Stock Market Analysis
Posted on June 16, 2008 - Filed Under Stock Market | Leave a Comment
Stock Market Analysis
There are two main types of stock market analysis utilized by investors. They include other concepts, some of which will be explained in this article. When performing analysis on the stock market, there are many factors to consider, but first you must decide which method you would like to utilize. Stock market analysis includes fundamental and technical analysis. Investors will typically stick to one method or the other and will typically not use both in tandem.
Stock Market Analysis includes the concept of fundamental analysis. Fundamental analysis is the long-term assessment of a company’s financials in order to calculate how much the business is worth. This tells investors how much the company’s stock is worth to determine the potential shares the investor is willing to buy for that company. Investors who utilize this method also practice other concepts. These concepts include knowing the price to earnings ratio of a company, meaning that investors need to know what the company’s share price is compared to its earnings per share.
Investors also need to know the dividend yield which is the company’s annual dividend payments and also need to know what the dividend per share divided by the price per share is for that company. There are other concepts included in this type of stock market analysis, but the main idea of fundamental analysis is bases on long-term investing.Another form of Stock Market Analysis includes technical analysis. This type of analysis includes the forecasting of future financial price movements based on past price movements. This method can assist investors to anticipate what is likely to happen to prices over time. Technical analysts are not interested in the intrinsic value of a company but prefer to identify patterns that suggest future activity.
These investors use technical analysis tools, including the use of stock charts. The use of charts in this type of stock market analysis enables the investor to identify the underlying trends or stock chart patterns for that stock. They look for stock charts with rising trends and the familiarity with trend line formations can help to measure the overall attitude of investors towards stock and companies. When performing technical stock market analysis the investor will take part and learn about stock charting. When learning how to read stock charts the beginner investor should learn now to read four types of charts. Those include bar charts, line charts, point and figure charts, and candlestick charts. Many successful traders believe that candlestick chart patterns are the easiest and most beneficial to read. Unlike bar chart that illustrates what price movements did during a specific timeframe, candlestick charts reveal ‘how’ that price moved. Candlestick charts demonstrate what investor sentiment was doing during the timeframe and how it did it.
This additional information creates a huge advantage for the candlestick investor when participating in stock market analysis.When deciding which type of stock market analysis is right for you, please note that there are two arguments against stock fundamental analysis. The first is that a lot of the fundamental type of information is very subjective since it is based on each individual investor’s interpretation. The second reason is that stock technical analysis investors believe that fundamental analysis provides no real advantage. They believe this is due to the fact that all of the investing information is based on information that investors in publicly traded markets already know.
If you have decided to participate in stock market analysis, be sure you understand the advantages and disadvantages of both types. This will help you to make a decision as to which method you would like to practice when playing the stock market.
Indian Stock Market Golden Rules
Posted on June 16, 2008 - Filed Under Rules, Stock Market | Leave a Comment
Indian Stock Market Golden Rules
We are mentioning few golden rules for trading and investing in Indian stock market or in any other Stock market.If you want to be a successful intraday / day trader or Positional / Delivery investor then simply follow these golden rules.”Trading runs in cycles; some are good, some are bad, and there is nothing we can do about that other than accept it and act accordingly” Think in terms of probabilities and act upon them.
There are no certainties in trading. You can keep yourself out of trouble by thinking in terms of probabilities. Get comfortable with approximate predictions and interpretations.”To trade/invest successfully, think like a fundamentalist; trade like a technician”Along with economic fundamentals that will drive a market higher or lower, but we must try to understand the technical as well.”Don’t be a hero. Don’t fight the trend. Follow the money flow” You should forget the news, remember the chart as chart already knows the news is coming and buy on rumors; sell on news.”In trading/investing, an understanding of mass psychology is often more important than an understanding of economics”Trading is a psychological game. Most people think that they’re playing against the market, but the market doesn’t care. You’re really playing against yourself. Hope, fear and greed are not strategies: they are emotions. Simple emotions are not an effective strategy.
Positive emotions could cause us to fail to apply risk precautions. Negative emotion could cause us to hesitate.”Learn to monitor yourself and draw conclusions from your mistakes. “Predetermine maximum losses in every potential trade. Do not risk more than 5% of your capital on any trade. Don’t average your losses.”Buy that which is showing strength - sell that which is showing weakness”The public continues to buy when prices have fallen. The professional buys because prices have rallied. This difference may not sound logical, but buying strength works. The rule of survival is not to “buy low, sell high”, but to “buy higher and sell higher”. Furthermore, when comparing various stocks within a group buys only the strongest and sells the weakest.”Think like a guerrilla warrior.”We wish to fight on the side of the market that is winning, not wasting our time and capital on futile efforts to gain fame by buying the lows or selling the highs of some market movement. Our duty is to earn profits by fighting alongside the winning forces. If neither side is winning, then we don’t need to fight at all.”When you lose, don’t lose the lesson!”Forget the names but remember the events.
Those who don’t remember the past are doomed to repeat it.
Make mistakes with composure and character, without blaming others, and don’t dwell on mistakes.”Evaluate your results at least monthly”.Monitor your P&L, your win/loss ratio, and the relationship between your biggest wins and worst losses. Reviewing these results helps you continually improve your understanding of the markets and yourself.”When in doubt, get out.”Scrutinize your positions at all times, each day, and you will not be left holding a stock without reason. Be willing to change direction at any time, because your flexibility as an individual investor is a big advantage which should be embraced! “There is no “genius” in these rules. They are common sense and nothing else, but as Voltaire said, “Common sense is uncommon.” Trading is a common-sense business. When we trade contrary to common sense, we will lose. Perhaps not always, but enormously and eventually. Trade simply. Avoid complex methodologies concerning obscure technical systems and trade according to the major trends only”.indian share market is one of the most volatile share markets in the world, that is why SEBI is so strict and demanding in terms of compliance.
This website is meant for technical analysis only, as we dont follow news much, its only the quarterly results and the normal news related to stocks like bonus and splits important for us, some news, like recent SEBI declaring a scam done by prominent share brokers, this type of news comes very rarely but if it comes then it is by chance and techncial analysis does not follow by chance news.Technical analysis follows mathetical methods like statistics and technical analysis involves lot of stats, which is performed automatically by the softwares, like Metastock Professional, supercharts, tradestation, Advanced Get, and so on.
Stock Trading Strategies
Posted on June 16, 2008 - Filed Under Stock Market, Trading | Leave a Comment
Stock Trading Strategies
Everyone is looking for a good trading strategy. How about if you had 6 to choose from? With a little bit of experience and discipline, you’ll find these to be quite useful.
1. Post-opening buying. If stocks rise 5% or more during early trading on any given day and it doesn’t make the news it will generally fall off after about 30 minutes or so of trading and the price will level. There are occasions when market makers are attempting to artificially inflate stock prices in order to sell off excess inventory. If the stock doesn’t fall off after about 30 minutes it is quite likely that they will continue to rise throughout the day. The tactic for this type of trading is to buy at 1/16 above the high of the day and sell at 1/16 below the low of the day.
2. Post-opening selling. This strategy is the direct opposite of the strategy mentioned above. When a stock opens low with no news it could be that there are nervous investors placing sell orders from the day before. It could also be the result of artificially lowered prices in order to draw in panic sellers so that market makers can purchase shares as the price declines and sell as they rise. The value of these stocks are generally recovered after about thirty minutes of trading and profit makers can make money by selling the stocks they’ve just purchased on the decline at the average price. If the stock continues to fall after 30 minutes or show no sign of recovery chances are that it will continue to decline throughout the day. The tactic for this investment type is to sell short at 1/16 of the days low and set a stop at 1/16 above the high for the day.
3. Playing the spread. This method is a little easier to understand than some of the others. Buy at 1/16 up and sell at 1/16 down. This method works best with stocks that don’t typically see more of a spread than 3/8 of a point. When you manage these trades successfully you will see the growth of a quarter point per trade. The problem with this type of trading is that you cannot always sell as soon as you place the sell order so it may not work, as market makers are more than aware of this tactic. It often takes several tries within a day in order for this to succeed.
4. Grinding. This is another tactic that is considered relatively easy. This is the act of buying an in demand stock as it is on the rise and selling quickly at 1/8 or ¼ of a point for a quick profit.
5. Fading the market. This is a contrarian strategy in which buyers capitalize by buying weaknesses and selling strengths meaning you buy stocks with small declines hoping they will see gains when the market reverses. With this type of investing you should hold on selling until the stock trades above its opening. The logic behind this tactic is that current owners will sell in order to prevent further loss, which will drive the prices down for the short term.
6. Shop the final hour. The last hour of trading on any given day will typically see stocks easing back from their highest prices of the day. The reason for this is that day traders and market makers are exiting their positions in order to ‘guarantee’ their profits. This results in lower prices on many stocks during the very last hour of trading and opportunities for short trading possibilities abound as the result of this common practice.
Tips for Day Traders
Posted on June 2, 2008 - Filed Under Tips, Tutorials | 2 Comments
TIPS FOR DAY TRADERS
1) If you are getting profit then please do book your profit first. Do not wait for more profit.
2) Do not wait or keep any trade more than 1:30hours. First book the profit or loss & then do new trade.
3) If advance Shares are more than Decline Shares then never make short position.
4) When you see that Numeric of Decline Shares is increasing means”GIRNE WALE SHARES” on that time short the position in Nifty.
5) Many times I saw that, only on the basis of day Trade Shares or depends only on Future’s Window short or buy position have been done by many Traders. But if sellers stand in more numbers then do not do any short position, first do wait and watch the shares rate & now do your position short on Higher Level Rates. Same as above if Buyers stand in more quantity wait for some time & when rates of the shares are coming lower, on that time you just buy.
6) If any Shares & Future Scripts do trade up to the 10 minutes of Crucial Point, that time should be buy & book the profit on R1-R2. When you are going to short the position do trade down to the 10 minutes of Crucial Point (According to below) & book the profit on S1-S2.
7) Always keep stop loss on Crucial Point.
If any Shares do trade on the 5DMA then be buy on that time but first see Crucial point.
9) If any shares do trade under the 5DMA, just do short the position but first see the Crucial Point carefully.
10) Never over the position for any greediness.
11) Do trade only depends on your capability.
12) Your money is only yours, don’t turn it into loss.
13) Safe & profitable trading is that should be do 1 or 2 trade only in a day & if you are getting profit of Rs. 500/- to 1000/-, you can hold this trade or you can keep it for Delivery base.
14) Please listen & watch carefully that whole profit is not only for yours.
15) You cannot catch Higher Level & the Bottom Level, so please be carefully always.
Note: If you will do trade according to these above tips, you will never take any losses in future.