The interview

Recently, I had  the chance to talk to a friend who had gone through an interview. I casually asked asked about his interview experience. He said that the overall interview experience was good, but something funny happened right before the interview. I asked him for details and here is what he said:

‘… I was waiting in the allocated area for people to wait before the interview. I was a bit nervous about my interview. Many different thoughts were bubbling in my head. I was trying to be cool and not show my nervousness. That is when I noticed that guy ahead of me in the waiting line.

He was very nervous and was shivering like a leaf in the wind. In the 30 minutes I was watching him, he drank 4 bottles of water and went to the washroom 5 times. He looked so pale and was looking as if he will faint if someone touched him.

Looking at him, I got a bit nervous. People are taking this interview very seriously, I thought. I was trying to change my thoughts. I tried not to let the shivering person influence my interview mindset anymore. That is when a guy came out the interview room.

People were flocking around him to hear about his interview. He sat next to me and was narrating the details of his interview. He was talking so fast, all I could think of was, ‘ how can someone talk this fast!’. Without any thoughts, I too started to listen to what he was saying.

‘The interview panel is very harsh. They don’t give me time to think. They didn’t even want to see my work. I had to ask them to see my works.’  He kept on talking. I was feeling nervous again. Fear of interview had crept into my mind.

On my right was a person so nervous about the interview and on my left was a person who was worrying people with his interview experience. Now, I was feeling so nervous, I was almost like that shivering guy (Except for the bottles and bottles of water). I had to reset my mind.

I went out of the waiting area, took a walk around the place, calmed my mind and came back just in time to attend the interview. I didn’t look at or talk to anyone before or after the interview. I didn’t want anyone to get tensed because of my babbling.’

I was listening to all this and was laughing uncontrollably. When I was done with the laughing, I thought about the incident in a different way.

Mostly, people when attending an interview will be nervous. Try to act in a way that doesn’t affect the psychology of people waiting for their turn. Even if people are asking you about your interview after coming out, just say that it went well, wish them all the best if possible and leave the place as quickly as you can.

Each interview experience will be different. Let others discover and enjoy the process. Don’t discourage people before they even start their journey. Have a good time

Share Market Trading For Dummies-10

The Warren Buffet’s Factor

These parameters are described in detailed in the previous post on the ‘share market for dummies’ series. I have combined my own experience with Buffet’s famous advises on share market trading in the previous writings. Still, I need to summarise those gems of advises by Warren Buffet here, without which any share market write ups  looks unfinished.

Factor 1: Have a highly diverged investment portfolio.

Diversification is protection against ignorance. It makes little sense if you know what you are doing

Factor 2: If values of your stocks in hold is falling, never sell it, hold them forever.

Our favorite holding period is forever.

Factor 3: Know your risks and understand where they comes from

Risk comes from not knowing what you’re doing

Factor 4: You should not Lose  Money at any cost

Rule No.1: Never lose money. Rule No.2: Never forget rule No.1

Factor 5: Buy when prices is lower, which happens when there was a temporary problem

“The best thing that happens to us is when a great company gets into temporary trouble…We want to buy them when they’re on the operating table.”

 

Share Market Trading For Dummies-9

Advanced Trading Techniques

As time goes on,  you will be capable of predicting the market or price of a share. At this time, you are en experienced trader(the one with a thick beard and classy spectacles) and you don’t have the time to watch and place order. So, here are some handy tools.

Stop Loss

While placing a SELL /BUY order through the order form, there is an option called  ‘STOP LOSS’. If you select stop loss limit, you will be prompted to enter an trigger price. The system will automatically wait until the trigger price. Once the trigger price is reached your share broker will sell/buy the shares at the market price after the trigger event. The trigger price can be  a lower limit or a upper limit .

For buy orders, the trigger price can be lower than the price of share at the time you creating order.

For sell orders, the trigger price can be higher than the price of share at the time you creating the order

Stop Loss Market = Order is placed automatically  when share value crosses trigger price. It is executed at the offer price of market when the order reaches the market.

Stop Loss Limit = Order placed automatically when share value crosses trigger price. It is executed only if the market offer is between the  specified limit or better price given by us.

Bracket Order:

It is the tool most loved by many traders. when a bracket order is placed, you will be specifying Stop loss and profit booking cutoff prices on the buy order form itself. After buying the shares at a low price, if they reach the specified upper limit then the shares will be sold automatically and a profit will booked. Also, you can specify the lower price beyond which you are not interested in holding the shares and want to sell them to avoid huge losses.

After Market Orders:

You can tick AMO in the order form. This means that next day you will be busy and based on analysis, you placing the order at nonworking hours of market. With AMO option your order will be placed on the next working period of exchange/market.

Order Validity:

Immediate Or Cancel (IOC):  If you select IOC, it means that your order will be placed immediately to the market and executed. If order was not processed immediately by the market due to no offers/bids, then the order will auto cancel and your order will not be valid any more. You have to place an order again

Day

If you select Day option on the validity, the order is valid thorough out the trading session, normally a day.

 

 

Share Market Trading For Dummies-8

Market Risk Factors

Market risk factors can be classified into micro and macro.

Change in policy, global crisis, monitory problem, financial crisis or a disaster; anything can cause a downward trend in a large number of companies listed in Share market.

As a trader or investor, you should keep the market risk in mind for a safe play. A knowledge of market risk is like a life jacket that will help us to survive if share market faces a crisis.

A problem for the company will make investors like you and me to pull out of the share market by de-investing our shares in companies. When more number of  de-investments are made, companies will struggle to meet their financial needs.

Put in another point of view, when companies are unable to run their business under problematic situations and sell their products, they meet loss. We investors pull out our investment which in turn causes more problems and financial crisis to the company.

Macro Crisis: A case story.

Five among us put Rs.1000 per head and jointly start a tea shop in a famous tourist destination. After making a huge profit, we make our tea shop in to a company that issues shares. We raise 80000 by issuing shares for public trading and expand our tea shops. Initially everything goes well. Our investors are happy. We are getting Tea powder from Assam, Sugar from Tamil Nadu and Milk from Kerala. There is no proper rain in South India. We get Tea powder as usual from Assam. But,

[Problem  1.]Sugar price increase due to low sugarcane cultivation.

[Problem 2]Since there was no rain, it was difficult to maintain cattle because cattle food price increased. This raises the milk price.

[Problem 3] Govt raises tax for value added products.

[problem 4] Poor climate attracts lesser number of tourists and many are not ready to bear the high cost of tea.

So we are facing problem after problem and meet losses.

[ Problem 5] Since we face losses, some of our investors pulled out.

[problem 6] Since there was no rain, some investors needed money and decided to pull put from investment for their family needs.

[problem 7] our company is running out of cash and is deciding to cut off employees and reduce procurement.

[problem 8] Since we reduced procurement, the sugar and milk factories who supply to us are also in similar distress and they also shut down.

Like this, almost all industrial bodies and business units and companies get affected. We call this effect a financial crisis. This financial crisis reduces Share price to very low values, without buyers and the previous investors who bought these shares for higher prices are now at risk and loss money. In market risk, the promoters and investors suffer by losing their money.

Micro Market Risk:

It originates from within a company or is caused by a local problems such as labor strike, people strike in the locality where company placed, company management issues, fraudulent activities that lead to loss of money to investors.

Quote:

A fall from the third floor hurts as much as a fall from the hundredth. If I have to fall, may it be from a high place.” – Paulo Coelho

 

Share Market Trading For Dummies-7

Market Analysis Techniques

If I am privileged to write a quote on Share Market, I would say

“99% Market Analysis and 1% patience brings success(profits)”

What is Market Analysis?

It is what you understand about the past financial performance of a company in various situations and their “expected” rate of rise or fall in future.

Market Analysis During Buying

As a curious trader, the first job you have to do is to find the companies you are going to invest. This is the most interesting job.

All you have to do is, take a Pen and Paper and open up a Share Market news website such as money.rediff.com or moneycontrol.com. Then, you have to browse companies one by one in Alphabetical order starting from group A. Group A companies as classified by BSE/NSE are more reputed than the other companies. For every company, have a first look on the latest share price and if that price is within your purchasable scope, then you can do a detailed research. Suppose you have Rs.10000 to invest and the price of  a single share is Rs.11000, we can leave this company. My opinion is to look for low priced stocks under Rs.2000 and  above Rs.5.  By concentrating on such low priced stocks you can buy more volumes.

After determining the purchasable scope, you need to look into the past six months to one year prices of the company’s shares. If the current price is lower than its pas six month price, you can mark it for next level of review.

The next level of review is to find the reason for such price fall. For this purpose, you can google the name of the company and read news about it. Apart from this you can read trader’s comments on platforms such as money.rediff.com. After reading some news, you will be able to find the reason for price fall. If it was due to market fluctuations or due to a temporary problem in company, it is likely to be resolved soon. If the low is due to reasons can be rectified by the company, you can mark it ‘OK’ for investment.

Suppose, if the reason for price fall is due to some big problems the company might not be able to resolve such as liquidation, serious fraud, mismanagement, serious Company-govt problems it is better to stay away from those companies.

Once you complete such an analysis for all the companies, as we call it as home work for trading, you should watch the short listed companies for two more days. This is to check whether the price will keep falling. Mostly the down trend will be a 3 to five day affairs and after the share price will try to rise. Our job here is patiently watch, wait and observe that threshold. When you watch the share prices for a day or two, you will be able to  easily guess whether the company will be getting back in track. Once the company is about to stop the falling trend and begin to rise we must immediately purchase stocks of the company.

This ‘watch and wait’ is a strategy to avoid pot holes in our analysis. Because sometimes, by reading news you conclude that price is falling only due to market fluctuations and begin to invest. But in subsequent days news will emerge concerning serious problems in the company.

Rule A: Determine the reason for falling stock price of company

Rule B. Buy only if Share price is lower than the past six month price

Rule C: See the Past year trends whether the company come back from such low stock price

Rule D: Determine if the reason for falling stock price as mentioned in Rule A, can it be resolved by the company or policies.

Market Analysis After Buying:

After purchasing stocks, keep an eye on the company whenever you get time. As a beginner, you must watch throughout the trading window (9.30/10am to 3.30/4pm) in some days. After that, you will grasp the trend and will understand the performance by watching just three or four times a day. If there is a serious downtrend post buying, you have to identify the reason. If it is very serious, immediately sell those stocks for loss. If the reason is less serious, you can keep them until they return to normalcy.

During post buy market analysis, if on a particular day, your stock price goes above +5% of the purchased value, you should set the day to sell and book profits. Once the stocks show upward trend, you stick to your computer and watch every minute of the price change. By doing this, you can sell the stocks for maximum profit. if you don’t have time to watch, wait for the price to cross +6% and sell immediately and book profit. You will get 5% profit after deducing broker and transaction charges.

Market Analysis Post Selling:

Once you have sold the stocks, you should not stop watching the company. You should watch the company and observe how long it is going up after you sold your stocks. After reaching a top threshold,the price will down trend again for sure. Watch and track the downtrend for a second cycle purchase.

If you are planning to be a serious trader you must be watching the trend of the companies of your interest, even if you are not investing. This observation will give a lot of predictive knowledge which will be help full as your experience grows up.

 

I am giving  you some cases of generalised analysis statements as follow as [just examples]

1. A hotel based business company makes more profit in summer months than in the other months of the year.
2. If we are investing in an airways company then we are going to lose everything that we invest.
3. The fate of a consulting or BPO firm is based on the previous session performance of its parent firm based in US.
4. OIL/COAL and allied companies grow highly depending upon government policies.
5. If a car company is announcing a release of its new model, in next three months there is room for growth.
6. When you see advertisements of a specific company they were looking for expansion or market reach
7. If  a company is dragged in to any allegations, the company share price will go low for next six months – one year

Share Market Trading For Dummies -6

Short Term Trading Explained

Yield and Risk: Low Risk|weeks-months| High Profit

Good For : Curious Traders, Beginners and Experts

Not Good For: People who have no time for market watch

Dont’s: Do not invest more than 25% of money in a single company

Do’s : Invest in Group A and Group B Companies 

It is the most successful type of trading with minimal loss and maximum gain. A trader who has good market analysis capability and follows short term trading reaps more profit than any one else.

Step 1:

The most important step in short term investment is to invest in the right company at the right time. Decide the company you are going to invest with market analysis (will share in future posts).

Step 2: Wait for time to buy.

Once you decided the companies you are going to invest in, you have to watch them for one to three days.  When you are going to buy, you must concentrate on shares on downward trend. A share that is performing poorly than its past six months is our target. If a good company’s share is cheaper than its past six months price(you can use moneycontrol.com or money.rediff.com for watch ), find out the reason for its down fall. If the reason is not a very problematic one such as dept, bankrupt, closure or court case and the down is due to overall market fluctuation, you can buy the share immediately.

If a company’s share is going down due to internal problems such as bad administration, poor performance, factory shut down, employees strike, court case, fraud, bankrupt, etc you must avoid them. You can get these details by simple googling the company name for recent news.

You should only select the companies free from the above problems. Select the companies whose share prices are down due to overall market fluctuation and governments policy decisions.

Rule One:

When the market is good, it is not the right time to buy shares. we should buy shares only when the market is down.

Once you have purchased the stocks, wait for three days until the shares are delivered to your account. From the fourth day onward, you must watch the status of those shares daily.

Once the price of a share purchased by you crosses +6%, you have to closely watch it every minute. You should sell it immediately if it crosses +8% or comes down to +5% from +6% without wait. If you try to make huge profits such as +15%, you might loss ultimately.

Rule Two:

Sell the share once it comes in between +5% to +8% of the value you purchased. Don’t wait for it to cross +8%.

Normally, a share bought by you following the guidelines specified here will reach +5% between 1 – 2 weeks or between 3-4 months. In some rare cases, if the share value goes down from the purchased value, you should not sell them until it comes up even if it takes a years.You should not hesitate to hold the stocks for long term.

A short term trading gives you a sure 10% PER MONTH profit, if you have good market analysis capability. Since we are holding non performing stocks for long term without selling for loss, we can tell this method as a minimal loss – maximum gain Trading.

 

This method of trading is suitable for full time, curious traders, who want to make regular income out of share market.

Disclaimer:

I have personal bias  and love for this “Short Term Trading” technique due to my own experience . So Keeping the Bias in Mind, Readers are advised to have their own discretion on the mode of investment.

-the author

Share Market Trading For Dummies-5

Intraday Trading Explained

Yield and Risk: High Risk|One Day| High Profit/High Loss

Good For : Gaming and Thrill Lovers

Not Good For: Everyone Else

Dont’s: Don’t Invest More than 500 rupees in a single Day

Do’s : Please don’t do Intraday Trading 

Intraday trading is buying and selling shares of a company within a day.

The rule is, if you are buying a share by specifying “intraday” option on the “Delivery Type” in Share order form, you should sell that share before the intraday cutoff time. Even  if you forget to sell the Shares with in the intra-day cut off time (normally 3.00pm), your demat provider also known as share broker will automatically sell it at 3:00pm for the without any consideration of the value of shares.  Intraday traders use minute by minute market fluctuations to make money.

In intraday trading, when you buy shares, it will not be delivered to your demat account like delivery type trading. Instead, you hold the stocks virtually for a day and at the end of the day you must sell. The chances of incurring loss in these type of trading is very high.

One advantage a trader can get from intraday trading is that the share broker will provide 3X to 5X margin of your money. It means, if you have 500 you can buy shares worth 2500 in case of 5X margin. This extra margin advantage can also drag you into the problem of losing more money.

To buy an intraday share, all you have to do is select the “Intraday” option on delivery type of the Order Form.

To be an intraday trader, you must be a fine lover of  thrills  and adventure with more money to lose.

This is not advisable for anyone, including curious traders who want to make sustainable high returns.

Share Market Trading for Dummies-4

Long Term Trading Explained

Yield and Risk: Low Risk|Long Duration| High Returns

Good For : People who have no time for market watch and have other employment

Not Good For: Full Time Traders and Curious Traders

Dont’s: Investing more than 25% in a single Company

Do’s: Investing in Group A Companies

Shares are Value of a Company split into many volumes. Say, if a company’s total value (assets and services) is 1,00,000, then the company may issue 10,000 volume of shares each priced at Rs.10.

A Trader just like you and me will be buying a part of the shares. Lets say that you buy 500 shares at Rs.10 per share.  If more number of traders are interested in that company’s share, then demand for the shares will increase and consequently the price will go up. Normally, when companies show growth or when companies plan for growth, traders will be interested in their shares and the share price will go up.

On other side, when a company seems to be in trouble, traders will not be interested in investing in the company and will begin to sell their share stocks. In this time, the share value will decrease. Most of the traders use the share price fluctuation to make money. They will buy shares at lower prices and then wait for some time (days, weeks,months or even years). Finally when the price goes up, they sell them.

But, when you  buy some 500 shares of  company having 1,00,000 shares issued, you become owner of 0.5% of the company. It means that when the company makes a profit, it will be given to you as dividend in proportion to share you own.

Mostly, companies declare profit once in a year after auditing and announce dividends. It is just like interest. Investing in a company, waiting for dividends and living out of that dividend is known as Long term Trading. It is interesting to note that even in long term trading, share price increases for a good company.

You will be investing a huge sum of money in various companies and will be waiting for dividends patiently. You will not be selling the shares daily or monthly, unless you feel that the company will not make profit.

If you don’t have time for daily market watch and you want to save money for say 5 years this long term trading is the best option.

Step 1: You should decide about the companies you are going to invest(I suggest Group A, details of analysis will be posted in future posts).

Step 2: Just Invest money, remember you should not invest more than 25% of your total money in a single company, even if the company appears like a very profitable option.

Step 3: Just  watch the share’s current price once in a month. Read news about those companies you have invested in, once in three months.

Step 4:(Just keep it in mind)

• Some companies declare dividends for quarterly. Some declare once in a  year and others once in two years.
• Dividends are credited as money to your savings bank account in some cases and paid out as dividend shares in some cases. Dividend share means you will be given extra shares proportion to your current holding.

Step 5:  When you feel a company is going to go through a crisis, like Vijay Mallaya, Spice Jets etc act immediately and pull out your investment from those companies.

Long term trading is not suggested for curious traders who want to have trading as their full time JOB,  as long term trading is a boring affair, frankly.

Share Market Trading For Dummies-3

Money Investment breakup Idea

The  three essential questions to be solved in Share Market Trading are

1. How much to Invest?
2. Where (In Which Share) to Invest?
3.  How to breakup the Money?

We call them as “Super Three”

1. How much to invest?

It depends upon your expertise on Share Market Trading

As a beginner, If you don’t know anything about share market. It is advisable to start with Rs.1000 for the first month

0-1 months from demat account opening Rs.1000

2-3 months Rs.5000

5-6 months Rs. 10000

6-12 months not more than Rs. 100000

13th month onwards, As much you like (Don’t trade with money by taking any type of loan, use only your own money. Don’t get caught in debts)

 

2. Where (in which Company share)to invest ?

Buy from Group A and Group B Company shares to minimize risk.

Selecting companies and analysing which share to be bought will be dealt in future posts.

 

3. How to Break up the Money for investment?

Rule No. 1

Do not invest more than 25% of your money in a single company share. If you have 1000, then the maximum amount you should buy shares from a single company should be less than Rs. 250. This will give you a diverse portfolio and reduces risk of loss.

Rule No. 2

Whatever the case, Do not override rule number one.

Share Market Trading For Dummies-2

 

Operating the Demat Account(Only Basics)

Once you receive your Demat Account after completing the tasks as specified in

For Dummies-1 post. You will have to learn how to operate a Trading Account

You need

1. A demat account.
2. Savings bank account with 1000 cash and internet banking.
3. A computer and internet connection.
4. A cup of iced Coke.

Step 1:

Login to your demat account with user name and password given by your Demat provider.

Step 2: 

You will be asked to change the password during your first login.

Step 3:(Just keep it in mind)

When you open a demat account with SBI and already have a Savings Account with SBI they will map these two accounts. This is applicable to  HDFC and ICICI too.

Step 4: (Just keep it in mind)

A demat account is where you will buy Shares of Company with Money. Just like your savings bank where your money is deposited and withdrawn, a demat account is used to deposit and withdraw shares of companies.

Step 5:(Lein Fund: i.e. Mark a fund intended  for Investment)

a. First of all, we need money in our demat account to buy shares. So we have to transfer the money we would like to invest from our SB account to demat account.

b. This can be done by clicking the “Lein Funds” Option inside the Demat Account. Once you click “Lein Funds” you will have to enter the amount you want to invest (Say 1000). Click ok.

c. On the next screen you will be taken to your Savings account Login, where you will login with your savings bank username and password.

d. Now you will have the transfered amount available in your demat account  for trading Purposes.

Step 6: (A Coke Break)

Have a sip of iced coke, take some rest.

Step 7: (Unlien Funds/ unmark funds from investment to Savings)

Suppose, if you decide not to trade for Rs.1000, but just Rs.800 and to return Rs.200 to your Savings Bank account . You have to find the “Unlein Funds”,  and then have to enter the Amount 200 and Click Ok/Unlein. Now your amount 200 will be unmarked from demat account and will be transferred back to your savings bank account.

Step 8: (BUYING Shares)

This is the essential step in Share Market Trading. Here I am telling about the basic buying method. Advanced Buying Methods will be covered in future posts. Decide the Company in which you are going to invest.

a. Find the “Order entry form”  in your demat account.

b. Click “Buy” option.

c. Select type as ” Equity”.

d. Next select the market exchange in which you are going to buy shares. There are two markets BSE and NSE. Some shares are listed in BSE and some are listed in both. As a beginner you just concentrate any one market Say “BSE”. So select BSE.

e.  Then you need to type the company name. As you begin typing, Column will Auto fill and you can select the company among the suggestions.

f. Then click ” GO”.

g.  Select product type ” Delivery”. It means, the  share will be delivered to your account in two – three days. (The other option intra-day is not needed now )

h. Select order type ” Market Buy”. selecting this option you will buy the shares at Current Market Price (Other types , we can see in future)

i. Enter the quantity of Shares. Find the Price of a Single Share. Say the price of a single share is Rs.29. you will get 27.586 shares for Rs. 800. So, we can buy 27 Shares with the money you have in your demat account.

j.  Once you Enter the quantity, click “Submit”.

k. Check whether your order was successful under “Order Status” option.

l.  If by a rare chance your order fails, the reason will be posted on the status and you can rectify and re order.

m. You will be curious to see the purchased shares in your demat account. Unfortunately, it takes three working days for it to be credited to your account.

o. After three days you will find the purchased stocks in your “Demat Holding” option.

Step 9: ( SELL Shares)

a. If you would like to sell a share, decide the quantity and name of the share you wish to sell.

b. You should have the stocks in your demat account holding prior to selling.

c. In Some Demat Accounts, you need a unlein a Stock before selling. For that you have to Click ” Unlein Shared For Trade” and then enter the number of shares you need to mark for sale and then click ok. Now you will be able to sell the unliened quantity.This “Unlien  a stock” option is not necessary in most demat Accounts, especially SBI.

d. After that, Find “Order Form”.

e. Click “Sell” option.

f. Select type as ” Equity”.

g. Next select the market exchange in which you are going to sell shares. There are two markets BSE and NSE. Some shares are listed in BSE and some are listed in both. As a beginner you just concentrate any one market Say “BSE”. So select BSE.

h.  Then you need to type the company name. As you begin typing, Column will Auto fill and you can select the company among the suggestions.

i. Then click ” GO”.

j.  Select product type ” Delivery”.  (The other option intra-day is not needed now ).

k. Select order type ” Market”. Selling selecting this option you will sell the shares at Current Market Price (Other types , we can see in future).

l. Enter the quantity you wish to sell.

m. Click “Submit”.

n. Check the “Order Status”.

o. Once the order is successful, you will have the money available from trade immediately. But you can’t unlein it to your SB Bank immediately. After Three working days the Money will be deposited in your SB Account.

 Step 10.

Logout of your demat Account.

Step 11.

Again take coke break and chill.