Comment on Query of the Day

Venu commented on 24 Feb 2016, 11:23 PM

There are 2 ways you can make money in the markets:
1) Buy low, sell high
2) Sell high, buy low
If you know that the price of a particular stock is going to drop, how can you benefit out of it? You sell the stock first and then when the price drops, you buy it back and close your position, thereby making a gain.

The stop loss price is the maximum risk that one is willing to take on a position. So if you’re buying a stock at Rs.100 and the maximum risk you’re willing to take on the downside is Rs.8, then your stop loss would be 92 (100-8) ie you’d close the position when the stock falls to 92, making a net loss of Rs.8/-

In your statement “Voltas is a sell with a stop loss of Rs 237 for target of Rs 223”, the analyst is recommending you to sell Voltas first (because he thinks the price of Voltas is going to drop) and recommends a target of Rs.223 (The price at which you’ll have to buy back what you sold to make a profit) or recommends to close the position at 237 on the higher side (The price at which he’s recommending you to book losses)

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