| Indian stock market is no doubt one of the most | | | | profits, and wait for lower targets as they get |
| volatile stock market in the world; many people have | | | | confident that market is correcting then why should |
| made millions of profits, and sadly lost millions also. | | | | we cover it, let the market correct, this policy |
| The problem is that 90% of traders in India rely on | | | | sometimes give good profits but sometimes take |
| tips which are given by amateurs and some so called | | | | away money also, and loads of money. So when you |
| technical analysts who claim 90% or in some cases | | | | are getting profit after short selling Reliance at 749.50 |
| 100% accuracy, this is very immature and I really feel | | | | and Reliance is at now 743 you are getting Rs6.50 |
| that some autonomous body in India should come | | | | profit per share. Say you shorted 500 shares then |
| who should track these analysts closely and give | | | | 500 x 6.50 = Rs3250, say the brokerage is .0005 per |
| them ranking or ratings on which investors can rely | | | | transaction (5 paisa), then: |
| and then subscribe to them on the basis of the | | | | Bought brokerage .0005 x 500 x 749.50 = 188 sold |
| ratings, of the autonomous body. Anyways this will | | | | brokerage .0005 x 500 x 743 = 186 total brokerage |
| take time to formulate, but if done then it will surely | | | | = Rs374 Total profit = Rs3250 - 374 = Rs2876 |
| bring sanity to the minds of day-traders and | | | | 5 paisa brokerage is equivalent to 5 / 100 = .05 then |
| investors who invest huge sums of money on the | | | | .05 / 100 = .0005 which is the % to be used in order |
| basis of these analysts' tips. | | | | to calculate the actual brokerage. |
| I am more interested in delivering profits to an | | | | Just exit at 743 if reliance touches that level, Rs2876 |
| average investor but on the same time I would like | | | | profit in a single day is enough. Even if Reliance |
| the investor or day-trader to understand the concept | | | | touches 744 I will exit, because volatility sometimes |
| of technical analysis, which is a very widely used | | | | is huge and I don't trade for targets, I trade for |
| word among traders who do some reading on | | | | profits. When I say I track sensex it is because |
| websites and watch TV channels. Technical analysis is | | | | Sensex is a broad based index as compared to NSE, |
| an incomplete study of statistical indicators, not one | | | | when I say broad based index, it is because sensex |
| indicator is perfect, you have to use many indicators | | | | has more stocks listed in its exchange and its base |
| together in order to come to a particular conclusion | | | | starts from 1975 onwards, than nifty and also sensex |
| that a stock is going to correct or is it going to fall. | | | | is the oldest index in Asia, NSE came in 1995 or 1996 |
| There are many factors which effect a trader's mind | | | | if i am not wrong. Sensex gives sometimes very |
| while trading in stocks. There are three ways a | | | | early signals of correction which Nifty does not. |
| trader can trade: | | | | Another rule I follow is to trade only after 10:15am, |
| 1) The trader can call his broker on phone and place | | | | this is because when market opens at 9:55am then |
| the trade via phone. | | | | market is at peaks of volatility and first 20minutes |
| 2) The trader can trade from home via internet, and | | | | decide the trend of the market, and this phenomena |
| place order by himself. | | | | is very important to follow the trend, what happens |
| 3) The trader can go to the broker's office and do | | | | that if market opens in negative then in first 20min |
| trading from there only. | | | | itself market might correct and start moving up |
| 1st and 3rd are old methods, and can bring huge | | | | which if you short sell in those 20min you will get |
| losses to the trader, the 2nd method is also | | | | stuck on lower levels and hence stop loss will trigger |
| dangerous, but less, if the trader knows's technical | | | | and you loose. To use technical analysis you have to |
| analysis. The 3rd method can be good again if the | | | | set some rules, and the most important rule is to |
| trader knows technical analysis, but then the broker's | | | | trade after 15-20min market has moved and some |
| trading software should have graphs for stocks, with | | | | sort of stability has formed, in the market. After |
| technical indicators. Technical analysis requires a | | | | 10:15am one should read the charts of the indices and |
| focused mind, technical analysis is not just making a | | | | try to figure out the main trend of the index, and |
| cup of tea and then drinking it and then you become | | | | then try to find those stocks which are moving with |
| a renowned analyst, NO!, it requires patience, a | | | | the index and are near very crucial support and |
| focused mind, and surely a four letter word "PLAN". | | | | resistances, and then once those levels are broken |
| Without planning you cannot succeed in technical | | | | then one can trade in that stock which obviously has |
| analysis it is the fuel which runs technical analysis, | | | | broken out in the direction of the trend and also its |
| once you plan that you want to short sell Reliance | | | | crucial support or resistance. |
| the next trading day, you watch out for a breakout | | | | Technical analysis is not a magic wand which you can |
| of crucial support level and the short sell it, during the | | | | swing and get instant results in a few minutes, |
| intra-day and while short selling you also make sure | | | | instead technical analysis is a tool which can be used |
| that Sensex and Nifty also show weakness or are in | | | | to enter and exit from stocks profitably, or in any |
| clear downtrend. | | | | financial markets, technical analysis lays a lot of |
| This a very simple technique just explained to you, | | | | weightage on volume. Make sure the stocks you are |
| but obviously it includes a lot of graph analysis which | | | | analysing have enough volume so that your analysis is |
| is not being discussed right now as then this article | | | | accurate on the basis of tools you are using. For |
| will be of more than 100 pages and I have just | | | | example my thumb rule is based on atleast 1 million |
| started typing this article and will like to do so, in | | | | shares are traded on that stock to be listed in my |
| future . When you read the word "PLAN" then many | | | | analysis list, otherwise I don't do analysis on that |
| thoughts come in the mind, what sort of planning | | | | stock. |
| should I do when I know market is going to fall | | | | Right now I have not mentioned how to find that |
| tomorrow, or rally? There are many methods but the | | | | support and resistance levels, neither i have explained |
| best method which I have followed is to follow the | | | | how to find the main trend of the index, these key |
| trend and big stocks like SBI, RELIANCE, TCS, | | | | points will be discussed in the later articles. I use |
| INFOSYS, and SATYAM. | | | | Japanese candlesticks, in order to find the trend |
| Let me give you an example: To follow the trend I | | | | reversal points and also to find the main trend of the |
| track BSE SENSEX chart everyday and in intra-day as | | | | index or the stock in which i want to take my entry. |
| well, the moment I find important turning points, | | | | Japanese candlesticks is vast study and requires at |
| where Sensex will correct or from where Sensex will | | | | least 100 pages (can go to 300 pages) of articles |
| bounce back at, and when that is confirmed I take a | | | | with examples to be explained in order to make it |
| directional call on a stock for example short sell | | | | clear to you. If you follow Japanese candlesticks and |
| Reliance at 750 is that is broken and keep a target | | | | other technical indicators and are an amateur, then |
| of Rs742, stop loss I keep as 757, which is roughly | | | | the method explained above will bring some method |
| 1% of Reliance cash market price. When I keep a | | | | and refinement in your trading. |
| target of 742 and I see a bullish pattern forming at | | | | I will end here my article which is a short one, but will |
| bottoms in Sensex and at that time reliance is at | | | | post many other articles to bring clarity in your mind |
| 744, then I buy it at that price or wait for it to touch | | | | in order to catch the trend in stock market at right |
| 743, and make it a point to cover the short sell fast. | | | | time, as that is the key to success in day trading, |
| 90% of people who loose money in short sell is that | | | | otherwise indian stock market is big jungle and you |
| they either get over confident or they want higher | | | | can get lost in it! |