Smita Sadana is a professional trader and has established the disciplines and consistency necessary to become a success in a very difficult business where few succeed. While managing her own muti-million dollar portfolio she has distinguished herself by consecutively beating the S&P 500 with double digit performance and without any year over year negative portfolio return. That is truly an amazing performance through the up and down markets and year over year.

 

Very few traders achieve such performance. But such performance does not happen by accident or without a talent and an understanding of the disciplines necessary to creates the consistency necessary for such success. Smita's success is derived from her ability to attain and sustain consistency through her disciplines. Her investment techniques and persistant approach to risk management are the foundations of her trading success.

 

You cannot get a better insight into the trading perspectives of a truly gifted professional trader than the information Smita shares with us in her Rules of Selling. Without question, the most difficult aspect of trading is knowing when to sell. No one has a vested interest in your selling. No one ever discusses selling or recommends selling because selling is the end of the trade for the brokers and stock market hypsters who are long the stock and need you to buy to take their positions higher. They want you to buy, not sell. But selling is both the best defense a trader has and the only way you can ever book a profit.

 

It just doesn't get any better than this from an "insider trading" perspective. You can go read every investment book in the library and not get the type of insightful and incisive stock market advice that Smita has provided. Her analysis, observations and trading techniques are based upon years of trial and error and have resulted in her very sussessful trading career. Keep in mind Smita is a trader. Most of her trades are entered with a time frame of a week to ten days maximum. Also focus on her trading insights into the markets and her proven techniques of dealing with risks and the diverse concepts of holding a position versus the trading the position in whoich she is involved. Let's examine her disciplines and the techniques that have made her a succesful trader:

 

 

"Most of my trades are held for a week - 10 day period. Most stocks I pick have a "Target Price" based on past resistance or some other measures. Sometimes I just sell when taht hits; other times I just play it by ear. In today's markets "targets" are usually overshot in either direction!

 

1. Sell when price-target hits.

 

2. Sell when (stop) loss cut hits.

 

3. Sell when the market runs up and some weak performers just do nothing. My aim is to keep the money working, and if something goes down in the face of such a broad rally, it's a sign of concern.

 

4. Sometimes I sell just to reduce exposure; I'll sell part of my position just to be 'safe' if I don't see market breadth or an Advance-Decline Line that's in sync with the advance.

 

5. I'll also sell when something goes up like crazy in a very short time -- Hit 'n' Run. If technically it looks great, then I'll hold 1/2 position in it. 

 

6. In case of market downturns, I sell ost individual stocks and maintain part long exposure in indices. Indices always tend to go down less.

 

7. In personal losing streaks - - again, sell more. Have smaller positions, since the losing streak shall pass. If my account has minimum damage I have less "performance anxiety".

 

8. I do not short anything if it has gone up too much too fast; only take something of the table if I have it.

 

9. I do not know if anyone else does this; I haven't taken it from any book, just personal experience, I sell when my "Account-Stop-Loss" is hit. When the market goes down in meltdown mode, I sell if my account is down about 2%; since most of these meltdown days have a follow through to the downside. I would rather sit out and watch like an observer than to be completely in it and watch my account dive and have no nerve to take any action when the time comes.

 

My MAIN aim is to limit my risk and make sure my account is always close to it's all time highs. I could handle serious drawdowns as an immature trader and then make all that back, plus some more. But as I have matured, drawdowns are harder to take. I am more risk averse, since I am managing larger amounts."

 

 

 

There is very little I can add to smita's excellent comments on her approach to trading. Remember, Smita is a trader and as such you must keep her time frame in mind within the context of her discussion. Smita has expertly outlined many of her disciplines necessary for successful trading. As she correctly points out the ultimate key to any approach is consistency. You will find that common attribute to be the foundation of any successful market participant, be they an investor or a trader, without consistency they will ultimately lose. 

 

Thanks again Smita for sharing such insightful market guidance and valuable information regarding your trading techniques in a market always full of risks and market uncertainties.  

 

Yacht

 

 

Reprinted with permission.