Bie Adieu 2023

Good Morning.

So, yesterday was the final trading day for the calendar year 2023. I am sure you had many learnings during this period. Just a reminder that never feel demotivated in this journey by looking at what you should have done instead of what you did in many past trades. This is a continuous learning process so the best way out is to jot down your rules at a place and mold them only when you think your system needs a fix.

I wrote this in July 2023 and I am sure all of your challenges fall into either one of these four buckets. Either you are a beginner and your stock selection is not fixed or you have spent a considerable time figuring out your exit plans. The best way out is to sit back for this weekend, pick a piece of paper and a pen, and write the rules of the stock charts you will trade. There may be 1-2 setups that you intend to play around with. What are the right entry criteria that suit your personality? For instance, one of my friends is flying with Indigo and I can not tell him to be glued to the screen and buy stocks as soon as the price meets your criteria.

Right position sizing is one of the most crucial aspects of Technical Analysis. A stock may move 2X but if you are holding just 2% of your total capital, it moves the portfolio by merely 2% despite your stock selection and entries being right. Without doing any course, I as a beginner started with a 7-10% size with less than a 5% stop-loss to begin with. As things progressed, I learned more and more to mold the system.

Right exit is one area that troubles everyone alike. For that, first, you need to understand what move do you intend to capture in a stock. If you intend to hold it for 2-3X move, then you must be prepared enough to sit with multi-weeks/months of underperformance or sideways move in the middle while using weekly charts. If you intend to capture shorter swings of 15-20% or occasionally more, then you have to let go of the thought that the stock went up 2X after you sold it. You decided that you need a higher gain through churning. There is no point in cribbing over.

Once that personality part is sorted, you have won more than half of the battle and are better prepared to deal with any eventuality.

Even after all of this, a lot of people ask which is the best book I can recommend to them. To which my answer always is, have you read your stats? How many trades you took per month? What is your average gain? How much gain did you lock in the ABC trade while getting out emotionally and what could you have got if you had followed the rules? Was your sale a pre-mature one or a late exit? your journal is the best book out there. Have you read it or even prepared it?

I would advise you to go through your trades for this weekend, prepare yourself for the next calendar year, write your rules somewhere, and try to fix up the thing that hampers you the most.

To me, I wanted to avoid the emotional aspect so seldom do I come back in front of the screen after I have placed an order. That is why reading Sir Nicolas Darvas becomes too crucial. I advise you to read whatever Sir Darvas has written so far.

To summarise, you are doing this for years to come - one bad or good year shouldn’t be the criteria to judge yourself. If you have made some money howsoever small or at least you are close to your original capital, you’re ahead of many YouTubers giving that superficial bookish gyan. This upcoming year I wish the best for you.

I have a free webinar tomorrow on Zoom and post that I will be preparing another letter for all of you.

I will have more for later.

Thanks and Happy Investing….