90: 10 Strategy

90: 10 Strategy

INTRODUCTION:
Buy shares in multiple of 10s or 100s.
If high price shares then multiple of 10
e.g.
100
500
1000
10000
Once share price increase by 10 % , it happens within few days or weeks.
Then I sell 90% shares and get back my capital.
10% Share remains as profit.Many of them become multibaggers.
Then , I deploy capital in other shares. Hence my capital is moving…
LOGIC behind 10:90

  1. It’s easily achievable target . 10% moves are easy to capture. It takes significant time to double share price.
  2. Profit remains in shares. Hence If stock keep on going higher and higher , you get benefit
  3. You take out capital hence no worries of share price.
  4. I pledge those shares and get margin for trading.
  5. Criteria for selecting stocks for positional trading:
    Trend Reversal stocks
    Fundamentally strong company.
    Recently beaten down.
    Double bottom or Triple bottom.
    Price Action – Previous Support
    Fundamental Support
    Volume – Higher as compared to last rally phase.
  6. If position size is big then stop loss is a must.
  7. Average period is 1-2 weeks of holding period.
  8. Hedging can be done with put of same stock by
    Buying PUT or
    Selling Future.
  9. In long term investing, if prices double then sell 50% shares..
  10. 15% Short term capital gain tax is applicable…We can’t avoid tax..If we want to earn money we should never be afraid of tax.
  11. At least 3:1 or 4:1 reward to risk is preferred.