Trading Yoga

MY LEARNINGS FROM MOSL 23rd Wealth Creation Study Based on the Video (See link at the end)       LESSON 1 Buy only when the RoE is greater than the cost of capital. MOSL Assumes cost of capital to be 13%   My notes : The cost of capital for most companies can be assumed to be 12 to 15% based on their credit rating. The cost of capital for NBFCs could be 8 to 10% The cost of capital for Banks could be 6 to 8% Check the latest investor presentation or annual report to get this data. But a 13% filter on ROE will help to weed out most of the companies and provide you with a list of companies that is worth spending more time on. Some sectors like Infra have a RoE of less than 10%. So the big question is whether it is even worth looking at these for investment portfolio.    Lesson 2 Assuming the RoE test is passed and we have companies which we feel has a reasonable growth prospects (i.e. RoE > 13% or cost of capital) then it has the potentia

How do I know if I am a trader or an investor ? Well it is almost a wrong question. The right way to ask the question is how to identify if the decision to buy (or sell) a stock is an investment decision or a trading decision ? Will the duration of holding determine if it was an investment or a trade ? Answer is No, there can be trades which last for weeks and months even years together. And there can be investments that are squared off within days or weeks even. Though, generally shorter horizon of holding is perceived as trading and longer format is perceived as investment. Will the tax liability determine if it was an investment or a trade ? Maybe the regulation may have some definitions to classify for tax purposes. However, tax kicks in after the exit from the position and not prior to it. Even then, taxation is not the right basis to classify an action as investment or trade. Will the instrument determine if it was an investment or a trade ? To some extent, the ins

QUOTE  Investor Action can Depend on two factors in a stock. Price Action or Business Action.  Focus on the 2nd. As long as business still makes sense and valuations still supportive, ignore the first and stay invested. Jiten Parmar Thoughts/Lessons from the Quote Most people buying shares (even as investors) don't understand the business (let alone business action). Most people understand the price action. Emotions move with price action because emotions does not have the anchor called understanding the business (and business action). And many times, business action waves the red flag, price action is bullish and the ignorant investor gets trapped. The first step is to acknowledge whether we understand the business or not. In most of the stocks I have invested, I have to confess that my business understanding is limited (as compared to some of the seasoned investors). If our understanding of the business is limited and/or non existent then we

#Learningbyte Breakout scrips method: I use the chart ink scanner to filter the long list of scrips making new highs (52W/ATH) The filters contain  technical conditions (RSI, Volume, MA etc.,) as well as fundamental conditions (Market cap, book value etc.,) Let us call this the First List My posts on Breakout scrips started from 8th Dec I have maintained a master list of scrips from the scanner filter. Next step, all repeats (i.e. scrips which are already part of the breakout from 8th Dec) are excluded and only those appearing for the first time from 8th Dec are included. Let us call this the Second List. This Second List is then further filtered on Quality and Fin Trend (predominantly using Markets Mojo). Let us call this the Third List. Only those which pass the above test (2 Green dots) are then posted on my Facebook page This is the short List. I collect certain details like Rise in last 1 week, market cap, sector, shareholding, PEG Ratio etc. that prov

Commentary On Index: Date : 10th Nov Day Stats : A bullish day with a gain of 207 points.   Day: Up Day Candle pattern:   Bullish Candle after a neutral candle confirm trend reversal. Healthy long body with very small lower wick and  small upper wick i.e. opened near the low and closed near the high.  Range: Wide ... indicating demand exceeded supply Volume:  Improved from last two/three days and closer to average (though slightly below average) BANK NIFTY COMPONENT STRENGTH SCORE 10 NOV 17* Component Strength Score : 54.75 EMA : 55.13 Interpretation : Neutral/Sideways. Candle indicating gathering of bullish momentum. *ABOUT COMPONENT STRENGTH SCORE I am experimenting and developing a Component Strength Score based on the study of the underlying constituents of the Index itself. I have started with Bank Nifty. Here is a WIP version. The graph has three data points The movement of BN itself (absolute points), then there is a Component str

Big Picture 09 Nov 2017 Day Stats : A  Bearish day with Close below open.   Day: Up Day with a gain of 5.80 point from previous day close Broad Based Indices: All Green. Top Gainer MidCap50 and MidCap 100 Sectoral Indices: PSU Bank Top Gainer followed by Metals. Top Loser Pharma Advance Decline Ratio : 1.35 (Widespread bullish sentiment) 52W HiLo Score: 73% (Below EMA) 13EMA: 84% Candle Stick Analysis Candle pattern:   Inside bearish candle (though the lower wick reached below the prior candle, the body is fully inside the prior day body). This is a 3rd down day. But because of the inside candle pattern, it does not qualify for the three crows. In a sequence of bearish candles, this candle shows that bears are losing their strength and further consolidation or rally is possible. Range: Wide. No Demand Volume:  Low. Indicates testing or end of supply allowing prices to settle near the mid point of the day's range. Notes: Nifty found support a