Top Seven points you should remember to prevent losses in your stock market portfolio.

1. B (beta measure)

Measure of volatility of the stock compared to the market as whole. A) If BETA is equal to 1, stock is going with the market. B) If BETA is equal to -1, the stock is going in the opposite direction of the market. Beta is used in (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks). CAPM is widely used as a method for pricing risky securities also for generating estimates in expected returns of assets, considering both the risk of those assets and the cost of capital.

2. Stop Orders

This is used to buy a stock once a certain price point is reached or to sell a stock once a lower stock price is reached. a) Stop orders are orders that are triggered when a stock moves past a specific price point. Beyond that price point, stop orders are converted into market orders that are executed at the best available price. b) Stop orders are of various types: buy stop orders and sell stop orders; stop market and stop-limit. c) Stop orders are used to limit losses with a stop-loss or lock in profits using a bullish stop.

3.GTC Order (Good till Cancel)

It says the effect of stock will remain active until executed. a) A Good Till Cancel (GTC) order is an order which works independent of the time frame until the order is cancelled. b) Traders may use GTC orders to cut down on day to day management of their portfolio.

4.Take Profit Order

You can you use this type of order to prevent losses and this order will never allow you to go broke. If the price of the security does not reach the limit price, the take-profit order does not get filled. a) Take-profit (T/P) orders are limit orders that are closed when a specified profit level is reached. b) Limit prices for T/P orders are placed using either fundamental or technical analysis. Take-profit orders are beneficial for short-term traders interested in profiting from a quick bump in the security costs.

5.Stop Loss Order

Stop loss orders are critical to trading survival. a) A stop-loss order specifies that a stock be bought or sold when it reaches a specified price known as the stop price. b) Once the stop price is met, the stop order becomes a market order and is executed at the next available opportunity. c) In many cases, stop-loss orders are used to prevent investor losses when the price of a drop. A) If you are long, Stop Loss is to SELL. B) If you are short, Stop Loss is to BUY. (Here long and short refers to time period)

6.Nifty investments

This is an investment where you don’t have to bother about your money, its time-dependent. When the market goes high, you are making profits then you can sell your stocks. And when the market goes low, be calm and wait till the market gets up.

7. Limit order

this allows you to buy a stock at no more than or sell a stock at no more than the specified price. a) A limit order assures you that an order is filled at or better than a specific price level. b) A limit order is not guaranteed to be filled. c) Limit orders can control execution price but can result in missed opportunities in fast-moving market conditions. These were the top 7 points one should know to prevent losses in the stock market portfolio. Three more bonus points: 1)Investing just before a peak can be extremely costly. 2)Investing at the bottom can be extremely profitable. 3) A) BULL market: (BUY HIGH and SELL LOW) B) BEAR MARKER: (SELL HIGH and BUY lOW)


Aditya Sasmal