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My Investment and Trading Guidelines

Risk Management - Not to hold more than 20% capital in a single stock or upto a maximum of 2,00,000

Long Term Blue Chips at reasonable valuations after reading at least one annual report and valuation with financials from 5 years. Buy after checking price data. Holding Time Period: 3 - 5 years Medium Term : 1-2 years Undervalued Stocks of Midcaps P/E < 10 or P/BV < 1 or Div Yield > 7% (closed to FD Rates). Operating Cash Flow Positive. D/E< 1 Profitable. When purchase decision is based on BV, ensure BV of asset is atleast fairly priced and is not made up of obsolete inventory and plant and machinery with no value. Investments and land , written off assets with useful value of life can be a great opportunity for asset play.

Short Term for Swing Trading: Check the technical price data. Time Buy and Sell based on candle stick Chart. Buy in Cash market. Holding Time Period : 3- 6 months. Target upswing - 5% + Trading strategies Risk Management - Not to risk more than 5% capital in a single trade  When Volatality is low be a buyer, when it is high be a seller.  Trade only where you know the script/index and a understanding of risk:reward ratio behind the trade.  Time value of option decay enables a far out of money option also obtain a decent premium.  Play the long game. Learn from your mistakes.  Maintain trade diary.

Option Strategies (1) Expectation: When the market is not expected to swing wildly Strategy 1A: Sell one at the money call and at the money put (closer to the spot) and one out of the money call and put . Strategy 1B: Sell deep out of the money call and puts. Keep stop loss of double premium

     Strategy Evaluation: 

(2) Expectation: Market is not expected to rise or fall to the call/put sold. Stop loss to be managed through option. Strategy 2: Sell one slightly out of the money call/put and buy one further out of the money call/put (same instrument as first). Advantage: if the instrument containing unlimited risk is closed first, the other one can be traded profitably as well in the remaining time period Strategy Evaluation:

(3)When a stock/index is expected to swing wildly in a direction.

Strategy: Long /Short in Futures market as expected. Buy a call/put for stop loss.

investment-manifesto.txt · Last modified: 2018/07/08 17:41 by priya