : 1. Entry. 2. Holding. 3. Exit.------------------------------------------------------------------Exit itecan be divided into several things. For example, 1. Stop loss. 2. Trailing Stop.Now Stop loss is your initial exit level,if the trade doesn't work or fail.........Usually,experts recommend 7% to 8% of your invested money in a bought stock to be your stop loss. It means if you have bought a stock with 10,000 taka,you have to sell it at 9300 taka with 7% loss. I have found that 10% loss is a good percent for stop loss in bangladesh.....I personally bet 10% on each trade. So,10,000 taka is my tolerant level for each 1,00,000 taka.Now the question is why such a technique. The reason is simple. As you are a chartist,you know when to enter. So,let's say you entered five times into a stock. You lose 10% in three,but gain 30% in two. So,you are having 30% profit in total. This is an interesting trick.-----------------------------------------------------------------Now the trailing stop/exit part. Well,like I have always said,I use two trailing stops for taking profit. Surely,if you follow trailing stops,you sometimes will have to lose some profit. It is because,you have to give some chance to the stock to go up. So,you have to lose your trailing stops. Please,go back to a stock's chart. And see that if you use tight stops,you will get out of a stock very quickly.You have to aim at big profit. Yeah,"YOU MUST TRAIN YOURSELF TO GAIN BIG PROFIT".The trickiest part of trading is to hold and to take big profit. Sometimes there will be so sever pullback that you will panic.But selling in that panic will deprive you of big profit.......---------------------------------------------------------------------Now let's see a real example. I trade this in real. And I am going to write how I traded here........Entry :There was candlestick buy signal at first. See the yellow box on the candles. Then,there was a buy signal by the software. I entered the later day at 1483 taka. I went on buying on later days.My stop loss was 10%.And later days,I saw I didn't need that stop anymore. Because I was out of risk............Exit:Now I got concerned around 2306 taka,though I was "trying" to follow the long term trailing stop. Because market went gloomy at that time. And ABBANK was at resitance point. So,I sold more than half of my holdings following the short term trailing stop,which is blue here.............Then,I rentered in ABBANK at 2370 taka,following another buy signal,volume and breakout. And again,I was following the sea green color,which is a long term traling stop line. However,AB again lost its strength around 3000 taka and started to create red candles.........So,I exited at around 2900 taka. This exit was based on not only trailing stop,but also on Candles,volume! I circled my exit in white box..............But see next buy signal. I entered into it,but realised that it was a wrong entry.I tried to exit,but had a lose of 8%. I took the lose. And see AB's chart of later part.It feel nearly 30% more............-----------------------------------------------------------------------------------Now when do you take profit? The simple rule is going with the Trailing stops,trading with your own nature,and staying with the trend.........Trend is a very important factor. As long as trend is up,you should be very aggressive. But when the trend is downward,you must be watchful,cautious........There is a very important thing that you have to discover. And that is nature. You would notice there are some traders that don't have difficulty holding a stock for long.But there are some that have real difficulty to hold a stock for long.They are comfortable holding stocks for short time...........Find out your nature of holding...............In short,let's summerise :1. Don't base your profit taking completely based on candlestick.But be on alert when candlestick sell signal appears.2. Always be prepared to take some profit at resistance level. But don't think resistance level is the end of everything.3. Always be watchful at fibonacci levels.Because prices do change direction at fibo levels.4. Always stick to your trading plans,whatever happens..5. Always believe in Trailing stops,even if they look ridiculous,absurd and confusing.6. Always develop your own style of trading,and believe in it from the bottom of your heart.7. Always try to buy a stock at the bottom,not at the top(whatever happens),unless there is clear breakout with high volume.8. Give a stock time to give you profit.9. Be on alert when a stock gets oversold by indicators like Stochastic,RSI,MACD. But don't sell at oversold situation,unless you are too confirmed of reversal.Use Oscillators for enterting a stock most of the time.10.In the end,again,believe in trailing stops.They do work.11. Practise,practise and practise in past of stocks. Give yourself time to understand what is going on. Oneday you would realise you are becoming like a robot,machine in trading. And that is a good sign.
Posted by Mazharul Islam at
7:31 AM HEIKIN ASHI: mrtq13Heikin Ashi is an averaged candlestick chart. The high,low,open,close of normal candlestick is averaged in Heikin Ashi chart. But why! There is a problem with candlestick-the problem with feeling smoothed. Look at the chart of normal candlestick and Heikin Ashi charts. You will see whereas Trend,support,resistance are clear in Heikin Ashi,you will have hard time to understand those in normal candle charts..........Besides Heikin Ashi has a trend showing feature,which normal candle doesn't.......I have one modified Heikin Ashi chart which changes its color when trend change.All you have to do is to enter when the color is green,and exit when the color is red. Easy.......Normal candle has small sentiment or trend showing capability.Not long.........Look at a candle chart,you will see a lot of red candles,which will tell you to get out of a trade early.But you will find that it was not an exit,as that stock later went up.So,you fell into whipsaws........To get rid of this kind of whipsaws,Heikin ashi was created,and also has been created the Trailing Stop method......When combined,these two can keep you into a trade very very long time without getting you shaken out...........Remember to stay alive in the market,and to really get profit,you will have to hold on to a stock as long as it is in uptrend.............I keep all type of charts in my soft. But I have different strategy for different situation in DSE. For example,I know that when there is compression pattern in Heikin Ashi chart,trend is going to change. This compression pattern was used to trade both Goldenson and 1stNRB and were profitable.........However,you can't interpret the candles of Heikin Ashi as normal candles.There is hardly any evening star candlestick formation in Heikin Ashi candle.But we actually don't need that too......The more experienced you get on Candlestick technique,the more skill you will be to quickly understand what is going on........Anyway,for that you need to practise.And using Bar Replay,you can practise and learn...........
Posted by Mazharul Islam at
7:31 AM EMA TRADING SYSTEM: mrtq13This is a trading system that I developed nearly six months ago. Let me explain what a trading system is : A trading system generates buy/sell signal on its own.But the rules to generate buy/sell signals are given by the trader.This trading system of mine is based on Moving Average Crossover,which is famous trading system technique. It is a trend trading system,not a breakout trading system. I have another trading system,which is based on Donchian breakout trading system. I like it a lot............This trend trading system is a work in progress. There are some good sides in it,and also some bad side. To talk about the bad side,it performs poorly in downtrending market. In a downtrending market,it gives wrong signals. But in a uptrending market,it generates nice signal.You will have to use some other methods like patterns,trends with this method to enhance its profitability.I rely completely on Chandilier exit for exit.This is basically for short term trading. However,mid term trading signal is also generated by this system..........There are some good trades that it generates.For example,if you see ABBANK,you will be charmed to see that the signal gave nearly 250% profit from may to aug of this year.....I am having difficulty to set the position of Arrows with the Buy/sell text on Heikin Ashi charts,as Heikin Ashi has different format.The Arrows' position fit well with normal candle charts. I hope in near future I will solve the problem....
Posted by Mazharul Islam at
7:31 AM FALLING MARKET: mrtq13FALLING MARKET:Stocks don't fall fore ever. They will stop somewhere and start to either rise or consolidate. Their stop is our entry preparations. Somehow DSE itself will alarm us of the stop. It is wise to follow DSE itself. Because its main index actually shows the first signal......Interestingly,market is actually going into buying mode. The prices are falling. What does that mean? They are becoming oversold,undervalued to big traders/investors. And they will come back to buy after a certain level of fall. And they start to buy,stocks will try to stop their downfall and consolidate. So,that's a nice time to enter.......We will just have to catch the move....Secondly,have you noticed that not all stocks start to move together. When the market starts to go up,enter into the ones that are in downward situation and consolidating....They will move after other stocks have moved higher........One thing you guys miss. Big traders don't hold on to any stocks for a long long time. See around you. Who are the guys in profit. Those big traders. And how are they profiting. By selling...By buying....What does that mean.....!!! Follow them.......
Posted by Mazharul Islam at
7:31 AM
