TARGET & PROFIT BOOKING HAS INVERSE RELATION.
Investor & Trader concentrate more on Given Targets now a days.
No Advisor or Analyst can give perfect target for any Stock , Nifty or Bank Nifty.After all they are also Humans And target can shift 1% to 3% Here or there And Many times 5% To 10% in long term targets.
Most important thing is Fundamentals,PE Ratio,Price to Book,Future Earnings,Management commentry & In short to medium term Support & Resistanance Levels,Overbought & Over sold Position on charts for Entry & Exit level.
For Trader & Short Term Investor “Target” is Whatever is on Table take it and enjoy the ride & For investor sooner or later Target can be achived.
Also Profit Booking is very Important in stock market.We would soon come out with an Article ,why profits Booking is Important & Its co- relation with Target.
CASE STUDY & REAL EXAMPLES
1.》 ANDHRA PETRO.
we had reco stock @40 Levels.
Stock had dream run made high of 76 in 3 months and again corrected till 45-50.We gave 3 Digit Target of 100.
But unfortunately It HIT 99.40 High & Took U Turn.
Smart investor & Trader kept Trading Stop Loss Also know as TSL & Booked profits around 97/96/95. Many were waiting for Exact 100 & They never booked & Now stock trading at lower levels.
Similarly we had Recommended KANCHI KARPOORAM@ 316. & Had given Target of 680.
Recently Stock had made 52 week High of 665 vs our Target of 680 ,Just 2.5% Away from our targets.
After hitting 665 It started coming Down Slowly Till 510 and again by end of the Day it closed at 655.We had given profits booking call@644 for short term.
Smart investor booked profits & Those who stick to targets never booked profits.
110% Returns in span of 3 months is not bad.Many times investor becomes greedy & Sets target in mind & Never sells stock when price rise.
Let’s take another stock Maruti.Which was investors favourite stock from past many years.
Stock moved from 800-1000 Levels to 9996 in last 4 to 5 yrs.All had great expectations and buzz was it would Hit 4 Figure mark 10000 to 11000.
But stock made life high of 9996 and took U Turn.It corrected Till 6500 levels.Here also smart investors & Traders booked profits around 9900/9700/9500 as they Kept Trailing S/L or never Wanted to hit bang Target,They took what ever profits available on Table.
The most important point to understand here that,When ever any Analyst or Brokrage house gives target ,Dont wait Till Bang for Target.Dont make up your mind that I would sell only at these rate.
Analyst can show you way or can give you profits.Its only you & Only you who has to act smart & Book Profits.
Concentrate on Price,Volume,Charts and keep Always keep Trading Stop or keep Trailing if you are long term.
✔Most Important Never Let profit Trade Turn into Loss Trade.
✔”TARGET IS NOT PARAMATER ITS JUST YOUR MIND SET”
✔RISK REWARD RATIO SHOULD BE PARAMETER FOR ANY TRADE.
✔TARGET & PROFITS BOOKING BOTH HAS INVERSE RELATIONSHIP WITH EACH OTHER.
whatever trade you do,You should know your Risk.You should Decide your own target & Play as per market situation Demands.
For someone even 10000 Rs a day is great profits.And for someone Even 1 Lac in one trade of just an hour is not enough.
Keeping is very Simple If Your trades are for short Term why you dont want to cut your position at 5%/10% or even 2%.
And If you have Invested for long term why you are worried of short term volatility & Price actions.
Hope This Article have changed your views on Target & Short term Trades and Long term trades.
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Disc – All views expressed are personal & For Educational and study purpose only. consult your financial advisor before investing.