Risk Management

Know how to manage the risk taken in stock trading!

There are vast differences between traders that are considered professional or amateur. A professional trader will avidly try to control risks and understand his/her risks on a daily basis. A professional trader will always be mindful of risk management before, during and after all trading activities. Qualities that make up a particularly good trader involve two key assessments:

* Risk exposure that will come from every stock trade
* Level of risk they are willing to take

Once a good trader has thoroughly these two key items, they will begin to properly understand the value and profit they could make from a particular trade. A trader who is mindful about his or her risk management will evaluate their position or exposure throughout the trade activities, and if the chosen trade carries a high risk, they will cut down on both in order to control risks on the portfolio.

Many traders use a risk management program that is made up various procedures that are implemented to estimate risks. The methods are set up to obtain the best investment results and they include:

* Quantify
* Estimate
* Control Risk

These are all areas of risk management that should be carefully considered, to quantify your risks and performance a financial analysts will apply these concepts and measure:

* Market Beta (linear regression slope of your portfolio or any single stock)
* Correlation (linear regression correlation of your portfolio)
* Volatility (standard deviation of the daily changes in percent of the portfolio price)
* Return and Risk Ratio (higher return or risk ratios mean better performance)

One very popular area of risk management is called the Value at Risk (VAR) concept. Many of the top investment advisors or trading houses use this concept to measure absolute risks of your portfolio. These are measured in dollars per day. In order to properly implement VAR it requires the person to study the price time series on all stocks within a particular portfolio. Many factors go into calculating the VAR concept, factors such as volatility of every stock, correlation among the entire portfolio, and stability of the relationships historically.

Risk management is only successful if the process begins prior to the start of a trade. Single trade risk management is implemented on a per trade basis. You must access many things before you are able to begin this risk management concept.

* First you must know the amount you are willing to lose prior to trading.
* Then you will need to ensure that the stock is active or sufficiently liquid, this is in case you would want to sell or buy promptly.
* Assess the “Cut Loss level” prior to any trading activity.
* Know the take profit level you are targeting.
* Only buy your stock when it as at the acceptable level of pricing.
* After your trade is confirmed, immediately enter a stop loss at market order with your previously determined level.
* Take your profit immediately when it reaches the profit target you determined.

When you manage your risks using the single trade risk management concept, you will find that your entire portfolio risks are under your control as well. Additionally, there are key areas you will want to assess in managing the risks of your portfolio as a whole, as well.

* Prior to building your portfolio, know the overall tolerance of risk
* Assess the overall level of cut loss, in general your portfolio as a whole should not lose in excess of 20% of the capital
* Maintain diversity with your investments, have at least three varied stocks
* Continually practice Single Trade risk management
* Assess the overall risk and the point where the risk comes
* If your risks limits are exceeded you must act quickly
* If your losses meet your overall stop loss level, it is time to close the entire portfolio

INTRADAY NIFTY

HDFC

HDFC is trading in its 5th impulsive wave presently trading in 4 of 5th wave so 5 of 5th is pending can long this with strict sl below 1590 for first target of 1740
cheers
rish

Apollo Hospitals Plans to Open 500 Indian Drugstores

Apollo Hospitals Enterprise Ltd. plans to open more than two dozen drugstores a month through May 2008 in India, where pharmaceutical sales are growing 10 percent a year.

Apollo, India's biggest health-care company, plans to invest 1.18 billion rupees ($26 million) expanding its chain of pharmacies to 850 from 350 over the next 18 months, K. Padmanabhan, the Chennai-based company's president, said in a telephone interview yesterday.

The company is widening its reach in a country where economic growth and rising household incomes are stoking demand for medicines and health care. Drug sales in India may increase 10 percent this year and next, outpacing global growth of about 7 percent, pharmaceutical research company IMS Health said last month.

Apollo's shares rose 0.2 rupee to end trading at 464.15 rupees on the Bombay Stock Exchange. The stock has declined 7 percent this year.

Apollo also plans to buy more hospitals in the country as the need for medical treatment grows in the world's second-most populated country. It already owns 22 hospitals in India and manages 19 hospitals locally and in countries including Bangladesh and Nigeria.

It's seeking facilities in Mumbai and cities in the Indian states of Uttar Pradesh and Andhra Pradesh, Padmanabhan said.

``We are actively looking at acquisitions of hospitals,'' he said. ``We're looking at valuations.''

Apollo, which hasn't set aside any money for acquisitions so far, has 1 billion rupees in cash available from its sale of securities overseas last year, Padmanabhan said. It would also consider borrowing from banks or the overseas-sale of bonds that can be exchanged for shares to make its purchases, he said.

The company plans to double the number of hospital beds it owns and manages to 14,000 in five years, and is management contracts in the Caribbean including Barbados and the Bahamas.