The Nifty Futures seems to be struggling between 2840 on the higher side and 2757 on the lower side. There seems to be an aggressive battle between the bulls and the bears trying to take the Nifty in either direction. Yesterday's activity saw Nifty going down with lower volumes indicating lesser conviction on the downside.
Today's strategy should ideally be wait and watch. And as already mentioned, if the Nifty manages to stay above 2830 and close at that level, then a new short term bullish trend seems to be possible. Similarly, if the NIFTY breaks below 2755, one can go short with a fixed stop loss of 2805.
Today's call:
Buy Infosys at CMP 1298 Stop loss 1275 Price Target 1340.
Buy RIL at CMP 1346 Stop Loss 1310 Price Target 1410
Sell L&T at CMP 610 Stop loss 632 Price Target 550
Disclaimer: These are my recommendations based on technical analysis.
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Hi! I am a friend of your wife's. She told me about your blog :) I am following in hopes that I will understand a little bit about stocks. Forgive my ignorance but I have one question - how do you decide what a stock's Stop Loss Price is going to be? Is it just a random number that you feel comfortable with or do you arrive at this price by some calculations?
ReplyDeleteHi. Thank you for your comment. With regards to your question, we arrive at stop loss based on our technical studies. To simplify the stop loss theory, there are various simpler methods which can be followed when arriving at stop loss price. The most common method used is two per cent stop loss method, which means irrespective of whether your position is long or short on a specific share, you keep your stop loss at 2 per cent of your price.
ReplyDeleteThe second formula is that irrespective of your position, you set your stop loss price at the previous day's low in case of long position and previous day's high in case of short position. (Long= bullish, short= bearish). Always remember, whether you are a swing trader, day trader, positional trader or a long term investor, stop loss is a must. Never trade without a stop loss.
Thanks for explaining. "Never trade without a stop loss" - makes sense.
ReplyDeleteHi. Just came to say hello and welcome to the blogworld. :)
ReplyDelete