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Sunday, May 17, 2009

STOP LOSS IN STOCK MARKET

1. Every body in this technical jargon of stock market speaks of Stop Loss but nobody speaks of the mechanism to apply a brake in order to ensure profit is taken home.

2. Always track 7 days and 20 days moving average for that particular stock and let us refer it as A and B respectively i.e. say
A=7 days moving average
B=20 days moving average

3.If A-B=+ve (hold stock)

4.If A-B=-ve or nearby Zero (exit stock if current day high is near previous day high either side i.e can be plus or minus by a small margin).

5. So make it a habit to take profit home as nobody has gone broke taking profit.

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