Split entries Protect and safeguard capital.Vishal Baliya is Author of the book: The Happy Candles Way to wealth creation. (Available on Amazon in Paperback and Kindle version)
Split entries Protect capital and reduces losses:
Many times I get the question: What are the best friend of investors?
My answer here would be: Stop losses, trailing stop losses and Split entries.
We will talk about Stop loss and Trailing stop loss in a separate article but today we will talk about Split entries. On the onset let me clarify this is not a call of any company. The chart used below is to explain the process of Split entries in stock market. Breakouts are a great thing. Lot of people make money through breakout trading and lot of people make even more money through breakout investing. But even after selecting a stock after proper due diligence, consulting your financial advisor, reading intrinsically about the company, making charts, studying fundamentals there is a possibility that breakout still might fail. No one can be 100% sure otherwise all investors would be multi Billionaires.
This is because there is inherent risk in investment whether it is equity or any other form of investment. More so in equity as there are many macro and micro economic and factors at play. Some or most are beyond control of even the promoters of the company or mega investors. Thus when you are not 100% sure of a breakout and there are important resistances still at play, you can opt for split entries.
Now have a look at the chart below.
In the chart you can see how this stock took the support of 200 days EMA Father Line after making a bottom near 3311. Zone A to Zone B is the area where we feel that the stock has completed the process of bottom formation and is turning around. Say you want to invest Rs. 21,000 in this company. Your X here is 21000. X/2 = 10,500 and X/3 = 7000 and so on. (X being the money you want to invest in a particular company.) Instead of going all in between zone A and Zone B shown in the chart. You can go X/2 between zone A and B. Why so? Because there is an important hurdle of Mother line at 50 days EMA still to be crossed. Suppose the Mother line acts up and stops the rally and stocks turns bearish your X/2 capital is still intact. To protect remaining X/2 there is a stop loss. In case the stock turns bearish, your Rs. 10,500 is intact. Suppose you have kept stop loss at 10% of your capital deployed. 90% of your X/2 is safe plus 100% of your X/2 capital which you are yet to invest is also safe. Thus Split entry protects your capital. Now ideal scenario in my opinion would be X/2 entry between Zone A and B. Second X/2 entry between zone B and C where you got a breakout confirmation when the stock has confirmed its bullishness as the stock has given a closing above Mother line which is 50 days EMA. To know about the Mother, Father and the Small Child Theory please do read my book: The Happy Candles Way to Wealth Creation which is available on Amazon in paperback and Kindle version. Which explains in depth many such concepts which will help you as an investor.
The argument against such an investment would be: Ah! If I would invest my full capital between Zone A and B. And cruise till Zone D. I will make more money. Definitely you would. But there was a greater risk compared to split entry. Even if you take a split entry between Zone A and B and Second X/2 entry between zone B and C and cruise till Zone D, you will still make a good amount of money. The risk you would have taken in case of split entry would be much less compared to having invested all your capital in one go.
Pyramiding Split Entry Approach:
Another kind of split investment is Pyramiding. In Pyramiding you gradually increase your investment in an equity after every positive breakout. Usually at a price higher than the previous one. Like base of the pyramid is large your first investment is high and gradually decreasing the quantum of investment. I personally use split entry/pyramiding split entry approach in many of my equity related investments.
Disclaimer: There is a chance of biases including confirmation bias, information bias, halo effect and anchoring bias in this write-up. Investment in stocks, derivatives and mutual funds is subject to market risk please consult your investment advisor before taking financial decisions. The data, chart or any other information provided above is for the purpose of analysis and is purely educational in nature. They are not recommendations of any kind. We will not be responsible for Profit or loss due to descision taken based on this article. The names of the stocks or index levels mentioned if any in the article are for the purpose of education and analysis only. Purpose of this article is educational. Please do not consider this as a recommendation of any
Purpose
long on syngenemultiple times resistance tested, breakout retest done + inverted H&S pattern
Disclaimer:
All information shared is just for educational purposes.
By no means shall we be accountable for any debits/losses amounting out of it.
We are not SEBI registered Analysts, so please consult your Investment Advisor and take rational decisions.
Once ETF misdirection recognized, BTC goes up at warp speed.Somehow i think that the general players in the BTC market are letting the Government misdirect their attention, allowing their ETF approval/disapproval game to manipulate and control the market.
They're somehow forgetting that Bitcoin hasn't had ETF before. It actually was created to have a currency that was free from manipulation, control and regulation by banking or governments.
Once they remember this, or are reminded of that by the alt-coins, they will realize Bitcoin once reached 20K without ETF. And maybe it didn't do that despite not having ETF but maybe it did it because it had no such regulations conformity.
At that point the actual important things like crypto-currency adoption, penetration and saturation will become the market's motivators. That has been steadily increasing despite the market's volatility, be it at a slower pace than before.
Also there's a point coming at which the ICO-tsunami will end, putting an end to the ludicrous number of coins, crypto-based projects and block-chain to asset gluing attempts that we've been seeing over the past year. This will be the start of the alt-coin massacre during which many coins and other trade-able crypto stuff will plummet in value and eventually disappear.
If the bitcoin is still there when that happens it will of course shoot up in price at warp speed. If not Bitcoin then whichever alt-coin has been able to show it can remain fast, anonymous, safe and still be cheap to use.
So i am confident that when the "ETF Show" is over the bitcoin price will go back to following its own path. It will return to its rebellious roots, and its fundamental need, its purpose, to be the decentralized, safe, anonymous cheap and independent currency of the world. I predict that before the end of the year it will pass the 10k boundary and won't look back until the last coin has been mined.
What happens then, no one knows.