Trading strategy
Key points: trailing stop loss, prediction success target, averaging out method
1. This section on trading strategy/concepts is for those using our stock market predictions for day trading or longer version of short term trading-whether paid members or not
2. our prediction model can predict approximate time of upswing or downswing in the main indices, not the levels or extent of change
3. Because of higher reliability of our predictions from our model, we recommend only buying call or put options, not writing or selling them and or dealing in futures.
4. We recommend carrying higher stop losses than usual or sometimes no stop losses when overall trade is of relatively small.value
5. we recommend starting with small trades and higher or no stop losses and once profits are made, introducing stop losses on higher value trades
6. because of quick response required in trading, and non availability of reliable quotations on premium of options, we use index values – djia, sensex etc to recommend sell/buy signals
7. Once a buy or sell signal is given and levels indicated, we expect trader to use trailing stop loss to optimize purchase/sale price. This is not unusual. For example even in, normal trade practices if trader buys Google GOOG at 400. And stock moves to 430. He will protect his profits by placing stop loss at say 425 and keep altering as it moves up rather than booking profits at 430. similarly if we predict a upward movement in nifty when it is in correction mode at 6000 we expect trader to trail nifty by 10-20 point margin say 6010 and if nifty moves down to 5960 before commencing its predicted upturn, purchase of call options will be triggered when nifty is 5970. Hence we recommend trailing the index at a suitable distance to get the best price. Even though in published prediction we may not indicate trailing margin this method in most cases must be followed unless we indicate otherwise.
8. Our prediction is successful if gain of 20 nifty points, 70 sensex points in Indian stock markets and 60 djia points or 15 NASDAQ points is made in trading. In reality profits will be slightly less and possibly considerably more when profit protection method is used using trailing stop loss.
9. We also recommend as an alternative or in conjunction with trailing stop loss methods average out purchases in two lots at different levels. Prediction will be considered if only one lots target price is triggered. For nifty call options we recommend purchasing at two levels 20 nifty points apart or 50 sensex point apart, for djia purchasing at two levels 40 points apart.
10. For weekly prediction whether sold or free sensex gain of 250 points or 50 points in nifty and djia gain of 200, NASDAQ 40 points may be considered successful prediction. This will be hold true if only one of the index from each of the two markets meets the target while others may fall short. no stop loss recommended for weekly predictions
11. for stock specific predictions, once gain in stock price of 0.50 percent is made profit may be protected and prediction deemed success
12. stop loss for exit positions will be twice the profit target
13. THIS IS FINAL . For paid predictions we will recommend two levels for purchase. In case market is trading at better price.so much the better. However success of prediction will be with reference to indicated purchase price unless lower is prevailing and even if only purchase is triggered for half the lot.
E.g. buy nifty call option at two levels -6000 and 6020. Prediction will be successful of nifty reaches 6030 which gives an approximate gain of rs 500 per lot on average nifty purchase level of 6010 since premium or gross profit of rs 2500 on 5 nifty lots per day trade. Actual profit may be much more or slightly less if trailing stop loss is used
a copy of this page is maintained for records dated april 3,2011 which is final for all trading dispute settlement only for paid members.no liability to free users of our prediction. fee back guarantee plan limits our libility to fee paid minus 10 percent as bank charges
