CONCEPT
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
ADVANTAGES OF MUTUAL FUNDS
The advantages of investing in a Mutual Fund are:
Professional Management
Diversification
Convenient Administration
Return Potential
Low Costs
Liquidity
Transparency
Flexibility
Choice of schemes
Tax benefits
Well regulated
TYPES OF MUTUAL FUND SCHEMES
Wide variety of Mutual Fund Schemes exist to cater to the needs such as financial position, risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry.
FREQUENTLY USED TERMS
Net Asset Value (NAV)
Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date.
Sale Price
Is the price you pay when you invest in a scheme. Also called Offer Price. It may include a sales load.
Repurchase Price
Is the price at which a close-ended scheme repurchases its units and it may include a back-end load. This is also called Bid Price.
Redemption Price
Is the price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity. Such prices are NAV related.
Sales Load
Is a charge collected by a scheme when it sells the units. Also called, ‘Front-end’ load. Schemes that do not charge a load are called ‘No Load’ schemes.
Repurchase or ‘Back-end’Load
Is a charge collected by a scheme when it buys back the units from the unitholders
Sunday, March 9, 2008
Saturday, March 8, 2008
Trading method using RSI signal
Trading Signals:
Different signals are used in trending and ranging markets. The most important signals are taken from overbought and oversold levels, divergences and failure swings.
Use trailing buy- and sell-stops to time entry into trades.
Ranging Markets:
Set the Overbought level at 70 and Oversold at 30.
Go long when RSI falls below the 30 level and rises back above it or on a bullish divergence where the first trough is below 30.
Go short when RSI rises above the 70 level and falls back below it or on a bearish divergence where the first peak is above 70.
Trending Markets:
Only take signals in the direction of the trend.
Go long, in an up-trend, when RSI falls below 40 and rises back above it.
Go short, in a down-trend, when RSI rises above 60 and falls back below it.
Exit using a trend indicator.
Different signals are used in trending and ranging markets. The most important signals are taken from overbought and oversold levels, divergences and failure swings.
Use trailing buy- and sell-stops to time entry into trades.
Ranging Markets:
Set the Overbought level at 70 and Oversold at 30.
Go long when RSI falls below the 30 level and rises back above it or on a bullish divergence where the first trough is below 30.
Go short when RSI rises above the 70 level and falls back below it or on a bearish divergence where the first peak is above 70.
Trending Markets:
Only take signals in the direction of the trend.
Go long, in an up-trend, when RSI falls below 40 and rises back above it.
Go short, in a down-trend, when RSI rises above 60 and falls back below it.
Exit using a trend indicator.
Friday, March 7, 2008
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