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The "STOP-LOSS" Order: Not Just for Preventing Losses

Posted on 28 November, 2015 at 8:55 Comments comments (1)

 

 

Hi Friends,

I know its been a long time that  we have posted anything on our website, but believe me we were really busy with our clients and making strategy to earn money for them.  In this past one month have seen many ups and downs for specific stocks and market as whole was in downtrend. We have seen upside in Tata Motors, Motherson sumi, Cupid, Aviation Stocks etc.. and downtrend in Dr. Reddy, Sun Pharma, Tree House etc..which were star performers for many of the fund house in the recent past.

Also I am sure what we have learnt in this was that retail investor have once again burn their fingers and lose their hard earned money at the same time. This was just because they were emotionally attached to these stocks and were wrongly advised by TV anchors and advisors to buy and short these scripts at high or low point.

Investor have not burn their finger because of their advise but because they failed to apply stop loss advised by them in some or the many cases. Financial adviser used this tool so called STOP- LOSS very smartly for their clients they track and monitor but for retail investor they have to control and apply it by their own. And Most of the time they failed to do the same.

So as HamaraProfit mission says that "we want to educate our clients and customers who visit us with good faith", We really want to teach them about " Stop- Loss" order and if you like the same then please share, like and give your valuable comments.

 

What Is a Stop-loss Order?

It is an order placed with a broker to buy or sell once the stock reaches a certain price. A stop-loss is designed to limit an investor's loss on a security position. Setting a stop-loss order for 10% below the price at which you bought the stock will limit your loss to 10%. For example, let's say you just purchased Tata Motors at 300 Rs. per share. Right after buying the stock you enter a stop-loss order for 270 Rs. This means that if the stock falls below 270 Rs, your shares will then be sold at the prevailing market price.

 

Positives and Negatives

The advantage of a stop order is you don't have to monitor on a daily basis how a stock is performing. This is especially handy when you are on vacation or in a situation that prevents you from watching your stocks for an extended period of time.

 

The disadvantage is that the stop price could be activated by a short-term fluctuation in a stock's price. The key is picking a stop-loss percentage that allows a stock to fluctuate day to day while preventing as much downside risk as possible. Setting a 5% stop loss on a stock that has a history of fluctuating 10% or more in a week is not the best strategy. You'll most likely just lose money on the commissions generated from the execution of your stop-loss orders.

 

 

Another thing to keep in mind is that once your stop price is reached, your stop order becomes a market order and the price at which you sell may be much different from the stop price. This is especially true in a fast-moving market where stock prices can change rapidly.

 

 

Not Just for Preventing Losses

Stop-loss orders are traditionally thought of as a way to prevent losses thus it's namesake. Another use of this tool, though, is to lock in profits, in which case it is sometimes referred to as a "trailing stop". Here, the stop-loss order is set at a percentage level below, not the price at which you bought it, but the current market price. The price of the stop loss adjusts as the stock price fluctuates.

 

Continuing with our Tata Motor example from above, say you set a trailing stop order for 10% below the current price, and the stock skyrockets to Rs. 400 within a month. Your trailing-stop order would then lock in at Rs. 360 per share (400 - (10% x 400) = 360). This is the worst price you would receive, so even if the stock takes an unexpected dip, you won't be in the red. Of course, keep in mind the stop-loss order is still a market order - it's simply stays dormant and is activated only when the trigger price is reached -- so the price your sale actually trades at may be slightly different than the specified trigger price.

 

Advantages of the Stop-Loss Order

  1. First of all, the beauty of the stop-loss order is that it costs nothing to implement. Your regular commission is charged only once the stop-loss price has been reached and the stock must be sold. You can think of it as a free insurance policy.
  2. Most importantly, a stop loss allows decision making to be free from any emotional influences. People tend to fall in love with stocks, believing that if they give a stock another chance, it will come around. This causes you to give the stock yet another chance to move as what you want . In the meantime, the losses mount....
  3. No matter what type of investor you are, you should know why you own a stock. This also means that if you are a hardcore buy-and-hold investor, your stop-loss orders are next to useless.
  4. The point here is to be confident in your strategy and carry through with your plan. Stop-loss orders can help you stay on track without clouding your judgment with emotion.
  5. Finally, it's important to realize that stop-loss orders do not guarantee you'll make money in the stock market; you still have to make intelligent investment decisions. If you don't, you'll lose just as much money as you would without a stop loss, only at a much slower rate.

Conclusion

A stop-loss order is a simple tool, yet so many investors fail to use it. Whether to prevent excessive losses or to lock in profits, nearly all investing styles can benefit from this trade. Think of a stop loss as an insurance policy: you hope you never have to use it, but it's good to know you have the protection should you need it.


Regards

HamaraProfit

 

 

Saving vs. Investing --- What you will choose?

Posted on 29 October, 2015 at 13:25 Comments comments (4)

Saving vs. Investing --- What you will choose?

There are lots of reasons to invest. Whether it's for a down payment on a house, your child's education, or your retirement, your goal is to accumulate enough assets to meet your financial objectives.

Although saving and investing are often used to mean the same thing, they are not the same. If you simply deposit your money in a savings account, you would earn a small amount of interest. This can be an effective way to meet short-term goals or to provide for emergencies, but you may not keep up with inflation over the long term. Investing means that you put your money to work to achieve your long-term goals.

 

 

Investing is buying things of value that have the potential to provide income or increase in value over the long run. Of course, the potential for growth comes with the risk that your investments may lose value. Here are some key differences between saving and investing.

 

Saving                                                                                    Investing

Safe                                                                                                                         Involves risk

Low return                                                                                                             Offers potential to appreciate in value

Easily accessible                                                                                                Volatile over short-term periods

Used for short-term goals                                                                                Used for mid- and long-term goals


There's always an element of risk with investing. Generally, the greater the potential for long-term returns, the greater the risk of short-term losses. That's why understanding investment risks and as well as your ability to tolerate risk is one of the first steps toward a successful investing strategy.


Happy Investing!!!

Regards

HamaraProfit

Deals of the day 28th Oct, 2015

Posted on 27 October, 2015 at 18:30 Comments comments (3)

Hi All,

Following suggestions and recommendations are by no means for intraday trading. Please do your study if you have any doubt on this investment ideas: 

Buy Trident ltd @ 42 for the short term target of T1: 48 Rs and T2: 53 Rs

Buy Container Corporation @ 1300 to 1330 for the target of 1450+ Rs

And you can buy snowman logistics @ 91 to 92 for target 102 rs and more.

Happy investing!!!

Regards

Hamaraprofit

Spicejet- The world is not Enough!

Posted on 24 October, 2015 at 10:10 Comments comments (1)

SpiceJet, the country's favourite low-cost carrier, achieved the highest Occupancy Rate of 93% for the month of September 2015. This is the sixth consecutive month that the airline has topped the charts in terms of Occupancy Rate. It is also the fifth consecutive month that SpiceJet has maintained an Occupancy Rate of over 90%, a feat unparalleled among its peers.

 

The airline has also remarkably bettered its OTP (On Time Performance) over the past few months and its OTP for the month of September 2015 stands at 85%.

 

Recently, SpiceJet was honored as the 'Best Airline' by West India Travel Awards at Goa. The awards were presented to achievers from different segments of the industry in West India such as Aviation, Domestic and International Tourism Boards, Hotels and Resorts, Travel Agents, Tour Operators and Technology Services. The winners of the awards were decided through a fair and unbiased selection process done through online voting and judging by a panel of jury consisting of the travel industry luminaries.

 

As they say this is just the beginning, the best is yet to come!!!

SpiceJet is truly flying higher each day!!!

Happy Investing,

Regards

Hamara Profit

Deals of the day 23th Oct, 2015

Posted on 22 October, 2015 at 11:45 Comments comments (1)

Hi All,

Hope you all had a good holiday yesterday and also global market did pretty well because of US data and ECB’s Draghi hints at more QE in December. As this is the good news for Equity asset class hence all the major indices went up significantly as there will be more liquidityo the come into the system. And this makes Euro weaker against the US dollar so people who have shorted EUR/ USD last week or earlier this week are at good profit  as we too had also shorted EUR/USD last week. So that is about global and FX market.

Now comes to our Indian stock market we are positive that it will take these global cues and will open in green tomorrow we have nifty support @ 8190 and resistance @ 8290 and 8330 crossing that we can go upto 8400.

Stocks which i like people to buy, please understand these recommendations are not for intraday it is purely an investment ideas play in cash rather than in margin

Buy Cosmo films between 225 to 235 rs for the shorterm target of 275rs as it will try to break its 52 week high this week.

Buy Mahindra CIE between 250 to 265 rs for the target of 300 rs. 

Buy Mangalam Drugs and Delta corp too as they had post a good earning result they both can fly tomorrow.

Guys if you like our posts or have any suggestions please do let us know. Also Like and share our website details with others too.

Note: Please invest in cash market not in margin call or by borrowed money as we all know market has its own risk.

Happy Investing!!!

Hamara Profit

Deals of the day 20th Oct, 2015

Posted on 19 October, 2015 at 15:15 Comments comments (10)

Buy Rane Brakes @315 for the target of 375 rs in short term

Buy Kitex Garment between 800-820 rs for the short term target of 900+

And Buy SKS Microfinanc by between 445 to 460  for the target of 500 to 550 in short term.

as these stocks are on the verge of breakout and with their decent quarter result it got the trigger as well. So recommending buy for these stocks.


Kitex Garment:


Rane Brakes:


SKS Microfinance


Happy Investing!!!!


Regards 

Hamara Profit

Deals of the day 19th Oct, 2015

Posted on 19 October, 2015 at 0:00 Comments comments (6)

Buy Spicejet @ 45 target 76 rs for coming 3 months.

Buy Repro [email protected] 450 Target 500 rs in few weeks.

Buy CCL Product @ 220 Target 280 rs in short term.

Buy Jet Airways @ 396 Target 450 rs in few weeks.

Regards

Happy Investing


Important Points About Stock Investing!!!

Posted on 17 October, 2015 at 7:55 Comments comments (3)

The Ten Most Important Points about Stock Investing:

 

1. You`re not buying a stock; you`re buying a company.

 

2. The primary reason you invest in a stock is because the company is making a profit and you want to participate in its long-term success.

 

3 If you buy a stock when the company isn`t making a profit, you`re not investing — you`re speculating.

 

4. A stock (or stocks in general) should never be 100 percent of your assets.

 

5. In some cases (such as a severe bear market), stocks aren`t a good investment at all.

 

6. A stock`s price is dependent on the company, which in turn is dependent on its environment, which includes its customer base, its industry, the general economy, and the political climate.

 

7. Your common sense and logic can be just as important in choosing a good stock as the advice of any investment expert.

 

8. Always have well-reasoned answers to questions such as "Why are you investing in stocks?" and "Why are you investing in a particular stock?"

 

9. If you have no idea about the prospects of a company (and sometimes even if you think you do), use stop-loss orders.

 

10. Even if your philosophy is to buy and hold for the long term, continue to monitor your stocks and consider selling them if they`re not appreciating or if general economic conditions have changed.


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