Guidelines for using SMSs
Every market participant desirous of or subscribing to our SMSs services must clearly understand the technique of utilizing these services. Following set of instructions describe this technique. Read these instructions carefully:
- Technical Analysis is a probabilistic science & therefore research reports are sent only when technical parameters reveal high probability of trade success. Please don't expect SMSs on every market rise or fall. Similarly, please don't expect that 100 % of the reports would be profitable. On some days market is erratic & volatile on such days stop losses are triggered & we need to have patience & tolerance. The secret is to loose the least when you are wrong and to make the most when you are right.
- Never risk more than 2 % of your deposit (Amount deposited in your Day Trading Account) in any single trade. The amount of risk depends on the difference between the entry point & stop loss level. If entry is at Rs. 100 & stop loss level is below Rs. 95, risk per share would be Rs. 5. If you buy 100 shares, the amount of risk would be Rs. 500 (+ Brokerage). You should adjust the quantity (number of shares to be bought or short sold) after calculating the amount of risk.
- In all the trades, risk-reward ratio would be 1:3+ or 1:5+. For example if a call is given to short sell Reliance Capital below 563 & Stop Loss is put above 573, the risk would be of Rs. 10, therefore the minimum Target must be 530 (profitability of Rs. 33).
- Day Trading or Investing without a definite & calculated risk is fatal; therefore stop loss is a must. An entry without a stop loss is suicidal. Never ever think of it, even in delivery buying or Futures & Options.
- It is always necessary to offload 50 % of the quantity to cover the stop loss risk. For example, if a stock is bought for Rs. 100 & stop loss is put below Rs. 95, as the stock reaches Rs. 105, 50% of the shares must be sold off so that even if the stop loss is triggered you will not lose money.
Examples of SMS Trade / SMS Prime Research Reports (SMSs)
| Examples of SMSs | Description |
|---|---|
| SMS Trade / SMS Prime: Buy RELIANCE above 1000. Stop loss below 990. Target 1050. Please dont buy below 1000 (NSE Cash) |
This report is for day trading & for NSE Cash market and not for BSE or Futures market. You are cautioned not to buy the stock below 1000 because there must be a resistance at this rate. You have to place a stop order for buying the stock above 1000. Immediately after the execution of order, you have to place stop loss below the indicated rate (990). As the stock moves above 1010, you have to sell 50 % of the quantity, so that even if your stop loss is triggered you will not lose money. You can hold the balance 50 % till the target is hit or if you want, you can sell them at any rate for profit. |
| Revised Stop Loss for RELIANCE below 1015 | When the stock is moving swiftly in the desired direction, the trailing stop loss is moved in the direction of trade. Move the stop loss as indicated in the report (SMS). This will make your trade profitable even if the trailed stop loss is triggered. |
| Exit from RELIANCE | This SMS is sent when it is felt that it is risky to remain in the stock & it's better to close the trade. |
| Book profit in RELIANCE | This SMS is sent when it is felt that it is better to close the trade by booking whatever profit is gained. |
| RELIANCE call has not matured | If you were asked to buy a stock above certain rate but the stock fails to reach that rate, this SMS is sent. |
| Market is volatile, keep away from market | This SMS is sent to caution the traders to keep themselves away from the volatile & choppy market that is when trend fails to get established. |
Understanding SMS Invest / SMS Swing Research Reports (SMSs)
| Examples of SMSs | Description |
|---|---|
| SMS Invest / SMS Swing: Buy JSW Steel above 720. Stop Loss below 648. Target 1037 before 30th November 2009. Risk 10%, Return 44%. Risk Return Ratio 2:9. Please donot buy below 720. | SMS Invest / SMS Swing reports (SMS) are sent for buying the delivery of a specific stock & holding it either for a short or a long period. Stop loss levels are also specified for the delivery calls. Please do not buy the stock below the specified level or do not remain in the stock below the stop loss level. |
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