SMART WAY TO TRADE

Smart Trader

Basic Terminology

BTL – Buy Trigger Level

STL – Sell Trigger Level

RISK – It is the percentage risk involved in the trade.

How is the Risk calculated?

 If the stock is currently trading between the buy & sell trigger levels. The

difference between the STL & BTL is displayed as the risk in percent.

Here’s the logic: If you place a short trade when the stock crosses STL,

BTL would be your stop-loss. And if you place a long trade when the stock

crosses BTL, STL would be your stop-loss. So, the maximum risk

assuming your stop-loss gets hit is the difference between the STL & BTL.

 If the stock has already crossed above BTL and is currently trading at say

Rs. X. Then placing a long trade at the current price (X) with STL as stoploss

would incur a maximum loss of (X-STL), if the stop-loss gets hit.

Hence the risk involved in the trade is X-STL in terms of a percentage.

 If the stock has already crossed below STL and is currently trading at say

Rs. X. Then placing a short trade at the current price(X) with BTL as stoploss

would incur a maximum loss of (BTL-X) if the stop-loss gets hit.

Hence the risk involved in the trade is BTL-X in terms of a percentage.

Understanding The Smart Trader! Interface

The Smart Trader! Interface is divided into three zones:

1. Stocks which have triggered their buy trigger level(BTL)s. (Upper Zone)

2. Stocks trading in between their buy & sell trigger levels. (Middle Zone)

3. Stocks which have triggered their sell trigger level(STL)s. (Lower Zone)

Basic Trading Philosophy

 Watch the stocks trading between the BTL and STL levels. These are

displayed in between the headings, “BUY IF CROSSES ABOVE THIS

LEVEL” & “SELL IF CROSSES BELOW THIS LEVEL”. Keep a close watch

on these stocks. Let us call this zone “Middle Zone”.

 The closer a stock is to the “BUY IF CROSSES ABOVE THIS LEVEL”

heading, the closer it is to its BTL.

 The closer a stock is to the “SELL IF CROSSES BELOW THIS LEVEL”

heading, the closer it is to its STL.

 The above display makes for easier spotting of upcoming trading

opportunities.

 Buy a stock when it crosses above its BTL. Place a stop-loss order at STL

immediately. These stocks are now in Upper Zone.

 Sell a stock when it crosses below its STL. Place a stop-loss order at BTL

immediately. These stocks are now in Lower Zone.

Managing The Positions

 When the system spots that a continuation of the present move is likely, it

continuously keeps revising the BTL & STL levels. Please change your

stop-loss orders immediately to the BTL & STL level depending on whether

you are holding a short or long position respectively. The associated risk

immediately comes down.

 If the risk involved in the trade keeps going up and the system does not

change the BTL or STL levels, we recommend booking profits on every

rise.

A Hypothetical Example

ZEETELE – LTP At 195. BTL at 196.05. STL at 194.

 ZEETELE is now in the middle zone i.e. a don’t trade zone.

 Let us say, ZEETELE now crosses 196.05. Buy the stock immediately &

place a stop-loss at 194. The stock is now displayed above the “BUY IF

CROSSES ABOVE THIS LEVEL” heading. I.e. Upper Zone.

 First Scenario: After a few minutes, the stock is now trading at 202. The

system did not revise the BTL & STL levels. The risk(202-194=8) has gone

up very much. Hence, this position may be closed slowly in equal small

quantities.

 Second Scenario: Here the stock is trading at 202. The system has revised

the BTL & STL to 200 & 204 respectively. The stock has now fallen back

into the middle zone. Modify your stop-loss to 200, thereby locking your

profits and hold on to your existing position. If the stock now crosses 204,

further buy(long) positions may be taken with 200 as stop-loss. Warning:

When adding to existing positions please add in small quantities. This

procedure may be continued as stock keeps going up and if the levels are

revised each time.

 In either of the above scenarios, if the stop-loss placed at STL gets hits

and the positions are squared-off. We advise reversing the trade

immediately.

 For instance, if the stop-loss of 194(in scenario 1) or 200(in scenario 2)

gets hits. Place a fresh sell order immediately with a stop-loss of

196.05(in scenario 1) or 204(in scenario 2) respectively.

 The same procedure as described above may be used when trading on the

short(sell) side.

We wish you great success in your trading endeavours.