I'll teach you the art of trading through technical analysis (THREAD): (A course worth Rs. 50K for FREE.)
(1) Select your trading timeframe: Positional Trader (Long-Term): Weekly/Monthly Swing Trader (Medium-Term): Daily/1/4 hours Intraday Trader (Short-Term): 5/15/30 Minutes
(2) Support & resistance levels: Support Lines: - Prices struggle to go lower. - Represents a floor for market prices. Resistance Levels: - Prices face difficulty moving higher. - Represents a ceiling for market prices.
(3) Find stocks in consolidation: - Positional trader: 5-65 weeks consolidation - Swing trader: 1-4 weeks consolidation - Day trader: 5 mins to 1 hour consolidation - Scalping trader: Focus on 1-3 mins consolidation
(4) Volume price analysis: Consolidation Phase: - Price stable - Volume contracts - Market indecision Bearish Reversal Signal: - Price falls - Volume spikes - Increased selling pressure Bullish Breakout Confirmation: - Price surges - Volume expands - Strong buying interest Caution in Uptrend: - Price rises - Volume remains low - Lack of conviction Reversal Warning: - Price declines - Volume surges - Potential trend reversal
(5) Entry criteria: Pivot point signals potential for significant price moves. Enter trades when stock shows strong price contraction near key supply/demand zones.
(6) Stop Loss criteria: - Positional: 15-20% stop loss - Swing: 5-8% stop loss - Intraday/Scalper: 1-2% stop loss
(7) Capital allocation: Position sizing based on risk management! - Positional trader: 5-10% per stock. - Swing trader: 20-25% per trade. - Intraday trader: 10-15% per trade.
(8) Targets with favorable risk-reward ratios: - Positional: 1:3 risk reward. - Swing: 1:2 risk reward. - Intraday/Scalper: Shoot for 1:1 risk reward. Focus on good risk-reward ratios for successful trading.
(9) Trailing stop-loss and partial profits booking: Move your stop loss to breakeven after achieving a 1:1 risk-reward ratio. Secure 50% profits at 2:1 R:R, let the remaining ride with a trailing stop using 50-EMA.
(10) General market conditions: Confirm 20-day moving average (DMA) > 50-day DMA, If true, stay invested.
Thread #124 - That's a wrap! If you found this useful: (1) Follow me @rohaninvestor for more such threads. I write a new thread every week simplifying trading/investing concepts. (2) Bookmark this thread for future.