- April 3, 2011
- Posted by: Ramki Ramakrishnan
- Category: Indian Stocks Trading
A few days back, during my interview with Deepak Shenoy, I had suggested that one should wait for at least 185 to buy the stock as I continued to be bearish for that stock (it was trading around 210 at that time, in late Feb). I returned from my holidays and looked at the chart, and wow, this stock has rallied some 30% from a low of 208.50. So what happened there?
Put mildly, I was caught on the wrong foot. Let this serve as a reminder to all that no technique can assure a positive outcome, no matter how (supposedly) clever the analyst is! So how can one guard against serious losses, then? First of all, understand whether the recommendation is to BUY or SELL. When I speak of a preferred buy level, it is not a recommendation to sell. A buy or sell recommendation will come after considering various factors. It has to be a low-risk trade either way, but always bear in mind that there is still ‘some’ risk. To survive in the market, we need to ensure that the risk we take is affordable. So we decide both our position size and the stop-loss level when initiating a trade.
If you ask me what one should do in DLF now, I will probably be loathe to give you a straight answer, because the signals are still conflicting. Why chase something that already went wrong?