Home > Education, Trading Ideas > RPL stock fall- a lesson in managing risk!

RPL stock fall- a lesson in managing risk!

Tuesday, November 6, 2007 Leave a comment Go to comments

Today’s market action was a great lesson in paying respect to “risk”. One thing I often see in the markets is that people enter late and then exit late.

Now for most of my clients who wanted to trade RPL for short term, we entered at 190-200 levels and exited at around 250-260 levels. Those who missed the rally actually wanted to enter on dips at 260!

Now imagine a player who entered in RPL futures at 260, not putting a stop loss thinking that it will go back to 290+ levels. One single day move of -20% wipes him out of his capital. So it pays to be disciplined and pay attention to risk. This is an area where I work hardest with the clients!

I personally feel that those who do not understand risk should stay away from futures markets.

The closing on NIFTY has not been encouraging and most likely it will drift down or sideways. All we need is a good strong closing(above 5950) on NIFTY to pick up momentum again.

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  1. sagecapital
    Saturday, January 12, 2008 at 3:56 pm

    Sahil- RPL showed some promise in breaking out of 250 but it failed to do so. Till that happens, RPL is playing in a range.

  2. sahil kapoor
    Saturday, January 12, 2008 at 3:12 pm

    rpl remains move back to preiovus level 298 in this month of jan08.

  3. Murtaza
    Wednesday, January 2, 2008 at 9:27 pm

    @ Pradeep,

    As told many a time earlier too in this blog and elsewhere, if one were able to ‘predict’ then one would become a millionaire and a multi-bagger millionaire in no time at all.

    Murtaza

  4. pradeep
    Sunday, December 30, 2007 at 3:40 pm

    can any body predict and tell me the target prices of RPL in the next 3 months…?

  5. Silver Saint
    Wednesday, November 21, 2007 at 6:05 pm

    I have a speculation that it shall shoot up than the current top mark 295 pretty soon…. that would be the reason for my taking the shares now a bit more than the rate for which i sold them previously.. and this time im sure to wait till the PE values are out from RPL

  6. sagecapital
    Tuesday, November 20, 2007 at 1:11 pm

    hmm..
    Not clear if you are playing long term or short term 🙂
    I have still not sold my RPL in the long term portfolios.
    Why did you sell at 200 and then bought it again after you saw it going to 295 and come back?
    I know why you did that but you also figure that out 🙂
    Always questions the “quality” of your decisions rather than the “outcome” of your decisions!

  7. Silver Saint
    Tuesday, November 20, 2007 at 1:06 pm

    Sage,

    i had bought RPL , 50 nos @ 70 INR and sold em all at 200 INR. Made a good lump for a beginner.. Then it shot upto 295… I stayed calm then and now at 210 INR i got back 100 of em. Am i playing the GAME?

  8. sagecapital
    Saturday, November 10, 2007 at 3:34 pm

    Its a matter of debate if investing is a quick method to “make” money or “lose” money!
    Just one simple suggestion- Do not jump in the markets driven by greed.
    You can read the following posts:
    https://sagecapital.wordpress.com/2007/08/10/5-simple-rules-for-every-investor/
    https://sagecapital.wordpress.com/2007/09/02/stock-market-misconceptions/

  9. manju
    Saturday, November 10, 2007 at 3:24 pm

    hi,

    i just saw ur blog while surfing the net. actually i am interested in investing in shares and stocks but i do not know anything about the market. seeing the current market trend i can only make out that the best way of making quick money now is to invest in shares. can u please tell me some guidelines about it or where should i start from. is there any book available for this study? thanks

  10. sagecapital
    Tuesday, November 6, 2007 at 5:07 pm

    Sharesingh- I always write about “managing risk”. May be you just focussed on “going long”.I always say that trading is a game of “probability”.
    Have you read one of my earlier posts:
    https://sagecapital.wordpress.com/2007/06/28/are-you-an-investor-trader-or-gambler/

  11. Sharesingh
    Tuesday, November 6, 2007 at 4:59 pm

    Hi Sage,

    You are long in the morning and risk in the evening.How it is so.

    Sharesingh

  12. sagecapital
    Tuesday, November 6, 2007 at 4:49 pm

    Navs- They were good bets till they decided to reverse! And I was still riding them but with reduced position sizes.
    I got stopped out on reversals. As my entry was at 190-200, I still made a neat profit! Of course I didn’t sell at the top of 295!

    This game is not only about “entry”!
    Check out PFC/PTC, they remain good bets as of today. Now if the stock reverses tomorrow, will it remain a good short term bet? As a trader your job is to react rather than predict.

  13. sagecapital
    Tuesday, November 6, 2007 at 4:44 pm

    I use my own models for entry,exits and risk management.
    On RPL futures side were sitting on approx. 2 lakh profit/contract which is huge,so had to reduce positions to balance risk.
    As a trend follower, I never capture the top but to reduce risk, I have to book profits and reduce positions. So some positions get squared off with profit targets while others get stopped out on reversals.
    If you playing really long term systems, then the stock is still bullish.

  14. Navs
    Tuesday, November 6, 2007 at 4:41 pm

    On Nov 5, you mentioned in ur blog post

    “RNRL and RPL are looking strong……All these stocks have been mentioned earlier and remain good bets.”

    There seems to be no indication of you exiting at 250-260 levels ?? You maintained your stand that they are “good bets” when RPL was around 270s ??

  15. Navs
    Tuesday, November 6, 2007 at 4:39 pm

    Sage,

    why did you exit RPL at 250-260 levels ? You always seem to ride the profits ?

    how did u determine that 260 is the exit point ? Any Models ?

  16. sagecapital
    Tuesday, November 6, 2007 at 4:32 pm

    Trailing stops and profit targets.If you are sitting on large profits you reduce risk by reducing your position.

  17. amol
    Tuesday, November 6, 2007 at 4:31 pm

    How you were able to exit it at 250-260?

  18. sagecapital
    Tuesday, November 6, 2007 at 4:20 pm

    Looks the Stock shall either drift lower or consolidate around 200 levels.But this is an unpredictable market-who knows the stock might go up again tomorrow?
    Around 200 can be good entry point to buy in small quantities. But this doesn’t mean that you average your losing positions!

  19. sreenivasula reddy
    Tuesday, November 6, 2007 at 4:13 pm

    Dear Sage,

    Do u think that I can enter RPL at current levels ?
    I am a long term investor and like to hold for long term ?

    What is your opinion for short term ?

    Thanks,
    Reddy

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