or

Trading strategy for positional calls

****OPENING RANGE BREAKOUT********

Do not trade for first 15 minutes i.e. upto 10.10 AM.
first 15 minutes of trade is known as OPENING RANGE. (O.R.)
Write down High and Low of Opening Range.
now whenever trades above high or below low of Opening Range then it is known as OPENING RANGE BREAKOUT. (O.R.B.)
If O.R.B. is up then stoploss will be low of ORB for intraday.
same way, If ORB is down then stoploss will be high of ORB for intraday.
***********HOW TO TRADE FOR POSITIONAL CALLS USING O.R.B.*******

--------When call is 'HOLD LONG'

Do not trade for first 15 minutes.
now if OR breaks up then hold your longs keeping low of OR as stoploss for trading upto 3.00 PM.
after 3.00 PM if trading level is above our closing stoploss level then carry forward the long for next day.
If during inraday, low of OR is broken down and you have closed the long for intraday, then re-examine the level after 3.00PM. If trading above our closing stoploss level then re-enter long to carry forward for next day and if trading below our closing stoploss level, then do nothing.
--------When call is 'HOLD SHORT'

If OR breaks up then close your short. Re-examine at 3.00PM. If still trading below our closing stoploss level then re-enter short and carry forward it for next day. and if trading above our closing stoploss then do nothing.
If OR breaks the OR down then hold the short for intraday keeping high of OR as stoploss.after 3.00PM decide as per closing stoploss level.
----------When call is 'INITIATE LONG'

If OR breaks up then initiate long.
If OR breaks down then avoid the call.
---------When call is 'INITIATE SHORT'

If OR breaks up then avoid the call.
If OR breaks down then initiate short.

************CONCLUSION*****

Do not trade upto 10.10 AM.
From 10.10 AM to 3.00 PM trade with three levels(OR high, OR low, Closing stoploss) and one strategy (Long or Short).
after 3.00 PM trade with one level(Closing stoploss) and one strategy( Long or Short).

31 march 2009

Do not Buy if the Stock Trades below Stop loss level


Do not Sell if the Stock Trades above Stop loss level


Always use Stop Loss.


Nifty Future ( Intra Day )


For the month of April 2009 Nifty may take support at 2943...2966 Zone and face selling at 3147 and 3241 level.


Futures and Options traders may plan their activity accordingly.


Close below 3081 may favour bear only


For today's trading NF may take support at 2950..2920 zone.


Upper side it may face selling at 3011.3033 zone.


Expected swing for today's trading is 2920..3033


Stocks for Day Traders


PIVOT TABLE FOR TRADING NIFTY AND NIFTY STOCKS 31.03.2009


If trades above Pivot Point then Pivot turns Support level. If trades below Pivot Point the Pivot turns Resistance level


STOCK
SUPPORT-2
SUPPORT-1
PIVOT
RESISTANCE-1
RESISTANCE-2


NIFTY
2913.30
2950.80
3008.80
3046.30
3104.30


NIFTY 2900 CALL
121.10
151.20
200.60
230.70
280.10


NIFTY 2900 PUT
58.40
76.20
87.60
105.40
116.80


NIFTY 3000 CALL
76.60
99.20
135.60
158.20
194.60


NIFTY 3000 PUT
90.10
117.70
135.70
163.30
181.30


BHARTIARTL
567.80
588.80
603.60
624.60
639.40


BHEL
1412.60
1442.60
1491.30
1521.30
1570.00


DLF
153.10
159.30
169.50
175.70
185.90


INFOSYSTCH
1235.30
1268.40
1298.70
1331.80
1362.10


NTPC
160.90
172.30
178.90
190.30
196.90


ONGC
746.60
764.60
787.20
805.20
827.80


RELIANCE
1475.50
1496.00
1515.50
1536.00
1555.50


RCOM
157.50
162.80
171.40
176.70
185.30


SBIN
946.80
984.60
1051.80
1089.60
1156.80


TCS
485.10
504.20
537.10
556.20
589.10


Above calculations are based on NSE trading data on 30.03.2009.

Day Trading

Learn how to make huge profit in the first hour itself. Explained with charts and graphs.


Learn how to make profitable trade by using only one indicator in Bull market or Bear market.


Learn how to make winning trade by using Pivot Points successfully. Click to view screen shot of Pivot Table. Very useful for offline traders and those who do not have facility to view charts. All you have to do is enter the High, Low and Current price of a stock or indices. Support and Resistance levels are automatically updated.


Learn how to make mind blowing profit by using New Mid Point Trading Strategy. Very useful for offline traders. Just call your broker and ask High and Low price of a stock then trade as per the instruction given in the ebook.


Learn how to make profit any time during trading session by using Weighted Average Price. Very useful for offline traders. Just call your broker and ask Weighted Average Price and Current price of a stock then trade as per the instruction given in the ebook.


Learn how to Sky Rocket your trading profit by using Channel Breakout Trading Strategy. Best strategy to make profit in the afternoon session.


Learn perfect Swing Trading strategy used by Successful Traders using only one indicator.


Learn foolproof strategy for Buy and Hold type of Investment.


Learn all about Option Trading and perfect Entry and Exit Strategy.


Learn all about Candle Stick reversal chart pattern


Learn important chart patterns to be followed for successful Day Trading.


Learn all those Golden Trading Rules.


Learn how to choose stocks for Day Trading.

heavy stocks

Heavy weight index stocks
Ten stocks are controlling 52% of index
just watch this 10 stocks for market direction


BHARTIARTL 5.79%
BHEL 3.15%
DLF 3.33%
INFOSYSTCH 3.46%
NTPC 5.37%
ONGC 8.14%
RELIANCE 12.26%
RCOM 3.95%
SBIN 3.44%
TCS 3.12%

SAVING

25 Useful Financial Rules of Thumb
Monday, 9th March 2009 (by J.D.)
This article is about Hints and Tips, Money Hacks


If you're new here, you may want to learn what this site is about. I encourage you to subscribe to my RSS feed. Thanks for visiting!

Lately I’ve found myself using more and more financial rules of thumb. A rule of thumb is a general guideline, an easy way to approximate a value quickly. It’s not meant to be completely accurate. On a whim this weekend, I gathered together many of the general rules I’ve been using, as well as several others I found online. Thanks to those who follow me on Twitter, who also contributed suggestions.

For example, @FourPillars wrote, “I hate rules of thumb — they are a poor substitute for proper analysis.” He’s right, of course. Careful analysis always yields the best results. (And there are times when you need the advice of a financial professional.) All the same, it’s often convenient to get a quick estimate of financial numbers. For those situations, it’s helpful to know guidelines like the ones I’ve listed below.

Saving
The number one rule of saving is: Pay yourself first. Set aside your savings every month before you use the money for other things, including bills. Always pay yourself before anything else.

The standard rule of thumb is to save at least 10% of your income. I think a better goal is to aim for 20%. At MSN Money, Liz Weston writes that if you’re young, you can follow this rule of thumb: “Save 10% for basics, 15% for comfort, 20% to escape.”

Nobody agrees how much you should set aside for an emergency fund. Even the experts offer advice ranging from $1000 up to 12 months of expenses. (The most common suggestions range from three to six months of expenses.) However, via Twitter @The_Weakonomist offered a clever rule of thumb to determine how much to save during a recession: Your emergency fund should cover X months of expenses, where X is the current unemployment rate. In other words, because the U.S. unemployment is at 8.1% right now, you should aim to have enough money in the bank to cover eight months of expenses.

On Twitter, @JoyfulAbode reminds us to bank a raise: “Don’t let raises get to your head. If you get a raise, yay! More for savings! (Maybe take 20% to use in your non-savings budget.)” This is the best way to avoid lifestyle inflation.

Finally, never forget inflation. Inflation is the silent killer of wealth. The commonly-cited average U.S. inflation rate is 3% per year. But the long-term average (since 1913) is about 3.42%. As a rule of thumb, I figure that inflation runs 3.5% per year.

Investing
Because the United States had 25 years of stellar stock-market performance, many of the investing rules of thumb got thrown out the window. Now people are wishing they’d stuck to the basics. One of the most important things you can do is know your risk tolerance before you begin investing. The time to decide how much you can afford to lose in the stock market is before a crash, not after one.

For years, the asset allocation rule of thumb was to have X% of your portfolio invested in stocks, where X is equal to 100 minus your age — with the rest invested in lower-risk investments like bonds. (Thus, if you’re 30, you should have 70% invested in stocks and 30% in bonds.) Over the past ten or twenty years, “experts” began to play with that formula. Since I’ve been writing Get Rich Slowly, I’ve seen all sorts of variations on this rule, with some gurus recommending as much as 140 minus your age invested in stocks. With this guideline, I’d be 100% invested in stocks right now. This is dumb. I suspect that the current market is going to prompt a return to the traditional “100 minus your age” advice. (Another way to think of this is that the bond portion of your portfolio should equal your age, and the rest should be in stocks.)

One rule of thumb I’ve seen many places is to invest no more than 10% of your total savings in your employer’s stock. Remember that diversification is important. If your savings and your job are both with the same company, you have all of your eggs in one basket. This is risky. Famously, many Enron employees were burned when the company went under because they had been encouraged to keep their retirement savings in company stock.

Long-term, the stock market averages about a 10% return. But remember: average is not normal. Also, many experts (including Warren Buffett) expect stock returns to be lower over the next few decades.

Perhaps the granddaddy of all financial rules of thumb is the rule of 72. To determine how long it will take an investment to double, divide 72 by the annual return. Thus, if you’re earning a 4% return, your money will double in approximately 18 years. But if you’re getting 10%, it take just a little over seven years to double your capital.

Homeownership
Via Twitter, @MillionMommyND writes, “Need to cut back? Housing, cars, and taxes dominate most budgets. Make dramatic cuts to these budget busters first.” She’s right. As a rule of thumb, tackle big expenses before small expenses. If you can save 1% when shopping for your home or your car, you’ll save more than if you save 10% each month on your cable television. (Though you should still try to do that, too.) Here are some guidelines for saving on a home:

How much house can you afford? @FrugalTrader writes, “When getting a new mortgage, the balance should be less than 2x your family annual income.” So, if your family makes $120,000 per year, your mortgage should be $240,000 or less.

When lenders calculate how much house a borrower can afford, they use the debt-to-income ratio, a measure of how much of your income goes toward debt. These lending limits have crept upward with time. I’m a strong advocate of being conservative here. I believe your housing costs should be less than 28% of your gross income, and your total monthly debt payments should be less than 36%. These numbers provide ample room but prevent borrowers from being trapped by too much debt.

In the Olden Days, the standard advice was to consider refinancing your home if interest rates dropped by 2%. Closing costs are lower today, and now it often makes sense to refinance your home when interest rates have dropped by 1% from your current mortgage. As always, use this rule of thumb as a flag to start looking, but run the numbers before you take action. (Kris and I are signing on our refinance this morning! We’re dropping from 6.25% to 4.96%.)

Automobiles
After your home, your car is probably your biggest expense. One common rule of thumb when purchasing a car is to buy used, or to buy new and to drive it for ten years. Either one will save you big money. (Do both and you’ll save even more.) Here are a couple of guidelines to use when shopping for a vehicle:

On Twitter, @marubozo suggests the 20/4/10 rule of thumb for buying a car. You should pay at least 20% down, finance for no more that four years, and the payment should be less than 10% of your income. The first part of this rule prevents you from owing more than the car is worth, and the last two parts prevent you from buying more car than you can afford. (@ced1969 offers a different approach: “Never finance a depreciating asset, like a car. Pay cash and immediately start saving for the next one.”)

Here’s another one from Liz Weston: To approximate a new vehicle’s five-year cost of ownership (in monthly terms), double the price tag and divide by 60. Looking at a pimped-out Mini Cooper S? Double that $30,000 sticker price to get $60,000, and then divide by 60. Is it really worth $1,000 a month to get rid of your crummy Ford Focus? (Or bookmark and use the Edmunds True Cost to Own calculator.)

Finally, remember the advice of Tom and Ray, the Car Talk guys: It almost always makes more financial sense to repair your car than to buy a new one.

Retirement
Save for your own retirement before saving for your children’s college education. They can get loans for school. You can’t get loans for retirement. When you’re saving, remember the following:

The standard advice is to aim to replace 80% of your pre-retirement income. I think this rule is lame because it focuses on income and not expenses. Income is irrelevant. It’s what you spend that matters. Instead, I recommend a different rule of thumb: Base your retirement needs on 100% of your pre-retirement expenses — plus 10%.

Another approach to retirement savings says that you’ll need to save about 20x your gross annual income to retire. In other words, if you earn $50,000 per year, you’ll need $1,000,000 to retire. Again, I think this is lame because it focuses on income and not expenses, and expenses are what matter. But still, this can be a handy gauge.

In his fantastic book Work Less, Live More, Bob Clyatt shares a common retirement rule of thumb. If you expect to withdraw from your portfolio for 40 years or more, you can probably safely withdraw and spend 4% of its value every year. (Clyatt notes that you can increase this amount to 4.5% with only “slightly diminished safety”.)

Miscellaneous
According to Consumer Reports, when you’re faced with the repair of an appliance (such as a television or a refrigerator), you should buy a new one if the appliance is more than 8 years old, or if the repair would cost more than half what it would take to buy a replacement.

Here are some general rules for credit cards: If you carry a balance, you want a card with a low interest rate. If you don’t carry a balance, you want a card with rewards. In either case, you want a card without an annual fee. (And if you have trouble with compulsive spending, you don’t want credit cards at all!) For more information, read about how to choose a credit card.

Finally, if you get a windfall, use 1% to treat yourself. (Or maybe 2% tops.) Put the rest in a safe place and ignore it for six months. After you’ve had time to think about it, make your decisions. (Read more: How to manage a windfall successfully.)

Other guidelines
Strictly speaking, rules of thumb deal with numbers. Still, there are a lot of non-numeric guidelines that I think are useful to know. Here are a few:

Always take the employer match on the 401(k).
Never touch your retirement savings — except for retirement.
Never co-sign on a loan.
Avoid paying interest on anything that loses value. (Note that under normal conditions, home values appreciate slowly, so they’re not included in this guideline.)
Don’t mess with the IRS. When it comes to taxes, don’t try to cheat. Pay what you owe. Claim all the deductions you deserve, but don’t try to stretch things.
In general, save an emergency fund first; pay off high-interest debt second; and begin investing (at the same time you pay down remaining debt) last.
If you’re not willing to pay cash for it, then it doesn’t make sense to buy it on credit.
For more on this subject, check out the following articles:

Kiplinger’s Personal Finanace: How useful are financial rules of thumb
MSN Money: 16 favorite money rules of thumb
Paul’s Tips: Ten good rules-of-thumb for investing
CNN Money: A cheat sheet for millionaires to be: Financial rules of thumb
Fairmark.com: Roth IRA rules of thumb
Now it’s your turn. What rules of thumb did I miss? Do you disagree with any of those I suggested? What financial rules of thumb do you use when managing your money?

HELTH TIPS 5

Why you need to spring clean your body
Your body is naturally equipped with a self-cleaning process. But too much sugar, caffeine, processed foods, stress, and too little exercise can slow the body's natural detox function to a slow pace. And then your body can't clean itself when it is put up against the increasing number of harmful and toxic substances in the environment. Toxins come in many forms: pesticides in produce, formaldehyde in carpets and cosmetics, PCBs from plastic containers, dioxins from bleached paper products, and more.

Your body will process and eliminate some of the hordes of chemicals that enter, but overflow gets stored in the liver, lungs, kidneys, fat cells, intestines, blood stream, and skin—which can result in chronic illnesses down the road. When you undergo a detox, you get these toxins out of your system.

How do you know if you need a detox?
You know you're suffering from toxic overload if you are experiencing fatigue, memory decline, difficulty focusing, allergies and infections, irritability, anxiety and depression, difficulty with weight gain and weight loss, muscle and joint pain or weakness, skin rashes and outbreaks, recurrent yeast and fungal infections, constipation, diarrhea, abdominal bloating, and indigestion.

Most people report vast improvement in their symptoms after a detox. At first, you may feel a little fuzzy because of the toxins being released. However, when you stick with it, you will begin to feel more alert, energized, and full of vitality.

At-Home Detox
Start small! Begin with a one-day program and gradually increase to one week or more. Here are 5 steps to a daily detox that will gently cleanse your body:

1. Start the Detox Day Right
• First thing in the morning, drink one lemon squeezed in 12 ounces of warm filtered water. Lemon activates your liver to release toxins and helps to cleanse and move the roughage that stays behind in your intestines.

• Take acidophilus or a probiotic supplement. Acidophilus is one of the many "good" bacteria and yeasts known as the probiotics. Probiotics balance our intestinal functions, helping to break down food and control the "bad" bacteria that is also in your system—all of which optimizes the detoxification process. Always take probiotics on an empty stomach.

2. Your Detox Meals
These meals are designed to jump-start your body into becoming healthier.
• Breakfast: Eat oat bran cereal, brown rice, or any other whole grain cereal as long as it is unbleached and does not contain any added sugar or chemicals. Pair with unflavored soy milk.

• Lunch or Dinner: Eat any combination of beans, brown rice, oat bran, vegetables, and organic chicken, turkey, or soy-products. When you eat, notice how your food affects you. You should feel satisfied and energized. If you feel tired and sluggish, try eating smaller meals so that you don't overwhelm your digestion and interfere with the detoxification process.

3. Eat Green to Spring into Health
The green pigment in plants, chlorophyll, is structurally similar to the hemoglobin in the human body—the iron-containing element in blood. It increases red blood cell production and improves oxygenation, detoxification, and circulation. Be sure to eat several servings of fresh green vegetables every day during your detox. Try this super-cleansing broth and juice as a quick way to up your veggie intake.

Detox Broth: Add as many of these ingredients as you can into a large pot of filtered water: collards, Swiss chard, kale, mustard greens, cabbage, dandelion, Brussels sprouts, daikon radish, watercress, seaweed, shitake mushrooms, cilantro, garlic, leeks, fresh fennel, anise, fresh ginger, and turmeric. Boil until all ingredients are soft. You can make in a large batch and refrigerate for up to three days.

Detox Juice: Juice the following together: Aloe vera juice (which can be found in most health food stores), apples, asparagus, beets (including greens), cabbage, carrot and carrot greens, celery, cucumbers, and parsley. You can also purchase vegetable juice from the store, but be sure that it has no added salt or chemicals.

4. Supplement Your Detox
• Take a daily supplement of 1 tablespoon of flax seed oil, walnut oil, or deep-sea fish oil.

• Green Tea is a strong antioxidant, and a great beverage choice for your detox. Be sure to drink decaffeinated green tea.

• Dandelion and Milk Thistle both protect and restore the liver. According to Chinese medicine, the liver is most active in the detoxification process during spring.

• Ginger is a bowel and kidney cleanser. Make yourself tea from fresh ginger root during your detox.

A popular herbal formula among my patients is Internal Cleanse, a special combination of natural herbs to detoxify, calm nerves, clear the mind, promote emotional balance, and ease digestion. For more information, click here.

5. Take an Invigorating Herbal Soak
Soak for 20 minutes in a revitalizing herbal bath. Help draw out toxins by infusing your bath water with eucalyptus, wintergreen, peppermint, fennel, cinnamon, and epsom salts.

Spring may be the best time to cleanse your body, but you don't have to wait until spring to start. Detoxification and cleansing is a healthy maintenance program for all seasons.

May you stay healthy, live long, and live happy!

-Dr. Mao

5 secreates

I had been investing for a number of years before I learnt how to deal with risk. By solidly identifying some market opportunities I had achieved good results, but I treated finance as a game of chess, an exact discipline, where I expected to benefit from good decisions and suffer from poor ones.

1. How to deal with risk

This over-ambitious approach occasionally caused some bad habits. For instance, when I was not performing well, I made three basic mistakes:

I let losing positions drag on for longer than I should, as I hoped that eventually, I would be proved right.
I was a bit harsh on myself, and I assumed that to make a loss, must have missed something obvious.
I let it depress me that many hours of work on research and analysis could actually lead to failure.
Equally, when I made profits, I was over-ambitious and assumed that my reasoning had been right. I thought I was a hero!

Backgammon rather than chess

Fortunately, it didn't take long before I evolved a different way of thinking. I realised that luck plays a role in the investment world. Profits can be simply due to good luck, and losses simply due to bad luck. Financial markets are more like a game of backgammon than a game of chess, because unpredictable events in the markets simulate the involvement of the dice.

With this discovery I started treating markets as partly random and accepted that there was always going to be risk. There is no perfect investment or trade. This approach helped my trading enormously.

I stopped blocking the possibility of losses out of my mind like some dark fear, and I began to consciously anticipate them.
I accepted that it would not always be possible to find a reason for a trade going wrong, apart from just chance. So I gave up over-analysing losses with endless post-mortems looking for my mistakes.
I learnt to assess risks and look at factors like correlation and liquidity.
Having consciously recognised risk, I reasoned that it was not always a good idea to try and minimise it. I knew that having identified some comparative advantages, I had to trust them to work over time.
I accepted that even good ideas can lose money. That helped me to get better at cutting losing positions. Being wrong did not mean that I was a lousy trader. Even a trader with a comparative advantage will often make what is later found to be the wrong decision.
This attitude to risk is worth adopting. Accept that trading is unique�-- a doctor or a lawyer would quickly be out of business with the number of failures that are part of a trader's life.

2. Good ideas can lose money

In 1999 and early 2000, Warren Buffett was very sceptical about the rising valuations in the stock market, particularly those in the tech sector. Consequently, he didn't invest as aggressively as many other fund managers. Then, of course, in mid-2000 the share prices of many tech stocks collapsed to a fraction of their boom value.

It was a massive market crash, and the so-called 'Sage of Omaha' was proved right (yet again!). I'm sure, however, that even he must have felt some pressure when prices were relentlessly rising and his funds were under-performing. With his reputation though, his investors stuck with him through this difficult period, and he held firm. They believed that he had the right approach, even though he was not getting immediate results.

Analysis after a loss

If you've lost money on an investment, ask yourself questions such as:

Were you pursuing a genuine opportunity?
Did you understand how the market usually works?
Did you back a big idea or market anomaly that you had identified?
Was the potential reward worth the risk?
If you have let yourself down, learn from the experience and try not to do it again. But if the investment looks like it made sense, then try not to be put off. Accept that you cannot judge the quality of a single trade or investment by whether you made a profit or loss.

This approach is very disciplined. You do not want to change your investment style on the back of just a few disappointments.

The outcome of an investment or trade is not necessarily a true reflection of the merits of the original idea. Good ideas can lose money.

3. Wild swings and losses are uncomfortable, but they may offer the best rewards

While the markets have evolved and become increasingly sophisticated, there has been enormous scrutiny of just about every possible opportunity. Any obvious and reliable way to make money has now probably disappeared.

This means that there are fewer opportunities which offer smooth above-average returns. In fact, the opportunities likely to last longest are those which are the most uncomfortable. Would you be prepared to back an idea that would probably lose money eleven months out of twelve, even if it would probably pay off in the other month?

A lot of traders don't want that life. A lot of funds would be hammered with capital withdrawals by their investors. We live in a quarterly or annual reporting world. People evaluate performance over a given period and take action if results are not up to scratch.

By careful management of risk, however, you may be able to take on these uncomfortable types of investments. In the mid 1990s, I had "retired" and I only wanted to invest my own money. I continued to trade currencies and futures on my own account, and I also decided to start investing in early stage companies.

Early stage companies are often private companies which are not listed on any share market, although that is normally their aspiration. There are many of these little unlisted companies searching for financial backers, and they usually find it very difficult, since few investors are interested in them.

4. Opportunities may be found in areas that others find uncomfortable

One of my reasons for moving into this high risk sector, was that many people find the risk profile too uncomfortable. The majority of the companies fail, and the investor needs to select his investments extremely carefully, and trust that the winners will more than compensate for the losers.

Investors also have very little liquidity, and they may have to wait years for a chance to get some money back when the company floats on the share market or is acquired by another company.

This is why I came to the conclusion that good, small companies can be underpriced. This can be an advantage for anyone investing in start-ups if they are able to sort through the many companies looking for money and to choose the good over the bad. I have found the process is not that different to looking at the fundamentals driving currencies, interest rates or other markets, and over a ten year period, I have managed to achieve well over a 20 per cent�annual return despite the market collapse in 2000.

Not everyone though, can invest in unlisted companies. The minimum investment needed is at least 50 grand, and you probably need a network to make the introduction. However, I have also been able to apply the experience I have gained from dealing with unlisted companies to help me evaluate small companies which are already listed on the share market.

These are accessible to all investors. In a later chapter I will explore the fundamentals of small companies which I think are important for investors to assess. The small listed companies are also generally riskier than the big solid blue chip stocks, but by making an effort to investigate these opportunities and by managing your risk, you may find that these more uncomfortable investments offer a better price.

In general, keep a lookout for investments and trading styles that others don't like. It is logical that it may be here that you find the winners.

5. Diversify

The benefits of diversification are very well-known. There is a famous expression saying that diversification is the one "free lunch" for the investor. No collection of strategies would be complete without a mention of this easy meal. The world is risk averse. People want to avoid nasty surprises. Investors would prefer to have steady reliable returns, rather than potential wild swings of wins and losses.

Diversification can allow investors to reduce their risk without reducing their overall return. The idea of diversification is that it smoothes out the flow of wins and losses. It is unlikely that a variety of separate trading ideas will all win or lose at the same time. So even if we are placing riskier trades, it may not result in a riskier total portfolio.

I have discussed how I believe that uncomfortable trades with the big swings in wins and losses may offer the best rewards. So diversification is especially useful, because it may be possible to have a more comfortable existence, and still pocket the high return.

There are a few points to note about diversification:

You can diversify within an asset class. For example, a stock portfolio can have a mix of some blue chips with some small stocks.
Diversification across all asset classes (stocks, bonds, cash, gold, property, etc.) is more effective though, since the positions are less correlated.
You shouldn't keep a losing position simply because another one is doing well. I was once very sloppy with a losing currency position, because I had a bond position that was profitable, and in aggregate I wasn't losing money. I realised later, that had I used my usual discipline I would have cut the losing position and been much better off.
Every position in the portfolio should be based on its own merits.
Remember that you can keep cash as one component in a diversified portfolio.
Diversification is not an exact science. Since it is difficult to accurately measure risk, so for diversification a rough mix, based on instincts, is probably adequate.

(Excerpt from Taming the Lion: 100 Secret Strategies for Investing by Richard Farleigh, who made millions before he was 35 through shrewd investing. Published by Vision Books.)

WHAT DO YOU MEAN RETIREMENT ?

What is retirement? And what age should it happen? Is retirement an age or a sum of money?

These questions bug everybody who is at least 32 years of age. Why 32 years? Simply because it takes 2-3 years for the mind to accept that you are no longer in your 20s!

So suddenly you wake up to the rude reality of `retirement`. Retirement can be defined in many ways. For some people it is the end of a journey. For many others it is the beginning of journey. Largely it means life has reached a stage when you can do `what you want to do` than doing `what you must do`. To many people it is the financial freedom to choose between a `job` and a fun activity. It is the choice of going to office happily with a smile on your face instead of worrying whether your boss can sack you. It is the sheer financial freedom.

It normally happens at a particular age - and the age depends on your profession. If you are a gymnast you retire at age 17, if you are a tennis player you may retire at 32 years, a cricketer at age 35, a practicing doctor at age 70, a lawyer at age 75 and a politician at age 93! A business man can choose to retire at any age as he chooses; however, the physical health may not allow him to work beyond 65 years! So, largely retirement is a function of age and the strength of the human body to work.

So if a gymnast can qualify as a doctor and then become a politician he can really work long! On a serious note, the end of a corporate job happens when the calendar says your age is `58` - as per your birth certificate, you need to retire. However retirement can come any time depending on your health condition and on the economic conditions prevailing in the economy. If you are working in a growing economy with a large young population - there is likely to be a tough fight to get into the job market if you have been asked to take a break!