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How to earn money online through stock market from your home

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Do you know that stock market is the biggest wealth creator? No other investment instrument comes closer to the return given by stock market.With the help of stock market it is not only possible to earn money online, but that too from home.So how do you start earning online through stock market and what are the procedure? 

One can earn money from stock market through these four ways

  • Investment- You must have heard about the famous investors like Warren Buffet,Rakesh Jhunjhunwala etc. They earn their money through investing their money in long term.Period Of Investment is more than 1 year.
  • Positional Trading- Another way to earn money through stock market is through buying and selling stocks/index for a period of more than a week. This is the short term way to wealth creation.
  • Swing Trading- This is similar to positional trading,only difference is your holding period.Here you hold the instrument for less than a week
  • Intraday Trading- As the name suggest in this form of trading you hold your position for a single day.Buying and selling happens in the single day.

Now you know the different ways to create wealth in stock market, lets move on to the exact steps involved from the beginning.

Step #1 Choose your broker

You might be wondering, what is a broker and why you need a broker? A broker provides you with the platform where you can conduct your buying and selling of the stock through the exchanges like NIFTY 50 and SENSEX (more on this in a different post).

A broker  basically is a mediator between you and the exchange, they provide you platform to trade and invest, and also various charting software to make a sound trading and investing decision.

Now, In India there are close to 50 broking house, so as a new trader you might be wondering which broker is the best for you?

I will make it easy for you, there are only few brokers which you can rely on when it comes to good platform and proper trading software. And in my opinion, you should choose among following three. These are called discount broker, because they offer trading facility at a retailer trader friendly price unlike other full house brokers( more on this in another post)

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    Zerodha - They are the one who launched the discount broking system in India.Very good for investing but due to heavy load frequent hang up issues are coming when it comes to intraday trading.​https://zerodha.com/​​​
  2. 2
    Upstox - This is the one which I use for my intraday trading. Less hung up issue than Zerodha.​https://upstox.com/​​​ 
  3. 3
    Fyers- A new bloke in the town.Has integrated tradingview in their charting software and has pretty cool features.​https://fyers.in/​​​ 

Step#2 Find a trading/investment strategy 

After choosing a broker, you should not start trading right away. First find a trading strategy, you can do so  either by trial and error, OR by finding a mentor who can teach you the same.Lets discuss the two one by one.

  1. 1
    Trial and error method- This is what most of the people do. They learn something from the internet or youtube and start the process. I will not recommend it ,but it is your choice.Warning: you might waste your precious few years in the beginning. But I can point you in the right direction.Here is my article(https://yourniftycoach.com/2018/01/31/build-price-action-trading-strategy-from-scratch/) which will help you immensely if you apply the concept.
  2. 2
    Through a mentor- If you get the right mentor, it will be the best decision of your trading career. He will not only mentor you but might shorten your learning curve by 3-4 years.Visit this page to know about my mentorship  program. 

Step#3 Backtest the strategy

If you start the trading without backtesting it you will surely loose money. There are several way to backtest the strategy, but you need only two methods.

First is manual backtesting, if your method is based upon price action.This is the only way to do so.

Second is backtesting with the help of coding.If your strategy is based upon indicators or mathematical model then you can backtest your strategy with the help of coding.

Step#4 Start Small

Trading or investment is a marathon, it is not a sprint. So whenever you are starting trading, start very small and build slowly from there. Manage your risk very well. If you compromise with risk management you will blow your account.That is for sure.



Trading or investment is not that difficult but you need to start very carefully. It is the best way to earn money oniine from your home. Once you get the hang of online trading, only sky is the limit. All your dream can come true but one request is to start small.If you want to get rich quick or overnight, then this is not for you.

People who do well in trading are disciplined, hard working and treat it as a business. You also have to remember that stock market is the largest wealth creator, you can compare it with any investment instrument .Over the period of past 100 years, the return given by stock market is the greatest. It has made numerous millionaire but many has got broke too. So trade wisely.

Glimpse of an Intrday Traders’ Journey?What not to do and what to do?

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The question many newbie traders have been asking is, how to be successful in the stock market? How much time it is gonna take and whether we should take the help of a mentor via training program?We are gonna discuss all these questions here, with the help of a story, which have the nuggets if you read it carefully.

So, how to be successful in the stock market?

My answer in one sentence is

“the longer you stay in the market the longer your chances of getting successful”

70% of the traders quit in the first month.20% in first six months after blowing their accounts.5 % within a year and rest 4% goes till 3rd year and decides ,it is not their cup of tea.Only 1% make it to the end.

The story of rabbit and tortoise is actually true in the stock market. Slow and steady wins the race.If you think you come into the market and conquer the world, it is not gonna happen, period.

Lets take an example:

You come into the market with full preparation. You have forward tested your winning strategy in the market, its working like a charm with virtual account.You decided to jump in, you started with cash market…you are loosing some and winning some but overall you are loosing but not hell lotta.That is the perfect start. Six months have passed.

you found out that you need to tweak that strategy a bit therefor you again went to the drawing room and forward tested it. You saw some improvement and you are satisfied, you again entered into the market.Again into the cash market, this time you are breaking even. Also you have started making a journal and naoticing your emotional and mental state while trading. One and half year have passed.

Your strategy is great, have a win ratio of 50–60% but your win size is higher than lose size. You are getting more confidence in yourself and your strategy. You don’t pay heed to what is going on in the news around stock market and simultaneously improving other things.Your execution skill is getting better, but you are still into the cash market as you should be.Your stoploss is getting smaller and you are fine tuning and reviewing your strategy every quarter or month. 2 years have passed.

You have hit a brick wall, whatever you win you give back to the market.You are frustated and start doubting yourself. you think after tremendous amount of effort and putting time you are still not getting there and it is not reflecting in your bank account(But you are forgetting that you are still only 2 year old in the market). You think your strategy is not good enough. You think about society and getting jealous of your colleagues getting ahead of you.You think about quitting but somehow manage to stay and found out that real problem is not strategy but your psychology. You take out your psychology journal and notice that you are revenge trading, your PnL is red when your emotional state is not good etc So you start working on your psychology with the help of your trading and psychology journal.Meanwhile you also got more disciplined as you work on your psychology.Three years have passed.

Now you have got renewed vigour and energy. You have sorted out your psychology and realized that it took max amount of time among strategy, execution and psychology. You foray into derivatives. Since you have seen yourself making small profit, you are not swayed away when you do not make much into derivatives and take whatever market gives you. You are not greedy and fearful. Your profits are either bigger sized, medium sized or small sized, But your losses are always small. Your trading success is getting reflected into your bank account, now you have your own business and can work from any part of the world.

You are so proud of yourself and the one that trusted you along the way. Your friends/distant relative are very much jealous of you because you are so popular and earning more than them, they realized only skillfull people get popular and not the one who are running the rat race. You wanted to give back to the trading community and started your own training programme.

So, if you have read the above story carefully, you will find what it takes to be a successful trader.I am not at all against training program, just against those who run it as a business. Getting a mentor is really important if you wants to shorten your learning curve by few years, they will help you out when you are down and want to quit.

I have my own training program and I can be contacted via whatsapp at 8770194566.

Youtube Link :YourNiftyCoach

Thanks for reading.

Why you should join my day trading course?

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In one sentence ‘this course will shorten your learning curve by 2 years’.Ok that was too short, lets dig deeper.
Are you new in this trading world and feels like you are lost in the tons of trading information over internet, and are worrying where to start from?
OR
Are you someone who has tried numerous trading course but found it too complicated or useless which doesn’t suit your personality?
OR
Are you the one who has burned a hell lot of money trying to be profitable and still hasn’t developed a method to trade?

If your answer is ‘yes’ to any of the questions above then this course is for you!!

When I started out 2 years back I was the same guy like you lost in the trading world without knowing where to start from, I enrolled in various training courses, most of them where completely scam and was run by money oriented people who where only interested in getting money from their clients.One guy charged money for his technical analysis course, also for his trading room and interestingly also for trading psychology. On top of that it was a video series and he didn’t even taught me personally( apart from a webinar where a lots of people were there). If you find this type of course just run away and never look back.

What is unique about my course is that technical analysis and trading psychology is bundled together and will be delivered to you personally by yours truly. If you are newbie you might say that teach me only technical analysis, I don’t need psychology stuff. But trust me after learning the strategy, it will be the psychology who is gonna determine your success in the long run. For the new people entering the market personal trading support is must in the initial phase of the career,I will also do your mentoring so that your base becomes strong and you dont tumble when the going gets tougher. Last but not the least you will get life time support from me.
Let me tell you one thing, I am not running this program as a business to earn money. For your information I make enough money from my trading to live a happy life. My sole purpose is to give back to fellow new and old traders who are struggling in this market which is a gold mine and can make you millions if your purpose is to get rich.

Now, lets talk a little about the method, consider this as just the trailer of the movie.This method is based upon pure price action trading(Price action trading use only price and volume to make trade decisions) and certain patterns which reoccurs over and over again in the chart. So it is certainly based upon experience but can be learned and applied easily if you practice over a week. We will only trade in the trending stocks which we are gonna discover with the help of a screener(I will let you know which screener I use personally).Most of our trades will be based upon breakout strategy, as it gives quick reward and requires less patience which most of us lack anyways.We will find support and resistance and trade breakouts with the help of volume and chart patterns, thats it , very simple isn’t it? No, not that simple there are intricacies in it too, which I will help you discover and understand. I will also train you to flawlessly execute the trade without second guessing yourself.
Here are some of the trades that I have taken and screenshot of the same:

So lets summarise it for those of you who don’t have time to read above paragraphs.
What are you gonna get in the programme:
1. Technical Analysis and Trading Psychology bundelled together.
2. Free trading room to discuss ideas
3. One on one training
4. Lifetime support
5. Pure price action based strategy no indicator used
6. Money Management
7. Info about scanner to find trending stocks.
That’s it friends, I have said what I had to say.Now it is your turn to take action.
Remember one thing
“Help will be given to those who truly asks for it and deserves it”
one of my favourite quote.
Ohh, I forgot here is some screenshot of the trades that I have taken in the past

How to build a price action trading strategy from scratch?

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Dear Traders,

Do you know most of the successful traders around the world use price action trading system.This is why there is so much fuss about price action trading system. And this is why I have devoted more than 3000 words to explain the PA system for trading.This complete article about PA is for beginners to formulate a strategy around PA and as well as for advanced traders to brush up their basics.

SO let’s begin

This guide is divided among following sections

  • What are the best levels to trade on your chart
  • The 4 stages of the markets every serious trader must know
  • How to identify a trending market without second guessing yourself
  • How to identify a range market easily
  • How to read naked charts like a pro and identify “hidden” strength & weakness
  • Quit memorising candlestick patterns, focus on these instead…
  • Advanced candlestick knowledge that nobody talks about
  • A price action trading strategy that works

Price Action Trading — Support & Resistance are the best levels to trade on your chart

Here are 4 things you must know:

  1. Support & Resistance
  2. Previous Support turns Resistance
  3. Dynamic Support & Resistance
  4. Trending & Retracement move

Let’s begin.

Support & Resistance

Support – An area on the chart, with potential buying pressure, to push the price higher.

Resistance – An area on the chart, with potential selling pressure, to push price lower.

Here’re a few examples:

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Remember…

…Support & Resistance is not a single line, but an area on the chart

Next…

If price breaks below support, previous support becomes resistance.

If price breaks above resistance, previous resistance becomes support.

Here’s what I mean…

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Now:

You’ve just learnt what are Support & Resistance, and their role reversal with one another.

These are “static” Support & Resistance, where their areas are fixed on the chart.

But wait… that’s not all.

Dynamic Support & Resistance

Because Support & Resistance can move along with price, which is called Dynamic Support & Resistance.

Dynamic support occurs in an uptrend and dynamic resistance in a downtrend.

They can be identified using moving averages. (I use 20 & 50 EMA).

This is what I mean…

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You’re wondering:

MG, is there anything special about 20 & 50 EMA?

The answer is no. I use it because it fits my trading style. Ultimately you need to find something that suits you.

Indicators are simply trading tools. It’s how you use them that make a difference.

Impulse & Corrective move

Here’s what I mean:

Impulse move – “Longer leg” on the chart, which points the direction of the trend. Candlestick size is usually larger, signalling momentum behind the move.

Corrective move – “Shorter” leg on the chart, which is against the current trend. Candlestick size is usually smaller because of traders taking profits, without strong selling pressure.

If you want to learn more, go read Impulse & Corrective move written by Chris Capre.

Here’s a few examples:

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Here’s a tip for you…

You can trade pullback on a corrective move, and breakout on the impulse move.

Depending on your trading style, both approaches let you get on board the trend.

Now, let’s move onto to the next section…

The 4 stages of the markets every serious trader must know

The markets are always changing. It moves from a period of a trend to a range, and range to trend.

You can break it down further into 4 stages:

  • Accumulation
  • Advancing
  • Distribution
  • Declining

Stage 1: Accumulation phase

Accumulation usually occurs after a fall in prices and looks like a consolidation period.

Characteristics of accumulation phase:

  • It usually occurs when prices have fallen over the last 6 months or more
  • It looks like long period of consolidation during a downtrend
  • The 200-day moving average tends to flatten out after a price decline
  • Price tends to whip back and forth around the 200-day moving average

It looks something like this:

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Stage 2: Advancing phase

After price breaks out of the accumulation phase, it goes into an advancing phase (an uptrend).

Characteristics of advancing phase:

  • It usually occurs afterprice breaks out of accumulation phase
  • Price formsa series of higher highs and higher lows
  • Short term moving averages are above long-term moving averages (e.g. 50 above 200-day ma)
  • The 200-day moving average is pointing higher
  • Price is abovethe 200-day moving average

It looks something like this…

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Stage 3: Distribution phase

Distribution usually occurs after a rise in prices and looks like a consolidation period.

Characteristics of distribution phase:

  • It usually occurs when prices have risenover the last 6 months or more
  • It looks like long period of consolidation during an uptrend
  • The 200-day moving average tends to flatten out after a price decline
  • Price tends to whip back and forth around the 200-day moving average

It looks something like this:

Stage 4: Declining phase

After price breaks down of the distribution phase, it goes into a declining phase (a downtrend) and consists of lower highs and lows.

This is the stage where traders who do not cut their loss become long-term investors.

Characteristics of declining phase:

  • It usually occurs afterprice breaks out of distribution phase
  • Price formsa series of lower highs and lower lows
  • Short term moving averages are belowlong term moving averages (e.g. 50 below 200-day ma)
  • The 200-day moving average is pointing lower
  • Price is belowthe 200-day moving average

It looks something like this…

So, you’ve learnt what are the 4 stages of the market, and the key characteristics to look out for.

Now, let’s move onto the next section…

How to tell when the market is trending

There’s a famous Wall Street saying that goes like this…

Question: What is the trend of the market?

Answer: What is your time frame?

You’re wondering:

What does it mean?

This means there are trends on different time frames. You can have a downtrend on 5 minutes chart and an uptrend on a daily chart.

Here’s an example…

So, you’ve understood that trends can exist in different time frames.

Now… let’s learn how to define a trend objectively.

There are two ways you can go about it:

  • Structure of the markets
  • Moving average

Structure of the markets

The market is in an uptrend when there’s series of higher highs and higher lows.

Likewise, in a downtrend, there’s a series of lower highs and lower lows.

Moving average

Alternatively, you can use a moving average to define the trend.

Here’s how you can do it:

  • 20 ema – Short term trend
  • 50 ema – Medium-term trend
  • 200 ema – Long term trend

If 20 ema is pointing higher, and the price is above it, then the short term trend is up.

If 50 ema is pointing higher, and the price is above it, then the medium-term trend is up.

If 200 ema is pointing higher, and the price is above it, then the long-term trend is up.

Let’s look at a few examples:

Now, let’s learn how to identify a range market…

How to tell when the market is ranging

A range market is contained between Support & Resistance.

A textbook example looks something like this:

Now, before the light bulb in your head goes off with “buy low and sell high”, I want you to see the reality of trade range markets.

Because in the real world, you get variations like:

  • Range expansion
  • Range contraction

Range expansion

This occurs when the market does a false breakout and trades back into the range. Thus expanding the “space” between Support & Resistance.

Selling at resistance would get you stopped out, as price breaks above the resistance, only to trade back into the range.

An example:

Range contraction

This occurs when the market enters a period of low volatility, usually due to an impending major news release.

Looking to “buy low sell high” would put you on the sidelines as the markets went into a tighter consolidation.

Here’s what I mean:

Personally, I find range expansion and contraction one of the hardest markets to trade, and I usually stay out of it.

Now, let’s move onto something interesting…

How to read the price action of any markets (and determine the strength and weakness of it)

Here are the things I look out for:

  • Slopeof impulse moves getting flatter
  • Candlestick bodiesgetting smaller on impulse move
  • Slopeof corrective move getting steeper
  • Candlestick bodiesgetting larger on corrective move

Slope of impulse moves getting flatter

Candlestick bodies getting smaller on impulse move

Slope of corrective move getting steeper

Candlestick bodies getting larger on corrective move

Here’re a few examples to walk you through…

Example 1:

A-Start of the move downward, look at the slope and length of the move

B-Corrective move called as retracement

C-A move downward, but candle size getting smaller compared to the previous impulsive more

D-A very small correction, signalling a move to support is imminent

E-Price moved to the support with this impulsive move and formed a dozi(I will explain it later)

F-Correction is almost 100%, signalling that move is almost done but we might retest the support, which often is the case

G-Tried to moved down, but failed, as bulls are getting stronger

H-Tasted the high of F

I-Very slow move to the support, you can see there are small corrective move and impulsive move within this down move, which is the indication of bears losing momentum.

J-Again a doji and start of the upmove begins, slope of the corrective move is more than 45 degree.

K-Very small correction, bears have died and bulls are coming strongly.

L-Very close to the previous high of corrective move F,

M-Same as K.

N-Broke the previous high of corrective move F, Bulls are in full control

Overall:

The downtrend is getting weak. Support comes in around 230 which is a strong line of defence for the bulls.

I will look to long or stay on the sidelines. No shorting at this point.

With the retest of support and formation of doji confirms that Bulls are gaining control and an upmove is imminent.

Example 2:

A-Corrective move after an strong impulsive move.

B-Price couldn’t travel much higher compared to previous impulsive move.

C-50% correction of the move B

D-Look at the slope, it seems like flattening out, but we can’t say bulls are done yet, as high is still higher the previous swing high.

E-Almost 60% correction, signalling bearish pressure is getting weaker.

F-Very flat move and into the resistance and topped by a doji, showing strong downward pressure.Bears are getting ready and can pounce anytime.

G-Look at the candle size, bears have come and want to take price down.

H-Last attempt by bulls to take price higher but they failed and now bears are in full control.

Overall:

Bulls were in full control upto the resistance area, as the price reached resistance area bears pounced, I will go short at swing high after corrective move H.

For further readings, I would recommend the works of Lance Beggs.

Now, let’s move onto the topic of candlesticks…

Stop memorising candlestick patterns, you only need to know these 4 things

They are:

  1. Wick
  2. Length of the wick
  3. Size of thebody
  4. Close of thecandle

Wick

The wick of the candle represents price rejection. If you see a longer wick, it represents greater price rejection.

Here’s what I mean:

Length of the wick

In general…

When you see wicks “flying” all over your charts, you’re probably in a “choppy” condition (usually in a range market).

And when you get little to no wicks, you’re probably in a “cleaner” condition (usually in a strong trending market).

Size of the candle

The easiest way to identify momentum in the markets is, to look at the size of the body.

A large body shows greater momentum, and a small body shows a lack of momentum.

An example:

Close of the body

To identify who’s currently in control, you’d want to see where the candle closes.

If it closes near the highs, the bulls are in control.

If it closes near the middle, the market is undecided.

If it closes near the lows, the bears are in control.

So, are you pumped right now?

Because you’re going to learn something really cool…

Advanced candlestick knowledge (that nobody talks about)

I used to get excited when I spot a candlestick pattern that I memorised.

“Look, a shooting star! The market is heading lower for sure!”

And it rallied 30 points.

Now…

Instead of “copy-pasting” what individual candlestick means, I’ll go deeper into it.

I’ll explain to you how not to trade them, how to trade them, and other variations of it.

Here’s what you”ll learn:

  • Pinbar
  • Inside bar
  • Rising three method
  • Wide range candles
  • Narrow range candles

Pinbar

A Pinbar is a reversal pattern, which was first introduced by Victor Sperandeo, in his book, Trader Vic: Methods of a Wall Street Master.

The key takeaway about this pattern is price rejection.

Bullish Pinbar – A small bodied candle with a long lower wick, showing rejection of lower prices.

Bearish Pinbar – A small bodied candle with a long upper wick, showing rejection of higher prices.

Now:

Just because you see a bearish Pinbar, doesn’t mean price is going to trade lower.

In fact, it’s usually just a retracement within a trend.

Here’s what I mean:

Do not “blindly”  go short when you see a bearish Pinbar or go long when you see a bullish Pinbar.

Chances are, it’s a retracement within a trend.

Here’s what you should do instead:

  • In an uptrend, only trade bullish Pinbar at an area of support
  • In a downtrend, only trade bearish Pinbar at an area of resistance

Following these simple rules, you’ll greatly increase the odds of your trade working out.

Look at this:

Recall:

The Pinbar shows price rejection on the charts.

But, there are more than one ways to show price rejection, and it may not come in the form of Pinbar.

So…

…if you’re only focusing on Pinbar trading setups, then you’ll miss trading opportunities like these…

Another variation of Pinbar is the Engulfing pattern.

If you think about it, Pinbar is actually an Engulfing pattern on a lower time frame.

Image from Tradciety

Remember…

Price rejection can come in many forms. You should focus on price, not the pattern.

Inside bar

It can be both a continuation and reversal pattern (I’ll focus on continuation pattern).

The key takeaway about this pattern is low volatility. Thus, you can get an entry with tight stops on this pattern (and improve your risk to reward).

Inside bar – Small candle contained within the previous bar highs and lows

How not to trade it?

Most traders would trade the break of the Inside bar, hoping to capture a quick profit.

But…

In a choppy market, the lack of momentum usually results in many losses (so it’s best to avoid choppy markets).

Here’s an example:

The best Inside bar setups occur when:

  • Price breaks out of a range with strong momentum
  • It’s a strong trending market
  • Trading in the direction of the trend

Here’s what I mean…

Another variation of the Inside bar is coined the “Fakey”, by Nial Fuller.

It’s when the Inside bar breaks out in one direction, only to reverse and close in the opposite direction (otherwise known as a false breakout).

Here’re a couple of examples:

Look how Fakey setsup perfectly in the downtrend, it broke on the wrong side and into support turned resistance, perfect way to go short on the break of the inside bar on the downside.

Moving on…

Price action patterns — Rising three method

This pattern was first introduced by Steve Nison, in his book, Japanese Candlestick Charting Techniques.

The main idea of this pattern is trend continuation.

Rising three method – This is a bullish trend continuation move, with three bearish candles as a retracement in an existing trend. Then a bearish candle closes lower, signalling the bears are back in control.

Falling three method – This is a bearish trend continuation move, with three bullish candles as a retracement in an existing trend. Then a bullish candle closes higher, signalling the bulls are back in control.

Here’s the thing:

By waiting for this precise pattern to occur, you’ll not get many trading setups (following an exact 3 candles pullback).

So… what other patterns can you trade?

If you think about it, another variation of this pattern is the flag or pennant formation.

Here’s what I mean:

Next…

Price action patterns — Wide range candles

A wide range candle is formed due to an imbalance of buying/selling pressure.

This represents “hidden” Support & Resistance in the markets (known as Supply & Demand by Sam Seiden)

Here’s what I mean:

There are traders who swear by Supply & Demand, and some who do just fine, with Support & Resistance.

Here’s the thing…

You don’t want to trade them in isolation, but use them with other technical tools, that add confluence to your trades.

Price action patterns — Narrow range candles

If there is a sudden range expansion in a market that has been trading narrowly,  human nature is to try and fade that price move.

When you get range expansion, the market is sending you a very loud, clear signal that the market is getting ready to move in the direction of that expansion. – Paul Tudor Jones

You’re wondering:

What does it mean?

Simply put, when you get series of narrow range candles (volatility contraction), get ready for an explosive move. (These findings can be validated by the works of Adam Grimes, Tony Crabel, and Mark Minervini.)

Here’re a few examples:

So, what’s the best way to enter such trades?

You can look to trade the initial breakout or the pullback after the breakout.

The last thing you’d want to do is trade against the breakout.

Let’s move on…

A price action trading strategy that works

Here’s what you need to do:

  1. Mark your areas of Support & Resistance (SR)
  2. Wait for a directional move into SR
  3. Wait for price rejection at SR
  4. Enter on the next candle with stop loss beyond the swing high/low
  5. Take profits at the swing high/low

Here’s an example…

  1. Mark your area of Support & Resistance

  1. Wait for a directional move into Support or Resistance area

  1. Wait for price rejection at Support or Resistance area

  1. Enter on next candle with stop loss below the swing low

  1. Take profits at the swing high

You can consider taking half your position off at the nearest swing high, and the remaining at the further swing high.

This depends on your trade management.

This is important…

You must understand the trading strategy isn’t the holy grail.

In fact, you’re going to have both winners and losers. And the only thing that will keep you in this game is proper risk management. My advice is to risk no more than 1% of your account on each trade.

Here are more examples of the price action trading strategy:

So, what’s next?

You’ve just learned what price action trading is all about, and how you can use it and to get a “feel” for the markets.

If you learn it well, it will improve your entries, exits and trade management.

Now… it’s time to put these techniques into practice.

New Traders-Roadmap to become a succesfull trader like Jesse Livermore

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Do you dream of becoming a great trader like Jessi Livermore? He didn’t become the great instantly, he also had to go through the trader development process just like any other trader. What I am going to write here may be one of the most important blog post ever for a struggling trader if he grasps the essence of it.It may shorten your learning curve by years.
You might have heard about the trader development phase and if you Google it you will find there are close to 10 phase according to many article. But for me there is only three phase to develop the kind of consistency, every trader dream about. 

DEFINING STRUCTURE

This is very straight forwards to many, lets take an example: Each body having mass on earth follows Newtonian law of physics, they are bound by the structure and rules given by Sir Isaac Newton. So to understand the movement of these body you need to understand by what rules these bodies are bound.

Now lets come to trading, if you want to know how price moves in a chart, you need to understand the structure of the market. The structure is mainly support and resistance which comes in many formats like Horizontal line, pivot point, moving average, round numbers,indicators  etc.So to identify the structure you need to define your support and resistance lines.

This is the first step, what many traders do is system-hopping, they don’t define the structure and change system so often that they don’t master it and eventually give up.Another important thing is to have absolute confidence in your structure, if you don’t have the confidence don’t go to the next step.Because if you will, you will fail.If the base is not strong how can you hope to build a building.

TRADING TACTICS 

After you have defined structure you need to find how to trade around those levels. My structure is based upon pivot points and horizontal support and resistance lines. I always trade away from these levels. You need to remember that first step is always very difficult but finding tactics is very easy, but many of us including me have done the opposite in the beginning .We put all our energy in finding the right tactics to trade, which is called system hopping. In the search of the holy grail we forgot the basics and jump from one tactic to another.

In my experience I have found out that If you have one tactic and put your heart and soul in mastering that tactic then one can be successful no matter what. But you needs to make your base clear i.e. defining your structure.

TAKING RIGHT ACTION

This is the most difficult part. You have everything in place, right structure, right tactics, everything is saying go long but you hesitated and missed the opportunity. This is called execution error. I am in this phase right now in my trading journey. 

Now have a look at the picture carefully, there are two slopes in it.These are called slippery slopes, and here I call step 1 and step 3 as the two slippery slopes. Let me explain why? If you don’t define the structure you will slip and again become  a struggling trader.If you don’t take right action or do execution error you will slip two step 2. It is as simple as that.

Now many people will say what about psychology and discipline and risk management. I would say these things matters, risk management is something which is integral to these concepts. As far as psychology and discipline are concerned, these things will be taken care of if you become consistent.But yes don’t ignore it in the beginning.

Nifty stock rejection criteria 101-Top 10 criterias to reject a stock for investment

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How do you choose stocks for investment? With Nifty having more than 1500 stocks to choose from and Sensex Also Having many stocks, it is often very confusing to get our hands on the right stocks.  Stock screening is the art which every investor should know before investing in the stock market.

Warrren Buffet’s only rule in the stock market is: Dont’t loose money  . If we don’t choose the wrong stock then we will surely not loose the money. So here are the  top 10 criteria associated with a  bad stock:

  1. Average Return on Equity for the past 3 years <  10 ( Logic: bank gives you on an average 7% return and inflation rate is 3.8 % so you should atleast get 10% returnt from your investment, otherwise it isn’t worth it)
  2. Debt to Equity ratio >1.( Excluding banking stocks)
  3. PE ratio > 30 for small cap and PE ratio >50 for midcap ( In NSE Top 100 companies in Market CAP are large cap, 101-250 are midcap, 250 onwards are smalllcaps )
  4.  Profit After Tax is less than 5crore.
  5. Stocks having institutional holding less than 5% ( check on moneycontrol app for instituitional holding)
  6. Stocks where promoters’ have pledged more than 30% in small cap stocks, and more than 50% in mid caps.
  7. Market capitalisation is less than 250 crore.
  8. Average daily value is less than 50 lakhs( average daily value= average daily volume * shareprice).
  9. Debt to FCF(free cash flow ratio) is greater than 3.( FCF= Net cash flow from operation- purchase of fixed asset(can be found in balance sheet))
  10. Financial trend of the stock is negative. It is better to buy stock when breakout has happened rather than on consolidation phase.More on fintrend in trading section.

I believe by having the above point in mind you can avoid the dangerous and non investor friendly stocks. Always follow one of Buffet’s rule in investing, i.e. Don’t loose money . It will go a long way in your wealth creation.