OBSERVE MARKET TREND
THERE IS A SAYING IN THE STOCK MARKET - THE TREND IS YOUR FRIEND, MEANING THAT IT IS ALWAYS HELPFUL TO OBSERVE THE MARKET TREND AND TRADE ALONG WITH THE SAME, JUST AS IT IS EASY TO SWIM IN A RIVER IN THE DIRECTION OF THE CURRENT, BUT IT IS VERY DIFFICULT AND SOMETIMES EVEN IMPOSSIBLE TO SWIM AGAINST THE CURRENT.
IF YOU GUESS THE TREND ON THE START OF ANY TRADING DAY BY SIMPLY CHECKING IF NIFTY AND SENSEX ARE IN GREEN OR RED, YOU MAY BE PROVEN WRONG.
FOR THIS, AS PER MY METHOD, YOU SHOULD NOT ENTER INTO ANY TRADE DURING THE FIRST ONE HOUR AFTER OPENING OF THE MARKET, THEN, NOTE DOWN THE HIGH AND LOW OF SENSEX OR NIFTY DURING THAT ONE HOUR. CHECK THE LEVEL OF INDEX AT CURRENT TIME, I.E, ONE HOUR AFTER OPENING OF THE MARKET. IF THE SAME IS NEAR THE HIGH REACHED DURING THE FIRST HOUR OF THE MARKET ON THAT DAY, THE MARKET IS IN AN UPTREND ON THE DAY. IF THE LEVEL OF INDEX AFTER ONE HOUR IS NEAR THE LOW OF THAT DAY, MARKET IS IN A DOWNTREND.
AD NATURALLY, IF THE MARKET IS IN AN UPTREND, YOU SHOULD TAKE MORE OF BUY POSITIONS ON THAT DAY AND IF THE MARKET IS IN A DOWNTREND, YOU SHOULD TAKE MORE OF SELL POSITIONS.
FOR EXAMPLE, IF THE LAST CLOSE FOR NIFTY IS 10,648.50 AND WHEN MARKET OPENS AT 9:15 IN THE MORNIN, IT OPENS IN RED AT 10,599.70 AND EVEN AROUND 10:15 AM, THIS IS AT 10,620,40. I.E, 28.10 LESS THAN THE PREVIOUS CLOSE, MOST OF THE TRADERS IN THE MARKET TREAT THIS AS A DOWNTREND ONLY, BUT THIS IS YOUR MISTAKE.
AS PER MY METHOD, IF AFTER OPENING AT 10,599.70, NIFTY TOUCHED A HIGH OF 10,630.20 UNTIL AROUND 10:15 AM AND IT WAS AT 10,620.40 AROUND 10 AM, WHEN COMPARED WITH HIGH AND LOW OF THE DAY, IT WAS NEARER TO THE HIGH OF THE DAY AND, HERE, THE MARKET WAS IN AN UPTREND THAT DAY AND WHATEVER BAD NEWS WAS THERE HAD BEEN DISCOUNTED ALREADY. IN SUCH A SITUATION, YOU ARE SURE TO GET CAUGHT IF YOU GO FOR SHORT-SELLING, YOU ARE SURE TO GET CAUGHT IF YOU GO FOR SHORT-SELLING. YOU SHOULD TAKE LONG POSITIONS IN SUCH CIRCUMSTANCES.
THUS, DECIDE ON THE RATIO BETWEEN YOUR LONG AND SHORT POSITIONS FOR A TRADE SESSION AFTER LOOKING AT THE MARKET TREND OF THE DAY.
OBSERVE THE STOCK
JUST AS THE METHOD OF FINDING OUT THE MARKET TREND HAS BEEN EXPLAINED IN THE LAST TIP, YOU SHOULD OBSERVE THE STOCK TREND ALSO AND THEN MAKE INVESTMENTS. THE PROCESS IS THE SAME AS EXPLAINED IN THE PREVIOUS TIP.
FIRST OF ALL, LET THE PRICE OF THE STOCK SETTLE DOWN FOR THE FIRST 60 TO 80 MINUTES. THEN COMPARE ITS PRICE AGAINST HIGH AND LOW OF THE PRICE ON THAT DAY. IF THE STOCK PRICE IS CLOSER TO THE HIGH REACHED TILL THAT TIME ON THE DAY, THE STOCK IS IN AN UPTREND. IT MUST BE REMEMBERED IN THIS REGARD THAT IT DOES NOT MAKE A DIFFERENCE EVEN IF THE PRICE IS BELOW PREVIOUS DAY'S CLOSE AND IS IN RED. IF THE STOCK PRICE IS NEAR THE HIGH REACHED DURING THE FIRST 60 MINUTES, IT IS TREATED TO BE IN AN UPTREND ONLY.
THOUGH, YOU NEED TO KEEP THIS IN MIND THAT THIS METHOD ALSO PROVIDES JUST A GUESS.
THE SUCCESS RATE MAY BE HIGHER HERE BUT THIS CAN'T BE 100% PRECISE. AS HAS BEEN EXPLAINED IN PREVIOUS TIPS, NONE OF YOUR METHODS CAN BE 100% EFFECTIVE IN INTRADAY TRADING, AS A COMPETING TRADER MAY WATCH YOUR POSITION IN MARKET DEPTH AND USE MUCH LARGER CAPITAL TO TAKE A POSITION TO YOUR POSITION AND DEMOLISH ANY OF YOUR TRADING STRATEGIES IN A MINUTE.
HENCE, THIS IS MY ADVICE AGAIN THAT SWING TRADING IS A MORE EFFECTIVE METHOD THAN INTRADAY TRADING AND IF YOU CAN EARN FROM SWING TRADING MUCH MORE THAN WHAT YOU MAY EARM FROM INTRADAY TRADING, WHY SHOULD YOU BE BOTHERED OF LEVERAGE INTRADAY TRADING ON MARGIN AT ALL?
❤❤❤
