90: 10 Strategy
Buy shares in multiple of 10s or 100s.
If high price shares then multiple of 10
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
- It’s easily achievable target . 10% moves are easy to capture. It takes significant time to double share price.
- Profit remains in shares. Hence If stock keep on going higher and higher , you get benefit
- You take out capital hence no worries of share price.
- I pledge those shares and get margin for trading.
- 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
Volume – Higher as compared to last rally phase.
- If position size is big then stop loss is a must.
- Average period is 1-2 weeks of holding period.
- Hedging can be done with put of same stock by
Buying PUT or
- In long term investing, if prices double then sell 50% shares..
- 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.
- At least 3:1 or 4:1 reward to risk is preferred.