Learn tech analysis to be good investor
Very often we hear traders saying when they buy shares the price falls and when they sell shares the price rises. Every trader faces this situation.
Very often we hear traders saying when they buy shares the price falls and when they sell shares the price rises. Every trader faces this situation. This problem can be resolved with a little bit of fine tuning or by modifying the trading style.
First and foremost, invest in learning technical analysis. This would equip you with the skill to earn for a lifetime. Technical indicators like MACD give clear buy and sell signals. Moving average crossovers also generate entry and exit points.
Trendlines give us information about patterns like double top and ascending triangle, flag patterns etc. These patterns give us valuable information regarding the price action of stocks.
A vivid and clear picture will be before an investor when he will be able to read the patterns and understand its significance in trading.
Candlesticks like hammer, gravestone doji, engulfing bullish and bearish candles also trigger buy and sell signals. For example, when we see the formation of a dragon fly doji candle at the end of a downtrend we can surely expect a surge in price.
Likewise, gravestone doji candle signifies a fall in price. When such technical indicators are used in combination one gets a clear buy and sell signal. Indicators help in buying at low levels and selling at high prices.
If we are trading in intraday, we need to select high volatile stocks with at least two to threeper cent volatility. Select those stocks which are popular.
Invest only in good quality stock and secondly buy only trending stocks. Intraday trading is everyone's favourite at least for experts because it helps make money on the same day. Very little understanding can raise big cash every day.
Support and resistance also help understand price action. Trade only when the stock is in uptrend. Even if you lose in intraday instead of booking the loss convert it to cash and carry or swing trade.
This way you can avoid loss and swing trade will definitely give you profit in few days or weeks.
To sum up, buy quality stocks, trade with trend and if need arises convert intraday to swing trading. With all the above, amazing profits will fall into your pockets.
(The author is a homemaker who dabbles in stock market investments in free time)