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The difference between the two metrics is that the Treynor ratio utilizes a portfolio beta, or systematic risk, to measure volatility instead of adjusting portfolio returns using the portfolio's standard deviation as done with the Sharpe ratio. Limitations of the Treynor Ratio A main weakness of the Treynor ratio is its backward-looking nature. Investments are likely to perform and behave differently in the future than they did in the past. The accuracy of the Treynor ratio is highly dependent on the use of appropriate benchmarks to measure beta.

For example, if the Treynor ratio is used to measure the risk-adjusted return of a domestic large-cap mutual fund, it would be inappropriate to measure the fund's beta relative to the Russell Small Stock index. The fund's beta would likely be understated relative to this benchmark since large-cap stocks tend to be less volatile in general than small caps. Instead, beta should be measured against an index more representative of the large-cap universe, such as the Russell index.

Additionally, there are no dimensions upon which to rank the Treynor ratio. When comparing similar investments, the higher Treynor ratio is better, all else equal, but there is no definition of how much better it is than the other investments.

This compensation may impact how and where listings appear. As a trader, you need to identify these points accurately. It is only after you have done this that you can think of making a profit. Before you place the buy order, always determine the entry point and the price target of the stock. Price target is the price at which it is valued fairly, after taking into consideration its history and projected earnings.

If the stock is running below its target price that is a good time to invest in it, since you will make a profit when the stock reaches its target price once again, or exceeds it. Keeping a fixed point for your entry and exit will also ensure that you do not sell the shares off as soon as you see a slight rise in the prices. Because of this tendency, you might lose the chance to make a bigger profit when the price of the stock rises further.

Keeping fixed entry and exit points will also loosen the grip of fear and greed since it will take away some of the uncertainty from the process. A stop-loss is an order designed to limit the loss an investor has. You can cut down your losses by making use of a stop-loss, so, you should make use of this strategy frequently.

Intraday traders should swear by stop loss if they want to avoid incurring huge losses. The stop loss you set should be proportionate to the target you have. An example will make this easier to understand.

So, as soon as the price drops to Rs. This can help keep your loss in check, thus making it easier to attain your financial goal. How does stop loss work? Stop loss is set in such a way that if the prices drop below a limit that has been specified, the trigger goes off and the stocks are sold off automatically. So, this is an extremely beneficial method if you want to keep your potential loss in check if the prices start dropping suddenly.

Rule 5: Follow the Trend When you are taking part in intraday trading, following the trend is your safest bet in ensuring profit. How likely is it that trend reversals would happen within the span of one day? Making trade decisions based on the possible reversal of trends might result in profits from time to time, but, in most cases they will not.

If you are thinking about how to earn Rs per day from share market, you can try following these guidelines- Select a few stocks you wish to target Track the movement of these stocks closely for at least 15 days, before you take any action In this period, analyse the stocks in a variety of ways based on volume, indicators, and oscillators.

Some indicators most commonly used are Supertrend or the Moving Average. If you follow your targeted stocks regularly in market hours you will gain a high level of accuracy in a span of few days. You will be in a better position to interpret price movements. Basis of the indicators you have used and your analysis, you can now fix your entry and exit points.

You should also fix on the stop loss and your target before you invest.

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