There are several methods using which one can trade financial markets. No method is perfect and there is no holy grail. One has to find a method which suits his working style and brings mental peace.
Here I discuss one such method which I have been using for positional cash stocks long only type. I have been using it for some time now and I have happy with the results. With markets obliging and with proper position sizing, one can double account within an year using this method.
Disc: I am just mentioning what is working for me and in no way an advise to start using this method for yourself.
Chart Example: VINDHYATEL
The above is VindhyaTele stock chart, weekly scale. In this post I am explaining what I do after I spot a breakout and once in a stock how to ride it.
The stock gave a breakout on a close above Rs. 723. Now there are two ways to enter, if the breakout is a runaway breakout, its prudent to wait out for a retracement or search for another stock. Or one can enter if the breakout is not runaway like this one.
I usually buy quantity worth Rs.75000 per stock.
After entry my Stop loss is 8-10% or the nearest swing low, which ever is closer. In this case 650 which also coincides with the up sloping red trend line.
I have found that in momentum stocks, 8-10% SL seldom gets hit and one can get good value for money.
Next, is the hot question: Target kya hai??
I am not a big fan of targets. So I do not believe in Multibaggers.
After entry and having a SL with which I am comfortable with, I tend to book out half tranche at 10-11% profits. So my R:R for the first tranche is a tad above 1:1 and it works. Nothing like making the cash register ring.
Once out of half position I raise my SL to dynamic 21ema levels. Till it does not close below it at 3.25 PM on any day, I am riding half of the position.
So in the above case, first booking target for me would be Rs.800. And then the trailing is on. Now the stock is above Rs.1000. I may have lost Rs. 200 on the first tranche, but as I said ,I believe in taking money off the table at regular intervals.
So this is how I approach any cash long position. The above can be used on daily charts also. Hope you found value in the post. Discussions are welcome.
As a trader who jumps into trading first time, life can be hard. There is a jungle out there and the pressure to succeed does not make it easier. Add to it the masala of Social Media which can confuse even further.
After trading for some time now and pouring over many indicators, I have learnt that the humble Trend line does the job perfectly.
What do I mean?? I am of the view, at least when it comes to Technical Analysis (TA) that charts are everything.
Here are some charts which I had put on my twitter handle (varun550@blisstrades). The charts are pulled up by me using a proprietary indicator which I use and then applying TA on them.
The idea is to catch the stocks which exhibit momentum and jump on them for a buck or two. (Sometimes can be pocketful too). Here the moot point is not where I have caught the stock to ride it. Many must have caught it way before. The idea is to study how a simple tool like a Trend Line can do wonders to your TA skills.
And the subsequent PA was a 4% move. And since its a weekly chart, more gains can follow.
As can be seen, price has now breached the second falling TL also.
Stock at 422 now!!
There are many more charts on my Twitter handle which you can use as your learning.
Now the next part is ... How to draw a Trend Line.
As can be seen from majority of my charts, I use at least 3 points to draw a trend Line. More the better!! I am not sure of any proof which says how many points to use to draw a TL but the basics which I use are follows:
1) The TL should be drawn using at least 3 points/touches. 2) Join the highs of the candles not closes. Do not try to fit a TL.
I hope I was able to convey what I wanted do. Please feel free to follow my Twitter handle for more TL examples.
Mail me at firstname.lastname@example.org for any clarifications, discussions on charts.
For my free Telegram Charts u can join here: https://t.me/blisstrades
For Picking momentum stocks by scanning stocks, one can visit: http://imojo.in/8jxij7
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COURSE CONTENTS:- Introduction to Stock Analysis How to see what is there on the charts and remove bias and become an effective analyst Why not everyone can be a Technical Analyst??
CandleSticks and CandleStick Patterns
1. How candlesticks are formed and how can they be used?? 2. How to use candlesticks to spot bullish or bearish setups?? 3. Most important candlestick patterns and how to spot and use them!!
Moving Averages / Moving Average Convergences 1. What are moving averages??. Which set of Moving Averages give the best result?? 2. How to make use of MAs practically??
Price and Volume Analysis 1. Price and Volume relation. What can be figured out using this relation??
Higher Tops Higher Bottoms / Trend Formations 1. Identifying strong trending markets using Dow Theory 2. How to scale up positions using dow theory.
Technical Patterns 1 1. Types of channels 2. How to carry out channel trading??. 3. Best channel set ups!!
Technical Patterns 2 Double Tops / Triple Tops How to identify the above and find out what is happening from the charts!!
Technical Patterns 3 – Flags/Pennants 1. How short-term trading can be done using continuation patterns like Flags and pennants. 2. Target Calculations using the above pattern
Technical Patterns 4 Triangles and various types 1. How to use the above pattern for effective trading?? 2 Target calculations
Technical Patterns 5 Cup and Handle 1. How to spot whether cup and handle is forming?? 2. Target Calculations
Fibonacci Retracement Levels:- 1.How markets reverse from Fibonacci levels 2. Using Fibonacci levels for effective trading and target calculations.
Head and Shoulders and Variations 1. Various types of head and shoulder formations!! 2. Which one to use and which to avoid ?? 3. Target Calculations
How to scan stocks using Metastock and find winning stocks?? In this section discussion we will be discussing one method using which we have made good money. This method will filter out stocks which are making highs as per Dow theory and trade on that information. This is a proprietary indicator and uses discretion.
How to use RSI: A different view!! In this section we will discuss how RSI can be used more effectively and differently from how it is currently used. This method can be used on any Time Frame but will produce best trades on longer Time frames.
For more details kindly contact me on below-mentioned contact number and email ID
The stock is consolidating in narrowing triangle and has bounced off many times from Weekly 200 EMA. Does the breakout look imminent? Watch out for rise in volumes... A close above the falling trend line will be very interesting!!