Stock Market Technical Analysis Part -1

Stock Market Technical Analysis Part -1

 

 

Stock Market Technical Analysis Part -1

Technical analysis is the foundation of the share market without knowledge of it would be foolish to jump into the stock market, by the way, let me tell you that I will not give you complete knowledge in this post, it means that I will give you all that stuff, I will tell what you need before entering the share market

Because it will take you 2 to 3 years to get complete knowledge, and if you go to the market with this much knowledge, then as you get older, you will automatically get knowledge and then you wont need me or any expert. 

My this post name is Stock Market Technical Analysis Part -1, because this is first post regarding Technical Analysis & Part - 2 & Part - 3 will be published soon. So lets start to gain knowledge...

There are two types of people in the market, one who trades daily and after taking profit, next day finds new stock for trade and one who find good company for long term investment ( 10 - 20 ) years or until they get very good profit. If you are getting it, you stay invested for a longer period of time. So who trade daily called "Traders" and those who invest for a long time are called " Investors ".

Traders:- It mainly uses Technical Analysis (TA).

Investors:- It mainly invests by looking at the fundamentals of the company but may be use Technical Analysis for buying the stock as per situation like candle stick, Volume, company result which is coming soon RSI Etc. 

So in this chapter we will know about the " Technical Analysis " and how it works, one more thing let me tell you that fundamentals may be necessary for technical analysis but there is no need for technical analysis for fundamentals.

Stock Market Technical Analysis Part -1

Imagine that you are on a holiday abroad, in a country where language, food, everything is new to you. Now you are very hungry. You want good food, there is a place nearby with many food and drink shops, But because of the difference of language, you are not able to talk to anyone, then what will you do?

In such a situation, you see that there are many shops which are very crowded but the food that you have never eaten, how will you know which food is good,

Now you have two options :-

1:- You will go to the first shop and see what is cooking. What it's using to cook, how it's cooked, and maybe you'll have to taste a little bit of template then you can decide that this food is good for you or not, but you will have to go with each seller & apply this trick to every shop then you will be able to find the place you like and eat the thing you like.

The only advantage of this method is that you are satisfied because you know what you are eating because you have done your own research to eat it. But now the problem is that if there are more than 100 shops in the market, then what will you do, will you be able to go to each shop and check it yourself. If there are more shops then it becomes more difficult for you. Because everyone is short of time because you can go to only a few shops. In such a situation, you may miss the best thing.

2:- You look at the entire market and try to see which shop is most crowded and selling the most. According to your estimate, you go to the shop and eat there.

This way you are more likely to get the best food in that market. The advantage of this approach is that you'll be able to discover as many good shops as possible and expect to eat good food by betting on the most crowded one. But perhaps choice of the crowd may be wrong and you do not get the kind of food every time.

Now you must have understood from both these options that the first option is fundamental and the second option is technical analysis, we will discuss the fundamentals in detail in my upcoming post. Here we will discuss about " Technical Analysis ".

Here you look for opportunities across the market and see where the market is going at the moment and what is the choice of the market? In the technique of technical analysis, trading opportunities are found keeping in view the preferences of all the traders present in the market. To identify what most of the traders in the market like, for which we see the chart of the stock/index. (we will discuss about the chart in my upcoming post so please learn from basic & stay with us ).

After some time a pattern is formed in the chart (we will tell you about this pattern in the coming chapter) and by looking at that pattern you can understand the market signal. The job of a Technical Analyst is to understand this pattern and formulate an approach accordingly.

Many concepts are involved in technical analysis and only after understanding this one should enter the market because we have to pay a very heavy price for the slightest mistake. It tells us when to enter the market and when to exit the market

How much profit is made from a trade:-

First of all, remove this from your mind that through technical, you can choose the same stock which will be the top gainer in NSE today and you can earn a lot of money, the truth is that it is neither so easy nor quick way to make money. Yes, it is true that if we can do technical analysis properly then big profits can be made,

But for that you have to work a lot and learn this technique. If you want to make a lot of money quickly through technical analysis, then you may have to make a big loss. When a lot of money is lost in the market, people usually give the responsibility to technical analysis while traders do not look at their mistake. Therefore, it is very important to keep your expectations under control and understand it well before trading based on technical analysis.

Here above I have shown you a chart here you will see that a company's stock ran from 13100 and stopped at 16700 and after that it gave a correction and it came back down till 14854 so you can see how much you can earn And how much you can lose and this movement has happened in a few days.

Some important things to keep in mind for technical analysis:-

1. Don't look for long term investment opportunities based on technical analysis.

2. TA deals are for some time, so do not expect any big profits. For success in TA, it is necessary that you do small and quick deals and keep earning profits.

3. Transactions based on technical analysis can range from minutes to a few days.

4. The trader identifies an opportunity and trades, but sometimes the deal can go wrong and the trader can go into loss. Many times a trader does not exit the trade in the hope that the loss will later turn into a profit. But remember that deals based on technical analysis are for short term only so you should have to use " STOP LOSS ".

So keep losses to a minimum and exit the deal and look for a new opportunity to earn it is wise. Technical analysis is not over yet, but I will write on this topic in my next post.

I hope you have read this chapter carefully, I request you to read it once more and understand it better, now in the next chapter we will know how to keep an eye on the market and how to choose the deal

If you really want to learn share market then follow me and if you have any question feel free to ask I will clear all your doubts I have put all my posts in Hindi also if you want then go to my blog and read.

- Thank You

Stock market trading is highly risky & the users agree to assume full responsible for all trading decisions that they make.As we are not SEBI registered, this blog is only for educational purposes only, We do not prefer or advise for investment in any stock.