Nifty PE Ratio

Nifty PE ratio measures the average PE ratio of the Nifty 50 companies covered by the Nifty Index. PE ratio is also known as "price multiple" or "earnings multiple". If P/E is 15, it means Nifty is 15 times its earnings. Nifty is considered to be in oversold range when Nifty PE value is below 14 and it's considered to be in overvalued range when Nifty PE is near or above 22. The market quickly bounces back from the oversold region because intelligent investors start buying stocks looking to snatch up bargains and they do the exact opposite when Nifty P/E is in the overbought region.

Check out what Professor Bakshi (a famous Indian value investor ) has to say about Nifty P/E. Recent research done by my firm shows just how dangerous it is to remain invested in an expensive market. Since NSE started, every time when Nifty's Price/Earnings ratio exceeded 22, the average return from Indian equities over the subsequent three years became negative.



History clearly tells us that if you are a passive long term investor you should buy stocks when P/E reaches 15-16 and stop buying when P/E goes above 22.

how to paper trade?

do u play chess?

if yes, has it ever happened that u made a move only to forcefully request your opponent to let u retract the move?

what if ur opponent refuses to let u?

chances are that u might have quit the  / surrendered / scrambled up the game!

why do u do that?

possibly because of frustration.....knowing the sheer hopelessness of the situation u find urself in courtesy that one wrong move.

but, if ur partner lets u withdraw the move, he/she is doing harm to u by programming u with the habit of always being careless with the moves knowing that u will be allowed to take it back.

on the contrary, if ur partner doesn't let u do that, he/she is doing u a world of good to u.

u will soon be free off the habit and start making right well thought of moves. u will act slow and own the responsibility for ur moves.

paper trading is like such a game of chess.

budding trader should do paper trading before he/she commits hard earned money to the market black hole.

just like a trainee pilot who initially is allowed to fly a jumbo in a  simulator!

but how to paper trade.

if u paper trade in the way that chess player was playing knowing that u can always take back the move, the purpose behind that paper trade is deafeated.

ur ego is intact. u r emotionally not involved. nothing is at stake.

so, how to make paper trade real like? how to involve almost real emotions which u r likely to encounter in the trading war time?

one good way is to announce ur paper trade. this way, though ur money is not at stake, ur pride is.

ultimately pride or face loss is as painful as the money loss.

u can announce that paper trade to urself (as by writing/noting in a diary whose page u would not tear), or to ur peers in a forum (like mudraa.com) etc.

once u have announced it, u have taken the plunge, bitten it. u would now have to chew it!

now, u can't disown it. u would have to face "the consequences"

u r "in" the trade....."in the real learning"

keep a record of 5 such trades and look in the mirror............u will see something real!

after the pride, get ready to pawn ur sweat, tears and blood....money can wait for the safe shores!

http://thebestbusinessintheworld.blogspot.in/2014/09/how-to-paper-trade.html

trading is essentially answers to these 3 questions!

trading is essentially answers to these 3 questions!

for me trading is essentially answer to 3 questions:-

1. is there a trade?

= should i trade or should i stay out?

2. which direction?

= if there is a trade, judging the direction is the next question. finding the trend, knowing which way the market is or about to move is the single most important decision. this is decisive! this is the heart of the trading. it took me years to get this right. once this step is right, rest is fine tuning, though therein lies the efficiency of the trade.

3. what quantity?

= this decision, answer to this question, decides the effectiveness / efficiency of the second decision above. not all situations are to be traded with same quantity. you have to enter and exit in steps. u have to commit the stake depending upon the probability, risk. u have to hold some cards for the contingency!

once the answer to first and second question are settled, all i am left to do is keep adjusting and managing the third one. i have to keep reducing or increasing or monitoring the magnitude of my stakes.

all this depends upon my market analyses and my answer to operator games. this also took many years to spot and learn.

i am rarely with zero stakes in the market when the answer to first question is 'yes'.

Sources:http://thebestbusinessintheworld.blogspot.in/2014/09/trading-is-essentially-answers-to-these.html