How to find and earn money in stock market using Swing Trading and Trading Psychology.
Who don’t like to earn few bucks from their savings money..? Instead of parking money at somewhere lets turn that amount to grow gradually in trading stocks. Why I prefer Swing trading than long term investing…?Long term investing is for people with no end of patience. One cannot frequently check the trading account to see how much percentage stocks have been moved. If you are the one who checks frequently, then long term investing is not for you. And you have to witness global pandemic like Covid, financial crisis in 2008 , news of wars on countries and stand back calmly. If you cannot withstand news and hold your horses for long term then you have to take a look at Swing Trading.
So what is Swing trading..?
Holding stocks for few days to few weeks for short/medium gains is Swing trading. But how do you identify good setups for swing trading ..? you cannot put your hard-earned on any random stocks and hope for it to move up. you need a defined setup and rules for it. The advantage of swing trading is you can withdraw your money whenever swing trade is closed, either it is in profit or loss, like in long term investing you will hesitate to sell stocks if it goes down and you will hope for to regain the loss which takes more time.
“Do you ever think why Support and Resistance works ..?Because price has a memory it remembers everything from where it begins.”
How I defined my rules and setup
- Use daily time frame for selecting stocks
- Select stocks which good volume . Don’t go for low volume stocks Operator might manipulate low volume stocks.
- Select stocks which are making Higher-High and Lower low
- Check for stocks which are taking support at 20 and 50 ema(exponential moving average).
- Look for bullish candle stick patterns at Price Action support and EMA’s.
- Draw Trendlines and channels and look for bullish candles at TL support
- Profits can be booked when price reaches its next resistance in Swing Trading.
Enough of theory, now lets see few examples
1.Here you can how ABFRL is taking continuous support at Lower TL and rejecting from upper Trend Line. Every time price reaches to Lower TL it is a good buying opportunity. Exit for this would be daily candle close below lower TL and a follow up candle.
2. Here Affle is bouncing whenever it reaches to 50 EMA. Exit for this would be daily candle close below 50EMA and a follow up candle.
3. What can be a good example for 21 EMA than APL APOLLO TUBES. Look how price is bouncing from 21 EMA. Exit for this would be daily candle close below 21EMA and a follow up candle.
4. Here you go, once a price breaks its resistance then that resistance would act as a support. So, every time price comes to its support levels its a good opportunity to enter. Exit for this would be daily candle close below support and a follow up candle.
5. Higher Hugh and Lower Low is a principle of Dow Theory, which makes price advances with out breaching its Higher Low.
Risk Management and Psychology :
Define your risk before entering the trade.
Don’t afford more than what you can loose.
Don’t fight with the market follow the trend and it will reward you.
Wait for price to reach your Target or Stop lose. Don’t exit your trade in between based on panic or news. You have seen in above examples how price reached to its support and bounced back. Trust your system.
Stop watching the screen once you enter the trade, give some time for it. Every small move in price makes you emotional either in booking small profit or exit in lose. Keep price alerts, so you will be notified timely and action can be taken.
If you are a beginner and minted profits in some trades, don’t jump and deploy more money. Increase the capital gradually.
Don’t enter or exit trades based on news or emotions. In news based moves price moves quickly up and comes back with double speed to hit your stop loss.
Charts knows which news come first. Believe in your charts.
Perhaps last point is more important and read it every day. “Market runs every working day, today is not the last day for market , try to sustain in market for few years”
Contact me at kchalla11@gmail.com for more info on Indian stocks.
Disclaimer: Above posted charts are for understanding Technical Analysis and not stock recommendations .
