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Experience of a Naive Market Operator
Gautam Dev
Short Essay
and had moved on to some other stock equally defiant.
My losing streaks continued! It was interrupted by a few winning trades, but they were few and far
My losing streaks continued! It was interrupted by a few winning trades, but they were few and far
between. So I will be losing… losing …losing… gaining… .losing… losing…. losing….losing…. losing…..losing….gaining….losing.
At this point I start getting worried. As a small investor, what do I do? How will I get insight about a company,or about the market in general? Or are stocks not for me at all? Should I just invest in mutual funds and forget about stocks? Oh well where is the fun in that! No, I was not ready to bite the bullet yet. I thought funds are for old people and retirement accounts. I still thought stock market has a big reward in store for me. If George Soros, William O Neil can do it, why should not I be able to do it. Moreover, if I play the market, I can watch CNBC, and Maria will always be there! I hope she knows how much I am suffering.
Someone told me to apply technical analysis. At first, I thought that will be a complicated thing. But I got to know that their main tenet is stocks which are in uptrend, tend to go up,and stocks which are in downtrend, tend to go down. May be it is just me; I cannot see what is so technical about it. I could have said that. I thought it would tell me something I don’t know.
There are some methods by which, they claimed one can make sure fire profitable trade. But some of the methods seem very complicated to me. One such method will say:
At this point I start getting worried. As a small investor, what do I do? How will I get insight about a company,or about the market in general? Or are stocks not for me at all? Should I just invest in mutual funds and forget about stocks? Oh well where is the fun in that! No, I was not ready to bite the bullet yet. I thought funds are for old people and retirement accounts. I still thought stock market has a big reward in store for me. If George Soros, William O Neil can do it, why should not I be able to do it. Moreover, if I play the market, I can watch CNBC, and Maria will always be there! I hope she knows how much I am suffering.
Someone told me to apply technical analysis. At first, I thought that will be a complicated thing. But I got to know that their main tenet is stocks which are in uptrend, tend to go up,and stocks which are in downtrend, tend to go down. May be it is just me; I cannot see what is so technical about it. I could have said that. I thought it would tell me something I don’t know.
There are some methods by which, they claimed one can make sure fire profitable trade. But some of the methods seem very complicated to me. One such method will say:
watch a stock to want to buy for a while until it gives a buy signal or sell? But to identify these signals one has to go through hoops.As an example, one needs to watch a stock with rising momentum. What is a rising momentum? It is a combination of rising price as well as rising volume. But that is not the end of it. Once you have spotted rising momentum on a stock, you watch for a setup which happens in the following manner. The stock should have four consecutive days of up followed by two down days, with diminishing volume. It is important that the down days don’t go below 10-day average. At this point, one should watch if any divergence is occurring between the 10-day standard deviation and the 20 exponential stochastic indicator. If all these conditions satisfy along with some others, one should place a buy order after four days of watching. At this point if one is not sick, one can buy the stock on the fifth day if the volume is above average. Now it comes to selling, and you guessed it, the rules get even more complicated for selling. I would rather leave it for the purpose of this article.
