As an investor the question often comes in mind whether festivals have an impact on the Indian Stock Market. As the second half of the Indian calendar year arrives, the list of festivals keep growing and one tend to think if more money should be invested to reap more profits. Let’s pick the S&P CNX NIFTY as a test criterion, as it has the most number of liquid scrip in the portfolio.
With Ganesh Chaturthi arriving, it’s important to do some measured analysis based on historical to evaluate the impact of this auspicious day. A series of daily returns from the historical closing prices have been generated. Continue reading
There are many skills required to be a successful trader. In addition to possessing the fundamental know-how about the capital markets and various technical aspects used in trading, maintaining discipline is a very important trait that every trader must give birth. We all have discovered accounts of traders losing millions by not maintaining discipline or by becoming excited. Such cases have led to increased focus on this particular skill among the trader’s world.
Meaning of Discipline in trading
The meaning of discipline with respect to trading is rather straight. A trader gets a number of buy and sell side entries in a daytime. A trader has or should have a fixed plan in mind before executing every single trade. This plan includes estimating the entry and the exit price along with a stop loss. Giving way to watch these without any solid reason may prove to be fatal in the long term.
Market bubble is a phenomenon, where the stocks are inflated way beyond their intrinsic value in response to exaggerated high expectation of resale value. The bubble is said to burst, when the stock prices suddenly collapse or go into decline, creating panic among the investors leading to a large amount of selling.
Commodities are the actual physical goods like corn, soybeans, gold, and crude oil. They are interchangeable with other goods and can be bought and sold physically as well in future market. They are tradable in the same way as financial futures with only one difference that this commodity can have physical settlement and asset quality is taken into consideration unlike financial futures. Futures are contracts of commodities that are traded at a futures exchange like the Chicago Board of Trade (CBOT), COMEX in USA and MCX and NCDEX in INDIA. They are standardized contracts among buyers and sellers of commodities that specify the amount of a commodity, grade/quality and delivery location. Each futures contract has a standard size that has been set by the futures exchange it trades on. Each contract has fix delivery month. Date of expiry has to do with delivering the actual commodity The contract will expire after the designated date in the delivery month. Continue reading
Sideways Trend, as the name suggests, is sideways- absence of any clear directional bias in the market.
Such horizontal price movement occurs when the forces of supply and demand (of the underlying) are nearly equal. Generally, sideways trend is a period of consolidation before the price continues in the direction of the previous move. Sideways price action is also known as “horizontal trend”.
Moving on to today’s discussion: “how to tackle sideways markets”, there are two distinct trading philosophies:
- Buy low, sell high (for Sideways markets, i.e. MCX wheat prices right now)
- Buy high, sell higher (for trending markets, i.e. Indian stock indices right now)