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How to Identify & Avoid Bad Stocks?
10 Steps to Identify Good Stocks & Avoid Bad Stocks Identifying bad stocks is crucial in the stock market. Here are the 10 simple steps to follow in order to identify the good stocks. 1. Do Research: Look into the company you're interested in. Check if they have a solid history of making profitsRead more
10 Steps to Identify Good Stocks & Avoid Bad Stocks
Identifying bad stocks is crucial in the stock market. Here are the 10 simple steps to follow in order to identify the good stocks.
1. Do Research:
Look into the company you’re interested in. Check if they have a solid history of making profits. Look for information about their products, services, leadership, and how they compare to their competitors.
There are multiple sites like moneycontrol and screener to check the financials and company history. Utilize those sites to go deep in to the history of the company.
2. Financial Health:
Check the company’s financial statements like balance sheets, income statements, and cash flow statements. Make sure the company is not in debt and has enough cash to cover its obligations.
It is recommended to check at least past 5 years of financial condition of the company.
3. Dividends:
Examine the company’s earnings growth over the years. Consistent growth is a good sign to invest. Also, check if they pay dividends regularly. A company that pays dividends can indicate financial stability & caring towards the investor.
4. Watch Market Trend:
Watch the trend in the market and the industry the company belongs to. If the industry is in downtrend, even a good company might face challenges. Make sure to check the reasons behind the downtrend of the company.
5. Management Team:
Analyze the management team. Good leadership can steer a company in the right direction, while poor management can lead to bad decisions and financial troubles.
Do you know the companies owned by the sharks in the program Shark Tank are performing 3x better.
This happens when a consumer identifies the inner nature of the founder. Personal credibility of the founder/ management is also makes big difference.
6. Company’s Debt:
Huge debt can be a red flag. If a company owes a lot of money, it might struggle to meet its obligations, that impacts the stock price.
7. Reviews and Ratings:
Check for ratings and reviews of the company and its products/ services by financial experts and other retail consumers. Their insights can provide valuable perspectives.
8. Stability and Volatility:
Look for stocks that are relatively stable and have a history of consistent performance. Stocks with extreme ups and downs may not be the best choice for long term investment.
Stocks like ITC, Hindustan Unilever are the best examples of stability. Identify the stocks like these for long-term investment.
9. Avoid Speculation:
Be cautious of stocks that are speculated or getting a lot of media attention. Sometimes, this rise doesn’t translate to real value. That rise may go down when the investors realize its’s actual value.
10. Diversification:
Spread your investments across different industries and different companies. This way, if one sector performs poorly, it won’t significantly impact your overall portfolio.
Ex: 20% in Cement Industry, 20% in IT Industry, 20% in Infrastructure, 20% in Steel Industry, 20% in Banking Sector
Remember, investing in stocks carries risks. It’s important to do your own research, diversify your investments, and stay updated about the companies you invest in. If in doubt, consulting with a financial advisor can be a smart move.
See lessWho is the Best Stock Market Trainer in India?
Best Stock Market Trainer There are many youtubers and offline trainers for stock market. But coming to the price action trading, one of the best YouTube channel to learn is Vikram Prabhu's Pivot Call YouTube Channel. Pivot Call YouTube Channel: Vikram Prabhu, a full time trader, trainer, and a YoutRead more
Best Stock Market Trainer
There are many youtubers and offline trainers for stock market. But coming to the price action trading, one of the best YouTube channel to learn is Vikram Prabhu’s Pivot Call YouTube Channel.
Pivot Call YouTube Channel:
Vikram Prabhu, a full time trader, trainer, and a Youtuber since 2019 and it gathered more than 3.50 lakh subscribers.
Mr. Vikram Prabhu has his own strategies in price action trading and a big heart to train and lead others to succeed in making good money.
According to Vikram, you cannot become a good trader overnight, you need to gain experience, spend screen time, analyze charts/price action, calculate the risk management, and trading psychology are essential.
He conducts various courses on price action on his webinars and you can obtain a complete picture from the official website: http://www.pivotcall.com or you can whatsapp @ 766650 4759 or contact through email at contact@pivotcall.com.
See lessWhat is the Difference Between Investment and Speculation?
Difference Between Investment & Speculation Here is the difference between investment and speculation in terms of stock market. Investment: Investment is like planting a tree. When you invest, you're putting your money into something with the hope that it will grow and provide benefits in the fuRead more
Difference Between Investment & Speculation
Here is the difference between investment and speculation in terms of stock market.
Investment:
Investment is like planting a tree. When you invest, you’re putting your money into something with the hope that it will grow and provide benefits in the future. You carefully choose in which stocks you invest based on its potential to increase in value over time.
Investments usually have a solid foundation and are backed by thorough research and analysis. The investor aim is to make money over the long term. They do not expect huge money in short term as the scalpers do.
Speculation:
Speculation is like betting. When you speculate, you’re taking a chance on something with the hope of making a huge profit in short time.
Speculative decisions are often based on short-term market movements, rumors, or a gut feeling on any particular stock movement. Speculators mostly depend on short-term price changes.
In simple terms, investing is a long-term strategy where you carefully choose what you put your money into, while speculation is a shorter-term gamble based on guesses or feelings about what might happen in the market.
See lessWhich Algo Software is Best for Trading?
List of Top 5 Algo Trading Software Apps With umpteen benefits an algo trading software provides, you must never be hesitant to know about the features led by the market players of Algo Trading. Here are the list of top 5 best trading software apps that can provide you with high returns on your invRead more
List of Top 5 Algo Trading Software Apps
With umpteen benefits an algo trading software provides, you must never be hesitant to know about the features led by the market players of Algo Trading.
Here are the list of top 5 best trading software apps that can provide you with high returns on your investments. They are
1. Zerodha Streak App:
Are you wondering about a good algorithm platform? Then in India, Zerodha Streak is the best, as per the stock market analysts.
2. Zerodha Algoz:
Zerodha Algoz is a wonderful app designed and launched in 2013 where millions have subscribed to it and the current, the updated features provide a great friendly insight.
Merits:
Demerits:
3. Algotrader
Merits:
Demerits:
4. Robotrade Algo Trading App:
Investors are fast relying on Robotrade, one of the most sophisticated and automated trading systems. The product is featured with real-time data, it also automates the investor’s stop loss. You can handle manually or conduct automatic trading. The order of execution will be sub-1 second, and it provides features that enable you in testing your strategies and the software utilises AI robotics. It provides an access to charting when executed, can provide a profitable strategy and also issues good technical insights. You can make use of multiple charts and templates simultaneously. The Robotrade supports National Stock Exchange, Bombay Stock Exchange, MCX, and F&O
Merits:
Demerit:
5. Robotrader:
Merits:
Demerits:
- You shall be provided access to free trading but it is limited in form. You will need to have analytical and programming skills to utilise the software tool effectively.
See lessWhy PR Sundar’s Workshop is so Expensive?
‘Why Is PR Sundar's Workshop So Expensive?’ In words of PR Sundar PR Sundar sir has given a clarity on why his workshops are so expensive. Here are the lines that was spoken by him on his YouTube channel. I was pretty impressed when I saw the logical explanation provided by PR Sundar when asked whyRead more
‘Why Is PR Sundar’s Workshop So Expensive?’ In words of PR Sundar
PR Sundar sir has given a clarity on why his workshops are so expensive.
Here are the lines that was spoken by him on his YouTube channel.
I was pretty impressed when I saw the logical explanation provided by PR Sundar when asked why the futures and option training programs under his guidance are heavily charged.
After listening to his argument I clearly understood the gravity of his (F&O) training programs and why those training hubs have been mushroomed by the enthusiastic investors of the stock markets.
At (F&O) workshops, he teaches several strategies, and helps to understand capital diversification.
Before I begin with, let me illustrate the basic system of training that is provided by Mr. PR Sundar. You can attend online training programmed and offline training programs and they are located in Chennai, Hyderabad, Bangalore, and Mumbai.
Online Classes:
In most of his digital training programs, you will find 50 percent of the time provided in learning through pre recorded digital classes and another 50 percent of the time is contributed to the live video zoom sessions where the course participants are given one on one query clarification sessions also.
You are free to approach the faculty (PR Sundar) after going through the pre recorded classes. Here, you must note that the offline classes are more expensive than the online classes as the course participants are provided with 100 percent live classes.
PR Sundar Offline Courses:
The offline course participants will be extended with knowledge on futures and option trading, a free hand-holding. It is for a period of 2 to 3 months and shall be extended to the first four batches. An impressive discount shall be provided to the course participants.
Offline workshops are charged more than the online, you will have to pay for hotel bookings, travel expenses, and so on.
You will get 18 hours to interact with PS Sundar in the two day workshop.
You will be participating in a 100 % live interaction with the faculty ( PR Sundar).
He speaks in an air of confidence in a manner but doesn’t promise that you will earn your investment done in participating in the free hand-holding F&O course.
Typically, after the course completion, you will be able to earn a return of 3 to 5 percent on your capital investment. Your return on investment may differ if any untoward stock market incidents occur.
Important Note:
You are strictly instructed to attend the course only when you are sure to do F&O trading with a capital investment of INR 25,00000 and above only.
Anybody less than that capital investment is not advised to participate in the futures and option (F&O) training program.
If you tend to calculate the percentage of the capital investment that goes into the offline training program is only 3 percent that means it will be somewhere around INR 70,800.00 inclusive of GST.
Workshop Structure:
With PR Sundar you can learn three things:
1 day workshop (10 lakh capital investment) Course content involves:
2 day Workshop (25 Lakh Capital Investment) Course Content Involves:
Even after providing so many benefits, you will be surprised to hear that the course fee (futures and option trading) has created a huge cry on the Internet.
Collared Option Strategies Course for a Low Capital Investors:
PR Sundar doesn’t want to dishearten low capital investors, if you can make an investment of about 1 to 3 lakhs then you can join another course. For example, Collared option strategies does concentrate on adjustment for the iron collared option strategy and even provides 5 pre recorded videos, and one FAQ video session. It is provided to the first 100 course participants on the iron collared option strategies where you can find most common doubts and queries on the subject. You can register by clicking the link on the collared option strategy web link page.
See lessWhat are the Best Monthly Income Schemes?
Best Monthly Income Schemes: You can earn a decent monthly income after your retirement or even before it by investing your earnings into securities. They are Post Office Senior Citizen Schemes, Systematic Withdrawal Plans, Bonds, Fixed Deposits, etc. You can obtain a brief description of them in thRead more
Best Monthly Income Schemes:
You can earn a decent monthly income after your retirement or even before it by investing your earnings into securities.
They are Post Office Senior Citizen Schemes, Systematic Withdrawal Plans, Bonds, Fixed Deposits, etc. You can obtain a brief description of them in the coming up paragraphs.
1. Post Office Senior Citizen Scheme:
Post office runs a monthly income scheme for the senior citizens who have attained 60 years and above. The scheme awards an interest rate of 8.0 percent with effect from 01.01.2023.
You can deposit anytime in the months of 31st March, 30th September, 31st December in a year and the interest will be payable on 31 March, 30 June, 30 Sept, 31 December.
You can open an account and deposit in the multiples of INR 1000/- and maximum deposit amount is INR 15 lakh. You will be provided a benefit of section 80C of Income tax act 1961.
Important Note:
You are advised to claim the interest payable every quarter and in case you fail to do it, the accumulated amount shall not attract any additional rate of interest.
You can seek your interest through an auto credit into a savings account at the same post office.
You can attempt premature closure, account closure on maturity, and even extend the existing account.
The senior citizen scheme is for a period of 5 years and if you intend to close the account the scheme will apply a penalty and let you close the account.
Within one year of account opening, you will have to forgo the interest paid from the principal amount.
If you are intending to close between one year and two years then you will have to forgo 1.5 percent from the principal amount.
If you are willing to close the account after 2 years and before 5 years from the date of opening then before the scheme is closed down the Post Office will deduct 1 percent from the principal amount and the balance shall be remitted to you.
You can extend the account for a period of three years and such an extension is possible within one year of the maturity date. You will be provided with an interest rate that is applicable on the date of maturity.
2. Systematic Withdrawal Plan in Mutual Funds
Systematic Withdrawal Plan, SWP can provide a regular flow of income from the mutual fund investment. Experts say it to be a wise investment because the fund can be redeemed easily, and the withdrawn fund is not taxed at the source.
Careful planning of the withdrawal funds can help you in skipping the taxation. You can withdraw the gains ( dividend) and retain the invested capital and likewise you can benefit from it.
You can make fixed withdrawals from your investments monthly, quarterly, bi-annually or annual basis.
You may have your investment of mutual funds in debt funds/equity funds, or a combination of both. The tax implications differ and are dependent on the nature of funds.
3. Bonds:
Bonds are issued by entities such as Central/State governments/RBI/banks/corporate and the investors loan the money at a formal rate of interest for a specific duration of time.
State/Central Government Bonds:
There are several kinds of bonds made available for you and they are treasury bills, cash management bills, dated government security, fixed rate bonds.
In addition you can obtain floating rate bonds, zero coupon bonds, capital index bonds, inflation indexed bonds, bonds with call or put option, special securities, strips, sovereign gold bonds, SGBs.
State Development Loans (SDLs):
These loans are preferred and issued by the state governments to meet the budgetary requirements.
RBI does the regulatory operations and this security is released in the markets for every 2 weeks. However, you can notice that the interest rates of the SDL are higher than dated government bonds. The interest rates are mentioned only at the time of auction.
Government of India Saving Bond:
In 2018, the government of India released GOI saving bonds at a rate of interest @7.75 percent which was earlier at 8 percent on saving bonds.
These bonds can be held by individuals, minors under legal guardianship, and with the hindu divided family.
The bonds are taxable under the Income tax act 1961 as per the income tax slab rates. You can make the investment in multiples of INR 1000.
4. Bank fixed Deposits:
Another financial institution that provides an income on your investment. The banks irrespective of public sector/private/cooperatives attract you by offering fixed rates of interest for different tenure. It could be for 45 days, six months, one year, and above.
These fixed rates of interest keep changing and banks are expected to operate as per the regulations set by Reserve Bank of India, RBI.
Fixed deposit interest rates differ from small finance banks, private sector banks, and public sector banks. In addition, you can also opt for a tax saving fixed deposit.
To illustrate an example, fixed deposit interest for small finance banks for 1-year/2-year/3-year tenure are in the following manner, AU Small finance Bank( 1-year, 6.10: 3-year, 7.75: 5-year, 7.20).
Fixed deposits in private banks such as Axis bank for 1-year, 3-year, and 5-year are likewise, Axis Bank (1-year, 6.75 : 3-year, 7.00: 5-year, 7.00).
Fixed deposits for public sector banks for 1 year, 3-year, and 5-year tenure of Bank of Baroda are as follows. (1-year, 6.75; 3-year, 6.75: 5-year, 6.25).
Banks also provide fixed deposit tax free for citizens and senior citizens too. For instance, AU Small Finance Bank ( General Citizen, 7.20: Senior Citizen, 7.70).
Advantages of Fixed Deposits:
You can have guaranteed returns on investment, and as your investment is invested in debt markets your capital is protected.
In addition, you can have a tax deduction under section 80C, seek a loan against your fixed deposit, and even acquire credit card against fixed deposit.
See lessWhat are the Best Books to Learn Options Trading?
Best Books for Options Trading The following are the best books that Shape up ‘Option Traders’ as Better Performers. A highly seasoned stock player does opt for option trading making a tremendous impact on exchanges. The following lines give a gist of information on leading books written by optionsRead more
Best Books for Options Trading
The following are the best books that Shape up ‘Option Traders’ as Better Performers.
A highly seasoned stock player does opt for option trading making a tremendous impact on exchanges.
The following lines give a gist of information on leading books written by options trading experts. They are Lawrence G. MaMillan and Sheldon Natenberg.
1. Options as a Strategic Investment Written by Lawrence G McMillan
Options as a Strategic Investment written by Lawrence G McMillan helps an investor to explore practical trading strategies. Through this book, investors can understand the methods to minimize risk and maximize profit potential. The book is a composite format of information covering over and above 1000 pages.
You Can Learn:
Options trading involves strategic techniques such as iron condor spreads, back spreads, dual calendar spreads wide, put ratio spreads, and synthetic straddles.
The book describes specific option strategies to be employed under specific circumstances in the stock markets.
The author provides a better insight into trading index options, trading options on futures, and measuring market volatility.
Investors traders holding non-equity options and listed options in stock markets can gain wealth by employing strategic opportunities for managing investments.
The book helps investors to follow the in-depth discussion that speaks about the list of volatility derivatives, futures, and options.
An investor will be required to implement broad-based index put options or volatility call options by not compromising on losing any portfolio. The practical examples do cite the protection techniques to minimize the losses.
An investor can update oneself through the current option symbology as explained with examples and tables in an effective manner. Further, the book defines the weekly options, portfolio margin, decimalization of prices, and the instances where the commission rates are lowered.
Note:
In the revised fifth edition, you can experience the business-tested tactics for making investments in new options and products available in the stock markets.
The information deals with the tax laws on the option trading profits or losses.
2. Option Volatility and Pricing by Sheldon Natenberg
The ‘Option Volatility and Pricing’ book is a must-read by option traders across the globe and its author Sheldon Natenberg provides an update on strategic trading developments. It discusses in detail the option products and newer evolving trading strategies.
Basically, options traders’ job is to find an edge and control the impending risk. The fundamental work involved in an option trader’s job is to realize and monetize the edge in stock markets.
Volatility ise a vital elemnt in deciding on option pricing and decay.
Option is a tool for leveraging the volatility ( fluctuations) in price moving in the upward and downward direction of the underlying asset such as equity, bonds, commodity markets, etc.
The author described the implied volatility relative to its percentile and mean reversion as a significant property of volatility.
In his book, he detailed the ‘Garch model’ that incorporates mean reversion and volatility extremes.
Natenburg explains the risk factors when trading options.
They are stock direction (delta), moment speed (gamma), volatility (vega), time decay (theta), interest rate, margin, dividend (rho), and in addition the multitude of trading strategies.
See less