When to enter a stock to maximize gains?
- raytraceventures
- Jun 19
- 6 min read
Hello my dear traders and investors, we always have a question of when to enter a stock. In this blog, I am going to answer it from the perspective of a risk manager. For a moment forget that you are a trader or an investor just think that you are given the responsibility to invest some capital and generate return on it while managing the risk.
Is it fair enough to call yourself a risk manager then, right?
Well, yes! why not?
Because at the core a trader or an investor they both are risk managers who try their best to generate alpha while managing the risk or minimizing the risk.
And they both look to take an entry when there is an symmetric reward to risk. It means if they are looking to risk INR 1 then they would expect the reward of INR 2 at least and more.
And hence, all their life they sweat hard, read historical charts, study fundamentals and do all types of analysis just to answer this one simple question-
When to enter?
Now look at the NIFTY 500 chart (Fig:1) and see the date when it created the double bottom which was on 7 Apr 2025, this is the indication that the trend may reverse from here. Mind it, it is not the confirmation, it is a sign that trend may reverse from here which eventually happened.
After the 2nd bottom is created index gave an up move of 13.5%. 15 Apr and 12 May were two significant dates when the index broke out from the bull flag. Also, have a glance at Fig:1 and see the key dates marked on the chart where the broader market started to gain strength or at least were the dates to compare the relative strength of the stocks.
NIFTY INDIA DEFENCE Index
On 28 Apr, Defense index started to take support at the breakout level of the base (marked yellow) it was the first pullback after the breakout, on 9 May it pulled back to 20 day simple moving average and took the support to show clear strength in the underlying stocks. Also, take note that 7 May was the date when Indian Armed Forces launched Operation Sindoor.
Now we will go through liquid stocks from Defense sector and see where were the probable low risk, high reward opportunities. I personally captured BDL, BEL and MAZDOCK at the right spot.
Bharat Dynamics Ltd.
BDL gave a nice breakout of 6-month base on 15 Apr and on the same day NIFTY 500 gave a breakout from the bull flag, this day could be a low risk, high reward opportunity in BDL and for the next few days as you can see price did not move much it was stuck in a range and then broke out from it on 9 May which was an opportunity to add more to the position with previous day low as the stop loss. After that also price did not do much and again went into creating a range. On 9 May it finally pulled back to the 20-day moving average and in the next sessions moved on the up side to achieve higher ground.
Mazagaon Dock Shipbuilders
MAZDOCK broke out from 10-month base(Fig:4) and if you would have tried to entered in it on 3 Apr when the broader market was pulling back and yet to confirm the trend reversal then it would have hit the stop. Also, there was lot of uncertainty and volatility due to Trump's tariff announcement which resulted in a big gap down in the Indian market on 7 Apr. 29 Apr was the clean entry day as it finally broke above the resistance zone, you could also take some position on 28 Apr on pullback to 20-day MA with previous day low as stop loss. Even after the breakout the ride has not been smooth on the upside but it gave a good move if you could trail it with 20-day moving average, it gave a nice move of 30%-35% before 29 May when it released earnings.
Cochin Shipyard As per my method entry in Cochin Shipyard was hard to spot, first of all the stock corrected ~60% from its top and then created a descent swing high after the earnings on 15 May it went up on the next day as well but the tight spot for low risk entry came on 3 June, not before as per my system. I could not trade it.
Garden Reach Shipbuilders
Same is the case with GRSE, it corrected by ~57% from its all time high and gave an entry on 13 May but on the same day it had earnings release hence, it was not preferrable to buy stock around the earnings. The stock gapped up on the next day but it could gap down as well. Anyways, as per my method to spot low risk entry spot, it offered an entry on 22 May. I could not spot it as well.
Paras Defence Space Tech
PARAS broke out from the base on 29 Apr with very high volume which was highest in the quarter but next day was earning i.e. 30 Apr and as per my rules, I would not enter in the stock which has earnings due the next day. After earnings the stock tightened and formed a range and gave a low risk opportunity on 9 May and from there gave a descent move of 30%-35%
Hindustan Aeronautics Ltd.
HAL gave an entry opportunity on 28 Apr which was a descent entry point before the base breakout but the problem was as the broader market was under pressure the price could not move much and on 13 May it had earnings release hence, I would exit it before that. After earnings release the price moved on the upside after taking a pull back on 20-day MA hence, 14 May could be a possible entry point where the risk was low.
Premier Explosives
PREMEXPLN broke out from 4-month base on 16 May but before that if you will observe it gave a very tight entry opportunity on 9 May when it took support on 20-day MA. And it had earnings on 22 May so irrespective of whichever day I entered I will exit on 21 May, not to loose on gains. And on the next day, it gapped down.
Data Patterns DATAPATTNS gave a clean entry on 28 Apr and after that the price traded above 20-day MA giving a move of 40%-45%. 9 May can also be considered as a pull back entry.
Astra Microwave Products
ASTRAMICRO gave a beautiful and clean entry on 9 May when it created a small shelf like structure or you can also call it a flag. From there it gave a move of 35%-38% without violating even 10-day MA.
Apollo Micro Systems
APOLLO gave an entry opportunity on 27 May, it had earnings on 23 May, the price fell by 7.5% on that day and then on the next day it created an inside candle. And on 27 May it broke out, you would enter on 27 May and use 50%-60% of the range(low-open) of that candle as your stop. It gave an upside move of 40%-45%.
Bharat Electronics Ltd.
BEL gave a nice entry opportunity on 9 May and after that gave a move of 28% in very few days.
On spot analysis
I posted about the BEL and MAZDOCK on 9 May in our Eight Figr League community on Discord which was on the spot as per my analysis.
This brings us to the closure of this blog. I hope you enjoyed reading it as much as I enjoyed writing it. If you liked what I wrote and are serious about creating wealth from the stock market you can become the part of Eight Figr League, a credible platform for market participants through which you can know the pulse of Indian, US, China and European stock markets, connect with other great traders or investors, get daily updates, learn fundamental and technical analysis, connect with me over video call. Your one month is on us, then it is just ₹22 a day.
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Thank you for your time. Have a great week ahead in creating sustainable wealth!
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