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Trading Psychology
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basant
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Quote basant Replybullet Posted: 31/Aug/2013 at 9:21am
Originally posted by zulfi

Originally posted by basant

Price & not valuation influences an investor's decision to go on leverage that's why leverage thrives with the bull & shrinks with the bear.


thats v get such depressed prices on stock , as v r seeing presently


Depressed prices look good when an investor is waiting with cash to buy them and in most cases cash does not get converted into stocks at market bottoms just as stocks don't get converted into cash at the tops.
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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rohit1889
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Quote rohit1889 Replybullet Posted: 31/Aug/2013 at 11:49am
True that. We wait for 10% fall. But even though it falls 20% , we think let the market fall another 10% then I will buy. Then finally we buy when market is up 50%

Originally posted by basant

Originally posted by zulfi

Originally posted by basant

Price & not valuation influences an investor's decision to go on leverage that's why leverage thrives with the bull & shrinks with the bear.


thats v get such depressed prices on stock , as v r seeing presently


Depressed prices look good when an investor is waiting with cash to buy them and in most cases cash does not get converted into stocks at market bottoms just as stocks don't get converted into cash at the tops.
If you're prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won't get bored.
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manish_okhade
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Quote manish_okhade Replybullet Posted: 31/Aug/2013 at 11:53am
When prices fall then volume goes down gradually as sellers are more and buyers less and systematic selling happens in tranches while volume increases heavily when repurchase starts. So stock appreciation is very fast and difficult to catch as compared to falling stock. And tragedy is that nobody knows the bottom except Almighty.So it makes sense to buy stocks one loves in SIP fashion with the valuation one is comfortable with instead waiting for absolute bottom to occur.


Edited by manish_okhade - 31/Aug/2013 at 11:54am
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zulfi
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Quote zulfi Replybullet Posted: 31/Aug/2013 at 11:56am
Originally posted by rohit1889

True that. We wait for 10% fall. But even though it falls 20% , we think let the market fall another 10% then I will buy. Then finally we buy when market is up 50%

Originally posted by basant

Originally posted by zulfi

Originally posted by basant

Price & not valuation influences an investor's decision to go on leverage that's why leverage thrives with the bull & shrinks with the bear.


thats v get such depressed prices on stock , as v r seeing presently


Depressed prices look good when an investor is waiting with cash to buy them and in most cases cash does not get converted into stocks at market bottoms just as stocks don't get converted into cash at the tops.
RISK IS NEVER IN MARKETS , IF U WANT TO FIND RISK, GO CLOSE TO THE NEAREST MIRROR @ HOME N LOOK @ MIRROR U WILL KNOW WHERE IS THE RISK
U CAN WIN A HORSE RACE BUT U CANNOT WIN RACES
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prabhakarkudva
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Quote prabhakarkudva Replybullet Posted: 01/Sep/2013 at 2:34pm
Another one about leverage: The more leverage (risk) we take the easier it is mentally to take even more leverage (risk).

This is the reason for a lot of people to lose their shirts and more. They start with little leverage and once they taste some success it is very easy mentally to convince ourselves to pile more leverage where even a small mistake turns out to be fatal.
Take your chances and keep them in a box until a quieter time.
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FutureBull
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Quote FutureBull Replybullet Posted: 03/Sep/2013 at 11:22pm
Prabhakar, good point. This made me think again on leverage and I saved some notional loss.
Also, the problem with leverage is the decision when to take leverage is laced with emotion and (over)confidence. Both can wrong since this is more to do with timing.

Originally posted by prabhakarkudva

Another one about leverage: The more leverage (risk) we take the easier it is mentally to take even more leverage (risk).

This is the reason for a lot of people to lose their shirts and more. They start with little leverage and once they taste some success it is very easy mentally to convince ourselves to pile more leverage where even a small mistake turns out to be fatal.
‘The market always does what it’s supposed to — BUT NEVER WHEN’.
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basant
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Quote basant Replybullet Posted: 03/Sep/2013 at 10:37am
Most people who take leverage (including me) are addicted to it. The sheer passion of investing makes you feel incomplete unless you have had a little more than what you can afford. As Livermore said if your stocks are keeping you awake at night than sell down to the sleeping point but for me if my stocks keep me relaxed during the day I take leverage upto the worrying point, its like saying okay I have now bet all that I could and can do no more but leverage should come with a lot of primary (real) research it can't be dependent on what we read on Internet forms, chat sites and hearsay brokerage reports.

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Quote Jimm0y74jp Replybullet Posted: 02/May/2016 at 9:37pm
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