FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka


Submit PostSubmit Post
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post



Latest topics

» DIPD/HAYC/HAYL
by stocknoob Today at 6:55 pm

» GLAS will be winner with Super Gain.
by stocknoob Today at 6:20 pm

» Growing Fear
by Mr. X Today at 4:55 pm

» ???? අප්‍රේල් 16 ???? මේ දින 3 කෙටි සතියත් කොළපාටින් අවසන් වුනා
by Wickyz Today at 12:54 pm

» විජේදාසගේ... voice cut ප්‍රතිඵල
by Mr. X Today at 12:40 pm

» LDEV LDEV LDEV
by Eranga87 Today at 10:27 am

» No trader can flee from making a mistake. It’s just that you need to be careful about not repeating your mistakes.
by Mithooshan Today at 7:42 am

» Daily Foreign Transactions
by Pradeep90 Yesterday at 8:33 pm

» SWISSTEK (CEYLON) PLC (PARQ.N0000)
by Chithi Yesterday at 7:45 pm

» ROYAL CERAMICS PLC (RCL.N0000)
by Jana Yesterday at 6:14 pm

» US dollar trading lower, euro near new high
by target1 Yesterday at 1:38 pm

» LANKA ALUMINIUM INDUSTRIES PLC (LALU.N0000)
by Equity Win Yesterday at 1:23 pm

» LANKEM DEVELOPMENTS PLC (LDEV.N0000)
by Thushara Ayya Yesterday at 11:59 am

» RAIGAM WAYAMBA SALTERNS PLC (RWSL.N0000)
by Eranga87 Sun Apr 18, 2021 4:12 pm

» CIC HOLDINGS PLC (CIC.N0000)
by abey Sat Apr 17, 2021 9:07 pm

» First capital holdings CFVF.N0000
by invest thinker Sat Apr 17, 2021 4:46 pm

» Lanka Walltile PLC Investment Case
by judecroos Sat Apr 17, 2021 8:55 am

» Which is the best at current market condition ? ( At least 30% within 30 Days)
by judecroos Sat Apr 17, 2021 8:39 am

» Big opportunity in Kegalle Plantations
by EquityChamp Fri Apr 16, 2021 2:58 pm

» If you buy a stock that’s not going up in price, you won’t make any money. STOCK market for beginners
by dayandacool Fri Apr 16, 2021 11:31 am

EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube

CHRONICLE™ NEWS PRODUCTS

FINANCIAL CHRONICLE™

Views & Reviews, Analysis, Evaluations, Discussions, Gossip and Hot Tips relating to Sri Lankan companies listed on the Colombo Stock Exchange (CSE)
Contribute




DAILY CHRONICLE™

Latest news and articles published in Newspapers, Websites, Blogs and other online news sites relating to business and investments in Sri Lanka
Contribute



ECONOMIC CHRONICLE™

This is a section that provide news, views, analysis, predications relating to Political and Socio-Economic factors and how such activities affect the Stock Market and other economic activity of the Country.

Contribute




EXPERT CHRONICLE™

This is an exclusive section for Expert Articles which will help member to share knowledge through comments and responses of the members. All members are allowed to reply and make comments to these articles.

Contribute


Submit Post


CHRONICLE™ YouTube

Youtube Videos and other visual presentations relating Stock market and other investment advise submitted by members or other contributors.

Contribute


Submit Post


කොළඔ කොටස් වෙළඳපොළේ වංශකථාව
කොළඔ කොටස් වෙළඳපොළේ ලැයිස්තුගත සමාගම් කොටස් ගැන තොරතුරු¸විශ්ලේෂණ¸සාකච්ඡා¸ කටකතා¸රසකතා යන සියල්ල අපේම සිංහලෙන් කතා කළ හැකි ‘කතා මණ්ඩපය’

Contribute

Twitter Feeds
POPULAR COMPANIES
A

ABANS ELECTRICALS PLC

ACCESS ENGINEERING PLC Hot

ACL CABLES PLC

ACL PLASTICS PLC

ACME PRINTING & PACKAGING PLC

AGSTAR PLC

AITKEN SPENCE HOTEL HOLDINGS PLC

AITKEN SPENCE PLC

ANILANA HOTELS AND PROPERTIES PLC

ARPICO INSURANCE PLC

ASIA ASSET FINANCE PLC

ASIA CAPITAL PLC

B

BAIRAHA FARMS PLC

BALANGODA PLANTATIONS PLC

BIMPUTH FINANCE PLC

BLUE DIAMONDS JEWELLERY WORLDWIDE PLC

B P P L HOLDINGS PLC

BROWNS BEACH HOTELS PLC

BROWNS INVESTMENTS PLC

C

CARGO BOAT DEVELOPMENT COMPANY PLC

CENTRAL INDUSTRIES PLC

CEYLON COLD STORES PLC

CEYLON GRAIN ELEVATORS PLC Hot

CEYLON TEA BROKERS PLC

CEYLON TOBACCO COMPANY PLC

CHEVRON LUBRICANTS LANKA PLC

COLOMBO FORT LAND & BUILDING PLC

COMMERCIAL BANK OF CEYLON PLC

CITRUS LEISURE PLC Hot

COMMERCIAL CREDIT AND FINANCE PLC

D

DANKOTUWA PORCELAIN PLC

DFCC BANK PLC

DIALOG AXIATA PLC

DIALOG FINANCE PLC

DIPPED PRODUCTS PLC

DISTILLERIES COMPANY OF SRI LANKA PLC

DUNAMIS CAPITAL PLC

E

EAST WEST PROPERTIES PLC Hot

EASTERN MERCHANTS PLC

EXPOLANKA HOLDINGS PLC

E-CHANNELLING PLC

F

FIRST CAPITAL HOLDINGS PLC

G

GALADARI HOTELS (LANKA) PLC

GUARDIAN CAPITAL PARTNERS PLC

H

HATTON NATIONAL BANK PLC

HAYLEYS PLC

HAYLEYS FABRIC PLC

HAYLEYS FIBRE PLC Hot

HEMAS HOLDINGS PLC

HIKKADUWA BEACH RESORT PLC

HNB ASSURANCE PLC

HVA FOODS PLC

J

JANASHAKTHI INSURANCE COMPANY PLC

JOHN KEELLS HOLDINGS PLC Hot

JOHN KEELLS HOTELS PLC

L

LANKA ASHOK LEYLAND PLC

LANKA IOC PLC

LANKEM CEYLON PLC

LANKEM DEVELOPMENTS PLC

LAUGFS GAS PLC

LAUGFS POWER LIMITED

LOLC FINANCE PLC

LOLC HOLDINGS PLC

LUCKY LANKA MILK PROCESSING COMPANY PLC

M

MELSTACORP PLC

N

NATIONAL DEVELOPMENT BANK PLC

NATION LANKA FINANCE PLC

NESTLE LANKA PLC

O

ORIENT FINANCE PLC

OVERSEAS REALTY (CEYLON) PLC

P

PANASIAN POWER PLC

PEOPLE'S LEASING & FINANCE PLC

PIRAMAL GLASS CEYLON PLC

PRIME FINANCE PLC

R

RAIGAM WAYAMBA SALTERNS PLC

RENUKA AGRI FOODS PLC

RENUKA CAPITAL PLC

RENUKA HOLDINGS PLC

RICHARD PIERIS AND COMPANY PLC

RICHARD PIERIS EXPORTS PLC Hot

ROYAL CERAMICS PLC

S

SAMPATH BANK PLC

SEYLAN BANK PLC

SIERRA CABLES PLC

SINGHE HOSPITALS PLC Hot

SMB LEASING PLC

SOFTLOGIC HOLDINGS PLC

SOFTLOGIC LIFE INSURANCE PLC

SRI LANKA TELECOM PLC

SWISSTEK (CEYLON) PLC Hot

T

TEEJAY LANKA PLC

TESS AGRO PLC

THREE ACRE FARMS PLC

TOKYO CEMENT COMPANY (LANKA) PLC Hot

U

UNION BANK OF COLOMBO PLC

V

VALLIBEL FINANCE PLC

VALLIBEL ONE PLC Hot

VALLIBEL POWER ERATHNA PLC

W

WASKADUWA BEACH RESORT PLC


You are not connected. Please login or register

FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » A Simple Method for "Stress Free" Consistent Profits

A Simple Method for "Stress Free" Consistent Profits

Go down  Message [Page 1 of 1]

hunter

hunter
Moderator
Moderator
Every now and then, in the forum, we see posts like;
'Will the market go up soon?'
'Why has it come down?'
'Is this a crash?'
'Will these shares go up?'
'Should I hold these shares any longer?'
'Oooops I sold it too soon!'
'Sh*t I missed the low price to buy'
'I bought these, what should I do now?'
'Those manipulators robbed me!' ...........................Exclamation Question Exclamation 
affraid 

the list is endless.
The reason, as I figure out, for all these outcomes is, the trading related (psychological) stress; and associated trading mistakes.

In my case, I have been in all of those situations, more than anybody in the market: clown  
But not anymore!!
Cool 
To help anybody who wants to improve consistency in trading, I thought of sharing a technique which helped me to improve myself.

This is a very simple position sizing technique. Intended to bring the 'mentality' form novice stage to consistency. However, when used intelligently, it can be used as a stand alone trading plan to beat the market as well.

**** A word of caution: every method has its limitations as well as favorable conditions. So there is no 100% guarantee that this will work if used "blindly".

----------------
There are few "so called bad" practices in the market quite similar to what I am going to describe, such as;
Averaging Down/ Scaling out/ Market neutral trading, Non directional trading, martingale, Grid Trading etc.
But non of those are exactly matched this method so I called it by a new name; that is

Constant Average Position Value Method.

I will explain it through an example below.
The language may sound a little 'childish' since this will be done keeping a novice trader in mind; nevertheless, I am sure, some experts may also find  things interesting.

Here we go........

The first step of 'Constant Average Position Value Method' is to find which stocks to invest in.

1. Screening and short listing:
You can decide to select any share you like. However, for better safety, I recommend selecting a corporate with a stable business; witch may not go busted within next couple of years.
For better performance, pay attention to counters which looks like to undergo some price fluctuations ( more that 20~30%) within next 3~4 months.
('Cause if price never moves, we will never make any gains. Isn't it obvious?)

OK. after selecting a share, we need to consider engaging (buying).
BTW. If you wish, you can use any fundamental analysis you like to select the stock.

2. Look for a signal to buy:
What I mean here is, deciding on a price at which to buy the shares. There is no hard and fast rules. The idea is to have an expectation that the price will appreciate by about 25% in near future (few months). If you like, you are free to use your favorite technical analysis methods here. If not, or if you are too excited, go ahead and buy now! : no price is too high to buy.

3. How much?
Now we have selected a share and decided at which price to buy. But how much should we buy? Now comes the most important part.
Before coming to this stage, you need to decide upon your 'risk capital' on one counter (stock). That means, how much you are ok to loose on one stock. In other words, let's say, today you buy this stock; then tomorrow you will hear that the company has closed and you would loose all you money invested in it: so how much would not make you uncomfortable?

Fine! now let's say you're ok to let go Rs 20k on this stock.

Then, at this stage use only 50% of that amount. That means use Rs 10k to buy shares at our decided price.

As an example; let's say your selected share's price is Rs 100. Then use Rs10k to buy 100 shares. Now, your 'position value' is Rs10k.
OK?
(Note: for the time being let's ignore the commissions and other overhead charges).
Now we have bought shares; what next?

4. Leg jump.
In this method, we need to decide on a leg size. That means how much the share price should move before we take the next action.
Let's consider a 25% leg size.

So we will wait until the price moves a 25%; Up or Down.

If the price moves 25% up before it hits a down leg, and if your target is a 25% overall gain, then you're free to sell the whole quantity and enjoy; and look for the next stock.

But, Let's imagine the market moves down and the price goes down 25%.
Then, you will invest 25% more so that the position value again becomes your original value of Rs10k.
In other words, if the new price is Rs80, you will buy 25 more shares so that your new position value is Rs 80*(100+25) = Rs 10k.
Then, if the price moves down again 25%, you invest 25% more.
On the other hand, If the price goes up by 25%, you sell 25% of shares, which will be your PROFIT!
So do like that whenever there is a 25% price movement; UP or DOWN!
And enjoy your stress free trading!!

Constant Position Value:
Essentially, at the end of each 25% price movement, you either buy or sell a portion of shares and make the value of the remaining lot a constant.
There is no panic since we are ok with the market to move up or down. There is no regret since we always have enough shares in our position for 'another more' 25% profit.
We do not care what our original buying price was since we always use our last 'action price' as our new reference price.

Sound interesting?..

-------------
In this method, if we use 25% leg size, 4 swings will give us a 25% of overall profit (out of our first investment).
as I have observed, if we select the right shares, we can gain about 20~40% within a year.
You are free to select any leg size to match your taste. Higher the leg size lower the number of swings needed but longer the time to wait.
Rolling Eyes 
After all, the main point here is not the profits, but learning to eliminate trading stresses and funny mistakes.
Wink 
Pls tell me about your views ; I like to learn any alternative ideas.



Last edited by hunter on Mon Nov 18, 2013 10:45 am; edited 2 times in total

Kithsiri

Kithsiri
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Thanks for sharing.

nihal123

nihal123
Manager - Equity Analytics
Manager - Equity Analytics
Thanks Hunter
very simple Very Happy 

kavi84


Senior Equity Analytic
Senior Equity Analytic
Thank you. indeed it's simple.

Jake Sully

Jake Sully
Manager - Equity Analytics
Manager - Equity Analytics
Thanks and appreciate.
One of the disadvantage is frequent commission expense to the broker.
But still this is a good one for a beginner.

hunter

hunter
Moderator
Moderator
Thanks for the comments.

Regarding brokerage, according to my calculations. it's true there will be frequent commissions; but the total value of the commission can be relatively far less than usual.

I am sure, most of the brokers will hate their clients using this. (At least my one does!)

Jake Sully

Jake Sully
Manager - Equity Analytics
Manager - Equity Analytics
To make an eventual profit out of this, the share price should move in an upward zigzag and not horizontal zigzag.
Brokers shouldn't be a problem if you are trading online. Of course they shud be happy.

UAEBOY

UAEBOY
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Thanks lot Hunter.....Very useful Strategy... study

kalum


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Thanks Hunter.
It's a kind of interesting. Im not sure if get the whole idea. Even this strategy people may find difficulties in phase 1 and 2?

BTW, can you please explain below scenario?
for ex: I am thinking to buy share x at discounted price say 10. i have 20k and i have invested 10k @ x = 10, 1k shares.
then it drop to 9 and within next 6 months it's never given a good return, say it is playing 9-10.5 range.
then trader get confuse whether to sell buy more or hold.

in the current market, most shares are undervalue as per my view. and most of the shares we have invested not given expected return but some were not fallen as well.

my current strategy more in to identify "swing" shares parallel to investing shares. "swing" means that shares tend to have "trade-able" move for given short period. there i am following steps similar to you and taking risk at buy on certain level and meanwhile give up at margin profit. but in same time if it is a solid and fundamental share i tend to reserve some profit in to it and try to increase the volume.

to take profit, you need to kit with the share every day. even there is a price drop, analyze and try to get some advantage in intra-day price moments.

This is a hard game and very time consuming and very less profit. but for few shares that i have tried so far succeed. some are yet to success since no much moments as expected. However it didn't occur any realized-loss yet. It is not bad if you enjoy maths, so you can be busy whole month do your own analysis Smile


hunter

hunter
Moderator
Moderator
@kalum wrote:Thanks Hunter.
It's a kind of interesting. Im not sure if  get the whole idea. Even this strategy people may find difficulties in phase 1 and 2?

BTW, can you please explain below scenario?
for ex: I am thinking to buy share x at discounted price say 10. i have 20k and i have invested 10k @ x = 10,  1k shares.
then it drop to 9 and within next 6 months it's never given a good return, say it is playing 9-10.5 range.
then trader get confuse whether to sell buy more or hold.

Thanks for the comments.

I guess your question is what we should do if the share price not moved; is it?

In my view, if a share price is not moving, we cannot do any successful trading. So my strategy is to consider more than one share (counter) concurrently for trading. In that way, if one share doesn't move some other will.

Furthermore, what I have suggested rely upon certain assumptions to work;
1. When the price goes down the chances are higher to bounce back up. In other words, the share becomes more attractive at a lower price hence more investors are attracted to it.
2. The prices will not go down indefinitely without giving some up movement.


Note:
This method should never be used in high leveraged environments with possible long trends in negative directions (Such as Forex Trading)

sriranga

sriranga
Co-Admin
Thanks for sharing. I'm using slightly different to your method. Honest to say working fine on less than Rs. 5.00 shares and warrants for short time trading. Concentrating on limited counters is important to the beginners and amateurs.

http://sharemarket-srilanka.blogspot.co.uk/

prasadrmb

prasadrmb
Manager - Equity Analytics
Manager - Equity Analytics
Thank you very munch Hunter
It's very interesting.

kalum


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@hunter wrote:
@kalum wrote:Thanks Hunter.
It's a kind of interesting. Im not sure if  get the whole idea. Even this strategy people may find difficulties in phase 1 and 2?

BTW, can you please explain below scenario?
for ex: I am thinking to buy share x at discounted price say 10. i have 20k and i have invested 10k @ x = 10,  1k shares.
then it drop to 9 and within next 6 months it's never given a good return, say it is playing 9-10.5 range.
then trader get confuse whether to sell buy more or hold.

Thanks for the comments.

I guess your question is what we should do if the share price not moved; is it?

In my view, if a share price is not moving, we cannot do any successful trading. So my strategy is to consider more than one share (counter) concurrently for trading. In that way, if one share doesn't move some other will.

Furthermore, what I have suggested rely upon certain assumptions to work;
1. When the price goes down the chances are higher to bounce back up. In other words, the share becomes more attractive at a lower price hence more investors are attracted to it.
2. The prices will not go down indefinitely without giving some up movement.


Note:
This method should never be used in high leveraged environments with possible long trends in negative directions (Such as Forex Trading)

Hi Hunter,

Thanks. yes my question was exactly what you have explained here.
I personally enlighten with your post because it is some what applicable to my strategies as well.
Can i get a bit more help form you if it is ok? can you please share or give me few hints according to the current market? may be couple of counters that is feasible to apply this theory? Let's assume. I can purely invest 50k and there is a chance for another 50k as a backup.

Please excuse me, if my question sounds unethical. I know it is not ethical to ask certain shares or advice from forum members / moderators. i just trying to built up my own strategy for next decade based on some experiments. So i would be greatly appreciate if you could at least PM me the request.

my concept is, i am done with 80% investing now. for next 2 years i will pump more 20% based on current investment.
Then i am trying to re-use invested capital to work for me for next decade. most probably if i live such long that investment should be enough when i retired Smile

Jake Sully

Jake Sully
Manager - Equity Analytics
Manager - Equity Analytics
@sriranga wrote:Thanks for sharing. I'm using slightly different to your method. Honest to say working fine on less than Rs. 5.00 shares and warrants for short time trading. Concentrating on limited counters is important to the beginners and amateurs.
Can you share that pls, or give us a link.

hunter

hunter
Moderator
Moderator
@kalum,
I am sorry, let me be a little undiplomatic and say I would hesitate recommending any shares.
I also do not know what will happen tomorrow.
But you do not need to know that in order to trade successfully.

Anyway, to give you a hint, pls have a look at @sriranga's comment above. He has mentioned two types of counters with better chances of bigger 'swings'.
Hope that will be helpful. Wink

kalum


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
hi hunter,

Thanks. I do understand the circumstance and those hints more than enough for me Cool 

Note: Please don't count me as a blind follower, but i am a good listener. The most of the day i tend to listen and analyze then EOD i'm trying to figure out some points that sense to me for my own R&D strategies Smile

hunter

hunter
Moderator
Moderator
@kalum wrote:hi hunter,

Thanks. I do understand the circumstance and those hints more than enough for me Cool 

Note: Please don't count me as a blind follower, but i am a good listener. The most of the day i tend to listen and analyze then EOD i'm trying to figure out some points that sense to me for my own R&D strategies Smile
That's the way to go; you have part of me in you. Very Happy

-------------------

I am happy that this helped many to improve their approach to trading.

kalum


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@hunter wrote:
@kalum wrote:hi hunter,

Thanks. I do understand the circumstance and those hints more than enough for me Cool 

Note: Please don't count me as a blind follower, but i am a good listener. The most of the day i tend to listen and analyze then EOD i'm trying to figure out some points that sense to me for my own R&D strategies Smile
That's the way to go; you have part of me in you. Very Happy

-------------------

I am happy that this helped many to improve their approach to trading.
Thanks hunter Smile

Sponsored content


Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum