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Trading in the stock market is not just buying and selling of stocks. It is way beyond that. You need to know when to buy the stock and when to sell it. Most importantly, identifying your holding period plays a crucial role. But, not everyone knows about analysing this. Several technicalities need to be learned first before entering the world of stock market trading.
Here’s what strategic approach you should follow to crack the codes of the stock market:
Understand the Candlestick Charts: The candlestick chart depicts the price movements of stocks. From the charts of different time periods, you can easily track the price consolidation of the stock – including opening and closing prices. According to Arun Singh Tanwar, Founder and CEO, Get Together Finance (GTF), knowing the price fluctuation and understanding candlestick charts will equip you with the logic behind these fluctuations.
Know the Reason: The only reason behind the price fluctuation is the demand and supply forces created by institutions.
“You need to study charts in such a way that you can crack the reasons for how and when the demand or supply is being created,” Tanwar said.
Excel in Bacis: Everything starts from basics in stock market trading. Even complicated theories are extended versions of basic theories or concepts. If you want to trade with the demand and supply concept combined with price action then grasp its basics like an expert. It will help you mold the strategy according to the market conditions in the future.
Start with a Minimal Amount: “Start your initial trading with a small amount and never risk more than 1 per cent of that amount. More than looking forward to making profits, look forward to protecting money. The profits will automatically come with a strategic approach and calm mindset that isn’t distracted from their goals by quick profits or sudden losses. Remember, both are part of the career you choose. All you need to do is trust your strategy,” Tanwar suggested.
Focus on Sectors: Stocks and their sectors go hand-in-hand. Whenever you go to trade in a stock, always check its sector conditions. There are times when a sector can change the momentum of the stock or vice-versa.
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