CNBC TV-18 Investor Camp (May 31, 2008 - Bangalore)CNBC TV-18 Investor Camp (May 31, 2008 - Bangalore)

CNBC TV-18 Investor Camp (May 31, 2008 - Bangalore)

Sudharshan Sukhani

Step 1 - Understand the Stock Market Phases (More on Stock Market Phases )

The Four Phases of an Investment Cycle

1. Accumulation Phase (Smart Money Enters Market)
2. Mark-Up Phase (We get interested, Public Enters)
3. Distribution Phase (Institution Sells, Retail Buys)
4. Mark-Down Phase (Painful Bearish Phase)

Timing:

A cycle can last anywhere from a few weeks to a number of years, depending on the market in question and the time horizon you are looking at. A day trader using five-minute bars may see four or more complete cycles per day while, for a real estate investor, a cycle may last 18–20 years.

Step 2 - Trading Strategy :: Determine the Current Market Stage (Develop your Trading Style based on the market stage.)

Accumulation (Trading Range):

• Buy for Small Gains

Mark up Phase (3-4 in a year):

• Hold your Trending Positions
  
• Buy on Small Consolidations / dips
  
• Dont trade short term - stay invested from run-up and relax

Distribution:

• Take Profits
• Close Existing Positions
• Re-enter with less volume on a new breakout
• We should not be buyers whom institutions are selling !!
• Selling decision is important - biggest mental block for all trades.

Mark Down:

• Set up Short Positions
• Buy small counter trend up moves (By keeping strict Stops you can take advantage of small upmoves)
  
• Stay Away

Objective Methods to Determine current Market Stage

• Support / Resistances
• 10 week MA
  

Some Stock Ideas from Mr. Sudarshan Sukhani and their current phases:

Cairn - Markup
Tata Steel - Suddenly entered in markup after accumulation
NIIT Tech - Entering Markup
Jindal Saw - Process of Accumulation

Swing Trading Guide

1. Look for Supply at Tops and Supports at Bottom.
2. 3 - 4 Big Trades will virtually give most profit. Therefore always look to "Lock-in" your profits.
3. Never Average a Loss
4. Never Listen to anyone Else's noise.

Signs Suggesting start of a Trend

1. Narrower Range in 7 days
2. Breakout Gap
3. ADX rising above 30 ( a tell-tale sign that this stock is doing something)
4. Termination Point of a Wedge

Decision Making

1. Every time you make a trade, you make a decision.
2. The more decision you make, the more you increase your self-esteem.
3. Decisions will go wrong lot of times. Allow yourself to fail.
4. Allow for human limitations and incorrect choices.