🔸 A lot of traders (especially intraday) look at a stock’s market depth table to determine the upcoming moves and accordingly take their BUY / SELL decisions.
🔸 Read below how market depth data can sometimes be misleading and lead to losses
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Here's how most traders read the market depth:
🟢 If there are higher number of buyers (bids) means the stock is in demand and will go up.
🔴 If there are higher number of sellers (offers) means the stock is in supply and will go down.
But that is not how it works.
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Sep 14, 2020 • 4 tweets • 1 min read
📕 HOW CREDIT CYCLE WORKS
One day a man visits a debt ridden hotel.
1⃣ He gives the owner ₹10,000 as advance for booking his one week stay in the hotel.
2⃣ The hotel owner takes the ₹10,000 and goes to pay his debt to his food supplier.
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3⃣ Food supplier rushes to pay the farmer and dairy.
4⃣ Farmer runs to pay the land lord from whom he took a loan for his crop.
5⃣ The land lord rushes to pay the event manager who managed his daughter’s wedding on credit.
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Sep 1, 2020 • 5 tweets • 2 min read
⭐️ SEBI SELLING MARGINS
Here's the logic behind SEBI's new rule to impose margins on selling shares from your holdings.
Say you sell shares from your holdings on Monday.
As per the current settlement cycle of T+2 days, the shares will be debited from your demat on Wed.
But that T+2 days cycle leaves a possibility of you transferring those shares to someone on Tuesday i.e. before the shares are debited from your demat on Wednesday.
This creates a short delivery settlement risk.
Brokers already have systems in place to avoid this.
1⃣ As per new SEBI rules, buying and selling of shares will require upfront margin.
Eg: If you want to buy shares worth ₹1 lakh then you must have ₹20K margin cash in your trading account & the balance of ₹80K to be paid within 2 days.
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2⃣ If you want to sell ₹1 lakh worth of shares from your holdings then too you must have minimum ₹20K margin cash in your account, failing which penalties will be levied.
You can keep extra cash / or can pledge your other holdings for the stipulated margin required.
🔶 Company makes a public announcement of proposal of de-listing (done).
🔶 Company seeks the following approvals:
- Approval from board of directors (via board meeting)
- Approval from shareholders (via special resolution)
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May 14, 2020 • 6 tweets • 2 min read
📕 HOW MARKET DEPTH WORKS:
🔸 A lot of traders (especially intraday) look at a stock’s market depth table to determine the upcoming moves and accordingly take their buy / sell decisions.
🔸 Here's how market depth data can sometimes be misleading and lead to losses.
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🔸Here's how most traders read the market depth:
✅ If there are higher number of buyers (bids) means the stock is in demand and will go up.
✅ If there are higher number of sellers (offers) means the stock is in supply and will go down.
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Before we understand the scam, we need to first understand an important concept that was used to execute the scam - Interest Rate Differential (IRD)
🔸What is IRD?
IRD is simply the difference between interest rates between two securities.
Eg: Loans, currencies, etc.
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Apr 26, 2020 • 7 tweets • 2 min read
📕 WHY MOST INVESTORS FAIL?
🔸Most retail investors are introduced to the stock markets via news channels, stock websites or by friends.
🔸They start investing their hard earned money without understanding how the #StockMarket works.
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🔸Analyzing a company is out of question. They don't even know how to read a company's financial statements like balance sheet, etc.
🔸What next? They start hunting for stock tips given by market experts.
🔸Finally, they make their first investment based on a tip.
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Apr 16, 2020 • 9 tweets • 3 min read
📕 HOW & WHY COMPANIES FAIL
The biggest challenge a company faces is developing its ability to adapt to changing business environments.
Any company, however big or stable, is not immune to a downfall if it fails to adapt quickly
Let’s consider JET AIRWAYS.
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#StockMarket
Jet Airways started in 1993 and quickly became the top private airline in India.
Their USP: Excellent in-flight service.
They enjoyed the loyalty of the rich class, bollywood celebs, corporates, commoners, etc.
They enjoyed peak market share for more than a decade.
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Apr 15, 2020 • 4 tweets • 1 min read
🧠 TRADING PSYCHOLOGY:
1️⃣ When your trade goes wrong, you’ll find it extremely difficult to exit the trade and book a loss.
2️⃣ Your mind will trick you into thinking that the trade might work based on some random information.
3️⃣ This “waiting” will work 9/10 times.
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4️⃣ Every time it works, your mind will reward you with a rush of dopamine (feel good sensation).
5️⃣ It will reinforce your thought process of “waiting till it works”.
6️⃣ Finally, the 10th time when it doesn’t work, you end up waiting till the trade blows your account.
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Apr 14, 2020 • 5 tweets • 2 min read
📕 A Quick Story:
Ipca Labs and the rise of its stock price by +40% in the last 2 months.
🔸 For the last 5 years, US FDA had imposed a complete ban on import of any drugs from #IpcaLabs
🔸 The reason cited by #USFDA was manufacturing lapses at Ipca's factories
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🔸 As the coronavirus pandemic broke across the world, a drug called #Hydrochloroquine (HCQ) was found to be effective against the virus.
🔸 India's pharma companies have always been producers of cheap generic drugs.
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Mar 28, 2020 • 7 tweets • 2 min read
📕 A Quick Guide on OPEN INTEREST (OI)
1⃣ What is OI?
OI is simply the number of outstanding contracts (open positions) for a given stock
For eg: A stock having OI of 1 lakh means there are 1 lakh open positions (long & short)
* OI data is available only for F&O segment
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2⃣ How is OI calculated?
As the name suggests OI represents the "interest" of traders in a given stock
For eg: If trader A has 10 long positions and trader B has 7 short positions then the total OI will be 17
That means buying interest is more than selling interest