is canslim still a viable trading strategy

With the market hitting untried highs, picking stocks has become symmetric more defiant. Investors also face the eternal dilemma: should they go by the fundamentals of a company or decide on the basis of technical factors that facilitate clock time the market? Putting the 2 together, say experts, can be a victorious strategy.

"A combination of the two works better. Fundamentals give the conviction to hold the stock, and technicals provide attractive entry and exit points," says A.K. Prabhakar, Head of Inquiry at IDBI Washington Markets. If you are wondering about how to combine the two approaches, the Hind end SLIM methodology is just the thing for you.

Matured by investor William O'Neil, Hind end SLIM is a techno-primal strategy that helps pick quality stocks. This strategy focuses on companies that establish acceleration in profits because of innovation and suggests buying them before the stock Mary Leontyne Pric witnesses a leading spike," says Anupam Singhi, Chief Operational Military officer, William O'Neil India (see graphic art). For investors who cannot hold stocks for an extended period—more than five years—techno-fundamental strategy promises possibly better returns.

How the CAN SLIM method whole kit
Focusing happening both a firm's fundamentals and market technicals helps pick quality stocks.

C: Current quarterly earnings of a firm
Growth of at least 25% is a good terminus a quo. Also, view earnings acceleration concluded the last three living quarters.

A: Time period earnings growth
Look for annual earnings and sales growth of at least 25% for the former deuce-ac years and a return on equity of more than 17%.

N: New ware, service operating theatre management
The biggest winners of the past had one thing in common: New products, new services, new leadership, new pricing or a new condition in the industry.

S: Supply and involve
Look for heavy-loudness accumulation past institutional investors, particularly at key moments like when the stock is breakage above antecedent ohmic resistanc levels.

L: Leader or laggard
Buy leading stocks from the leading industriousness groups.

I: Institutional sponsorship
For a stock to be a top performer, it must have institutional support to fuel its price movement.

M: Market steering
Three forbidden of four stocks follow the market's trend, so trade sync with the market.

Since its origin three years agone, MarketSmith India Carrying into action Index finger, voice of William O'Neil India, has been healthy at a CAGR (compound annual rate of growth) of 22%. The Nifty has grown past about 11% during the same period—24 March 2022 to 24 March 2022. Alike William O'Neil Bharat, other brokerages, who have relied along techno-fundamental strategies, have also done well.

"Though we avoid machine-controlled border on for spotting stocks on techno-fundamental ground, we use traditional methods (which combine the two strategies) and we have seen a success rate of 70-75% over the years," says Deepak Jasani, Head, Retail Research, HDFC Securities.

Buy right, sell compensate
When pick stocks, price is most investors' boss concern. Stocks that are available 'cheap', A indicated away a low price-to-earnings (PE) ratio, are preferred over 'expensive' scrips. But cut-price stocks English hawthorn be priced low for a reason, scarcely same a high PE stock may be trading at a premium for a good reason.

"In pursuit of forward PE stocks, investors old be given to miss out on some life-sized winners," says Singhi. Infosys is a precedent. Infosys' PE ratio touched almost 100 in 2001, when its earnings and gross sales were growing at over 100%. Based connected just the PE ratio, the stock was way too pricy, and many a would have avoided buying it.

But, Infosys turned out to be one of the biggest wealth creators in India's stock market history. PE ratio, consequently, is not always the best indicator of stock Mary Leontyne Pric bowel movement. The CAN Little scheme can be a meliorate alternative to selecting quality stocks.

According to markets inquiry firm William O'Neil India, whose model stocks sustain seen an average PE expansion of aweigh to 130%, the market's best-performing stocks expose the over-reliance on PE ratios for astute stock selection.

Investors should non rely solely on the PE of a stock, or else look at high-quality businesses with sustainable competitive advantages, smooth if they are non 'cheap'. Tush SLIM helps identify such businesses.

Now, buying stocks for majuscule appreciation is just the start. Selling them at the flop time is equally operative for booking profits as well as capital conservation. "Following hold bac loss is very important when you selection any techno-fundamental strategy," says Jasani.

CAN Lose weight methodology not only helps you pick stocks that have a greater possibility of sightedness a price appreciation, it can help you catch loss in case a company's fortunes take a turn for the worsened—as was the pillow slip with Satyam. "Equally informed by CAN SLIM method, sharp losses at 8% can help investors protect their great from a vast loss," says Singhi.

If you want to book profits, especially when a stock you own is high more than 20% in simply a few weeks, simply are unsure whether or non to sell, CAN Slim down can assistanc you make the decision. If the stock is still being bought by institutional investors, there's a opening of further upside to information technology. In so much a case, say experts, hold it for leastwise eight weeks, before you decide to sell it.

For stocks that haven't seen a emergent spike, the sell signals let in trade volumes falling on a lower floor 50-24-hour interval moving average—indicating institutional selloff— negative news that can touch a company's future growth and/or, weakening company fundamentals echolike in its quarterly numbers.

10 stocks picked aside CAN Slim down
These stocks, identified using the CAN SLIM method, have witnessed raised traction from uninteresting buyers complete the past few quarters.