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Tag: Beginners

  • Things Beginners Should Keep In Mind While Doing Intraday Trading

    Intraday trading is the act of buying and selling stocks and ETFs during regular trading hours within the same day. You can buy or sell shares quickly without having to go through the trouble of getting real share certificates. Intraday trading is based on the idea very short term price movements can be capitalised. Shares are bought for less money and sold for more money. The difference between the two rates is the profit.

    Understand how investing and trading are different.

    Trading and investing are two very different ways to put money to work. Just because you know how long-term value and growth investments work doesn’t mean you’re automatically good at day trading. For day trading, you don’t use the same criteria to choose stocks as you do for long-term investments. Day trading uses market volatility to make money, but long-term investments are made so that they can handle daily market volatility.

    Let’s take a look at the basics of intraday trading in India.

    Choose stocks that are easy to buy and sell:

    Day trading requires you to close out your position before the end of the day. If you buy a stock that doesn’t have enough liquidity, you might not be able to sell it when you want to. One of the most important rules of day trading is to only trade in liquid stocks. When there is enough liquidity, there are no limits on how much can be traded. When there are a lot of buyers and sellers of liquid stocks, the prices fluctuate, which is what day traders need to make money.

    Research:

    Day trading is a sure shot way to lose your capital if you do not do your research. Before you buy or sell any shares, you should do a lot of research on them. Choose stocks in a field you know a lot about. Before you start trading, watch how the prices of the shares you’ve chosen change, as well as other signs like volume and liquidity.

    Choose stocks in the same trend as the broader index:

    Price changes can be caused by many things, but some stocks move in the same way as larger indices. For example, these stocks will go up if the Nifty goes up and down if the Nifty goes down. But a large number of stocks don’t follow a predictable pattern, so you should be careful when dealing with them.

    Recognize the right price:

    If you want to make money on an intraday trade, you must choose the right entry and exit prices. Traders use support and resistance levels in a number of ways to choose the right entry and exit prices. Some traders close out their positions when a trade starts to make money, while others choose to go with the trend. Your approach might be different, but you should always keep your cool and stick to the plan.

    Set up a stop-loss:

    Brokers offer a lot of leverage for intraday trading, which increases both the chance of making money and the chance of losing money. Setting a stop loss is important because day trading can lead to big losses. A stop-loss limit closes your position when the share price goes over a certain level.

    These are some of the must-know tips for beginner traders who are looking to trade in equity in the share market online.

  • The Beginners Guide To Open Interest For Intraday Trading

    Intraday trading is a word that means exactly what it says: trading that takes place during the same day. One thing an intraday trader needs to understand is what is called “open interest.”

    What is open interest?

    In its simplest form, open interest (OI) is the number of active contract numbers at the end of each trading day. These are positions that are still open and haven’t been closed yet. Open interest is a way to measure how busy the futures and options markets are in general. For every new position that a buyer and a seller take, the open interest goes up by one contract. When traders close their positions, the number of open contracts goes down by one. If a seller or buyer transfers their position to another seller or buyer, the open interest doesn’t change.

    If the OI has gone up, it means that the market is getting more money. If the OI is going down, the current trend in prices is about to end. In this way, the OI shows how prices change over time.

    It describes participation

    Traders should also know that open interest and volume are not the same thing. Volume is the number of contracts that are bought and sold in a day. Volume is a measure of how many contracts have been made between the seller and the buyer. This is true whether a new contract was made or an existing contract was changed. The main difference between open interest (OI) and volume is that OI shows how many open and active contracts there are, while volume shows how many were actually executed.

    How prices change and what they do

    Another thing to think about when talking about OI is how the price moves. In trading, price action is the way a graph shows how the price of a security changes over time. It refers to whether the price of a certain security is going up or down.

    Most traders analyse the market based on volume, Open Interest (OI), price, and other market indicators. In general, a market is strong when the price is going up, the volume is going up, and the OI is going up. On the other hand, a market is weak even if the price is going up if the other two indicators are going down.

    Here are a few tips for traders who want to use OI to keep an eye on how the market is doing:

    When the OI goes up and the price goes up at the same time, there is a lot of money coming into the market. It shows that there are buyers, so it’s seen as a good sign for the market.
    – When prices are going up but the OI is going down, money may be leaving the market. This means the market is going down.
    – Even if the OI is sky-high and the price drops sharply, this is still a bearish sign for the market. This is because it looks like people who bought at the peak have lost money. In this case, there is a chance that people will sell out of fear.
    – If prices are going down and the open interest is also going down, it means that holders are feeling pressured to sell their positions. This shows that the market is bearish. It can also mean that the best time to sell is coming up.

    OI is important because it shows how many contracts are open or active in the market. When more contracts are added, OI goes up. When a contract is squared off, the open interest goes down. Volume is another word that is often used with the term “open interest.” The volume shows how many trades were made on a certain day. It doesn’t last into the next day, though. On the other hand, OI is live data because it affects what happens the next day.

    Together, open interest, price, and volume data help intraday traders understand how the market is doing. Using this information, an intraday trader can figure out if the market is going up or down.

  • Trendline Trading Strategies For Beginners

    Individual traders tend to utilise technical analysis more frequently than fundamental analysis, so trendlines are particularly popular in both forex and cryptocurrency trading. Interest rate movements affect forex markets, yet central banks’ established interest rates seldom fluctuate. This implies that prices fluctuate in line with traders’ predictions of interest rates, which are far more difficult to interpret. Price action and analytical tools like trendlines, according to technical experts, are the most reliable ways to gauge the sentiment of traders.

    Trading strategies using trendlines

    There are other methods to employ trendlines, but in this article, we’ll go through the two most popular trendline trading techniques as well as a third, less well-known but extremely viable, strategy.

    1) Trendline reversal

    Trading in accordance with the trendline-supported trend is the aim of this technique. Either purchasing or selling near to an uptrend or downtrend line.

    Steps in the plan:

    Decide if the price is moving up, down, or sideways.
    Create a trendline that connects at least three swing points.
    the trendline be extended into the future
    A) Watch for a subsequent price contact of the trendline B) Place a limit order at the trendline (adjust as price moves)
    When the price has reached the trendline, place a trade in the trend’s direction.
    In an upswing, place a stop-loss order under the prior swing low (above the previous swing high in a downtrend)
    Place a take profit order with a minimum ratio of 2:1 to the stop loss size.
    Example of a chart: trendline bounce

    2) Trendline break-through

    Although the trendline breakout may be utilised to trade against the trend, that is not what we are promoting here. How is breaking a trendline a trend-following tactic? Trading the breakout of short-term trendlines in the direction of the main trend is how it’s done!

    Steps in the strategy: identify a long-term trend
    Wait for a price “correction” or buck the general trend.
    Create a trendline to represent this recent correction.
    Keep an eye out for the price to go over this trendline.
    A) Place a stop order past the trendline to enter on the breakout B) Buy at the break of a downtrend line or sell at the break of an uptrend line
    On the other side of the trendline, place your stop loss order.
    Place a take profit order with a minimum ratio of 2:1 to the stop loss size.

    Examples of charts: inner trendline breakout

    3) Confluence between trendlines

    The use of trendlines is effective, however no technical indicator or price action trading strategy is faultless. Using many analysis techniques and watching for possibilities when they all come to the same conclusion will always boost your chances of success on a transaction.

    For instance:

    Using Fibonacci retracements, draw trendlines
    In this illustration, a buying opportunity at a rising trendline is supported by one at the 61.8% Fibonacci retracement level.

    Moving averages and trendlines
    In this instance, a rising trendline coincides with the prominent 200-day moving average.

    Japanese candlestick designs with trendlines
    In this case, bullish engulfing candle patterns help trendline bounces.

  • How To Trade With The Trendline

    Trendlines are one of the most simple and useful tools that traders use. Read on to find out what they are, how to draw them, and the best ways to trade based on trendlines.

    What is a trendline?

    A trendline is a line that is drawn through a chart to show the trend. On price charts, trendlines are drawn to show the general direction of prices in the trading environment. Traders use this information to decide whether to buy or sell in the direction of the trend. Trendlines can be used to track the price of a stock, a currency pair, or a cryptocurrency. In technical analysis, trend lines are one of the most common ways to show how prices are moving.

    A good example of how a trendline works

    Usually, a trendline is made by drawing a straight line between a number of swing highs or swing lows. For an up-trend line and a down-trend line, the swing lows and swing highs are used. In this method, the trendline helps traders understand till when a trend can continue. These can also be thought of as dynamic support and resistance points.


    Starting on the left side of the chart and moving the line to the right is how you draw a trendline. As a general rule, a trend line must go through at least three price “swings” before it can be taken seriously.

    How to use trend lines in trading

    Use a trend line to figure out the direction of the price trend. Traders can then choose to go with the trend if they think it will keep going or against the trend if they think it will change. Both strategies use the same way to read the trendline.

    Bullish because the price is above the uptrend line, which means the trend is going up.
    Bearish because the price is below a line that shows the price is going down.

    Trend following

    Trend following is a way to trade where you buy when the price is going up and sell short when the price is going down. A common trading strategy is to use an uptrend line to figure out if the general price trend is going up. A decline can also be shown by a line going down.

    Trading against trend

    Countertrend trading is a way to trade where you sell when the price goes up and buy when the price goes down. This is more like the basic rule of investing, “Buy low and sell high.” Reversion to the mean says that after a price trend goes in one direction, it will eventually go back to its average price. This is why short-term traders trade against the trend.

    The following point is one of the most important pointers to remember while using a trendline.

    Using a trendline when there is no trend is the worst mistake you can make as a beginner with trendlines. The clue is in the name!

    The best angle for a trend line is 45 degrees. Even if the trend keeps going in the same direction, a slope of more than 45 degrees means that the price is going up too quickly and could easily break the trendline. Less than 45 degrees means that the trend is weaker and is almost trading sideways.

    Three times in total

    As a trendline goes through more swing points, more traders can see it. This makes the trendline stronger. But after five touches, the chances of the trendline “breaking” are much higher.

    Zoom out

    To see where the trend you’re trying to show with the trendline started, make sure to zoom out on your trading platform’s chart. For example, if you want to draw an uptrend, try to start your trendline at the bottom of the previous downtrend or at the swing low.

    Five trendlines zones

    Trendlines are not based on good science. Price doesn’t often hit a trendline right before it turns around. The trendlines shouldn’t be taken as a specific price but as an “area” of prices. Having this information makes it easier to choose an entry price and a stop loss.