0This is a simplified guide to enable you to consistently make profits in the stock market. I will show you the correct approach for succeeding in the stock market. However, before you read any further, I want to make the hard truths about stock market clear to you:
- Unhedged short-term trading, including intraday trading, is a “low probability but high rewards” approach and should be avoided unless you are a disciplined genius. However, whether you are a genius or not will become evident only after many years of stressful trading.
- Lower timeframe charts (for example, 1, 5, 10, 15, and 60 minute charts) are the tools used by short-term traders. If used, I can guarantee you that your confusions will grow exponentially. The result is that you may end up with disastrous trading decisions.
- Indicators such as RSI, Stochastic, MACD, and so on are there to add to your confusions. I would advise you to completely remove them from your analysis tool.
- All analysis techniques such as western chart patterns such as triangles, flags, gaps, head and shoulders, etc., and Japanese candlestick patterns such as hammers, shooting stars, etc., are approximate methods to guess the price direction and potential length of movement. So, either avoid relying on them or use them with caution. I have experimented with these for 11 years, at the least! And so you can take my word for this.
- It is almost impossible to time the price movements that are random to a certain extent. So trying to trade the futures or options contracts with unhedged (naked) positions is analogous to skydiving without a parachute! The futures trades are for the deep-pocketed investors who know how to hedge and also able to rollover the positions continuously with the ability to fulfil margin calls. Options trades are for people who completely understand the concepts and strategies so that they take the appropriate positions in conformance to market conditions.
- Most of the free as well as paid recommendations provided by operations who are desperate to create buyers for the shares that the promoters or other shareholders intend to dump. So don’t end up being a dump yard!
- Nobody in this world ever knows the correct value of a share price which is determined by the bid and ask prices quoted that you can see in your trading terminal. So don’t try to invest all your money in a scrip at once. Because the prices are approximate, you should always resort to the rules of averages. But this doesn’t mean you should try catching a falling knife. And, if you didn’t understand this phrase, please GOOGLE it out.
- Automated trading is a myth! Whether they make money for you or not, they certainly make a lot of money for your broker by way of brokerages on numerous entries and exits. And yes, they make you donate humongous amount of money to the clearing house and exchange as transaction and other charges.
- Unless you are a successful trader, always have a job or business to generate regular income and invest a certain portion of your savings in the stock market for a substantial length of time.
I am sure by now you are very surprised because I have negated most of the well-known approaches and methods that leading analysts and writers have been preaching to poor chaps like you and I for years. So, your question to me should be “what are the approach and method that really work for us?” I will try to answer this question with as little words as possible.
Have you come across any business that helps you make profits from day one itself? It’s really hard to identify one. Well, maybe there are blue-collared jobs that pay on a daily basis. But those jobs don’t make more than a few bucks and only provide for sustenance.
