Reblog: Top 7 Principles of Growth Investing

Investors have many different strategies that they can follow to build wealth in the stock market. Income investors tend to prize dividends above all else. Value investors seek to buy stocks that trade below their intrinsic value. Growth investors, on the other hand, aim to buy businesses that hold the greatest upside potential and tend to de-emphasize traditional valuation metrics that generally show a growth stock to be expensive compared with the company’s current earnings.

Growth investing is highly attractive to many investors because buying the right companies early can lead to life-changing returns. However, companies that promise huge upside potential usually trade at lofty valuations. That amps up the risk that they will fail in spectacular fashion if they don’t meet expectations.

So how can investors increase their odds of buying the next (NASDAQ:AMZN) instead of a Fitbit (NASDAQ: FITB)? While there’s no bullet-proof solution to this conundrum, I’ve found that buying companies with the following traits can greatly increase the odds of success:

  • A large and expanding market opportunity
  • A durable competitive advantage
  • Financial resilience
  • Repeat purchase business model
  • Strong past price appreciation
  • Great corporate culture
  • Talented leadership with skin in the game

Let’s dig into each of these principles in detail to see why they work.

Coins and a roll of bills stacked to look like rocket ship

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Reblog: Trading As A Business – My Step By Step Guide

You have all probably heard that you need to treat trading as a business if you want to be successful. But what does this actually mean? Instead of letting it be just another meaningless phrase, let’s take a deeper look to fully understand it.

The ideas behind “treating trading like a business” are very important to get you on the right track and after we have taken a look at the different aspects, I am sure you will get some ideas on how to take your trading to the next level and treat it more like a business.

Your setups are your products and services

Every business has either physical/virtual products or services to sell in order to generate profits. The business, hopefully, knows everything there is to know about their products, where it is from, how it is built, what the benefits are, what the potential struggles are, how to keep improving their product, what their customers want, and how to use it in the best possible way. The business must be the #1 expert in what they are offering. Obviously.

As a trader, your setups and your strategies are your products. Your setups are a set of rules and triggers to help you find potentially profitable trades. Whether your setups consist of classic patterns, indicators, pure price action or a combination doesn’t matter here.

What is important is that YOU must be the expert in your setups and patterns. You must know every little detail, when the setup works best, during which market conditions it doesn’t work, in which markets and timeframes to use it, how to improve the odds, how to set stops and pick targets, when to move stops and how to manage trades, when to add to a position or take some off the table, when to stay out, etc.

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Sensex slips 135 points, Nifty ends at 11,753; Jet crashes 32%

Selling in banks, realty and metal counters dragged the domestic equity market lower on Thursday. The headline index, S&P BSE Sensex lost 135 points or 0.34 per cent to settle at 39,140, with YES Bank being the biggest loser and Reliance Industries (RIL) the top gainer.

Out of 30 components, 22 scrips ended in the red and rest eight in the green.

Market breadth remained in favour of declines as out of 2,727 securities traded on BSE, 1,671 declined and 888 advanced while 168 scrips remained unchanged.

The broader Nifty50 index of the National Stock Exchange (NSE) lost 34 points or 0.29 per cent to end at 11,753.

On a weekly basis, both the indices gained around 1 per cent.

In the broader market, the S&P BSE Midcap index slipped 138 points or nearly 1 0.89 per cent to close at 15,382.57 while the S&P BSE Smallcap index ended at 15,021, down around 150 points or 1 per cent.

All the sectoral indices ended in the negative territory with realty stocks taking the hardest knock, followed by media and PSU banks.

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Reblog: How to Develop a Consistently Profitable Trading Strategy

During My Training session Many of the traders face the problem their current trading strategy blows; it’s time to search for a new one. That’s what a lot of traders think when they are not seeing consistently profitable results. What you probably don’t realise is that you have all the tools; it’s just a matter of fine tuning.

In this article I will share with you a step by step approach for creating and fine tuning a custom trading strategy fit to your personality.

1: Trading Quotes to Keep Motivated

Included in this plan should be your specific monetary  goals, perhaps a motivating quote which acts as your inspiration, and your ideology towards the markets. During the bad phase of trading where you get stop out quiet often, when market are choppy, These quotes will help you to have relax mind and take market head on with out getting frustrated.

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Sensex recovers 212 points from day’s low, Nifty ends at 11643

Buying in select bluechip counters such as ITC, Maruti, ICICI Bank and Infosys helped benchmark indices to settle in the positive territory on Friday.

The S&P BSE Sensex recovered 212 points from day’s low to settle at 38,767, up 160 points or 0.41 per cent. FMCG major ITC emerged as the top gainer on the index with over 3 per cent gains while Tata Motors (down over 1 per cent) ened as the biggest loser.

The broader Nifty50 index of the National Stock Exchange (NSE) settled at 11,643.45, up 47 points or 0.40 per cent, with 27 constituents advancing and 23 declining.

On a weekly basis, Sensex lost 0.24 per cent while Nifty settled with 0.19 per cent decline.

In the broader market, the S&P BSE MidCap index gained 44 points or 0.29 per cent to end at 15,426 while the S&P BSE SmallCap index added 56 points or 0.37 per cent to end at 15,022.

Sectorally, all the indices ended in the green with media stocks gaining the most, followed by FMCG and auto. The Nifty Media index gained over 1 per cent to end at 2,443 level.

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Reblog: When Holding is the Hardest Part

“The easy money has been made” is one of my least favourite sayings about investing.

Making money in the markets is never easy. In fact, I would argue that it’s always hard.

Convincing yourself to buy during a bear market is hard. Convincing yourself to hold during a bull market is hard. Figuring out what to do during a sideways market is hard. Watching others make more money in the markets than you is hard. Following a plan when things aren’t going your way is hard. There’s always going to be a reason to do something that goes against your best interests.

Howard Marks wrote about this idea in a memo for Oaktree Capital a couple years ago:

Two of the main reasons people sell stocks is because they go up and because they go down. When they go up, people who hold them become afraid that if they don’t sell, they’ll give back their profit, kick themselves, and be second-guessed by their bosses and clients. And when they go down, they worry that they’ll fall further.

Where we are in each cycle usually determines what the hard part is at that moment. The hardest part for the past few years has been holding on during a rising market. Investors witnessed two epic market crashes in the span of eight years to kick off the start of the century. Those types of losses leave scars on an investor’s psyche.

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Reblog: Fearless

When I was younger I would immediately take big positions. If I liked something, I would go all in. I was fearless.

This strategy worked until it didn’t.

Today I buy a third to a half of a full position after due diligence and I’ll add more as management executes. Inexperience almost always underestimates risk. The more you experience the more you respect what you are up against.

But it’s a balancing act.

Investing’s greatest lessons can’t be taught in a book or in a classroom. They have to be experienced and often times the teacher is loss. And losses can be painful.

The most painful part of loss isn’t financial but mental.  The battle scars left behind can paralyze you. The spirit of courage you were born with turns to fear. Fear slows you down. Indecision can be an investors biggest adversary.

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Sensex surges 177 pts, Nifty ends at 11,665; financials rally

The benchmark indices ended on a positive note on Friday after two consecutive sessions of losses, lifted by a sudden surge in the last 15 minutes on a day when the indices remained rangebound for the majority of the duration.

The S&P BSE Sensex ended at 38,862.23, up 177.51 points, or 0.46 per cent, with Tata Steel being the top gainer and State Bank of India being the biggest loser. About 1,500 shares advanced, 1,049 shares declined, and 165 shares remained unchanged.

The NSE’s Nifty50 index closed above 11,650 level at 11,665.95, up 68 points, or 0.59 per cent.

Metal stocks advanced the most, followed by realty and IT counters. The Nifty Metal index ended almost 2 per cent higher at 3,132.35.

On a weekly basis, the S&P BSE Sensex ended 0.49 per cent higher while the NSE Nifty 50 gained 0.36 per cent on a weekly basis.

In the broader market, the S&P BSE Midcap index surged 97 points or 0.63 per cent to close at 15,509. The S&P BSE SmallCap rose 108 points or 0.72 per cent to end at 15,046.

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Reblog: 15 Quotes From Legends In Sports That Will Help Boost Your Trader’s Mindset

That Will Help Boost Your Trader’s Mindset

Being a top athlete takes a lot of grit and perseverance. Because whenever one feels complacent is exactly when one might fall flat on one’s face. So, professional sports are constant acts of pushing past limits. And not every person can manage such levels of physical and mental efforts.

That is why top athletes often have these extraordinary nuggets of wisdom they occasionally share with the world. And what’s fascinating is how these pearls of wisdom are relevant in trading. But not only — they’re also relevant in business, relationships; in fact, they’re relevant in life in general.

Here are some of the best motivational statements by legends in sports:

1. Success is where preparation and opportunity meet. – Bobby Unser, automobile racer

In trading: Rash decisions that will leave you in a weak position. Always come prepared.

Trader's mindset Michael jordan

2. Obstacles don’t have to stop you. If you run into a wall, don’t turn around and give up. Figure out how to climb it, go through it, or work around it.  – Michael Jordan, basketball icon

In trading: When failure smiles at you, the best thing you can do is smile back, while acknowledging that the lessons that stick are those that hurt. Your failures are stepping stones on your way to success.

3. I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed. – Michael Jordan

In trading: Again, be patient with yourself. At first, you will make mistakes; you will fail. But you want to fail. You need to fail. Failure is good for you. It builds resilience of mind; develops wisdom; it is the foundation upon which mastery, success, and happiness rest upon.

4. In baseball and in business, there are three types of people. Those who make it happen, those who watch it happen, and those who wonder what happened. – Tommy Lasorda, Hall of Fame baseball player and manager

In trading: You miss 100% of the trades you don’t take. Stay active, trade small. Engagement leads to success. There is no overtrading if you’re trading a proven system.

5. There may be people that have more talent than you, but there’s no excuse for anyone to work harder than you do. – Derek Jeter, longtime Yankees shortstop

In trading: You have to depend on your own work ethics to get ahead in this field. Don’t wait for trade ideas from others. Work on being completely self-reliant.

6. Everybody’s got plans… until they get hit. – Mike Tyson, boxing icon

In trading: The satisfaction of instincts cannot be the main way by which you place and manage your trades. You need a plan, and you need to follow it with consistent and conscientious regularity.

Trader's mindset Arnold Schwarzenegger

7. Strength does not come from winning. Your struggles develop your strengths. When you go through hardships and decide not to surrender, that is strength. – Arnold Schwarzenegger, professional bodybuilder, actor, businessman, politician

In trading: Muscles need a certain amount of stress in order to grow. It is with muscles as it is with life –meaningful growth requires challenge and stress. So, don’t think of losses, mistakes, and failures as the end of the world. They’re just opportunities for growth.

8. Bodybuilding is much like any other sport. To be successful, you must dedicate yourself 100% to your training, diet and mental approach. – Arnold Schwarzenegger

In trading: Whoever focuses solely on his/her market edge while neglecting his/her trading psychology will soon discover trading to be an unwinnable battle.

9. Champions keep playing until they get it right. – Billie Jean King, International Hall of Fame tennis star

In trading: Whatever you do, trade small. If you can’t stay in the game, you can’t learn. It’s simple as that. Failures and mistakes have to be small —so small that they can teach you instead of ruining you. If they’re too big, you’ll eventually get booted out of the game.

10. A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be. – Wayne Gretzky, hockey icon

In trading: It doesn’t take a lot to predict price action (human behavior) and capitalize on it. You only have to assume that people will always try to escape a disagreeable situation with the smallest possible expenditure of intelligence. With that in mind, you need a plan to guide your own behavior, and you need to trade that plan with discipline and vision.

11. Always make a total effort, even when the odds are against you. – Arnold Palmer, golf legend

In trading: Part of being a good trader is knowing how to go through drawdowns with grace, courage, patience, and vision.

12. The more difficult the victory, the greater the happiness in winning. – Pele, Brazilian, soccer legend

In trading: You fall, you fail, but after some time, you learn. And eventually, you master! Then get-rich-quick prospectors watch you from the outside, jaw hanging. They see how trading is simple and they think it’s a straight line. It never is.

Trader's mindset Muhammad Ali

13. He who is not courageous enough to take risks will accomplish nothing in life. – Muhammad Ali, Boxing icon

In trading: Here’s something that’ll raise a lot of eyebrows: Even if you’re a consistently profitable trader, you will never become incredibly wealthy by being too conservative. For that to happen, you gotta be wild sometimes, take some daring bets, with size, and be truly ok with failure.

14. It isn’t the mountains ahead to climb that wear you out; it’s the pebble in your shoe. – Muhammad Ali

In trading: When you approach the markets with equanimity, all mental stories are thrown away, and what remains is just the market as it is.

15. Persistence can change failure into extraordinary achievement. – Matt Biondi

In trading: Patience/ resilience/ non-delusion will be rewarded by the markets.

Bonus. If you aren’t going all the way, why go at all? – Joe Namath, Hall of Fame football quarterback

In trading: Resilience is key! Do what you have to do to stay in the game long-term. In due time, you’ll be able to:

  • Trade and understand the market like no one
  • Trade with size
  • Turn small accounts into big accounts

And best of all: Nobody will be able to take that away from you.

The original compilation is by Yvan, appears on and is available here.

Reblog: 4 Simple Relative Strength Index (RSI) Trading Strategies

In this article, we will cover one of the most popular oscillators – the relative strength index (RSI).  You have probably read a number of general articles on the RSI; however, in this post I will present four trading strategies you can use when trading.

Before we dive into the strategies, let’s first ground ourselves on the RSI indicator and provide you with a few techniques not widely known.

Relative Strength Index Definition

The Relative Strength Index (RSI) is one of the most popular indicators in the market.

The RSI is a basic measure of how well a stock is performing against itself by comparing the strength of the up days versus the down days.  This number is computed and has a range between 0 and 100.  A reading above 70 is considered bullish, while a reading below 30 is an indication of bearishness.

Relative Strength Index Formula

The RSI was developed by J.Welles Wilder and detailed in his book New Concepts in Technical Trading Systems in June of 1978. For all you hardcore technicians, below is the relative strength index formula example.

The default setting for the RSI is 14 days, so you would calculate the relative strength index formula as follows:

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