Chart reading - using Candlesticks

The candlestick chart is a good way to find out historical information. It can be a bit confusing if you are a beginner so I am going to show you how great it is.


Now, the candlestick shows you two things:

1. The opening and closing price of the day.

2. The high and low of the day

The solid body of the candlestick shows you where the price opened and closed.

If the candlestick is blue then it opened low and closed high (share price went up). If the body is red then it opened high and closed low (share price went down). Line charts only give you the closing price.

To show where the share price went during the day the candlestick shows a thin line coming from the top and bottom of the body. (These are called shadows).

The day's high is where the line stops at the top
The day's low is where the line stops at the bottom.

How do candlesticks help you make investment decisions? They allow you to see share price movements during the day, which gives you much more information than simple line charts

Have a look at some patterns at

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:candlestick_bullish_

Current Read - Your next Great stock

You can Buy this book on Amazon.

Market Update - 20 Dec 2007

Market monitor is still in extremes. 300 plus for 65 days is extreme. There may be a short term bounce but can't see any real rally this year. Earnings period coming up so some stocks may rally on earnings surprise news. Earnings surprise is still a relative new area for me and currently I am reading few books and articles on it.

No Double trouble candidates for last 2 days.

4% plus breakouts for today

ADM.L
CIU.L
FKI.L
IFL.L
JMAT.L
NEX.L
RAB.L
SCHE.L
SIT.L
UCP.L
WHM.L

High volume breakouts

High volume breakout (up more than 4%) in last 2 days

WG.L - This stock has been rallying last few days. Looks a good buy.

DEB - Rallied today on news that Mahesh "Micky" Jagtiani has taken a 7% stake in department store chain Debenhams and may be mulling a bid.

NEX - National Express journeyed higher on news it expects full year results at the top end of market expectations and remains confident about prospects for 2008.

AGK - temporary power supplier Aggreko expecting full-year operating profit to rise by 50%, although it warned that conditions in North America could become more difficult.

Market update - 18 Dec 2007

Market monitor is showing extreme reading for last few days. Such extremes usually result in a bounce. Let see if the theory proves correct. I have closed my all but one position. This one is a long term and I have committed very small amount to it so I am not worried about market conditions for this stock.

Double trouble candidates for 17th Dec
TEO - Penny share. Ignore

Double trouble candidates for 18th Dec
EPO - Nothing exciting about this share. It made loses recently. It is from software sector which hasn't being doing good lately. Volume is high but the high spread between bid and offer is putting me off. Also share has rallied by more than 10% in last 10 days.
SOLA - Volume is good but the correction from peak was huge. The share was up by more than 10% on following new contract deal

"ReneSola is doing well Tuesday after the solar cell producer said it has signed new deals with JA Solar Holdings and leading global photovoltaic companies. The firm has signed a long term sales contract with solar cell manufacturer JA Solar to supply 600 megawatts (MW) of solar wafers over five years, beginning in the second half of 2008. This is in addition to the 60MW wafer sales contract announced in August. Tolling production contracts for the processing of an additional 500 tonnes of polysilicon to be delivered in 2008 have also been signed with leading global PV companies, said the group. It has also entered into contracts to procure over 1,000 tonnes of feedstock for 2008, which chief executive Xian Shou Li said will help the company achieve its growth plan for 2008."

This is a good catalyst to trigger a rally. Buy with caution.

FTSE relegation

Northern Rock has seen its share price crash from above 600p to around 100p in the last three months so it was no surprise to see it ejected from the list of FTSE 100 constituents in the quarterly shake-up.

Also being ejected from the FTSE 100 are pub groups Mitchells and Butlers and Punch Taverns, electricals retailer DSG, housebuilder Barratt, newspaper group Daily Mail and sugar giant Tate and Lyle.

They will be replaced by Cairn Energy, Kelda, TUI Travel, FirstGroup, G4S, Admiral and Thomas Cook.

The changes will come into effect on December 24. Some use this as a opportunity to buy in these shares that are bing promoted to FTSE 100. The reason behind this that the fund managers tracking FTSE 100 will have to buy these shares to keep their portfolio up to date. These shares have been rallying for last few days. There may be still some steam in these shares. Also most of these are long term investment. Something for your retirement may be!

Market Update - 13 Dec 2007

Looking at today's figures in market monitor, it appears market is heading down. It might to be bit early to say that but market monitor has been flashing alert for last few weeks. There is lot of confusion in air about involvement of central banks. Market is not sure how to treat this news. For the time being finance and housing sector is taking the market down. In such time it is best not to trade and go in cash preservation mode. I will be consolidating my positions as holiday period is coming up. I will take a fresh look in new year.

Double trouble candidate for today
LAM - Volume is low and stock has already rallied for more than 10% in last 10 days so it might be bit late to enter. Also it pulled back almost 33% from peak.

Market update - 12 Dec 2007

Market is still very erratic. There is all mixed emotions in air. Next few days might decide which way the market is heading. Last attempted rally was a failure. Best advice is to stay on sideline.

Double trouble candidate for today. For education purpose only. Not worth the investment.
PET
PHC

Volume is good on both not very high but good from thier standards.

PHC was high on following news "Plant Health Care (PHC) bloomed after Monsanto entered into an agreement to evaluate, develop and commercialise applications of the PHC’s Harpin-based technology. "

Qualities of a successful trader

Recently I came across this article. I thought I will share it here. A good read. I haven't read the book though mentioned at the bottom of this article. I completely agree with most of the points mentioned here. I have learned most of these lessons hard way but I am content that I am learning and I am not repeating the mistakes I did during my early days. It is still a long way to go but these skills are for life. Enjoy the article.

Many people take to trading in the mistaken belief that it is the simplest way of making money. Far from it, I believe it is the easiest way of losing money. There is an old Wall Street adage, that "the easiest way of making a small fortune in the markets is having a large fortune". This game is by no means for the faint hearted. And, this battle is not won or lost during trading hours but before the markets open but through a disciplined approach to trading.

1. A successful trader has a trading plan and does his homework diligently

Winning traders diligently maintain charts and keep aside some hours for market analysis. Every evening a winning trader updates his notebook and writes his strategy for the next day. Winning traders have a sense of the market's main trend. They identify the strongest sectors of the market and then the strongest stocks in those sectors. They know the level they are going to enter at and approximate targets for the anticipated move.

For example, I am willing to hold till the market is acting right. Once the market is unable to hold certain levels and breaks crucial supports, I book profits. Again, this depends on the type of market I am dealing with.

In a strong up trend, I want the market to throw me out of a profitable trade.

In a mild up trend, I am a little more cautious and try to book profits at the first sign of weakness.

In a choppy market, not only do I trade the lightest, I book profits while the market is still moving in my direction.

Good technical traders do not worry or debate about the news flow; they go by what the market is doing.

2. A successful trader avoids overtrading

Overtrading is the single biggest malaise of most traders. A disciplined trader is always ready to trade light when the market turns choppy and even not trade if there are no trades on the horizon. For example, I trade full steam only when I see a trending market and reduce my trading stakes when I am not confident of the expected move. I reduce my trade even more if the market is stuck in a choppy mode with very small swings.

A disciplined trader knows when to build positions and step on the gas and when to trade light and he can only make this assessment after he is clear about his analysis of the market and has a trading plan at the beginning of every trading day.

3. A successful trader does not get unnerved by losses

A winning trader is always cautious; he knows each trade is just another trade, so he always uses money management techniques. He never over leverages and always has set-ups and rules which he follows religiously. He takes losses in his stride and tries to understand why the market moved against him. Often you get important trading lessons from your losses.

4. A successful trader tries to capture the large market moves

Novice traders often book profits too quickly because they want to enjoy the winning feeling. Sometimes even on the media one hears things like, "You never lose your shirt booking profits." I believe novice traders actually lose their account equity quickly because they do not book their losses quickly enough.

Knowledgeable traders on the other hand, will also lose their trading equity -- though slowly -- if they are satisfied in booking small profits all the time. By doing that the only person who can grow rich is your broker. And this does happen because, inevitably, you will have periods of drawdowns when you are not in sync with the market. You can never cover a 15-20 per cent drawdown if you keep booking small profits. The best you will do is be at breakeven at the end of the day, which is not the goal of successful trading.

A trading account that is not growing is not sustainable. Thus when you believe you have entered into a large move, you need to ride it out till the market stops acting right. Traders with a lot of knowledge of technical analysis, but little experience, often get into the quagmire of following very small targets, believing the market to be overbought at every small rise -- and uniformly so in all markets. Such traders are unable to make money because they are too smart for their own good. They forget to see the phase of the market. Not only do these traders book profits early, sometimes they even take short positions believing that a correction is "due".

Markets do not generally correct when corrections are "due". The best policy is to use a trailing stop loss and let the market run when it wants to run. The disciplined trader understands this and keeps stop losses wide enough so that he is balanced between staying in the move as well as protecting his equity. Capturing a few large moves every year is what really makes worthwhile trading profits.

5. A successful trader always keeps learning

You cannot learn trading in a day or even a few weeks, sometimes not even in months. Successful traders keep reading all the new research on technical analysis they can get their hands on. They also read a number of books every month about techniques, about trading psychology and about other successful traders and how they manage their accounts. I often like to think about traders as jehadis; unless there is a fire in the belly, unless there is a strong will and commitment to win, it is impossible to win consistently in the market.

6. A successful trader always tries to make some money with less risky strategies as well

Futures trading, for example, is a very risky business. The best of chartists and the best of traders sometimes fail. Sure, it gives the highest returns but these may not be consistent -- and the drawdowns can be large. Traders should always remember that no matter how good your analysis is, sometimes the market is not willing to oblige. In these times the 4-5 per cent that can be earned in covered calls or futures and cash arbitrage comes in very handy. It improves the long term sustainability of a trader and keeps your profit register ringing. Traders must learn to live with lower risk and lower return at certain times in the market, in order to protect and enlarge their capital.

Disciplined traders have reasonable risk and return expectations and are open to using less risky and less exciting strategies of making money, which helps them tide over rough periods in the markets.

7. A successful trader treats trading as a business and keeps a positive attitude

Trading can be an expensive adventure sport. It should be treated as a business and should be very profit oriented. Successful traders review their performance at regular intervals and try to identify causes of both superior and inferior performance. The focus should be on consistent profits rather than erratic large profits and losses. Also, trading performance should not be made a judgement on an individual; rather, it should be considered a consequence of right or wrong actions. Disciplined traders are able to identify when they are out of sync with the market and need to reduce position size, or keep away altogether.

Successful trading is like dancing in rhythm with the market. Unsuccessful traders often cut down on all other expenses but refuse to see what might be wrong with their trading methods. Denial is a costly attitude in trading. If you see that a particular trade is not working the way you had expected, reduce or eliminate your positions and see what is going on. Most disciplined and successful traders are very humble. Humility is a virtue that traders should learn on their own, else the market makes sure that they do. Ego and an "I can do no wrong" attitude in good times can lead to severe drawdowns in the long term.

Also, bad days in trading should be accepted as cheerfully as the good ones. So disciplined traders maintain composure whether they have made a profit or not on a particular day and avoid mood swings. A good way to do this is to also participate in activities other than trading and let the mind rest so that it is fresh for the next trading day.

8. A successful trader never blames the market

Disciplined traders do not blame the market, the government, the companies or anyone else, conveniently excluding themselves, for their losses. The market gives ample opportunities to traders to make money. It is only the trader's fault if he fails to recognise them. Also, the market has various phases. It is overbought sometimes and oversold at other times. It is trending some of the time and choppy at others. It is for a trader to take maximum advantage of favourable market conditions and keep away from unfavourable ones. With the help of derivatives, it is now possible to make some money in all kinds of markets. So the trader needs to look for opportunities all the time.

To my mind, the important keys to making long term money in trading are:

• Keeping losses small. Remember all losses start small
• Ride as many big moves as possible
• Avoid overtrading.
• Never try to impose your will on the market

It is impossible to practice all of the above perfectly. However, if you can practice all of the above with some degree of success, improvement in trading performance can be dramatic.

9. A disciplined trader keeps a cushion

If new traders are lucky to come into a market during a roaring bull phase, they sometimes think that the market is the best place to put all one's money. But successful and seasoned traders know that if the market starts acting differently in the future, which it surely will, profits will stop pouring in and there might even be periods of losses. So do not commit more than a certain amount to the market at any given point of time. Take profits from your broker whenever you have them in your trading account and stow them away in a separate account. I say this because the market is like a deep and big well. No matter how much money you put in it, it can all vanish. So by having an account where you accumulate profits during good times, it helps you when markets turn unfavourable.

This also makes drawdowns less stressful as you have the cushion of previously earned profits. Trading is about walking a tightrope most times. Make sure you have enough cushion if you fall.

10. A successful trader knows there is no Holy Grail in the market

There is no magical key to the Indian or any other stock market. If there were, investment banks that spend billions of dollars on research would snap it up. Investing software and trading books by themselves can't make you enormously wealthy. They can only give you tools and skills that you can learn to apply. And, finally, there is no free lunch; every trading penny has to be earned. I would recommend that each trader identify his own style, his own patterns, his own horizon and the set-ups that he is most comfortable with and practice them to perfection. You need only to be able to trade very few patterns to make consistent profits in the market.

No gizmos can make a difference to your trading. There are no signals that are always 100 per cent correct, so stop looking for them. Focus, instead, on percentage trades, trying to catch large moves and keeping your methodology simple. What needs constant improving are discipline and your trading psychology. At end of the day, money is not made by how complicated-looking your analysis is but whether it gets you in the right trade at the right time. Over-analysis can, in fact, lead to paralysis and that is death for a trader. If you can't pull the trigger at the right time, then all your analysis and knowledge is a waste.

Excerpt from How to Make Money Trading Derivatives by Ashwani Gujral.

Double Trouble - 11 Dec 2007

Double Trouble candidates

AFR - This looks a good candidate except that it has rallied more than 17% in last 10 days. The shares were up on the news that Morgan stanley hold almost 9% shares in the company. Watch this share.
EPO - poor volume. Ignore.
GPX - Good volume. Keep an eye.

Market update - 10 Dec 2007

Market monitor is still fashing caution. 65 days ratio is still red.

DT candidate, few but none of them convincing. Here is the list for anyone who wants to understand the concept behind it. All of these are lacking volume. FPM has most of the items ticking from the DT checklist.


COP
EMED
FCE
FPM
GPC
IDOX
NSV

Catalyst checlist

Earnings Release
Earnigs Guidance
Sales Acceleration
Earnings Estimate Raise Analyst
Sector
Insider Buying
Research tie up
FDA Approval
New Orders
New Product
Regulatory Policy Change

Double Trouble Checklist

Things to look out for a Double Trouble candidate

1. Very high volume.
2. 1 month (22 days) weakness within 10%.
3. 3 months (65 days) weakness within 25%.
4. Earnings, sales update or any new contract i.e. reason for current breakout.
5. Stock moving sideways within last 65 days or the graph show relative linear growth.
6. Sales, profits, earnings up by more than 25%.
7. EPS more than 40%.
8. It wasn't a DT candidate in last 10 days. It was a good buy at that time.
9. Top 2 and bottom 2 by % change from 52 weeks low.
10. Close to high price during 100% move.
11. Within 25% of price during 100% move.

Market update - 06 Dec 2007

Morning rally lost momentum in fternoon as fears in housing market took its toll. Also weak metal price pulled the miners.

DT Candidates
JLH.L - Penny share. Avoid
NGP.L - Penny share. Avoid.
PLAA.L - Volume too low. Avoid.
RHL.L - Volume is low but this look a good candidate. The share was up on following news
"Engineer Redhall has tripled full year profits thanks to two significant acquisitions during the period and has started the current year in line with expectations. "

The share has been moving sideways for last few months.

Double Trouble - 05 Dec 2007

GMG came up on DT scan on 30th Nov. It was 10% up then. Today the stock went up almost 16% on the following news.

"Computer games retail Game Group shot forward after the Competition Commission conditionally agreed to allow its acquisition of rival Gamestation."

The volume looks good. A buy on pullback.

Market Update - 05 Dec 2007

Another fresh rally today. 65 days is still red so it is still on the exteme caution side.

DT candidate for today

CRG - 22 and 65 days weakness is within 10%. Volume is low, otherwise looks good.
QTI - Volume very high. Penny share so any minor move can have major effect on your profits. Better avoided.

There were many stocks breaking out. Here is a list of some on verh high volume (1M and above)


AAL.L
ABG.L
AFR.L
ASC.L
AU.L
BDEV.L
BLT.L
BRE.L
CHS.L
CHTR.L
CNE.L
COLT.L
CPH.L
DCI.L
DSGI.L
FKI.L
GMG.L
HOME.L
KIN.L
LII.L
LOG.L
MARS.L
MXP.L
NXT.L
RDW.L
SOLA.L
SXS.L
TPT.L
VED.L
XTA.L

Market Update - 04 Dec 2007

Market couldn't hold the rally from last week. All stocks which had a breakout last week are breaking down this week.

Market monitor is showing exteme caution.

DT Candidate for today
NOP - The share has rallied on following news

"Northern Petroleum's first independent report on its Giove discovery in the southern Adriatic Sea has indicated 19.67m barrels of probable oil reserves. "

It pulled back almost 35% from peak in last 65 days so may not be a good buy. Risky option.

The Long and Short of it.

Often you must have heard or read somewhere, "go long on share xyz" or "go short on share abc". I am sure like me even some of you must have wondered what these terms mean.

Well here is what my understanding is:

Going long is when you buy a share expecting it will go up over a certain period. So you will buy at price x and sell in future at y when y>x. So your profit is y-x.

Going short is when you sell a share(which you don't own!) expecting it will fall and then buy at a lower price. Say you sell at x and buy at y where y

There is risk associated with both methods. In case of long, if you buy a share and if it drops in value, you loose money. In case of short, you will loose money if the share price rises. Shorting a trade is for more experienced users due to the risk associated with it.

I am still naive in this area. So please feel free to correct me on anything I have mentioned above.

Raj

Stocks doubled in last 1 year

Following stocks have gone by by more than 100% in last 1 year.
ABH
CLE
EO
GMG
HGM
HMS
IHP
UTN

Following stocks have gone up by more than 200% in last year
EME
GON
PET

All of the above stocks were up by more than 4% on Friday. Some of these stocks have the potential to rally further.

Raj

Market Update - 30 Nov 2007

Number of breakouts are on the rise. Some of these are having follow through days. 65 days is slowing turning towards postitive. If the current action continues, we may see the ratio to be in positive by mid next week.

DT scan has following candidates
GMG -
This came in DT scan few weeks back. Since then the stock has risen by 10%. Volume looks good. Also this stock has been moving sideways in last few months. It is almost ticking all boxes of DT. A good buy.

GON - Pull back has been more than 10%. Pass.
HMS - Pull back has been more than 10%. Pass again
IHP - Penny share - Pass.
PET - Pull back more than 10%. Pass

4% on high volume breakouts
BOY
BUR
COLT
GKN
GMG
LLOY
MPI
PDL
PZC
SL
STAN
TLW

Raj

Confirm rally?

There is already news in the air that market is in confirmed rally mode. Many big pundits are out with the news. I will be updating the market monitor and my analysis later today.


VED was in DT scan yesterday and it is risen by almost 7% today. The stock may rally and go up to £25. I would recommend buy on weakness as it has rallied for last two days.

Raj

Market Update - 29 Nov 2007

Market rallied yesterday and there was a late rally today. Some of this was due to the speculation of another possible rate cut by Fed. 65 days ratio is still red so trade with caution preferabbly with lower profit margins.

Double trouble candidate for 28/11/07
EDD
FOGL

Double trouble candidate for 29/11/07
EMED
IDOX
PHC
VED

VED seems to be ticking all boxes of DT. The volume was ver high.

Market update 27 Nov 2007

There was no follow through for the high volume breakouts from yesterday list. Market monitor is still showing correction phase. There was some follow through on some stocks but the volume is not very encoraging.

Here is the list from todays scan. Some of these had exceptionally high volume.

BARC
BNH
DLAR
FIF
PMO

There is no candidate for DT today.

4% breakout on high volume

The scan came up with 18 stocks but I have narrowed down to following list based on volume. These share are worth a look. I will monitor these stocks for next day or two to study how these breakouts behave.

CKSN
ITM
MGNS
NRK - Nothern rock. Even a granny knows about this now.
PAG - Another casulty of sub prime.
SGI
TRC
WG

Market Update - 26 Nov 2007

A rally on Friday and today morning faded by end of day. Thanks to HSBC who revealed plans to prop up its sub-prime arms.

There is more bad news from ECB as it plans to pump in more money in the financial market. Housing market is not helping either. All doom and gloom in US market may impact the economy in India and China and this negative sentiment is causing the slide in the mining shares. Commerical property and banks are following the trend.

There are few candidated in DT scan but none of them worth mentioning here. The volume is very low.

Market Update - 22 Nov 2007

Market still seems in correcttion mode. With reading toching exteremes, chances of a bounce are increasing.

Even in this volatile market, sectors like Utilities and Healthcare are doing well,

For people who want to invest long term, here are few stocks worth having a look

National Grid
GlaxoSmithkline
AstraXenca
Northumbria waters

There are no candidates for Double Trouble scan today.

Market Update - 20 Nov 2007

After a brief busy period at personal front, here is update for today.

Market monitor is still shows correction mode. After making some losses due to some hasty decisions, I am finding it really difficult to control my nerves. This is normal as after a period of activity it is difficult to keep quite. However I am following my mentors advise and I am currently in capital protection mode. I have only one commitment. I am waiting for market to turn around. Even though a rally looks around the corner, it may take some time to build.

Currently there is lot of negative sentiments in air. Housing market, bad debt, banks, economy slowing down, retail sales down, high interest rate etc. Once the market stabilises, our methods should help to make some sustantial gains.

DT Scan:
Candidate: SNR - Volume is not very encouraging otherwise looks good on charts.

Double Trouble Scan - 14 Nov 2007

GMG - Focus this one. It is ticking most criteria of DT.
SCHE - Wait for 20 days weakness on this. It is close to all time high.

Start of another bull rally?

Market monitor reading are turning on postive side. 65 days ratio is about to turn. This could be start of another rally. Watch this space for next few days.

AIM STUDY IDENTIFIES KEYS TO MARKET'S SUCCESS

The returns on the stocks listed on Alternative Investment Market (AIM) is very high but so is the risk. If you carefully study the share and apply right principles, you can make some good returns. A recent study of London School of Economics and Political Science (LSE) has some interesting finds. Read the full report.

DT Scan for 13 Nov 2007

TAN - http://moneycentral.msn.com/companyreport?Symbol=GB%3aTAN

- Profits up by 200%


Today might be start of another rally. It will be confirmed in next few days.

Market Roundup - 12 Nov 2007

It has been very volatile since last Thurday. There have been some erratic moves. Miners which were making solid gains until friday were all in red today. It was other way round for banking shares.

Double trouble candidates
- none

Virgin
AMC.L
BES.L
IBB.L
JSG.L
LNR.L
PGD.L
QQ.L
REH.L

RareHighTightFlag Candidates

AAZ.L
AGLD.L
BNK.L
BODI.L
BRR.L
GFF.L
LEG.L
MDC.L
MTV.L
OSS.L
PLW.L
PLX.L
PPR.L
RAF.L
RVD.L
SFX.L
SNX.L
SOLG.L
TEO.L

Market Update - 07 Nov 2007

Market monitor is flashing alert. However commidities related stocks specially oil and gold are breaking through. One of the stocks I have been following since its breakout on Monday is SOLG http://moneycentral.msn.com/investor/research/newsnap.asp?Symbol=GB%3aSOLG. It share price is almost doubled today. Interesting it cameup in 4% breakout scan on Monday and it has come up in Virgin scan for today.

Double Trouble candiates.
-None

Virgin
MBK.L
CGNY.L
CSH.L
SOLG.L
SNX.L

Look for SOLG.L and SNX.L on Thursday. I am seeking some position in SOLG when market opens on Thursday.

Market Update - 06 Nov 2007

Double Trouble Candidates

FOGL.L
ITK.L
STBR.L

Virgin scan
FOGL.L
IMP.L
MTV.L
OPM.L
PAA.L
PELE.L
PPR.L
PXS.L
RIFT.L
TPH.L
VOG.L

RareHighTight Flag

AAZ.L
AGLD.L
ANTP.L
SOLA.L
SRV.L

Market Monitor

Market Monitor has been showing caution for last 2 days. However 65 days ratio is still positive. Trade with extra caution.

Double Trouble Candidates 02 Nov 2007

COP - http://moneycentral.msn.com/investor/research/newsnap.asp?Symbol=GB%3aCOP
-- Yet to be analysed
PANR - http://moneycentral.msn.com/investor/research/newsnap.asp?Symbol=GB%3APANR
-- Yet to be analysed
EROS - http://moneycentral.msn.com/investor/research/newsnap.asp?Symbol=GB%3AEROS
-- Yet to be analysed
PHC -- http://moneycentral.msn.com/investor/research/newsnap.asp?Symbol=GB%3APHC
-- Yet to be analysed.

Double Trouble Candidates for 01st Nov

These candidates are based on EOD data for 31st Oct 2007


GMG - http://moneycentral.msn.com/detail/stock_quote?Symbol=GB%3AGMG
- Good growth rate
ORI - http://moneycentral.msn.com/detail/stock_quote?Symbol=GB%3AORI
- No catalyst

Market on 01 Nov

Banks led the FTSE into red on Thursday. Here is an excerpt from email newsletter

"Big losses for the banks following a downgrade for Citigroup sent Footsie spinning into the red by the close. Citigroup could have to cut its dividend, sell assets or raise new funds to restore its capital base according to CIBC World Markets. Barclays, Northern Rock, Lloyds TSB, HSBC and HBOS all slumped in sympathy despite last night’s cut in US interest rates. "

Methods Triumph

Intially when I started trading, I use to buy/sell stocks based on news, broker tips or based on top movers for the day. Soon I realised that you can make money this way sometimes but most of the times you will loose. Here are few reason:

1. Tip from a news paper: By the time the news comes out in news paper, the stock has already priced in the good news. So it is already late as you have missed the rally. Sometime it may rally a bit as most novice traders will try to buy the share based on the tip.
2. Broker recommendation: By the time brokers recommendations comes out into the publc domain, large institutions have already bought their share. So again the news is already priced in.
3. Top movers of the day: Again the shares have already rallied by the time you look at your favourite website for topmovers. Ideally you should have bought this share a day before.
   

This is where methods comes into rescue. If you have right methods and sound principles, you will be able to pick up share before they make a major move and catch them on the way up.

Some of the principles I use or am learning are

1. Double Trouble : This scans for shares which have doubled in last one year and have a potential of further growth. The scan along with any latest news like earnings or new contract gives you a narrow list of stock. Not all the stocks in this list rally but chances are high.
2. Virgin: This scans for shares which have been neglected since thier IPO.

You can find more information on above scans at www.stockbee.net or stockbee.blogspot.com

Double trouble candidates - 30 Oct 2007

ALD - http://uk.moneycentral.msn.com/investor/quotes/quotes.asp?symbol=GB:ALD

- 6 months charts is showing V formation or cup and handle

- News: Miner Albidon said its joint venture partner African Energy Resources has commenced a 4,000m drilling programme at the Chisebuka uranium prospect in the Kariba Valley to evaluate high-grade surface uranium mineralisation. The group said initial programme comprising a minimum of 40 drill holes has been planned. To date, 13 drill holes have been completed for 1,091m.
“This programme will complement the ongoing Chirundu JV drill programmes at Njame and Gwabe, for which resource estimates will be available in November and December, respectively,” it added.

LCG http://uk.moneycentral.msn.com/investor/quotes/quotes.asp?Symbol=LCG

- New contract deal with Betfair

- Chart show smooth rise

- Profit margin 27% plus

VEL http://uk.moneycentral.msn.com/investor/quotes/quotes.asp?Symbol=VEL

- rise in profit by 63% over last year. Expanding operation in Asia.

Market Monitor 26 October 2007

Monthly ratios are flashing caution. Lets see how market opens on Monday. Watch this space.

Doube trouble candidate 24 Oct

Double trouble candidate based based on EOD data for 24th OCT is

EDD - http://moneycentral.msn.com/detail/stock_quote?Symbol=GB%3AEDD

Triggers.
1. Earnings report
2. Profits on the rise

Double Trouble

This is one of the methods I use to filter the stocks. The concept has been designed by Pradeep Bonde. As I am on the learning curve, he recomended to master this first as this is one of the simplest concept. You need historic data for last 1 year to run this scan. You can use any scanning software. I use Amibroker.

Here is what Double Trouble about.

1. Filter all the stocks which have doubled in last 1 year (260 trading days).
2. From this universe filter out stocks which are up 4% on high volume.
3. Filter out stocks which are withn 25% range of their highest price in last one year.
4. Reasearch these stocks for earnings or any breaking news. Look for one month weaknes.
5. Buy on next open.

There are high chances that these stocks will make upto 1500% move.

Market Monitor Philosophy

Market Monitor is an early indicator of any major change in trend. It also indicates a safe period to trade. The system has been designed by Pradeep Bonde. Please visit www.stockbee.biz or http://stockbee.blogspot.com for more information.

The colour scheme is self explanatory itself. Green indicates safe period, orange is cautious and red is alert zone. Avoid any trading during the alert period.

The major indicator is 65 days. Any reversal in this ratio indicates start of bull or bear phase. Stocks down 25% in 65 days below 200 indicates a major correction around the corner. Stocks up 25% in 65 days below 200 indicates start of bear phase. Above 200 and ratio > 1 indicates bull phase.

Number of stocks up 4% up or down above 50 indicates high volatility.

Number of stocks up 50% above 20 indicates a correction around the corner.

Market Monitor

I have created a excel sheet in google and have added it on left side. I will update the Market Monitor stats in that on daily basis.

As of today the stats show market is quite stable. There is lot of buying and selling happening. keep an eye on 65 days ratio. Any reversal in this ratio will signal turn in market direction.

Currently minor correction is happening but I am hoping this is forming a base for another rally.

Miners are having a day!

On 25th Sep, I recommended BHP Billiton(BLT.L). The stock was around 1700p. It has risen 11% since then. Also other miners
like Vendanta(VED.L) are doing well. They had a 4% breakout today. Looking at the charts these show a uptrend. Vedanta seems to have broken
the resistance line and will form new support line. Buy!

Other stock to watch for is Vodafone(VOD.L). It had a 4% breakout today.

Market Monitor

Market monitor is a system which will give early indication of where the money is flowing. It will have following bull/bear ratios

4% plus breakout on high volume
4% plus down on high volume

Stocks up 25% plus in 65 days
Stocks down 25% plus in 65 days

Stocks up 50% plus in a month
Stocks down 50% plus in a month

Stocks up 25% plus in a month
Stocks down 25% plus in a month

Stocks up 100% plus in 260 days
Stocks up 200% plus in 260 days

Currently I am developing the system in Amibroker to pull these figures out for me on a daily basis. I will put these figures in an Excel sheet and put it on the flog. I will explain later how to interpret these ratios. The principles behind Market Monitor are similar to one mentioned on Stockbee which follow US stock market.

Raj

A good mentor

One aspect of learning new things is to have a good mentor. My mentor is Pradeep Bonde. He has been studying the stock markets over years and has developed his own methodolgies. He is reaping the benefits of his efforts now.

You can read about his methodolgies at Stockbee. For more experienced traders he has a member only area at easyguru. The principles I will be developing here will be mostly, though not entirely, based on the principles mentioned at Stockbee.

One of the first thing I will be implementing is Market Monitor for UK stock market. I will discuss about Market Monitor in my next blog.

Raj

Market Recovery

Markets around the world seems to have recovered well. Bombay stock exchange is all time high and will continue bull run as festive season approaches. Gold will be a good invesment now as many people in India buy gold around this time of the year. It is 28 years high.

Also miners dealing in gold might be a good buy like BHP Billiton (BLT.L). Other miners took a beating today as metal price came down.

Banking stocks are best avoided. Northern Rock is due for further fall as they have done a U turn on the dividend and they are struggling to find a buyer.

Software Tools

To build a good investment strategy, it is useful to invest in a good software. Personally I have invested in Amibroker. It is used worldwide by most investors from armatures to professional. Also with my software background, it is easy for me to customise the software to my needs. I will be posting the formulas on this blog as I develop them.

Market very volatile

Currently markets around the world are very volatile due to slow down in US housing market. In UK, Northern Rock is the first casualty of this even though it is not directly linked to the ongoing sub prime woes in US.

Today banking shares are down. Northern rock is down 40% today and has lost 80% from where it was at the start of current year.

I have burnt my figures with it and will try to stay away from the banking sector for some time now. This section has performed very well in past.

For time being I am on the sideline and will be watching market actions very closely.

Raj

Learn to Trade - Another blog on share trading?

For many years I have kept myself away from the stock market. I always beleived that it is for the experts. I couldn't have been wrong any more.

I think stock market is a place where the money flows from fool to smart people. Yes you need to have good undestanding on how things work and what those figures mean. But you don't have to be an expert to make money.

I know there are many blogs out there on investing, picking shares etc. In this blog I will be sharing my personal experience and the things I will learn as I go along.

Hope more people will add to this blog and we will be able to share our experience.

As the name suggest, this blog will discuss few basic principles of selecting good shares for trading. We will build our own principles as we go along and we will test them to see if they work.

We will discuss other means of investment. I will be primarily covering UK and Indian stock market.


Thanks

Rajesh