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Stocks

Trading: Up 40% since Aug 30.

Trading updates: I’m up nearly 40% since I started (versus Index gain of 27%). A lot of changes to the portfolio this week.

On cash stocks, I had sold Jai Corp at 1278 as it showed signs of weakness…I bought nearly all of it back today as it showed strength again. I also bought L&T (at 3335) and Reliance Capital (at 1745). Today I added HOV Services – a stock that is unbelievable but seems to have been overlooked by everyone – at 205. A result arbitrage trade in Voltas didn’t quite work out, so closed it at a small loss. Closed positions: IGate, as I decided it wasn’t quite showing the momentum I wanted. Bought at 338, sold at 355 within two weeks.

F&O: Expiry was on Thursday and I sold out the 5100 puts as the Index neared 5200 as there was very little time left to expiry and these options were expensive. I owned some 5700 calls which obviously didn’t make the grade, but they were high risk and low cost anyhow. A number of Nifty future trades, based on momentum based directional calls, yielded nearly 20% on the investment this week. I took a loss in the Suzlon future the day before its results and I was totally unaware that the next day was results day! Had I stuck on, I would have made over 60% on that investment in a day – lesson learnt: don’t exit a stock before you check its event calendar.

Small losses also in NIIT Tech (waited for results and then the market didn’t like ’em), India Cements (another ridiculous intraday play – note to self: don’t play the intraday game, it doesn’t work for you) and in Nifty puts and calls on Expiry day (it was an attempt at a pinning strategy which didn’t quite work).

I managed a result move in Satyam – results being good, I picked up the future for a three day move. The very next day the stock ended up 5% higher, and I sold – the leveraged move yielding about 4,200 per contract. I sold as it retraced actually, a trailing stop loss in a way. Some quick momentum moves in RPL as well, over two days, have yielded an F&O profit. I own the stock in cash (as a longer term purchase) but the intraday moves in RPL scare me, as it could wipe out a significant amount of my capital. So I end up taking small profits. Lesson here is: Either increase your capital or don’t use these stocks on F&O, because I will not always be lucky.

What’s coming out of here is certain parameters I am comfortable with, and certain others I am not. There are lessons on multiple fronts: what kind of stop losses I should have, how I should deal with massive volatility, what kind of positions are within my comfort zone and finally, what data I need to make important trading decisions. My aim is to beat the index comprehensively – right now I’m up 40% and the index is up 28% in the same time frame, and I need to be much better. What’s interesting is that I did not overleverage myself, so I didn’t have too much of a problem during the dip, in fact I recovered all losses the day after the dip.

Note: This is my trading update. I don’t mean to recommend any of the above stocks, or even that you try anything like this. Don’t do it because I do it – as I’ve said I can afford to lose a significant amount of the money invested.

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