0This is one of the most curious question in every beginners mind, You will feel amazed by some of the analysts seeing them giving future targets for any stocks and you will keep hitting you brain like how they can say this level will come in few days.
Ex of such recommendations by analysts like.
Buy Tata steel
Current market price 400
Stop loss 390
Target 440–450 ( Time frame - 15 days ) HOW ?
How ? They can say this target will come ….How? Is there any news ? Any calculations behind ? and so many thoughts will come in mind.
Now let me clear you this. It is possible though Technical & Fundamental analysis.
As a trader I love Technical Analysis so I am giving few examples here for future price analysis through use of Technical charts & Indicators.
First one EXPONENTIAL MOVING AVERAGES
See in the above chart you will find out the GOLDEN CROSSOVER came over EOD chart at 121 level and in the time frame of 3–4 months it made a high of 207 so far. So if you are having position in this stock you can hold it for as long as the signal reversal not appears. You can find the crossovers in any stock of your desire.
BUYING LEVEL 121 ( SIGNAL - EMA CROSSOVER )
HIGH SO FAR 207 ( UP-MOVE MORE THAN 70% )
TIME FRAME 3–4 MONTHS ( SO NOW ARE YOU CONFIDENT ENOUGH THAT YOUR BUYING IS AT CORRECT LEVEL AND YOU WILL SEE THE HIGHER LEVELS IN NEAR FUTURE )
LET’S SEE FEW MORE EXAMPLES.
DEATH CROSSOVER
Let’s suppose you are holding this stock for long term investment but still you are seeing DEATH CROSSOVER over EOD chart at around 511 level and in just 2 -3 months it came down to 409 level.
Here you can exit your position for profit booking if you have buying at lower levels.
If you have buying around 500 level you should better exit for any further losses.
So act accordingly as per you position but it was very clear with the charts and indicators that in future price is going to fall.
CHECK HOW AN INVESTMENT GIVES YOU MIND BLOWING RETURNS
FROM 120 TO 700 IN 3 YEARS
UPSIDE MOVE MORE THAN 500 %
So here you understood how investors making tons.
Above are few examples for Investment strategy. How investments are giving awesome returns with the use of just one technical indicator EMA.
There are many more indicators good for different time frame and strategies for making money in this financial world.
Now let’s move to Intraday pattern like how you will analyze that price will move high or low in the next hour.
Let’s see Intra - day chart.
Script which I am going to discuss with you now here check in the above image.
Tata Motors ( One of the most common Intraday stock - Trader’s favorite )
Date of this chart 24th october 2016
Now, Lets come to the point.
If you know technical analysis you will get to know that am using very basic concept of technical analysis in the chart I have drawn in the above & just the candlesticks pattern.
Am using 5 min candles over continuous chart.
Now let me explain you one thing… What is trailing stop loss ?
When we shift Stops in our favor keeping our gains safe and shifting it higher side in long positions and the same is applicable in short selling trades as well.
Check in the morning 9:15 am stock opened at around 545 made a high of 547 volume was high if you will check but after the first 5 min candle continuous 3 red candle but showing no strength in the selling side.
Again see one big green candle around 9:35 am which confirms buyers strength and after this candle again 5 candles trying to push the price down but not able to, signal for weak sellers
High of the candles in this range was near around 549.90 but bulls will definitely try to move it higher as bears don’t have strength as per the last 35–40 min trades. Am keeping buy order now at 550.50 around so if the jump will come I will get into the trades.
Yes !! Bought at 550.50 Stop loss kept the low of this 5 min candle that is 549
And yes now see the chart you will better understand how I shifted my stop loss in profits side and trailing it and enjoying it
The final trailing stop which got hit was at 561.50
And now my stop triggered at 561.50 around 2:45 pm
Bought at 550.50 & sold at 561.50 with the help of trailing stop loss.
What I am trying to explain you here is am not using any rocket science am not using any technical indicators like EMA,RSI,BOLLINGER and nothing else just am checking the volumes and analyzing the strength of buyers in comparison with sellers and simply sitting tight with my trade position.
Now question will come what if it doesn’t move like this and stop comes.
Yes stop loss are welcome by heart because if you will try to be in profit in every trades you make you can’t be a trader then, Getting stop losses is the part of this business and we have to accept it open heatedly.
Now the most important point here is see the risk reward ratio
stop loss as per my trade was 549 and buy was at 550.50 so risk of 1.5rs and the reward i got in this trade with the discipline i maintained here is 11 rs
As per the lot size of 1500
Profit was 16500 with the risk of 2250/- was worth taking isn’t it ?
This was just the normal discipline and strategy a day trader should keep as per my experience, And why to complicate things when you can make money keeping it simple silly.
Being a professional trader I may use so many different technical indicators and other parameters for taking any trade position but for a beginner isn’t this a very simple and easy to understand methodology for making trades.
This is how you use technical indicators to make profits as a day trader or as a Investor.
There are many other ways of making profit like scalping, Hedging etc.
For now I think you are able to understand how to analyze stocks movements for further upside or downside.
Stay invested … Love trading
Being a trader you can enjoy you can take your office along with you anywhere you want.
Enjoy the freedom of being trader & Investor.
Life is awesome forever . Hope you are happy with the answer and keep smiling you have just few months in this market . Long way to go All the best
