Important explanation for traders and investors.

The followers of this blog should be clear about the terminology that we use in our posts on stock market investing and trading.

First and foremost one may note that we give advise to three different sets of people.

1. Intra-day traders.  It is understood that the intra-day trader has continuous access to the trading screen and can get in or out of a trade at any point in time between 9.15 am and 3.30 pm. It is also understood that his internet connection is very fast. This class of trader is supposed to watch the market in the initial hour of trade and make sure as to which side of the critical mark, stated in our post, the market is trading. They should accordingly trade placing strict stop losses and square off their trades as soon as they make money. There is one more thing. The traders may put stop losses and may train themselves to forget their profits or losses at the end of the day. All they should focus in is to see that they put in equal amount of money everyday. Say for example if you put 10000 rupees  on any day then you should put in no less and no more then 10000 on any other day. You have to shell exactly 10000 bucks everyday. More importantly you have to square off your trades on the same day. You are not supposed to carry your positions to the next day no matter what.

2. Short-term traders. This class of traders too are understood to have continuous access to trading screen but they may not necessarily square off their positions on the same day. The maximum period for which they should cling to their positions is from one to three days. However, they should also place strict stop losses and if they do not square off their positions on the same day then they may revise their stop loss on the next day as indicated in our post on the next day. They may also see that the total money they have put in the market should be the same everyday.

3. Mid-term investors. This class of investors are supposed to carry over their trades and portfolios for at least three days and beyond to at most three months. They are required to place their bids and offers in small quantities and in case their bids or offers do not get hit i.e are not successful i.e. the shares do not get bought or sold at the given prices, they should not revise their bids and simply forget buying or selling them. In no case should they change their bids or offers from the ones we give. They may however off sell their investments in case they get anything above what the standard bonds offer.
Disclaimer: The writers of this column do not personally hold any stock or position in the F&O market and do not intend to benefit in any way by publishing this column. The final discretion is that of the reader and we disown any responsibility for any loss incurred by the reader