Friday, January 11, 2008

If you swap your stock,does it benefit?really?

See it
Most of the times,selling the stock we own and buying a more profitable stock is really useless

(unless the stock you own begins a new downtrend.)
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I have IDBI stock 200 bought at 171.
now drops to 161.
My feeling
I see REL was at 2630 and drops to 2390. It looks it can give more profits if I swap stock.
I also see TECHM stock drops from 1150 to 1020, and has potential to go back up by 130

Evaluate feasibility and profitability
Is it REALLY worth to sell IDBI and buy REL ?
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EVALUATE VARIOUS OPTIONS
1.IF i CONTINUE WITH IDBI
2.iF I SELL IDBI AND BUY rel
3. if i sell IDBI and Buy techm

1. Continue case
see IDBI PRICE BEHAVIOUR-moves from 155 to 180 and back
uptrendstock or dntrend stock/? range bound after uptrend
I bought at 171, while support price was 155.
mistake 1, not buying at support
profit possible if i hold idbi, 10 rs per share
for 200 shares, profit=200*10=2000
brokerage buy+_sell=700 max,
net gain=1300 likely

2. sell IDBI and buy REL with same money
money got=200*161=32200
Brokerage loss=700 at 1% to&fro
Buy REL at 2390, I get 14 shares
potential gain with REL 2630-2390=240
GAIN IN FUTURE WITH rel=14*240=3360
REL brokerage costs=700
Loss in IDBI=200*(171-161)=2000 AND BROKERAGE 700=2700
OVERALL NET GAIN DUE TO SWAP=3360 LESS 700 LESS 2000 LESS 700= MINUS 40
RESULT: NEGLIGIBLE GAIN
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3.SWAP TO techm
Buy 33 shares of TECHM at 1030
Likely gain=33*120=3960
OVERALL NET GAIN DUE TO SWAP TO TECHM
=IDBI LOSS-IDBI BRK -TECHM BRK+TECHM GAIN
=-2000-700-700+3960=NET GAIN 560
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Summary
best to hold idbi
Always buy at support to get max profits and exit at resistance
swapping does not serve purpose of more profits unless you trade stuff like options.
hint
say take nifty 5800 PE JAN 31 EXPIRY
price varied from 55 to 74,by 19 rupees.
centre point=64.5 or How about using ATP,average traded price?

1/6 th part=16% of range=3.10 rupees
Evaluate the moving average of option price, and buy 3.10 below it and sell 3.10 above it
the question is
what is most reasonable trading price zone centrepoint? 20ma?
test this
In reliance money brokerage per option=1.20 rupees

Buying 300 options and selling same gets you, gain of 300*6.20=1860 less brk of 360=1500

check it
set it right
test it

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