Trade What You See, Not What You Like
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Beauty reigned supreme in an era where Bollywood often favoured heroines with titles like Miss World, Miss Universe, or Miss India. Yet, as the spotlight shifted to the silver screen, the importance of acting skills became apparent. While these titles could secure success in modelling, they offered no guarantee of survival amidst fierce competition in the film industry. Similarly, once hailed as stalwarts in the stock markets, blue-chip companies can falter unexpectedly, highlighting the need to look beyond superficial appearances and recognise the importance of performance and adaptability.
In trading and investing, letting emotions cloud judgment is too easy. Investors often find themselves swayed by personal biases or hopeful sentiments, particularly in blue-chip stocks. When these market giants start to stumble, there's a common misconception that the dip represents a bottom, and many hold onto the belief that the stock will inevitably rebound. However, history tells a different story.
There are two distinct types of downturns: those that coincide with a broader market decline and those where a stock experiences a correction independently of market trends. While the former may be attributed to systemic factors affecting the entire market, the latter signals specific issues within the company. When a stock falls irrespective of overall market conditions, it often serves as a red flag, indicating underlying weaknesses or challenges that investors should heed. Recognising and avoiding such stocks is a must.
Over the years, we've witnessed numerous instances where once-revered blue-chip stocks fell from grace, leaving investors hesitant to glance in their direction. The list of such stocks is extensive, ranging from Unitech and Satyam to RCOM and DHFL, to name a few. Despite their previous status as market darlings, these companies suffered significant downturns that caught many investors off guard.
Even now, amidst talks of potential revivals for struggling giants like Vodafone Idea and Yes Bank, the question remains: Is this a reversal or a temporary blip in a downward spiral?
As a chartist, I adhere to a simple principle: I trade based on what I see on the charts, not personal preferences or speculative optimism. One of the strategies I rely on is the Laidback Strategy, a well-known approach within the Definedge community.
Let's consider some examples to illustrate the effectiveness of this approach:
- Hero Moto Corp:
Despite its stature in the market, Hero Moto Corp experienced a prolonged period of underperformance. However, when my system indicated a BUY signal for the first time since 2017. The system triggered a buy at Rs. 3,760 at the end of November 2023; the stock demonstrated significant outperformance, proving the value of trading based on technical indicators rather than sentiment.
- Suzlon:
Another example is Suzlon, which faced challenges and scepticism from investors for years. Yet, when the charts signalled a BUY at Rs.14 after long years of underperformance, the stock defied expectations and delivered impressive returns.
- IOC Ltd:
Like the examples above, IOC languished for some time before showing signs of a potential turnaround. Again, following the signals from my trading system led to profitable opportunities.
As for Vodafone Idea and Yes Bank, while there may be murmurs of a potential resurgence, my system has yet to trigger a BUY signal. Therefore, I remain cautious and avoid entering positions until the charts indicate.
1. Yes Bank
2. Vodafone Idea
The key takeaway is to trade what you see on the charts, not what you wish to see or hope for. Emotions and personal biases can cloud judgment and lead to costly mistakes in investing and trading. By relying on technical analysis and adhering to proven strategies, navigate markets with greater confidence and discipline.
Let the charts be your guide, and remember: it's not about what you like but rather what you see unfolding before you.
- Hero Moto Corp:
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sir please share some alert of trividh in this forum too
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@L M Sure sir
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aree aap sir ho ,we are ur student
