Try them...they are really good for scalping in day trading....but keep stoploss...and also identifying the pattern is difficult...so dont be in overconfidence....just paper trade them....The reason being it is difficult because every share has different movement pattern....some shares make higher bottom higher lows, lower tops, some make triangles, some makes rectangle...so try to paper trade them....and if the pattern are not confirmed or even a little bit of unclear, dont trade them (dont over trade)...trade what you are 110% positive...most traders lose because of overtrading...identify the pattern...trade them...if no pattern, then dont trade...good to be with zero profit then losses...
Beginners Guide
- Thread starter rajputz
- Start date
Moving Averages:
Moving Averages (MA) are used to smooth prices so that market trends can
be observed. It is calculated by taking the average price during a fixed number of days.
Moving Averages are very important to have on any price chart. Some people use the crossover of a ten and twenty bar moving average as a buy and sell signal. This is not how professionals use them. I find them more useful as an indication of support and resistance by observing when prices bounce or break key moving averages.
The most dominant moving averages that tend to be used are the 10, 20, 50, 100 and 200 MAs. Every trader you speak to will have different arguments for using different moving averages and it is a highly subjective subject. Most would agree that the key moving averages listed above are useful. I use moving averages as support and resistance on pullbacks. Firstly I can observe an uptrend by looking at the moving averages. If the moving averages are trending up in sequential order then this is a clear uptrend. For example the 10 is above the 20, which is above the 50, which is above the 200 moving average. As I would only follow the trend in such a bull market I will be looking for pullbacks to the moving averages to enter long positions. If the price pulls back to the first moving average I wait for a reversal signal to enter long positions. If it breaks this MA then I look for a reversal on the next MA down to enter new long positions. If it breaks this MA then I look for a reversal off the 50 MA to enter new long positions. Once the stock breaks the 50-day MA then the stocks trend may have reversed and I start to look for shorting opportunities. I now use the moving averages as resistance rather than support Moving Averages are plotted alongside the price chart.
The difference between simple and exponential moving averages:
A simple ten-bar moving average, for example will take the average price of the last ten days with each day having an equal weighing in the calculation, an exponential ten-bar moving average will put more of a weighting on the more recent days in its calculation.
Moving Averages (MA) are used to smooth prices so that market trends can
be observed. It is calculated by taking the average price during a fixed number of days.
Moving Averages are very important to have on any price chart. Some people use the crossover of a ten and twenty bar moving average as a buy and sell signal. This is not how professionals use them. I find them more useful as an indication of support and resistance by observing when prices bounce or break key moving averages.
The most dominant moving averages that tend to be used are the 10, 20, 50, 100 and 200 MAs. Every trader you speak to will have different arguments for using different moving averages and it is a highly subjective subject. Most would agree that the key moving averages listed above are useful. I use moving averages as support and resistance on pullbacks. Firstly I can observe an uptrend by looking at the moving averages. If the moving averages are trending up in sequential order then this is a clear uptrend. For example the 10 is above the 20, which is above the 50, which is above the 200 moving average. As I would only follow the trend in such a bull market I will be looking for pullbacks to the moving averages to enter long positions. If the price pulls back to the first moving average I wait for a reversal signal to enter long positions. If it breaks this MA then I look for a reversal on the next MA down to enter new long positions. If it breaks this MA then I look for a reversal off the 50 MA to enter new long positions. Once the stock breaks the 50-day MA then the stocks trend may have reversed and I start to look for shorting opportunities. I now use the moving averages as resistance rather than support Moving Averages are plotted alongside the price chart.
The difference between simple and exponential moving averages:
A simple ten-bar moving average, for example will take the average price of the last ten days with each day having an equal weighing in the calculation, an exponential ten-bar moving average will put more of a weighting on the more recent days in its calculation.
Dear Friend,
Follow few precautions for intraday. We may not be getting much time for technical or fundamental analysis during the trading hours. But you can follow
few strict rules to avoid loss.
Wait Watch and Trade. Do not jump in market early. Confirm the market direction and make sure and confirm all your strategies like resistance and support levels and then plan to trade
Watch yesterdays high low and volume
Decide number of shares to buy
Dont short sell in a bullish market at any cost and if short sell start with minimum shares only.
Always go with Market trend
Dont short sell, if the market is going up and dont buy if the market is falling down. Trade with market direction and dont go against market direction.
Do the volume with less profit
Don't buy any shares at the days highest rate
Watch the world market
There should be stop loss while short selling and intraday buying high value shares
Get satisfied in small profit and do multiple trades
Check support level
Don't Over trade. First and very important is not to Over trade.
Dont short sell in booming shares. Especially new shares. Try to buy only,
With a small quantity
Gopan
Follow few precautions for intraday. We may not be getting much time for technical or fundamental analysis during the trading hours. But you can follow
few strict rules to avoid loss.
Wait Watch and Trade. Do not jump in market early. Confirm the market direction and make sure and confirm all your strategies like resistance and support levels and then plan to trade
Watch yesterdays high low and volume
Decide number of shares to buy
Dont short sell in a bullish market at any cost and if short sell start with minimum shares only.
Always go with Market trend
Dont short sell, if the market is going up and dont buy if the market is falling down. Trade with market direction and dont go against market direction.
Do the volume with less profit
Don't buy any shares at the days highest rate
Watch the world market
There should be stop loss while short selling and intraday buying high value shares
Get satisfied in small profit and do multiple trades
Check support level
Don't Over trade. First and very important is not to Over trade.
Dont short sell in booming shares. Especially new shares. Try to buy only,
With a small quantity
Gopan
I Sincerely thank your approach regarding markets and it is correct to all the extent. But with my time in market i have seen that the Second bottom and Second top method (confirming the trend and entering at second top or bottom) if practised and applied correctly, the one doesnt to need to care about market trend, global market, technical analysis, fundamental analysis. All he/she has to do is confirm the trend, and enter at second bottom and second top. This method is workable for all type of stocks. To add some thing extra you can try and learn the price and volume movement. This method works in range bound market also and trending market also. The other indicators i have told needs to be understood by your own and applied in contrast to extra indicator. Indicators gives you whipsaws most of the time, but the double confirmed method doesnt. once the indicators are finished, i have some combinations that i will be throwing in here. You can check them.
tell me more on what analysing a stock entails. this is the little i know; it is kinda long(ish) but i think that there is much much more to consider;
The first thing that you have to consider is what type of analysis you will base your investments on; technical or fundamental. It is possible to consider both or either. Most investment companies have separate teams what specialize in both fundamental and technical investing. Other investors are mostly inclined to either and then periodically borrow a leaf from the other.
After this look for companies that are undergoing temporary adversity like a lawsuit or something that has caused a temporary depression in its stock prices. This company should be have a sufficiently high market capitalization because this will mean that the funds and brainpower at their disposal will carry it over this adversity and thus an increase in stock prices as faith in the company is restored. At this point, you should delve into the operation of the company and find out EXACTLY how the company makes its money.
After flagging the companies that you have gained an interest in, find out the intricacies of its financial position by looking for the following things;
-the current ratio: this is the ratio of the current assets and the current liabilities. The minimum should be 2:1
-The rate at which earnings are growing. A minimum increase of a third in per share earnings for the past 10 years or more using at least three year averages is recommended.
-the P/E ratio; ratio of the price of a stock to the earnings in the previous years. This P/E ratio should not be more than 15 i.e. the current stock price should not be more than 15 times the average earnings for the past three year averages.
-the price to assets ratio. The current stock price should not be more than 1.5 times the book value of the stock as reported in the latest financial statements (I will describe how the book value is calculated very soon). A rule of the thumb suggested by Benjamin Graham in his books is use of the multiplier i.e product of the number obtained by dividing the current stock price and its earnings (in this case it is 15) and the price to assets ratio(in this case 1.5). This new number should not be over 22.5
After ascertaining its financial strength, the next thing is to find out its earnings stability. The company should show consistent earnings for the past decade or more- particularly if it has undergone an economic upheaval and still sustained its earnings.
The next thing is to look at the dividend record of that company. The same rule goes but in this case they should be uninterrupted for at least 2 decades.
All the above information is obtained from a companys cash-flow statements, income statements, balance sheets, the quarterly reports and the analysts report. As you can see, you will need an inordinate amount of time to pore over all this paper work in search if the best stock to buy. The upside is that if this analysis is done right, better than average results are obtained from your investments and you will be the object of envy for the speculators all trying to mirror your investing acumen.
that's about it. what else can you add, particularly in the actual analysis??
The first thing that you have to consider is what type of analysis you will base your investments on; technical or fundamental. It is possible to consider both or either. Most investment companies have separate teams what specialize in both fundamental and technical investing. Other investors are mostly inclined to either and then periodically borrow a leaf from the other.
After this look for companies that are undergoing temporary adversity like a lawsuit or something that has caused a temporary depression in its stock prices. This company should be have a sufficiently high market capitalization because this will mean that the funds and brainpower at their disposal will carry it over this adversity and thus an increase in stock prices as faith in the company is restored. At this point, you should delve into the operation of the company and find out EXACTLY how the company makes its money.
After flagging the companies that you have gained an interest in, find out the intricacies of its financial position by looking for the following things;
-the current ratio: this is the ratio of the current assets and the current liabilities. The minimum should be 2:1
-The rate at which earnings are growing. A minimum increase of a third in per share earnings for the past 10 years or more using at least three year averages is recommended.
-the P/E ratio; ratio of the price of a stock to the earnings in the previous years. This P/E ratio should not be more than 15 i.e. the current stock price should not be more than 15 times the average earnings for the past three year averages.
-the price to assets ratio. The current stock price should not be more than 1.5 times the book value of the stock as reported in the latest financial statements (I will describe how the book value is calculated very soon). A rule of the thumb suggested by Benjamin Graham in his books is use of the multiplier i.e product of the number obtained by dividing the current stock price and its earnings (in this case it is 15) and the price to assets ratio(in this case 1.5). This new number should not be over 22.5
After ascertaining its financial strength, the next thing is to find out its earnings stability. The company should show consistent earnings for the past decade or more- particularly if it has undergone an economic upheaval and still sustained its earnings.
The next thing is to look at the dividend record of that company. The same rule goes but in this case they should be uninterrupted for at least 2 decades.
All the above information is obtained from a companys cash-flow statements, income statements, balance sheets, the quarterly reports and the analysts report. As you can see, you will need an inordinate amount of time to pore over all this paper work in search if the best stock to buy. The upside is that if this analysis is done right, better than average results are obtained from your investments and you will be the object of envy for the speculators all trying to mirror your investing acumen.
that's about it. what else can you add, particularly in the actual analysis??
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