GUIDELINES TO MEMBERS28 Aug 2014 at 05:55 pm

By S. P. Tulsian

 

We have seen many of our members, as also traders in the market, losing money. If we lose money in this bullish market also, it will be difficult for us to make money ever. We need to respect and obey some rules and techniques in this market.

 

Why do people lose money in the market? Some reasons:

 

  1. They go overboard in Futures & Options (F&O) by creating huge positions, which largely results in losses.

 

  1. Investment calls are converted into trading calls, that too by taking big positions in F&O. By doing this, one can hardly make money.

 

  1. Some members are seen buying huge quantity of Options, presuming that they are safe. This is a myth.

Options generally rule at a premium of 3 to 6% at the start of each series, on either side viz. CE and PE. This leaves limited room for upside and hence gives losses in 90% cases. We need to be selective while picking few such calls. Also, many of them are seen taking intraday (ID) view on Options in stocks and sectoral indices, which is difficult to yield gains, due to limited time horizon. If someone is buying Options, he/she must remain prepared to lose it full, as well, which can really be painful.

 

  1. Due to gap up and gap down opening, ID trading potentials are seen very low in this market. Still, we see many of the traders playing ID only, by which, it is difficult to make money, in our opinion.

 

  1. Even for investors, they seem to have limited time horizon, during which, one gets caught at the end of their time horizon. So, if you are a ST investor look for time horizon of 1-3 months for a gain of 5-10% and exit in this period, without waiting till end of your time horizon. No one can time the market!

 

  1. Traders and investors are generally seen chasing momentum and buying stock after it has seen big run up at the upper levels, or seen selling the stock after it has corrected and get caught at the wrong end.

 

  1. Pure technical view can never work in this market, as technical experts only extrapolate the present trend. They see bullish trend for a rising stock and vice-versa.

 

  1. Improper allocation of funds is seen to be landing investors in losses. One must allocate over 50% of the investible funds in blue chip or frontline stocks, while 30% in mid cap and 10% in small cap. Infact, we see investors selling TCSs of the world and buying the likes of Roltas in the respective sector. This imbalances the quality allocation within the portfolio.

 

  1. In a bull market, traders start expecting 10 to 20% return in a week or a month, which is not possible, as it happens only with a few stocks. So, set reasonable expectation of 3 to 5% as a trader in a month.

 

  1. Investors become greedy and are not able to sell a rising stock and get fearful and not able to hold a falling stock, without considering its fundamentals. Also, everybody wants to buy in upper circuit (UC) and wants to sell in lower circuit (LC). One must control this instinct.

 

  1. Habit of rolling over trading position beyond one series is seen suicidal and loss making. Still, we see traders doing this for months at end. Also, sectoral indices need to have positional view, with position in small lots, if money is to be made. No sector or entire market can remain bearish or bullish for the whole F&O series.

 

Under the given circumstances, we advise our members to adhere to the following guidelines:-

 

  1. Request to read guidelines given with each section (of the Member Zone).

 

  1. Avoid trading in F&O for stocks, on which investment view and call is given by us.

 

  1. Restrict trading in F&O, in not more than 2 stocks, with not more than 2 lots for each stock, depending on your risk profile.

 

  1. Trade in Options to as little as you can,.

 

  1. Avoid taking huge position in sectoral indices, especially in Options, as they are having poor track record of giving profits.

 

  1. Avoid ID view on all the trades.

 

  1. Define yourself as a trader and investor with time horizon and look to stick to that, for each stock / trade.

 

  1. Keep booking gains of 3 to 5% in trading over one month and of 5 to 10% in investment over and above 5 to 10%.

 

  1. Even while trading in Futures, avoid taking only technical view and look to combine it with fundamental view as well.

 

  1. Avoid BTST (buy today sell tomorrow) or STBT (sell today buy tomorrow) trades, as same trend is not likely to continue next day as well.

 

  1. Avoid borrowing money above 10% per annum to invest in the stock market.

 

  1. Avoid availing T+5 margin funding kind of facilities, which is infact a big trap for the retail investors. This facility is seen profitable for only for NBFC and brokers.

 

  1. If a trade is executed on our call, stick to the given time horizon in the call.

 

Instances of Greed:-

 

  1. Marico Kaya – Stock moved from Rs.280 to Rs.590 in the month of August. Till yesterday (Wednesday 27th August 2014), all experts on channels were giving buy call on the stock and everybody wanted to buy it. Reason was that it was hitting UC. Today (Thursday 28th August), no one is even talking of it, because it is available now (not locked in circuit). Fundamentals do not justify the stock to rule at Rs.590.

 

  1. Force Motors – We gave buy call in Stock Recommendation (SR) column (of Member Zone) on 14-08-2014 at Rs.684 and for whole of that day, stock was ruling below Rs.690. Nobody shown interest to buy it on the recommended day. On 18-08-2014 (the next trading day), it moved to Rs.740, and some interest came in from buyers. On 19-08-2014, it moved to Rs.855 and many members were keen to buy it. Now, it is ruling at Rs.790 and no one is interested in buying it.

 

  1. Indiabulls Real Estate – We gave buy call in SR at Rs.88 on 11-07-2014 and since then it has not been moving up. Many members have seen created huge long position in futures and incurred losses. Typical case of an investment call converted into a trading call!

 

Conclusion -

 

Our sincere advice is to -

 

  1. Curtail F&O trading, as much as you can.

 

  1. Return Expectation: Expect 36% annual return as an investor or 5% monthly return or 10% in 3 months.

 

  1. Asset Allocation: Invest more than 50% in blue chip and quality stocks. Also, don't put more than 5% in 1 stock and not more than 15% in a single blue chip as well.

 

  1. Tax Planning: Look to avail long term capital gain as well, by holding quality stocks for 1 year and above.

 

  1. Investments: Develop conviction and patience on investments.

 

  1. Trading: Avoid greed on trading and ST calls.

 

 

Feedbacks


Jaipal Singh Datta (Guest)
24 Nov 2015 at 03:45 pm
I trust you. 
bharat l dave (Guest)
24 Nov 2015 at 12:30 pm
good advise.....sirji 
Rajeev Mahajan (Guest)
15 Aug 2015 at 04:35 pm
Awesome advice, very helpful insights and an eye opener. Wish this advice was given to me by someone earlier, would have save d myself a fortune. 
Mayur K Upadhyay (Guest)
10 Aug 2015 at 06:45 pm
Sirji Only You can give such a true advise. Its a eye opener. Thanks 
bhushan1978 (Guest)
30 Dec 2014 at 10:22 am
500% correct analysis.So sir please help the members in becoming the investors not traders (by investing merely for re 1 or 2 re gain).  
D.Jain
17 Oct 2014 at 12:06 am
Sir, Please write one more article for the medium and long term investment .  
DINUBAPAT
16 Oct 2014 at 12:24 am
Sir,This is great article. Must read for all type of investors. Request you to write one more articl e for medium to long term investor. regards, Dines h  
switchindia
27 Sep 2014 at 01:20 pm
Your works ' if u can't make money in this bull market u can't make for ever ' is eye opener for new and very old members als o. rgds switchindia  
Vikas.m.garg
05 Sep 2014 at 12:45 pm
If following someone advise then also stick to his/her rule and advise. No one can be 100% right at 100% time. 
joshi (Guest)
02 Sep 2014 at 11:24 pm
sorry to say but I stopped my subscription because i needed fundamental ana lysis & advisor but saw sir becoming technical expert which I didnt want to indulge in to.Its honest opinion sir.  
sonu (Guest)
02 Sep 2014 at 05:50 pm
in this bull mrkt adviser also make some wrong sug gestion u also given call on ongc at 465,triveni a t 34, siemens at 970, skil at 95,india bull at 88,mm finanace at 290 who made position on this share they r waitting for buy price not for trgt u give 150 call in month member become confuse as where to work what to buy i requset u to u also chang some stratagy to give call  
AVTAR
01 Sep 2014 at 10:32 pm
Really it is eye opener to all type of inveystors,thanks to tulsian sir and team. 
revgkargies
01 Sep 2014 at 01:01 pm
good note, thanks.. i think GS,PP,PS,SR should follow asset allocations recommended given 50% to blue chip. also not to forget that ibreal had come in OC, FC. it would be great if you could close the calls, like you send a summary on SR by email. This is a key for our members success through learnings  
Ashok Manek (Guest)
01 Sep 2014 at 11:13 am
very nice explanation Thanksssssss  
jhasumit82
01 Sep 2014 at 09:30 am
what a great explanation of the behaviour of the tradder.  
(Guest)
01 Sep 2014 at 07:33 am
Your thoughtfulness for all of us is really admired and appreciated.Many Thanks for the same... 
rajkamal
31 Aug 2014 at 11:38 pm
if anybody seriously follow these rules 90% of their problem is over. 
n364
30 Aug 2014 at 08:08 pm
These sujjestion excilent for investor.  
ramesh (Guest)
30 Aug 2014 at 05:26 pm
we never meet but throgh TV and this site we meet.I never loose money inthis market may be the gain small.my sincere thanks to you for your hard work.  
Vishwas patil (Guest)
30 Aug 2014 at 01:32 pm
Nice article if you follow the above rules you will never lose your money in market 
RKRISLC6
30 Aug 2014 at 01:09 pm
Very good practical advise. Liked it. At the end of month Making money as a ST investor for quite so metime now,Not made money as trader.  
switchindia
30 Aug 2014 at 11:25 am
must for every investor or trader irrespetive of his experience in the stock market. An article to be preserved and read again and again particulary those who incurr losses in trading/investing. Righ tly said if we cant make money in this bull market , then it is better to s tock investing /trading in stock markets rgds happy ganesha chaturti to all members of pre family. 
manojsen38yahoo.com
30 Aug 2014 at 09:37 am
SIRJI THIS WILL BE LOT MORE BENEFICIAL IN THE CURRENT MARKET. 
VH RAO (Guest)
29 Aug 2014 at 08:05 pm
I am in the market for 4yrs now and did not loose money overall (not in individual trades). The reason is I never trade ID/GOd. Thank you for advising systematic practices to make money in the market.  
tukitakionline
29 Aug 2014 at 07:11 pm
Must Read One, Who Does Not Read SQ Section Regularly. It's a Compilation Of Daily Advices Given Us By SIR.  
usdeshmukh13
29 Aug 2014 at 06:38 pm
Excellent cover feature Sirjee...  
sanvi
29 Aug 2014 at 03:10 pm
sir,i have invested entire amount in equity only as per your advise. i bought one lot of one share in future.iam getting the profit as per your expectations in time horrison.i am able to concentrate in my profession as a gynaecologist because of investment in equity.thanks for excellant advise giveny  
shreeumiya (Guest)
29 Aug 2014 at 02:58 pm
The only Person in Stock Market who thinks of Retail and small investores everytime..alwz.Really everyone needs learn a lots from you sir.. 
NITINSNA
29 Aug 2014 at 02:04 pm
The write up clearly summarises the goof ups the members make while in stock market and suggests the right ways. Very good.Su ch periodical doses are indeed necessary. 
firoz hajiani (Guest)
29 Aug 2014 at 01:34 pm
The only thing which no one has said is "MAY GOD BLESS YOU WITH MORE KNOWLEDGE'  
rajeshguptaca
29 Aug 2014 at 01:22 pm
excellent message. Any recomended share gives profit to many of us as well as loss to some among us. The deciding factor rema ins our approach. 
gopalk19
29 Aug 2014 at 12:56 pm
This all-time great article deserves to find a place in a text-book on 'Trading'. Now we know why you stand so tall amongst the crowd of so called experts.  
Gopal (Guest)
29 Aug 2014 at 11:40 am
This all-time great article deserves to find place in a text-book on Tradin g. This article alone is enough to prove that you stand tall amongst the crowd of so-called experts.  
srdg
29 Aug 2014 at 10:13 am
Guruji, Yeh cover feature vakaee EYE OPENER, ENLIG HTNING THE CORRECT PATH and WELL WISHER for all our PREMIUM FAMILY ! " GREAT EFFORT " as a "GURU". I bow for you.  
amit.naresh
29 Aug 2014 at 10:12 am
Thanks for your guidance sir, will always need it.  
Leocap
29 Aug 2014 at 09:58 am
Excekkent, Mr.Tulsian. You are a friend, philosopher and a guide. I have kept a copy in my desk to go through this frequently lest I forget the basics . Many thanks. 
ameyared
29 Aug 2014 at 08:00 am
The best advice for sure shot profits! 
rjkmama
28 Aug 2014 at 10:38 pm
Sirji,really Exellent!!!massages for one who lose even in this bulls run!!!by trading!!!T&R 
subbareddy48
28 Aug 2014 at 10:25 pm
Excellent message for the members.The three exampl es of instances of gree are are superb.One should read again and again and should give serious thought before trading/investing.We should thank mr.tulsian for the message .Hope all of us benfit from the cover article 
subbareddy48
28 Aug 2014 at 10:24 pm
Excellent message for members who should read and think well before trading/Investing.The examples of the three instances of Greed are superb.Hope our tulsian family of trader s and investors will benefit.We should thank Mr.Tulsian for this cover article.Good Luck for all . 
Suresh (Guest)
28 Aug 2014 at 09:36 pm
Candle stick, price action, wave movement along with little fundamentals can groom into get investor / trader. No need of any armchair analyst  
NIRMAL_LICKNH
28 Aug 2014 at 09:34 pm
I feel proud being family member of SPTulsian on s uch a supreb article on trading!  
Neeraj Shukla (Guest)
28 Aug 2014 at 09:08 pm
Thanks, I would keep it as guidelines for all I do in market  
Tarun_1984
28 Aug 2014 at 09:08 pm
This is akin to ghram and Dodd for investors- Buy Quality, Manage Risk Properly. Would add that any expectation above 25% is simply not achievable over very long period 
modirajiv
28 Aug 2014 at 09:06 pm
putting all your wisdom, which I keep reading in SQ, as an article only shows your genuine concern for all members to have a profitable association with you. Thankyou for your efforts.  
pdubey1908
28 Aug 2014 at 08:53 pm
Res. Sir U r really great person, this article wil l help to members how to make money in bull market.Thanks & God bless U. Rgds P.K.Dubey 
artishah
28 Aug 2014 at 08:22 pm
Thank You Mr. Tulsian. Excellent ground rules provided to be in market.  
suren
28 Aug 2014 at 08:18 pm
thanks for the guidance sir. will follow it  
DRSINGH
28 Aug 2014 at 08:12 pm
very good 
venupani
28 Aug 2014 at 07:34 pm
request to members to follow the guide lines. same happened for me. i lost nearly 15 lacks in futures and options. 
kinshuk300
28 Aug 2014 at 07:32 pm
Truly amazing synopsis of hard reality!  
Kanchan_Sharma
28 Aug 2014 at 06:49 pm
Happy Ganesh Chatuthi....Thanks sir for wonderful advice on cover page. 
santoshsohoni
28 Aug 2014 at 06:47 pm
Article is an eye opener. While giving any call; P lease categorise the stocks in categories like Bluechip Mid cap Small cap to enable us to allocate funds as per your gudile nces9  
Saishil H Shah (Guest)
28 Aug 2014 at 06:41 pm
Awesome Article... Must read for ALL 
sham632002
28 Aug 2014 at 06:25 pm
R/Sir, Excellent message to all members, which wa s not possible thru Stock Query ? Happy Ganesha Ch atutharthi. Members shud take a print out and keep in pocket.Rgds.  
spchitalia
28 Aug 2014 at 06:23 pm
Timely article. I can say from my personal experie nce that the rules, however well you know them, are difficult to follow "in the heat of the moment". Now I realize why many s ay that trading/investing requires a very high lev el of discipline. I guess we get disciplined only with time and after loosing some money. I am still trying .....  
jatinprabhu
28 Aug 2014 at 06:20 pm
Sir how much u care for us, thank u sir , i think it is all bout mind set, sometimes an investor wil buy it but keep lookin a t prices daily witout conviction,n sometimes a trader wil buy positionally n wait patiently for d target, sir i feel an fno trader who plays wit sufficient margin n has conviction in ur calls can also make money,