WiseMan Trading

  Common Gaps Sometimes referred to as a trading gap or an area gap, the common gap is usually uneventful. In fact, they can be caused by a stock going ex-dividend when the trading volume is low. These gaps are common (get it?) and usually get filled fairly quickly. "Getting filled" means that the price action at a later time (few days to a few weeks) usually retraces at the least to the last day before the gap. This is also known as closing the gap. Here is a chart of two common gaps that have not been filled for while but now filled up . Notice that after the gap the prices have come down to at least the beginning of the gap? That is called closing or filling the gap. A common gap usually appears in a trading range or congestion area, and reinforces the apparent lack of interest in the stock at that time. Many times this is further exacerbated by low trading volume. Being aware of these types of gaps is good, but doubtful that they will produce a trading opportunities. Brea...

1. Having no plan An investor with no plan does not know what he wants. Investments are made in order to finance or accomplish something. In order to be able to invest in a proper manner, an investor should know what he is trying to achieve. He needs to have a reason he is investing for. For some investors this may be for the retirement, for some it may be the education of the children, but there are also who are willing to invest for the short-term goals such as a vacation. Having a plan helps the investor to decide in what type of securities he must invest in, how long he should invest and how much he should invest in order to get the expected return that he wants.    6 financial planning mistakes that can change life 2. Going with the market trend Some investors give too much importance to what is written in financial media. They almost always refer the Financial news before making any investment. By investing in this so-called fashionable securities, investors fall into a ...

This article is about the basics of portfolio diversification. If you want to get a more comprehensive idea of portfolio diversification. People may have huge resources at their disposal deployed in a particular asset class. For Example, Mr. Alex had a huge amount of funds which he decided to invest only in real estate.  Accordingly, he pooled a large amount of funds in the real estate market. In a couple of years,  he gained multiple amounts of returns from the investment made and therefore continued to invest in that particular asset class. He was contended without diversifying his portfolio. What if that particular asset class suddenly starts showing a bad result? What if the market does not respond well to that asset class? What if Mr. Alex had a cash crunch and liquidity becomes an issue? Like Mr. Alex, there are several investors who are unwilling or are not aware of the benefits of portfolio diversification. To resolve all the above-mentioned queries and to make the inv...

 Mistake 1 – Waiting for the so-called “right time” for investing in financial markets During our school or college days, when we are financially dependent on our parents, we think that we will invest soon when we get our first salary. On getting our first salary, we think that it is the time to rejoice the perks of all the hardships, so we treat ourselves with the best of luxury. We all know that money is what money does. Gone is the first salary and then year after year, since we get addicted to the luxury, we end up complaining that we do not have much left in hand after expending. Well. If you are spending before saving, then obviously you have no amount of savings in your hand at the end of the month. You promise to yourself that you will start investing as soon as there is salary hike. Salary increases, but you never save. Eventually in the early 30’s, when you face the boredom of responsibility you wish you would have saved at the “right time” That right time was soon after ...

 Traders often go through periodic up and down phases in stock market, but if it occurs on a frequent basis, they should introspect and try to find out the reason for the same. It may so happen that they might ride on beginner’s luck at the start of their trading career, but soon law of average will likely kick in and if they are not disciplined, they may lose quite a lot of money. In such scenarios, instead of getting depressed or cursing the market, traders should spend time in figuring out their weaknesses, improve their knowledge and become more disciplined. Many people consider trading stocks to be the simplest way of making money but it often comes out be the easiest and fastest way of losing money. Also, often you might have heard an analyst discussing on news channels that market is making new highs but you may wonder that your portfolio is not performing the same and rather end up in losses. Today you will get to understand the 5 important reasons why most traders lose mon...

If you are one of them who pays a lot of attention to financial media and base your trade based on their recommendation, here are eight facts you must know about how media affect your mind and behaviour in the long run. 1. Everyone is biased Most of the people we see on business media is paid. Since everyone is selling something, biasness is bound to occur. If you still want to base your decision on the financial media, it’s better to conduct your research rather than blindly following them. 2. People in business media are more actors than experts The anchors and analysts on financial media try to create an authority bias through good English, use of high-fi jargons and with good dress up. These are the perfect ingredient to trap people. 3. Everyone is selling Everyone is selling something or other thing in the market. Some sell you the stocks they already hold (so that they become richer and richer when you buy), some tries to sell some financial products, some newsletter or any finan...

Investment is a process or an action undertaken with an expectation to generate profit in future. In the dynamic environment, we live in it has become a very common tool used by people at almost all the levels, making proper planning of money is an integral part. However, the financial planning mistakes that a person makes can change its life. Money is a very vital part so decisions regarding how to invest money and where to invest money should be taken with utmost care. Investments, if put to good use, can yield great benefits and vice-e-versa. Therefore this tool/process called investment should be used wisely. As per Alan Lakein – “Failing to plan is planning to fail” Therefore avoiding financial planning mistakes is very important for safeguarding your and your loved one’s future. 

The best way to profit in the stock market, or any financial market, is to capture a trend in your time frame. There are other ways, like selling option premium or hedging production by selling futures contracts.                                               DECEMBER PNL AN REQUESTED BY MANY   But the majority of market participants are trying to capture a trend on their own trading or investing time frame. Buy and hold investors are betting on the long-term uptrend of the stock market over the course of their working life. Day traders try to capture trends from the time the market opens, until the time it closes, all in one day. Swing traders are looking to buy a low and then sell it as it trends higher over a few days, or sell a high price short and cover it at a lower price over a few days’. I have found that the longer the time frame, ...

 How to Trade the Cup and Handle Chart Pattern How to Enter and Exit This Powerful Pattern  Chart patterns occur when the price of an asset moves in a way that resembles a common shape, like a triangle, rectangle, head and shoulders, or in this case a cup and handle. These patterns are a visual way to trade. They provide a logical entry point, a stop-loss location for managing risk, and a price target for exiting a profitable trade. Here's what the cup and handle is, how to trade it, and things to watch for to improve the odds of a profitable trade. 

I too started as a buy and hold investor. Like any other investor, I used tools like PE ratio, PB ratio, EPS etc for my analysis. I compared the company PE ratio with the Market, Sector, Industry and the historic PE of the same company. I wasted a lot of money, energy and time after buying an undervalued stock and waiting for the market to discover the value. One fine morning, it dawned on me that I must focus on market price rather than on this ratios .So I changed the formula.    PE Ratio = Market Price / Earnings per share    TO    Market Price = Earnings per Share * PE Ratio So the Market price is a multiple of  EPS and a variable. This variable is nothing but the market sentiment. Our companies declare their results quarterly and this EPS remained a constant at least for a quarter .Then everything was clear, the focus should be on the sentiment rather than on earnings for the short term player. People may argue that projected EPS is more impo...