How To Make Profit In Short Term Trading?

Short-term trading is more profitable, but very risky. It can last for as little as a few minutes to as long as several days. To succeed at this strategy, traders must understand the risks and the rewards of each trade. They must not only know how to spot good short-term opportunities, but also must be able to protect themselves from unexpected events. 

The Fundamentals of Short-Term Trading

Several basic concepts must be understood and mastered for successful short-term trading. These fundamentals can mean the difference between a loss and a profitable trade. Let's take a look at these vital principles.

• Recognizing Potential Scripts and Spots
• Controlling Risk
• Technical Analysis
• Buy and Sell Indicators 
• Patterns               

Principle 1: Recognizing Potential Scripts and Spots

Recognizing the right possible trade will mean that you know the difference between a good potential situation and the ones to avoid. Some basic steps must be followed to find the right trades at the right times. 

Step1: Watch the Moving Averages

A moving average is the average price of a stock over a specific period of time. The most common time frames are 15, 20, 30, 50, 100 and 200 days.

Step2: Understand Overall Cycles or Patterns

Generally, the markets trade in cycles, which make it important to watch the calendar at particular times. Since 1950, most of the stock market's gains have occurred in the November to April time frame, while during the May to October period, the averages have been relatively static.

Step 3: Get a Sense of Market Trends

If the trend is negative, you might consider shorting and do very little buying. If the trend is positive, you may want to consider buying with very little shorting.

Controlling Risk

Controlling risk is one of the most important aspects of trading successfully. Short-term trading involves risk, so it is essential to minimize risk and maximize return. One can control the possibility of loss by setting strict stop loss and keep modifying it in regular intervals so as to ensure that the sudden falls will limit your loss or will allow you to book at least minimal profits in the right time.

Technical Analysis

Technical analysis is a process of evaluating and studying a stock or markets using previous prices and patterns to predict what will happen in the future. In short-term trading, this is an important tool to help you understand how to make profits while others are unsure. Technical analysis has become very easy with invention of various software and applications. A beginner to the stock market must take required training to use the software. Also technical analysis may go wrong in many situations like, unexpected rumors, global market downturn, and regulatory views/decisions on a particular sector or industry.

Buy and Sell Indicators

Several indicators are used to determine the right time to buy and sell. Two of the more popular ones include the relative strength index (RSI) and the stochastic oscillator. The Technical Analysis software will actually give these indicators but to understand and act on that you need to have sound knowledge of the markets. 

Patterns

Another tool that can help you finds good short-term trading opportunities are patterns. A pattern is a change in direction up or down in the price of stock and reflects changing expectations. Patterns can develop over several days, months or years. To study the patterns of various scripts you need to know the performance graph of the respective stock. We can also determine the patterns of a particular stock by going back to the past of the stock like how it performed after the announcement of each Central Budget or after declaring the company's financial results. 

There are primarily three types of traders/investors in the stock market:

·         Investors

·         Day traders

·         Short-term traders

Investors: Those who expect minimum 30-40% appreciation and are willing to hold between two months to a few years. They enter only long positions and usually select a scrip based on fundamental analysis. Medium-long term investors can utilize technical analysis to time their entry and profit booking better.

Day traders: Day traders enter long/short trades to square up on the same day. They usually base decisions on technical analysis or at times, gut feel.

Short-term traders: Short-term traders expect 5-20% returns within 2 days to 3 weeks. They enter long as well as short positions. These include:

A.    Position trading, where one either buys a stock and holds for the required appreciation, or sells from an existing long (or borrowed) position to cover at a lower level.

B.    Futures & options trading

The popularity of Short-term trading is on the rise due to the following reasons:

• It provides an opportunity to make substantial profits in a short period and ensures continuous rotation of capital.
•  As against long-term investment, short-term trading has limited downside because of strict stop losses.
• Short-term trading has less demand on the trader's time, while day trading requires full-time attention at the terminal. Hence, even those who pursue other professions can do short-term trading.
• One can leverage on margin in case of short-term trading in futures.
• Short-term trading in options requires smaller investment and has limited risk.
• Like every discipline, short-term trading also has its Dos and Don'ts. These are not well understood by all. This article outlines these rules, which would make short-term trading a relatively safe and satisfying experience.

Conclusion

Short-term trading uses many methods and tools to make money; however, you must know how to apply the tools to achieve success using this type of strategy. If you can do this, you will be able to make money in both bull and bear markets while keeping your losses at a minimum and your profits at a maximum. This is the key to mastering short-term trading.

Gujarat State Petronet Ltd. BSE Code 532702 CMP 90-92

GSPL at Glance

Gujarat State Petronet Limited (GSPL) was set up to complement the efforts of GSPC. While GSPC harnesses and procures natural gas, GSPL is building the infrastructure that transmits the gas across the state of Gujarat and ultimately allows last-mile linkage to the end-user.

GSPL is laying a gas grid, to facilitate gas transmission from supply points to demand centres.

State-of-the-art network

The gas grid is equipped with the latest bi-directional gas transmission technology to enable two-way gas flow. This introduces a lot of flexibility into transmission by allowing gas to be sourced or uploaded at either end of the pipeline network. Besides, the network is continuously monitored using SCADA systems integrated with GIS technology.

Flexibility of transmission

Another innovation is in the open access or contract carrier principle of transmission. This allows any gas transmission company to approach GSPL for permission to use the network on payment of the required charges. Thus, private sector participation in gas transmission is encouraged, which makes more volumes available for consumers.

Pipeline Network 

GSPL has already put in place a pipeline network of about 1874 km and further extension of pipeline network is going on. The company has signed gas transmission agreements with various industries for the transportation of natural gas from various supply sources in Gujarat.

OPERATIONAL MILESTONES

The Company has been expanding its pipeline network over the years. The build-up of the pipeline network over the years is given below:

Presently, the company transports over 35 MMSCMD of natural gas.

GSPL's Operation & Maintenance function is ISO 9001:2000, ISO 14001:2004 & OHSAS 18001:2007 certified. 

Audited Financial Result for the year ended 31st March, 2011

http://www.gspcgroup.com/pdf/gspl/GSPL-Q4-2010-11_Result.pdf

Gujarat State Petroleum Corporation Ltd [ GSPC ] harnesses and procures natural gas, GSPL is building the infrastructure that transmits the gas across the state of Gujarat and ultimately allows last-mile linkage to the end-user. The company's revenue model offers visibility over the long-term. GSPL's transmission contracts are on a "take-or-pay" basis which means that the user has to pay a fixed charge if he fails to transport gas during the contract period. The company has come a long way since 2001 when it owned just 15 km as compared to the current 1874 kms spread across the State of Gujarat which is one of the most vibrant States on Indian territory. The company transports gas to more than 31 customers including Refineries, Steel Plants, Fertilizer Plants, Petrochemical Plants, Power Plants, Glass industries, Textiles, Chemical and other miscellaneous industries. 

GSPL has signed a 15-year agreement with Reliance to transport 11 MMSCMD and another one with Torrent Power to transport 4.5 MMSCMD for 20 years. The long-term agreements lend visibility on usage of capacity and on revenues.

GSPL has picked up strategic stakes in group companies — GSPC Gas, Sabarmati Gas and Krishna Godavari Gas Network Ltd — that are setting up city gas businesses in Gujarat and Andhra Pradesh. City gas distribution, which includes supply of compressed natural gas for automobiles, will be a natural diversification for GSPL from its transportation business.

In the medium to long-term, the company also plans to venture beyond Gujarat into neighboring States such as Rajasthan and Maharashtra to set up pipeline networks.
Promotor's own 37.74 per cent, FII's own 10.51 per cent and DII's own 31.46 per cent in GSPL.  The five year topline growth was  26.97 per cent – revenues which were to the tune of Rs. 317 crs in FY07 shot up to Rs. 1046 crs in FY11.The 5 year bottom line grew spectacularly by 41.56 per cent – PAT which was just Rs.89 crs in FY07 shot up to Rs.506 crs in FY2011.

For the full year of fiscal 2010-11, total revenues was up by just 4.6 per cent at Rs.1046 crores but PAT shot up by 22.5 per cent to Rs.506.38 crs compared to Rs.413.77 crs in FY2010. Q4FY11 Net Profits too zoomed by 39.64 crs  to Rs.150.64 crs compared to Rs.107.87 crs in Q4FY10.

Company enjoys handsome PAT margins which hover around 41per cent [FY10] and 48 per cent in FY2011.  ROE and ROCE are around 29 and 27 per cent respectively. Gearing is 0.81 times and Interest Cover is 7.68 times. As the company keeps expanding its pipelines, depreciation and interest costs will lower all the three – PAT, ROE and ROCE.

2 Phase Buying Strategies Suggested [Always buy in SIP ways]

1^st Phase  : Buy at the current price range Rs 90 – 92 [50% of investment]

2^nd Phase : Add if the price falls down to Rs 78 - 80 [50% of investment]

Buying on dips is suggested.  

One should do his/her own research before buying. Stocks are subject to market risk. The recommendation made herein does not constitute an offer to sell or solicitation to buy any of the securities mentioned.

Entrepreneurism in India

Skilled youth are increasingly opting to start their own businesses and become young entrepreneurs making a place for themselves in the market, regardless of challenges. With brilliant business plans and strategies, many have succeeded in their effort to start their own business. Primarily it is their vision and foresightedness. There is a huge increase in the number of people who are coming forward to start something of their own.

Problems Faced by Entrepreneur

Below mentioned are the major problems faced by young entrepreneurs in India.

• Political Instability
• High Inflation
• Lack of Capital
• Government Support
• Support from the Family
• Infrastructural Facilities
• Lack of experience
• Inadequacy of Information

Political Instability

Political stability is very much important for a country's economic strength. Only in a steady and stable economy new entrepreneurs can experiment their ideas and become successful. Political Instability does not encourage an investor to invest in the economy even if he has invested, he might decide to take it back due to the existing unfriendly economic climate. Political and economical stability of a country is the back bone for the growth of the country. 

High Inflation

Inflation is an economic condition distinguished by a general and continuous rise in the price level over a period of time. In other words inflation means the decrease in value of money therefore high inflation impacts very badly on budding entrepreneurs. Since the purchasing value of money has reduced they have to pump in more and more money to start up something of their own.

Lack of Capital

Capital is the most important asset which is required to start a business. The amount you need to invest for starting a new organization is called as capital. Normally capital inadequacy is a major problem faced my most of the young entrepreneurs. The initial capital for the take-off of the business may not be adequate.

Government Support

Government has a very important role in imparting entrepreneurial traits in youth. It is not only about imparting the skills more over it has to support them in all the ways by providing the necessary support. Giving consultation services, making available soft loans, all these things will help the potential entrepreneurs in taking their ideas forward.

Support from the Family

Generally in India relationships are backed with more sentiments and attachments. Parents want their child to be a doctor, engineer or in any other safer jobs. Since there is risk involved in being an entrepreneur, parents discourage their children from entering into this field. If your parents are not supportive, (not only financial, moral support is also very important) you may not be able to take an initiative to start a new venture. Basic changes should happen from the grass root level. Parents should encourage and motivate their children in taking initiative to start business; they should never try to kill the entrepreneurial skills of a budding entrepreneur.

Infrastructural Facilities

Real estate is one of the fastest growing sectors in the country. Taking commercial space in a convenient place of the city is just out of reach for a common man. The cost has been increased to a greater extend. Out of your initial investment a major portion will go towards Infrastructural Facilities. This may hamper or hinder the development of entrepreneurial activities.

Lack of Experience

For young entrepreneurs lack of experience is always a hurdle to successfully implement their ideas. Innovation, enthusiasm and experience help a person to become a successful entrepreneur out of these traits experience is an important factor which makes a person to take the right decision at the right time. If somebody lacks this, which will adversely affect his/her entrepreneurial initiative. There are many situations in an organization's life cycle which demands experience to solve the issues. Taking a decision without knowing or anticipating the real impact of it will end up in complete destruction of the business.

Inadequacy of Information

A new entrepreneur should make proper research and analysis of his business plan before he/she start investing on it. Collection and analysis of relatively dependable, reliable and authentic data will facilitate and enhance forecasting and planning. It is important to point out that the entrepreneur may not be conscious of the existing forces of law of demand and supply that directly or indirectly affects consumers' behavior instead he should be concerned about the future. But getting the market information to do the research is not that easy, unavailability of right information at right time is effecting the budding entrepreneurs to a greater extend.

Steps to help Young Entrepreneurs

We have already discussed about the hurdles a budding entrepreneur has to overcome to become a successful entrepreneur. Some remedial measures from the government and the society can help them to overcome these difficulties. Following are the various areas where we need to support the young entrepreneurs to overcome the basic difficulties in setting up an organization.  

• Young entrepreneurs should have access to free advice and guidance on both basic and advanced queries about starting a business. 

• Young people lack access to capital, which is very much needed to start a new venture, since they lack experience, getting venture funding will also be difficult for them. 

• Young entrepreneurs need the help of good colleagues who are ready to give their heart and soul to the business to get the things done in proper time.

• Some young entrepreneurs' feel that the limit of business is only restricted to science and technology, there is no scope for businesses outside science and technology fields. Understanding the real scope of business is very much important.

• Understanding the market from all the angles is essential for the growth of an entrepreneur. It may be hard for young entrepreneurs to understand certain markets.

• Support from the family is another vital element to nurture the entrepreneurial traits in a person. Financial and moral support from the parents and relatives is essential for the successful accomplishment of the business ideas.

• Young entrepreneurs may face difficulty in finding other business owners or aspiring entrepreneurs who share their ideas and interests.

• At the most basic level, since many young people lack a credit history or hold large student loan debt, start-up capital may be virtually impossible to obtain.

• Young people need help in understanding how to leverage their credit and how to be disciplined with money when starting and running a new business.

Total Entrepreneurial Activity Ranked by Country

Below given table shows the country wise total entrepreneurial activity as a Percent of GDP.

Country	Average	Country	Average	Country	Average
Peru	30.60%	Australia	11.90%	Latvia	7.00%
Uganda	31.50%	Iceland	11.50%	UAE	8.50%
Bolivia	29.80%	Mexico	11.30%	Finland	5.90%
Venezuela	22.80%	Malaysia	7.75%	Iran	9.00%
Angola	22.70%	United States	10.60%	Turkey	5.90%
Philippines	20.40%	Kazakhstan	9.40%	Denmark	5.50%
Thailand	20.10%	Canada	8.90%	Croatia	5.70%
Colombia	20.40%	Ireland	8.70%	Singapore	5.72
Indonesia	19.30%	Norway	8.30%	Italy	5.40%
Dominican Rep.	18.20%	Serbia	7.00%	Germany	4.90%
Jordan	14.30%	Czech Republic	7.90%	Netherlands	5.30%
Ecuador	17.20%	Egypt	7.90%	Hong Kong	4.70%
Jamaica	18.90%	Greece	7.60%	France	4.60%
New Zealand	15.70%	Poland	6.90%	Slovenia	4.60%
Macedonia	14.50%	Switzerland	6.90%	Sweden	4.30%
China	14.90%	Portugal	6.60%	Taiwan	4.30%
South Korea	12.20%	South Africa	6.40%	Romania	4.30%
Chile	13.50%	Spain	6.30%	Austria	3.90%
Argentina	13.30%	Israel	6.30%	Russia	3.80%
Brazil	13.00%	Bosnia & Herz.	5.40%	Belgium	3.40%
Uruguay	12.20%	Hungary	6.60%	Japan	3.20%
India	12.10%	United Kingdom	6.00%	Puerto Rico	3.10%

Source: International Entrepreneurship

• World Average = 10.6%
• Africa Only (15.6%)
• Asia Only (11.2%)
• Europe Only (6.4%)
• North America Only (13.4%)
• South America Only (19.2%)
• Mid Eastern Only (11.8%)

Future of Entrepreneurship in India

In these days both the Central Government and different State Governments have started showing more interest in promoting the importance of entrepreneurship. Individuals are being encouraged to start new businesses and are being provided with many supportive measures to facilitate the creation process like;

• Tax incentives
• Buildings
• Roads
• Communication system

Since politicians are realizing how enterprises create jobs and boost the economic output of the region the encouragement by the central and state governments will continue in future as well. Every state government should develop its own innovative industrial strategies for nurturing entrepreneurial activity and timely development of the technology of the area. The states should have their own state-sponsored venture funds, where a percentage of the funds have to be invested in the new initiatives of young entrepreneurs.  

In India what we lack when it comes to entrepreneurship is support from the society. Society's support is critical in providing both motivation and public support. Media has a major role in the development of societal support. In short I can conclude that only a collective support or encouragement can give birth to a successful entrepreneur.