Investment strategy in Bear market

You are lucky enough if your portfolio is still empty and you are looking for investing in stocks for next few or more years. Because most of those investor's portfolios are bleeding very badly who has bought shares in last month/ or starting of the 2020. Don't worry if you are one of them, this is right time to add more stocks to your portfolio it's just because of the coronavirus impact. No need to panic for investor's.

Let's talk about Indian stock market

Till now because of the coronavirus impact sharemarket is already dropped about 30% in last few days( about month). And also nifty hit seller circuit.

Let's come to the point
1. Long period investment

It is impossible to predict bottom of the stocks for anyone. No one can be sure that stock will be get reversed from particular price(where we called bottom)
But in bear market if you found stocks ar their fair value and company is fundamentally strong then this could be best opportunity for long run investments.

Note: Remember one thing, you can find good stocks at their fair value only in bear market.

2. Buy Dividend Stocks

Find out the company who are often paying dividends to their shareholders. In bear market, it could be a good time to add dividends stocks, to your portfolio. In doing so you'll not only start generating a steady income stream but also you can reinvest your dividend money in another side.

Find out some best stocks in bear market who can perform very good in next coming years.

For example if you had bought Amazon shares in 1997 of $5000 investment then it would be more than $4million today.

This is the power of compounding returns.

You can't go back to the 1997 and buy shares of the Amazon.
But you can definitely find out the shares who can be like Amazon in next coming years.
Note.  Don't panic find good stocks who's are fundamentally strong it will perform good in next year .

Trading strategies in bear market

here we have some best tricks with you can make money even while stocks going down 

So let's learn that strategies.....

*Short sell 

Many new trader don't know that they can make money while stocks go down. this is called short selling, short selling can be more profitable in bear market.

you have to manage your risk very aggressively when short selling. In a  long position you can lose what in your account balance but with short selling you can lose more than what in your account. 

* Buy on dips

Buy on dips is common trend in bull market foe those who are fundamentally bullish.

if you are fundamentally bullish on particular stocks you should buy on dips and if stocks goes down more than your buying price then add more stocks and stay calm. if you have done enough research then have some patience, when stock will change the trend u will earn heavy profit.

* Hold cash 

Many traders wipe out because they simply trade too much. closing trade in profits are not easy things to do.

when market is more volatile don't trade, most of the traders loose their more money in volatile market. in the volatile market don't panic just hold your cash. if you survived in volatile market and safe your cash then you are likely to earn more in coming years.

* Find good stocks to buy 

Bear market gives you the opportunity to buy best stocks on cheap price.

this is the best time to buy stocks for lone period.

find out the companies whos are giving dividend in this bear market, this companies are more likely to recover and go bullish soon.

Triangular Arbitrage

* What is triangular arbitrage ?
Triangular arbitrage is the act of use and opportunity resulting from a pricing difference between three different currencies in the foreign exchange market.

(Triangular arbitrage is also known as cross currency arbitrage / three point arbitrage.)

A Triangular arbitrage opportunity occurs when the exchange rate of currency rate does not match cross currency exchange rate. the price difference arise from situations when one market is overvalued and another one is undervalued.

* Risk in triangular arbitrage
This types of arbitrage is riskless profit that occurs when a quoted exchange rate does not equals the market cross exchange rate.

* Example of triangular arbitrage
Though this is not the most complicated arbitrage strategy in use, in triangular arbitrage a trader converts one currency to another at one bank, converts that second currency to another at a second bank, and finally convert that third currency to the original at third bank, the same bank would have the information efficiency to ensure all of its currency rates are aligned requiring the use of different financial institutional for strategy.

for example assume you begin with $2 million you see that at three different institution the following currency exchange rates are immediately available.

> Institutional 1 : Euros/USD=0.894
> Institutional 2. Euros/ British pound =1.276
> Institutional 3. USD/ British pound =1.432

First, you would convert the $2 million to euros at the 0.984 rate, giving you 1,788,000 euros, Next, you would take the 1,788,000 euros and convert them to pounds at the 1.276 rate, giving you 1,401,254 pounds. Next, you would take the pounds and converts them back to USD at the1.432 rate. giving you $2,006,596. Your total risk free arbitrage profit would be $6,596.

Risk free trading Strategy

We have some strategies where you only need to find out opportunities,  whenever you get the opportunity apply this ARBITRAGE strategy, where risk will be 0% and you can book the profit on the expiry so let's start learning ARBITRAGEOUR...


* What is arbitrage ?
Arbitrage is occur when a security is purchased in one market and simultaneously sold in another market at a higher price. thus considered to be risk free profit for the trader.

* Who is Arbitrageour ?
people who engaged in arbitrage are called arbitrageour.

* A simple example of arbitrage,

As a simple example of arbitrage consider the following. If the stock of the XYZ company trading at 200rs on NSE cash and future is trading at 210rs then u can buy in cash and sell in future market and difference will be your profit. because on the expiry both price will be converge.

* Is Arbitrage is illegal ?
 There is no question that arbitrage is legal because the Arber is exploring price difference in the market. effectively buying and selling as any trader does. there is nothing illegal about this.

* Advantage and disadvantage of arbitrage.
     -Advantage:-
-Advantage of arbitrage is that it can totally eliminate or highly limit your risk.
-Also, arbitrage helps keep the price of securities more less then same in the market and reduce fluctuation.
-more, arbitrage encourage the market to be more efficient.
    - Disadvantage:-
- Disadvantage of arbitrage is that there may be too many transaction costs in trading securities, this can lead to wrong calculations of profit and may cause losses in the long run.
- many arbitrage opportunities it would require a lot of time capital and technologies.
-It is expansive, you will need lakhs of rupees.

* Condition for arbitrage
Any of three condition met, arbitrage is possible.
1. The same asset does not trade at the same price on all markets.
2. Two assets with identical cash flow  don't trade at the same price.
3. An asset with a known price in the future does not today  trade at its future price discounted at the risk free interest rate.

F&O Question and Answer

F&O

* What is future price ?
 the price of a stock or commodity on a futures contract —contrasted with spot price.

* What is spot price ?
the spot price is current price in the market at which given equity, commodity, or currency can be traded at the price.

* What are future and options ?
A future is a right and an obligation to buy or sell an underlying stock (or other assets) at a predetermined price and deliverable at a predetermined time.
and the  Options are a right without an obligation to buy or sell equity or index.

* What is forward contract ?
A forward contract is a customized contract between two parties to buy or sell an asset at a specified price on a future date. A forward contract can be used for hedging or speculation, although its non-standardized nature makes it particularly apt for hedging.

* What are the product available for trading in F&O ?
In F&O contract are traded on indices and in single stocks.

*Why future and options ?
lets learn about future first,
If you want t buy 200 stocks of Britannia at a price of 3000rs you will need a investment of rs.620000, so in future you can buy 1 lot of Britannia stocks and you need to pay only 15 to 20% of the total investment needed 
that mean you will get profit  5X
another side risk will be also 5X

now come to the options,
you can buy Britannia 3100 call at the premium of 50rs and lot size is 200 shares , your investment is 10000rs if Britannia share goes down side your risk will be maximum 10000rs and profit will be unlimited on upside move.

* Benefits of trading in F&O ?
make big profit with minimum amount of capital risk
low transaction cost
liquidity
derivatives markets are lead economic indicators.


thank you.

Sector wise profit

Here we will learn, how much profit you can book in particular sector. In short your returns on your investment is totally depends on which sector your investing in.

Let's say

* How much profit i can get in oil and gas sector ?

Ans. In the oil and gas sector 14%  to 17 % is best return u can get.

*  How much profit i can get in Banking sector ?

Ans. In the banking sector u can get 30to35% in private banks & 20to25% in PSU banks.

*  How much profit i can get in metals  sector ?

Ans. In the metals sector u can get 10to15% returns.

*  How much profit i can get in IT sector ?

Ans. In the IT sector u can get 25% returns.

*  How much profit i can get in FMCG sector ?

Ans. u can consider this sector as a asset class investment, u will get huge returns if u hold it for long.

*  How much profit i can get in Auto  sector ?

Ans. In the Auto sector u can get 20 to 30% returns.

*  How much profit i can get in pharma sector ?

Ans. In the pharma sector u can get 40 to 50% returns.

Basic share market tips and tricks

    SOME BASIC TIPS AND TRICKS

* Always follow the global markets.

* When crude oil price down eventually oil sector will get benefits.

* When nifty performance negative, buy gold.

* When global market is down sell the metals.

* If global markets closes down,  nifty will also open negative.

* Always follow india vix chart.
 if india  vix is making higher high then nifty will make lower low & if india vix making lower low then nifty will make higher high.

* Avoid trade against trend.