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I went through the charts of most companies in NEPSE. I noticed that during an uptrend, an upward swing lasts for about 15 days before going through a pullback or a reversal. This can be higher or lower for different stocks but after a stock roughly gains 15%, its strength weakens for a while.
This is the reason why 15% is the nearest target for every stock I buy according to my trading strategy.
I bought SADBL (Shangrila Development Bank Limited) for Rs. 155 per share on September 20th and sold it today on October 4th at Rs. 180. Thus, including the commission and charges, I made roughly 15% profit in about 15 days.
Reasons to Buy
1) The stock showed a sudden spike in volume on the previous trading day. The last time SADBL had such volume was on the peak of February.
2) The RSI showed a sudden spike from 48.15 to 62.59. In my trading strategy, whenever a stock crosses RSI 50, it is considered to have started an uptrend.
3) The MACD was sluggish and negative until that day. The fast line then jumped up from the slow line. This signals the possibility of the start of an intermediate uptrend. As expected, the MACD became positive in subsequent days.
In the day when all this happened, the stock had closed at Rs. 153. The next day, I bought it for Rs. 155 per share.
Reasons to Sell
1) The stock gained 15%, thus hitting my target.
2) NEPSE is open while I am writing this article. It now seems that a dark cloud cover has formed, signaling a pullback if not a reversal.
Thus, I sold it a few minutes ago at Rs. 180 per share.
Now, the stock can go even higher after I sell. I am fine anyway because I reached my target. Perhaps this is what sticking to your strategy means. Although I had sold IPO shares before, SADBL is the first stock I bought and sold in the secondary market itself. Thus, I do not want to be too greedy or too fearful from the start.
That’s it, fellas. Money smells good.
Click here to access all the articles of My NEPSE Trading Journey Series.