Showing posts with label stock trading technique. Show all posts
Showing posts with label stock trading technique. Show all posts

Monday, November 19, 2012

Stock Trading Tools

Before venture into share trading you have to know the basics of technical analysis. There three basics in technical analysis. The first and for most one is Japanese candlesticks. The graph of the stock price gives us some information. It rises and falls in a zigzag manner. The main advantage of Japanese candle sticks is, it provide us a direct reading about the psychology of the traders. This can decrypt the price movement over a given unit of time and can infer, in which side the market is in favor of? i.e. in favor of buyer or the seller. To construct a candle stick we have to connect the opening price at the closing of a trading secession usually daily. What we call this as true body if the market is bullish the graph is white and if the trend is bearish the candle will be black. From the color variation we can distinguish whether the market is increasing or decreasing. The extremes of the market session are represented by the thin lines called shadows. Form the different forms of the candlestick we can judge the market trend.

 What is interesting is the combination of Japanese candlesticks. For example, assume three Japanese candlesticks in succession, therefore the ‘real body’ is becoming smaller and the shadow is longer and longer. This implies the buyers are losing hand to the sellers and the reversal is going to happen naturally.

 Apart from this, for a better trading we need to know the market namely, the areas on which course many buyers appear and where the sellers offload. The support level is the price level which is horizontal where by the market is sufficiently attractive to the current buyer develops.

Resistance is opposite of the support level of prices where the selling price mounts which leads to the decline in the price. The support and a parallel resistor forms a channel, that is why we say buy at support and sell at resistance. A support and a parallel resistor form a channel. It is for this reason that they say you have to buy support and sell resistance.

 Other one we should know in the stock market reading is Moving averages. A simple moving average is an arithmetic average of the last x periods. For example a fifty days moving average is equal to the arithmetic average of the last fifties taken daily. It is called moving because in each period the new one replaces the course of the old one and this process continues. When the price breaks to increase the level of the moving average we can say the short term trend is reversing towards the trend is increasing in the medium term. This trend is favorable to the buyer. Conversely, when the price breaks down the level of the moving average, we say the short term trend is reversing towards the trend towards lower medium term which is favorable to the seller.

Wednesday, November 14, 2012

What strategy to be followed in Stock trading?

           Generally most of the large traders and share market investors had gained some shots of huge money. It is not a mere coincidence that those rich people are skilled somewhat, the fact is those rich people used the leverage provided by the financial markets. The great people such as Warren Buffet have been followed successful investment strategies which allowed them a great success in the market. Many books have been published about them and their trading secrets and technique and countless of peoples analyzed the secrets of their technique in stock trading.

      Apart from them hundreds of thousands of people around the world claim to have the best trading strategy to generate steady gains, if it is so then what is the correct key to wealth? And what is the best investment strategy to follow? Most of the successful personalities give the following tips: Diversity is remarkable investment strategy to follow. This illustrates the fact that it is not a holy grail. Hence we can conclude not a single investment strategy is better than the others, hence we have to shape our personal investment strategy accordingly to move towards the success.
Your own strategy will not be best suited to your fellow trader, hence everyone have to be very comfortable with the technical analysis of the market to tailor his own strategy. The technical analysis helps you to find out the clear picture of the company, their organization, their financial activities and others, their strategies etc. The technical analysis further helps you to predict the future trend in stock price. This kind of approach leads you towards success and success alone. A good investor should have a long term vision but he must be aware of both short term and long term views since both of them have their own merits and de merits. Once you are accustomed with your own technique for successful trading then stick on it and make necessary adjustments now and then if needed and over the time you refine your strategy of trading and knowledge then Success will be at your door steps.
                                                Happy trading!!!