The notional amount of Rs. 5,00,000 was given to start the week and the rules are explained in detail post this section. Following is the thought process behind selecting the stocks, Exiting and what really made a difference.
Even though it was notional amount given but the feelings were not much different given the fact that it was viewed by millions.
Stock selection was done on basis of identifying the momentum stocks rather than capturing reversals. Screening out involved looking at more than 100 charts to see if there was Elliott wave pattern along with Momentum.
Forecasting Nifty direction and range was important to understand out of 4 calls how many to be kept on the buy side and sell side.
During the week from 9th May 2016 to 13th May 2016, overall tone of the market was range bound but still there was positive bias as per the Elliott wave pattern given the outperformance from Midcap and Smallcap space and so I considered having 3 Buys and one sell on most of the days. However, it fluctuated based on my expectation from the broader indices using Elliott wave.
There was option of selecting one Futures position. Selecting stock has been one of a very important task but at the same time it was crucial to leverage when majority of the indicators and Elliott wave pattern were in favor and we went long on IBReal Estate Fut on one day and short on Canara Bank Fut on another day to squeeze out most of the momentum and trend.
It was crucial to not lose the patience and get greedy and so we preferred trading stocks and not futures when the trend was not strong. I adopted play safe strategy when the direction of the overall market was not clear.
Even though individual stock follows its own direction but for intraday trades correlation with index is high and so knowing Nifty direction was very important. The most important tool at our disposal to predict that is Elliott wave, Neo wave and Time cycles.
Risk reward was crucial along with prudent allocation to stocks and letting profits run was important. A few of the trades helped in gaining nearly 5% in single day and targets were set bigger to allow this to happen. So the old adage of let your profits run is extremely important with prudent stops to cut out the losses.
Nevertheless, with all said and done a factor of lady luck also had some role to play.
And most important thing
Markets always teach you by playing out new things and the best way to beat it is to accept losses as they come and learn from mistakes rather than playing out with ego!