5 Minutes Investing - Investopedia

[DCaulfiel]

[CUVXN]

I found this very interesting article (click or copy&paste this link >>> http://www.investopedia.com/universi...fiveminute.asp) on investopedia which tries to eliminate any prediction from long-term investment, cutting losses, and letting profits run. Also, this article describes various stock market myths and words of wisdom. It is a very lengthy article. If you are running short of time, then just check:
Chapter 4: Stock Picking
Chapter 6: The World's Worst Trading Strategy
Chapter 7: The Reverse Scale Strategy
Chapter 8: Margin Power

OR you can directly check
Chapter 9: Implementing the Reverse Scale Strategy


Now, the questions I would like to put forward are:
1. How effective do you consider this strategy?
2. How can be this strategy altered to suite Indian context?
3. Is there any testing methodology you can suggest?

I would request senior members to put their views.

Thanks

[DonaldVes]

I personally recommend and use the The Reverse Scale Strategy as a part of my trading strategy.

This strategy involves adding on fresh position only in the direction of the profitable trend.

[duncanst]

I too read this strategy just 1-2 days before and still analysing it. The strategy looks very good and it has some of the best money management techniques in it. Also, it has solid techniques to protect your money.

The technique deals mainly with a fixed amount of investment and doesnt tell us how to play in variable capital investment.

Like Initially my investment may be to start with 2-3 lacs and eventually i can take this investment to around 10 lacs. In that case how to split the capital among the stocks is a big question.

I hope traderji will enlighten me on this....

[EdwardBind]

Thanks for yous reviews. Apart from the variable capita stuff raised by srisara, the question that still remains unanswered is that how can we modify this to suite indian markets. Stock picking part of the article asks to avoid stocks below $15 which cannot be directly applied to indian stocks as it would be hard to find stock with prize above $15 and hitting 52-week high. So, what can be the indian equivalance of this prize. Like this, there may be many more things to alter in reverse scale strategy. Hope, traderji could shed some light on them...