Last year nifty struggled in first half and went up till Oct. Then struggled and just reached previous high in Jan. It fell on war news but gave a chance to recover in April. It didn't reach previous high in April. Afterwards sentiment turned fully negative. You can ST line color. Whenever it is green good to trade. When it is red, then should reduce exposure. Or get out altother when previous could not be crossed but ST turned red soon after failing
Trading based on daily lists was going fine for me. Last year returns matched close to small cap index. I worried that I need to beat. In last months of last year returns reduced. To improve I didn't control exposure. I bought full capital. Actually with four sample position sizing strategy one will only take 25% exposure to risky market. Later samples are added after observing in real time. Initial sample is given some time to let stock swing up and down and move to New highs again. First sample can have 20% stop loss. So in downtrend your maximum risk is 5% for full capital. And no entry till index ST turns green. This would have protected you from huge fall from April to June. Also once you add second sample you will not have 20% stop loss. It becomes 10% or less depending on how you see the stock moving. If it turned to profit then rule is to get out before that turns to loss. 1% execution loss is fine.
Now I realized that I need not beat small cap index in good times. I need to follow same position sizing strategy with dialy first list stocks. Then strict exit of portfolio based on ST line of indices. After a downtrend I will have better % return than small cap index. I didn't think of this because I was not thinking of any downtrends as I focused on bad downtrend like 2018, 2008 only. While anything else could be recoverable, short term trading should not be turned to waiting-it-out.
How things changed after indices ST line turned green. Now the markets are falling less and jumping more. Across the board some stocks are jumping a lot. I am seeing more than 20 stocks in daily lists. I lost the habit of posting daily lists. One needs to be in control of their habits to become successful in trading. So I will start posting. But then I will keep an eye on ST line of indices. When they turn red no need to post. That is time to be cautious and prepare exits. When they change from red to green I will start posting.
I cleared my stock watch lists in this downtrend as all are falling and started adding freshly since few weeks when ST line changed. Some of them jumped good. Some went up daily. Some fell and went up. Few are struggling.
The idea behind this is simple. Stock prices have hysteresis. Because humans are involved. There is memory effect. Once market establishes a direction, it takes a strong opposite force to reverse it. We need to recognize strong forces from mean reversal pullbacks. The best way is to see that in RSI as it is about strength or weakness of market.
What I have observed by October last year is that my portfolio of holdings would have recovered from war impact. So the potential of the daily list is that it would have recovered from downtrend faster than small cap index. And would beat index returns when index recovers. One should not disturb the portfolio when market index is in downtrend.
Once our portfolio recovers back to where it was before market downtrend began, or index ST line turns green then regular trading with daily list can be done. This now made it easier to manage the portfolio in all times.
Do not underestimate the potential of these lists because I don't bother popularising them. They are serving me well and I am sharing with some friends who can follow and make use of them.
